Every blog becomes a cinema

NEW YORK (Fortune) -- Former AOL executive Ted Leonsis was frustrated: He'd produced a critically acclaimed documentary called Nanking, a film that looked at some Westerners who had protected Chinese civilians during a brutal, six-week attack by the Japanese army in 1937. But he was pretty sure the film, which premiered in 2007 at the Sundance Film Festival, would reach a relatively small audience.

Only a few hundred movie theaters in the U.S. will even show documentaries, and even those cinemas don't always give non-fiction films prime spots on their schedules. Distribution is a source of aggravation for many documentarians.

Unlike most filmmakers, though, Leonsis, who stepped down from day-to-day management at AOL at the end of 2006, had the wherewithal to do something about the situation. Last year he launched SnagFilms, a company that aims to distribute documentary films via the Internet. But rather than just stream its library of 650 titles through the SnagFilms site, the company is enabling portals, news sites and individual fans to share the movies through their own Web sites, blogs, Facebook home pages and other sites.

"Everyone talks about user-generated content," says Leonsis, who also is majority owner of NHL's Washington Capitals. "Let's talk about a new category called user-distributed content,"

Leonsis' Nanking, which will be available online for the first time Memorial Day weekend, is the centerpiece of an 10-film slate Snag is presenting during the holiday; each of the movies commemorates the heroism of soldiers and civilians during periods of war and conflict.

For films released in theaters Snag provides an opportunity for the documentaries to find new audiences. A blogger who is writing about alcohol abuse on college campuses, for example, might seek to embed in her blog a Snag video player that shows the movie Haze, a look at a drinking-related hazing incidents.

Filmmakers who make their movies available to Snag benefit in a few ways: For each film it includes a "Buy DVD" button that takes a viewer immediately to the documentarian's DVD distributor. Leonsis contends that many Snag users will only watch a portion of the film via the Internet, and that true fans will end up purchasing the film to watch on their home televisions.

Snag also sells advertising in the documentaries, and splits the ad revenue with the filmmakers. "We are writing checks to filmmakers every quarter," Leonsis says. "They're not always big, sometimes as small as $20 but sometimes more than $1,000."

Finally Snag offers users a chance to make an online donation to a cause of the documentary maker's choosing.

But for most directors who work with Snag, the main benefit is the opportunity to reach more people. "Filmmakers have never had this kind of opportunity before," says Steven C. Barber, whose film, Return To Tarawa, is part of Snag's Memorial Day slate. "I can get my film to every single country this way."

Barber's film has already run on Discovery's Military Channel, and many of the films in Snag's library have traveled a fairly conventional path for documentaries (film festival, theatrical or television premiere, DVD) before landing at Snag. But Snag CEO Rick Allen says the company is looking for more documentaries to launch on Snag, a concept that would upend the traditional theatrical distribution model.

(Entrepreneur Mark Cuban has also sought to disrupt theatrical release windows, showing films on his HDNet Movies channel two days before the film appears in theaters.)

Allen says it is too early to know if Snag's Internet-distribution efforts will cause major movie studios to think differently about their current models, but he does believe the film industry will go through lots of experimentation in the coming years.

"I think everybody believes that digital distribution is the wave of the future and they're all trying to figure our how it affects content delivery and content creation," Allen says. "I think people in large media organizations have seen the success of something like Hulu and its broadened people's ideas about how to get content out there and consumed."