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Passive Income For Modern Filmmakers

By Sherri Sheridan

April 7, 2009



How To Set Up Your Financial Life For Filmmaking

What is passive income? Why do you need it if you want to make your own dream films for the rest of your life? How would you like to never have to worry about getting another job or film project funded again?

The American dream seems to be crashing down all around us these days. No job seems safe and becoming financially independent is a good idea to weather such uncertain times - if you have what it takes to make it work. Maybe you already lost your job, or cannot find one, and have some free time to ponder your next big plan. Or maybe you do not like your current job and want to do something else for money.

If you are a filmmaker I urge you to consider thinking outside the traditional get a job box for income while trying to finish a dream film on the side. Odds are you are going to be too tired after working 30-70 hours a week to do your film. Filmmaking may become a lost dream.

Passive income covers any business that makes money for you when you are not there doing anything. A passive income money machine cranks out cash when you are sleeping, playing golf, surfing, playing with your kids or making a dream film.

Some examples of passive income:

Royalties on books, CDs, DVDs or films – See CreateSpace below
Rent money from tenants on property that cash flows
Parking garages
Automatic car washes
Tree/Solar/Wind farms

Raising wild turkeys
Investments that pay like clockwork (interest on principle)
Internet businesses that are automated such as digital downloads

Now which passive income business model above jumps out to you?

If you already have real estate you are probably renting it out but may not have considered getting your monthly expenses below that amount. If your family has lots of land it may be easy to plant a bunch of trees that can be harvested over the next three to ten years. If you are a filmmaker you are most likely gravitating towards the ultimate goal of big book and film royalties. One of the best options for creating passive income for digital filmmakers these days is an online business explained in more detail below.

New ways to make passive income and help green energy the planet include installing solar and wind farms on your land. A friend of ours, who has some acres in Northern California, just spent $200,000 to install both solar and wind farms on his property. He will make about $60,000 a year to sell his energy to the power company. And he is now off the grid himself producing all the energy he needs. In a little under four years he will have paid off his initial setup investment, and will have enough passive income for the rest of his life. He's a musician and budding filmmaker so this gives him time to do whatever he wants to creatively with some security. Most artists and creative people I know do not want corporate jobs for life. They want the freedom to pursue their visions.

Step 1: Cut Monthly Expenses Down To The Bare Bones

The first step to creating a digital filmmaking passive income lifestyle is to get your monthly expenses down to the lowest number possible. If you need $10,000 a month just pay your bills, you are going to have to make a lot more passive income than if you only need $2000 or even $500. Make a game out of how much money you can save each month by writing down what you spend and seeing where cuts can be made.

Tips On Reducing Monthly Expenses:
You can find lots of these types of tips online. Here are a few of my favorites that I have seen work best for creative filmmakers creating passive income lifestyles.

• Most people’s main expense each month is housing. Move back in with your parents to save on rent if possible while making your film. If this idea sounds like it would drive you crazy skip to the next one. Some parents are more suited to this option than others. Be an ideal tenant who helps with housework, cooking and shopping, or things they need, so they will not want you to leave. Don't hang out all the time in the living room watching TV or playing video games - you've got a film to make! You may also have an elderly relative or friend that needs help who may give you a free rent deal.

• If you own or rent a house see if you can fill it up with roommates to cover the mortgage or rent. You may be able to have enough roommates where you do not have to pay anything in exchange for managing the house. If you are already making films, you may be able to get roommates who are film or animation students to help as interns who also pay rent.

• Stop buying anything you do not absolutely need. Enough said. Get your monthly expenses as low as possible. The less you spend, the more you have. Consume the minimum produce the maximum. This area includes eating out and expensive entertainment.

• Stay out of debt – the opposite of passive income. If you already have huge credit card debts or underwater mortgages you may need to make some tough business decisions to reduce your monthly overhead. If you have recently lost your job, and the outlook for employment is not great, you need to have as much cash on hand as possible right now during these unprecedented stormy financial times. One of the biggest money traps I see young filmmakers falling into is student loan debt. Going to a top film school may be a good choice for some, but getting out of a two year program with $75,000 worth of debt to repay makes financial freedom very challenging.

Step 2: Thinking Up Good Passive Income Ideas

Think up a passive income business perfect for you and your skills and interests. A good business model solves a problem for people. A passive income business solves a problem and does it in a way that requires very little overhead, employees or production costs after the initial setup and launch.

The trick to passive income is setting up multiple streams of money machines to keep all your bills paid, while you cherish every second of your free time for creative filmmaking pursuits. You want to set up several different types of passive income businesses, since they tend to make money in cycles, and you need to make sure you always have more money coming in than going out each month. First get one passive income business going strong, then set up another and another until you are making enough to pay your basic expenses each month.

Digital filmmakers are wise to set up their lifestyles for making passive income. It has become so inexpensive to make films the main financial challenge now is just covering your monthly living expenses. Time to create your very own cheap digital film masterpiece is what you really need, not that new $20,000 HD dream RED camera holding up your over inflated production budget.

It always amazes me how many filmmakers are not making their films because they think they need a certain new WOW camera. When you ask about their script, you often find out it has not been written yet, or there is no animatic. But the camera is going to somehow take care of all that time consuming story stuff in their minds. It is easy to get stuck on lack of money or cameras. It is harder sometimes to come up with a great story that attracts everything you need at the perfect time. Many stores that sell cameras have 30 or 90 day return policies. If you do tight preproduction, you may be able to shoot your film and return your camera in time for a refund. Sometimes cameras do not feel right when shooting or look a little strange optically. Costco lets you purchase items with a credit card online and then return them for cash back at the store within a certain timeframe depending on the items. Digital cameras are still 90 day returns at Costco last time I checked.

Make the film you can afford today, and if it is any good, more money will come later for better cameras. Do not use a camera that shoots looking cheap either, but don’t get stuck on the top flavor of the month out of your price range production stopper. Maybe you have a friend or family member who bought a bunch of digital toys during the recent hyper consumption binge cycle (high resolution 3 chip type DV camera), and you can borrow that one to make a film or barter something in return.

Step 3: Create An Online Business

My partner Nate has three record companies with over 4000 songs, CDs, and DVDs he sells online to cover his passive income. I have several books and a new DVD Workshop that I am selling as multiple forms of passive income. is another form of passive income I am setting up that will allow lots of filmmakers to create steady royalty streams from their film projects, while paying my own expenses for setting up the model.

What do you know how to do that you could sell online? Could you make a DVD class or documentary about it that 1000’s or millions of people would want to buy? A friend of ours just created a how to video in about 2 weeks that he sold for $60,000 to a big online rental movie company. The trick here is making a film they want to buy and know they can rent.

You can also now sell your own independently published books, CDs and DVDs online at places like, which links into for instant global distribution and monthly passive income sales. CreateSpace makes the CD, book or DVD and ships it out using a print on demand model then deposits your share into your bank account each month. If you sell a DVD for $20 you get about $6 per sale on CreateSpace. A $25 DVD will net you about $8. A $15 CD will get you about $4. A $25 book will net you about $13 per sale. Most people set up a website featuring their products, do lots of marketing and try to sell their products to as many groups and people as possible. Digital downloads are starting to catch on in a big way too.

Passive Income Tip: You do not want to see your product, touch it or ship it if possible. This is why CreateSpace is such a good deal since they do everything once you set it up. Many entrepreneurs get stuck making things to sell and do not spend enough time on sales and marketing. It is more fun sometimes to create something than it is to sell it. Passive income businesses tend to focus on business ideas where you do not have to deal with making physical things, manufacturing, shipping and trips to the post office. These things take lots of time and money. The best business ideas are automated and collect money, or have someone else do the manufacturing and shipping if necessary. You make it once like a film, they duplicate and ship it like CreateSpace. Create the best product or service possible then focus on sales and marketing to get your business model going.

Do not quit your day job until your passive income money machine is generating a steady amount of cash to cover your basic overhead. On the other hand, you may already be out of work and have 6 months of unemployment to set up a passive income business on the side or make a film to sell.

How We Did It

Nate and I have almost gotten to the point where passive income will be paying for our living expenses and film projects for the rest of our lives. We started off by working at corporate creative jobs fresh out of college to gain experience, but quickly realized that just getting by each month, and maybe saving a little, was not how we wanted to live. Creative companies tend to run out of money too and job security was an issue. Lots of friends had stories of going into work to find out their game or film company had gone out of business. If you have your own passive income business you know exactly how much money is coming in and are not at the mercy of some corporation for your survival.

We then started our own company Minds Eye Media in 1995 to get out of the job trap. The only problem was the clients. They were worse than having a job sometimes. Most of our clients were wonderful but a few of them were nightmares. The bigger the clients the bigger the lawsuits over getting paid. Doing client projects on an hourly basis is a losing game from what we saw, after barely breaking even on several big multi-million dollar projects. We really just wanted to make our own films by 2001 so we concentrated on creating several passive income models. Some ideas worked better than others and we are still learning. The best part of our passive income lifestyle now is checking our PayPal and online accounts seeing money just appear each day like magic.

It has been interesting to turn down big paid project after amazing project, saying "No thank you - we no longer do outside clients." We laugh about it at dinner! "Guess who called?" When we explain what we are doing, they too become inspired and want to know how to do it for themselves. We love our passive income lifestyle. We get up when we feel like it and sometimes work until 6am at our home studios to connect better with our people in Asia and Europe.

Alarm clocks freak us out!

Back in the client days we almost worked ourselves to death covering huge overheads. Now we take lots of little vacations during the week when no one else is on vacation and work when we feel like it. Lots of creative people also make a living off of what we are doing. The internet allows us to work with people all over the world. Our main CD and DVD factory is in Hong Kong. Our new programmers are in India. Our distributors are all over the world. Walmart is calling. We get to empower 1000's of other artists by putting out their music and films. And we are just getting started!

This article is designed to inspire you to get financially free by creating multiple streams of passive income so that you can spend your time making films.

How did we find out about passive income? I took a free weekend class called the Millionaire Mind in 2001 from a man called T Harv Eker. He explained how some business models were better for making money than others. Most artists do not have MBA’s. I highly recommend Harv’s latest book Secrets Of The Millionaire Mind. I do not get any money if you buy his book, or use CreateSpace, they are both just great resources for helping you on your way toward financial freedom. I then sent Nate to the class and he came back a changed man vowing we would stop doing client gigs as soon as possible. He now quotes T Harv Eker on a daily basis as we brainstorm for more ways to create passive income so that we have more time to create our dream films.

Here are the 17 ideas covered in Secrets Of The Millionaire Mind:

1. Rich people believe "I create my life." Poor people
believe, "Life happens to me."

2. Rich people play the money game to win. Poor people
play the money game to not lose.

3. Rich people are committed to being rich. Poor people
want to be rich.

4. Rich people think big. Poor people think small.

5. Rich people focus on opportunities. Poor people focus
on obstacles.

6. Rich people admire other rich and successful people.
Poor people resent rich and successful people.

7. Rich people associate with positive, successful
people. Poor people associate with negative or
unsuccessful people.

8. Rich people are willing to promote themselves and their
value. Poor people think negatively about selling and

9. Rich people are bigger than their problems. Poor
people are smaller than their problems.

10. Rich people are excellent receivers. Poor people are
poor receivers.

11. Rich people choose to get paid based on results. Poor
people choose to get paid based on time.

12. Rich people think "both." Poor people
think "either/or."

13. Rich people focus on their net worth. Poor people
focus on their working income.

14. Rich people manage their money well. Poor people
mismanage their money well.

15. Rich people have their money work hard for them. Poor
people work hard for their money.

16. Rich people act in spite of fear. Poor people let fear
stop them.

17. Rich people constantly learn and grow. Poor people
think they already know.

I could add one to this list:

18. Rich filmmakers make films. Poor filmmakers complain about not having the right camera or enough money.

These tips are not about becoming a money obsessed greed monster. They are about setting up your life so that you can be independently financially free to make your dream films. Passive income requires trying different things until finding ones that work best for your own skills, interests and situation. Once you get a few successful passive business models set up, you will begin to experience a whole new world of creative freedoms!

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"A genius is one who shoots at something no one else can see - and hits it ."

– Anonymous

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