Independent film distribution deals
Then, as soon as you have a strategy, you have to push really hard. Newman was adamant—and Bocco was reassuring. As distributors, we will collaborate with you to find the ideal approach. But as filmmakers, you should think about this in advance. Ask yourself: Who is your audience? Where will they most want to watch your film?
How will you generate the right kind of excitement? They both agreed: finding the right marketing strategy requires ingenuity, outside-the-box thinking. And whatever the strategy, artwork should play a key role. That gets old. In other words, images without sound—or at least, not heavily dependent on sound—are the new normal. Instead of making a long-winded trailer, you should select short clips. Additionally, make sure you have a few great stills. Why stills? This can make or break whether someone chooses to watch it. Yes, awards matter—if you can land one. If you want a Primetime Emmy, choose a distributor with a background in broadcast.
If you have time for more festivals, choose one where you might win an award. Quinn had one last thing to add. For Newman, DVDs matter for a different reason.
How to Distribute Your Indie Film in the Digital Age
And then, if enough people request your DVD, you may be able to get it on streaming. Is there any way to help make that happen? Again, Newman had an answer. And yes, you may even make money. Download Tekken 3 game for pc subsequently go by means of this guidebook.
Skip to main content. No Film School. Not only can expenses from one territory be crossed against others, but expenses in one media can be crossed against revenues from another. In many instances, a distributor will lose money on a picture's theatrical release and will want to recoup those losses from revenue generated from home video and television. Media Media is the means of exploitation. Many motion pictures are meant for initial exhibition in theaters, the theatrical media. The time period, or "window," during which the movie will play in theaters will be short for a flop, while a blockbuster can play for many months.
After the theatrical release, a picture may be distributed and exploited in the so-called allied and ancillary markets, which includes home video, non-theatrical colleges, community groups , pay television HBO , network television ABC and television station syndication. The film may also generate revenue from merchandising, publication of a movie novelization and a sound track album. The nomenclature may be misleading because the so-called "ancillary" media now generate most of the revenue.
In the United States, home video revenues are about five times theatrical revenues. A theatrical release is still primary in one important respect. Although the theatrical release may not generate net revenues - because of the considerable cost of print duplication, advertising and shipping - the theatrical release creates public awareness for the film. It is the engine that pulls the train. When consumers visit video stores, the cassettes they rent or buy first, are the movies they learned about from the advertising and publicity accompanying their theatrical release. Ancillary media tend to be much more profitable than theatrical media.
When a distributor releases a film to television, there are minimal expenses. If you license a film to CBS, for example, the expenses incurred are the manufacturing cost of one video sub-master and expense of shipping it to CBS.
The distributor does pay for advertising, as CBS will promote the movie. Thus, most of the revenue from television licensing flows to the bottom line. Because a theatrical release is often not profitable, and because the ancillary media frequently are profitable, most domestic distributors will decline to acquire only theatrical rights.
They do not want to take the risk of a theatrical loss, without the offsetting revenue that can be obtained from the ancillaries. Consequently, filmmakers need to exercise caution. If they license home video and television rights first, they may find they cannot obtain a domestic theatrical release. In fashioning a grant of rights clause, filmmakers will want to retain rights to media the distributor will not actively exploit.
It has become fashionable for distributors to ask for multimedia and interactive rights although few exercise these rights. Indie filmmakers normally grant a distributor three media: 1 theatrical, 2 television all forms including pay TV, cable TV and broadcast , and 3 home video distribution by videocassette, laser disc and DVD. Filmmakers should expressly reserve all other rights including dramatic play , radio, electronic publishing, merchandising, music publishing, soundtrack and print publication rights, although the distributor should be granted limited radio and print publication rights in order to advertise the film.
Remake, sequel and television spin-off rights are usually reserved to the filmmaker. Term Distributors tend to ask for long terms, often 10 years or in perpetuity. It is not in the filmmaker's interest to have an unduly long term. A distributor's enthusiasm for a film wanes as the years pass. This can be frustrating for the filmmaker, especially if he has the desire and ability to promote the film. The filmmaker may need to negotiate a reversion of rights from a distributor who has done an inept job of marketing the film. A filmmaker is well advised to license his picture for a short term one to three years.
One can appreciate, however, that distributors who disburse large advances or spend a great deal on marketing, will want a longer term to ensure that they can recoup these costs. A good compromise is to give the distributor a short initial term followed by a series of automatic extensions if performance milestones are met. For a low-budget film, the contract might provide an initial term of two years, and if the distributor returns X amount of dollars to the filmmaker during this first period, the term would be extended.
There could be a series of such rollovers, with the total number of years capped, perhaps at ten. There is another "term" that should be addressed. This is the term of any license the distributor may grant to a third party. Unless the contract restricts the distributor, it may license rights to territory buyers for any length of time. A filmmaker is wise to limit third-party licenses to 12 years, except for Germany, which often demands 15 years.
What a filmmaker wants to avoid, is discovering that a distributor near the end of its term, enters into a series of long-term agreements with third parties at fire sale prices. The distributor may figure that since it will soon lose all distribution rights anyway, it might as well take whatever it can get. Distribution Fee Distributors generally take a distribution fee based on a percentage of gross revenues. This maximizes their fee as it will be a percentage of a larger sum than if the fee was based on revenues after deduction of expenses.
In many instances, after the distributor takes a distribution fee, and recoups its expenses, there may be nothing left for the filmmaker. Distribution fees vary by territory and media. The distributor bears all distribution expenses. Keep in mind that the price charged retailers for some films are at a much lower, so-called sell-through price e. At other times, tapes are sold to retailers on a revenue-sharing basis. Most of the major studios, and independent operators like Rentrack, now supply video cassettes to retailers on this basis.
From the filmmaker's point of view, the royalty approach has the advantage of ensuring that the filmmaker shares in revenue even if sales are modest. Moreover, since the filmmaker's royalty is calculated on the number of units sold, less returns, there is much less room for creative accounting. Licensing a film for television may entail little more than contacting HBO and offering them the film. Delivery is accomplished by shipping a video sub-master, accompanied by artwork and perhaps chain of title documents. More effort is involved in selling to the numerous pay per view, pay cable, basic cable and broadcast outlets.
A distributor may be able to arrange for a series of sales to different distributors, giving each a "window" of time to exhibit the film. Care must be taken to ensure that the windows are coordinated so that there are no conflicts, and to ensure that maximum revenue is obtained. Once a film has been exhibited on basic cable, for example, it may not be desirable to pay cable buyers. The order of the windows for release of product is generally: theatrical, home video, followed by television. Within the television window, the order is pay-per-view, pay cable, network broadcast television, basic cable and broadcast syndication.
Note that most indie films are not licensed for network broadcast. The aforementioned order can be varied. Sometimes a network is willing to pay a premium to obtain an earlier window. Likewise, HBO acquires a limited number of completed films and distributes them as HBO premiers, meaning that these films premier on HBO without a prior theatrical release.
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The sales agent will be allowed to recoup certain distribution expenses after deducting its fee. The balance will be paid to the filmmaker. Note that gross revenues are usually defined to be a sums less than true gross. Gross is receipts actually received less any refunds, collection costs, currency conversion, wire transfer and bank costs, withholding taxes and any duplication or manufacturing expense incurred to deliver materials to the foreign buyer.
Some countries may not allow licensee fees to be transferred out of the country. In this event, the filmmaker's share of the frozen funds are deposited in a separate account in the foreign country in the name of the filmmaker. If these funds cannot be repatriated, the filmmaker will have to spend them in the foreign country. Sometimes these frozen funds are spent for a foreign vacation, or to produce a film. Such a film is a revenue-generating asset that can be removed from the country. The fee paid by a territory licensee usually does not include the cost of manufacturing film prints, video sub-masters, key art or other materials needed.
Most of the time these expenses are paid separately. Either the foreign buyer will pay the laboratory directly, or the sales agent is paid for these items.
Some sales agents may mark up costs in order to earn additional revenue, a practice that is often not disclosed to filmmakers. On the other hand, if duplication costs are included within the license fee, this will inflate gross revenues, increasing the distributor's commission.
Distribution And Marketing Expenses The distribution agreement should clearly define the nature and extent of expenses the distributor is allowed to recoup. Many filmmakers are shocked to discover that much of the money generated from their film will stay with the distributor in the form of distribution fees and reimbursement of expenses. Some distributors will acquire films that they expect will sell poorly, knowing that whatever revenue is generated will help the distributor cover its operating overhead. These expenses might include the rental of a suite of rooms to serve as market headquarters, airfare, local transportation, lodging and meals for staff, shipping, duplication of video cassettes, and entertainment of foreign buyers.
If the foreign sales company is marketing 10 films, the cost might be apportioned equally among the films. In this scenario the filmmaker's movie benefits the distributor while the filmmaker receives little in return. The distributor gains in a number of ways: first, it earns a distribution fee; second, the distributor covers its overhead to attend markets.
If the distributor has one or two of its own films to license, that revenue will not be offset by overhead expenses because these costs are covered by films acquired from indie producers. Third, the distributor benefits from the advertising paid for by the filmmakers. These ads often promote the distributor as much as any film. Fourth, the distributor may earn fees by marking up the cost of various deliverables and pocketing the profit.
Fifth, the distributor may secretly receive kickbacks from poster designers, trailer makers and laboratories. Finally, the distributor may profit from various accounting games played with revenues and expenses. Expenses incurred on one film may be misapplied to another, or applied doubly. Filmmakers may find themselves "reimbursing" the distributor for more market expenses than were actually incurred. While a filmmaker may not be able to control a distributor's expenses, the filmmaker can restrict which expenses the distributor is allowed to recoup.
It is often useful to categorize expenses and restrict each type. I like to divide expenses into 1 market expenses, 2 promotional expenses, and 3 direct distribution expenses. Since these terms do not have widely accepted meanings, the drafter must precisely define each. Market expenses include airfare, hotel, shipping, telephone and staff expenses to attend a market. These expenses should be recoupable for the first year of distribution only, and limited to those markets which Distributor attends.
The distributor should agree to attend no less than three 3 markets during the first year of distribution. No market expenses should be charged for subsequent years. Promotional expenses include the cost of preparing posters, one-sheets, trailers and advertising. The distributor should agree to spend a minimum amount of money the floor and a maximum the ceiling or cap. These expenses are limited to direct out-of-pocket expenses actually spent on behalf of the film.
The agreement should provide that, at the producer's request, the distributor will provide receipts for each and every expense or forgo recoupment. Recoupable promotional expenses do not include any of the distributor's general office, overhead, legal or staff expenses, nor any of the aforementioned market expenses. The filmmaker may want a provision that requires the distributor to spend the minimum amount necessary to adequately promote the film, including preparation of a trailer, poster, one-sheet, videocassette and customary promotional material.
If the filmmaker has created his own poster and trailer, for example, the cap on expenses should be lower. The category of direct distribution costs includes all reasonable and verifiable costs incurred in connection with the distribution and sale of the motion picture. Such expenses might include, long distance phone charges, photocopying, fax, shipping and courier charges, clearance and brokerage fees, warehouse and handling charges, insurance, bank transfers, taxes and duties, and the cost of manufacturing any delivery item that the filmmaker fails to deliver.
Duplication of screening cassettes and program master tapes, transfer to PAL format, dubbing, creating a foreign language version, and manufacturing of promotional material may be recoupable as well, provided that these expenses have not been paid for by the territory buyer, and they have not been recouped as a market or promotional expense.
Direct distribution expenses can be capped at a dollar amount or on a percentage basis e. Advances And Guarantees There are a number of reasons why filmmakers benefit from receiving an advance payment toward their share of revenues. First, if the distributor is dishonest or goes bankrupt, the advance may be the only money the filmmaker ever collects. Second, the filmmaker can immediately use the advance to pay outstanding production expenses, debts or to repay investors. An advance is useful because there is often a considerable delay from the onset of distribution to the receipt of revenue from territory licensees.
Moreover, revenues are applied first to pay distributor fees and expenses. Third, if a distributor has paid a significant advance to secure distribution rights, it has a strong financial incentive to sell the film. Advances are recoupable the distributor can recoup this payment from revenues , but they are not refundable if the film generates insufficient revenue for the distributor to recoup its advance, the filmmaker does not have to return the advance.
Advances are either paid on execution of the distribution agreement, or after delivery, inspection and acceptance of the master materials. If the filmmaker fails to make delivery, or if the materials are defective, the distributor may refuse to pay the advance. It is best to give the distributor a limited period to inspect materials and raise objections.
If materials have defects, the filmmaker should be allowed a reasonable opportunity to correct them. I like to give distributors no more than 30 days to have the laboratory run a quality control test. The distributor has a legitimate interest in ensuring that the film materials are adequate to make copies that will be acceptable to licensees. What a filmmaker wants to prevent, however, is giving the distributor a loophole to wiggle out of paying an advance by taking an unduly long time to approve deliverables, or by allowing the distributor to falsely claim the materials are defective in order to avoid paying the advance.
If a distributor claims deliverables are defective, and the filmmaker disagrees, or the filmmaker cannot fix the real or purported defects, the filmmaker should be able to void the distribution deal and regain all rights to the film. If the advance is paid in installments, then the arrangement is more properly characterized as a guarantee. Of course, a guarantee is only as good as the financial health and integrity of the guarantor. If the distributor goes bankrupt, or if sales are less then expected, the distributor may renege on its obligation to pay the guaranteed amount.
Distribution agreements should always specify the deadline by which time the guarantee must be paid. In the current marketplace, many distributors decline to pay advances or guarantees for low-budget films without name actors. Dealmakers need to be creative in devising formulas that protects the filmmaker's interests while not imposing an unacceptable burden on the distributor.
In other words, regardless of the amount of money due the distributor in the form of recoupable expenses or distribution fee, at least 50 cents of each dollar received will be remitted to the filmmaker. An unrecouped distributor may recoup the balance owed from future revenues, if there are any.
This device will preclude the scenario where a distributor acquires a film, makes minimal sales, and retains all the revenue. Consultation Rights Distributors often grant filmmakers consultation rights. This right may include consulting the filmmaker about the artwork, selection of theaters, and the amount and type of advertising purchased. Consultation rights usually do not mean much because the distributor is only obliged to consult the filmmaker, not follow his suggestions.
Distributors often insist on having the final say because: 1 they have more expertise on distribution matters than the filmmaker, and 2 they are advancing marketing costs. These deals are often referred to as "service deals," or "rent-a-distributor," deals. They permit the filmmaker to use the distribution apparatus of a distributor for a fee, often a percentage of the revenues generated. The distributor might receive a distribution fee of In those instances where filmmakers do not have control over marketing, they may still be able to restrict the distributor from editing or changing a film or title without the filmmaker's consent.
The distributor may be limited to editing for censorship purposes, adaptations for television broadcast e. Warranties And Representations Distributors routinely require filmmakers to warrant certain facts, and indemnify the distributor for any loses or legal fees incurred from a breach. Since the distributor was not present when the script was written, or the movie produced, the distributor doesn't know whether the filmmaker secured all the rights needed to exploit the film.
The distributor wants to ensure that the filmmaker has a clean "chain of title" to his work. To fully own a film, the filmmaker needs to secure film rights to the script and any underlying literary property, obtain depiction releases from the actors, and secure work-for-hire agreements with the director, editor, cinematographer and anyone else who makes a creative contribution. The distributor will also ask the filmmaker to warrant that the film doesn't violate any third party rights, including actions for copyright or trademark infringement, invasion of rights of privacy and publicity, and defamation.
Astute filmmakers will demand that the distributor make some warranties of its own. Many of the 37, screens in the United States are concentrated in urban areas. A popular movie might fill the seats in several theaters in the same city while another movie would have a much smaller audience. Most theaters use buyers to represent them in negotiating with the distribution companies. Large chains such as AMC Theatres or United Artists employ buyers while small chains and independent theaters contract with a buyer. The negotiating process is very political.
The buyers often will accept a movie that the theater is not very interested in to make sure they get a film they really want. Distributors try to balance the movies they lease to theaters in the same local area to make sure all of the theaters will continue to work with them. Sometimes a theater will get an exclusive or special engagement to premiere a movie in its area.
A Guide to Independent Film Distribution in the 21st Century - Film Independent
Once a buyer is interested in a movie, the lease terms are discussed. How the Cannes Film Festival Works. How the Oscars Work. How Movie Distribution Works. The Art of the Deal. Prev NEXT.