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Film Distribution Survival Guide (How to Actually Make Money)

Over the years, by far, the single most significant area where I have seen most filmmakers stumble on is film distribution. There is not a lot of information out there about the inner working of the film distribution process, let alone indie film distribution.

We have all heard the horror stories about and indie filmmaker signing a horrible distribution deal from film distribution companies, never getting a dime and losing control of their film for ten years to boot. As crazy as that might sound, it happens more often than you might think.

These stories are not outliers or exceptions; they are the rule. Most filmmakers have no idea what to do when they get into distribution of their film. For this reason I put together this Film Distribution Survival Guide to help guide you through these uncharted waters. I hope these few tips you are about to read will not only help you but save you time and money.

Traditional Distribution

As I stated earlier, most filmmakers suffer heartache when they deal with traditional distribution companies because of a few reasons.

    • By the time they get to this point in the filmmaking process, they are exhausted.
    • Filmmakers are ignorant about the entire process.
    • Filmmakers have no idea what to ask for or look out for.
    • Many times filmmakers never did market research to see if their film had any value and when the harsh reality hits them they have very few options, so they sign a predator distribution deal to get a digital release of their film.

Now not all feature film distribution companies are immoral or predatory. I’ve run into many good players in this game, but I’ve also dealt with some predator distributors that I wouldn’t trust to carrier my groceries up the stairs.

Here are some essential tips when looking at a potential film distribution partner.

Please note: You should always seek legal counsel when deciding to sign any agreement. The information I layout in this book is based on my experience being in the film industry for over 25 years and should be a starting point of discussions with legal counsel.

Do Your Home Work

Anytime you speak to any independent film distribution companies, always do your homework. Contact filmmakers, they have done business with in the past and ask them about their experience.

  • What did they do for the film?
  • Did they pay you?
  • How often and detailed are the quarterly reports?
  • Would you work with them again?

This one tip could save you years of heartache. I would call at least 3-4 filmmakers and compare notes. You can go to IMDB Pro (if you don’t have an IMDB Pro account get one ASAP) look up the films they have distributed before and reach out to the filmmakers of those films.

How Long Have They Been Doing Business

One of the easiest ways to see if the company you are talking to is better than most is to see how long they have been in business. This method isn't perfect since I know distributors who have been around for years that I would never work with, but this does weed out potential problems.

If the company is new and the filmmakers they have worked with are giving them good reviews, then do homework on the key players of the company. Many times the CEO and founder has been in the distribution game for years working for a larger company, and he or she is opening up shop. The key is doing that homework.

The Devil is in the Details

Now you reached out to a distributor, have done your homework and you have a beautiful indie film distribution contract sitting on the table for you to sign, all your filmmaking dreams are about to come true, not so fast. You need to go over this agreement over with a fine-tooth comb.

First, have an entertainment attorney look over the agreement. Please do not use your uncle Bob who is a real estate attorney; he will not be savvy enough to understand the little tricks and fine print you will find in most distribution agreements.

Out of Control Expenses

Distribution companies usually will charge you for expenses they accrue in the process of distributing your film. Depending on the distributor this could cover, trailer editing, poster design, film market travel, final deliverables, E&O Insurance, Close Captioning, and many others.

The key is to demand a cap on expenses, which means that you are not responsible for any costs above a certain point. Let us say we cap the marketing fees at $20,000. If the expenses are $25,000, then you are only responsible for $20,000. So the first $20,000 made from sales of the film go to covering those expenses.

If you do not cap these cost and leave them open-ended, then chances of you ever receiving a dime for your film is extremely slim.

Length of the Agreement

I have seen distribution contracts that are ten years, some ever fifteen to twenty five years long. In a nutshell, the distributor owns your film for the length of the agreement.

If you have not signed a smart deal or made an agreement with a distributor that will try to sell your film, then you have given you movie away as a gift to this distributor. You can not generate any revenue from your hard work, let alone pay back investors, or recoup your expenses.

I have signed film distribution agreements for as little as three years, not the industry norm. Most arrangements are between 5 to 7 years. So make sure the deal you sign is a good one because you will be in bed with this company for years to come.

Audit Rights

In the agreement, you need to make sure you have the right to audit their books. I know of a filmmaker that insisted the company put this in contract and years later that filmmaker went into their office and checked their books.

They found thousands of dollars that owed to them. Most reputable film distribution companies will not have an issue with this.

BONUS PRO TIP:

This tip could save your film from falling into a dark prison that you cannot break it out from. Make sure there is a clause in the agreement that if the distribution company happens to closes, is prosecuted or goes bankrupt that the rights of your film return to you automatically. Again, most reputable distribution companies will not have an issue with this.

I know Sundance, SXSW and Cannes filmmakers that had their films locked up in the courts for years because of a bankruptcy. Trust me you do not want this to happen to you.

Paperwork Deliverables

Here comes the fun stuff, the paperwork. Most film distribution companies will ask for a mountain of paperwork to be delivered with your film. The paperwork is there to protect you, your film. the potential buyers and the distribution company.

Some of the paperwork you will need is the following.

Licensor must provide the following items to Sales Agent:

  • Contractual Credit Block
  • Synopsis
  • Production notes
  • Layered Key Art
  • High-Definition Frame-grabs
  • Digital production photographs
  • Lab Access Letter
  • Quality Control (“QC”) Reports with an “approved” grade must be delivered for all 
      high definition masters
  • Errors and Omissions policy maintained by Licensor for five (5) years
  • Complete chain of title comprising the following:
    • Copies of copyright registration certificate filed with the U.S. Copyright office with respect to the screenplay and the motion picture
    • Copies of a Copyright Report (including opinion) and a Title Report
      (including opinion)
    • A complete statement of all screen and advertising credit obligations
    • A statement of any restrictions as to the dubbing of the voice of any player, including dubbing dialogue in a language other than the language in which the Show was recorded;
    • Copies of all licenses, including, but not limited to: fully-executed master use and synchronization /performance music licenses; contracts; assignments and/or other written permissions from the proper parties in interest permitting the use of any musical, literary, dramatic and other material of whatever nature used in the production of the Show;
    • Copies of all agreements or other documents relating to the engagement of personnel in connection with the Show including those for an individual producer(s), the director, all artists, music composer(s) and conductor(s), technicians and administrative staff;
    • Final shooting script
    • Chain of Title Opinion
    • Certificate of Origin
    • The dialogue continuity script
    • Music cue sheet

What is E&O Insurance

Most film distribution companies need E&O (Errors and Omissions) Insurance. E&O is the insurance policy that buyers of your film need to have in place. If you have a scene in your movie with someone dying at the hand of a Coca-Cola bottle while the killer is wearing a Mickey Mouse t-shirt, you are going to have a problem.

The E&O Insurance policy protects buyers from any legal issues your film might have. The insurance company will watch your movie, flag any problems then sign off once everything is to their liking.

Physical Film Deliverables

Film deliverables are the elements that the film distribution companies need to represent your film for sale. Deliverables is a deep subject, but I will give you a brief overview of the basics you will need to budget for when delivering your film. You will need to plan for the following items.

Digital Masters

You’ll need to deliver a Master ProRes 422 HQ Master Quicktime File of Your Film in 1080p and possibly 4K.

Textless Master

You'll need to create a textless master as well that removes any on-screen graphics (i.e.: locations, time of day, credits) that are graphically placed on the film. These graphics need to be removed so foreign distributors can replace them in their language.

You audio will need to be in stereo and 5.1 surround. You will also need M&E (Music and Effects) separate audio masters for foreign sales (more on this later).

Trailers and Posters

Many times a feature film distributor will pay for new key art and trailer editing. If you feel that you can present the distributor with both then do so. It will cost much more if you have them pay for these deliverables.

Digital Cinema Package

In its purest form, Digital Cinema Package or more commonly known as a DCP could be seen as the digital version of a 35mm film print. Its main advantage is that you can present it to theaters to enable them to project it via a digital projector.

A digital cinema package is recognized and accepted all over the world. The digital cinema package comes in a briefcase. The case is usually either yellow or orange, but many theaters download the DCP from the cloud.

Does every film need a DCP, no? DCPs are just for theatrical exhibition. Do not spend the money on creating a DCP unless you know for sure you will use it.

Below is a typical list of deliverables you will need to provide to your film distributor.

Schedule of Delivery Items Required

LAB ACCESS: Licensor must provide lab access to Sales Agent throughout the active term of this Agreement for both the Feature and Release Trailer in each of the formats listed below. These elements are in addition to those to be delivered to Sales Agent in the following sections of this schedule:

  • Original Negative
  • Original Soundtrack Source
  • 35mm Interpositive or Digital Intermediate
  • 35mm Internegative
  • 35mm Stereo Optical Soundtrack Negative
  • 35mm Final Answer Print from Negative
  • 35mm Check Print from Negative
  • 35mm Textless Sections Interpositive
  • Reel-By-Reel Fully-Filled M&E
  • MASTER FILE: a 2K or High Definition Apple ProRes 422 HQ
  • PROJECT FILE: Final Cut Pro, Premiere or AVID file (including all sound files)
  • PAL 25fps 4×3 Full Frame masters on Digital Betacam (DBC)
  • 23.98fps or 25fps HIGH DEFINITION (HD) master on an HD-CAM SR tapes


THE ITEMS THAT FOLLOW ARE TO BE DELIVERED TO SALES AGENT

Film Items

All elements listed below must be provided for both the Feature and Release Trailer. These elements are in addition to the prints being kept at the lab and may be used on loan to distributors:

  • 35mm Internegative
  • 35mm Stereo Optical Soundtrack Negative
  • 35mm Textless Sections Interpositive
  • 35mm Release Print

Video Items

Masters must be provided for both the Feature and Release Trailer by Licensor to Sales Agent for all items listed below:

  • PAL 25fps and NTSC 29.97fps 4×3 Full Frame masters on Digital Betacams (DBC).
  • PAL 25fps and NTSC 29.97fps 16×9 Full Height Anamorphic masters on DBC
  • 23.98fps and 25fps HIGH DEFINITION (HD) 16 X 9 Full Frame masters on a HD-CAMSR
  • MPEG-2 files in both PAL (720×576 pixels / min 5000/448 kbps) and NTSC (720×480 pixels / min 5000/448 kbps)
  • HI-DEF Quicktime files
  • CLOSED CAPTION files time-coded to agree with both the NTSC and PAL Digibeta masters in. CAP format (this can be expensive but I have a hack for you, see below)
  • BONUS FEATURES on a DVD video disk in both NTSC and PAL

Sound Items

Licensor must provide continuous audio elements to Sales Agent per below:

  • 29.97fps and 25fps sets of PCM or AIFF digital audio files
  • Sets of 5.1 digital audio files, either PCM or AIFF

As you can see, many distributors will ask for EVERY deliverable in the book. Sometimes the reason behind this ridiculous is just plain laziness. The company has an intern or office assistant email you an old deliverables list from the '90s. If they are asking for Beta SP masters, then this is a dead give away.

Always ask what they need before spending money on deliverables you do not need to spend money on before writing that check.

What is Closed Captioning?

As any filmmaker who has ever delivered a film or video to distribution knows Close Captioning is a big and expensive pain in the butt. The process is convoluted, confusing and most of all  PRICEY.

The cost to have close captioning created for your movie, television series, web series or youtube video can range from $8-$15 per minute. On a 90 minute film that could cost filmmakers up to $1350!

Closed captioning (CC) and subtitling are both processes of displaying text on a television, video screen, or other visual display to provide additional or interpretive information. Both are typically used as a transcription of the audio portion of a program as it occurs (either verbatim or in edited form), sometimes including descriptions of non-speech elements.

Every feature film that is going to stream on iTunes, Amazon, Netflix, Hulu, or any streaming service must have close captioning by law. There is just no getting around it. So you'll need this.

I've been using Rev.com for a while now. I tested the service first with my first feature film. This is Meg, and it worked like a charm. I recommend the service to any filmmaker or client that will listen to me.

Every time I receive my close captioning (CC) from Rev, they have passed QC (Quality Control) for all my streaming options, including super strict platforms like Amazon, iTunes, and Hulu.

Good Luck

I hope this guide has helped you on you film distribution path. There are many sharks and predatory film distributors out but there are also many good, honest distributors out there as well. You are ultimately responsible for any deal you sign so do your homework and get ready do some work.

There is no magic film distributor that will come along, pay you a ton of cash, do all the heavy lifting in getting your film marketed and you just sit back and collect check for life. It doesn't work that way.

If you want to do a deeper dive into film distribution, try enrolling in our FREE Film Distribution Crash Course. You can find how reserve your spot below.