Amazon vs. Indee

How our startup took on Amazon… and won

September 13, 2012

An Amazon company tried to kill our startup by individually targeting all of our common clients and threatening them with a TOS violation if they used us. Here’s our story of how we screamed bloody murder and got 12,000 other filmmakers join in, eventually getting Amazon’s subsidiary to change their TOS.

The Players

Starting last year, Indee, our young startup took on the entrenched player in the field of film festival submissions – Withoutabox . Withoutabox (WAB) was founded in the year 2000 and has had an undisputed monopoly in the space since then. In 2008 they were acquired by Amazon.

Both Indee and WAB provide a marketing and submissions platform for film festivals. Essentially, a conduit for filmmakers to submit their films to festivals – similar to how students submit their applications to colleges. When we first started, we were bringing in less than 5% of the submissions for our festival clients. By March of this year, for some of our more established festivals that number grew to 30% of the submissions.

This affected Amazon on two fronts:

  1. Reduced revenue
  2. Loss of their monopoly

While reduced income is obvious, losing the monopoly is a larger problem for Amazon than one would assume.

See, most independent films will be vetted by a film festival before being released publicly. For Amazon, which has several plays in the independent film space, losing 30% of the filmmakers to Indee means losing one of the best acquisition channels to filmmakers and insight in to their films’ performance at hundreds of festivals.

The Offense

Here’s what Amazon thought they could get away with.

One hectic afternoon, I received a frantic call from one of my favorite festival directors saying they wanted to quit using Indee and requested that we delete their festival’s submissions from Indee. This made no sense, he had constantly raved about how much better our product was when compared to WAB and also introduced us to other festivals. Why was he dropping us? I tried to piece together from his livid voice that WAB was forcing his hand in some way. He then forwarded an email they received from Amazon. [Evidence at bottom of post]

While still on the call with him, another one of our festivals was flashing my call waiting. I got done with my call and spoke with the next festival. This was brand new sign up and were mighty pleased with our system when I spoke to them last, which was only a couple of days ago. Now they were signing the same tune as the previous caller with WAB forcing their way in. I soon realized that WAB had a clause in their Terms of Service that required exclusivity. The WAB email to festivals stated “deactivate all third party submission services in order to avoid disruption to your Withoutabox service.”  [Evidence at bottom of post]

Amazon was being smart about enforcing this as well. The festivals were allowed to pick Indee or WAB, but if they chose Indee, they were threatened to lose all the festivals submissions on WAB within a 12 hour period. This is analogous to Hotmail threatening to delete all your emails if you were to try Gmail! We lost most of our festivals over the course of the next few hours as Amazon reached out to each of them individually.

We were devastated. How the hell were we going to overcome this? I started reaching out to our advisors. Most of them suggested that this is clearly anti-competitive and I should pursue legal action. That wasn’t an option for us. Going head-to-head with Amazon’s legal guns wasn’t something our artillery or coffers could handle.

I felt the worst I’ve ever felt going to bed that night. Our baby that we’d fought so hard to build and fussed over every little button placement and email phrasing, was being felled in one swoop because of some potentially illegal clause? I vowed to pull out all stops the next morning and go down fighting.

A Swarm Returns

The next morning, I had to break the news and devastate the morale of our entire team. Luckily, we had a fledgling new product we were building- Screeners, which was a most wonderful distraction for our team’s morale.

Next, we called all the festivals that decided to stick with us rather than WAB, thanked them and also received a nice pep in seeing them stick with us through the threats.

Press strategy was next. We thought about reaching out to the tech press, but we were nervous about frightening away potential future investors in Indee if I was a whining little bitch on the tech blogs. So we decided to skip them.

I also thought about the people I knew at WAB, they were all great people; fun to hang out with and genial. I even recall a conversation I had with one of them at SxSW on what parts of Indee we should improve to make it better. These weren’t evil people I was dealing with. They were wonderful people, who simply had to fall in line with Amazon’s requirements or risk losing their jobs. We weren’t ready to vilify them.

We started to see what Amazon was hoping to get out of this – the monopoly over filmmakers. We decided to reach out to just that audience to twist Amazon’s arm. Over the next few days we pushed hard on social media to get the filmmakers informed about this travesty and they individually took on our cause. Over 12,000 of them to be specific.

filmmakers against Withoutabox

This was the point at which we saw the tide turning. The film press got in touch with us after hearing from some filmmakers. Over the next few days both IndieWire and Variety seemed interested and several festival directors from the largest U.S. festivals agreed to speak to the press on our behalf against WAB’s uncompetitive terms.

I guess the alarm bells must have gone off at the WAB HQ when the reporters from the major film press began contacting them. They immediately back-tracked and said that the exclusivity clause was a part of their aging ToS and that they intended to drop it soon. When we first read about it in the IndieWire article, we were amazed at how quickly this change took place. From vehemently enforcing their exclusivity clause to actually committing to dropping it was just a few weeks apart.

Now we’re trying to rebuild our festivals business from scratch, and it’s going to be hard, but in the meanwhile our screeners have taken off. We have some of the largest film sales companies like Lakeshore Entertainment, IM Global & Ealing Metro using Indee’s screeners. But we’re not ready to give up on festivals either.

Here we go…

What do you guys think? Is there anything we can do to protect from something like this in the future? Could we have handled it differently?


Epilogue – Evidence

For those interested in the hard facts, here is the evidence of what transpired below.

Here’s the email the festivals received from WAB:

Dear [redacted],

It has been brought to our attention that [redacted] Film Festival is accepting submissions through another third-party submissions system. The Withoutabox partnership agreement requires exclusivity; it is a violation of the agreement you entered into with Withoutabox to use a third party submission system while a Withoutabox partner. In order to avoid disruption to your Withoutabox service, we will require that you deactivate all third party submission services no later than Friday, March 16th, 12:01 AM Pacific Time. To place your account in good standing, we will require proof of deactivation.

Thank you,
Withoutabox Festival Support

For one of the festivals we disabled them on Indee, but forgot to delist them from our submissions page. The next day the festival got this aggressive email from WAB.

Dear [redacted],

Thank you for your email. [redacted] Film Festival is still listed as accepting submissions on the indee.tv site. The festival will need to be removed from the site to avoid disruption of service. We can extend a courtesy of one hour to have the festival removed from the site before we will need to temporarily deactivate your Withoutabox account. Please email us back once it has been removed.

Thank you,
Withoutabox Festival Support

A motivating note from one of our festivals:

So sorry all this happened Sharan, you have a great product. I’m hoping you find a way to fight back. its tough fighting the big guy but definitely worth the fight.
Keep us updated.
[redacted]

The festivals have been vocal on social media as well:

Festival Director on WAB monopoly

Festival Director on WAB monopoly

Finally, the actual clause from the WAB terms. Note: These terms aren’t the same as the publicly listed terms on their site, you had to be logged in as a festival view them

1. Specific Rights and Obligations of Parties:
Submissions: Festival hereby engages Withoutabox as the exclusive on-line system for accepting and processing all films to be submitted for entry into the Festival for the festival submission period covered by this contract. Such acceptance and processing of the online Submissions shall occur exclusively through the technology provided by Withoutabox on the www.withoutabox.com web site, the www.imdb.com web site, another web site owned and/or operated (in whole or in part) by IMDb.com, Inc. or one of its affiliates, or any successor or replacement web site to any of the above-set forth web sites (individually and collectively, the “WAB Site”). or the use of such technology provided by WAB Sites but appearing on the [Redacted] Film Festival web site.

4 Comments

  1. I thought you’ll handled it very well indeed.
    Best wishes with Screeners and the festivals!

  2. komatsu says:

    It’s victories like this that make being an entrepreneur worth all of the work. Good for you for not backing down! They clearly expected their poor behavior to go entirely unnoticed.
    Competition is good for every industry.

  3. Indee says:

    Thanks Samvith & Komatsu!

  4. Festivals and filmmakers are rallying together against Withoutabox!

    Should Withoutabox be investigated for anti-trust violations?

    https://www.facebook.com/FestivalsAgainstWithoutabox

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