Think you know what a movie distributor actually does? Think again…
In today’s post, I wanted to go over the topic of what a movie distributor is and actually does. Now, I know my last post was about the same topic – roughly. But, I think distribution is such an important conversation to have for filmmakers because it’s one of the most overlooked aspects of the process. Without financial planning, knowing the marketplace and how the game is played, a filmmaker’s journey is fruitless.
I think the first step is really understanding what a distributor actually does. A lot of filmmakers have a misconception of what a distributor is and does. They often think of these magical entities as the end-game for their projects. They are often thought of as companies that will take titles, pay lots of money for them and sell them across the world. Now, that maybe true in some cases, however the reality of labels are quite contrary.
One thing to note is that most companies that call themselves distribution companies do not actually distribute anything.
A distribution company (in its classic sense) is a fulfillment company, or a company that actually takes a product manufactures it, ships it and distributes it across a marketplace. Most of the companies that list themselves as film distribution companies, are more or less sales agents, who sell properties to exhibition companies such as Netflix, Amazon and iTunes, Walmart, eat. You get the point – right?
So why is this important? Who cares – right?
It is important to note the functionality difference between the two, and I’ll get to that in a moment. But first, let me say this:
You have to start thinking about sales companies as partners and representatives of your creative endeavor.
In all honesty, they work for you. Now, they can certainly choose whether or not to sell your title, but if they do except to represent your film, then they must act accordingly to your desires and goals. This is why the distinction is important to me. The term “distribution” in the movie industry has been misused, and is often held as a power card term over filmmakers who feel that they need such companies to find audiences and success. This is not the case. Finding your audience is on you. The job of a sales company is to position you for various markets, and do their best to sell you in areas you can not reach on your own. I feel that its important to humanize these so-called big shots and bring them onto a level that gives you some confidence. Think of your sales agent as your real-estate agent. If you don’t like the one you have, you can certainly find another one.
I drive this fact because there are only a few actual “distribution companies”, out there, but are literally thousands of “sales companies.” Distributors are the actual distributors of content. They are paid based on fulfillment from exhibition companies. Exhibition companies pay money for the rights to titles. Now let me be clear, you most likely will never be able to deal directly with an actual distributor or a exhibition company. They only deal with third part aggregators or sales agents, like the ones that would be representing your movie. So its important that you find a good sales company to represent you. But again, they need to be aware of your goals and working on your behalf.
So how do sales companies actually do business?
Well let’s take a second to look into this from a market perspective.
There are over 30 different film and television markets across the world. They happen pretty much every single month, and in various countries and territories all over the globe. In some cases, these film markets are film festivals. For the most part, these markets are essentially industry conventions where buyers and sellers of motion picture and TV content gather to make deals. There’s nothing magical or mysterious about these events. Moreover, most of the sales agents or sales companies that attend these events, rent booths to showcase huge catalogs of titles.
Typically, a sales company will bundle titles and sell them for one price to various territorial buyers.
So for example: If Company X has your film, plus ten other movies from different filmmakers, they sell all of these titles as part of a bulk deal to their buyer of Australian programming, the revenues are split among the group of filmmakers, and a distribution fee is deducted from each of the films separately.
Sounds like the stuff that comes out of a horse’s rear-end, right?
The biggest downside to this, is that most sales companies have dozens of new titles coming in quarterly. So unless your title stands out, or as has a talking dog on the cover, it is easily possible for your movie to be buried in a catalog somewhere. Plus with bulk deals like this, your margin of return is very low, and getting your rights back becomes a tricky situation.
This another reason why it’s important for you to do your due diligence, and make sure your entertainment lawyer puts benchmarks in your contract to make sure a sales agent is giving you the proper attention you deserve, or giving you the ability to pull out of a deal if it doesn’t hit particular financial goals.
There’s also another component to sales company. Most people think that independent movies are marketed by these types of companies. In fact, 90% of low-budget genre movies are marketed 0%. This means the distributor will put absolutely zero money to market and promote the film. This is of course with the exception of creating a trailer and poster art which amounts to like a dinner at Sizzler. (By the way, Sizzler is delicious… Deliciously affordable!)
Moreover the distribution fees that are attached to most agreements, are not necessarily split among the vast catalog movies that are in one particular company’s portfolio. This means that if a tradeshow cost a sales company $20,000 to exhibit for the week, then out of the 300 titles that they have showcased at their booth, each of those filmmakers are absorbing almost 100% of the cost.
Now how does that make sense? Well that’s exactly why I do these blogs.
Trade show expenses should be split fairly, but sales companies like to apply expenses for markets to every single film they represent. This allows them to make their money essentially off of one title, and profit on the rest.
This is another reason why it is so very important for you to minimize net deals, and start moving your film contracts to gross deal contracts, eliminating distribution fees and expenses, and starting creating goals for the sales agent to meet. This prohibits a sales company from charging you anything they want, and keeping you further from the recoupable range.
A Sales Company’s expenses for attending film markets and creating artwork should be a part of their percentage intake. It should not be a part of a separate fee that’s tapped onto your sales report. Be sure to have an entertainment lawyer go through your contract before you sign it. Make sure there is a definition of gross receipts. Also make sure that there are no hidden distribution fees that are tacked onto your agreement. And if you can, have a transparent accounting record, and limit your movie being sold as a part of a bulk deal.
By protecting yourself, you may scare away some reps , but do not be afraid. There are plenty of sales companies out there. They need titles more than you need them. So, I leave you with this thought…
Be sure to draw the line. And do not be afraid to walk away from a crummy distribution deal. The best deals are sometimes the ones you walk away from!
I hope you enjoyed this post. Best of luck. Happy Hunting!
Kelly Schwarze is an Emmy © Nominated filmmaker who has written directed and produced 6 feature films, dozens of music vides and commercials, and has owned successful media companies in Las Vegas.
Kelly also does one-on-one consulting for filmmakers. Click here for more details.
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