The following is part of a series of posts re-imagining the entertainment industry for a digital age. If it ever becomes a book, the title will be Hollywood 2.0.

While there are always the El Mariachis and Primers which are anomalous, in general there’s a certain minimal budget for producing a “major motion picture.” There are SAG and other union minimums, the base costs for each key crew member, insurance, and P&A (prints and advertising) which I think a lot of indies are realizing they need to factor in now. No more crossing your fingers and hoping a distributor smiles down upon you.

So as dramatic as are the recent drops in prices for cameras and other equipment, they barely affect the minimum budget. There are just too many other costs that remain the same, or are going up in the other direction.

But what if you worked backwards, and found the minimum amount that an indie film needs to make to keep a filmmaker making mortgage payments. There are a ton of data points and no two films are identical. Finding a pattern in the chaos won’t be easy, and it won’t be done in one short blog post, but I’ve been thinking about how a new model can be constructed, and I have some plans of attack.

When is a film like a vacuum cleaner?

A vacuum cleaner does one thing. It vacuums. There all different features you can have – different amounts of suctions for different thicknesses of carpet, arms and brushes for hard-to-reach places – but basically, that’s all it does: vacuums.

Films would seem to be different. A horror film is evoking something very different from the audience than a gross-out comedy. Or a historical romance. Or an action movie.

But maybe we can lump all these evocations into a bigger bag: entertainment. (I’ll set aside the educational and informational components for the time being.)

So let’s imagine a film as a vacuum cleaner that doesn’t vacuum, it entertains. It’s a widget in a box, and whether an audience is going to buy it is going to depend on the following factors.

Critical reviews. Vacuums have Consumer Reports. Movies have folks like Roger Ebert, although there seems to be an ever-dwindling number of them.

Brand Loyalty. You had a Brand X vacuum and it served you well before it finally died. Right now, despite attempts by directors to horn in with the ‘A Film By’ credit, actors have the (literally) marquee names. With the exception of Disney, the studios do a terrible job of branding themselves. I guarantee the average moviegoer doesn’t go see a Warner Bros. movie or a Sony movie or a Paramount movie simply because they are fans of other movies put out by the studio.

Word of mouth. If your friend tells you he likes his Brand Y vacuum, you’ll probably buy a Brand Y. If your friend tells you X-Men: Mutants A-Go-Go was a great movie, you’ll want to see it.

Advertising. You see an ad for a vacuum, the people who use it look sexy and successful, you want to be sexy and successful… see where this is going? A movie trailer makes it look entertaining, you like entertainment…

Now there are plenty of ways movies aren’t like vacuum cleaners. Movies are consumed in multiple forms — theatrical, home video, television broadcast — and unless you are a wholesaler, you probably will see a lot more movies in your lifetime than you will purchase vacuum cleaners. But my point is, as individual as each movie is, there are still premises for comparing them.

Tipping the Scales of Demand

Of the four factors listed above, which ones can an independent filmmaker influence on a modest budget? Surprisingly, all of them.

Let’s start with critical reviews. Getting your film in front of respected critics is not that difficult. Get into a major festival, and you’re set. The critics come to you. Play a few shows in New York or LA and papers of record can probably be persuaded to at least send an intern. Plus, sending out DVDs to a mailing list of movie critics is within the range of possibility. Assuming $5/dvd and press kit + $1.90 USPS postage, you could hit 72 select critics.

A PR agency can probably ensure that more of the people you send them to actually end up reviewing them. I don’t have figures for a PR agency, but here are some names of places that have gotten me to review a movie: Platform Group, Big Time, PMG. PR agencies aren’t doing anything fancy; well-written personal appeals from filmmakers have also gotten me to review a DVD or streaming version of a film.

The bad news is that, on aggregate, critics end up having a small impact on box office. The good news for indies is that, according to a study by Peter Boatwright at Carnegie Mellon, individual critics do appear to have considerable influence of limited release films.

Moving on to brand loyalty… Here is where an indie just starting out has an uphill battle. You don’t have an established name as a filmmaker. I always laugh when I see “A film by…” on a first feature. Who does the filmmaker think he or she is? They’d be better getting Spike Lee to slap “A Spike Lee Joint” on it, or Tarantino to give a “Quentin Tarantino presents” or, in the case of indie darling Precious, the Tyler Perry and Oprah names cannot be discounted as factors in its meteoric success.

Nor can the casting of names such as Mo’Nique and Mariah Carey. In fact, many indies have realized the value of getting name players in, if only to shoot for a day. With actors, this inevitably means making your movie SAG. However, if you’re truly on the shady side of SAG’s low-budget agreement, I say forgo the contract and get a celebrity with name value who is not an actor. It could be someone from the world of sports, music or politics. What matters is that the name have, as a former teacher of mine used to call it, ‘mental real estate.’

If all that fails, the premise of your story should at least have some ‘mental real estate’ with a contemporary audience. A movie based on the mythology of Santa Claus stands a better chance than a movie about Jinky, the Christmas Newt. Likewise, a story that’s a modernization of Jane Eyre stands a better chance than a modern story that’s based on a thing you heard about once from your uncle. (Unless your uncle is a Brontë sister.)

Hollywood knows this, and puts a premium on premium franchises. But franchises aren’t limited to the big boys. B-movie producers have always known this, and churned out schlock sequels. While I don’t think it’s good artistically for a filmmaker to dwell in the same world for every film, it certainly doesn’t hurt to stay within the same genre for a while or to take a ‘one for me, one for them’ approach.

Word of mouth is probably the most difficult factor to influence, and therefore the most trusted. If your friend tells you she likes a movie, you’ll trust that over a critic’s poor review. While both your friend and the critic bring biases to a review, your friend has the magic influenced of social connections. People naturally want to be part of the conversation of their peer group.

It is possible to put a thumb on the scale, however. Marketers have identified people who have more social connections than others, the so-called superconnectors. If you can get them on your side, the rest fall like dominoes. There are plenty of marketing books about this, but I don’t feel like reading and summarizing them because…

There’s a huge factor I haven’t mentioned yet: Entertainment Value. If your film is entertaining — not ‘is the film good on the technical merits,’ but does it tell a good story? Does it hold the audience’s attention? Horror, Action, Romance — all those genres I mentioned earlier all have strategies for being entertaining, and there’s no shame in studying what has worked in the past and applying to the present. It’s a fine line, but Hollywood has already staked its bet that it’s better to be formulaic than experimental.

Yes, if you want to be solvent as an indie, you’ll have to make peace with some conventions. This doesn’t mean you can’t tweak those conventions, or subvert them completely. In fact, it’s probably better if you do. But Western storytelling has been evolving for thousands of years. You’d be an idiot to go back to the paramecium stage when there’s a whole complex dramatic ecosystem.

So we come to the final factor, advertising. I’ve already written about stealth advertising for indie films. As a freethinking individual, I hate to admit how influential ads are. Even on smart folks like us, who are aware of their manipulations, ads are still effective. Yet an indie producer can’t afford to blanket the old media airwaves.

Or can they? Understandably, producers keep p&a spend numbers under tight wraps. This is where a lot of the creative accounting takes place. I found an estimated $120M for Avatar, and the-numbers.com says the average movie spends $34.4M. Needless to say, this is outside the realm of indie possibility.

However, what would it cost to blanket key sites on the internet when the film is already available on DVD and digital download? $10,000 will get you full-service advertising on imdb.com. And pay-per-click services like AdWords can help you spread your key art far and wide for pennies. ‘Conversion,’ the process turning a curious surfer into a paying customer, is a topic for another day, but there are ways to tie the advertising to a conversion result. So you can experiment with different sales approaches quite economically online.

In fact, the second group that a filmmaker should reach out to after their own social network, is online affinity and interest groups. You’d be mad not to pick the low-hanging fruit first. Or, to use another metaphor, a fire starts with kindling.

Ultimately, I think filmmakers need to continue burning the old structures to the ground. Say you want to make one film a year, and make about $60,000 profit. I.e., your yearly salary would be $40k-$80k. Subtract that from the amount your film can reasonably be expected to make. That number – the new minimum budget – may be small. But films can be made for small amounts. The best thing about that number is that it’s sustainable. The economics of film virtually require you to produce more than one movie. So light a match!

John Ott is a writer, filmmaker and futurist. Become a Facebook Fan here and follow him on Twitter here.

Images: minimum speed limit, a Creative Commons Attribution Share-Alike (2.0) image from thetruthabout’s photostream. Vacuum, a Creative Commons Attribution (2.0) image from brettneilson’s photostream. balance, a Creative Commons Attribution No-Derivative-Works (2.0) image from archeon’s photostream. Mouthing off, a Creative Commons Attribution (2.0) image from demibrooke’s photostream. Sunset with burning building, a Creative Commons Attribution (2.0) image from primejunta’s photostream.