By Ted Hope | Hope for Film May 6, 2011 at 10:39AM
Ah, it's that time of year again. I just booked my travel at Cannes; of course I did it last minute. My love for the market is as great as my dislike, alas. The place is filled equally with hope as despair. The promise of wealth and discovery looms with every glass of Rose and Pernod -- and I am not sure which causes my headaches more. That said, I am packing my bag, glad that once again I have a film playing in the official selection. I wish the first time I went I was armed with all the recommendations that regular contributor Orly Ravid has thought to offer us today.
Going to Market or Seeking Distribution
Going to a festival / market such as Cannes is exciting. Wine is often cheaper than water. Almost anything you eat there tastes better than almost anything you'll eat here, even though it is a tourist trap. Somehow, no matter how many carbs one eats, one usually still loses weight either because of the hustling and bustling or the fact that the French make their food lighter even when it's rich and they don't use preservatives when we do.... ahh France. But, I digress.
When searching for distribution at or in preparation for, a festival or market, be clear about your goal and the amount of responsibility you have to your investors. You should be conducting a lot of research before you ever hit the market floor to identify which companies will be a good fit for your film. Depending on your knowledge, experience, willingness to take responsibility and the type of film you have, it may be advantageous to sell your film on your own, or it may be better to use a sales agent. Much is entailed with selling a film in different territories and formats and if you do not have experience in doing so, you may be better off working with someone who does. I have some tips for you to follow regardless of how your film will be sold. The Film Collaborative can help filmmakers who have decided to handle their own sales by evaluating contracts and guiding them through the process without taking the filmmakers rights, but it does depend on the filmmaker’s willingness to actively solicit buyers in the first place. Attracting suitable buyers is a time consuming and costly process (travel, marketing, sales skills), so if you have no interest in doing this, it is better to delegate that work (and your rights) to a sales agent. Before signing on the dotted line with ANYONE, (sales agent or distributor) you will need:
1. REFERENCES: Get references, and then call or email the *other* filmmakers the company has worked with. I am only partly teasing. You should be able to find a list of current clients on their website and you can research contact details for those people. It's great to contact the references actually given, but sometimes it gives a clearer picture to contact a few at random. You'll be shocked by how useful this can be to either comfort you that you are doing the right deal or protect you from being stuck in a deal you should not have done. The Film Collaborative has set up a Distributor ReportCard (a sort of “Yelp of Indie Film Distribution”) to help in the research of this. Check out our Distripedia™ section on our website www.TheFilmCollaborative.org
2. CAP EXPENSES: Define and cap all recoupable expenses and evaluate those based on projections. Spending $30,000 - $50,000 - $75,000 - $250,000 ++ is not inherently bad or good. It depends on the upside and the reasoning. Be clear about what the expenses are for, how much is approved, and if you and 8, 10, or 12 other people are being charged back for the exact same bill. Let's not let that happen. Are you paying for a party in Cannes? Maybe that is what is needed to attract buyers…just make sure that you are choosing to do so and that it makes sense. If the expenses are for distribution, have an idea about P&A budgets for different types of releases, the size of the release, the realistic projection of return and how long that return might take. The bigger the release (theatrical to many cities, large advertising spend, high cost publicists), the more expense is incurred and likely the longer it will take to recoup. And one should have a clear sense of the objectives and projections of the theatrical so one can properly analyze expenses.
3. RIGHTS vs RIGHT TO SELL RIGHTS: Distinguish between the right to represent the rights (example, traditional sales agency could choose to do vs taking all rights) and vs having rights to actually directly distribute (example a sales agency that takes all rights so that it can also then directly do digital distribution or a buyer who buys multi territories but then has other companies do the distribution in most of them, or a company that does not do its own theatrical or its own digital or its own DVD. Extra middlemen mean extra fees means less $$$ to you. You may want a company to have both and take care of it all for you and maybe it’s even the most advantageous deal because of relationships and best terms. Just know what the deal terms will be instead of realizing after the fact. This is especially critical when fees and expenses come into play. You may not want or need your sales agent to directly distribute to digital platforms if you can manage this yourself or they don’t end up even doing that in unsold territories but have your rights anyway, or maybe you do. And that brings me to another point about rights, don’t give any away that won’t be “exploited” as they say in the industry (that’s meant to be a nice thing). I.e. have rights revert back to you that are not properly handled and try to not give them away in the first place without knowing why it makes sense to. And I always like to carve out digital platforms a filmmaker can get onto that a sales agent or distributor does not want or choose to (in collaboration with the distributor or sales agent of course).
4. ACCOUNTING: Make sure you know when Accounting is due and when your corresponding payment is due. Try for QUARTERLY unless you don't like money coming in at least 3 times a year since most will pay no sooner than 30 or 60 days after the end of the quarter. Semi-annual accounting is possibly acceptable later into a term if you have no choice.
5. AUDITING & ARBITRATION: Reasonable Auditing and Arbitration provisions are key so you can have a clear way of investigating. Know where the arbitration will be conducted. “Resolving a matter via arbitration may be less expensive and more expedient than having to sue the distributor, but an arbitration provision may also be less effective at encouraging the parties to compromise prior to invoking arbitration than the threat of a lawsuit,” says TFC's legal counsel Cherie Song, an attorney at McGuireWoods LLP. Also, "a distributor should have an obligation to maintain records of all sales and rentals of the film, and give you the right to inspect such records at reasonable hours with prior notice," she says. "If your audit finds an underpayment, the distributor should pay you the difference within 30 days of demand, and if the difference is more than 5%, the distributor should reimburse you for your auditing costs.”
6. TERMINATION: Also set parameters by which a deal can be terminated. Not suggesting this should be random and exploitive of the sales agents or distributor's efforts, but should they be in breach or become insolvent, one needs a remedy if it’s not cured. “If the distributor fails to fulfill a material obligation (e.g., if the distributor fails to pay the MG or your share of “Gross Receipts”, fails to provide statements or fails to market or distribute the film within a certain time period following complete delivery) or files for bankruptcy, then you should have the right to terminate the agreement with notice, with the rights to the film in unsold territories immediately reverting to you," Cherie recommends. "The distributor should also indemnify you for claims resulting from its breach of the agreement and violation of third party rights. Furthermore, the distributor's payment and indemnity obligations should survive the expiration or earlier termination of the agreement.” And our capitalizing of “Gross Receipts” is on purpose. All terms that have any possible key meaning and affect your deal should be capitalized and DEFINED! Many thanks to Cherie for her impeccable services to our filmmakers overall.
7. MARKETING PLAN: In order to distinguish a knowledgeable and reputable distributor from one who is less so, ask for a detailed marketing plan. For filmmakers to be in the strongest negotiating positions on this, a marketing plan should have already been developed and implemented during production and a fan base already started. The distributor will simply be adding extra muscle to this plan, both in terms of financing and staff. If there is no previous plan, ask to see exact specifics on how the title will be handled in-house and the expenses associated with it before agreeing to a contract. This is of utmost importance as the success of your title depends on these efforts. Without a clear understanding of the strategy, you may find your title simply becomes part of a catalog passed along during markets or part of a library that is rarely exploited. The more effort a filmmaker makes in gathering an identifiable audience for their work, the more leverage he/she has because the film has provable potential.
8. BUILDING AN AUDIENCE YOURSELF: Intentionally putting a fine point on this topic! More and more distributors and sales agents are researching your title just as much as you are researching them. If you haven’t made any effort to build an audience, the perception is maybe there isn’t one. You should be looking at the sales agent/distributor relationship as a partnership not as a savior. This makes your film far more attractive to those companies because they can see the money making potential and their efforts will make the title a much stronger earner. Wouldn't you want to have an edge up on getting a better deal or not even needing one if you had already built an audience around your film well in advance of your first premiere? I know I would. (And thanks to our social network marketing guru / strategist Sheri Candler who contributed to this blog and especially #7 & #8).
9. CARVE OUT SOME DIY: Whenever possible, carve out the ability to sell off your own site and also via your own social networking pages and via other key DIY platforms & solutions. We recently did a blog (April 2011) about these so feel free to check out that info via the TFC site.
10. SPLIT RIGHTS / BE AS DIRECT AS POSSIBLE: If there is one thing I cannot stand is big fees taken out for being in the middle of revenue and not doing much to justify the fee. If a distributor is direct to key retailers and key digital platforms and is doing all or most of the release directly great. But if a distributor is licensing your rights for a not-very-huge-fee and hiring someone else to do the theatrical (and recouping an extra fee expenses) and / or not direct with libraries and institutions (if relevant) and/or not direct with key retailers or digital platforms then why bother? Go direct. Be as direct as possible. Split rights as much as possible especially when there is little investment on the MG side and/or little theatrical P&A side that help justify the rights needed for recoupment.
In closing, I will again emphasize research, research, research. Don't be lazy and then regret later. It may have been more difficult to do this as an average filmmaker previously, but it isn’t difficult now. Take responsibility for your work and the business of it. Ask around. Ask other filmmakers, other companies, Ask us. Ask at least 3 people any given question so you can get a sense of the real answer to the extent there is one.
-- Orly Ravid
Orly Ravid has worked in film acquisitions / sales / direct distribution and festival programming for the last twelve years since moving to Los Angeles from home town Manhattan. In January 2010, Orly founded The Film Collaborative (TFC), the first non-profit devoted to film distribution of independent cinema. Orly runs TFC w/ her business partner, co-exec director Jeffrey Winter.