22 Indiefilm Distribution Definitions Filmmakers NEED to know
If you’re going to read and understand your distribution agreement, then there’s some terminology you have to grasp first. So with that in mind, here’s a breakdown of some key terminology you ABSOLUTELY need to know if you’re going to get traditional distribution for your film.
This is one of those blogs I should probably start out by saying that I’m not a lawyer. Always talk to a lawyer when looking at a film or media distribution contract. With that out of the way, I’d recommend we get started.
1. License
At its core, a license for an independent film or media project is the right to exploit the content for financial gain. Every other piece of a license agreement is clarifying the limitations of that license.
2. Licensor
A licensor is a person or entity that is licensing a piece of media to another entity to either distribute or sub-distribute its content. In general, this is the filmmaker when the filmmaker is dealing with a sales agent or producer’s rep, or the sales agent or producer’s rep when they’re dealing with distributors.
3. Licensee
The License is the entity that is acquiring the content to distribute it and exploit it for financial gain. In the instance of filmmakers and sales agents, it would be the sales agent, in the instance of sales agents and distributors, it would be the distributor.
4. Producer’s Representative (Producer’s Rep)
An agent who acts on behalf of a filmmaker or film to get the best possible sales and distribution deals.
Related: What does a Producer’s Rep Actually do, anyway?
5. Sales Agent
A Company that licenses films from sales agents or Producer’s Reps in order to sub-license the film to territorial distributors around the world.
6. Distributor
A company that directly exploits a film in a given territory on agreed upon media right types.
Related: What’s the difference between a sales agent and distributor
7. MG (Minimum Guarantee)
This is a huge one. It’s the amount of money you get up front from a sales agent, or a sales agent receives from a distributor. The biggest difference between this and a license fee is that at least in theory an MG has the potential to receive more in residual payments beyond the additional payment. In practice, this is less common.
8. License Fee
A license fee is a set amount of money paid by a distributor to exploit media in a defined territory and set of media rights. Unlike a minimum guarantee, a License fee is the total amount of payment the licensor will receive over the course of the license, regardless of the financial success the film goes on to achieve. License fees can be paid in one lump sum, or over the course of the license.
9. Revenue Share
Revenue share is the other most common way films can receive payment. Revenue share essentially means that the licensee will split the revenue with the licensor according to an agreed-upon commission generally after they recoup their expenses.
10. Producer’s Corridor
A producer’s corridor is an alternate payment waterfall of money a filmmaker is paid prior to the licensee recouping their expenses. This generally means that the producer is paid from dollar one.
11. Term
Term is the length of time a contract is in place. For most independent film sales agency contracts, the term is generally 5-7 years.
12. Region
The instances that generally apply to traditional distribution in the modern-day region refer to a set of territories in which a film can be distributed in. While they vary slightly from sales agency to sales agency, they are generally English Speaking, Europe, Latin America, Asia/Far East, and others.
13. Territory
When it comes to film distribution and international sales. territories are areas within a region that add greater specificity to where a sales agent can parse rights. Latin America is both a region and a territory.
14. Media Rights
The sorts of media that a distributor has to exploit in a given territory or set of territories.
Related: Indiefilm Media Right types
15. Benelux
A territory consisting of Belgium, the Netherlands, and Luxembourg.
16. Four-Wall
The act of renting theaters in order to screen your film in them. It generally involves a not insignificant upfront fee, and as a result, all money returns to the licensor.
17. Community Screening
An alternative to a theatrical run for films with a strong niche or cause. See below for more information.
Related: How Community Screenings can replace a Theatrical Run
Related: 9 Essential Elements of Independent Film Community Screening Package
18. Payment Waterfall
When it comes to independent film distribution agreements, a payment waterfall is contractual representation How many flows from stakeholder to stakeholder? If there is a producer’s corridor or some other non-standard modifications of a license agreement, there may be more than one waterfall in said contract.
Related: IndieFilm Distribution Payment Waterfalls 101
19. Collection Account
A collection account is an account that a sales agent pays into which pays out all other stakeholders according to a pre-defined set of parameters.
20. Reports
In the context of independent film distribution and international sales agreements, a report is a statement made monthly, quarterly, bi-annually, or annually that states all incomes and expenses for a film. Generally, this is accompanied by a check one is due.
21. Payment Threshold
When it comes to film and media distribution, a payment threshold is a minimum payment owed by a licensee in order to issue a payment to a licensee. This payment amount is generally dependent on what payment method is being utilized. For instance, the minimum is for a wire transfer is generally higher than a check which in turn is generally higher than for a direct deposit.
22. Recoupable Expense
A recoupable expense is an investment made into marketing or distribution-related expenses by a licensee. This investment will need to be paid back before the licensee pays the licensor, with the notable exception of the producer’s corridor. Generally, these investments will fall into one of 3 categories of capped, uncapped, and uncovered expenses. For more information, please check out the blog below.
Related: What are recoupable expenses?
BONUS! - Expense Cap
An expense cap is a cap on the total amount of expenses that a licensee is able to take out before paying the licensor. There are exceptions, see the related link above for more information.
Thank you so much for reading the glossary! I hope it’s Helpful. If this is all intimidating and you need a little help, consider hiring a professional to assist you in the process. So you could consider checking out Guerrilla Rep Media’s services. These blogs Blogs are largely a public service and marketing tool for me, most of my business is from representing and consulting with filmmakers just like you. You can learn more and submit your film via the link below. Or, if you're not ready for that, but want to support more content like this, join my email list to stay up to date on new offerings and get an awesome film business resource package while you’re there.
