Indie Film Distribution Offers and Deals

In my last post, I shared four steps you can take to improve your chances for successful distribution for your indie feature film.

In this post, I want to talk about the various types of distribution deals that are out there for indie feature films. It’s a bit confusing and very subjective at times. So, you have to be careful.

Before jumping into the actual distribution deal, let me take a moment to talk about what exactly can be sold.

Territories
First, you have territories. Often, a distributor comes in and wants to distribute your film worldwide. That’s every territory, every country, every region. Other maybe, they want just foreign rights (which is everywhere in the world except the US or US and Canada). Or vice versa, they may want domestic rights or North American rights.

For Fissure, we received a few worldwide offers. The foreign distribution company that we signed with initially approached us wanting worldwide rights, but we wanted to keep our domestic rights, so we negotiated out the US and Canadian rights, and let them distribute our foreign rights.

Rights
Next, you need to understand what can be sold within those territories. Here’s a list of the rights that can be sold within each territory:

  • Theatrical
  • Broadcast
  • DVD/Laserdisc (yes, Laserdisc!)
  • Online/Download
  • Pay-per-view
  • Airline

Most distributors will bundle all of these in their contract. Sometimes, a distributor may come in and just request “Domestic Broadcast” or “Foreign DVD”, but usually they want all of them.

If you wanted to, you could literally carve out different variations based on territory and rights. For example, you could sell the Bulgarian PPV rights or the Thailand Broadcast rights. But honestly, you need someone who knows what they are doing and has the relationships in place to secure those deals. That’s why is common to sell all of your foreign or all of your domestic rights.

The Offer
Now that you understand territories and rights, let’s jump into what an offer looks like. There are typically three things that are the focus of most distribution deals:

  • The advance
  • The marketing expenses
  • The royalty

These are often the three first questions I ask when an offer would come in on Fissure. What kind of advance are you paying? What are your marketing expenses and are they capped? After expenses are paid, what is our royalty?

The Advance
Today, with such a saturated market, advances are becoming more rare. I’ve heard that advances can often be your only revenue for your film. Exaggerated marketing expenses and hefty administrative cost can sometimes keep you from reaching the royalty stage.

I have a friend who received a good advance on his foreign deal and good advance on his domestic deal, but he told me that it’s really all he’s expecting in the way of revenue. There’s a royalty deal in place and even a cap on marketing expenses, but he’s convinced that the advances will be all he gets on the film.

Marketing Expenses
Marketing expenses were always the subjective part of the deal where most filmmakers were taken. I hate to say it, but this area is the most dangerous, yet the most needed.

Marketing is essential for the success of a film. You need to get the word out. Posters, advertising, PR, website, social media, box art, viral campaigns, trailer, contests, screenings, give-aways, tee-shirts, etc. It’s all needed.

The problem comes when distributors manage that. First, they mark it up to cover their management and administration of the marketing. So, if the bottom line costs for the trailer creation is $5K, they may market it up 40% and charge you $7K for the trailer. Now, they don’t charge you directly, but pull the $7K from the first money that comes in.

And, here’s the kicker–they don’t pay off marketing expenses until after they pull their royalty. So, for example, if the first order from Blockbuster comes in and it’s $50K order and the royalty deal is 50/50, and the marketing expenses are $20K, here’s how the numbers work. First, the distributor calculates his 50% off of the $50K. That’s $25K to the distributor. Then, they pay the marketing, $20K. That’s a total of $45K, and now your profit on the $50K order is $5K. It sure doesn’t feel like a 50/50 deal.

So, marketing expenses can be tricky. The two things you can push for in the contract are: a cap, so that they don’t spend more than they need and secondly, request that all marketing expenses must be agreed upon by the production company. In other words, you have approval over what they spend on marketing. I’m not sure if this is possible, but I know of a distributor who is doing this now.

Royalties
This is what is paid to the production company after all marketing expenses have been and all replication costs have been recouped. We’ve had a variety of royalty offers come our way:

  • 70%-filmmaker / 30%-distributor
  • 50%-filmmaker / 50%-distributor
  • 30%-filmmaker / 70%-distributor

There are quite a few different deals out there.

Recently, I have seen a new type of distribution deal emerge based on a unique combination of the three areas.

In the past, most distribution deals looked like this:

  • Advance: $5K to $50K
  • Marketing Expenses: Capped at $20K to $50K
  • Royalty: 30% to 70%

This was how most of the deals were made–an advance, with a marketing cap and a royalty.

Today, there’s a new type of deal being offered, what I call a “first-dollar, royalty deal”. It looks like this:

  • Advance: $0, no advance
  • Marketing Expenses: No marketing expenses
  • Royalty: 30% to 50%

It’s becoming more common to have no advance, no marketing expenses and then a straight royalty. This a good for both the distributor and the producer. There is no fluffy accounting that can happen. The distributor pays the production company on the first dollar that comes in. It’s seems to be a very clean deal compared to previous distribution deals.

Our foreign distributor, Boll, offers a straight, first-dollar deal. This deal is even promoted on their website:

    Our offer to you is better as what other worldsales company offers: we sell your movie for 30% but in that 30% are all our costs (from legal to marketing) what means from every sale you get no matter how small the deal is your 70%.

Closing
So, there you have it. Independent film distribution in a nut shell. Sure, there are many variations and details to film distribution, but this should give you a solid overview on the distribution process.


This entry was posted on Wednesday, January 7th, 2009 at 10:43 am and is filed under distribution.
You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.


9 Responses to “Indie Film Distribution Offers and Deals”

  1. JB Says:

    Russ, this is really very good info to know for any first time filmmaker. Thanks for sharing!

    JB

  2. Mark Lipsky Says:

    There actually *is* a distribution company with a new idea. indieWIRE wrote about Gigantic Digital here: http://www.indiewire.com/article/gigantic_releasing_moves_indie_film_distribution_into_new_era/ Our next release, Morgan Dews’ “Must Read After My Death,” will open in February on screen in NY & LA (as well as a few other markets) and day-and-date nationally via Gigantic Digital. In other words, this is a first-run film that will be accessible to a couple of hundred million more moviegoers than any 3000 screen studio release.

    Yes, there’s the issue of how folks will know it’s playing on Gigantic Digital and we’re working our asses off addressing that with the media. Our basic argument is a comparison with an office worker who happens to be telecommuting rather than working from their cube. The work they do from home is no less valuable than the work they do from the office. Same concept. If a new, first-run film happens to open online in Dallas or Seattle or Boston rather than in a bricks and mortar theater, why wouldn’t the local media alert their readers, viewers and listeners to its ‘local’ premiere? Especially when the streaming quality is as good as it gets, when the presentation is commercial-free and when the ticket price is just $2.99 for 3-day unlimited viewing. Why not review it and write a feature about it if they like it?

    It’s a harder sell right now than it should be but we’re fighting that fight. We’re actually doing something about the awful state of things rather than just talking about it. Will it work? Yes. In February 2009? Maybe. I hope so. I hope we’re only a tiny bit ahead of the curve rather than way ahead. But this *is* the future for independent films. You know, films by directors who aren’t household names. Films without movie stars. Films without millions in studio (or studio-lite) dollars behind them. Films in a language other than English. Films that would otherwise never be seen by anyone in today’s (and tomorrow’s) onerous theatrical environment. Our success will be your success. Pray for us.

    OK, maybe just wish us well.

  3. HFilmFestival Says:

    Be Discovered in Hollywood! Great Networking Opportunity!

    The 13th Annual Hollywood Film Festival is now open for submissions in the following areas: Features, Docs, Shorts, and Music Videos!

    Visit http://www. hollywoodfestival. com to submit

    P.S.
    Hustle and Flow’s Craig Brewer was discovered at the HFF!

  4. Richard Steward Says:

    We are looking for world wide distribution for a movie called bosses in the booth and also west coast Legends which is starring Tupac and e40 as well as too short. They are allredy done and ready to go we are just looking for a great or decent offer.
    17025641996 call me if you can help..
    Thanks!

  5. Mark Lipstein Says:

    Thanks for the intro to film distribution. I wanted to know if you had a list of distributors that actively pursue films to purchase, or where I can find such a list. I am talking about those apart from the ones that show up to festivals. I am in serious talks with an investor but he knows that a film without distribution, it is tough to make any return, because no one will see it. So if I could provide him with a list of potential distribution avenues it would help immensely. Thanks

  6. russ Says:

    There are a few resources out there to help you find distributors. There is an online catalogue called Hollywood Creative Directory (http://www.hcdonline.com), and it has a list of all the active companies in the business. Film Specific (http://www.filmspecific.com) is also a good resource for forums and connecting with other filmmakers who may know which companies are buying right now.

    As for which companies are actively seeking content, you’re going to have to find someone to help you navigate those waters, someone who is plugged into that industry. Producer Reps can help. The guys are Circus Road Films (http://circusroadfilms.com) are plugged in pretty well.

    Hope that helps.
    Russ

  7. Blake Bickerstaff Says:

    Russ, thank for this post. I’ve used it to help me write my business plan for our feature.

  8. Blake Bickerstaff Says:

    Mark, check out filmspecific.com. you have to subscribe to see their distributor’s list, but its very thorough and $20 could save you a lot of frustration looking elsewhere.

    Blake

    Reply to:

    # Mark Lipstein Says:
    April 18th, 2009 at 1:03 pm

    Thanks for the intro to film distribution. I wanted to know if you had a list of distributors that actively pursue films to purchase, or where I can find such a list. I am talking about those apart from the ones that show up to festivals. I am in serious talks with an investor but he knows that a film without distribution, it is tough to make any return, because no one will see it. So if I could provide him with a list of potential distribution avenues it would help immensely. Thanks

  9. naorem Says:

    We are looking for distributors who can market our films in Asian continents