Independent filmmakers are irate after Amazon slashed royalties by 60% on its self-distribution platform

Brand New Day Entertainment/Freebird Entertainment‘Cloudy with a Chance of Sunshine.’
  • Amazon Video Direct allows filmmakers, free of charge, to upload their work (movie, TV series, shorts) on Amazon for customers to buy, rent, or watch on Prime Video.
  • However, beginning March 1, filmmaker royalties for projects that are on Prime will decrease 60%.
  • Filmmakers are outraged and some in the industry believe Amazon is taking advantage of artists who desperately need the service, as it’s one of the few outlets for their work.

Independent filmmakers who for the last few years have found a way to get some cash for their work by distributing it on Amazon’s self-distribution arm, Amazon Video Direct (AVD), were disappointed to learn recently that their royalties would soon be slashed by 60%.

Unlike Amazon Studios – which acquires films for theatrical and streaming, and produces TV series and movies in-house – AVD gives filmmakers an outlet, free of charge, to let their work be available on Amazon to purchase, rent, or be viewed on Prime Video (which filmmakers get royalties from Amazon for).

On January 29, filmmakers who had uploaded their work to AVD were notified that beginning March 1, the royalties they got for putting their work on Amazon Prime would drop from its current 15 cent per-hour rate to 6 cents per-hour for any project worldwide that had under 100,000 hours streamed in a year.

The email, which Business Insider obtained, also stated that all hours streamed for a title would be reset back to zero at the end of 365 days.

This means that, despite how many hours projects pile up in a year’s time, all the titles will go back to 6 cents per-hour at the start of a new year.

Amazon touts AVD as a “self-service publishing interface, without the need for complex negotiations or contracts.” But Amazon’s ability to change things on the fly has now left filmmakers angry, and has forced them to decide if they should continue using the platform, or seek other financially rewarding outlets for their work.

“The new reality for filmmakers is the whole thing is completely one-sided”

For many low-budget filmmakers, being on AVD (as well as YouTube and other web-streaming distribution outlets) is where they will earn a good majority of revenue for their work. Most have put their projects on the service because they are creating content that won’t attract the major film festivals or have the potential to be acquired for millions of dollars. The 60% royalty decrease has some filmmakers feeling they are getting the rug pulled from under them by one of the biggest companies in the world.

37 problems lisa ebersoleLisa Ebersole’37 Problems.’

“I have a hard time imagining that independent film is affecting their bottom line,” Lisa Ebersole, director of the web series “37 Problems,” told Business Insider. “It feels like such an arbitrary place to cut.”

Ebersole said she was earning around $US1,500 a month from having “37 Problems” available to Prime subscribers through AVD. She said the extra cash helped her not have to find a third job to support herself and her art.

Filmmaker Rebecca Norris, who has her movie “Cloudy With a Chance of Sunshine” on AVD for purchase or rent (but not Prime), was so impressed by the ease of AVD she even wrote about the advantages of using the service.

Norris said she was planning to make her movie available on Prime but then got the email about the royalty change and is now reconsidering adding her title.

“If you do the maths for our film, we would have to have 11 people watch the entirety of the film to make a dollar,” Norris said of the 6-cent royalty. “We don’t know if it’s worth it.”

And Mike Whitla, whose animated music shorts catered for kids, “Howdytoons,” have increased in views on Prime every month since he uploaded them, said with the change in royalties he feels he’s going back to square one. He also said the change by AVD shows how filmmakers are at the mercy of Amazon because you have no contract with the company.

“One of the difficulties of the new reality for filmmakers is the whole thing is completely one-sided,” Whitla said. “They can decide tomorrow, ‘No, it’s not going to be 6 cents anymore, we’re going to go to 3 cents’ and what is my choice? I can remove the content and make zero or keep it there. It’s not a good situation to be in so it’s very frustrating.”

Here is a breakdown of the AVD content rates beginning March 1:

Tier 1: 0-99,999 hours streamed, $US0.06/hour Tier 2: 100,000-499,999 hours streamed, $US0.10/hour Tier 3: 500,000-999,999 hours streamed, $US0.15/hour Tier 4: 1 million-plus hours streamed, $US0.06/hour

There was a small amount of good news in the changes, however. The previous 500,000-hour, or $US75,000, annual pay cap on AVD titles will be lifted beginning March 1; and filmmakers will continue to receive 50% of the sales from their AVD titles purchased or rented on Amazon.

“The big untold story in our business”

Some in the industry see this as the latest example of powerful companies getting hours of content for pennies. Even the analytics Amazon gives its filmmakers turn out to be unhelpful.

“This is the big untold story in our business,” said Emily Best, CEO of Seed & Spark, a crowdfunding and streaming service known well in the independent film community. “The data tech companies can see at any moment – what people are mousing over their website, where a sale exactly came from – filmmakers have none of those tools. We handed all the power to Amazon and Netflix. They have the data and independent filmmakers don’t.”

Whitla said the data provided by AVD is extremely limited and not very helpful for him.

“I have no idea how people are finding my stuff through Amazon Video Direct,” he said. “The analytics we’re provided, you feel like you’re fumbling around in the dark. I get very meager analytics. I get a report that says the total minutes in each country in each day, and then I can sort that by series. That’s it.”

Seed & Spark began its own subscription service, similar to Amazon Video Direct, and offers a 22 cents per-minute royalty to its filmmakers. Best said her company is also striving to provide audience data that goes far beyond what AVD and the other big streaming companies will provide its filmmakers.

Vimeo has also expanded into the streaming distribution realm. The company has an eye-popping 90% revenue split for filmmakers who upload their movies to its Vimeo On Demand subscription service.

“We believe that putting more money in the creator’s pocket is a good thing for our industry and the broader video ecosystem,” Vimeo CEO Anjali Sud said. “It encourages more people to become storytellers and earn a living from those stories.”

Howdytoons mike whitlaMike Whitla‘Howdytoons.’

With the royalty tweak by AVD and the recent change in YouTube’s advertising program that has also affected small video makers, companies seem to be trying to distance themselves from DIY filmmakers who need these services the most.

However, in a statement to Business Insider regarding the royalty change on AVD, an Amazon spokeswoman pointed to the fact that titles getting higher “customer engagement” would now be rewarded with higher royalty rates. She also highlighted the elimination of the annual $US75,000 cap, and stressed that Amazon always listened to “provider feedback.”

Amazon also confirmed to Business Insider that movies that take part in Amazon Video Direct’s Film Festival Stars – titles from select major film festivals that join AVD – will get enhanced royalties and not take part in the four-tier rate structure.

It’s hard to say if the 60% royalty decrease by AVD will cripple its business model. Many of the filmmakers on AVD Business Insider talked to said they were likely going to continue using the service, or were unsure if they would leave it. And filmmakers getting into the self-distribution game aren’t completely dismissing AVD.

Filmmaker Jamie Stuart, who is preparing to self-distribute his debut feature “A Motion Selfie,” is currently figuring out how he’s going to unveil it to audiences.

“When I blanked the festivals I submitted to and self-publishing looked like the ultimate option, I began focusing on Vimeo and Amazon,” Stuart said. “Vimeo seemed more attractive – better features, more customisable. Amazon seemed like a slightly more complex undertaking. For instance, they required close captioning – however, my movie has no spoken dialogue. Plus, it would take several days for the movie to go live once it was submitted. The plan I settled on was to launch with Vimeo, then consider going to Amazon as a step two. Revenue is revenue.”

But Emily Best warned that when you deal with a company like Amazon, you have to be wary of every decision.

“The idea that they were ever going to be on the independent filmmaker’s side, that’s not what they were built to do,” Best said.

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