Should Filmmakers Take Vimeo’s $10,000 Offer?

Video hosting service Vimeo is tempting filmmakers fresh from success at this years Toronto International Film Festival with a lucrative-sounding offer. In exchange for $10,000, Vimeo is granted exclusive internet rights to films for 30 days (or until the $10K is paid back, whichever comes first.) It sounds like a great deal, but is it really? And if so, which side is making out?


The Payoff

For a lot of filmmakers, ten grand is a lot of money, especially to be given it upfront. It can go a long way to paying the bills or keeping the lights on. Independents are known for their devotion to their creations and plenty of stories abound about maxed-out credit cards.

So the money is right. The terms seem right. Thirty days isn’t very long at all; most similar agreements cover much longer periods of time, and it’s non-exclusive to Vimeo either. In other words, you can still sell physical media, merchandise and screening tickets yourself and not run foul of the agreement.

So far it all seems win-win. However, there are a few caveats to be aware of.

The Caveats

Firstly, we’re back to the old exclusivity thing again. Yes, Vimeo wants to be the exclusive internet distributor because it coughed up $10,000 for he privilege. However, this means that they can dictate how the film appears online, and in this case, that means only as a sale, or video on demand.

Video on demand, as we all know, is a great concept, except that Vimeo uses it to brand their pay as you go service. A.k.a. viewers of any film under the service must pay for each video they watch.

Now; so far they’ve only managed to sign up about two thousand videos; a pithy amount compared to how many Vimeo alone hosts.

The other catch is that the ‘admission’ for the filmmaker’s film must be $4.99 or higher. Ouch!

Lastly, filmmakers also agree to continue to host their films on Vimeo for two years, non-exclusively.

There are two fundamental ‘flaws’ with the offer. The first has to do with making money from the film and the second, more general concept, is scarcity on the internet and media in general.

Flaw 1: Making Money

Making money from a film used to be simple. You made the film, then sold distribution/screening rights and made your money from a combination of those and the box office receipts the film brought in.

Today it’s different. There are no distributors for the most part on the internet. Sure YouTube takes a cut, but only from ad revenue; they don’t charge you to put the film up in the first place, nor do they pay you to host it there either.

What Vimeo’s offer equates to is a hybrid of the old and new. They will pay you for distribution, but the amount is low and the term is short. You can still earn ‘ticket sales’ but not a penny until the advance is paid back.

Why is all this bad? Well for one, by putting content behind a paywall, you immediately (and almost-certainly irrevocably) reduce the size of your potential audience. Someone looking for content online is far more likely to choose something that’s free over something that is being charged for.

Not too worried? Comfortable with the $10K? Well you shouldn’t be.

In this new media age, making money is dependent on quality and eyeballs. the better quality a film has, generally the more eyeballs it attracts. OK, so the film was screened at a festival, we know it’s good. But! putting the paywall in front of it reduces the number of eyeballs who can see it!

The reason this is important to note is that those eyeballs equate to dollars. More eyeballs genereally equal more dollars for the filmmaker. Now Vimeo, by virtue of the advance, is essentially paying for the eyeballs up-front, and offering a generous split thereafter. However, that is only for views. Where films really make money is in all the ancillary sales (of merchandise, etc.) Those sales are absolutely dependent on, again, eyeballs! Fewer eyeballs, less merch sold and less money in the filmmakers pocket!

Of course, you could argue that a consumer who pays to see the film is more likely to want to buy merchandise, and that may be true. But they do not negate the difference that exists when the content is available for free. (The result of a vastly larger audience.)

So at the end of the day, Vimeo is giving filmmakers a lot of money, but in return for their ability to make money through other forms.

Flaw 2: Scarcity

As if on cue, Ben Elowitz published a post where he talks about content, scarcity and the value of media in the internet age. It’s well worth a few minutes of your time.

What makes it relevent to this post is that Vimeo is attempting to create a scarcity around the films they buy. A fine theory in practice, except that nothing is scarce on the internet, and the abundance of substitute products makes it a moot point anyway.

Vimeo may extract something from their efforts, but it is unlikely to gain traction with the ordinary viewer. Yeah, we all want filmmakers to eat, and Vimeo’s on-demand service give them the ability, but it also creates a scarcity that is irrelevant to the end user and is ultimately not worth their time or money.

Instead, consider David OReilly. A proponent of the Tip Jar feature of Vimeo, where viewers can donate at their discretion. It doesn’t force the viewer to pay, but does provide them an ability to directly contribute something to the creator. income may be low and unsteady, but something is better than nothing, right? Besides, it premits OReilly to earn money from something while focusing on others. There is no scarcity save for the knowledge and feeling that the viewer is directly helping the creator.