Late to the party, and I still don’t have time for as detailed a reply as I’d like.
For some, a film just has to be made. It’s in their head, and they need to get it out. That’s often where it starts.
Once the filmmaker has made his film, he (or she, but I’ll stay with the ‘all inclusive “he”’) wants it to be seen. He may be content to show his film to friends and family. Perhaps he belongs to a club, and he shows it there. And of course there are festivals. Typically, the top prize is a few hundred dollars.
It’s difficult to get distribution for a short film. Who wants to pay for a 15-minute masterpiece? When cable TV really got started, networks (particularly Showtime) bought short films for filler between their features. I don’t have Showtime, so I don’t know if they still do that, 30 years on. In the late-'70s and early-'80s some filmmakers garnered some success distributing short films. Ernie Fosselius comes to mind with Hardware Wars and the lesser known (and hilarious) Porklips Now (Part 1 linked). Other notable shorts that come to mind are Closet Cases Of The Nerd Kind, Bambi Vs. Godzilla, and Quasi At The Quackadero.
I am guessing that those films turned a profit. The vast majority of short films don’t, and/or are ‘never seen’. Short films serve several purposes. For example, they are an artistic outlet for the filmmaker. They also teach a filmmaker how to make a film, without having to spend a great deal of money. They are also ‘calling cards’. Short films, or clips from short films, are included on ‘demo reels’, which are video résumés. Short films can lead to paying work. If a film is good enough to win a contest or two (or three, or…) then as an ‘Award-Winning Filmmaker’ you stand a better chance of someone giving you money to make a feature. Apart from rare exceptions, short films do not make a profit. If a film does not happen to be one of these exceptions, a small profit might be seen by its inclusion in a collection of short films.
As Stranger On A Train notes, short films used to be made on super-8. (Mark Pirro made a name for himself by shooting feature-length films on super-8.) When we started, a cartridge of super-8 film cost about $5 and could be developed by Kmart. It was a cheap way to learn. More serious filmmakers generally learned on super-8 and then moved up to 16 mm. Sixteen millimeter was originally a ‘home movie’ format, but it became the primary medium for documentaries and low-budget productions. I’ve noticed that Ken Burns uses an Aaton super-16 camera, and some TV shows were shot on super-16. There are a couple of problems with 16 mm. First, it’s expensive. A 400-foot roll of Fuji 125 costs over $100, and it runs for 11 minutes. A tight shoot may expose four rolls of film for every one used in the finished film. That’s being careful. It’s not uncommon to have a much higher shooting ratio even on a low-budget film. Not only must the film stock be bought, it must also be developed (cost-per-foot, plus set-up), prints made for editing if you’re not editing on video (otherwise there is the cost of transferring the film to video), conforming the negative to the edited reel, audio and the costs associated with that, and so on. The other problem is that popular film stocks are being discontinued. It’s hard to make a film without film.
Digital video has brought us back to the days of super-8, where virtually anyone can make a film. (I’m using ‘film’ to mean a production, even if it is technically a ‘video’.) This is a double-edged sword. One edge allows filmmakers to make a film when they otherwise would not be able to afford to. The other edge cuts cruelly, in that so many people are making films that the films really must be exceptional to receive any notice.
So the business model? Basically, the filmmaker is hoping his short will lead to paying gigs and fame. Making short films is a cost of business, invested toward this goal.
How much does a short film cost, and who pays for it? A short film can cost virtually nothing, or it may cost six figures. It depends upon what the filmmaker is trying to do, the nature of the project, the resources the filmmaker has at his disposal, his experience, the format, and myriad other things. Robert Rodrigues made the feature-length El Mariachi for $7,000 by careful planning, using friends, and using the tools he had at his disposal. A friend, inspired by Rodriguez, made his first feature film, Cut Up, for about $42,000 on 16 mm film (shot on an Eclair NPR, for those who want to know). Films, short or otherwise, cost what they cost. Remember that the medium is only part of the cost. Lighting is important, and I’ve seen films that had a good story and good acting that suffered from not having a lighting budget. You can get your friends and family to act, but are they good? You might have to pay for actors. Sets, props, audio recording, crew, meals (it’s customary to feed your crew and actors), transportation, permits… it all adds up. If you want to know how much a film costs, and how to make those costs minimal (and read about the journey from shooting to distribution), I highly recommend Robert Rodriguez’s Rebel Without A Crew: Or How a 23-Year-Old Filmmaker With $7,000 Became a Hollywood Player.
Independent filmmakers usually pay for their productions out of their own pocket, charging up their credit cards and/or getting money from family and friends. Rodriguez famously hired himself out as a ‘lab rat’ to get money for his film. (And he also had time, while in the clinic, to work on the script.) I contributed to my friend’s short film Alptraum. If you’re making an independent feature, you might try to get investors. Cut Up had investors, which my friend and his filmmaking partner found through their landlord (who became the producer), and by crashing a presentation where someone else was looking for investors. As mentioned upthread, money can also come from foundations or such entertainment companies as HBO.
And now I’ve spent entirely too much time posting! I have to get back to my data!