In the old days, a feature, a short film or television pilot was either developed and produced by a studio, or was “picked up” or acquired by a distribution company for some amount of up-front money and a small cut of the profits. Those deals do still exist – usually splashed across the front page of Variety during Sundance – but they are rarely as straight-forward or as profitable for the maker as they used to be. Even the seemingly best case scenario now comes with a lot of strings attached.
Traditional Commercial Distribution
In an ideal world you probably would want to have a proper distributor: studio for film, network for television and maybe one of the big three (Netflix, Amazon, Hulu) for web. However, traditional commercial distribution comes with lots of rules and conventional wisdoms. Sure, you get a sense of legitimacy, really good money (if you ever get paid), a launching pad for a career…but also very little control and a lot of bureaucracy.
Fish Where the Sharks Are
For film, the easiest way to get your project in front of a distributor is at a festival, preferably one of the top tier international festivals (Sundance, Berlin, Cannes, Toronto) or one of the American regional festivals frequented by industry professionals (SXSW, Tribeca, New Directors/New Films, Los Angeles Film Festival, Hamptons). Those glamorous sounding film purchase deals almost always happen at one of these places, along with some of the less friendly deals that basically screw the makers in exchange for a limited distribution. For television, the old fashioned pitch meeting to network and cable execs is still the best way to get your work discovered. In the emerging field of new media projects, simply putting your work out there to gain a cult following is the best way to attract attention. If you’re a hit on YouTube, they’ll find you…and hopefully give you some money and a wider audience.
Terms to Understand
Distribution deals are never as easy as a simple exchange of money for goods and services. For any distribution negotiation and contract there are some important concepts that are helpful to know.
An “advance” is money given up front for the right to distribute the project. This money is exactly what you think it is: an advance against future revenues.
The “back-end” is the revenue made by the project after it’s been distributed and usually after the distribution company has deducted the cost of marketing and their distribution fee. In the world of media, profit is never as simple as it sounds.
The “distribution fee” is some percentage of the revenue – usually gross revenue (meaning before any other deductions, not “ugh”) – that is paid to the distribution company as a fee for its services. It’s basically the distributor patting itself on the back for doing such a good job with your work.
P&A | Marketing Expenses
“P&A” (old school) or “marketing expenses” are those expenses that fall into a VERY broad category, encompassing everything from how many copies of the film were made to advertising to promotions to artwork to PR firms, etc. If you think you’ll be surprised by what constitutes a marketing expense, you’re correct.
Rights and Territories
Because media companies believe themselves to be in a constant state of global war, rights and territories are important distinctions in any distribution contract. The internet now makes it almost impossible to limit the reach of a project, but for more traditional platforms – like theaters, televisions, DVD’s or even airlines and cruise ships – the territory defines where the distributor is allowed to screen your project and the rights determine which of those platforms to use. Most often, territory distinctions will actually screw up a deal, not enhance it – especially when internet rights are included in the mix. For instance, American distributors will typically ask for “the United States, its territories, military bases and protectorates as well as the Caribbean Basin.” But guess what? France and the UK also have islands in the Caribbean Basin. If your lawyer has experience with distribution contracts (in fact, this is pretty much essential for these types of contracts), he or she will know to use limiting language like “English speaking only” or “non-exclusive in the Caribbean Basin” so that the French have a chance to hate your project for its own merits and not because they had to pirate a really crappy stream.
The “term” is the length of time the distributor is allowed to work with your project. Many companies fight for “in perpetuity,” which is legalese for “forever.” Most advisors will tell you not to allow this if at all possible. Because you know, forever is like a really long time, man.
If ancillary rights even come up in negotiations, it’s probably a good sign. These rights include any merchandise related to your project such as clothing, toys, accompanying books or soundtracks. Most of the time these negotiations are a concern for projects aimed at children or featuring superheroes, but there have been some unlikely franchises that spring from the low-budget world. As a general rule, don’t simply sign away these rights if you know the company is not going to make use of them. Cue the How-George-Lucas-Became-A-Billionaire example…
- If you really want to go deep, check out the second edition American Film Market’s book, “The Business of Media Distribution: Monetizing Film, TV and Video Content in an Online World”
- Check out this article for a decent overview of traditional distribution, primarily for films.