The eBay Model Goes To The Movies

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It sounds like a B-School case study: How can independent filmmakers and small film libraries, whose titles are languishing unseen in storage, connect with the new venues for video that are sprouting up? The traditional methods of licensing films--attending film festivals and markets or meeting with distributors--are too expensive, exclusive, and inefficient for almost everyone but major players. Here's one possible solution: inDplay, a Silicon Valley startup backed by Google (GOOG ) Chief Executive Eric Schmidt and Kleiner Perkins Caufield & Byers venture capitalist William R. Hearst that aims to connect films with professional buyers through an online marketplace.

InDplay Inc. occupies the middle ground between the frenzied user-generated playground of YouTube Inc. and the select world of theatrical distribution. Its DNA is part eBay Inc. (EBAY ), part IMDb Inc. (AMZN ), the popular online movie database. On inDplay's Web site, slated for official launch at the end of the year, anyone who owns rights to a video can register as a seller and upload relevant information, from trailer clips to available rights. Buyers representing theaters, DVD, TV, cable, Internet sites, and wireless channels search the online listings, which range from Lars von Trier's arty Nicole Kidman flick Dogville to Dave Barry's Complete Guide to Guys. They bid by e-mailing an offer to the seller. The purchase is made via PayPal or wire transfer, and inDplay currently takes about an 8% commission, equivalent to a traditional sales agent's fee. "We want to bridge the gap between the creative and business worlds," says inDplay CEO Goetz Weber.

The business model points to a new way of buying and selling media online using digital brokers. A growing crowd of startups, including Pump Audio, Zattoo, and Lulu, are jumping into the market to help niche music, TV shows, and books find new audiences online. This emerging model is also a sign of the robust market for digital video. Digital video channels are proliferating on the Web, mobile devices, and new TV over broadband services, making all types of video--even older, narrowly focused films--suddenly valuable. There are about 10 million film and TV programs around the world available for license, estimates inDplay, and more than 100,000 professional buyers. "Rights holders tend to focus on the big deals, like TBS paying them $500,000 to play a movie once," says Scott Kirsner, editor of the blog CinemaTech, which tracks the tech and media industries. "But the Internet is making possible lots of $1,000 transactions, too."

Indeed, many of the new buyers are folks like Cecil Coe and Rob Morgan. Coe heads VideoJump Inc., a video content aggregator with an Asian focus based in Santa Clara, Calif. Next year, he's launching a Mandarin Web channel and wants to use inDplay to find English-language programming for it. (He'd add subtitles.) Morgan is in charge of acquiring content for GUBA, a video-sharing and downloading site. He's counting on inDplay to help him track down independent films with available Internet distribution rights.

Despite early interest from buyers at broadcast, cable, and Internet companies, inDplay faces the challenge of pioneering a new type of online marketplace. Its vitality will turn on whether it can enlist quality buyers, sellers, and merchandise. The site currently boasts around 30 buyers, several hundred sellers, and 300 video properties. A recent deal with Allied Artists Corp. will add thousands more titles, and inDplay hopes to close deals with three other film libraries soon. After opening the service to buyers two months ago, inDplay has closed several sales, including those for documentaries on Timothy Leary and Nobel prize winner Muhammad Yunus.

Now, says Weber, the company is focusing on building the site into a full-fledged community by adding eBay-like ratings and reviews and connecting people at all stages of a film project. Ultimately, though, the startup's fortunes depend on its ability to simplify the licensing process and on the success of the new models emerging online for making online video pay. InDplay can control one part of that equation by working to be the most efficient broker online. As for the rest, it's a game of wait and see.

By Elizabeth Woyke

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