IFH 343: The Dark Underbelly of Predatory Film Distributors – BEWARE!

Alex Ferrari 1:28
Now today, guys, I want you to strap on and buckle up because it's gonna be a doozy. I am pissed off. And I don't often do episodes like this. But this is going to be a raw episode. So I need you to prepare yourselves for this episode. The last time I did an episode like this was Episode 88. Or it was called why are f why are filmmaker are so f'n broke all the time and what they can do to fix it. And if any of you have heard that episode, which I'll leave in the show notes, a link to it. It's me for an hour going off about what I was just really upset about. And really hope that helped a lot. And is it's one of the most popular episodes I've ever done on the show. But today, I'm going to talk about the dark underbelly of film distribution. And that also includes self distribution, as well. Now, I've been getting a ton of messages, emails, calls, consulting sessions, coaching sessions about distribution lately. And what I'm hearing is just mind boggling. So I have to, I just got to put this out there because it's something that absolutely must be discussed. And I really need to warn you all about what you might be getting into because a lot of you who listen to me right now have not maybe haven't gone back and listened to the other 342 episodes that I've put out. And a lot of it within that world of content. There's some of this information, but I'm going to distill it down for this, this episode in regards to film distribution, the legacy model of traditional film distribution is completely stacked against the filmmaker. Understand that when you're walking in if you're going to make a deal with a traditional distributor, you need to be very, very careful. Now am I saying all film distributors are evil and blood sucking and bottom dwellers? No, not all. I'm going to actually give you a couple of resources at the end of this episode, which are good distributors and what to look for in a good distribution contract for independent film. But with that said, is the majority of the film distributors that I have been either in contact with or filmmakers that I've worked With known or heard of, had been caught in contact with, have they been blood suckers? And people who just plain some of them are just plain evil? Yes, a lot of them have been. And it is built on this model, this legacy bs model that was started back in the olden days of Hollywood, where filmmakers could only go through a distributor to make money. And that is in today's world not true. It's not true. Depending on your budget, and what you're trying to do. There are options without question. But this legacy model is literally stacked against you. It's like playing craps at a casino, you might win once or twice, but you're always good, the house is always going to win. And the distributors are the house. And we are the poor gamblers, praying that when we put our film on read or our chip or our money unread, and we spin that wheel that it's going to come up in our favor. And it doesn't, more often than not, it doesn't. So this legacy model is a model that preys on the, the the filmmaker who doesn't understand doesn't know is an educated about or has not reached out to professionals or someone to consult them in regards to their deal. Now I have a friend of mine, who calls me up, he called me up, he has a great movie out. And he's trying to look for distribution for it. And he's being contacted by all these distributors. And I'm not going to name this distributor, but you if I named them, you would know who it is. Now, this distributor offered this micro budget independent film, which by the way, has done very well. He's self distributed. He's done a bunch of stuff outside of distribution more like for walling and theatrical and things. And he's done very well with it. But now he's looking for a traditional distributor to get it out there. And they offered him a 15 year deal with $100,000 expense cap may repeat 15 years. And $100,000 expense cap. Now, let me explain that for everybody who doesn't understand what I just said. The 15 year deal means that this company will own the rights to that film for 15 years. Okay. And that $100,000 cap is what they are expected to or limit themselves to, in his case of expenses for marketing, going to fill market, trailers, posters, advertising, print everything, they're going to limit themselves to $100,000 for this film. understand something that well, first of all, that there's a limit is a shock because a lot of these, these blood sucking distributors won't will purposely not put that in the agreement will say, hey, just you know, we're gonna have some expenses, and people who don't know any work better will sign it. And the second they sign it, it's done. Because that film will never, ever see any money come in for the filmmaker, that I can promise you, if you sign an agreement like that, you will never see a dime. And even if you signed a deal with a expense cap in there, whether it's 2030 4050 $100,000 cap, I promise you that most distributors will bump up to the top of that cap, they will spend every single piece of that cap before you ever see a dime. And how do they do this, I'll tell you how they do this. Let's say you're going to use, you're going to use them to encode your movie for the online platforms. Alright, so let's say you use them and they're going to charge you and then they're going to spend 15 $100 by calling a post production company to encode it for them, they will turn around and charge you $3,000 for it, even though they paid 1500. So they're already making money off of you before they've even sold anything. And that's just off encoding lesson I get into closed captioning, QC reports, every little eyeline item, they will mark up, they will mark them up so they get paid. Do you understand when a film when a a distributor takes on your film is because they believe that they can make some money from it somewhere that night might not be necessarily that they're going to actually distribute your film or get it out there and a lot of way, you know in a big big way. They'll go look, you know what we'll be able to make five $10,000 off this film, our expense cap on this film is $20,000. And we're gonna charge them blah, blah, blah, blah, blah, they'll never see a dime and we'll own it in ill they'll fill out our portfolio in our catalog for the next 10 years. And anytime somebody wants to come in and, and buy a whole bunch of content, our catalog looks big film distributors love having big catalogs. Because the bigger the catalog they have, the bigger deals they can make with other other distribution or other outlets. So it makes them look a lot bigger than they are. But also don't think that just because they're making big deals, that you're going to get any of that money. You know, there's there was a story I heard about of about a filmmaker talking to a distributor the other day, and they said, you know, they were complaining about the reports not getting, you know, not getting reports in a timely fashion. And in not being you know, the communication falling down. And in this film had been with this distributor for a few years. And the distributor, once they got him on the phone, they said, You know what, man, you're looking you even got to check a lot of people don't even get checks. You guys have no idea how good you have it. Can you believe the audacity? He said, point blank, you're lucky you even got checks, most distributors wouldn't even send out checks. Can you? I mean, can you? Do you understand how ridiculous this is? But that says everything about this industry about film distributors, these legacy, film industry traditional film distributors. This is a systemic problem that has been going on for decades for decades. They feel that they have all the power. And then they just think that you know, filmmakers are just filmmakers. Now again, not all of them are like this, but a majority of them are. And I would argue with anybody on any panel anywhere that I've just have not run into a lot of good ones. Are there? Yes, there are. There are some good ones out there. No question. But this is a systemic problem. Now I was talking to another filmmaker the other day, and they sent over their reporting, their first reporting for a film that this big distribution company and who will remain nameless, but if you if I said their name, you would know who they are. And this distribution company sent them this report. And if you start at the beginning, you're like, Okay, made $20,000, here, you made $15,000, there, boom, boom, boom, and all of a sudden use like, oh, wow, gross take in was like around $55,000, which is great, holy cow. That's amazing. But as you keep going down, by the time you were at the end of this report, they were in the hole for $30,000. They made 60. But because of all the expenses, and all the BS, and all the chargebacks, and all the things that they just throw up on you, that poor filmmaker, and that film was in the hole for 30 grand. And the sick part about it is that this is business as usual. This is not an outlier. This is not an exception to the rule. This is the rule for the most part. How does this make any business sense? Just because it's the way people have been doing business for the last 50 years? Doesn't mean it's right. We are in a different world today, guys. Sure, traditional distributors have a place in it without question. The good film distributors definitely have a place in it because hopefully, they're there to not only make money for themselves, but help the filmmaker actually make money as well. But this this, this just arrogance of the way they do business is just it's appalling. And it's disgusting. And I'm tired of it. I am absolutely tired of it. I was talking to a at AFM. I was at AFM A few years ago, and I was talking to a a film distribution executive. And this is what they basically told me. They said that the distributor will give out these ridiculous offers to as many of these films as they feel that they can make any sort of money with. And because they already have a lot of output deals and a lot of relationships because they're a big distributor, they can kind of estimate on how much money they're going to bring in off of any specific title, give or take. Now, if you think that a film distributor is going to actually start pumping money into marketing, that is as rare as a unicorn, which means almost non existent. And basically what happens is this, the distributor will try to see what happens when they put the film out. If they see any sort of heat on it, where they can actually generate a little bit more revenue, they'll put a little bit more punch behind it. But generally speaking, they won't know if it's a high profile film with a high profile star or something else that they can use as kind of a example of their distributing prowess, when they have a bit an Oscar winning actor or actress or big time action movie that they've been able to course into their mitts, then they will put a lot of money in marketing behind it, because that will also help sell other filmmakers to give them their movies, because it's just a marketing ploy for other filmmakers to go well, if they're, they're distributing a movie with ex pertino ex actor and who won an Oscar. And this other one that's this is like, it looks like $100 million movie, and they want my little movie, oh, I must give it to them. I don't care what the deal is. It's part of the game guys understand that. So the executive continues to tell me that out of 10 or 20 of those one of those, they'll probably put a little energy into if that, and the rest of them will, they'll just throw up on all the platforms. And if they get no bites, and if they get no, no action anywhere else other than on the digital platforms, which anybody can put everything up on digital platforms, then it dies, it dies, they won't do a thing because they've got another crop of brand new films coming in next month. And that's the way the cycle goes. If you can't make money for them, don't expect them to get them on the phone. Don't expect them email back. Don't expect quarterly reports. Generally speaking, it's just not the way the business is run. It is horrible. It's disgusting. And I'm, I'm just honestly tired of it. So that's why I'm doing this episode, I want to really just put it all out there. And hopefully, just hopefully, this episode will help and save a few filmmakers out there. Now I'm just going to give you a few tips of things that to look out for when signing a deal with a distributor one, make sure you have some sort of say over the creative because they will change your movie poster to benefit themselves and to help sell the movie regardless of what you want. They will re edit the movie. So a drama will all of a sudden turn into a romantic comedy. And then when you watch it, someone shoots somebody else in the head and you're like what the hell just happened. I thought this was a romantic comedy. That's what I signed up for. So be careful with all of that and make sure you have some sort of say, also stay away from long term contracts. This 15 years is just predatory. It's leech, you're there leeches in 10 years is a long time. Now if someone gives you 100 200 $300,000 upfront as a minimum guarantee or an mg, well, that's a different conversation. All of a sudden, then you're like, you know what, you're giving me that much money up front. And you might need 10 years to recoup that money. That's a, that's a big maybe I would estimate anywhere between five to seven years. That was it five and seven year deals, five, five year deals are harder to come by. But between five and seven is industry standard. But even then guys, even then I want you to understand something very, very clearly. When you sign a five to seven year deal, they own your movie for five to seven years or 10 years or 15 years. It's out of your hands, you have no control of any revenue coming in from the sale rentals or any exploitation of that film in the distribution world. Think of it as a non non tax deductible donation to them. Because that's what it is. You're just giving your movie away to them for that long. So if you are going to sign a deal this long, you better really do your homework and really feel like this company is going to do something good for you. Because a lot of them will be really upfront. They're very nice. They're very slick. I can make this much money. I'm going to go to AFM. I'm going to go to Cannes. I've got the buyer over in Germany. I'm going to sell I know I can get you on Netflix tomorrow. I could call them directly on all of this stuff. I can get you a cable deal I can get you I can I can even sell you on DVDs because I know the main buyer at Walmart and a target all of this stuff. They'll tell you everything you want to hear Don't like a used car salesman. But at least when you buy a lemon, you get to drive off the lot with the lemon. You don't just give them your your car and hope that they're going to do something with it. And that's what this is. We'll be right back after a word from our sponsor. And now back to the show. This this whole concept of just making a movie and giving it over to somebody else, giving your power over to somebody else is mind boggling to me. Do you think that Apple, or let's say, you create the iPhone, it was this, it's the equivalent of me creating an iPhone spending hundreds of 1000s, if not millions of dollars developing a product like the iPhone, and I don't have a distribution outlet for it. So I go to Apple, or I go to another big company, and I go here, here's my, here's my invention, here's my product, I need you to market it and sell it and just give me a kickback. And give me a percentage of the deal. And I'm going to trust that you're going to be able to do that. In what other business in the world? do you do that? Maybe the music industry, oh, and definitely the publishing business. And those are two other competitions for two other podcasts. But this is like that. It's insane. It is insane. But unlike the music in the publishing business, the end product doesn't cost you millions of dollars, and two or three years of your life. Generally speaking, so it's it's in sane, it's disgusting. And I, I am making it my goal to put an end to it. Now, a lot of people will also say, well, I'll just self distribute, I'll go through an aggregator. And I want to talk about aggregators right now really quickly. You know, if you're going to self distribute your film, which I did in the past, and you're going to work with an aggregator, and there's a handful of them out there. You have to be careful in one sense. If you've got a $500,000 movie, and you're going to try to self distribute it yourself. You really, really, really need to know what you're doing. You really need to understand marketing, you really need to understand your your market your audience your niche, and have like ninja skills, to be able to recoup that kind of money, I mean ninja skills to recoup that money. In all the days that I've been working with indie film, hustle and doing research and checking out case studies and all of this stuff in regards to self distribution, success stories, less than a half a percent of a percent, generate over $500,000. If there are anomalies, that's not the norm. So you need to understand that. If you have a smaller budget film, it's a possibility. And even then you still need ninja style, marketing muscle and understanding of your niche audience. Now the aggregator I use for my first film, this is mag was distributor. And distributor, when I was working with them, is a very different company than the company that exists today. A lot of the key players that I worked with has left that company. And it is not the company that I was once promoting. Now I did promote them fairly heavily. Though, for almost three years, I've been promoting them very heavily because they did really good by me. This is Meg was a success. They helped me get a Hulu deal. They did a whole bunch of things. And I was very, very grateful for it. But I've been hearing recently, many stories from filmmakers around the world that use distributor and they can't get them on the phone. They can't, they aren't getting paid their royalties, their tracking is off. It's just it, there's problems. So the company is going through. They're going through some sounds they're going through something. And if I can't get ahold of people, and if I'm having issues with people, someone who's promoted them and sent them a lot of business over the years, if I'm not able to do that, what chance does it just an independent filmmaker with a small movie half. So I'm publicly saying right now until further notice or until I get some other source of information. I am not recommending any filmmaker use distributor to aggregate their feature film. I repeat, I do not recommend any filmmaker use distributor As an aggregator to get their films out there, period. I'm all about helping filmmakers. I'm all about just trying to help them survive and thrive in this business. And if I feel that something I've done or promoted in the past is no longer doing that or is even hurting filmmakers, I will come out with a vengeance. And this is coming from a lot of filmmakers who've reached out to me consulting clients who've reached out to me that are saying, Hey, I have a movie, I heard that distribute is really good, because you've told me it was really good. I can't have that anymore. I literally have gotten probably about 10 of those messages in the last week. And I just said, I can't I can't do this. I want to make sure that no filmmaker is hurt with this process. And now that I've discovered that they're going through a lot of changes, and a lot of the people that were there are now gone. No way. So once again, I do not recommend any filmmaker use distribuir as a aggregator to put their films out into the fit VOD world. And now I know a lot of you have been asking me what where do I go out is what other aggregators do I use, I will let you know. Because I will do some research and find some other people that I can recommend, hopefully, somebody out there is going to be a good fit for not only the indie film hustle tribe, but for anybody who listens to my voice, and lets them know that these guys I feel are good. And I'm going to take good care of you. So I'll let you know when I find an option. Now, another option guys I want to tell you is I have had her on the podcast many, many times. If you have a movie of a certain budget range, indie rights, is by far one of the best deals in town for a traditional distribution company. And they're really not even a traditional distribution company. They're so they're so wonderful. And outside the box, they kind of they kind of don't fit the model of a distributor. So Linda Nelson has been on the show many times, and I'll put links on, on the episode on the show notes for her episodes, you can listen to them. And they have a wonderful deal. And I have gone with them to release my film on the corner of ego and desire. And I have if I'm going with them for my feature film that probably says a lot. So I would recommend you reach out to them as a possible distribution partner in your in your films. And if you listen to her episodes, you can hear all the details about how great their deal is how transparent they are with their filmmakers. They allow all the filmmakers to talk to each other. Everyone sees, you know, results and reports it there's a lot of transparency inside indie writes, and I would recommend them highly. And check out what they have to offer. And again, I'll put all that information in the show notes at indiefilmhustle.com/343. Now, a lot of you are asking I'm sure in your head. Alex, is there any hope for us? Is there any hope for filmmakers outside of going down this traditional model? Yes, that is why I am writing my new book Rise of the filmtrepreneur. It is a book that shows you a blueprint on how to think outside the box when it comes to your film. It shows you how to create multiple revenue streams outside of just distribution of your movie. There is multiple ways you can make money with your movies. And some in some cases that I put in the book, they make tons more money off of things that are outside the movie, that they actually give the movie away to generate sales for their other product lines. There is hope guys, and that's why I opened up film intrapreneur calm the podcast and why I'm writing this book and hopefully the book will be out sometime in October, if not early November. And trust me this book is going to be fairly epic it is I really go deep and I kind of uncover a lot of myths and B's that I've seen heard about or experienced within this business and I it is it's a must read for anybody listening to me and anyone making a movie or anyone trying to get their movie out there. You should definitely read this if you're thinking about making a movie I would also think about reading this as well. And that's another thing guys, so many filmmakers like I just finished my movie Okay, now I got to figure out distribution No, no You need to figure out distribution, when you're in pre production of your movie, start thinking about all of that way, way, way before. There's no other business in the world that you will spend literally hundreds, if not millions of dollars on a product. And then think about how you're going to sell it after it's done. Nobody does that. That's not good business sense, guys. So think about your distribution, think about other revenue streams that you can create off of your film. And again, I'll go into all of that in the book. And if you want to preorder the book, just head over to filmbizbook.com, that's filmbizbook.com. And you can pre order it there, it already hit the number one on the bestseller list on Amazon for filmmaking books. So obviously, there is a need for this. And I really hope that this book provides you an immense amount of service and helps you on your filmmaking path. I hope this episode helped you out a lot. You know, I just am just tired of hearing these stories and these horror stories of filmmakers just taking getting abused and abused and abused. Bye. Bye by by distributors by these predatory distributors. And that's exactly what they are. They are predatory distributors. I mean, I can't even tell you. I wish I could tell you my stories and my horror stories of distributors I worked with years and years ago, before I even opened up indie film hustle. And I could tell you horror stories then. It's just, it's, it's fairly disgusting. And I really do hope that this episode has helped. Even just one filmmaker, not make that mistake. Because when you make that mistake, guys, and you make a bad distribution deal, what are your chances of making another movie, and that's where the heartbreak happens. That's what this business feeds on. It feeds it, this business cannot run without the fresh blood that these leeches can suck off of every month. So now everybody's making movies, everyone's coming in. There's new product, there's a gluttony of product in the marketplace. So they have their pick of the litter. They could do whatever they want, they could be as abusive as they want, because they have all the power or so they think there is another way there is hope. And hopefully this episode has helped you move into that direction. And if you haven't already, please go check out my new website filmtrepreneur.com or you can use filmmakingbusiness.com will get you there faster. If you can't spell filmtrepreneur and check out the podcast check out all the content that I'm putting up there weekly. It's a real good resource for filmmakers, trying to figure out another way to make money with their film actually turn your movies into a business and not solely just depend on film distributors for the income and the revenue streams. From your movie. There are other options. So thanks again for listening, guys. As always, keep that also going. Keep that dream alive. And I'll talk to you soon.