The makers of Scenes of A Sexual Nature, out in November, are not just hoping it’s a hit in the box office – they are also testing a new online distribution model which they say could help independent and low-budget films.

Ed Blum, the film’s director, and Suran Goonatilake, the investor behind Blum’s production firm Tinpanfilms, hope the system will reduce distributors’ control and give private investors more of a say in how movies are marketed and where revenues end up.

Dubbed ‘The Really Honest Little Distribution Company’, their firm will handle the distribution process, while a collection agency will be used to allocate the film’s takings. If it proves a success, they plan to offer their service to other smaller productions.

Social networking agency Rareface has also been recruited to manage an online PR and marketing campaign using the likes of Myspace and YouTube, through which it plans to learn best practices and replicate similar campaigns for other movie releases.

The film’s makers are nothing if not ambitious. It attracted an A-list cast including Ewan McGregor and took six weeks to complete, despite its budget totalling less than £500,000. We spoke to them about their plans.

How did you end up at the decision to distribute the film yourselves?

Ed: One of the things about this film is that it is all private investment. I approached Suran and gave him an outline of what I was trying to do, and he came in with an investment.

If one of the big studios had picked up on the film we would almost definitely have gone with them. We had offers from what I would call some middle-ranking and smaller distribution companies, but the offers that were put on the table, we looked at and thought they were crazy.

Everyone said to me, all the way through the making of the film, that it would be impossible to get an A-list cast, to finish the film on its budget and very difficult, if not impossible, to distribute the film ourselves. But we sat down and said that in keeping with the spirit of the film, it would be better if we did that.

We set up a virtual distribution company, appointed a head of marketing and head of publicity, and because the film-makers are distributing the film, there was a whole energy to the process. We were also introduced to Rareface, because one of the things from the beginning was that we really wanted to do much of the marketing online.

So, basically, you are cutting distributors out of the value chain?

Ed: For me, it’s fascinating because one of the key things distributors used to tell you is that you don’t know about marketing, you don’t know how the market works, and won’t be able to reach the audience without a specialised distribution company behind you.

But in fact, with social networking, if you get it right and generate enough buzz, there’s no reason why you can’t raise the profile of your film, and not just in your country. We haven’t signed any US distribution deal yet, so if this kicks off we could start raising the profile of a small budget film internationally, and all from a small office in the centre of London.

If we do get this right, we’ve made a film with private investment, and any film-maker can do that. We’ve made it with no public money, or any of the large studios, and now we are going to distribute the film using a very innovative model.

If it comes off, it could be a really fascinating example for other film-makers. Other film-makers with low budget films have traditionally had to go to a distributor to raise their profile. There are famous examples of online marketing like The Blair Witch Project and Snakes on a Plane, but they had big studios behind them.

What does this mean for investors?

Ed: If this becomes a success, instead of lawsuits happening in years to come where actors and investors try to get money out of distribution companies, all the money from any revenues, be it box money, DVD or TV sales, goes into a collection agency and immediately is spread out to anybody that is part of that collection agreement. Anyone involved will be able to go immediately online and see what is happening to their percentage.

Suran: Distribution companies are notorious for being opaque about the money they collect. But with what we have done here, the structure is very transparent and the system allows you to share distribution.

If you take it from a production point of view, because of digital cameras, the cost of making films has being going down, but when it comes to distribution it is still very hard. The distribution networks are very controlled and it’s very difficult for them not to be risk-averse. But we’ve taken it head on, and said if you have the talent and passion, anyone can distribute a film. All the models and established systems are breaking down, whether it’s music or film or TV.

Ed: The revenues do not come into our distribution company – so it’s not up to us to spread out the profits, it goes into a collection agency first. The normal distribution model is that the distributors normally get their distribution and ad spending back first, but the people who put money into the film before it was made, who took the biggest risk, are way down the line.

With our model, the people who took the most risk, and put their money in first, get their money back first. The people who put their money into distribution and advertising are at an advantage as they can see the film and their risk is lower.

What interest have you had from other film-makers?

Ed: The British film-making community is very small. I’ve given one talk already to new film-makers and word has already got round. We’ve been approached already by several producers who want to sit down and talk to us about how it works. We are still looking at all sorts of new approaches, especially with social networking, but we’re very happy to sit down with people and tell them how it’s done.

It’s a fascinating way to go, because with any art form – be it music, TV or cinema – there are normally a lot of people that can’t do risky or innovate projects because the big corporations are worried about losing money.

One reason the range of music is much broader than the range of cinema is that they’ve narrowed the funding of the distribution of films. It’s very hard to make money out of them because the distributors won’t pick up on them. Over time, if this way of marketing films works, I hope it will bring a much bigger diversity in film-making.

Everybody thought that the digital age had come to film and TV when film cameras became digital, and became very cheap to make and buy. Everybody expected an explosion of new film-making, be it cinema or TV, but that wasn’t the case. Now, though, it will be because you have cheap cameras and editing equipment, and at last you’ve got a means to distribute it cheaply. There are portals like Myspace and YouTube, and eventually there will be film sites where you can download new films.

It’s a combination of low cost filmmaking and low cost distribution, which I think in the next three or four years will see an explosion of new film-makers. It could be slightly chaotic over the next few years but I think, some very exciting film-makers will emerge.

While large distribution companies try for the widest possible audience, because that’s where they get their highest possible profit margin, certain filmmakers will become much more attuned to their own voices and find a very specific audience via the internet.

On the marketing side of things, what do you plan to do?

Ed: What we are doing is a combination of online and traditional marketing, so there will be ads on the Underground and in press outlets. We’ll be doing daily vodcasts on the countdown to the release and using portals such as Myspace and YouTube, and doing character profiles where the actor talks as the character in the film.

In terms of social networking, it’s very measurable because you can see the amount of friends you have on Myspace and how many clips have been downloaded. The real beauty of it is that it shows you exactly how many hits and visitors you’ve had, and it’s interactive. People can walk past a poster on the Underground ten times and not take in that it’s a film or the release date, but as soon as you start interacting and clicking links, you take in the information on that page. So they are aware about the film – when it is released and who’s in it.

The other thing that’s important is the idea that social networking is collaborative and generous in the way people support other people, and the film-makers have got together and worked on this film for very little money, so they’re both part of the same philosophy.

Does Myspace suit your audience?

Ed: It’s changing rapidly. Forty percent of Myspace’s audience is over 30 so it is breaking out from the 18-24 bracket and is becoming exponential in terms of its growth. We’ve made a film that appeals to a wide range of people, but there are groups who will be passionate about it.

With our online and offline marketing, we’ve borne in mind who we think our main audience is, but you never want to be too specific about it.