Hi all! I have replied to various questions about what a “good distribution deal” looks like on this page since it started. What I am going to do here is give some sound advice but this does NOT mean you are off the hook on doing your part. First off, “a good distribution deal” is subjective and varies from the type of film and the filmmaker’s options (and their expectations). First and foremost, make sure you have an entertainment attorney to review the agreement and advise you!!!! There are some really solid indie ones out there that won’t cost you a fortune. It is YOUR responsibility to know what the hell you are signing!!!!
They have always been a class act, even when we could not work out terms. I’d suggest looking into them (and any others that come recommended).
Okay, so here are some things I feel make up a GOOD deal. FYI, I will be using what we do and offer as an example. This is NOT soliciting rather than advice on what a good deal can look like, which we built after having been screwed way too many times as indie filmmakers ourselves. Our model, like any other, is NOT for everyone. DO YOUR HOMEWORK!!!!!
1) ADVANCES – It’s great to get an advance but the sad reality is that most indie films DO NOT justify one. So, although it’s wonderful to think you deserve one, don’t think a distributor is bad because they don’t offer them. We don’t, but we also pay for many things the filmmakers don’t sit behind. I’ll get into that later. That said, if you do get offered an Advance be sure you understand everything else you will sit behind (Advance, Distributor percentage, their expenses, their marketing, etc.) or else that advance might be the only money you ever see.
2) SHORT TERMS – I personally never understood why a distributor wanted my film for 10 years or more. Never made sense. I suggest terms that are never more than 7 years. We do 5 with a mutually agreed yearly renewal. Some out there offer as low as 3.
3) FLEXIBLE RIGHTS – I don’t believe in giving a single distributor all your rights or nothing at all. A reputable distributor will be flexible. For example, we allow for filmmakers to retain their festival rights, 4-wall/theatrical rights, Hard Goods (DVD rights) and foreign rights. You should be able to have this option so you can exploit your DVD and foreign rights elsewhere and not have all your eggs in one basket to help increase your chances of making $$$. We are even flexible on certain platforms like Vimeo, iTunes and Google Play.
4) NO CROSS-COLLATERALIZATION – This is a HUGE deal, especially if you give a distributor all rights to all media. DVD sales can murder you if they do a huge deal with Big Box retail (EG: Wal-mart) and your film tanks. Even if it’s doing well on digital the distributor will recoup all lost DVD revenue from that digital money if you allow them to cross. NO CROSSING!!!!!! EVER! Don’t let it happen. Walk away if they won’t budge.
5) GUARANTEED MARKETING – This is great to have but in my experience, it almost NEVER happens. And I have had films with many distributors over the years and they didn’t do shit. AND if they say they will but it’s not in the agreement you are shit out of luck. If a distributor wants to build in “Marketing expenses” that you will be expected to sit behind, then ask them to outline what the marketing plan will be. For example, we guarantee paid ads for every live platform. Although we don’t provide an exact market spend because it’s ongoing, we also don’t have a filmmaker sit behind this expense.
6) REVERSION OF RIGHTS – Every single distributor should have this clause in the event of Bankruptcy or a sale. Even if they wish to sell you should have the right to opt-out of the new label. We go a step further and also have a KEY MAN Clause that allows filmmakers to opt-out if I die or leave the label AND we also allow for an out of we don’t place on a minimum of 3 major platforms and do marketing.
One thing I hear a lot about is filmmakers wanting a “minimum threshold” out and a guarantee they will get your film licensed to Netflix, Hulu, Shudder, etc. or have an out. Okay, reality check – NO indie distributor can guarantee this. I’m not talking about A24 or Bleeker Street Media but true, indie companies like us cannot. We have NO WAY of knowing what your film will make. Some burst out of the gate and make money ASAP and some take 4 or 5 quarters and 7 to 8 platforms before the revenue starts to really flow. On the licensing side, some get licensed and some don’t.
As an example, we have a first look with Shudder and all that means is they will consider any horror film I send them but it does NOT mean they will license it. Holding out for these two things for an indie film is unrealistic in my opinion.
7) PERCENTAGES / EXPENSES – This is a beast to really cover because distribution deals can run the gambit from 20% to 50% to capped expenses to no cap to non-recoupable and so on. You have to review all of this and feel it all out after doing your due diligence and speaking with your legal counsel. When we first started we had a traditional model of 25%, capped marketing and “at cost” verifiable and approved expenses but we were not placing money in the filmmaker’s pocket fast enough (I know, crazy thing to hear right?) so we changed it and rolled the dice on a 50/50 model.
When we launched it, we weren’t sure how filmmakers would react and although it’s not a model for everyone, the new model took off because for us, once you properly deliver your film we do the rest. Meaning we create the poster and trailer. We pay for the QC. We pay to fix minor QC issues. We pay platform delivery service fees when we are not direct with a specific platform. We guarantee PR and paid ads. We pay for all the sized platform art (they all require different sizes). And the filmmaker does not sit behind ANY of this. This is our skin in the game on every film.
Again, I am not saying this model is for everyone but we have more happy filmmakers than not. There are many other models that work for filmmakers. It’s up to YOU to explore it. And don’t listen to anyone just shitting on a model. That’s their opinion. This goes for any distributor and or aggregator. Opinions are great but they are like assholes, everyone has one and most are full of shit. Listen to feedback but do your own homework. For every filmmaker who hates a certain distributor, another one loves them. No one will make everyone happy.
8) E & O INSURANCE – This should be OPTIONAL for most indie films. Almost NO buyer askes for it and when they do they have always accepted our Distributor’s E&O policy. Now keep in mind when you sign a distribution agreement you are stating that you have the right to enter the agreement and have all legal rights to the film, its contents, images, music and so on. A Distributor’s E&O will NOT protect you from a 3rd party claim if you’re using say unlicensed music and that person comes after you. You will be indemnifying the distributor in these situations so make sure you have your shit in order as far as your rights if you have no E&O, but again, it should be optional from most indie distributors.
9) DELIVERABLES – OMG this was always mind-numbing to me. No indie distributor should need to see your actor, writer, director, finance agreements, nor do they need about 75% of the crap they ask for. More deliverables are often required for traditional foreign sales (Not digital) and North America should be even less complicated. Make sure they are being flexible with what you absolutely need to deliver before you spend a bunch of money creating shit they will never use.
10) RESIDUALS – If you have Union residual obligations, a lot of indie distributors will happily take this on. Keep in mind that royalties are from the gross per quarter but will come out of your share and you will be charged a minimal accounting fee to have it handled but taking this on is not a big deal as many distributors will have you believe. That said though, many distributors (us included) will not sign SAG’s DAA. They are too invasive. SAG does not like this but they only care that residuals are paid and the truth is that YOU are the signatory and it’s actually your responsibility at the end of the day to ensure residuals are paid. If your distributor won’t take it on, just hire an indie entertainment accounting firm like NPI to handle this for you. It’s not that complicated.
11) TRANSPARENCY & COMMUNICATION – This is an add on. This is not something you will get in the actual agreement per se but we find it to be VITAL to have a distributor who is honest and transparent. This is in every aspect, not just on reporting. I mean the good AND the bad. We go out of our way to communicate with our filmmakers from new platform partnerships, to platforms we’re pulling films down from due to lack of payment to shit situations like what happened with Go Digital or if we’re running behind on reports, which for our small company happens from time to time. We probably send too many emails sometimes. LOL! But this is something you should expect from your distributor. Don’t be afraid to ask them questions once they have signed your film. We have an open policy for questions about platform performance, showing proof of marketing ads we have run, to working with filmmakers when their film can’t seem to perform and so on. You have every right to ask questions.
I welcome thoughts and remarks on ANY of the content above in the comments section below…