Ready to sign that distribution deal? Not so fast…
There are a ton of blogs and articles out there on indie movie distribution, but one thing that is missing is the reality of how so many filmmakers get screwed in the distribution phase of their journey. Not saying that this is always the case. There are a few companies that are actually filmmaker-friendly, and work to build honest and transparent relationships with their clients.
However, so many filmmakers fall prey to predatory distribution companies. And what is most surprising is that some of the biggest villains are the most “reputable” of companies. For legal reasons we won’t name anyone. And spoiler alert… This blog post shall make a few enemies.
After signing many distribution contracts (some very bad and some okay) I have discovered what is important for the filmmaker to protect. There are a few areas that filmmakers overlook when being presented with an agreement. Obviously, you should always have an entertainment attorney look over a deal before you sign, but make sure you are at least paying attention to these following points. It could save you tremendously.
Also, a special note here. Find a entertainment attorney that has experience with movie distribution.
- The boiler plate deal. Every company has them. These are the pre-drafted distribution rights grab deals that companies send to everyone. DO NOT SIGN THESE AS IS! Take some time to go over them with an attorney. Do not be afraid to rebut these deals and send them back doused in red ink.
- Look for short term deals. Do not sign a deal longer than 3 years, unless you are getting some money up front. It is custom for companies to try to grab as many years as they can. I have even heard of 50 year deals. Do not sign these.
- Keep some of your rights. Do not give a distributor all rights to your picture. Carve out some offerings for yourself. With the emergence of social media and platforms like VHX, and Amazon Video on demand, Filmmakers can effectively market and distribute their films on their own, and actually make some residual income in the process. I suggest keeping the rights to the following: Amazon, iTunes streaming and download. DVD and disc rights for your own website. Any foreign territory that the distributor doesn’t typically sell in. DO YOUR HOMEWORK!
- Keep your ancillary rights, such as sequel rights, novels, comic books, music and merchandising to name a few. The disturb doesn’t need these.
- Look for GROSS DEALS rather than NET DEALS. It is a pretty known fact that Net Deals means you get NET-SQUAT. Gross deals exempt you from having to owe any monies toward the distributor’s expenses. Typically expenses are how most companies make their money. In some cases, companies will create superficial expense caps that are hard to track. In most cases you will be paying them forever. A gross deal is an honest deal. Both you and your sales company start making money once the movie starts selling. That’s fair right? Think about it. You paid money out of your pocket, or an investor’s pocket to make the movie, so why shouldn’t a sales company have some skin in the game. The sales company was already planning to attend various film markets regardless of your film being signed. So what’s it to them to shell out a few bucks for screeners, artwork, a trailer and a few other items of marketing collateral. And look at it this way, if they don’t have the confidence that they can make their money back on your film, then you shouldn’t be signing with them anyway.
- Definition of Gross receipts. There is a thing called sub-distribution. Sub-distribution means a sales company (in which you have granted exclusive rights to) has the ability to cut side deals with other distributors. The monies they collect from these deals are not only hard to track, but in some cases, not counted as the overall revenue intake for a film… UNLESS it is defined in the agreement. Be sure to get your lawyer on this topic early on.
- First right to edit. Do not give a sales company any licenses to edit or revise your film without gaining your permission. This of course excludes the right to subtitle, or break up for broadcast.
- Benchmarks. I saved the most controversial tip for the bottom of this post. Benchmarks are often nasty words for distributors. Benchmarks mean a distributor is on evaluation, and is to be held accountable. Since most agreements offer the filmmaker no representations and warranties that a sales company will do their job, it is up to you as the filmmaker to set goals for your film’s release. Depending on the company and your ability to persuade, you can set benchmarks to keep a company from sitting on your film. Most distributors and sales agents will argue, claiming that they “sell movies. Not sit on them.”, but that is usually false. Companies enjoy having multiple titles in their catalog regardless if they are actively pushing them or not. It makes the company look good to buyers and gives them more leverage to create bulk movie deals with buyers. In order to insure that a company is making all reasonable effort to sale your film, create sales goals for them to achieve by the end of the first year. Otherwise,you should have the right to reduce the term or suspend various territorial rights. You have to understand that most companies are receiving new titles every month. So be aggressive.
- Don’t be afraid to walk. The best deal sometimes is the one you walk away from. Do not be afraid to walk. There are tons of ways to get your movie distributed. Don’t stress about a bad deal. Now, you may not be able to negotiate all of these terms, understanding their importance will go a long way in helping you make better distribution decisions. Take your time and believe in your project.
I hope you enjoyed this post. Best of luck. Happy Hunting!
-Kelly Schwarze
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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