IFH 228: How to Deal with Residuals & Paying Back Investors with David Zannoni

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Have you ever had to deal with paying out investors, guilds, unions, residuals, and producers from the revenue your film makes? Today’s guest is David Zannoni of Fintage House, does just that but on a global scale. David helps you, the producer, ALL the rights for your film globally.

Now, this is a subject I didn’t know I needed to know about. After meeting David at AFM I knew I had to have him on the show to drop some knowledge bombs on the IFH Tribe.

In today’s film industry, it is customary for independent film productions to have a collection account in place. Often film financiers, (international) production companies, sales agents, and lawyers representing any of these parties require the establishment of a Collection Account before they step on board of, or have their client commit to, a project.

What is exactly a Collection Account? A Collection Account is an account opened in the name of an independent, neutral, trusted third party, the so-called Collection Account Manager or simply the CAM. The CAM receives into the Collection Account the revenues generated by the worldwide exploitation of the film from the distributors on behalf of the beneficiaries of the film.

This is called Collection Account Management. This ensures that each beneficiary of the film will receive its share of the revenues. Beneficiaries include the sales agent, the producers, (institutional) financiers, talent (writers, directors and actors) and equity investors in the film.

A Collection Account is set up in the name of the CAM. The film’s sales agent or worldwide distributor subsequently instructs the local distributors of the film, in each territory and for every media window, to pay into the Collection Account the royalties generated under the distribution agreements.

To make sure distributors actually pay to the Collection Account, the sales agent includes the details of the Collection Account in the distribution agreements, the invoices it sends to the distributors, or by means of sending a notice of assignment to the distributors advising them of the existence of a Collection Account for the film.

The benefits of having a Collection Account in place are amongst others:

  • Protection of revenues
  • Avoidance of conflicts between parties of interest
  • Creating transparency in the accounting side
  • Outsourcing of the film’s administration

Here’s a bit on today’s guest.

 

David Zannoni negotiates agreements for films and television series for Fintage House clients, is involved in business development, maintains relationships with clients specifically in the US, Latin America, and Spain, and represents Fintage at film markets.

On behalf of Fintage House, David has given presentations, workshops and seminars at universities across the globe and at events such as the yearly conference of the National Association of Latino Independent Producers in the US (NALIP), the Winston Baker Film Finance Conferences, the Rio Film Market and the Bogota Audiovisual Market (BAM). David currently resides in Mexico and speaks fluent English, Spanish, Italian and Dutch.

Enjoy my conversation with David Zannoni.

Alex Ferrari 0:02
Now, we're going to get into the weeds a little bit today with today's guest, David Zannoni, of vintage house. And we're going to really get into the weeds on how you manage rights of your movie, how you're able to get investors paid back properly, how to protect yourself as an independent filmmaker. It's really some amazing stuff. And I met him at AFM this year. And we hit it off. And I said you have to be on the show. filmmakers just don't understand this and don't under it's just a completely, you know, covert world that I had never even heard of. And I've been in the business for over 20 odd years. So I know a lot of you guys haven't heard about what he does, and tricks to kind of protect yourself on on working with investors, working with unions, and so on. So without any further ado, here is my conversation with David Zannoni. I like to welcome to the show David Zannoni. How are you doing, brother?

David Zannoni 3:11
I'm doing very well Alex, thank you for having me.

Alex Ferrari 3:14
Oh, thank you for coming on, I bumped into you at AFM. And we have our mutual friend rb, from stage 32 that connected us. And once I started talking to you, I was fascinated by what you do. And and I think you could be of a service to many filmmakers, because it's just something so mysterious that I really never thought about. So before we get into what you actually do. How did you even get into the business? And why are you Why are you in another business instead of this crazy one?

David Zannoni 3:46
That's a very good question. And Alex, you know, first of all, I'm I'm from Holland. So my, my story about getting into the film business is probably different from many other people, especially in the US. So I was I two of my passions are basically traveling and, and languages. And when I was in my mid 20s, which is about 10 years ago or so, I just returned from from living and traveling and working abroad in Italy and Mexico when I was basically in the Netherlands, just looking for an opportunity to travel and to speak my languages and to do international business. So at some point I run into this small company and enlightened small town near to near Amsterdam, which was in the film business doing everything basically internationally working obviously with we're producing Hollywood's but also people in in Spain and Latin America. So I was I was impressed. I was fascinated by it. I didn't know anything about The film business other than you know, that I like watching films, but I didn't know anything about how how the Independent Business worked at all. And I applied and they hired me. And that's when I started my journey in this descretion business, Alex, that's awesome. That's awesome.

Alex Ferrari 5:20
Yeah, the film industry is is a very seductive siren. It is. And I have to say, I mean, in the beginning, I seriously, I didn't know what I was doing. Because you know, and maybe this is different from for many of your other speakers, you know, the business, I'm in side of business collection account management is it's not a creative, not the creative side at all. It's, it's really the, the business side. So I had to start working on collection account management agreements with independent producers and multi party agreements. So I had to learn everything from from scratch. And, you know, if you're from a small country, outside Los Angeles, but you know, even outside other, let's say, international financial centers, or local films like London, for example, but even Madrid or Paris, and it's very hard to show, there's no comparison. There's, of course, there's a Dutch, a Dutch film industry, but it's generally local, and it's small. And it's, it's, it's not that, let's say that office that you run in, it's not like in Los Angeles, wherever you are, that you meet people who are one way or the other involved in the film business, right? They are producers or, or people working at Starbucks, and, you know, one of the writers, that doesn't happen at all it does. A little tiny lighting. So, so yeah, that that's, that's gadget.

So tell me what you are doing today. Exactly.

David Zannoni 6:55
Yeah. So, you know, my, my focus on behalf of vintage house is on its own collection account management for independent film and television productions. Okay, so and that's, like I said, completely on the on the business and legal side. So others would work, independent production, independently produced, financed and distributed. With all the risks on the on the collection and allocation of revenues, because generally, a film or television series impendent project is sold to distributed independent distributors worldwide. And those distributors pay minimum guarantees and basically licenses to or royalties to license to films locally. You know, they pay them in principle to the production will be the LLC, for a US production. And from there, they're pretty cool company as the the commitment obligation to pay all those beneficiaries, all those people who have been involved in the film and have a financial interest in film. So whether that's repaying of investors finding Sears or dissociation cells to film internationally, our talents, right, whether that's deferred a producer fees, for example, a bookshelf, the bonuses. In principle, the production company has all those those commitments. And basically, what but but but but we do, we, we open collection accounts, single can single accounts per fill. And though the distributors rather than paying directly to the LLC, they pay to this collection account, which is a single purpose account, it's only set up for that specific film, and it's only purposes to receive the revenues from the cell international revenues and to distribute them amongst the beneficiaries of after sale.

Alex Ferrari 9:05
Investors, investors,

David Zannoni 9:07
Investors minuses, yeah, guilt you're important to mention. So the only thing we actually do is precisely that we receive, we receive those those revenues for the film, and we distribute, we allocate and distribute those revenues amongst the beneficiaries. And we do it pursuant to a collection account management agreement, single standard loan agreement we entered to with the production company, and the parties were the main financial interest in the film. And the position we take on as a collection account manager is completely neutral. So the only really the only job it has is to receive and allocators revenues completely, literally, in accordance with the collection agreements. So by doing this, it basically provides in, let's say and gear Tea to the beneficiaries and film. Not the distributors pay for the film. But once the our revenues generated and are properly paid by the distributors to sell the local distributors to the collection account, we basically guaranteed those monies are paid in accordance with the recoupment schedule, the conditions, the terms and conditions, we agree in the collection account management agreement. That's, that's basically the the, the whole essence of of the search.

Alex Ferrari 10:31
So you, you're basically a babysitter for the money coming in. And a lot of ways, you're like, Look, look grown up, the money's gonna come to me, and then I'm gonna give it out to everybody. And we're not emotional about it. We're not, there's nothing creative here. We're strictly a service. And we all you basically just, yeah, in many ways, you'd like the babysitter in a good way, in a good way.

David Zannoni 10:54
I think that's the best summary, the best definition I've ever heard about it, but it's certainly true. I mean, and it's it's it's precisely that so all those you know, if everybody who's who's worked on a film project has produced a film that are generally show many people involved in an independent film project, and everybody has his or her interests in in the film. So these parties need a neutral third party basically, to take care of, of something which is extremely important to everybody. But nobody really has to focus on from the beginning, right, we always say the producer focuses on producing the reality, you know, focuses on getting films made. The sales agency focused on selling the financier wants to investor wants to bring in money in the film and wants to recoup investment. And I usually this this is this is not centralized, to show through through a collection account manager, you basically centralize the whole business side of receiving and allocating revenues. And indeed, there's nothing creative about it. It's it's completely, you know, just just completely robotic in a way, right that the only thing we do is Debian so there's no argument possible that it's, you know, it's impossible, it will be impossible to say, you know, what, this is what we did the amendment, or in the in the agreement, for example, $100,000 per user fee payable to body and the body wants to renegotiate or spaced instructing the collection covenants manager to pay differently, there's just no way. We only strictly follow the agreement.

Alex Ferrari 12:35
Got it. So David, what, what is the biggest mistake you see filmmakers make with payment structures for investors, because I know a lot of you know, a lot of filmmakers have no idea of like, what should be a proper, you know, payment structure? What would you say?

David Zannoni 12:50
It's, that's a good question. The biggest mistake, I mean, I don't, I don't really think you can define it as a mistake. I think it's for every filmmaker, for producers making a film is a journey and many people, many dependent producers, it may take years before the film was actually made. So it's not like that there is a you know, and a certain guide or that that people have experienced to put this all together. But but I do think is that when people maybe rather than speak to mistake, when people do not really realize is how, how complicated destructions can become. And also the fact that that that that independent film production, and finding finding schedule is very often made of several single pieces who all independently create commitments, right? That means that, for example, that the producer has the commitment to pay maybe four or five equity investors, but at the same time, and all in order to get it to make to get the film made. Right. So maybe at the same time there isn't agreement with an actor with a director to defer compensation. So that's another commitment. And there there may be at the same time the obligation to pay residuals, right? If there are if, for example, actors are guild members. So all these single obligations are usually each of these obligations. It has its own deal and agreement with its own language. I think the people that that for filmmakers, it's, it's not even the question of whether whether they make a mistake, they realize it's just very often too much to deal with. While you're marketing

Alex Ferrari 14:42
While you're marketing it while you're trying to get distribution. While you're you know, you're getting your next project set up.

David Zannoni 14:49
Yeah, I did. And what's also very important to mention, you know, many of the filmmakers, independent producers, they make maybe won't film each each, you know, a couple of years. It's it's a lot of work on on one project, where as for example, the show's agents who sell the film, they may do 10 or 20 or 30 films, you look, look at myself, Alex, I've, I think we from from vintage perspective, but speaking, we do about 140 150 films a year. I think personally, I see probably one way another maybe 4050 films a year. So you see a lot more. I mean, the involvement is a lot less less, not less in detail. But you see all the structures, you see all the bodies, you see how people handle our people, how people deal with issues. And it's for an independent film filmmaking developers is a lot more difficult. So I think that's probably but but for independent producers, the biggest hurdle you're getting getting together, the payment structure, the recoupment schedule, how we call it, which is basically a waterfall. So putting all those single commitments in terms of allocation and disbursements of revenue, so repayment of investments, the deferred producer fees, back end participants to put it all together in one schedule, and get everybody to sign off on it. So all those parties with the financial inclusion feel that's probably the biggest, you know, challenge, let's call it a challenge for filmmakers.

Alex Ferrari 16:26
It seems like it's it's such a massive thing you have to deal with. And if you're not, you know, good at it, or have experienced doing it. It could be very unruly, and I know of many filmmakers who get called back, you know, like, Oh, you know, back payments on the DGA, or the Writers Guild or this investor didn't get the money they exactly wanted, or the back end points and all that kind of stuff, it gets really hairy really quickly. So having something like this really helps things out. Now, how would a film producer normally deal with sag residual payments if they didn't use a service like yours?

David Zannoni 17:03
Yeah. So basically, in a nutshell, and film producer has two options, either if there's if the sag is involved, they can either paid out of the budget to residuals or they can make a payable out of the revenues. Now, if the moment that residuals are payable out of the revenues, that the SEC basically enforces, or or they they're obliged to produce it to, to enter into a collection account management agreement. If it was without a collection account, then then the distributors of the film, so the moment that the that the sales agent, on behalf of the producer start start starts to sell the film internationally, all those single distributors, and they were talking maybe about 20 or 25, territories, right, different territories, and different MTC, etc, then those revenues would go typically, first to the to the agent to the shelf agent, the sales agent who's in accordance with the sales agency agreement, Dave says commission and expenses for the remainder to the to the LLC, the pension company, and that

Alex Ferrari 18:17
Those expenses can be a little bit pricey sometimes. That's

David Zannoni 18:22
That's the issue and and, you know, if if anything, I mean, whatever ends up with the production company, the producer would then it would still need to hire always should pay more house to calculate the residuals and, and pay those residuals. But whether whether we're talking about payment of residuals, right, or repayment of an investment, or deferred producer fees, at the end of the day, the whole structure of selling the film, distributing the film, receiving those revenues through Association and from there, as independent producers having to deal with all those single payments. And again, in accordance with all those single agreements and the single guilty terms. That's probably the the biggest hassle, the biggest risk. So and if if the producers do not deal with it properly, then they have obviously a huge issue with with the SEC. So without a collection account, they have to would have to deal with it themselves. And from experience nine out of 10. You know, that's a that's a real real challenge.

Alex Ferrari 19:33
Now, how did distributors generally pay out to producers, for people in the in the audience who don't know exactly how that works?

David Zannoni 19:41
Sure. And first of all, you referring to distributors to the local distributors, you're referring to the agents shield agents selling the film internationally.

Alex Ferrari 19:49
And I'm talking more about the distributor. If everything goes through a sales agent, there's one way if you used to make a deal with a local distributor here in the United States, let's say so you just you go with gravatar so you go with a 24? Or you go with any of these guys, how do they normally, you know, how to how do payments come out generally? And how do they get to the producer? And then and then please explain that sales producer aspect of it as well as sales aspects as well.

David Zannoni 20:16
Okay, so yeah, are there a couple of different deals that that produce basically can can make with distributors, it's can be straight distribution can be an mg. If it's straight distribution, it completely depends on how the film basically performs locally. And you know, when it comes from the from the theaters, from the exhibitors to the distributor, there's a certain mechanism, the split between distributor and exhibitor, it ends up with the distributor, and then there's, and that's all negotiable between producers and distributors, there's a certain formula between in terms of split between a distributor and unlicensed or producer. So at the end of the day, only a small portion of the revenues end up with the producer. Now, if if the distributor has expenses to recoup, which could be you know, being a distribution expenses, etc, it may well be that if the film doesn't perform properly, that there's nothing that for the producer and the whole, the whole charge is obviously to make sure that the distribution distributors accounting is is proper, and that's been up to date, you know, it is so this is a very delicate, gray area. Great. Let's go the gray area. Yeah. Now, if it's a minimum guarantee, you know, it depends on on what the secret but it's usually a couple of installments, two or three, and they pay those those installments to the the production company

Alex Ferrari 21:47
Generally by quarter.

David Zannoni 21:49
Yeah, indeed. And if there, if there is a collection account in between those monies would go through the collection account on behalf of the of the producer right now. And that's let's say domestic distribution and international distribution. A, the traditional way is for producers to hire sales agents. The sales agent has its its its own infrastructure, its relationships, context with local distributors. And it basically on behalf to producer sell stole stole the rights to to local distributors. And it's very rare to see straight distribution deal. So it's almost always made him guarantees. And that's the same thing, it's a couple of installments. The distributor basically pays. And again, it could be two or three or four installments. And those revenues would without a collection account, first go to the sales agent from the shell say to do production company, whether collection accounts, the distributors locally. So whether that's in Germany, or Japan or Mexico, they will they pay directly to the collection account. And from the collection account, we actually we pay the sales agent. So by doing this, you basically take control away from from the sales agent, at least control over the revenues. And you know exactly what's coming in, you know exactly what's coming in. So basically what a collection account manager typically does for every single payment that is received in the collection account, it sends a payment notification to all parties involved. And issue statements every month or required. It depends what's been negotiated between the parties, and those statements contain gross receipts report. So basically, the monies received in the accounts with the breakdown per territory, and and per distributor, and it basically shows the deal the commercial deal negotiated by the sales agent. So for example, whatever $50,000 dollars mg from Mexico, and $25,000 already paid so $25,000 attending. So everybody involved in the film, basically is aware of, of the revenues received and still pending. And at the same time, the collection account manager pays the sales edge, its commission expenses and the expenses. Usually there's a cap negotiated and if an agent claims expenses above the cap, the collection government typically needs the approval from the producer. So it is there to basically protect not only the producers position but also the sales agent, right? Because also up to the cap there's no discussion right so it's just payable to the sales agent is seen it as basically customary In connection with selling the film, but at the same time, it cannot claim, for example, $2 million shift of marketing expenses in Canada. It's impossible, because we don't really never, never approve it. And we all know that it will be nonsense.

Alex Ferrari 25:19
Now, what is the craziest creative accounting story you've ever heard? Because I've heard of a couple I mean, but like you're dealing with all of these distributors, where you go, and you look at the numbers, and you just go, Oh, come on, guys, come on.

David Zannoni 25:39
Crazy counting stories. I mean, I think the typical things whereby you could argue question, now whether or not the over talking about a distributor in the US a local distributor straight distribution, whether those monies, if it's really what they're reporting, if those revenue, that's really the, the revenues left, after they recoup their expenses, and mpma. On the international side, it's not so much on the accounting side, trying to remember I've seen what i what i have see is, you know, people just just just faking agreements and falsifying letters of direction. So for example, there's in the collection agreement, we agree whatever that there is an amount payable to, to the producer. Let's say 250,000. I remember one couple films we received from from the shelf agent actually, won't room Ron mentioned the name. Of course, we don't we don't work with them anymore, sir. But you know, just amendments, saying, you know, this was signed by this is produce a signature, my signature, just please sign literally, literally, to the tune of 50,000 people now be able to me, you know, for whatever reason, we got a couple of these amended for a couple of films. And obviously the first thing that we do and that's the you know, the power of of being in control the revenues, you're obviously checking, or this is coming from shellfish, which got a questionable reputation anyway, we're going to just go first of all, always check with the producer, if he still did come forward, the signature, but it doesn't say anything. And just we figured out that it was just a complete scam.

Alex Ferrari 27:26
There's a lot of that stuff that goes on in, especially in distribution. And I've heard just horror stories where, you know, I just heard a horror story the other day that there was a film where a distributor was, was going to about to make a deal with Miramax. This is back in the 90s which obviously, in the 90s, Miramax was at the top of their powers. And, and another product, another distributor, took the film and said, Hey, I'm going to sell it and they sold it overseas, and I can without their permission. And by the time it was already too late, they already sold the movie and they lost the deal with Miramax lost millions of dollars.

David Zannoni 28:07
Yeah. And if the thing is once once there's a collection account in place, the the number of incidents of these kinds of things happening is actually rare. Because people know that there's a collection company, maybe

Alex Ferrari 28:23
Maybe it's a babysitter

David Zannoni 28:24
Babysitting. Exactly. So they know you know, they don't want to they don't want to mess up with with with the reputation they know that everything is being watched and monitored. So it doesn't happen that often now without a collection account and obviously I've got these conversations very often when people get interesting collection account management, you know, the stories I hear from from from from independent producers, the way that they're just being being screw this just is tremendous. I mean, indeed stories about people agent selling their, their their film, they don't know anything about you know, if the film was actually sold if the rights were relicensed and any people I've heard stories, people ending up with the film being licensed twice, just because they never received the information from the agent who on their behalf already have licensed the film in a certain territory but never informed the producers. And once the agent got kicked off, the producer started to do you know to distribute the film themselves and they ended up basically licensing the film twice, and it could end they can could end up with first of all the film is will never ever be properly distributed. So you lose basically everything the opportunity to show the film, but also obviously financially and it can end up in an in a big mess. And one of the things that you actually try to avoid with having collection account management in place is precisely this because it doesn't know having a babysitter. Alex doesn't prevent the case of dancing on the table. If you really, really knowledge gets, of course, you know, when I say people who want to scam that they will always do. But the thing is with a collection account in place, you probably figure it out at a very early stage. And you also having a company that's been in business for for more than 20 years, and also many films, many and so forth in so many aspects of, of the film business nobody wants to mess with with the reputation. So it's a lot less likely. And if it happens, you usually figure it out pretty soon.

Alex Ferrari 30:40
We'll be right back after a word from our sponsor. And now back to the show. Right, exactly. So you'll catch them on the table quicker than if there was nobody there. There'll be dancing on the table for hours. Now, is there any tips you can give on how filmmakers should? Or things that should filmmakers should look out for when dealing with a distributor? Like things or maybe are like red? Red Flags?

David Zannoni 31:13
Yeah. Well, I would first of all, always, it we always speak about sales agent, the distributor. So when filmmakers do with sales agents who sell the film's their films internationally, they should definitely make sure that the agent has a proper reputation that for example, the agent works with, with collection accounts, right and it's something the producer can actually enforce in associates up with just by adding a line, you know, we will, we will contract a independent neutral third party will take care of receiving allocating the revenues, I think, at least from our perspective, and it's, it's fair, that's something we always recommend filmmakers ship to do.

Alex Ferrari 32:01
More specifically for international, but also also it works as well, for domestic,

David Zannoni 32:05
It depends, it depends how the film was being distributed, it could also be domestic. Now if it's done domestic, it could be done through sales agents, sometimes it's through one of the agencies, I would also base disabled go for, for for for the agencies, right. So just to make sure that the monies are that the whole payment of the revenues of the MG, or royalties are done through collection accounts. That's important. Now, I would always say Check, check the the distributors check their reputation, check their, to the extent possible, their, their their payment behavior. That's extremely important. And maybe going back to mistakes people make. The problem very often is is that it's very difficult to get a film made, it's very difficult to get a film financed very difficult to get to feel distributed. So. So once people are in the process, and it all starts to happen, obviously, they're excited. And it's also I think, part of human nature, once we start to work together with people and everything is beautiful, and everything's fantastic that you don't want to think about what could possibly go wrong.

Alex Ferrari 33:17
Of course,

David Zannoni 33:18
And that's that's that that's it, that's a human thing. But we have to. So even if this is produced or offered a deal by distributor negotiating an interesting deal, I think they should always look first of all, if it makes sense for their film, creatively, of course, but also financially and business wise. So that they get a good deal. So whether the straight distribution makes sense or not worth the minimum guarantee actually makes make sense. And I think in a general thing, dealing with distributors and doing those doing the deals, looking if if, if the money if there's enough, being generated to, to to at least pay back, you know, the, the their investors. So basically, with, with, with all the deals in mind, are the deals that I'm closing. And I'm aware that it's not always you cannot always control it. But to the largest impossible with all the commitments I have. Am I closing the right deals?

Alex Ferrari 34:21
Right. Okay. Now 10? Can you tell me what Tell me what your company or where the benefit of working with a company like yours is for filmmakers, even on a smaller scale as opposed to a bigger independent film? And do you do have a minimum? Do you work with certain filmmakers, certain budget ranges? Or do you work with all ranges?

David Zannoni 34:42
Yeah, so let's to answer the last question. We work with everybody. And there's no minimum. So we have done I mean, just to give a couple of examples, the we've done the Terminator films, Paranormal Activity Also Hacksaw Ridge recently spotlights, see within their eyes, which are pretty big, independent films are very successful, are they independent films, many of them are in a way

Alex Ferrari 35:14
Independently financed and then picked independently financed,

David Zannoni 35:17
Although they may be through, you know, to to production companies. But they are independently financed and produced and distributed. Now, but we also at the same time, you know, we do small documentaries, we do a lot of foreign films, many films in Spain, Latin America, so there's no, no real minimum, it makes a difference in the price, you know, without going too much in detail. And I guess it goes for all production account management, because it's all based on on revenue. So usually, typically, collection companies takes a percentage. Now, if it's a big project, and a lot of revenues expected, the fees can be very competitive, if it's a small thing, at the end of the day is you know, it's all private. It's all private business. So people have to make money, the fees are generally a little bit higher. Now, it always makes sense to have a collection account in place, Alex, and I don't only say this webinar with my head of representative of Senator Charles. But But even if people have to pay a relatively high C, to say, to have a collection account in place, at the very least, they they know that the revenues that are received are being properly paid out. And again, nine out of 10 cases where there are many parties involved, that doesn't happen. So in terms of benefits, yet again, the guarantee that the monies received are properly paid out to the benefit of the film. So everybody gets his or her share of the revenues. That's that's the only the biggest benefit. But also, another thing is basically, yes, see a collection account management company as an as an outsourced opportunity, because, you know, it's not only receiving all those revenues, paying them out properly. It's also producing payment notifications, right, every single payment received to a payment notification to all beneficiaries, statements being issued, maybe once a month, or maybe a film generates revenues for three or four years substantial methods. So maybe they're on a film, though, 20 or 30 statements. But also, and I don't think I mentioned that before, but the collection account manager also typically collect all relevant information, financially relevant information on the film, from the shelf age, and so distribution agreements, sales reports, etc, etc, just to make a central point in which all the administration is, is put together. So all that work is a lot of work. And imagine an independent producer taking care of all this. So it's also outsourcing. Now, another benefit is avoidance of conflicts, just by entering into more multi party agreement with all the parties with a financial interest in the film. And everybody's signing off in the collection account management agreement on the fact that the collection agreement supersedes all the single deal terms at least with respect to revenues, it means that you just avoid conflict. Right? Yeah. So I guess these are the main benefits. Do you created maybe just quickly, also creating transparency, just the fact that everything is shown in the open the deals done with distributors where the rights are for how long for how many years? In which territories?

Alex Ferrari 38:51
A massive amount of work in the back end? Yeah, massive amount. Now, let me ask you a question. Do you mind me asking what the ranges are, as far as the percentages are?

David Zannoni 39:01
Sure. So typically, it's it's it's typically 1% or or less. Now, I have to be careful, should we? And I think all players, so all collection account manager and by the way, there are a lot, but I know we all do the same thing. So we look at the film, we always want to know what's the size of the film? And what's the complexity, so size? How many revenues can be expected, basically, and complexity? are we paying two parties or 100 parties, for example, and based on that we we can't. So every project is different, but on average, I would say it starts at 1%. And then it can go down with a sliding scale. And depending on the film, again, if it's a big film, that should be more than sufficient if it's a small film, or documentary, generally, there's a setup fee charged. Just to give you very quickly examples. If a film expects whatever, say $100 million in revenues? Well, this is a very it's no problem, no discussion. Now, if it's a small thing that we have done, the documentaries were excellent. For four or five years, 4000 bucks. So can you send me? Can you

Alex Ferrari 40:22
Say that again, you just broke up a little bit.

David Zannoni 40:24
Also. So if there's a documentary that generates or expects $100,000, well, if it was only 1%, it would be $1,000. And you cannot manage the film, the revenues and administration for four or five years for 1000 bucks, that's impossible. So then we have to charge a setup fee. And again, that can be between 2010 $1,000 completely again, depending on the size of the film. But again, even if you have to pay a setup fee, and the revenues on these $100,000, you know that at least those $100,000 are properly received and properly paid out. The risk is average, it's and that risk is very real, that if you don't have a collection account in place, you should think, well, I've received a cease Yeah, doesn't make sense that there's a there's a real risk that you don't see a penny, there's nothing received at all,

Alex Ferrari 41:22
Especially everyone else was especially at that budget range. You know, when you're when you're talking about $100,000, you know, the chances you actually getting money back out of that 100 1000s of revenue, depending on the kind of deals you've got set up with your sales agent and or distributor. Is it can be challenging, you know, I I've seen it, it's no question.

David Zannoni 41:48
Yeah. And we say, well, maybe you have to pay whatever, just for the sake of the discussion, the $7,000 in collection fees, because on the $1,000, it's already seven half percent for the collection account manager, we say well, that it's 90, what is it 92.5% for the rest of year, rather than zero. So I of course, I'm not saying I'm not saying that if there's no collection account in place, sure. Then immediately it means that there are no revenues. Now, of course, the reality of the industry is that it's pretty challenging.

Alex Ferrari 42:22
So it all depends on the project. And then again, everything's negotiate and negotiable, you know, once Of course,

David Zannoni 42:28
With insert their majors, but of course, everything depends on again, size, complexity, and maybe also avoid but also for, for, for financial needs. And I guess we're, we're everybody's pretty similar in this. In this industries, all other collection combinations will do the same. At the end of the day, we want to work with all the filmmakers. So you don't want to put a burden. We always try to find a way to work together, because you want this service to be available for everybody. That's one thing that's the you know, the and then on the other hand producer makes a small, short film or documentary today, maybe tomorrow makes the next big the big thing around, so we always try to make it work. Now,

Alex Ferrari 43:15
I'm going to ask you a few questions asked all my guests, so it's gonna become rapid fire. Can you tell me a book that had the biggest impact on your life or career?

David Zannoni 43:23
Oh, that's a challenging one, Alex. You know, I think personal life and career it all comes pretty much together. For me, which which has been a very, to date, very important book is actually it's called gafa Islam, which is from Carlos Castaneda. It's about now that we know the book. I know Carlos,

Alex Ferrari 43:52
Without question.

David Zannoni 43:53
It's Latin American literature. And it's, yeah, it's about a shaman. Who if I remember well, it's that that basically shows this very successful businessman from the US I do. Remember, we're sitting somewhere in the desert between the US and Mexico, what the real essence of life is. So nature being close to nature. And one of the things I always remembered that we had take, basically with me every day, almost the fact that there's a story about the death, you know, the depth following us as a shadow wherever we go. So if you look quickly, you can see them and basically it shows you that every day could be your last day and I think if you live like that, maybe for some people it would be depressing but the the of the I think it makes you appreciate everything in life every day. So for me, it's been a very important book in my profession, but in the broadest sense in my entire life. Now, the name of the book was journey. The journey to Islam. Yes. Journey to Islam. Yeah. Carlos Castaneda,

Alex Ferrari 44:57
Yeah. And he also wrote the his famous book is the teachings have done one. Yeah, yes, that's insane. Yes. So don't want don't want Yes, I've read yeah to an insane book his all his books are amazing, but fantastic book. Now what lesson took you the longest to learn whether in the film business or in life? I know these are big.

David Zannoni 45:18
This these are these are really complicated questions deep you know, maybe If I look at my life, the lesson took you the longest, maybe the lesson that life is short, and that you have to do whatever you want to do you have to do today. And maybe from a personal note, you know, I, I love Latin America, I love Mexico where I live nowadays, but it took me a very long time to, to realize that this is my, you know, my journey, my path in life. And if you're from a very developed city, maybe not a good word to say, because developed again, is for everybody different. But let's say a very easygoing country like Holland and you've got everything. And then moving to a more difficult country like Mexico, that's that's a big decision. But I realized that you just only live once in life, you know, you've got people say, I wait until I'm 65. And then I retire or people say, you know, I'm just going to finish my job, and I do my career. And once I have enough experience, I'm gonna do this. My lesson would be also but I would tell people just do it today. You only live once, but it took me too long to realize, but I'm happy that I took the decision and that I realized that still still on time.

Alex Ferrari 46:43
Yes, exactly. And we're at the end of the day, we're only in a race with ourselves, I guess. Now, what are three of your favorite films of all time?

David Zannoni 46:54
Favorite films of all time? I mean, depends on

Alex Ferrari 46:58
Today. Today today.

David Zannoni 46:59
Yeah, let's, you know, because of the the whole thing I I watched the original film again, I have to say it, although it's looking back at now, as an adult. They did, but I still like it very much. Sixth Sense. Now, it's actually one of the best things. I think this films ever. And then, you know, I really like the more light in the Spanish Spanish films, or Latin American films are so many great films. Probably I would say, Is this the secret in their eyes, but the original one so segreto sawhorse. I think it was great. Argentinian film. I think they even won Best Foreign Film couple of years back. Yeah, fantastic. And also because it shows so much about Latin American society, about Argentina in, in particular, all those films where you really, you know, can be the feel. But, but people are actually culturally doing. For me. That's, that's, that's, that's amazing. There are many, many other films but Latin America, but these are the three.

Alex Ferrari 48:17
And then where can people find you and learn more about your service?

David Zannoni 48:22
Where where they can find me? I would say they can all come over to Quintana Roo, Mexico. Welcome to Cancun.

Alex Ferrari 48:32
They'll give your home address more online where they can find

David Zannoni 48:37
You can find me on on LinkedIn, probably the easiest. And otherwise they can go to the vintage house webpage. But I guess if they typed me in LinkedIn, there are no there are not so many days. It's a known issue in this world. So people should be able to find me,

Alex Ferrari 48:53
David, thank you so much for taking the time out to educate the tribe about this. This this, this aspect of the film business that I've never really gone deep into and I'm glad that we had you as a resource to to explain it all to us. So thanks again, David.

David Zannoni 49:09
Well, thank you very much for having me Alex. It was a pleasure and I hope it's it's useful for the for the for the community for the tribe.

Alex Ferrari 49:15
Thank you my friend.

David Zannoni 49:17
Take care.

Alex Ferrari 49:18
Many knowledge bombs were dropped in this episode. Thank you, David, so much for jumping on the podcast and, and sharing all your knowledge and wisdom with the tribe. I know I learned a lot Honestly, this was an area of the film industry that I just really didn't know anything about. I hurt a little bit here and there but nothing as detailed as what was laid out in this episode. And you know, I know a lot of you are micro budget filmmakers, low budget filmmakers that you're like, well, I don't have to worry about that. Alex my budget 15 Grand 20 grand. Yeah, I get it, but at least you get a little understanding of what to do. Once you get bigger budgets and I know for a fact that a lot of people listening a lot of people in the tribe are working on 100 200 A $500 million $2 million movies as well. So this is something you should really look into and understand very carefully moving forward because it can definitely be a pitfall for filmmakers if they're not aware of what to do and how to do it. And you know, in all honesty, to being involved with so many projects over the years, having a a middleman or a middle person who handles all the money and there's not emotional about it, God, that's a really good thing to do. Because filmmakers, creatives, producers, directors, egos, everything gets out of hand sometimes. And, and it's always good to have someone with a, a non no side, Switzerland, if you will, someone right in the middle, who's not going to take any sides and just do what was contractually set up to do in the first place. So definitely check it out, guys. And if you want to get a you want to reach out to David, or vintage Charles, or any of anything we talked about in this episode, head over to indiefilmhustle.com/228 for the show notes where I'll leave all his contact information. And don't forget, we are launching Suzanne Lyons indie film producing masterclass on April 9, and if you want to get in early and get a special early bird discount and get access to to the to the course, a little earlier than everybody else, just email me at [email protected] And let me know that you want me put on the list and we'll put you on the list, the list is starting to get fairly big because a lot of people want to get in this and I'm telling you this course is insane is about five, six hours, it was normally a 2000 to 20 $500 course or workshop that she gave, and we put it on, we put it on film, and put it on an online course for everybody in the world. It could not get to our workshops to have access to insane, insane knowledge as well as any kind of paperwork you might need to raise money to make a movie contract agreements, all included in this course. So definitely check it out. And I have a slight little bit of big news coming up. In the next few episodes I will be announcing it soon. Has nothing to do with ego and desire. Though I can't wait to hopefully give you some great news about ego and desire soon. But this is about something else. We're going to be doing something else very cool at indie film hustle. And it's it's a pretty big deal. So I can't wait to to share that with you. So I'm getting close to launching, getting close to finishing it up. I've been working quietly in hard at in the lab. Getting it all ready for you guys. So thanks for listening, guys. And as always keep that also going. Keep that dream alive. And I'll talk to you soon.

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