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IFH 410: Why Most Independent Films NEVER Make Any Money

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I’ve been thinking about doing this podcast for a long time. In the tradition of Why Filmmakers are Always So Damn Broke & What They Can Do to Change It this episode is going to be a cold bucket of water over your head if you are not ready for it. In the insane world, we are all living in today, filmmakers need to break out of the mindset that we are living in the golden age of indie cinema.

The rules have changed dramatically since the 90s and even more so in the last 8 months of the COVID pandemic. The rules aren’t the only thing that has changed but the game has as well. The film distribution infrastructure is broken and has been broken for many decades. It is not set up to help filmmakers make money. It is purely designed to put more money into the pockets of film distributors.

I have written extensively about this in my book Rise of the Filmtrepreneur: How to Turn Your Indie Film into a Moneymaking Business. I want to put together one of my hard truths episodes to help filmmakers better understand the indie film marketplace and how to best position themselves to actually make money.

There is so much talk about new cameras, lenses, rigs, post-production software, and other more interesting aspects of the filmmaking process but when it comes to selling and making money with movies filmmakers rely on old information that is no longer relevant in the current marketplace. I hope this episode empowers you to not only make more movies but to also make money while doing it.

Strap yourself in because for some of you it will be a rough episode to listen to. Be well, stay safe, and keep that hustle going.

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IFH 397: Predatory Film Distributors – The Netflix Guarantee Scam

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It was brought to my attention that there are predatory film aggregators and distributors out there selling promises that they don’t intend to keep.

Yes, I know shocking. The question on most indie filmmaker’s mind is…

How To Sell A Movie To Netflix?

Specifically, I came across a few film aggregators, and use the term “aggregator” extremely loosely, that were promising filmmakers that if they use their service they could guarantee their film would be placed on Netflix, Hulu, Tubi, etc.

“THIS IS 100% BS!”

In this episode, I’ll breakdown the predatory tactics they use and will follow the money so you can see how the sausage is made using this scam.

Some of these “aggregators” have no experience in film aggregation AT ALL. No history working with filmmakers. I mean they just buy a URL, open shop, use a fancy website and promise indie filmmakers the world. You need to do your homework. You need to ask around to see if you can find anyone who has done business with them. You can reach out to the amazing community of indie filmmakers over at the Private Facebook Group: Protect Yourself from Predatory Film Distributors/Aggregators and see if they have any insight.

It’s just not predatory aggregators, we can’t forget the predatory film distributors.  These companies promise you this and that but never deliver. If it’s not in the agreement it doesn’t matter what they tell you. DO YOUR HOMEWORK. Speak to a qualified entertainment attorney with an expertise in film distribution.

As I stated last year, when the economic situation in the world changes predatory film aggregators and distributors will become more and more desperate.

Stay vigilante out there tribe. Sharks are around every corner.

Alex Ferrari 0:00
It was brought to my attention recently that there were some pop up film aggregators. Can you believe this pop up film aggregators, who were targeting independent filmmakers and trying to get them to use their service to get you know, on the on the different platforms. Now, the thing that I was, I noticed about a handful of these that I was actually looking at was that they, they were promising access to Netflix, who to be Pluto, and a couple of other big s VOD, and a VOD platforms. And sure, they also included Amazon and iTunes in there as well. But, but when they were guaranteeing that they would get you in, or at least the way they worded it seemed like they were guaranteeing you to get access to Netflix, Hulu and to be for example, I want to make something extremely clear. That is a straight up lie. There is no company. And I'm saying this very straight, I can't make it any clear. There is no film aggregation company, nor distributor that can guarantee placement in Netflix, Hulu, to be Pluto, or anything like that as a general statement. Sure, some of the bigger studios and some of the bigger distributors might have direct relationships with those companies. And there might be very good chances of you getting in through those companies to Netflix. But the landscape is changing changes so rapidly, especially with Netflix and Hulu, and tubi, where one month, they might want your kind of film. And the next month, they don't. So there's no guarantees, and anyone that says that they can guarantee have them put it in writing period, oh, you can guarantee I could get into Netflix or into Hulu, put it in the agreement, there is a guarantee. And if you can't get into me the contracts null and void or I get a bonus or I get some money back or something along those lines. put them to the test. Because that is the the new way that these predatory aggregators and distributors are trying to bring in filmmakers into their clutches, if you will, by the promise of Netflix, of Hulu, have to be and so on. I mean, I got my first film was was licensed to Hulu. I couldn't do that deal today if I wanted to. If I tried, because Hulu is not buying my kind of films anymore. The one that the my this is Meg, they're not buying that kind of film anymore. They're not buying many independent films anymore, or licensing any independent films anymore, because the game has changed. In 2012, Netflix was buying everything. 2020 not so much. So you have to be very, very careful about what people promise you, specifically distributors, and aggregators. If someone's promising you something, have them, put it down on paper, have them put it down in an agreement. Because if you don't, if they're like, Oh, we can do this. And we could do that. And we can get you on this platform and we can get you on that a bad situation and we can get you this kind of press. If they can't put it in an agreement, then it doesn't exist. It's just lip service. There's no power in your hands, to do anything, any sort of retaliation if they don't follow through with what they verbally said. So have them put it down in an agreement, if that's what they're actually saying. And oh, Let me go back to a couple of these these platforms. Netflix and Hulu, obviously are two of the bigger s VOD platforms here in the United States.

Peacock is coming up isn't is a newer a VOD platform that is starting to come up. It hasn't launched yet as of this recording, but and they are going to eventually start taking in outside content. But that hasn't started yet. But they are going to start doing that I have a good word that that is happening. But the COVID thing has kind of thrown everything into into turmoil for the entire industry in general. So, Avon used to be like to be used to accept anything that you gave them, they put it on, because they needed content. But this is the this is the life cycle of these platforms. At the beginning, they'll buy everything, they'll accept everything. And this includes Amazon, they'll accept anything and everything. Because they're trying to build up their library, they're trying to build up their content, when there's a certain threshold that is hit, that they just have so much content, then they start getting picky, then they even start stopping completely, they even stop accepting new content, because then they start making enough money that they're like, you know what we're going to buy things outright, or we're going to start creating our own content, which we'll own in perpetuity. And I have to worry about these licensing deals, this is the lifecycle of all of these. So now to be in Pluto, are starting started to reach that point where they have so much content that they are now curating where before it wasn't as much curated. Now they're curating content coming in. Amazon prime is a perfect example of that, at the beginning, anything and everything was was allowed up on amazon video, everything. And it didn't care about content and didn't care about anything. And you were getting paid 12 cents, 15 cents an hour of streaming time, and everybody was making obscene amounts of money. But as that world in their their entire library grew so much, that now they're just starting to throw people off, that they don't like that they're not playing anything that has even remotely controversial stuff in it nudity, you know, action that they don't want gone, just gone.

So that is the world that we live in with these platforms. And that a company is going to come in and say, Oh, I can promise you I can get you in this. And that goes for sales agents and sales reps, producers reps, all of those guys, if they say I can guarantee you placement in any of these platforms run away, because there's no guarantee. Now could they submit for you sure, do, they have a better chance than other people possibly. But it's about the wording. It's about how they're planning to do. And I'm going to show I'm going to tell you how these aggregators, these new pop up aggregators are coming up. This is their business model. At the end of the day, they don't really care about you or your movie. Or if you make money or not, they just really don't, they are a service style business. They want to provide you a service. Now, the way that they are marketing to you to sell their service is by promising you access to all of these amazing platforms, all the they're selling you the dream, they're selling you the sizzle, like Hollywood does they sell you the sizzle, but ain't no much not much steak behind it. Now, the reason why they're selling you the sizzle is because their business model is based around a service based business. Meaning that they want to bring in your movie and charge you for QC charge you for delivery, like prepping your files, possibly closed captioning, all these other add on services ala carte services that they can add on to you, and they could charge you 500 bucks, 1000 bucks, that's where they want to make their money. That's where they're going to make their money. And they're going to tell you, they're going to submit you to Netflix. But do you really? And they're going to charge you a bit to try to submit you to this. But are they really going to submit you? Who knows? Maybe Maybe not. I can tell you from the from the distributor debacle that we heard from people that they were charging people that they were going to submit to Netflix and they were never submitted.

So you have to be very, very careful with this. But I wanted you to understand why they're doing it and how their business model works. They're not in the business. They're not making money by you going up on the platforms. That's not where they make their money. They make their money on the encoding, on the QC on the closed captioning. And if you're not educated in the process, they can take you for a ride and their day dangling the golden carrot of Netflix, Hulu, to the Pluto, iTunes and all the other platforms for your movie, they're selling you your dream because they know what you want. They know that you want to be on all these platforms, they know that that's what you want. So that's what they're selling you. So I want you to be very careful with these predatory film aggregators. And of course, the predatory film distributors. And obviously, their business model is, Hey, I'll get you on Netflix, I think we have a really great deal on Netflix, just sign on the dotted line and give me your movie for next seven to 10 years, and no mg upfront. That's what they're using that for. They're using the dangling of the carrot of all these other platforms to just get you locked in and the basically to take your film, and you'll probably never see a dime of their predatory film distributor. So it's all about the agreement. It's all about the paperwork. So always look for a experienced entertainment attorney who has experience specifically in film distribution, to look all over this all all anytime you're dealing with with film distributors, film aggregators, you should be consulting a entertainment attorney that can guide you through this process. All right. So I wanted to bring this guy this to your attention, guys, it is a weird and wacky world that we are living in. And as I said, I was yelling this last year, I kept saying, guys, we are in good economic times, wait until the next crisis hits, and you're going to start seeing more of these predatory tactics start popping up. And what has happened exactly that. And I hate to tell you guys, but we have not seeing the bottom of this by any stretch of the imagination, it's going to get worse. And it's going to get more predatory when it comes to predatory to film distributors, and aggregators, and all aspects of our industry. So you have to be very vigilant in regards to who you give your movie to how you're going to get paid. All of these things be very, very careful, it is going to get worse. This I promise you. But at the end of this, when the the walls of Rome, as I keep saying is burning, when the city is burnt down to the ground when this this old model is finally kind of broken down to its foundation. Hopefully, a new system will be put in place that will help filmmakers have sustainable careers as filmmakers, because they're actually getting paid to do what they love to do. And I also wanted to give you an update that my film distribution confidential course, the course that predatory film distributors do not want you to take is open, I have opened up a launch beta version of the course. And it's at a steep discount. And the for the first 100 tribe members that sign up now you will be helping me build out this course by seeing lessons as I build them. Every week, I'll be adding 1015 lessons as I continue to build out this course and you'll be the first ones to see it and get it at again a steep discount if you want in and it's only open for the first 100 seats after that I will close it and then re release it when it's finally done at the full price. So if you want to head over to indie film hustle.com Ford slash let me in. That's indie film hustle.com Ford slash let me in. Thank you again for listening guys. Be well stay safe out there. And as always keep the hustle going. Keep that dream alive. And I'll talk to you soon.

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IFH 374: Predatory Film Distributors – The Bankrupt Reboot Scam

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I’ve spoken about predatory film distributors before on the show (The Dark Underbelly of Predatory Film Distributors – BEWARE!) but I just discovered how some of these scumbags have figured out how to absolutely screw over filmmakers using a legal loophole. It’s called the Bankrupt Reboot Distribution Scam.

Here’s how they do it. A predatory film distributor will prey on desperate indie filmmakers and will try to obtain the rights to as many low budget indie films as they can, usually for no money upfront in a short period of time. Let’s say 1-2 years, if not faster. During that time they sell-off the rights in one big transaction to a bunch of different platforms, outlets, streaming, foreign agents, etc.

Now here’s the rub, rather than actually paying filmmakers what they are owed, the distributor files for bankruptcy protection, which is extremely easy to do in the United States. So you must be asking

“If the distributor goes bankrupt, what happened to the rights of all those films?”

Glad you asked. These bottom dwellers go to the bankruptcy court hearing and then buy back all the rights to the catalog of films from their own bankrupt company. The court has no other choice because that is how the bankruptcy law is written and there’s no one else there to buy these assets.

These bastards then form a new company and assign the newly purchased film catalog to themselves through that company. Now they are no longer legally obligated to pay the filmmakers (or anyone else they owe money to). So they own the film you killed yourself to make for pennies on the dollars and they never have to pay you a thing.

This is made possible because of the original contract the filmmaker signed, which has a clause absolving the distributor in the event of bankruptcy. Then to add insult to injury when the rights they originally sold off expire, they re-sell them again.

These predators run this scam over and over and over with new companies formed each time. This is an extremely profitable business model. It’s not ethical but it is legal.

In this episode, I breakdown a case study of how one of these predatory film distributors pulled this off and I also go over how you can protect yourself. Make sure you take some notes because this episode is a doozy!

Alex Ferrari 2:55
So guys, today, I have a interesting episode, I kind of started this new series that I'm going to be doing on the podcast every once in a while. And it's going to be entitled predatory film distributors, and the different scams and things that they do to screw over filmmakers. And I'm going to be bringing these little ways out into the into the light out of the corners in the darkness in the back alleys of film distribution. And before I get started, I wanted to give you a quick update on the tug situation. If you have not listened to Episode 373, definitely check that out. And it breaks down everything that we know to date about the closing of tug, and how it's affecting hundreds, if not 1000s of filmmakers. And I know just from the few filmmakers that I've spoken to that we're easily into the hundreds of 1000s if not millions of dollars that are owed to filmmakers and also two customers that bought tickets through a tug screening. So if you want to get the latest updates on all of that, you can join my facebook group, which was the protect yourself from distributor Facebook group. But now we're transitioning that in to protect yourself from predatory film distributors slash aggregators. And you can get to it by going to indie film hustle.com Ford slash protect yourself. That's where all the latest information on tugg other filmmakers experience and what's going on with other predatory film distributors, and or aggregators, or, you know, just shenanigans in general in the distribution world. That's where filmmakers are going to, to inform and educate each other. And that little group that I started for, basically to help distributor victims has turned into a wonderful community of filmmakers there to help and assist and answer questions about distribution. And that's why it's evolving into this app. tugg I felt that it's time to, to evolve that group. So just go to indie film hustle.com forward slash protect yourself and sign up. Now, before I get into this scam that predatory film distributors use, I want to make it really clear that I am not bashing all film distributors. It is I want to make that very crystal clear. There are good film distributors out there. I do believe that there are many more bad distributors, I think it's harder to find a good distributor than it is to find a bad or predatory film distributor without question. So please, anytime I hear me talk about predatory film distributors, there's a reason why I'm saying predatory. It's not all film distributors. I myself am with a film distributor for this is Meg. And for parts of this is Meg. And for on the corner of ego and desire. I've partnered with this distribution company, which is indie REITs. And I love them, they're, they're great. And there are they are a unicorn in the distribution world. And there are other good ones as well please do your own homework, please do your own research and due diligence on any film distributor that you work on. But what I'm talking about in these, these episodes that I'm going to be doing over the course of the year, exposing these kind of slimy, ridiculous, you know, immoral techniques that these guys are using to screw over filmmakers. Just be aware that you have to be looking out for this with any and all distribution contracts that you might sign. So let's get into it, guys. So today's episode is about the bankrupt reboot scam. Now, I been in this business a long time. And as you guys know, I'm in this I'm in deep, especially now getting into the distribution side of the business. I had never heard of this scam before. And it's been going on for years. And the scam is done. Not only in our industry, but many industries around the world. And this is how it goes guys. A predatory film distributor will prey on desperate independent filmmakers. And we'll try to obtain the rights to as many low budget indie films as they can in for no money upfront. Of course, no MGS, no minimum guarantees in a short period of time, let's say a year or two, if not faster. During this time, they will package large groups, if not all of their films into kind of clusters into packages into transactions that they can sell them off to. So if they have 50 movies, they'll sell all 50 movies off as a package to foreign agents, streaming services, other distribution outlets, wherever, wherever they think they can get some money. And they'll do that a bunch of times, of course, because you've signed a horrible deal in the first place with these guys. They will take forever, if anything to pay any money out and they'll probably won't even pay anything out at all. Now this is the rub guys, rather than actually paying the filmmakers that are owed money. And they've already screwed you over by packaging them out. And I talked a lot about that in my book, this predatory film distributor will then file for bankruptcy protection, because they're going to crank up a ton of money ton of debt, doing what they do. And filing for bankruptcy is fairly easy here in the United States. So then you must be asking yourself, but if distributor goes bankrupt, what happens to the rights to all those films? Well, I'm glad you asked guys, these bottom dwellers go to the bankruptcy court hearing and then buy back all the rights to the catalog of films from their own bank robbed company. The court has no other choice because there's nobody else there to buy it. So basically, someone they raise their they anybody here willing, willing to bid for this. And they go in and they buy it. So since nobody else is there to bid against them, they buy back the rights to your films, pennies on the dollar. But it even gets worse from there. These bastards then form a brand new company and assign all these newly purchased films to themselves through that company. Now because they did this, they are no longer legally obligated to pay any of the filmmakers any of the money that is owed to them. So they own the film that you killed yourself to make. And they buy it for pennies on the dollar. And they never pay you a thing. This is made possible because of the original contract that you signed as a filmmaker and the clause is absolving them in the event of a bankruptcy. And to add insult to injury, when the rights they originally sold off expire, they get to resell them again and Again, and again, these predators run this same grift, on filmmakers, again, and again and again. And each time they form new companies and new companies, this is an extremely profitable business model, not ethical in the least. But it is legal. Now you as a filmmaker can sue for this, and sometimes you'll win. But now you're looking at a lot of court costs to try to get the rights back to your film. And it might make sense if you have a large movie, and you feel that you can make money with it. But they are banking, that most of the filmmakers are either embarrassed or not able to, to do it, they're not savvy enough to do it, they're afraid to take them to court, all these different things. And, and they just bank on filmmakers just rolling over. And nine out of 10 will there'll be that one that squeaky wheel that makes a lot of noise. And they might just give that movie back just to shut them up. And that happens all the time. As I did more and more research about this, I was shocked at how prevalent it is in the industry, I can't believe I hadn't heard about it. This is one of those dirty secrets. Because there's predatory film distributors, there's there's people that will create a contract, that is obviously just misleading and completely in favor of that distribution company and worded in a way that you will never see a dime, there's that predatory guy. But then you've got this completely new level of scumbag that is literally coming after your film in a fraudulent way, knowing what they're going to do is going to screw you when you sign that that paper. It's it's unconscionable. And I just wanted to bring this up. And I wanted to put it out there. So filmmakers can be very aware of what the hell's going on. Now, during my research, I found a bunch of these cases of companies doing this. So I'm going to give you a little bit of a case study. Now I'm not going to name names, obviously, but I will give you rounded about estimates of what they did. So this distribution company, had her company declared insolvent let's say last year, and all of her company's films, which was about 350 films were deemed not to have any value to third parties. Because it's not really NASA. It's not a it's not a microwave, a computer office supplies, it's none of that. So they had no value. In other words, this distribution companies library was worthless in the courts eyes. And the company owed about $6.5 million to creditors, including many, many, many filmmakers. And the company assets were basically around $200,000. That's it. So then they create a separate company that then purchase all of their original all the original company's assets for about $150,000 because nobody else was there to bid. So this predatory distributor bankrupted their company, and bought back all of their films for about 200k saving themselves, about $5.8 million. I mean, you I mean, it's diabolical. It really is. But it is so immoral and so just horrible to do to people. It's amazing. And this company had done it multiple times. So how do you protect yourself as an independent filmmaker? Well, before I continue, I you have to understand I am not an attorney. And this is not legal advice, you should definitely reach out to an attorney, an entertainment attorney who understands entertainment law and distribution contracts. But to my understanding after talking to some attorneys, these are things that you can do to help protect yourself. First off, do some research. Start doing your homework on the company. Find out the owners of the company, how many times they've been they filed bankruptcy. How old is this distribution company? Is it a fly by night distribution company that just launched has in all these things you need to understand call filmmakers who were with them from their old company if they had an old company. call those filmmakers see what kind of experience they have with them. Don't ask the company for referrals because you're only going to get sweet people who are probably their best friends. So do your homework, do your research. You got to be careful about these little clauses, these little bs clauses that can literally Screw you. So first thing you need to do is include a clause in The contract that states that in the event of a bankruptcy, all rights revert back to the original owners. And make sure that your lawyer checks that language and make sure there is no way they can get out of it, make sure it's ironclad. And another thing you need to do is to make sure there's an official procedure outlining the steps in the event of a bankruptcy, and what needs to be done in order to get your film back. Again, please consult with an attorney about this. But this is just one of many clauses, and many little tricks that predatory film distributors use in their contracts to screw you over. I know of a specific I know this, a specific Sundance winning film and filmmaker who signed with a distribution company who went bankrupt and their Sundance winning film was locked up in bankruptcy court for three to four years. And that and by the time the filmmaker got that movie out, it was old news, it was done. If they would adjust put in a clause stating if the company goes bankrupt, all rights revert back, please check with an attorney on this and make sure that they go over every little clause with a fine tooth comb. And like I said, in my book, Rise of the entrepreneur do not get Uncle Bob who's a real estate attorney, he's not going to understand the minute language, that in clauses that will screw you as an independent filmmaker, you've got to get a seasoned entertainment attorney who knows film distribution contracts and is extremely savvy when doing it. But at the end of the day, guys, it's your responsibility to do as much homework as humanly possible. If you want to learn more tricks of predatory film distributors, I have an entire chapter actually two chapters, detailing all the little tricks and scams that they pull on filmmakers in my book, Rise of the film intrapreneur at WWW dot film biz book.com. And check it out there. Also, thank you so much, guys, for all the amazing reviews the Amazing love that I've gotten for on the corner of ego and desire, I am humbled that you guys love the film so much I truly, truly, truly appreciate all the love from the tribe. It is now available on prime on Amazon Prime if you want to watch it on Amazon Prime. And on Tuesday, if you want to watch it for free, if you want to go iTunes is there and of course on indie film, hustle TV, where you get these six hours plus of special features on how I made a $3,000 film at the Sundance Film Festival. And you can go to ego and desire film.com. And you can get links to all of those places there. And if you did see the movie, I need you to do me a favor, I need you to go to Amazon and leave a review, we need to get to 100 reviews before 30 days if we do, Amazon's algorithm is going to really give this a lot of juice. And that's really, really important. So please, if you see it even on another platform, and you have an Amazon account, please just do me a favor and leave a review there. And also there were a bunch of haters on IMDB that came out before the movie even was released and dropped our rating on IMDB and has been growing so much. Thank you so much for everybody that's gone on and rated it all you got to do is go on to IMDb and give us a good review, hopefully eight 910 stars if you like the film, and that really helps us out a lot as well it works with the algorithm on Amazon. So that's a little trick. By the way, if anybody is going and self releasing or self distributing their film on Amazon, those are some of the metrics that you need to hit to really get some love from Amazon's algorithm. So I hope this episode was of service to you guys. I hope it's if it just saves one filmmaker, the pain and suffering that I've seen so many other filmmakers go because they did not understand that this was a clause. This was a little trick that that these bastards do. I hope it really does help at least one person. And since you have listened to this, please share this. I want this information to get out to as many filmmakers as possible. So you don't if you don't want to share that the link, just tell them just get this information out there. I want this information out to as many people as humanly possible. If you want to get a quick link to this episode, you can share it it's indiefilmhustlecom/374. And there I will have links to the Facebook group to everything else that we talked about in the episode. And if just please just get this information out there. I really appreciate it. We're in this together. And I'm just truly tired of filmmakers being taken advantage of by these predatory film distribution companies and predatory sales agents and all the other you know just scum shark snakes that are in this side of the business. It is My goal in life to expose all of these little tricks and techniques as much as possible so you guys can be educated and protect yourself from these things. Because if you make a movie and you spend $500,000, if you spend $5, and it takes you a year to make and it's your baby, and all of a sudden one of these guys comes in and steals it from you, because you were ignorant to what they could do, then I have failed. So hopefully, I want all this information to get out there to help as many filmmakers as possible. Thank you for listening. As always, keep that hustle going. Keep that dream alive. And I'll talk to you soon.

YOUTUBE VIDEO