GOING BIONIC: DISTRIBUTING INDEPENDENT FILMS INTERNATIONALLY – FIVE STRATEGIES FOR NEGOTIATING YOUR INTERNATIONAL DISTRIBUTION CONTRACTS!
This week I’m prepping to attend MIPCOM in Cannes, the world’s most substantial television sales market. After sending out e-mails to thousands of qualified buyers worldwide in order to set up meetings for the film and television products my company represents, I was reminded how important MIPCOM is to independent filmmakers. That’s right, MIPCOM. This television sales market is just as important and possibly more important to independent filmmakers than the Cannes Film Market. If you just choked, laughed or spit up your food, you should consider the following truth: most independent films are better suited for television and cable sales as opposed to theatrical release deals. This is because the Cannes Film Market, which takes place during the Cannes Film Festival, is tailored for star-driven and genre-based feature films, not indie features that lack star power. So, if you’re wondering what pasture all the non-star driven indie features graze on, the answer is television and cable!
So, for those of you who are having your films represented at MIPCOM, and for those who will have your work represented in future sales markets, here are five things you should know about dealing with your international distributor/sales agent. While divulging the following five insights will get me in some serious trouble with my competitors and colleagues, knowing this information will help all of you when you negotiate your future distribution contracts.
Avoid Companies Demanding Up Front Fees
It never ceases to amaze me how often filmmakers will get duped into paying up front fees for distribution. The truth of the matter is if your distributor/sales agent is demanding money up front, then they are not very compelled to earn money for your film. For example, if a distributor asks for an up front fee of $15,000, and then settles on $10,000 after you beg them to take less, you may think you’re “getting a deal,” but in actuality, you’re likely buying them a new car, or worse, a house. This is because your distributor is making the same offer to 600+ filmmakers, hoping to lasso 100-200 suckers. Think about it. If 200 filmmakers say “yes,” the distributor earns $2 million ($10,000 X 200 = $2,000,000) before a finger is lifted on any one of the 200 films. Furthermore, paying a distributor up front also kills any incentive for them to make sales. This is because under the scenario above, the distributor has already made $2 million on a crop of films that may not achieve total sales of $2 million collectively, even if they tried to sell them 24/7. Yes, it’s harsh to say that 200, non-star-driven indie films will make less than $10,000 each in international sales, but that statement is painfully true, especially in our tumbling world economy. So, while the distributors whom engage in such practices won’t “take the money and run,” they will “take the money and sit,” meaning they will keep farming on new crops of filmmakers year after year, and they won’t worry about those filmmakers who got angry and took their films away from the distributor. A film lost here and there means nothing to these distributors, because they were paid for their services up front.
Remember, reputable distributors will never ask for up front fees. Thus, the rule of thumb is simple: if the distributor doesn’t think he or she can sell the prospective film, then they shouldn’t be taking it on.
Keep Contracts Less Than 8 Years For “No Advance” Deals
Since 85%-90% of a film’s international territory sales occur in the first 12 months, it’s ridiculous to sign your film away for longer than eight years, in situations where an advance was not paid to you. Three to five years is the fairest length of contract for filmmakers, but eight years seems to be the current standard term length in Europe. Of course, if you received an advance, 10-15 year terms are reasonable, and even up to 25 years in cases when you received five to six figures advance.
Do Not Agree To Having Your Film Sold In A “Package”
Many distributors will sell 100 movies for $1,000 each, to a bottom-feeder buyer. While this is good for the distributor, because they close a $100,000 deal, it royally screws the 100 filmmakers, who are locked into a $1,000 that should be 10 to 50 times greater. Thus, do not allow your distributor/sales agent to package your film.
In the event your distributor/sales agent wants to include your film in a package deal, force them to give your film its own contract. This way you escape being tied into a big ugly mess, where problems with any one of the other films in the deal will hold-up, delay or outright kill the deal.
Urge Your Distributor To Refrain From Selling Your Film To Countries Where Copyright Law Isn’t Observed
Even though China and India are the world’s biggest countries, their value as international film territories is miniscule and primarily insignificant. This is because these countries don’t follow copyright law, and, as a result, all films, TV, music and other entertainment related product are pirated within minutes of being distributed. Thus, filmmakers should urge their distributor to sell these territories last, after every other possible sale has been exhausted. Selling China and India too early will deplete the value of your film to more valuable markets like Germany and Japan, because if 40% of the Earth’s population has access to your film for free, then the other 60% of the planet is going to pay less to see it – or worse – see it for free themselves.
Put A Firm Cap On “Administrative Expenses”
All reputable companies will clearly define how much their services will cost you. Don’t be fooled. Do not agree to a “rolling cap” or a situation where the distribution company/sales agent can tack on additional fees without your expressed written consent. Not paying attention to this clause will allow your distributor to forever keep money earned on your film, instead of being legally obligated to pay you.
Okay people, that’s what I’ve got for you today. Stay tuned for next week’s article, which will be written from me being on the ground at MIPCOM. Until then, thank you for lending me your eyes and I look forward to borrowing them again next Tuesday!
As always, you can also follow me on Twitter @Lonelyseal.
Posted on September 27, 2011 in Features, Going Bionic by Hammad Zaidi
If you liked this article then you may also like the following Film Threat articles:
- GOING BIONIC: DISTRIBUTING INDEPENDENT FILMS INTERNATIONALLY – HOW NOT TO GET SCREWED ON YOUR DISTRIBUTION CONTRACT!
- GOING BIONIC: DISTRIBUTING INDEPENDENT FILMS INTERNATIONALLY – (ALMOST) CRIMINAL CONTRACT CLAUSES, PART 1
- GOING BIONIC: DISTRIBUTING INDEPENDENT FILMS INTERNATIONALLY – PREPPING FOR CANNES 2012 – PART 1
- GOING BIONIC: DISTRIBUTING INDEPENDENT FILMS INTERNATIONALLY – THE WORD ON THE STREET!
- GOING BIONIC: DISTRIBUTING INDEPENDENT FILMS INTERNATIONALLY – READER Q&A SERIES, PART 6
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