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Can Indie Films Make Money on YouTube?

by Jeff Steele

Sorry, Not Bankable.

I recently heard a report on NPR’s “Marketplace” about amateur videographers making a killing on YouTube, most famously the father behind “David After Dentist,” and Nebraska teenager Lucas Cruikshank, the creator and star of “Hey, It’s Fred.”

“David After the Dentist” seen by about 60 million people, has resulted in direct sales of merchandise, along with licensing of David’s catch-phrase, “Is This Real Life?”

“Fred” has more than 400 million views and, as the New York Times recently reported, in a first-of-its-kind deal for children’s entertainment, “Fred: the Movie” will debut on Nickelodeon this summer. Execs are hoping to create a franchise and may follow up with a Fred Christmas movie.

These are happy accidents, but should indie filmmakers be using YouTube as a component of their finance plan?

No, they should not.

Licensing a zeitgeist like “David After Dentist” is merely capitalizing on the here and now, right now; maintaining this enthusiasm for two years while a the film version is produced is far cry from from trying to convert right now.  In addition, the Fred audience are tweens that move from fad to fad quickly and never look back.  Will Fred be as cool to tweens in two years?  The next generation of tweens will seek out the own Fred phenomenon.  Trying to recapture lightening in a bottle after a two year lag time is foolish enough, let along trying to do it with the shortest attention span demographic.

Massify, Lionsgate, and YouTube are sponsoring a program called LINC, the Lionsgate Incubator, to make and distribute short comedy films online. In January, YouTube announced it would collaborate with Sundance to rent the top films from the 2009 and 2010 festivals.

Participation in these filmmaker opportunities is not unlike earlier opportunities offered by AFI, Fox Searchlight, Sundance, and other festivals. Now there’s a digital component, but whether or not a career can be launched through such an opportunity depends on what an individual wants out of their profession.

There are also YouTube partnerships: allowing YouTube to place ads on your content and share in the rewards.

One of the successes within this paradigm is Demand Media, which “brings together writers, editors, experts and filmmakers to create informative content and develop online communities around a wide range of topics that run the gamut from healthy lifestyles to adventure travel to learning how to manage your personal finances.” Demand Media has launched more than 20 different YouTube channels, some of which are among the top-most-viewed on the site.

The cornerstone of Demand Media’s success is that they embrace the fact they’re in the search-engine-optimization business: “While many see YouTube as a destination site, we know that YouTube is also a top search engine. In fact, the largest percentage of our channel views comes from searches on YouTube. So we take that into account and utilize many of YouTube’s services for increasing discoverability of long-tail content so that we do not have to rely on hits from general search engines to be successful,” says EVP Stephen Kydd.

I was looking for an indie film use of YouTube and came across Example of 3 Lads, An American Fool, One Night – indie gay film – first posted YouTube segment four years ago – now over 165,000 views. Buy the DVD for 1.99 on Amazon. How significant is this to the filmmaker’s success?

Based on the internet hype of festival-darling, “Kick-ass”, Lionsgate (which paid $15m for US rights) was rumored to have tried to shake down exhibitors for a nearly 100% take of its opening weekend box office.  After a relatively disappointing $20m opening weekend, the the ability to quantify and parlay YouTube hits and online chatter into actual dollars, a negotiation position, or even a financing pitch is limited at best.  If the film ends up having legs and can get carried by word of mouth, then it could be a precedent in the making.

Some indie films have claimed success in raising funds online by posting spec trailers, but the most successful example I’ve found only  raised $60k over four years.  Four years is too long to wait.

Instead of layering the “old school” indie on top of a new platform, the smart approach is to follow Demands’ lead and recognize this is a new medium, with different requirements; it’s actually more a search engine than a content delivery system or distributor.

  • Martin

    This was something I was contemplating doing with youtube. Jeff thanks for putting this type of “distribution” into perspective for me. It makes total sense.

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  • http://www.biracy.com Phil Botana

    I think you are spot on on this one Jeff.

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  • http://www.themagicofchristmasmovie.com al cacioppo

    I whole heartily agree with your take on this subject. It seems to me that basing your distribution plan around a youtube success, is akin to basing your business plan on the success of Blair Witch./al

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  • http://www.whomadewho.ca Jeff L Burke

    Can You-Tube be used to help generate crowdfunders for a film? If a person wished to make a feature film, can they not put items on You-Tube and gain a following that way? The people who check out those shots or related material can then go to the website and buy into the feature? Is this not a potential source of funding as opposed to revenue?

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    • http://filmclosings.wordpress.com steelejeff

      If you’re deadset on crowd funding then YouTube is an essential element for that campaign. But I suspect it will be slow going and I predict that after four years of crowd fundraising, you will have to recast your actors.

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      • http://www.whomadewho.ca Jeff L Burke

        The film I’m producing right now is based on building an audience for the film. I look at YouTube as a way to possibly build and connect with an audience by having them submit their similar themed films while creating interest in my feature and hopefully find support from the YouTube + social media audience.

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        • Myron

          Sounds like a lot of “Hope” is built into that strategy. Hope it works.

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          • http://www.whomadewho.ca Jeff L Burke

            I believe that if the project is solid and has the potential to build an audience through conception and production to the post & release then why not try it. Hope may be a portion of it but talent is the true strategy.

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  • SaMoGuy

    Other sites report LG’s purchase of KickAss at $25 million. With that outlay, and an expensive P&A campaign, LG’s position on the movie (and perhaps with Icahn) is even more precarious. Add in their attempt to take 100% of the film’s BO and the whole KickAss gambit doesn’t look great. The youtube play appears, as you state, not to have paid off as well.
    Anybody can miss the boat on any movie — it’s that kind of business — but execs losing control because an 11 year-old girl says the C-word is probably a new low, even for Hollywood.

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  • Scott Hillman

    Actually Fred got 4 million views-not 400 million views. If it got that it would have been scene by the entire US population *twice*.

    While i generally agree with your sentiment. i would state that if a property got that kind of exposure i might make an excemption.

    I would also be kind of scared.

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    • Martin

      @Scott The NYT article says that Fred got 400 million views. Did the NYT get their facts wrong?????

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  • http://www.ButterfliesTheMovie.com Ester Brym

    We have launched our feature film Butterflies on YouTube few months ago and it has been great so far. It is indeed a documentary about YouTubers, so our audience is already there, and we are not getting amazing views in millions like Fred (btw, his exact view count is 472,196,346) but we are very grateful for this awesome exposure.

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  • http://ecinemanetworks.com Mark

    Hi Jeff, You realize that the film maker could run that trailer on cable/ TV in select markets under rule 262 to attract the invesment dollars. I dont think the message has been very clear to the investor on You Tube to really attract invesment thats the real problem. Its not you tube its the Investment message the film maker delivers. mj

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    • http://www.whomadewho.ca Jeff L Burke

      Hello Mark. I point to examples such as Age Of Stupid with the current platforms of IndieGoGo & Kickstarter. My project would have the legal protection of those organizations while using my own website plus interaction & awareness through YouTube, Facebook, MySpace, Twitter to build the audience. Once the funds are raised, there must be the presentation to the crowdfunders/audience/followers of the project through perhaps a daily report of the shoot or dailies for subscribers.
      Upon post production, continue to leak out portions complete while still maintaining a solid following. Upon the release, use the audience through VOD or film festival to get the product out there, with the audience being involved in this particular movie. It is a mockumentary and having audience participation is key while maintaining a low budget which will ensure a return while a filmmaker builds his audience and product.
      I’m open to give a better description of my project, my plan and thoughts to those of you who are interested in this. Thank you for all the comments.

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  • http://www.facebook.com/pages/strange-frame/182133437902 GBH

    I agree with the premise that most of the online successes we see are flukes and we can’t model a monetization plan on YouTube, but what about one of my neighbors here on the Big Island: Nigahiga? http://www.youtube.com/user/nigahiga

    He’s going into year 3 of being on YouTube and his new videos typically get 2,000,000 hits. He has over 2 million subscribers.

    Your thoughts?

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  • http://NOMPCo.com Stan Gill

    Whole heartedly agree with you, Jeff.

    I just don’t see a good ROI for YouTubers unless it’s short, which isn’t conducive to feature length projects.

    “Happy accidents” is certainly a great way to put it.

    But, the probabilty exists someday someone will get a feature-length project on YouTube and make something from it worthwhile.

    God help the financial markets as everyone would then use that project as an example they could do the same.

    Happy accidents and lightning in a jar. Go for it if you have the time.

    I just don’t see the viability.

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