The latest example of a short film evolving into a feature length project is The Raven, which began life as a 2010 online video directed by Ricardo de Montreuil, and is now in development as a feature film for Universal. The premise: A telekinetic rebel with some sweet parkour skills goes on the run from a futuristic LAPD.

While the film was originally being developed as a vehicle for producer Mark Wahlberg, Deadline reported this week that The Raven is looking to sign Hunger Games star Liam Helmsworth for the lead — bringing the dystopian sci-fi action project that much closer to multiplexes.

Here are some key takeaways from The Raven‘s success:

You never know what will get you some attention

De Montreuil is an established director on the festival circuit, having already directed three feature films, including the 2008 Mancora, which was screened at both the Sundance and SXSW film festivals. But it’s this $5,000 short, shot in 48 hours, that pushed him towards directing his first big studio picture.

Sometimes the path of a successful online short film takes you directly to a feature — take the example of Neill Blomkamp, whose short film Alive In Joburg eventually evolved into the Oscar-nominated 2009 film District 9.

But other times it’s less direct, as with former Totally Rad Show host Dan Trachtenberg, who made a big splash in 2011 with a short inspired by the video game Portal.

While a Portal feature remains elusive, the buzz that resulted lead Trachtenberg to another project — directing the adaptation of Y The Last Man, an award-winning graphic novel series that has equal fanboy appeal.

The Raven is more likely on the Blomkamp track than the Trachtenberg track, but even if a feature version is never produced, De Montreuil has gotten his foot inside the door.

Making movies really does take a long time

The Raven was originally posted on April 21, 2010, and was picked up by film blogs a few days later.

But the deal with Universal didn’t come through until July 2010, and between then and now there have been few updates. Even for projects that could technically be considered success stories, the pace of the studio system requires no shortage of patience.

Put it all out there

The Raven was released simultaneously on both YouTube and Vimeo, and across both sites the description is simple and to the point — it lays out the project’s logline, the cast and crew, the tools used to create the short, and a contact email for the creator.

And the most important fact laid out is the budget for the project: $5,000, which is impressive given the level of digital effects involved.

In addition to the short film, the official Facebook page contains news updates and concept art for the future tech featured in the project, and a short behind the scenes video showcases some of the stunt work that gives the project a human edge.

All of this leads to a concept of the short film as more than a short film — as a prototype for a much larger project. Which, for filmmakers interested in this approach, is the most valuable takeaway of all.

For now, HitBliss is available only on the web and on desktops, not on mobile devices — though the company plans to expand to other platforms soon. Among the available content at launch are new movies like Argo, Magic Mike and The Bourne Legacy and new episodes of shows like Real Housewives and The Walking Dead.

Users are served a “playlist” of ads that are delivered to them based on information that they include in a profile. When they watch the ads, they earn virtual cash that can eventually be redeemed for content. Users can specify how much information they’re willing to make available to advertisers; the more information they share, the faster they earn.

Other companies have dabbled with virtual currency in exchange for video. Yidio, for instance, gives users points for completing various tasks, and the points can then be redeemed for Amazon Video on Demand credits. HitBliss is different, however, in that both earning and viewing are done through the same platform.

As HitBliss users watch ads — which they can do at any time, not just right before they want to watch a movie or TV show — cash accumulates in their accounts, and they can redeem it when they wish. HitBliss charges $3.99 for a new movie rental, $1.99 for an older movie rental and $1.99 per TV episode. (Movie rentals last 24 hours, while users will own the TV episodes.) In general, about 8 to 10 minutes of ad viewing (roughly four ads) can be redeemed for one new movie.

The system includes a lot of checks to make sure that users are actually watching ads. “Advertisers are only paying when users are paying attention,” HitBliss cofounder and CMO Sharon Peyer told me. If a user plays an ad and then navigates away or mutes the sound, the ad pauses. An “attention assurance meter” — with a patent pending — occasionally requires users to click it to ensure that they’re paying attention; if they are not, “it gets very angry,” Peyer said, referring to a smily-face icon that turns to a frown the longer it is ignored, before ultimately resetting the ad and requiring the user to watch it again. Over time, users earn “trust points” that decrease the frequency of prompts to make sure they’re paying attention.

Peyer said the platform’s store will eventually expand to include other types of digital content, like apps and virtual goods. HitBliss is based in Lexington, Mass., and is backed by Andy Marcuvitz’s Alpond Capital. Peyer and her husband, CEO Andrew Prihodko, founded the company in mid-2008 after selling a video- and picture-sharing site called Pixamo.

Singer Ellie Goulding is holding “the world’s first digital album signing” to promote her latest release, Halcyon – the latest high-profile celebrity chat facilitated by Google’s increasingly media-savvy Google+ Hangout team.

That, of course, is an anachronism. A digital album can no more be “signed” than thin air be coloured green.

But album sales are plummeting, displaced by the success of digital track download stores. For artists who still attach importance to the album, could “signing” digital content draw fans to buy the whole digital collection, not just individual favoured tracks? That remains to be seen from Monday’s event, when meeting Goulding in a video chat will likely be the bigger draw. The takeaway is this – buyers value an experiential piece of the creator.

While Universal’s Polydor, to which Goulding is signed, re-images the virtual as physical, EMI is suing a retailer doing just the same.

Boston startup ReDigi lets customers list their used, legally-bought MP3s and, soon, ebooks for re-sale  to peers as “second-hand” files. But the record label has taken the outfit to court in New York and: “The company is demanding that the one-year-old start-up pay a $150,000 penalty charge for each song it has sold on” (via Telegraph).

The case may centre on the apparent reality many retailers do not sell customers actual digital content but merely license to use that content – licenses which often prohibit re-sale.

Second-hand retailers of CD-based music and games like Music Magpie are becoming popular. By launching a secondary market for second-hand digital content, ReDigi is attempting to profit from introducing characteristics of the pre-digital content ecosystem, when primary and secondary value could be easily ascribed to artefacts that boasted tangible presence in the real world.

But labels like EMI would have plenty to lose from ReDigi song fees that could be just five percent of originals’. Although diminished, the industry has been kept afloat thanks to digital track downloads that were still growing by nine percent annually last year.

There is a parallel precedent in a separate jurisdiction and a related industry. In July, the European Commission ruled that customers can re-sell and re-buy licenses to computer software, as long as those licenses are deactivated prior to re-sale.

Sites like UsedSoft and Green Man Gaming are already operating such marketplaces. In the music case, much could depend on how stringently ReDigi ensures second-hand songs can no longer be played by their original buyers.

The agreement with NBCUniversal International TV Distribution will stream films including Battleship, The Lorax, The Bourne Legacy and Safe House to Lovefilm’s two million European subscribers in the second pay TV window. The pact also ends a dispute between the two companies over DVD rental that dates back to 2009.

The second subscription pay-TV window resides fairly late in a film’s distribution cycle, coming several years after a movie leaves theaters. In the western European region where Lovefilm operates, BSkyB’s pay TV service Sky Movies has exclusive first-window rights to the films of all six Hollywood majors — Lovefilm ends up getting Universal movies about six months after Sky Movies gets done with them.

Still, second window or first, access to top-tier motion-picture content remains essential for over-the-top services like Lovefilm to grow their subscriber bases. And the Universal deal has significance in regard to Lovefilm’s competitive positioning to rival Netflix, which has signaled its intention to expand into western Europe beyond the UK and Ireland later in Q4 after expecting to return to profitability in Q2.

The question: With Lovefilm already having signed a number of key exclusive licensing deals to premiere content, what will be left for Netflix by the time it fully infiltrates the western European region?

Last year, for example, Lovefilm signed similar exclusive second-window licensing deals with Warner Bros. and Sony Pictures, now giving it access to content from half the of the major studios.

Also among major American content suppliers, Lovefilm signed an exclusive deal for Disney/ABC TV shows in Janaury.

Read a Morgan Stanley Research note to investors Wednesday:

“We continue to believe that Netflix will face a highly competitive environment overseas. The fact that consolidated profitability is weighing on international expansion only buys time for incumbent competitors to become more entrenched prior to Netflix’s arrival.”

CEO Adam Klein is hoping the new site will help the company rebound from a bit of bad news from earlier this week, when several indie labels-Merge Records, Domino Records, and Beggars Group-decided they would no longer do business with eMusic. “A handful of labels have left us, and we trust they’ll be back at some stage,” said Klein. “We hope so, because we miss them.”

The overwhelming majority of labels stuck with the new price scheme, he pointed out. As to why the labels departed, Klein said: “I can only tell you, we all have to make our own decisions, and I’m respectful of that.”

The new service, which previously charged for plans beginning at $11.99 for 24 tracks per month, will now simply charge users money for each track. Track prices will range from $.49 to $.89 each, depending on the newness and popularity of the songs.

[Clarification: Users will still have to commit to a subscription, spending at least $12 per month to become members of the service and have access to eMusic's collection.]

That represents a price increase over the old model, where no track came out to more than 50 cents. But eMusic just finished adding 250,000 songs from Universal Music Group to its catalog, and will now be carrying tunes songs from Sony Music and Warner Music, so Klein is hoping that the increased selection will make up for higher prices on some tracks.

For users who aren’t buying the newest music, the price will stay the same. About 80 percent of the 10 million tracks available on eMusic will be 49 cents each-the same price point as before. And whatever price point users are buying at, Klein emphasized he will still beat the prices of what he called the “a la carte” music stores by 25 to 50 percent.

“We now go from front-line content, all the way through some deep old catalogs,” said Klein. “Because you commit up front, there are certain advantages, and price is one of them.” Another is the curating and editing of the site, which Klein hopes will help users find new music that they wouldn’t have otherwise known about.

While the deal with Universal opens up a large store of popular artists to eMusic members, the store still doesn’t have available some of the newest albums by big artists. For example, while Lady GaGa’s 2008 album, “The Fame,” is available for $6.49, compared to $9.99 on iTunes. But her 2009 follow-up album, “The Fame Monster,” isn’t available on eMusic. Nor is Jay-Z’s “The Blueprint 3″ (released September 2009) or the new Drake album (June 2010), all of which are available on Amazon’s MP3 store.

Labels that do business with eMusic are paid in two ways. First, they’re paid a “wholesale price” on each track downloaded. They also get part of the overall eMusic revenues, based on their relative market share on the site.

There’s “absolutely no difference” between the deals eMusic strikes with indie labels and the ones they strike with major labels, Klein added. And the labels have “a fair amount of control” over how they want their music to be priced-but eMusic also has its own pricing rules that come into play, which look at factors that include what level that music is priced at on competing music services.

As eMusic prepares to add 250,000 songs from Universal Music Group’s catalogue to its sizeable online music store-and make a major overhaul to its subscription pricing scheme-it appears to be having a falling-out with a large group of independent record labels. Those failed negotiations suggest that the digital-music service may not be able to strike licensing deals that satisfy both large and small music labels.

eMusic subscribers were notified by e-mail Tuesday that they have two days remaining to purchase music from several independent record labels that are about to stop doing business with eMusic. Those labels include Domino, Merge, and the Beggars Group of labels, which includes 4AD and Matador Records.

Losing those labels means that eMusic will lose access to tracks from some of the most well-known “indie rock” bands, including Arcade Fire, Spoon, Belle & Sebastian, Cat Power, and Yo La Tengo. “This is as heartbreaking to us as it is to you,” the company’s email stated. “Please know we have done everything we could to keep them from leaving.” The email includes a large button encouraging recipients to “Add Your Voice” by signing a sort of online petition advising the labels that their music is wanted back on the service.

Gerard Cosloy, head of Matador Records, explained the departure in a post on the Matador blog: “[A]s eMusic has brought more major labels into the fold, they have changed the terms on which they deal with labels, some of which we have found impossible to accept, in our own interests, those of our artists, and ultimately those of their fans.” Merge Records wrote: “Unfortunately, eMusic’s unilateral changes in an effort to bring on the major labels has created a situation where it would be harmful to the interests of Merge and our artists to continue our partnership at this time.”

“We are treating all labels equally and therefore we believe fairly,” CEO Adam Klein wrote on eMusic’s blog, 17 dots. “We will greatly miss their artists and their music and trust that they will find their way back to our members soon.”

A recent report suggested that eMusic’s user base hasn’t grown much lately, staying steady at around 400,000 subscribers since 2007. Even after adding major label content, eMusic’s user base is likely still heavy on fans of lesser-known bands that have signed with independent labels.

eMusic grew its music service by focusing on fans of independent-label bands, and charging for MP3 downloads through a subscription scheme. In 2009, it started signing major labels-and raised its prices accordingly. eMusic signed a deal with Sony (NYSE: SNE) Music in 2009, and with Warner Music earlier this year.

In October, eMusic announced it would add 250,000 tracks from Universal Music Group, and change its pricing plan to vary the price for individual tracks. In an email to users, eMusic noted that “members would still enjoy savings of 20% to 50% compared with iTunes a la carte prices.”

During negotiations, Netflix CEO Reed Hastings had publicly acknowledged the impact that cheap rentals were having on DVD sales and said that his company was willing to take new releases at a later date, as long as the studios gave Netflix a significant discount. Netflix says its deal with Universal will give it the “benefits of reduced product costs;” it does not make a similar assertion about Fox.

Both deals do however let Netflix builk up its instant-streaming catalogue. Fox, for instance, says it will make all prior seasons of several hit TV series, including 24, Bones and King of the Hill, available to Netflix instant-streaming subscribers, while Universal says it is doing the same with some “premium domestic titles,” like Gosford Park.

One winner may be Blockbuster (NYSE: BBI), which itself has been negotiating with the studios so it can rent new releases on the same day they are available for sale. So far, it has gotten Warner Bros., Sony (NYSE: SNE) and Fox to agree — and has been loudly advertising its advantage over Netflix and Redbox when it comes to Warner Bros. titles.

Laws started heading up the company’s mobile efforts when it first created a dedicated division in May 2006. Laws wrote: “It was a good run, but now it’s time to do something different. I will miss this place, but I am looking forward to new challenges and opportunities.” No word on who might be taking over the reigns, but Laws outlined a list of future contacts, including Calvin Lim for mobile; Roni Lubliner for broadcast and stills; Sam Nouri for online and advertising; and Jordan Gilbert for original digital content.

At the heart of the issue is that Universal dislikes Redbox pricing, saying they are too low (sometime as low as 99 cents for a day) and are hurting other DVD retailers. It also doesn’t give a cut of the rental price back to the studios. And it stocks a limited selection of movies, the one it wants, instead of taking diktats from the studios. Reasons enough, you would think. Redbox is one of the biggest kiosk operators, and has been increasingly popping up in supermarkets around where I live here in LA.

Universal also wants Redbox to not stock more than eight copies of a movie per kiosk, compared with the four dozen or so it does not, for popular releases. Also, it wants Redbox to stock its DVDs no earlier than 45 days after they hit traditional retailers like Blockbuster (NYSE: BBI), though that would hurt Redbox rentals as most of them occur in the immediate weeks after the DVD release.

Blockbuster, meanwhile, is also testing these vending machines, and will likely be renting them out higher than 99 cents (despite its recent efforts on lower price), and give a bigger cut to studios.

Download court documents (via PDF):
– The Redbox lawsuit
– Evidence of Universal’s demands
– Motion to dismiss from Universal, and its reasoning on defending its distribution right

Photo Credit: Adam Melancon

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