IFH 377: Predatory Film Distributors – The Minimum Guarantee Scam



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Today on the show I continue my series on Predatory Film Distributors. An IFH Tribe member reached out to me to let me know about a scam that she almost fell for. If she hadn’t reached out to a very experienced entertainment attorney, she would have lost $90,000. I’m calling this The Minimum Guarantee Scam.

I reveal the scam on the show and discuss how you can protect yourself. Stay safe out there. Things are getting scary.

Alex Ferrari 2:51
Now today, I am continuing my ongoing series of predatory film distribution scams. And this one was the you know, when you think you've heard it all, you haven't. And this is again, a brand new scam that I had never heard of before, in all my years working in the industry. And I've I've been taken taken for a ride by some of these scam artists early in my career. But this wasn't this was new, this was a brand new one. So a member of the tribe reached out to me. And they told me about a scam that they almost got caught up into before they contacted an attorney and the attorney had experienced with this specific scam, and steered them away from it. And they reached out to me to kind of put the word out to other filmmakers so they don't get taken advantage of by this scam. Now I'm calling this the minimum guarantee scam. And for many of you who have been listening to the show for a while, have read or read my book Rise of the film intrapreneur you'll know what a minimum guarantee is. But for everybody else, a minimum guarantee is an upfront payment for your film when you have a distribution deal when you're signing a distribution deal. So if you're going to sell your movie, or let's say a big distribution company wants to acquire your film, what they'll do what they did, excuse me, they don't do it very often now, which is one of the more interesting things about this scam, but that distributors would if they felt that this was a very big movie, or they could make a lot of money with it and they wanted to really lock it down from you, they would give you an upfront fee. And that upfront fee could range anywhere from $3,000 to a million or 2 million depending on the film. And in the olden days, minimum guarantees were handed out left and right because there was a lot more money flowing around in the system. As many of you have heard in my past episodes, which I'll link into into this in the show notes as well like the death of traditional film distribution and the other predatory scammed episodes that have a have those in the show notes. But you'll know that now, they aren't giving those out as often. And if they are, it's very, very minimal. So on $100,000 movie, they might and I say big might, you know, a very, very, very small percentage of a percent of a percent might get a 5000 upfront or a 10,000, upfront, minimum guaranteed, but they're very rare. And they're extremely unheard of now, to be able to cover the cost of your production before you could go to a distributor and go, Hey, I'm going to have a movie with this guy and this girl. And this is going to be this genre. And this is the director. And they would basically give you a pre sale or a pre minimum guarantee. So they would lock down your movie before you ever made your movie. And you could use the money that you were going to sell to this distributor to make the movie and then you can go sell off rights elsewhere, depending on the deal you had. Now the scam is this guys. There are a handful of guys or shysters out there who are offering to teach you how to guarantee a minimum guarantee by prepping the package and packaging it all out. So they can present it to different distributors. And they will be able to give you a minimum guarantee. Now, the rub on this is that they're asking for a upfront fee for this service. And and that is that that isn't completely, totally unheard of, you know, some producers reps, and some sales agents not as much. I'm a little hesitant with that. But more producers rep sometimes will will charge you an upfront fee. Depending on the services they're going to give you whether that might be legal might be you know, helping you finish the film with like a post production supervisor or something like that. They'll up you know, the other often they'll ask for an upfront fee. And that fee can range anywhere from 234 grand. And there are some very reputable producers reps out there. I know many of them, they've been on the show as well to do good work and truly care about filmmakers. But the scam with this one, the minimum guarantee scam is they're not asking for two or three grand. They're asking for 60 to 80 grand upfront to do this job. And they are selling it like oh well we'll you know for that 60 or 80 grand, we're going to be able to get you the financing for your film, you're going to get automatic distribution, everything's going to be set up, they're going to help you package the deal and and really help you produce your film without any major risk. Because working with us, we're going to cover you on all of that. Yeah. So this is the scam guys. That that is unheard of. You shouldn't do it. There are companies who do that you know who they are CAA. W me, but they don't charge you 60 to 80 grand upfront to package up a film, they'll take a percentage of the money that they raise, or the or the percentage of a deal just putting the deal together. You know, there's a lot of people out there who say they can go get your money for your film. And that's fine. And a lot of them will take me you know, 5% You know, I've even heard of a 10% finder's fee, but 5% finder's fee. So if someone shows up with, you know, I don't want to go talk to my friend who's a qualified investor, he's going to give you $100,000 for your movie, I'm going to get five grand out of it because I connected you guys. And they'll probably ask for an executive producer credit, of course. And that's, that's done all the time. But it's based on the work that they've already done. It's a commission based situation. Whereas these guys are asking for 60 to 80 grand up front to help you package this. This is and they don't have any direct relationships with the money or anything. They're they're just they're just telling you that they're going to help you get a minimum guarantee. That's their sell. That's their sales pitch that they're going to they have connections in the distribution space. And they're going to call those distributors. And they're going to say, hey, look at this package we've put together for you for this film, and that they're going to go Wow, look at this pretty package. Where do I sign up? How much do they want, I'll give you 100 grand or 200 grand minimum guarantee. And then they use that to generate to get the rest of the money. The problem is there's not a lot of success with this. Because when you pay them the 60 to 80 grand or more, sometimes I've even heard up to 100 grand or more. They're doing you a service. So they're packaging everything. They're doing all this stuff, and that's what they're charging for. Whether you make it or not relevant, whether you actually get an mg irrelevant. It's a scary, scary thing, guys. And they they kind of prey on desperate, independent filmmakers who are green and don't know what's going on. And because this world that we're in right now is so erratic in regards to distribution as regards to making money with your films, and all of that, you know, filmmakers become more and more desperate. And any guy who shows up going, Hey, hey, follow me I can I can lead you to the to the promised land. Just give me 80 grand up front. And we'll be all good. I wanted to put this out there because I want I know, there's a lot of filmmakers out there who don't know these things. So hopefully, that you know, this will help you This episode will help you I know that the filmmaker, the tribe member who reached out to me and said that they almost fell for this if it wasn't for an attorney, who they reached out to who knew the situation. And the basic question you got to ask them is, if they if someone like this approaches, you just go show me some proof that this has worked before. Let me talk to some filmmakers that have made this, that your plan that you've put together has worked. That's all you got to do. Ask them for a handful of filmmakers, ask them for the projects that they worked on. And then look up those filmmakers on IMDB pro and do your own due diligence. Don't give anybody 60 to 80 grand of money that you don't have in the promise that they might be able to produce some magical mg. It doesn't work this way, guys. So please be very, very careful out there. And I promise you as the economic environment continues to change, as anybody has been looking at the market recently, how much it's been dropping lately, and the Coronavirus and all the things that are happening in the world. Things are starting to change. I mean, look at South by Southwest right now as of this recording, there's companies pulling left and right out of South by Southwest. I don't know if South by Southwest is going to happen. I think it will. Hopefully it will. But it's going to be a lot less companies and a lot less action there this year because of the Coronavirus. So that's affected. That's that's an emic economical major economical hit and not only South by Southwest, but to the city of Austin. All the flights, all this stuff has ripple effects guys, and you'd be naive to think that what's happening outside in the world is not going to affect the film industry. So as this becomes more and more desperate, in the months and years to come, the scam artists and these predatory distributors, aggregators and other companies and people who are going to become more and more desperate, are going to become more and more predatory. So you as filmmakers, and independent filmmakers and producers need to be more vigilant need to educate themselves on this process. I don't want you to be that filmmaker who borrowed 100 200 grand from their family to make their first movie, and it be lost because of a scam, or because of a predatory distributor. So I hope this episode does help. Please share this episode with as many filmmakers as you can, because it's getting tougher and tougher out there and becoming more and more predatory. And if you have heard of a new scam, or have been a victim of a scam, please hit me up, let me know I'll do my investigations. And I'll see if I can put it out into the world. You know, the show has morphed a lot since I launched it in 2015. And I'm very happy to be providing value to my audience to my tribe, to any filmmaker who happens to listen to these episodes, regardless if they're listened to from Episode One or if this is their first episode. My goal and mission in life is to help as many people on this planet as possible in multiple different ways. And my people are filmmakers so I'm helping them out as much as I possibly can with whatever platform I've been able to create over the course of the last five years. So please share this episode. Please be very vigilant and please educate yourselves. Read books, listen to books on Audible. listen to podcasts, read art, read articles and blog posts. Just do as much as you can ask people, you know, hire consultant that can guide you through this stuff, talk to attorneys, you know, just just reach out for the information because the information is out there. A lot of it's free. You know, this podcast is free, and it's an immense amount of information I put out every week. So look for it, educate yourselves. It's not sexy. But I promise you, if you don't do this, you will become a victim. And you'll be out of this game before you even got started. If you want to get links to anything we spoke about in this episode, please head over to the show notes at indiefilmhustle.com/377. I'll also put links there to the other interviews in regard and other episodes that I've talked about predatory distributors and all that stuff. And one of the biggest resources you can do guys, and biggest things I have to offer you is this amazing Facebook group that I put together because of the distributor debacle, and is now called protect yourself from predatory film distributors and aggregators. And you just head over to indiefilmhustle.com/protectyourself, and you can sign up there. There'll be three questions answer those questions. Me or one of my moderators are reviewing every single submission. So it is a very close knit community of filmmakers helping each other. navigate these waters, these kind of predatory shark infested waters of distribution and how to generate revenue with your films. So definitely go there. indiefilmhustle.com/protectyourself. It's free. Just check it out and take a listen and chime in and help other filmmakers out as well. Thank you for listening, guys. As always, keep that hustle going. Keep that dream alive. And I'll talk to you soon.



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