Star Wars Uncut: Director’s Cut from Casey Pugh on Vimeo.

1. Price point / negative cost below $5M;
2. “Estimated” Foreign Value at 80% or higher  of negative costs;
3. Track record of collaborators in US Acquisition market to project 25% of negative costs;
4. Utilization of Soft Money/Tax Benefits as revenue — not enhancement;
5. Manufacture desire: inject freshness & an ability to cut through the noise;
6. Predetermined & Accessible Audience;
7. Aura Of Inevitability= Polished Script+Show Reel or Look Book + _________?
8. Urgency of the deal;
9. Something old (proven genre)
10. Something new (fresh scent).

What does this all add up to?  Is there a formula we can use?  I think so.  Why don’t we just get to that tomorrow?

I started this blog for many reasons, but chief among them was to work so that we don’t miss the opportunity that remains before us – the opportunity to build a sustainable future for diverse and ambitious work, free of mass market dictates and antiquated beliefs, transparent, inclusive, participatory. IndieWire’s network, syndication, and reach hopefully will bring this dream closer to reality. We need to grow community and deepen our involvement.

It is crucial for those with experience to work with those that are forging new paths, to both mentor and be mentored. My growth and knowledge over the last 18 months due to the participation of all of you who have written in and written for this blog is more than I could ever hoped for. Thank you for your generosity and commitment. It has been greatly needed in these tough economic and cultural times – you’ve kept my hope for film always growing .

The posts that we in this “TrulyFreeFilm” section will on IndieWire be titled “HopeForFilm”. A truly free film culture remains my goal though. This URL will remain intact and continue to host the other columns “TheseAreThoseThings”, “LetsMakeBetterFilms”, “Issues&Actions”, and my Kid’s Corner “BowlOfNoses”. Those feeds will continue if you subscribe..

I hope to be able to set the Feedburner Subscriptions here to the new URL so that there is no disruption. In the event I fail, I will publish the new URL for you to subscribe to. Please be patient but we should get it working soon.

For those of you who periodically received my “IndieFilmLives!” email blasts, you should now receive a weekly newsletter of my posts. I hope this is not too intrusive; I find them a useful tool to find what I missed during the week. If you don’t want it, you’ll be able unsubscribe with a simple click.

I greatly appreciate IndieWire and Snag Films offer to come to their site. Others had indicated they wanted to do likewise, but only IW & Snag took the initiative. Their growing commitment to diverse voices seems evident. The power of aggregating them all in one place and using that to facilitate great conversation is tantalizing. Our collective voice, particularly when married to ambitious film, could be a far more powerful force that I believe we even realize. It’s going to be interesting to see what happens.

Making it Happen (Highlights) from Vimeo Festival on Vimeo.

Until the double whammy of Toronto 2010 & Sundance 2011, it looked like the US acquistion market for feature content had fully collapsed.  No reasonable P&L would have shown more than a modest six figures for US acquisitions.  Hybrid & DIY models have not been developed yet to consistently deliver returns in excess of this amount (or even at these figures).  Perhaps this is now changing, but it would still be foolish for any filmmaker or investor to expect this and we can’t budget for such expectation.

How many of the 7500 films produce in the US annually return 20% of their negative cost from US licenses?  Although it puts emerging filmmakers at a great disadvantage, I think the surest determining factor for predicting US acquisition potential is the filmmakers’ track record.  If you have found buyers previously, you are well suited to find them again — and even still exceeding that 20% is the exception and not the rule.

When the US market was depressed, I often had sales agents & finance experts challenge me with the claim that the market wasn’t down; it was just that there were no good films.  People like to think that good films sell for good prices.  If 7000 American films can raise money to fund their works and no films are selling, what are those investors thinking when they fork over their cash?  They can’t be thinking that are actually helping their children or nephews and nieces when they give them money only to recognize their failure?  They must be thinking that they are making good films, and all 7000 can not be 100% wrong.

Clearly we are at a point in US film culture where the infrastructure is not serving either the investors, the creators, or the audiences.  Good films are getting made but not being delivered to their audience.  Last year I went to a film investor conference. Several other producers were invited and we all asked to pitch projects.  None of us left with funding, but the investors said to me that I was the only one that addressed how we would deal with the reality of not just getting our film to market, but bringing it to the ultimate end-users — the audience.  As artists build communities around their projects in advance of actual production, they are developing a plan to give domestic value to their films.  It is hard to imagine that any artist will be able to do enough pre-orders to predict 20% of negative costs from the USA — unless they are working on microbudgets — but taking a step forward is still a better plan than surrender to the unknown.

So where are we now in the process of getting your films funded?  If you’ve gotten your foreign sales estimates, and you can somehow reasonably anticipate a 20% of Negative Cost US Acquisition License, you are in great shape.  That is, you are in great shape if you have foolish investors.  The wise ones will still be wondering about how they cover sales fees, sales expenses, and the opportunity costs on the money.  Those numbers are still routinely ignored in many business plans for indie film I find.  If you are working with semi-literate investors, you will still be scrambling to find another 25% or so of your negative costs.

How will you fund your film if you can not predict full recoupment from the combined US & foreign licenses?  Fortunately, if your film is set in America, you can pull in some tax credit relief.  Otherwise, I hope you carry a foreign passport, and qualify for foreign subsidies.  If you plan on cash flowing any of this soft money, don’t forget to discount them and budget for the additional legal expense.  From personal experience, I find it hard to justify the costs of cash flowing soft money on the type of budgets we are talking about  – but that’s good news.  In the NMOIFFv2011.1 you are wise to treat this soft money as revenue towards the project so that such aforementioned costs will be covered.

If you are fortunate enough to have all of these rare qualities (foreign value, US acquisition potential, strong team with a track record, soft money qualifications, and cash flow partners) inherent to your project, you probably are still wondering where’s the upside.  How do we get to profit?

I think we now have a subject for tomorrow’s post.  Stay tuned.

It’s been a long and winding road, but this week PUTTY HILL opens theatrically in New York City.

PUTTY HILL spent the last year touring festivals and was picked up along the way by Cinema Guild, who will handle all U.S. rights, beginning with a theatrical rollout on February 18th at Cinema Village. We’re very happy to be in such strong hands and feel confident that our timing is right: if Sundance is a barometer for the state of indie film, audiences are embracing stories about America outside the mainstream.

That said, it’s hard for a little film to get noticed without substantial buzz. I remember back five years, when my first feature, HAMILTON (2006), opened at Anthology Film Archives the same day HALF NELSON hit theatres. I went around the LES with my wheat paste and posters trying desperately to find some free space beside the ubiquitous Ryan Gosling, hoping to share some of that limelight. Or, I think of Stockholm, when HAMILTON played right after a sold- out screening of OLD JOY and I thought, this is good: a perfect double feature until OLD JOY ended and everyone left the theatre but me and 11 people (one of them Ryan Fleck). Point is: I like these movies and I think audiences that like these movies will like my movies.

So how do I connect with them?
I’m not certain there’s one answer, but I’m hoping PUTTY HILL will prove we’re doing something right this time around. No matter how limited our resources or reach, it’s a fact that audiences beget new audiences. It’s called word-of-mouth.

So far, this has been at the core of a fairly simple strategy: make good work, share it with everyone we can (friends, filmmakers, programmers, press), and let it speak for itself. If it speaks with honesty, people will listen and respond.

For the theatrical premiere of PUTTY HILL next week, we hope to cultivate the dialogue that’s taking place around the film and carry it into the theatre. Each weekend night, Cinema Village will host three post-screening discussions with the filmmakers and some very special guests, friends of the film from inside and outside the industry. The idea is to join new audiences in conversation with audiences we’ve found along the way.

I hope you, reader, will join us opening weekend. Bring your friends! The events culminate Sunday the 20th with a celebration at Lit Lounge, featuring some of the best music coming out of Baltimore right now: Co La, Dustin Wong, and Dope Body, all collaborators on PUTTY HILL.

You come to my indie, I’ll come to yours.

******************************

Friday 2/18

• 5pm screening: conversation w/ Yancey Strickler (Kickstarter), Matt Porterfield and Sky Ferreira
• 7pm screening: conversation w/ Jonathan Caouette (TARNATION), Sky Ferreira, Zoe Vance and the PUTTY HILL crew
• 9pm screening: conversation w/ Yance Ford (POV), Esther Robinson (ArtHome, DANNY WILLIAMS: A WALK IN THE SEA) and Ross Kauffman (BORN INTO BROTHELS)

Saturday 2/19

• 5pm screening: conversation w/ Jeronimo Rodriguez (NY1 News) and Matt Porterfield
• 7pm screening: conversation w/ Richard Brody (The New Yorker) and Matt Porterfield
• 9pm screening: conversation w/ Amos Poe (filmmaker) and Matt Porterfield

Sunday 2/20

• 5pm screening: conversation w/ Amy Dotson (IFP) and Matt Porterfield
• 7pm screening: conversation w/ Chris Keating (Yeasayer) and Matt Porterfield
• 9pm screening: conversation w/ Jem Cohen (filmmaker) and the PUTTY HILL crew

Matt Porterfield studied film at NYU’s Tisch School of the Arts and teaches screenwriting, theory, and production in the Film & Media Studies Program at Johns Hopkins University. His first feature, Hamilton, was released theatrically in 2006. Putty Hill premiered in 2010 at the Berlinale’s International Forum of New Cinema.

Foreign estimates still set the initial value for films, and it is CAST that is the predominate determinator for this value.  Before a film is shot, there are three types of actors that mean something to foreign buyers:

• 1) stars that have been in big hits in the relevant territories;
• 2) stars that have been in popular television shows in those territories;
• 3) stars that can be expected to generate a great deal of publicity everywhere.

Other than stars, there are a few other aspects of a film that create foreign value.  Stars are another entity altogether from cast or actors — and it is really the stars that determine foreign value.

Are there any other factors that help shape what your project is determined to be worth overseas? Fortunately, yes!  The track record of the collaborators have impact on a distributor’s willingness to consider a project.  Experienced directors and producers have more foreign value, provided they have made films that have fairly recently been well received, either commercially or critically.  Similarly, proven cinematographers, designers, editors, composers, and vfx supervisors can mean something.

When the foreign markets were more hungry for US product, it was partially due to their paid and free television’s appetite for it.  Although that has been vastly diminished, if your film will fit well into foreign television programming, you have some security.  It is generally thought that comedies and “urban” (i.e. non-white) content doesn’t travel.  Nonetheless I have had buyers get excited about an office place comedy precisely because they feel like television but aren’t.  Similarly, as new niche channels develop, new audiences aggregate.  I still remain confident that as much as hip-hop transcended music to become a global lifestyle, “urban” programming can get some international  legs once it gets its foot in the door.

Every international territory struggles with the same challenges of expensive marketing.  When a project comes even with the hopes of decreasing some of those costs, buyers perk up. I have seen those results come both from aggregated audience action (i.e. twitter followers, facebook friends, and data lists) and transmedia builds.  Although there is not yet the model that can be used to demonstrate success, let alone predict it, these first efforts still increase the appetite for acquisition among buyers, and thus potentially also the value.

For there to be foreign value, you need to have the potential to sell.  The things that increase that potential also increase a film’s foreign value.  At acquisition markets you see this phenomenon in full play as film’s that appear to be headed to a subsequent (and more major) festival, get snapped up far more readily.

Tomorrow Friday, we will look at why a film might hope to get acquired in the USA and where else can funding come from in the states.

The agent said there was no room for guess work in today’s mainstream indie business.  If you want to get your film made, you have to have to make it for a price that all concerned feel it will certainly recoup at.  ”Absolute sense” is this regard is a film that will inevitably make back what it cost.  ”Absolute sense” can also mean a project that a company feels it has to have, usually due to the people involved or the timeliness of the concept, but those “packages”  are frankly even harder to come by than those that seem to be inevitably recoupable.  You are looking for  the needle in the haystack with either, and need to build it yourself if you want to hope to come close.

My last few projects all were designed to remove any guess work for financiers.  Between foreign sales estimates, tax credit rebates, and the undisputed value or attraction of the stars, if you want to be sure your film will get made, your project needs to read that the value of the work will exceed the cost of creating it.  Value in this regard, is strictly business related, and not cultural (sorry art-for-art’s-sake fans, this isn’t going to be one of those posts).  As much we can understand or even accept, those words though, what is the math that adds up to this formula? And where do the numbers even get their value anyway?

Even with 39 or 40 (and still rising)  films selling at Sundance this year, the first take away from it is we probably should keep our budgets below $5 million.  Granted the highest sales were the ones that had budgets towards the higher side of the scale, but those were also the ones that had the most to lose.  The films at Sundance 2011 were acquired for reasonable amounts with the US acquisition price generally in the low 7 figures or below.  No one, even the large corporate distributors, can stomach losing a great deal of money these days, and the business is currently designed around this preventative action of covering one’s ass (no surprise that several of the corporate funded indies are now exploring the micro-budget field).

If the film business remains in an era of risk mitigation (and how in this economy could it not be?), just as acquisition prices will continue to be reigned in, budgets will be kept to a minimum by most investors.  Let’s leave the issue of how to attract experienced producers and directors to a project when you can’t afford to offer them a reasonable rate aside, and not worry about how budget effects the quality of the project; instead, let’s try to give some greater understanding to what this principal of risk mitigation looks like in practical terms of getting our movies made.

As foolish as it is, the mainstream indie film industry relies on estimates from foreign sales agents to set the value for the films.  It is this “market value” that truly determines the budgets for the films that get made under this system.  Forget for the moment that everyone recognizes that those estimates rarely hold water any more these days.  Let’s ignore the fact that international sales have been dropping 20-30% annually for several years.  Dismiss it as anomaly that certain former major territories no longer license films like they used to.  Until we develop the tools and know how to assign valid figures to the other factors that actually determine a film’s success, this is the system we have.

Tomorrow, I will get into how foreign value appears to be determined.

Why is it if you are an artist whose art is singing other people’s songs, our culture has worked it out in the most frictionless way manageable? But if you are an artist whose art is filming artists whose art is singing other people’s songs, you have to go to herculean tasks to gain permission?  Filmmakers are required to go through a much more difficult process to practice their art in this instance.

To sing another artist’s song, you pay a royalty on record’s sold (and in countries outside the USA, even when it is performed in a public context). To film an artist performing a song, be it theirs or someone else’s, you can’t simply pay a royalty, you have to get permission. In the case of PUTTY HILL, this lead to a costly reshoot to replace The Rolling Stones. Now some may say, why film this to begin with if you don’t have permission, but what if your style is, like PUTTY HILL’s, a combination of fiction and doc, where you are trying to capture the world as it is when it is, and that includes someone singing “Wild Horses”? Shouldn’t we find a way for our culture to be inclusive and allow this to happen?

On “The Devil And Daniel Johnston” some great scenes of Daniel covering others’ compositions could not be included in the film precisely because of this reason.

Maybe someone can explain the logic behind this for the rest of us…

The days of Machiavellian moves to maximize an limited audience art film’s budget seem thankfully over — and as sad as I will be to seem some friends’ films become obsolete, I smell another golden age brewing.  Filmmakers and investors seem to have both embraced the “less is more’ ethos.  Expect may more films to be made in the lower than $5M bracket, and far fewer indie works in Mark Gill’s former sweet spot.  The large indie finance companies of 5 years ago, had to make films at higher budget levels in order to justify their overheads and salaries.  Those companies have crashed and so did the silly models of $20M art films.

The Film Biz is coming off two consecutive extremely robust film markets.  Toronto 2010 saw almost 30 deals close during the festival.  Sundance 2011 exceeded that mark.  Surely there were quite a few deals done post market too (I have not seen any reports to track this; let me know if you know any).  Coming off of two years where the prudent would not expect anything for US rights, this an exceeding positive change.  With a well produced and well positioned films, investors can reasonably hope to recoup — and then some.  Now the challenge for producers will be to be disciplined enough not to allow the budget creep to return.

There are other factors, beyond the sales market itself,  that heighten my optimism.  The financing model for indie films shifted over the last couple of years to be generally inclusive of additional investors.  Seasoned producers generally try to keep investors to a minimum in order to better manage the relationships — although having more than one (but still as few as possible) is still a recommended strategy so that creative control is not beholden to another.  The increase in the number of investment partners was due to a both a reduction of available capital and new investors’ tendency to look towards others to verify a project’s value, and their desire to limit exposure.

With more films selling, and those films having more investors than previously, logic reveals that we have more investors out there who may have actually recouped their investments.  The best part of this is that they are now investors with experience, who hopefully have gained the knowledge on how best to collaborate.

It’s interesting to look at the ROI (return on investment) for the films that sold. Although I don’t have the time to do an accurate comparison, I can tell you what it feels like to me.  The highest ROIs have come from the micro budget world that delivers quality to a quantifiable audience, particularly when they have a somewhat recognizable cast.  Sundance hit, LIKE CRAZY is the posterchild of this model with three accomplished young stars and a tale of love, helmed by a director of proven ability.  Word is that it delivered ten times it’s negative cost on the Sundance sale alone.

For those that want to increase the production value in order limit risk and deliver a more polished look, the low budget range of $500K – $2M did very well this year.  The multiples were not as high, but several films at Sundance seem to have doubled their negative cost by sticking to this formula.  As Kevin Smith pointed out though, the days of Happy Texas sales are long gone.  Granted the higher budgeted star-cast flicks at Sundance may have had the highest sales, but certainly not the highest ROIs, particularly when one factors in the cost of the money, both literal and opportunity-wise.

The challenge this new investor breed faces in repeating this season’s success is how to afford the experienced directors and producers when working on limited budgets.  Genius does bloom every year, but that is a risky game to play.  I have produced about 25 first time feature directors, and as much as I believe that talent is a recognizable attribute, experience is a more valuable resource when navigating the rapid speed and intense volume of decision making that feature film production requires.  Budgets of $2M and less will struggle to attract directors and producers with similar track records.  Lucky for them, many of us still truly love movies and want to see great stories told!

Besides, if you noticed, my post was really a jumping off point to try to address how we want to watch, or at least like to watch.  We do have to offer our work for single transactions, but we have to recognize that is not how most people are choosing to watch.  And yes, as many noted, we should not judge the lack of traction on YouTube for online rentals as representative of much.  As Scilla Andreen pointed out, you need to honor your work with appropriate placement.  YouTube has done so well building a community of generators and viewers accustomed to watching for free, it may be antithetical to the experience to pay anything ever there.

Everything is a Remix Part 2 from Kirby Ferguson on Vimeo.

Video Essays are one of the most under utilized art and communication forms. Kirby Ferguson makes this clear with his fun and engaging series “Everything Is A Remix”. He tops most of my film school education and delivers it in about six minutes, and in a form that easy to share and consume. (Thanks to NYMag’s Vulture for the tip!)

Follow Kirby on Twitter here. And check out his website. Part One focuses predominately on music covers and knockoffs, via Led Zep.

TechCrunch reported late last month on the new video tagging tool BlipSnips:

BlipSnips allows users to mark “moments” within videos that mark specific events. Users can also caption these moments with comments and descriptions.

Another unique capability within BlipSnips is the ability to tag Facebook friends within a video. This differs from Facebook’s tagging features because BlipSnips allows users to tag and mark friends within in the video, so a viewer can see where a friend makes an appearance within the timeline of a video (as opposed to just a general tag). And BlipSnips iPhone app includes all of this functionality. You simply log-in to the app via your Facebook credentials and you’ll be able to post and tag videos on the go.

Producing benefits from having addressed certain moral and ethical challenges before they actually confront you.  Hell, what field or way of life doesn’t?  I have encouraged the consideration of some of these “challenges” before in virtual party game manner, but I do think it is always worth considering.  I think it comes down to the questions of “what do you value?”  People? Money? Principles? Property?  And how much do these matter to you?

If you’ve set your values — or at least have a firm handle on them–, if you then seek to make the product of your labor (i.e for a film producer, your movies) reflect your values, you will be on your way to still feeling good about what you are doing twenty years from now. Essentially this is the “Know-what-you-care-about-and-reflect-that-in-your-work” approach.  But it alone is not enough to carry you through the twenty years.  It is the content driven approach and you will have to also consider the process and the environment you inhabit to stay satisfied.

To feel as good twenty years from now as you do today (and that is assuming you feel good today of course), it is not just the destination that you must concern yourself with but also the journey.  It is the daily interactions and the small things that require as much attention as the big picture.  How do you treat the people around you?  Do you see them as just as important as you?  If you value people, maintaining their equality with you is something you won’t want to ever lose sight of.  The hierarchy of a film set can chip away at this if you are not vigilant.  I’ve certainly seen many filmmakers whose work reflects such values but their day to day interactions reflect something quite different.  Always ask yourself: “How are your values reflected in the smaller interpersonal processes?”.

I wish it was as easy as making sure that both your work and your processes reflected your values in order for you to feel as good a couple decades out as you do when you start — but it is not going to work that way.  The next part of the equation is the one of building an environment around you that you admire.  Certainly for some in the film field, this seems simply to apply to the design and decor of the office — which usually is meant to convey some sort of power message.  Ultimately, this is really about whom you choose to surround yourself with.

I think that it in the long run it is important to have the people who you work with reflect your values as much as your work and processes do.  It is a bit harder when it comes to people, because not only do you not control them, but they don’t always know their own values, and even when they do, they are not always static.  I almost left my first company Good Machine when my partners would not dismiss a mid-level employee who could not treat those below (or really around) her decently; I ultimately wasn’t going to leave the company over another person, but it was when I first knew that I would need to move on to something else if I valued my happiness.  Working with decent people who care about things in a similar fashion to you is not a privilege of the film business, but a necessity since the industry is otherwise over run with those that will stop at nothing to make a buck.  Unfortunately, it is also one of the more difficult things to achieve.

Having your values reflected in your work, your processes, and your environment, seem to me to be the three most important factors in making sure you feel as good today or tomorrow as when you started out.  I am sure there is a lot more to it though and I hope you can help me figure it out a bit more fully by your comments.