Dutch filmstudio believes there's money in free distribution of content

Artists and producers in the creative industry are understanding better and better how to generate income from their work in today’s digital age. Despite –or perhaps thanks to- the fact that sales of music and movies have deteriorated dramatically in the last ten years, new innovative online business emerges. Business cases are no longer mainly based on selling creative content, but rely on indirect income from concerts, exhibits, merchandise and advertising.

A number of artists and producers are so successful in generating indirect revenues that they start giving away their primary content for free and, at the end of the day, make profit out of it. Snoooep, a Dutch company that makes entertainment productions and distributes them online, is a good example. Today they launch a new horror movie called 'Claustrofobia’. The film will be released online and is available free of charge.

Edvard van ’t Wout of Snoooep expects the movie will attract about half a million viewers. These customers will not pay a single cent. Van 't Wout will not disclose exactly how he makes money, but yesterday he revealed a little bit of his trade secret to Spits, a national newspaper that is distributed for free in The Netherlands, like for example Metro. Snoooep has five or six sources of income and is able to make the free distribution profitable. "The more people log on, the more advertising revenue we get," Mr. Van ’t Wout explains. In addition, the project is sponsored by the Dutch fund for organ diseases (Hepato-Gastro-intestinal Foundation). "The story about organ trade was allready in the script. We approached charities to explore possibilities of sponsorship." Although no source confirms this, trading personal customer data could be one of the more secret ingredients of this business. Snoooep expects to offset their costs through their alternative funding plan, “but this will not make us rich,” says Van 't Wout.

The question arises whether business models based on giving away the creative work will be sustainable in the long term. Projects like 'Claustrofobia' and for example, free Hollywood-films on Hulu are currently uncommon and out-of-the-way ideas that get full page coverage in the newspapers. This is particularly interesting to advertisers and generates curiosity among consumers. But, as soon it is increasingly normal to adopt this strategy, I wonder whether such projects still generate enough attention. It is also questionable whether the entertainment industry will benefit from propagating the idea that its products are available free in the long run.

Snoooep has undoubtedly struggled with these questions too, but concludes that there is a future for this business plan. For understandable reasons they keep their recepy to themselves, but it seems things are looking good for Snoooep: "We are already working on our next project, if you ask me, this film is only the beginning of something brand new," says Van 't Wout. Snooep has faith in the “free” business model, do you?

Reference: Spits, June 9, 2011, page 18-19