vhxtv:


Introducing: VHX Stats

We’re big believers in transparency and knowledge-sharing, and it’s time to put our money revenue stats where our mouth is. Today we’re launching VHX Stats, which will update daily, so you can watch the market grow as more people sell films and video content directly to fans.
The numbers that we’re putting out into the world so far are:
Number of titles for sale
VHX total gross revenue
Number of total transactions
Number of customers who’ve bought more than one title from VHX (something we want to improve)
Sales by geographic region
…with more to come. Creators want to have a conversation about the economics of selling their work, and this is our small contribution. Take a look, ask questions, and help us make it better.

vhxtv:

We’re big believers in transparency and knowledge-sharing, and it’s time to put our money revenue stats where our mouth is. Today we’re launching VHX Stats, which will update daily, so you can watch the market grow as more people sell films and video content directly to fans.

The numbers that we’re putting out into the world so far are:

  • Number of titles for sale
  • VHX total gross revenue
  • Number of total transactions
  • Number of customers who’ve bought more than one title from VHX (something we want to improve)
  • Sales by geographic region

…with more to come. Creators want to have a conversation about the economics of selling their work, and this is our small contribution. Take a look, ask questions, and help us make it better.

This is a regression analysis of the correlation between the Meta Critic score for all Paramount wide-release films from 2010-2014 and the percentage of overall domestic box-office that’s made up by the opening weekend gross. You can see that the polynomial trend equation matches the data pretty well by eye, and this is confirmed by the R^2 of 0.3695.

Basically this proves that the quality of a film has a pretty large impact on how well a film does after its initial weekend’s performance.

However, when you run a regression analysis comparing the opening weekend box-office with the Meta Critic score. There’s clearly no meaingful correlation at all.

These two exercises prove something that I’ve suspected for a while. The quality of a film has very little impact on its opening gross, but it has a pretty large impact on how well it will do over its whole life.

Personally, I find this refreshing. You can prove that quality does matter when it comes to the overall financial success of a film. It just doesn’t seem to matter opening weekend.

So what does this mean to the overall gross of a film? If a film opens to $20,000,000 opening weekend and has a 25% score on Meta Critic, then this model predicts the total gross of the film will be $46.51 million. If a film opens to $20,000,000 opening weekend and has a 75% score on Meta Critic, then this model predicts the total gross of the film will be $58.82 million. That’s a pretty significant difference! High-res

This is a regression analysis of the correlation between the Meta Critic score for all Paramount wide-release films from 2010-2014 and the percentage of overall domestic box-office that’s made up by the opening weekend gross. You can see that the polynomial trend equation matches the data pretty well by eye, and this is confirmed by the R^2 of 0.3695.

Basically this proves that the quality of a film has a pretty large impact on how well a film does after its initial weekend’s performance.

However, when you run a regression analysis comparing the opening weekend box-office with the Meta Critic score. There’s clearly no meaingful correlation at all.

These two exercises prove something that I’ve suspected for a while. The quality of a film has very little impact on its opening gross, but it has a pretty large impact on how well it will do over its whole life.

Personally, I find this refreshing. You can prove that quality does matter when it comes to the overall financial success of a film. It just doesn’t seem to matter opening weekend.

So what does this mean to the overall gross of a film? If a film opens to $20,000,000 opening weekend and has a 25% score on Meta Critic, then this model predicts the total gross of the film will be $46.51 million. If a film opens to $20,000,000 opening weekend and has a 75% score on Meta Critic, then this model predicts the total gross of the film will be $58.82 million. That’s a pretty significant difference!

But They’re Already Famous…

One of the common responses to my “Tear Down These Walls” post is that people are afraid the new artist/fan model is only sustainable for artists who have already built a huge fan-base under the traditional entertainment industry model. People who are already famous. I don’t think this is true. First of all, there are already success stories of content-creators who have thrived in the new model without any major prior success from the traditional content distribution system. But I also think that this perception is a result of where we are in the timeline of transition. The new model of artist/fan interaction is, after all, a new model. Of course the artists who already have big engaged fan-bases are best suited to use this new model, and of course most of the artists who already have big fan-bases managed to build those relationships in the old system. That too will change.

But the simpler response to this criticism is just to highlight some artists who have already found success with the new model without the benefit of large fan-bases built on the back of traditional media. (And I’m ignoring the incredibly successful artists that used online popularity to build a foothold in the traditional media system, such as Justin Bieber and Soulja Boy and Carly Rae Jepson and let’s be honest almost every other big new pop or hip-hop artist.)

So here are some people who used online and non-traditional media to build strong artist/fan relationships and who used these relationships to build successful pipelines for creating and distributing art and entertainment.

JONATHAN COULTON

As Wikipedia says, Coulton is “an American singer-songwriter, known for his songs about geek culture and his use of the Internet to draw fans.” He was a computer programmer who started creating his own music in 2003. Coulton has released his music under the very friendly Creative Commons Attribution-Noncommercial license which lead to a lot of early podcasts using his music. As Coulton’s popular online built, he was approached to make the song “Still Alive” for the end-credits of the popular video-game Portal.

In 2011 Coulton revealed that he was making $500,000 a year from his music, without having a traditional record label contract. It’s fair to assume that his earnings have increased in 2012.

FREDDIE WONG

Freddie Wong (aka FreddieW) joined YouTube in 2006. The competitive Guitar Hero player and video-game junkie started creating and sharing wacky VFX-heavy video-game inspired videos. He currently has 3.4m subscribers on YouTube and his videos have over 675m views. In 2011, Freddie tried to raise $75,000 on Kickstarter to fund a more ambitious online video series called Video Game High School. He ended up raising $273,726.

RICH BURLEW

Burlew was a Dungeons and Dragons geek growing up. He attended Pratt Institute for a degree in Illustration, and ended up with a job doing elementary school textbook design and layout. I guess technically that’s a job in the old media system, but it’s not much of a foothold. In 2003, Burlew decided to add a stick figure comic to his personal website Giant In The Playground. This web-comic grew to be “The Order of the Stick.”

After selling self-published “The Order Of The Stick” books from his website for a few years, he ran out of copies of the original book. This year, Burley decided to try to raise some money to fund a reprint. He set a target of $57,750 which was the minimum needed for a second print run. When the Kickstarter campaign closed, Burley had raised $1,254,120.

JERRY HOLKINS and MIKE KRAHULIK

In 1998, Holkins and Krahulik started a web-comic called Penny Arcade. It is incredibly popular. It’s hard for me to explain the level of cross-media popularity and impact attained by Penny Arcade in a short paragraph, so I recommend checking out the long Wikipedia entry for Penny Arcade for some more context.

MARKUS “NOTCH” PERSSON

I saved the biggest for last. Notch is the pseudonym for video-game developer Markus Alexej Persson. Notch is currently one of the biggest celebrities in the video-game community. Back in 2009, Notch was just another programmer working for a video-game development company. However, all that changed when Notch released a tech demo for a personal gaming project called Minecraft. This was a game he created, promoted, and marketed himself. He has now built a small company around the game, and remains vehemently independent. As of today, 6.8 million people have purchased the PC/Mac version of Minecraft. The game is available for computers, and has versions available for XBox 360 and iOS. Minecraft has earned well north of $50m for Notch and his company Mojang. All of this without using any traditional video-game distribution systems until after earning more than $20m in revenue from direct sales to fans.

Minecraft has very transparent sales figures. In the last 24-hours, direct sales of Minecraft resulted in over $360,000 in revenue.

The power, influence, control, and yes, money, that Notch gets from Minecraft vastly outstrips what would be possible if he developed and released Minecraft through the traditional channels. Although, let’s be honest, the traditional channels never would have made a game like Minecraft in the first place.

Perhaps you notice a pattern here (besides the unfortunate pattern that all the people I listed are men). These success stories are primarily people who are creating content that appeals to gamers. As I mentioned in my prior post, I believe that this new model is currently more successful in the world of gamers because gamers are already highly engaged with finding, purchasing, and consuming content online. Gamers are the early-adopters of the new model of artist/fan interaction. There are also plenty of robust alternative distribution, marketing, and publicity platforms for independent game developers and for people making content that appeals to gamers. I think that other audiences are a few years behind on this timeline, but we’re going to start to see these success stories rolling out across more types of content as more and more people become engaged online.

This is where we’re going.

Of course, this list would look totally different if I started talking about self-publishing e-book authors… But that’s another post.

In case I haven’t already made it clear, Louis C.K. is my hero. Everything in this interview is worth reading, but one simple sentence really stood out to me.

I don’t like when I’m prevented from doing things the way I think they should be done.

The more I think about it, I realize that this statement from Louis C.K. the driving force of my life. I am an incredibly opinionated person when it comes to subjects that I care about. I think there are right ways to do things and wrong ways to do things. I may not be correct all the time, but I want to try to do things the way I think they should be done.

This is why I was drawn to producing films independently rather than at studios. This is why I feel frustrated when we finish a film hand it over to a distribution company, and they don’t listen to what we have to say about the release of the film. Even if they pay us well for the right to distribute a film (which unfortunately is not the most common case), it still frustrates me that we lose control over that part of the process. And then it’s just insulting in cases where we lose all control and the distributor is only risking a small fraction of what we risked to actually make the film. The system as it currently stands is overvaluing distribution and undervaluing creation. Things have to change.

[via Marco.org]

Tear Down These Walls

In the entertainment business, we’re living in very interesting times. There’s a wave of momentum pushing forward a powerful new relationship between artist and fan.

At its most basic, there are only two important parties in the world of art and entertainment: the artist and the fan. However, over time, a wide variety of industries have set up shop between the artist and the fan. These middle-man entities took control of helping artists fund their art, helping artists market and distribute their art, helping fans discover and consume the art, and helping fans build a semblance of a relationship with artists they admire.

These industries used to serve incredibly important purposes. It was very expensive to make a lot of modern art forms such as music, Broadway, or film. It was very expensive to create and administer a distribution network that had to get vinyl records into thousands of stores or to manufacture and ship heavy 35mm film prints to hundreds of theaters. It was very expensive to market art to the public. And while some of these expenses are still here, the need for most of them have started to drop or disappear over the last few years.

Unfortunately as these expenses have started to disappear, the middle-man system has clutched harder and harder at the control it maintains over the creation and distribution of creative content. Studio executives wield creative power with a stronger fist than any time in the last few decades.

But over the last few years, the reality is that these middle-man positions have become less and less important. First the web and now the social-web (mostly Twitter, Facebook, and Tumblr) have removed communication barriers between artists and fans. Platforms like Kickstarter and Indiegogo make it possible for artists to fund their work through a direct relationship with fans. Amazon, iTunes, Steam, and other initiatives make it simpler for artists to make their work available directly to millions of potential customers. Google and Facebook both have advertising systems that are incredibly powerful and user-friendly.

It’s possible today for artist and fan to have a direct relationship in terms of content consumption, communication, and commerce.

From my position as an independent film producer, it looks like we’re at a turning point. If you are creating content that appeals to an online-savvy audience, all of the tools you need for creation, distribution, and marketing are accessible and affordable. And clearly I’m not the only person to see this. There are success stories across all popular forms of art and entertainment:

This is something Patton Oswalt recently discussed in his keynote address at Montreal’s Just For Laughs 2012. Patton puts it incredibly well:

Our careers don’t hinge on somebody in a plush office deciding to aim a little luck in our direction. There are no gates. They’re gone.

The old gates are gone, and new gates don’t try to control the content. Kickstarter, iTunes, and Twitter don’t try to fiddle with what an artist wants to create. They don’t try to own the content. They don’t try to insert themselves into a position of power in the artist/fan relationship. They have business models based on facilitating artist/fan relationships, not based on controlling the content of those relationships.

I believe that comedians and video-games are the best early-adopters for this new model, and that’s why we’re currently seeing the most success in these areas.

Comedians have been building direct artist/fan relationships for years, based on touring. This is what lets Louis CK reach his fans directly. This is what led to Kevin Hart’s huge success with his theatrically self-released standup special. As artists in other fields build these direct artist/fan relationships, they can start using the same powerful direct-distribution and communication models that are being pioneered by comedians. I suspect that music will come next, and then finally film.

In terms of potential business models, video-games are the most interesting example. The current state of video-game distribution gives a sense of where all entertainment distribution will go over the next few years. Video-games are ahead on this timeline compared to other forms of entertainment for a variety of reasons:

  1. Video-games appeal to people who are already online-savvy.
  2. The people in control of video-game production are already online-savvy.
  3. Video-game players are already conditioned to experience the content on the same platform where they discover and purchase content.

All three of these things will happen to other forms of entertainment over the next few years. So let’s see what interesting models we see in the world of video-games…

  • Steam is a hugely successful distribution platform for independent games.
  • Kickstarter has had multiple video-game projects funded for over $1m, proving the power of a direct artist/fan relationship.
  • Humble Bundle provide a powerful promotional and sales platform for independent games. They package multiple video-games into a limited time sale where people can pay whatever they want for the games. A business model like this would be laughed out of most board rooms a decade ago, but the last Humble Bundle video-game bundle grossed over $5,000,000.

Right now Humble Bundle are selling their first non-video-game bundle. The Humble Music Bundle includes geek-friendly releases by OK Go, MC Frontalot, They Might Be Giants, Christopher Tin, Hitoshi Sakimoto, and Jonathan Coulton. There are ten days left in the bundle, and they’ve already sold $300,000 worth. That’s a pretty significant chunk of change for a limited-time sale where people are allowed to pay whatever they want.

So I sit here in 2012, looking around myself as an independent film producer stuck in the traditional world of film marketing and distribution. Like Patton Oswalt, I have benefited and failed based in large part on the whims of people in a plush office deciding to aim a little luck in my direction. And I’m stuck in this position despite the fact that I usually only show up in the plush offices with completely finished and releasable films. I could get into specifics, but there’s no real advantage to throwing people and companies under the bus. But I sit here looking at the film-industry around me right now, and I don’t like what I see.

I look over the fence at Louis CK, Amanda Palmer, and Double Fine. It’s not just that their grass is greener than my grass. It’s that their grass is growing, and my grass is dying. I want to be on the side of the fence where the grass is growing.

So I’m putting my money where my mouth is. I recently invested in VHX, a platform for artists and filmmakers to distribute video content directly to fans. I am a vocal supporter of Kickstarter, and have backed over 30 projects on their platform. I’m looking to support new platforms that will help build direct relationships between artists and fans.

And yes, my plan over the next year is to jump over that fence myself. I’m sick of relying on somebody in a plush office deciding to aim a little luck in my direction. I want to live at the intersection of artist and fan. I want to help tear down the broken system so we can build something better in its place.

[You might also want to read my follow up post: “But They’re Already Famous…”]

vhxtv:

We’re very proud to announce that VHX is powering the worldwide release of Indie Game: The Movie on June 12.
Indie Game has come a long way since their ambitious Kickstarter project. Two years later, they’re armed with an amazing film, a basket of accolades, and an eagerness to redefine what indie distribution truly means. We could not dream of a better fit for VHX for Artists.
You can pre-order it now and you’ll get high quality streaming and DRM-free downloads. If you want to find out more, you should watch the trailer!

Filmmakers, film execs, and film lovers: pay close attention. This is where the film, video, and television business is going. It will start with the crowd-funded and self-funded films by artists on the bleeding edge of technology, appealing to the early adopters. The musicians and comedians will embrace it, as they’ve always been the closest to their fans. It will creep into traditional independent film, as the pipeline for a well-supported self-release proves to be more lucrative and stable than gambling on traditional distribution. And finally the studios and networks will be dragged into the future kicking and screaming, left with no alternative as the market shifts under their feet.
But this is it. This is where we start. Crowd-funded on Kickstarter; self-released on iTunes, Steam, and VHX. Our Edison is Steve Jobs, our Chaplin is Louis CK, our multiplex is VHX, and our Warner Brothers is Kickstarter. I hope you can be our Hitchcock, our Curtiz, our Méliès, or our Griffith.
Movies are still young. It’s just the system that’s getting old. High-res

vhxtv:

We’re very proud to announce that VHX is powering the worldwide release of Indie Game: The Movie on June 12.

Indie Game has come a long way since their ambitious Kickstarter project. Two years later, they’re armed with an amazing film, a basket of accolades, and an eagerness to redefine what indie distribution truly means. We could not dream of a better fit for VHX for Artists.

You can pre-order it now and you’ll get high quality streaming and DRM-free downloads. If you want to find out more, you should watch the trailer!

Filmmakers, film execs, and film lovers: pay close attention. This is where the film, video, and television business is going. It will start with the crowd-funded and self-funded films by artists on the bleeding edge of technology, appealing to the early adopters. The musicians and comedians will embrace it, as they’ve always been the closest to their fans. It will creep into traditional independent film, as the pipeline for a well-supported self-release proves to be more lucrative and stable than gambling on traditional distribution. And finally the studios and networks will be dragged into the future kicking and screaming, left with no alternative as the market shifts under their feet.

But this is it. This is where we start. Crowd-funded on Kickstarter; self-released on iTunes, Steam, and VHX. Our Edison is Steve Jobs, our Chaplin is Louis CK, our multiplex is VHX, and our Warner Brothers is Kickstarter. I hope you can be our Hitchcock, our Curtiz, our Méliès, or our Griffith.

Movies are still young. It’s just the system that’s getting old.

The autopsy began before the corpse was even on the slab.

Mr. Beaks takes the film-journalism world to task for how they covered JOHN CARTER leading up to its release.

I’ll add an insight of Jean Cocteau's from 1948, those quaint times when tentpole movies only cost a couple million dollars:

The main danger confronting [film], not only in France but in all the countries of the world, is the amount that it costs and the fear of taking risks imposed on us by the money that producers invest. This deprives [film] of those contrasts, experiments, flights of daring and marvelous failures that allow art to overcome inertia and to break with habit.

I’m holding off on writing my thoughts about JOHN CARTER, as it’s the first film of 2012 that made me want to immediately watch it a second time.

But I will say this… None of us see a financial loss or gain if JOHN CARTER does well or poorly at the box-office. The financial success of the film has no impact on the quality of the film, as the film was made and finished long before any revenue was generated. Let the people who are actually invested in the success or failure of a film worry about its financial prospects. Why can’t we just celebrate the contrasts, experiments, flights of daring and, yes, even the marvelous failures?

Surely we have much more to gain from encouraging a conversation about film that ignores financial success and failure. No one comes out of a film saying “I really love the part where the studio made a lot of money releasing it” or “I really liked the film until I realized the studio lost money on it.”

"Well, what about The Ritz in Philadelphia, Leo?" Stanley would say. "Midnight Cowboy ran for six months and ended its run at $10,000 in its last week? Nothing looks better than that.”

"And in Columbus, The Wild Bunch had a great engagement at The Paramount, which is perfect for our audience.”

The calls would go on for nearly an hour as Stanley, knowing Leo was dumbfounded at the other end of the speakerphone, moved around the office with a wry smile on his face, hitching up his pants and winking at me as Leo, already in awe of Stanley’s reputation for thoroughness, promised to get back quickly after he checked out the preferred cinemas and their availability. It was classic Kubrick, winning the chess match through perseverance and ingenuity.

I highly recommend reading this article about how Stanley Kubrick invented not only the modern box-office report, but also a system for choosing theaters based on prior box-office performance.

I think film geeks and scholars tend to forget that many of the past great film artists are also the great film business minds. It’s hard to get more “auteur” than Stanley Kubrick, and his obsession went beyond the art and into the business side of film. This doesn’t sound too different from the type of obsession you see from James Cameron, who certainly micromanaged the release of Avatar.

I’m sure you’ve seen this already, but for the people who haven’t, here is my sales pitch for Mr. Louis CK.

Louis CK is selling a standup special “Live at the Beacon Theater” for $5 via his own personal website storefront. He paid for the recording of the special, and is paying for the distribution and the marketing of the special. For its first wave of distribution, he is eschewing every traditional distribution method (including the new distribution models of iTunes and NetFlix) in order to reach his fanbase directly.

He’s also providing the special with no DRM (Digital Rights Management) technology. This essentially means that he is letting people download the special, and watch it wherever they want whenever they want for as long as they want. He isn’t creating artificial digital rules on how the content can be viewed. This is exciting, and shows that Louis is trusting his audience to be good people.

The result of this trust is that Louis has grossed over $500,000 in sales in just four days. He’s well into profit on the venture, and I suspect is going to have a model that he can use for the rest of his career as a comedian.

As an independent filmmaker, this is something I want to support. Louis made an independent film (albeit a comedy concert film) and is self-releasing it online. This is a model that I hope can be successful for a wide variety of filmmakers, and allows them to grow a direct relationship with their fans.

So I suggest buying Louis CK’s new stand up special for two reasons:

  1. Support a fan-friendly and positive model for artists to generate revenue.
  2. Louis CK is hilarious, and the stand-up special will make you laugh.

Mosaics

[This is a message board post I made in 2002. Seven years later, I still think it’s an apt analogy not only for screenwriting, but also film in general.]

In some ways a screenplay is like a mosaic. You construct a larger picture by arranging small parts: scenes, sequences, dialog, and characters. Now it’s very important to be able to work with these small parts. To be able to have them play off each other to affect the viewer. However, no one is going to give a damn unless the mosaic makes a picture they want to see.

When you want someone to pay you to make a mosaic you don’t show them how well you can form the tiles. You give them a sketch of what the mosaic will look like. The picture. That’s the high concept. It’s the picture. When you pitch a screenplay, you don’t tell people how wonderful your characters are. You don’t tell them how witty your dialog is. You give them a sketch of the picture. If they like the picture, then they pay you to make it.