The 8 Things You Can Actually Sell (None Of Them Are Your Film)

Your film is tap water. This is how to make a bottle and sell like Fiji.

Oct 14, 2025

A lot of possible new business models for Non-Dē filmmaking seem very complicated.

They’re bitty with so many small revenue streams, many unique to each project; it can seem overwhelming, random and difficult to brainstorm.

Jon Stahl recently wrote two excellent posts here and here about exactly this. In a similar vein Will Harrison at Brands to Fans regularly writes great posts about what is working, what isn’t and what might. They’re deep in the tunnels excavating interesting and new developments.

But business models always revolve around the same basic frameworks.

And if you know the original ideas - a of things become much simpler.

Simply apply the core understanding and come up with your own business model that suits your project.

From about 2004 Chris Anderson, Kevin Kelly, Mike Masnick and some others (but I’m going to focus on them) started laying out a framework for understanding how digital economics transforms media business. Anderson and Kelly were colleagues at Wired, and Mike Masnick ran a blog as part of his consulting firm called TechDirt.

Their core insight was to take seriously what happens in competitive markets where price tends to marginal cost - and marginal cost is zero.

For most goods in our industrial, mass production economy (and most goods in history): marginal cost is always greater than zero.

That is, you build the first one for a lot, and the price reduces for each widget made drastically as you scale to making 100, or 1000, or 10,000,000 or 1 billion - but it never goes to zero. Materials, labour, distribution—there’s always some cost for making that next widget.

And in a competitive market, you are forced to price just above that cost.

This is broken by digital. The internet is nothing but a copy machine, to paraphrase Kelly. The first copy costs everything. The second copy costs nothing.

This is standard microeconomics and Anderson discusses this in Free (2009). He goes into detail on the unique ways information goods differ from physical. In academic literature, Carl Shapiro and Hal Varian’s Information Rules (1998) looked at how information goods economics differ due to high fixed costs and near-zero marginal costs. Yochai Benkler wrote The Wealth of Networks (2006) and examined how sharing information could be more economically efficient than with patent/copyright encumbrance, and Lawrence Lessig published Free Culture (2004) and developed Creative Commons. However, he was more focused on legal/IP frameworks than business models.

But it was really the guys fromWired andTechDirt that started developing the real world business applications.

The Origins: Chris Anderson and The Long Tail (2004-2006)

In October 2004 a Wired article introduced the Long Tail concept. When Anderson visited digital jukebox company Ecast, he discovered that 98% of their 10,000 available albums had at least one track chosen each quarter. This contrasted with physical retail where the top 20 albums made 90% of revenue wirh smaller catalogs.

Looking at this digitally, When distribution costs approach zero and shelf space becomes infinite, the cumulative value of niche products can rival or exceed hits. Anderson here wasn’t primarily about empowering creators - he was looking at how big platforms could profit from unlimited inventory.

He then expanded this into a book The Long Tail: Why the Future of Business Is Selling Less of More.

Kevin Kelly: Better Than Free (2008)

In 2008, Kelly published “Better Than Free” on his blog (which is well worth reading across many subjects - there is a wealth of interesting information there). He starts from the position that “The internet is a copy machine. At its most foundational level, it copies every action, every character, every thought we make while we ride upon it.”

Kelly’s core idea is a classic intuition pump: think in the invert. When copies are free, you sell what cannot be copied. He then identified eight things he called “generatives”. These are unique qualities that cannot be replicated for zero cost:

1. Immediacy - Getting something the moment it’s released. Premium shipping. First access to beta versions, opening night at the movies, early boarding on a plane. Time is money. People pay premium prices to be first.

2. Personalization - A generic concert recording may be free, but one tweaked to sound perfect on your specific hi-fi has greater value. Van trainers come in all colors - but you can pay more to get them exactly as you want. Customization to individual needs, preferences, or contexts.

3. Interpretation - Understanding often comes at a price. This dovetails with time constraints. The software may be free, but manuals, training, support, and expert guidance cost money. “How-to” services built around free content.

4. Authenticity - Certified originals versus copies. Verification, provenance, official releases from known sources. You could copy a painting infinitely, but the original still commands premium prices. In fact, the more a painting is copied - the original becomes more valuable (the Mona Lisa for example).

5. Accessibility - Convenience, organization, storage, delivery across devices. Delivery food. People pay for having things where and when they want it, properly organized and easily accessible.

6. Embodiment - Putting digital content into physical form. Vinyl records when MP3s are free. Physical books when PDFs exist. Concert attendance when recordings are available. The experience of the medium itself.

7. Patronage - Some audiences want to reward creators directly. To have a direct relationship with one seller over another - even when it is more expensive. Radiohead’s “pay what you want” for In Rainbows, Kickstarter campaigns, Patreon. The satisfaction of supporting people you value.

8. Findability - In an ocean of free content, being discovered has value. Curation, recommendation, placement in the right context at the right time. Again, this dovetails with time constraints.

1, 3, 5 and 8 all relate to the fact that the only hard constraint we have as humans is time. We’re all running out of it, all the time (Serius est quam cogitas - “It’s later than you think”).

2, 4, 6, 7 relate to interaction and the experience of being a human in a social world.

In particular, in contrast to the current focus on the attention economy, Kelly emphasized that advertising was not the only solution:

“Ads are widely regarded as the solution, almost the only solution, to the paradox of the free. I think ads are only one of the paths that attention takes, and in the long-run, they will only be part of the new ways money is made selling the free.”

Mike Masnick at TechDirt

Around 2008, Masnick published a post on Techdirt that he continued to explore and return to for many years after. It was the first time I came across his repeated refrain: all advertising is content and all content is advertising. This was long before “content” became an overused word - his distinction was that content is something you chose to watch rather than advertising which is something you may or may not choose. There were four principles he elucidated:

1. The captive audience is dead. No one online has to watch your ads. There is endless choice available, so people will ignore, or skip rather than endure intrusive advertising.

2. Advertising is content. Without captive audiences, there’s no such thing as “advertising” anymore, just content. If you want anyone to pay attention, it must be good, interesting, and relevant content.

3. Content is advertising. Every piece of content advertises something, whether intentionally or not. Techdirt’s articles advertise Techdirt’s expertise and business. A musician’s video advertises that musician. An article about endangered species advertises the cause or the publication.

4. Content needs to be useful/engaging/interesting. If you want anyone to pay attention, content must deliver genuine value. This applies equally whether you call it “content” or “advertising.”

Masnick’s key point was that the traditional distinction between “content” (eg. a TV show) and “advertising” (the interruption) can’t hold in a zero marginal

cost distribution environment. All content (ie stuff people have chosen to watch) functions to raise awareness and attention on something intentionally or not, and all advertising is content that people may or may not want to consume.

He wasn’t advocating for advertorial (as in disguised advertising), which he explicitly rejected as “bad content” because that pisses people off. Instead he advocated creating genuinely valuable material that people seek out, which also happens to promote something.

The classic example of this was back in 2001 when BMW ran the Clive Owen branded content films from the agency Fallon which created branded content as a category. These were great films that just happened to star a BMW, and subsequent sold a lot of cars.

Chris Anderson’s Free: The Future of a Radical Price

Anderson’s 2009 book Free: The Future of a Radical Price went into detail about how “free” works as a sustainable business strategy rather than a promotional gimmick or loss leader. Why is the internet different from Gillette razors?

He identified four business model categories:

1. Direct cross-subsidies - The old school “bait and hook” model. Gillette sells razors cheap to make money on blades. Printers are cheap; ink cartridges are expensive. One product subsidizes another.

2. Three-party markets - Free content supported by advertisers. Traditional broadcast television, free websites with ads, ad-supported streaming services. The audience gets free content; advertisers pay to reach them.

3. Freemium - Basic service free, premium features paid. Spotify’s free tier versus Premium. LinkedIn’s free accounts versus premium subscriptions. Some percentage of free users convert to paying customers.

4. Non-monetary markets - Production itself is free through volunteer labor or zero marginal cost. Wikipedia, open-source software, user-generated content platforms. Motivation comes from reputation, satisfaction, community, not money.

Anderson’s key idea: if something becomes free, it is abundant.

Leverage the abundance: the logical thing to do is to waste it.

Google for example, treated computing power as effectively free and focused on what remained scarce (attention, click-through rates, quality traffic).

“Every abundance creates its own scarcity.”

Mike Masnick: Connect with Fans + Reason to Buy (2009)

Early 2009, Masnick delivered a presentation to a music conference that structured these ideas specifically for the music industry. He used Nine Inch Nails as a case study. Reznor had recently released a couple of albums free and was experimenting with business models.

Masnick came up with:

Connect With Fans (CwF) + Reason To Buy (RtB) = Profit ($$$)

Trent Reznor’s strategies demonstrated the model:

Released albums Ghosts I-IV and The Slip under Creative Commons licenses
Offered multiple price tiers: free downloads, standard purchases, $75 deluxe editions, $300 ultra-deluxe packages
Created genuine scarcity through limited editions, signed copies, physical artifacts
Communicated directly with fans via email, social media, personal engagement
Built authentic relationships rather than treating fans as revenue extraction targets

This works because fans have no “obligation to buy” in the digital age. Trying to enforce that obligation (lawsuits, DRM, guild trips) fails. But if musicians connect authentically and provide genuine reasons to buy—scarcity, experience, personalization, patronage, embodiment—fans pay voluntarily and enthusiastically.

You have to recognise the unique selling point of each Kelly generative as it relates to your possible products. And in fact recognise the things that were always being sold were a bundle of scarce items.

The copies (MP3s) could be free because value was in immediacy (first access), personalization (signed editions), embodiment (vinyl, concert tickets), patronage (supporting artists directly), and authenticity (official versus bootleg).

Masnick emphasized this worked for artists large and small—it wasn’t about already having fame, but about building genuine fan relationships and creating real value beyond the reproducible content itself.

So what has this got to do with film?

The film industry has been slower to adopt these ideas for structural reasons:

Production costs: Music can be recorded by individual in short time frames with little equipment. Films tend to require more capital, you need to pay crews, rent gear, design sets and costumes and so on. The barriers to creation remain much higher.

Consumption patterns: Albums can be enjoyed repeatedly over years in the background or in fragments. For most people, most films are one-time experiences.

Existing infrastructure: Theatrical exhibition, complex windowing strategies, international rights, and powerful incumbent distributors create more complicated frictions than music.

Digital distribution costs: By the early 2000s music could easily shared at decent quality in files of a few Mb. Films at high quality can be hundreds of gigabytes. At Bluray spec compressed files can be 25 Gb. To distribute digital files of that size at zero marginal cost easily the quality needed to be reduced or technology improved. Films compressed to 500mb for sharing are still notably worse compared to a 4Gb or 10Gb version. A 3mb music file and a 25mb file of the same music is harder to distinguish. This means film - for the moment - is still a little protected by the convenience generative: Netflix is easier to use and instant, in a way that torrenting films isn’t.

Exhibition economics: Theater chains take ~50% of box office revenue and exclusivity windows help this. In addition, the theatrical experience is a separate thing than watching on television. This creates a structural difference with direct-to-consumer models that work for music.

However, some of these ideas have been used - even unwittingly:

The Blair Witch Project (1999): Proto-viral marketing using an authentic-seeming website that created mystery before the film released.
- The promotional material was the experience fans wanted, demonstrating Masnick’s principle that advertising is content, before he coined the phrase.
“The Beast”: A.I. Artificial Intelligence ARG (2001): “The Beast” remains the most influential alternate reality game in marketing.
- Created by Microsoft’s entertainment division and 42 Entertainment for Spielberg’s A.I. Artificial Intelligence, it launched when audiences noticed a credit in the film’s trailer: “Jeanine Salla, Sentient Machine Therapist.” Searching that name led to a rabbit hole of fake websites, phone numbers, email addresses, and company front.
- There were over 30 interconnected sites containing thousands of pages of content. The campaign told a murder mystery set in the A.I. universe but narratively independent from the film. Players had to decode messages, solve puzzles, follow real-world clues, and collaborate globally to unravel the story.
- The campaign ran for months, engaged millions of players, and generated massive organic media coverage. This was actual entertainment, that drove fandom. People were actively seeking out and engaging with material that was advertising.
Paranormal Activity (2009): Originally made for $15,000, built grassroots buzz through “Demand It!” campaign where fans voted to bring the film to their cities.
- Direct fan engagement drove distribution decisions which is a version of CwF+RtB.
Kevin Smith’s model (2011+): Smith used podcasts and social media to maintain constant fan connection between films, then monetized through direct sales, theatrical tours, and special editions.
- The podcasts were free content advertising his brand. This leverages Kelly’s generatives with Masnick’s business model.
Louis C.K.’s comedy special (2011): Sold Live at the Beacon Theater directly for $5, no DRM, trusting fans.
- He made over $1 million in 12 days. This exemplified CwF+RtB: he’d built fan relationships via comedy and a relatable persona, then gave them reasons to buy (convenience, authenticity, patronage, supporting an artist who respected them) rather than pirate.

Why had adoption been limited in films? I suspect mainly inertia - it is risky to change, so don’t until you can’t help it. In addition, there is little to no vertical integration in the US film business. It is not easy to bypass exhibitors without destroying those relationships. In addition, there is still value in the theatrical experience and window. Th system optimizes for extracting maximum value from each release window, and this conflicts with strategies that prioritize fan connection over revenue maximization.

A paradigm shift in thinking towards delivering quality over profiting from scarcity. This is (or was) the Steve Jobs Apple model. Focus on developing customers rather than selling products. It is about competing on quality not price.

In addition the high upfront , capital require for production makes experimentation risky with big productions. You can see what happened with Warners poor execution of day and date during the pandemic. A failed experimental release strategy for a $100M film has far more serious consequences than a failed album release on a $50K recording budget.

So how does this play out?

In the 20th century, reproduction was expensive which encourages a focus on hits because only mass products justify fixed costs. Distribution was expensive because of hysical bottlenecks such as shelf space, broadcast slots, theaters. Attention was captive meaning Interruptive advertising works, you watch free TV, in exchange we show you ads.

In the 21st century this becomes…

Reproduction is free. This makes a long tail viable because niche products collectively can rival hits. Distribution costs pennies so infinite shelf space is possible because every product available everywhere. However, this makes attention scarce, so content must earn attention captive audiences don’t work well as a business model.

Value then shifts to Kelly’s generatives - what cannot be copied becomes valuable: immediacy, personalization, embodiment, patronage, authenticity, accessibility, interpretation, findability.

The issue is that if the long tail is viable then those with the largest library wins. This is why entertainment companies spewed huge quantities of cash to build out material over the past few years.

But this isn’t great for artists because the long tail is so long and so vast that it can only really be discovered algorithmically or through search. And the incentive is to tweak the algorithm towards the sending people to popular content not distributing them to their niches (which is harder) - so you end up with extreme power law effects.

So the aggregator platforms initially win. Unlimited inventory beats a physical store inventory.

So in response, creators must cultivate other generatives. Compete where you are not going to loose. Compete on ground where you have advantages. You have to look under the hood of the business model. What are you actually selling? You’re not selling copies (MP3s, PDFs, video files - those are zero marginal cost = free), so what are you selling you’re selling immediacy, convinience, personalization, patronage, embodiment.

Marketing becomes creation. Every brand becomes a media company. Red Bull makes action sports movies, BMW makes films, every creator builds a media presence.

Direct relationships replace intermediaries. Classic disintermediation - who needs record labels, studios, and publishers when creators can connect directly and do everything themselves via social media and platforms that enable CwF+RtB.

Of course, intermediaries do provide some value - not every artist wants to do a marketing plan or spend time on social media. Companies will spring up to fill these gaps. Kinema for Filmmakers FilmHub The Label are all examples of this.

How have these patterns changed the early 2000s?

Recorded music revenue is growing again, but live music revenue has grown far faster. Average concert ticket prices for top 100 tours roughly tripled between 2000 and 2020. Taylor Swift’s Eras Tour generated over $2 billion which vastly exceeds her recorded music revenue. The albums are marketing for the tour (embodiment, immediacy, experience).

In video games, free-to-play dominates mobile and increasingly console/PC. Fortnite generates billions selling skins, emotes, battle passes (Kelly’s generatives: personalization, status, patronage). Gameplay is free; value is in what cannot be copied.

In the new creator economy, Top YouTubers make more from merchandise, product lines, and live events than from ad revenue. MrBeast’s Feastables chocolate, Logan Paul’s Prime drinks, Mark Rober’s CrunchLabs subscription toys. Their shows become customer acquisition engines - otherwise known as advertising - for physical products (embodiment + CwF+RtB).

More bizarrely, as Paul Krugman and others have pointed out much of the right wing media sphere has a business model based around vitamin supplements. Why? Regardless of your ideological position on the content - supplements are a high-margin category (and of low marginal cost) that pairs well with audiences predisposed to distrust mainstream medical establishments (authenticity + CwF + RtB).

In streaming video, Amazon Prime Video functions partly as customer acquisition for Prime membership, which in turn is a large multiplier on the amount of stuff people buy from Amazon. Apple TV+ reinforces ecosystem lock-in for devices and contributes to building Apple’s premium brand.

Motion pictures, long form and short, increasingly serve strategic purposes beyond direct monetization. They are part of a larger business model and a larger, more integrated ecosystem.

Everything old is new again.

This is sort of becoming a running theme of this newsletter.

It’s something that keeps slapping me around the head when I read a lot of commentary on Substack and around the web.

From think pieces about attention spans and the younger generations anomie to apocalyptic stories about of AI - mostly this stuff has happened before. Maybe it’s a different colour, or shape, but the structures are the same, just expressing themselves a little differently.

The entertainment businesses, video games and music have been dealing with free and zero marginal cost distribution for some time in different ways. Film has been a little sheltered.

There are very few new ideas.

Nothing changes everything.

Yes even AI.

If you understand the structures, everything else is surface noise.

I very briefly mentioned this in my post on Monsters of Man’s marketing. So much of digital marketing is really just the ideas from 1950s direct mail and Tupperware parties with a digital accelerator. David Ogilvy would truly be in his element.

A recent post by Doug Shapiro seemed to demonstrate that knowledge of the original frameworks around these business models isn’t widely acknowledged (or perhaps known) in the film business. Though he did just post a piece acknowledging the influence of Chris Anderson.

But Kelly and Masnick are more important to filmmakers. They give you a way to think - they are more generative and useful for problem solving.

(And, if you have not heard of him, Kevin Kelly is such an OG of the computer age that he has a 2 letter url: kk.org. His website is a wealth of free knowledge.)

I’m always highly skeptical of people who tell you their deep new insights about this radically new world we live in. Especially those that charge for them.

All the secrets are out there in the world, it’s probably not changed much and the information is free to access if you look. Masnick, Kelly and Anderson share everything freely because they know “Information wants to be free” and they have good businesses selling scarcities (and are constantly experimenting!).

The biggest problem is the signal to noise ratio.

This relates to something Ted Hope recently mentioned. There is a broad lack of institutional knowledge in indie film, and this results in a lot of energy spent reinventing the wheel every time.

The FilmStack Resources tab on every FilmStack page is a great idea of Ted Hope’s - and these kind of things are great first steps to collating and sharing this knowledge. Similarly the Filmstack Discord server recently set up by Dave Baxter is another element - as well as the inspiration and FilmStack challenges. These are all excellent community building.

Not that these are sufficient or the ultimate solution, but they are progress on a way to a system where there is a sustainable community for the creation and appreciation of great cinema.

All of that said, it does mean that in the 21st century that the film alone (in most cases) won’t sustain a business.

Success requires cultivating one or more of Kelly’s generatives. It requires a plan to connect with fans and give them reasons to buy. Films can function as customer acquisition for scarce complements. The relationship with the audience then matters more than the specific content piece. Scarcity has be created around abundance (limited editions, experiences, access, community, personalization), to leverage that abundance.

So again, everything stems from the insight that when reproduction costs approach zero, not only does value migrate to what remains scarce, abundance in one thing creates scarcities elsewhere. It’s your job to find them.

This pattern appears across industries. Like many things, it is a very old problem. What is bottled water but something you can get for free, in abundance, for almost zero in most countries. How do Fiji, San Pelligrino, Perrier and Evian have vastly profitable businesses?

In the case of water, it’s usually accessibility (it’s cold and in front of me and I’m thirsty and don’t want to wait) and authenticity (I prefer this product over another due to the brand values) that you buy - but if you dig into their business models I’m sure you might find interesting ideas for CwF and RtB.

When you know the economics and the frameworks, you start seeing them everywhere.

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