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Why filmmakers accept $0.01/hour from Amazon...

 

Recently I shared some thoughts on Twitter about Amazon’s brutal royalty structure for filmmakers, which pays as little as one cent per hour of content streamed.

This is a growing issue for filmmakers which I want to unpack in a bit more detail today. Let me start here -

The only reason I release my films on Amazon is to reach the widest possible audience. It has nothing to do with money.

Visibility is the one benefit that Amazon can really offer, and they do it better than anyone else. Amazon’s method for placing and suggesting films to viewers disproportionately benefits indie creators, at least when compared to the other platforms. 

Amazon employs something called the long-tail approach, which seeks to highlight lesser-known products (or movies).

While almost every other platform is focused on promoting the top 5% of content out there (mostly Hollywood/studio films), Amazon is equally interested in the bottom 95% as well… Which is of course, where micro-budget films live.

They recognize that there is an audience for these films, and their search/recommendation algorithms are powerful enough to predict if someone half-way across the globe wants to watch your indie film about figure skating (or whatever).

If you were to just dump your film on every platform and do no advertising or marketing, it will unequivocally perform best on Amazon. No other major platform offers filmmakers the same reach. Not even close.

The drawback of course, is that you’re literally paid next to nothing. If your movie is an hour and half long and you’re getting the $.01/hour royalty, you make less than 2 cents for every full watch-through of your film.

If 10,000 people watch your movie, you will net $150. 

If 100,000 people watch your movie, you will net $1500.

If 1,000,000 people watch your movie, you will net $15,000.

Now let’s compare that to TVOD (where viewers pay directly to rent your film).

Let’s say you rent your film on Apple TV+ for $1.99, and net $1.50 after platform fees… You only need to rent the film 10,000 times to make $15,000.

If you get a million viewers to rent your film on TVOD, you could theoretically earn $1.5MM in revenue.

The only problem is, TVOD platforms (like Apple TV+) aren’t going to help you reach a million viewers. Their system isn't designed to highlight smaller titles, so you're lucky if you make any money at all.

Only by spending hundreds of thousands of dollars to advertise your movie on TVOD might you be able to reach that kind of scale, and even then there are no guarantees.

So what’s the solution?

One option is to use Amazon strictly as an audience building tool, and not worry about the money at all. That's what I do.

I know you’re probably thinking: "But I need to at least make SOME of the money back from my movie, I don’t want to just give it away!"

And I would completely agree. Making money is important, no doubt. But does your revenue need to be directly generated by your movie? What if it’s generated indirectly? Does that make the profit any less valuable?

Of course not.

When I release a film on Amazon, I don’t expect to make any real money there. I know what Amazon pays, and am not fooling myself into believing they will cut me a huge check each quarter.

But I also know that Amazon will help my films reach hundreds of thousands (maybe millions) of people, some of whom will become fans of my work.

Ultimately this influx of traffic and activity generates interest in other things I’m doing that have dramatically higher profit margins - releasing products, courses, educational material, etc.

Here's an example - 

My first feature was made for $12,000. To make that money back on Amazon at .01 cent/hour, I would need 1.2 million hours of the movie to be streamed. That’s close to a million full views, and even then I would just break even.

Conversely, I could generate that same amount ($12K) with only 48 sales of my educational courses, most of which run $250.

What’s easier to do, sell 48 products or 1 million products?

By leveraging Amazon to drive awareness to my other activities, I was not only able to turn a profit, but also build my audience at the same time.

It was a win-win.

This is just my paradigm of course, and these are the products that I’ve chosen to create because I believe that’s where I can offer the most value.

What you sell (above and beyond your movie) could be virtually anything, so long as it's related and provides value. A companion book, custom apparel, DVDs with bonus features, educational screening kits, etc. are all viable options.

The key is to think of your movie as an advertisement for other offerings in the $50-$500 range, not as the sole product you’re putting out there.

Don’t get wrapped up in how much the actual movie itself makes, but rather how much your business makes.

That’s exactly what big movie studios do on a much larger scale. They aren’t selling action figures to sell movie tickets, they sell movie tickets to sell action figures.

Not every filmmaker wants to become an entrepreneur, and that’s perfectly okay. But those who do are at a massive advantage, and if you’re already selling your own film, then you already are on an entrepreneurial path.

It’s just up to you whether or not you’ll maximize your reach and profitability. 

Don’t forget to follow me on Instagram and Twitter for more content like this.

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