Guess what isn't super-sized? Digital distribution revenues for filmmakers, apparently.
AUSTIN, Texas--The Internet and the rise of online video have meant a plethora of new options for independent filmmakers. But, as has been well-publicized, the money just isn't there yet. A panel at the South by Southwest Interactive Festival on Monday highlighted that this is an extremely contentious issue.
"Digital distribution is not some magic bullet," said panelist Gary Hustwit on the success of his documentary "Helvetica," in front of a packed room of audience members that came from both SXSWi and its sister festival, SXSW Film. "It's not that because the film is available digitally it does well. It's because you do the work...because of that exposure, it did well."
In spite of widespread blog speculation that DVDs are dying and that digital downloads and streams will replace the physical medium in due time, filmmakers say that from the creative side, relying on these outlets--iTunes, Amazon, Hulu, Joost, and SnagFilms, represented on the panel by CEO Rick Allen--simply is not profitable yet. In fact, in many cases, sales and revenue numbers are kept on the down-low.
Morgan Spurlock, the documentarian behind "Super Size Me" and "Where In The World Is Osama bin Laden?," put it bluntly. "The reason numbers aren't released (for digital distribution revenues) is because the numbers are pathetic," he said. "The numbers are sadly low in comparison to what we expect from film and television."
"If you're looking to pay your rent, not so much, if you're looking to pay your phone bill, you have a great chance," Spurlock continued. "It's getting to a point where it's down the road from being profitable, but we're just not at that point yet."
The panelists disagreed over whether the best digital distribution strategy is to get a film on as many platforms as possible or to be strategic in the hopes of making more money.
Matt Dentler of digital representation group Cinetic Rights Management argued for the be-everywhere model. "We are a direct aggregator to, I would say, about a dozen portals in the U.S., and we just closed our first couple of deals in Europe." Dentler said that Cinetic's films go to YouTube, Hulu, iTunes, SnagFilms, and quite a few others. "We're probably going to have about five to ten more in Europe over the next few months...what this touches on is there are so many freaking options out there for consumers that you kind of have to provide all of them."
But Steve Savage, president of distributor New Video, disagreed. "It's good to be agnostic, and I think it's a good way to put everything out there and see what sticks but there's also other ways to do it," he asserted, "to be really strategic, to find where the money is."
The panelists seemed to agree that, as so many people have said before, digital revenues are on the way. "The money you're going to make as an independent filmmaker right now," Dentler said, "the fact that we can start cutting checks for people today, it might not be huge checks, but at least they're checks."
"They don't approach TV license fees," SnagFilms' Allen said. "We are at the front end of this. However, they are hundredfold, a thousandfold, the size of the checks that most independent documentarians have received from theatrical release."
Gary Hustwit said that filmmakers need to take responsibility for pushing the digital distribution business forward themselves. "Go directly to the audience instead of relying on, with all due respect to the distributors here, other businesses to do it," he suggested. "Why are we building other people's businesses when we could build our own businesses?"
Updated 2:30 p.m., with comment from Microsoft.
It had become a ritual for Microsoft's consumer unit. Every year it came out with a new version of Microsoft Money and sent new boxes to retail stores.
That tradition is now dead.
Microsoft, via a newsgroup posting from one of its enthusiasts, announced it will no longer update Money each year and, more importantly, it will stop selling the product at retail stores.
It's the latest indication that Microsoft is seeing a shift in the way people, particularly consumers and small businesses, buy their software.
(Credit:
Microsoft)
"More and more retail consumers are going online to shop the endless rows of digital shelves," Microsoft said, according to the newsgroup posting, which was noted earlier Friday by ZDNet blogger Mary Jo Foley. "In response to our retail partners' needs, consumer behavior and business efficiencies, Microsoft is focusing distribution efforts for Microsoft Money Plus software online via download and discontinuing traditional box sales of the software at retail."
Money is not the first consumer title to see its fortunes change in recent years. Another perennial shelf space occupant, Microsoft Digital Image Suite, was discontinued altogether last year.
However, Microsoft added in the posting that it is not abandoning packaged software companywide.
"Microsoft does not see shrink wrapped software going away anytime soon and we are always talking to customers about different ways to price and package our software offerings," it said in the posting. "The company is evolving its strategy and product solutions to meet customer demand and optimize business efficiencies."
Indeed, the company has seen very strong sales of the latest version of Office and its OneCare security software is also sold heavily at retail stores. The company just introduced Equipt, which is a subscription service combining the two, but sold as a packaged product at retail.
The company has been eyeing this shift for some time and looking at options like subscriptions, online services, and even advertising-funded software on the PC. After years of weighing the issue, the company went ahead with Microsoft Works SE, an ad-supported free version of its consumer productivity package.
Intuit, another big name in consumer software, has already seen a huge shift to both online sales as well as selling its personal and small business finance programs as online services, rather than packaged software.
The company already gets more money from its TurboTax online service than it does for the packaged product, with more than 10 million people doing their taxes online. The company also has 128,000 small business customers using its online services, according to spokeswoman Heather McLellan.
It has also debuted niche products that are online-only such as a medical account expense manager product.
Update: I spoke this afternoon with Chris Jolley, a product manager in Microsoft's financial products group. He added some details on the trends that prompted Microsoft's move.In the past 12 months, half of the sales for Money Plus, the latest version of Microsoft Money, have come via digital download. That's roughly three times the rate of a year earlier, he said.
Although the company laid the ground work for less-than-annual updates when it renamed the product a year ago, Jolley said that the decisions to go digital and to skip this year's update were made more recently.
The New York Times is reporting that HBO is launching its own online distribution service for a portion of its content both past and present. Starting this week, lucky residents of Green Bay and Milwaukee, Wisconsin will be the first to get dibs on the new software application that can be set up to download and stack episodes old and new that can be watched on their PCs. Cable provider Time Warner (the same folks working on the lovely bandwidth metering down in Texas) is sending out the application on an CD to current HBO subscribers "soon."
Already there are a few caveats to using the fancy new software. For one, the application is limited to Windows machines, and unlike standard network television channels, Internet users can't access the programming without being an HBO subscriber--a system that's likely to be checked with activation servers. The downloaded content is also given a self-expiration date of one month, regardless of whether or not it's been watched. In many ways it's similar to the BBC's efforts with the iPlayer project, both in helping people catch up on old episodes, and attempting to curb piracy with easy access.
The Times notes competitor Showtime's foray into digital distribution that started with iTunes back in 2006. Showtime currently has just over a dozen shows on iTunes and Amazon's Unbox service at $2 a pop, although unlike HBO's standalone downloading media player, both services are on a purchase model that allow users to repeatedly watch episodes on their computers, TVs, and in the case of iTunes--iPods and iPhones.
HBO Subscribers are getting a slightly better end of the deal than their Showtime counterparts as long as they're willing to watch the shows on their PCs and forgo bringing the programming with them on portable devices. I'm still interested to see how much legacy programming HBO intends to offer in its first few months, as two of the key reasons for piracy are people simply not wanting to buy DVDs or missing the episode within its initial TV window. Isn't this what they created on-demand programming for in the first place?
One thing that struck me during Steve Jobs' keynote yesterday was this odd moment when Jobs was trying to rationalize many of the reasons MacBook Air owners would be happy not having an optical drive in their laptop. He was going down a list of things we need optical media for and replacing them one by one with various Apple creations. Apple's perceived solution for not having a drive would be to buy all your media through iTunes and play it on your iPod, delegate the task of reading discs to another computer in your house, or simplify things with a new and proprietary $99 external drive. Sounds simple, right?
It's commonly been referred to as the "Steve Jobs reality distortion field" and there hasn't really been a clearer example of it since Apple launched the "simpler" version of its one-button mouse that actually had five. In this case, it's the importance of optical media and the role it still plays in our lives. While I applaud Jobs and Apple trying to get rid of what's admittedly become a weak and cumbersome format, I'm a little disappointed that Apple hasn't decided to offer a real solution to the problem they're creating for novice computer users and road warriors who want to avoid optical media altogether--at least not yet.
(Credit:
Apple.com)
What I'm getting at is that Apple's in the perfect position to start offering digital software downloads to the masses, and tie it into a software system that millions of people are comfortable with giving their credit card information to on a daily basis. I'm speaking of course, about iTunes.
Apple's got all the pieces in place to start offering people computer software the same way Valve's been doing with video games with its hugely successful Steam service for the last six years. I love Steam for many reasons, but primarily for its built-in updating tools and easy-to-navigate digital storefront that make it easy to buy software with one click and not have to worry about it again. If I could get the same performance from an app that's admittedly become a little bloated but already has a decent updating system, I'd be happy as a pig in mud.
Two things stick out in my mind as being good signs such a service is in the works via iTunes:
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