Filmmakers Glossary of Film Investment Terminology
It’s hard to raise funding for a film, and the contracts get confusing quickly. Here’s a glossary to help you understand the mountain of paperwork you’ll need to sign to get your film financed. This blog doesn’t mean you don’t still need a lawyer (I’m not one, and this isn’t legal advice), but it will help you understand the paperwork you’re sent.
Last week I laid out a glossary of general-use film business terms, but the blog ended up a bit too long and dense to be a single post. So, I broke it into two. Last week was the basics of business terms, this week is the next level, and focuses entirely on investment terms. Some of these may seem tangential and unnecessary, however if your goal is to close an investor, you’ll need to thoroughly speak their language. If there’s something you don’t see here, check out last week’s blog here. I’m not a lawyer, this isn’t legal advice, and you should have a solid attorney on your team before trying to close an investment round. With that out of the way, let’s get started.
Capital
While many types exist, The term most commonly refers to money.
Liquid Capital
Money that can be spent immediately, or near immediately. Non-liquid capital would be considered something like real estate holdings which would first need to be liquidated in order to sell.
Principle
In finance: it’s general the initial capital investment or the remaining balance on a debt.
Interest
A percentage fee is added on to the principle of a loan or line of credit.
Compound interest
Interest on the principle of the loan and interest.
Simply: interest on interest.
High-Risk Investment
An investment where an investor may lose most or all of the money they put in. Independent Films are always high-risk investments
Securities and Exchanges Commission (SEC)
The main financial regulatory agency in the United States. It oversees most forms of investment.
Accredited Investor
A person of means who is generally considered to have enough business know-how to appraise an investment, pay someone to appraise it for them, or who wouldn’t be completely destitute from taking a high risk-gamble. As of the date of this publishing, according to the SEC the investor must meet either (NOT both of) the income or net worth requirement in order to be considered an accredited investor.
Income Requirements
1.If filing individually, a person must have made 200,000 USD a year for the past 2 years, and be likely to do the same this year.
2.If filing Jointly, a household must have made 300,000 USD a year for the past 2 years, and be likely to do the same this year.
Net Worth.
The investor or household must have 1 million dollars in net worth OUTSIDE of their primary residence.
High Net Worth Individual (HNWI)
Outside the obvious, this term is generally a financial industry term for accredited investor
Edgar Database
A database of high-risk investments maintained by the SEC that is only accessible to Accredited investors and licensed brokerage or investment firms.
Financing Round
A round of financing or funding that is large enough to take an organization or project to the next major milestone. For how this works in film, check out the youtube video I’ve linked below, and the blog linked below that.
Related Video: The 4 Stages of Indiefilm Financing
Related Blog: The 4 Stages of Indiefilm Financing
Business Plan
A document written by an entrepreneur or filmmaker outlining their investment. In the film industry, this document will also often educate the investor on how the industry functions as a whole. This document is also known as a prospectus, but that term is not as commonly used as it once was.
Private Placement Memorandum (PPM)
A document that’s filed with the SEC for investors to consider investing in your project. Frequently an attorney will base this document off of the filmmaker or entrepreneur’s business plan. In most cases, a PPM will be registered with the aforementioned Edgar database for a modest filing fee.
Pro-Forma Financial Statements
Financial documents consisting of an expected income breakdown, cash-flow statement, and top sheet budget to be invaded in the business plan and function as the basis for many of the financial sections of other documents
The Three points above are heavily outlined in my business planning blog series.
Related: How to write an independent Film Business Plan (1/7)
Backed Debt
A secured loan backed by something like a tax incentive or pre-sale agreement.
Unbacked Debt
An unsecured loan, or debt without backing. Generally very high interest.
Financial Gap
The space between what you are able to raise and the amount you need to finish your project.
Financial Markets
A market where stocks, bonds, derivatives, or other securities are bought and sold. Common examples in the US would be the DOW and the NASDAQ.
Film Market
A convention where films are bought and sold primarily by sales agents and distributors. For more, check out the link below.
Related: What is a film market and how does it work?
Gross Domestic Product (GDP)
The total value of all newly finished goods in a given country during a set timespan. Most commonly calculated on an annual basis.
Recession
A macroeconomic term signifying a period of a significant decline in economic activity. It’s generally only recognized after two consecutive quarters of down financial markets.
Depression
A severe recession that lasts longer than 3 years and corresponds with a drop in GDP of at least 10%
Bull Market
A market that’s strong and growing. It’s called a bull market as the upward trending graph looks like a bull nodding its head according to some people on Wall Street.
Bear Market
Yes, I spelled that right. It’s a financial market that’s going down, or staying stagnant. The name comes from a bear swiping its claws down. Probably the same wall street guy came up with it.
Thanks so much for reading! If you liked this, please make sure to check out last week’s general financing glossary, as well as my glossary of distribution terms. Also, please share. It helps A LOT.
Filmmakers Glossary of Business Terms
Additionally, make sure you grab my free Film Business Resource Package to get a print ready PDF version of all 3 glossaries.
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Filmmakers Glossary of Film Business Terminology.
I’m not a lawyer, but I know contracts can be dense, confusing, and full of highly specific terms of art. With that in mind, here’s a glossary of Art. Here’s a glossary to help you out.
A colleague of mine asked me if I had a glossary on film financing terms in the same way I wrote one for film distribution (which you can check out here.) Since I didn’t have one, I thought I’d write one. After I wrote it, it was too long for a single post, so now it’s two. This one is on general terms, next week we’ll talk about film investment terms. As part of the website port, I’m re-titling the first part to a general film business glossary of terms, to lower confusion on sharing it. It’s got the same terms and the same URL, just a different title.
Capital
While many types exist, it most commonly refers to money.
Financing
Financing is the act of providing funds to grow or create a business or particular part of a business. Financing is more commonly used when referring to for-profit enterprises, although it can be used in both for profit and non-profit enterprises.
Funding
Funding is money provided to a business or non-profit for a particular purpose. While both for-profit and non-profit organizations can use the term, it’s more commonly used in non-profit media that the term financing is.
Revenue
Money that comes into an organization from providing shrives or selling/licensing goods. Money from Distribution is revenue, whereas money from investors is financing, and donors tend to provide funding more than financing, although both terms could apply.
Equity
A percentage ownership in a company, project, or asset. While it’s generally best to make sure all equity investors are paid back, so long as you’ve acted truthfully and fulfilled all your obligations it’s generally not something that you will forfeit your house over. Stocks are the most common form of equity, although films tend not to be able to issue stocks for complicated regulatory reasons and the fact that films are generally considered a high-risk investment.
Donation
Money that is given in support of an organization, project, or cause without the expectation of repayment or an ownership stake in the organization. Perks or gifts may be an obligation of the arrangement.
Debt
A loan that must be paid back. Generally with interest.
Deferral
A payment put off to the future. Deferrals generally have a trigger as to when the payment will be due.
“Soft Money"
In General, this refers to money you don’t have to pay back, or sometimes money paid back by design. In the world of independent film, it’s most commonly used for donations and deferrals, tax incentives, and occasionally product placement. It can have other meanings depending on the context though.
Investor
Someone who has provided funding to your company, generally in the form of liquid capital (or money.)
Stakeholder
Someone with a significant stake in the outcome of an organization or project. These can be investors, distributors, recognizable name talent, or high-level crew.
Donor
Someone who has donated to your cause, project, or organization.
Patron
Similar to donors, and can refer to high-level donors or financial backers on the website Patreon. For examples of patrons, see below. you can be a patron for me and support the creation of content just like this by clicking below.
Non-Profit Organizations (NPO)
An organization dedicated to providing a good or service to a particular cause without the intent to profit from their actions, in the same way, a small business or corporation would. This designation often comes with significant tax benefits in the United States.
501c3
The most common type of non-profit entity file is to take advantage of non-profit tax exempt status in the US.
Non-Government Organization (NGO)
Similar to a non-profit, generally larger in scope. Also, something of an antiquated term.
Foundation
An organization providing funding to causes, organizations and projects without a promise of repayment or ownership. Generally, these organizations will only provide funding to non profit organizations. Exceptions exist.
Grantor
An organization that funds other organizations and projects in the form of grants. Generally, these organizations are also foundations, but not necessarily.
Fiscal Sponsorship
A process through which a for-profit organization can fundraise with the same tax-exempt status as a 501c3. In broad strokes, an accredited 501c3 takes in money on behalf of a for-profit company and then pays that money out less a fee. Not all 501c3 organizations can act as a fiscal sponsor.
Investment
Capital that has been or will be contributed to an organization in exchange for an equity stake, although it can also be structured as debt or promissory note.
Investment Deck (Often simply “Deck”)
A document providing a snapshot of the business of your project. I recommend a 12-slide version, which can be found outlined in this blog or made from a template in the resources section of my site, linked below.
Related: Free Film Business Resource Package
Look Book
A creative snapshot of your project with a bit of business in it as well. NOT THE SAME AS A DECK. There isn’t as much structure to this. Check out the blog on that one below.
Related: How to make a look book
Audience Analysis
One of 3 generally expected ways to project revenue for a film. This one is based around understanding the spending power of your audience and creating a market share analysis based on that. I don’t yet have a blog on this one, but I will be dropping two videos about it later this month on my youtube channel. Subscribe so you don’t miss them.
Competitive Analysis
One of 3 ways to project revenue for an independent film. This method involves taking 20 films of a similar genre, attachments, and Intellectual property status and doing a lot of math to get the estimates you need.
Sales Agency Estimates
One of 3 ways to project revenue for an independent film. These are high and low estimates given to you by a sales agent. They are often inflated.
Related: How to project Revenue for your Independent Film
Calendar Year
12 months beginning January 1 and ending December 31. What we generally think of as, you know, a year.
Fiscal year
The year observed by businesses. While each organization can specify its fiscal year, the term generally means October 1 to September 30 as that’s what many government organizations and large banks use. Many educational institutions tie their fiscal year to the school year, and most small businesses have their fiscal year match the calendar year as it’s easier to keep up with on limited staff.
Film Distribution
The act of making a film available to the end user in a given territory or platform.
International Sales
The act of selling a film to distributors around the world.
Related: What's the difference between a sales agent and distributor?
Bonus! Some common general use Acronyms
YOY
Year over Year. Commonly used in metrics for tracking marketing engagement or financial performance on a year-to-year basis.
YTD
Year to Date. Commonly used in conjunction with Year over year metrics or to measure other things like revenue or profit/loss metrics.
MTD
Month to Date. Commonly used when comparing monthly revenue to measure sales performance. Due to the standard reporting cycles for distributors, you probably won’t see this much unless you self-distribute.
OOO
Out of Office. It generally means the person can’t currently be reached.
EOD
End of Day. Refers to the close of business that day, and generally means 5 PM on that particular day for whatever the time zone of the person using the term is working in.
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22 Indiefilm Distribution Definitions Filmmakers NEED to know
There are a lot of terms of art in film distribution. Here’s a primer.
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.
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What Deliverables does my Sales Agent Need to sell my Independent Film internationally? (Deliverables 2/4)
If you want a sales agent to sell your movie, they’ll need some things to do it properly. Here’s a guide as to what those things are.
Last week, I covered the basics that are required as deliverables for almost every U.S. Distribution or International Sales Contract. This week, I’m going through the servicing lists. Most of these servicing requirements are for the internationalization of the film, be they subs or dubs. Some are more for marketing purposes, but in the end, it’s what the sales agent needs to effectively put together a package and the film to where it needs to go.
Again, this list though expansive may not cover every distribution deliverable from every contract you may encounter, although it should get most of them.
NOTE FROM THE FUTURE: After running a distribution company, I found these blogs are overly intensive, and really you’re not going to need everything across the 4 blogs. I may do a revised version in the future if I get enough comments, but until then I’ll leave this up for posterity.
1. Final Timecoded Continuity Script/Spotting List:
This is different than a script. This is you watching the final cut of your movie and going through and noting the timecode of every single line of dialogue. You’ll also have to write down exactly which words are spoken for this spotting list. This document is generally used for creating subtitles and dubbing scripts.
You may also be required to provide this for any trailers.
2. Final Shooting Script
Even though you will need to have the spotting list, turning over the final version of the shooting script can help provide a backup, in case parts of the spotting list are unclear, or do not translate well.
3. Music Cue Sheet
A Music Cue Sheet is similar to a spotting list, but instead of being for dialogue, it’s for music. While you will be required to provide music and effects tracks, the music queue sheet is required in case of edits are made to the film for censorship or time reasons.
4. Music & Effects (M&E) Tracks
If the sales agent sells the right to dub the film, they’re going to need the Music and Effects tracks to do it well. These tracks are essentially all the audio in the film without any dialogue. Sometimes the tracks on which each type of audio will be placed on are specified, however, that’s beyond the scope of this article.
5. Final Main Credits
This is a typed list of the opening credits as they appear on the screen. Generally, these are more for subtitling purposes than straight-up replacement purposes. Most of the time delivery of this item will be via Word document.
6. Final End Credits
Similar to the final main credit entry above, this is a list of all credits in the back end of the film. Again this is something you can deliver to your international sales agent in a simple Word document. Generally, these are preferred to PDFs in case minor changes or copy-pastes need to be made.
7. Press Kit
This deserves a longer entry than I can give it here, but a press kit is essentially a list of all pressworthy information about the film. What goes into it is subjective relative to space requirements and how you’re using it. In this instance, it’s best you talk to your sales agents to clarify what they really need in a physical press kit. Although generally speaking, you’ll want a review or two from festivals, any festivals you got into, any press coverage you’ve already gotten, some screenshots from the movie, the poster, and maybe a few quotes from the director/producers/lead talent.
8. Logos
You’ll need to deliver logos to the distributor for the production companies involved in making the film. If you’re using a producer’s rep, then you’ll need theirs too. Generally, the distributor will want the Photoshop file, and they’ll probably have other tech specs for you as well.
9. Bonus Material
If the distributor is planning a DVD release, they may ask for bonus materials. Things like BTS Footage, deleted scenes, an alternate ending, a blooper reel, cast interviews, and commentary tracks.
10. Electronic Press Kit (EPK)
This is an electronic version of the press kit. It will contain everything listed above, plus more links to reviews, broadcast-quality interviews (if available) and more dynamic and updatable content than a paper press kit can provide.
Thanks so much for reading! Check the other posts for more. Next up is legal, and it’s LONG. Also, Grab my free Indiefilm Business Resource Package to get a free e-book, templates, and a monthly blog digest to increase your ability to find meaningful distribution.
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What do I need to deliver to my Independent Film’s distributor? (1/4)
If you want to get your film out there, you’ll need to give your distributor, aggregator, sales agent, or or post house certain things. Here’s an outline of those deliverables.
So there are a lot of questions about what’s involved in Distribution Deliverables for an Independent Film. So I’ve scoured a few contracts to find a very thorough list of what you might need to provide for a distributor or Sales Agent if they take your film. Since this list is quite expansive, there may be some stuff on here that most distributors do not ask for, but I figured it best to know what you might have to be able to provide
Given how massive this list ended up being, I’m actually going to break this out into 4 parts. This part is the basics, the next part will be deliverables used in internationalization and marketing, part 3 will be legal, and the fourth and final part will be some of the stranger and incidental things you might have to provide or be willing to pay for the sales agent to provide.
All of this being said, even though this list is massive, I may have missed something, so definitely talk with your post-house supervisor, lawyer, and editor before submitting these items.
Let’s Dive right in.
1. Color Stills and Photographs (50):
These color stills and photographs are generally not meant to be Behind the Scenes photos. They’re meant to be stills from the movie itself to be used in various forms of promotion. They can also be images of the talent in costume to use in the creation of key art, posters, trailers, and other places where art may show up across platforms.
2. Screeners (50)
While many distributors/Sales Agents have moved to providing internet screeners through services like Vimeo, some still prefer DVDs. These distributors generally won’t want you to put a watermark of any kind on the film. I’d be hesitant on this due to piracy concerns, but I’m putting it on here because I found it in a contract.
NOTE FROM THE FUTURE: This isn’t really done anymore. Distributors just use the master file to create their own screener to send to buyers.
3. Digital Promotional Trailer
Unsurprisingly, the sales agent will want a trailer to help with sales. It's extremely important in market meetings with buyers. It’s reasonably likely they’ll need a new trailer cut, but if the trailer you deliver suits their needs, they’re less likely to charge you for that deliverable.
4. Credit/Billing Block
This is just a listing of all credits for the film, to help the distributor keep up with legal obligations and consistent crediting across platforms. Be careful in delivering this, as their distribution agreement probably includes something indemnifying them should issues result from errors in files you delivered to them.
5. Certified Statement with Contractual Obligations.
This statement is just so the distributor knows how underwater you are with investors, and more importantly debtors. Among other things, the distributor wants to know that they won’t lose the film because the bank took it from you.
6. Tax Payer Information: W8/W9
The Distributor is paying you, and they have to pay their taxes just like anyone else.
7. Layered Keyart
Most of the time the distributor will need to make changes to your art, so they’ll need the PSD file. If you don’t deliver that file, they’ll just have one made completely independent of your art.
8. 4k Technical Sample.
If you’re delivering in 4k, The distributor will also need a 4k sample to show buyers in market meetings. That’s what this is.
9. 100% QC'd HD ProResHQ or 4444 Master .mov Files:
If a sales agent is going to sell your movie, then they’ll need a copy of it. They may ask for a few versions for SD, and they may also ask for a 4k version. There will be a lot of technical specs you’ll have to match exactly, and you’ll have to undergo a QC Check from a professional lab. By the way, if they ask you for a 422 file, don’t send them a 4444 file. 4444 files are only needed for really specific tasks that your distributor doesn’t need to do. The increased file size will annoy them or their lab.
10. Bluray Market/Festival Screening Masters
These are for screenings the sales agent might want to do for buyers in any of the provided market screening rooms.
11. Master Audio Files
They are going to need the stems for the film. Every once in a while, sales agents need to make edits for other markets. That’s where these come in.
12. Copy of Music Score: Digital Files
Sometimes when you cut a film to comply with censorship in other countries, you’ll need to mask some cost by replacing the score. That’s why they need some original files for the score.
13. Certificate of Full QC Pass
A QC Check is required for any distribution you would actually want to have. This generally involves sending the completed film to a lab, and and having every part of the film checked to ensure it’s in broadcast quality. Generally this sort of check costs around 1500 per time you have to have it checked. That means, if you fail your QC check, you’ll have to pay to have it done again. I may do an entire post on the QC check process in the future, if I do, I’ll post it below.
Thanks for reading! This is the first of several posts covering Deliverables for Distribution. Check the other posts for more. Also, Grab my free Indiefilm Business Resource Package to get a free e-book, templates, and a monthly blog digest to increase your ability to find meaningful distribution.
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Understanding the difference between an LOI and a Pre-Sale
A Letter of Intent (LOI) and a Pre-Sale are not the same thing, here’s what they are before you ask a sales agent or distributor for one.
A few weeks back I did a post on how to get a Letter of Intent from a Sales Agent. You can read that post here. However, I realized it might not be a bad idea to step back and examine the differences between a Letter of intent and a Pre-Sale. While I touch on it in the Rules for Getting a Letter of Intent blog, It seemed like the topic was worth a little bit more explanation.
At its core, the primary difference between the two is that a pre-sale is a document that has a tangible value, and an LOI does not. It’s a document that says once you deliver the completed film to the sales agent/distributor you will receive a check for an agreed-upon amount. Generally, they’ll come coupled with a completion bond. If you get a presale from the right sales agent/distributor, then this document is serious enough that you could take it to an entertainment bank and take out a loan against it.
A letter of intent is a much less serious document. It essentially guarantees that a sales agent will review a film once it’s completed and if it passes quality concerns, they’ll make an offer to represent the film at that point in time. This document has no monetary value but proves to investors that you have access to distribution.
RELATED: 5 RULES FOR AN LOI FROM A SALES AGENT
The reality is that while pre-sales still happen, the likelihood of getting one isn’t very high for the vast majority of filmmakers.
In an ideal world, every filmmaker would be able to get presales and fund most if not all of their movie on them. Unfortunately, we do not live in an ideal world. With the glut of content currently being produced, most filmmakers should consider themselves lucky to get a Letter of Intent.
The reason a Sales Agent or a Distributor would pre-buy a movie is so they know they’ll be able to fill the programming slots when the time comes. It used to be that if they pre-bought content, they could get it at a lower cost than when they bought it after it was completed.
Unfortunately, due to a glut of equity financing in the market that is no longer the case. With how many films are being made every year, the likelihood of them being unable to find suitable content is slim. That’s why the only people still buying content require reputable directors and recognizable name talent.
Now as then, the only reason to pre-buy is so you can get the films you need when you need them. Given the glut of content filling the marketplace at the lower levels, the only films worth pre-buying have to be very high quality, with very high-quality assets.
In order to get a presale, you need 3 things:
The director must have a proven track record of 3+ films in a similar genre to the movie you’re producing now
some level of recognizable name talent,
The film must not be execution dependent.
All of this really boils down to distributors wanting to know that the movie they’re buying before it’s made will meet the needs of the outlets the distributor intends to release the film on.
That’s why the director’s track record is so important, and the notoriety of the cast is also a huge selling point. It’s also where the idea of execution dependence comes in. By Execution dependent, I mean that the film must not rely on the intricacies of good execution to be profitable. Something like Moonlight is very execution dependent, whereas The Expendibles 4 is not.
Pre-selling your film is also if the film is based on well-known existing source material. This could be a long-running series of books that might have flown under the radar of other movie producers, a recognizable web series, or even a video game. Uwe Boll made his career by pre-selling terrible movies based on video games. Of course, he also had the help of some very lenient German Tax incentives.
Letters of intent are much easier to get, as they’re a much less severe document. If you have a strong relationship with a filmmaker, it’s very possible you could get a letter of intent. It’s also possible that if you or your producer’s rep know what they’re doing, they can work with the right sales agents to escalate the document into a pre-sale once the package comes together.
Thank you very much for reading. As always, there’s a lot more to this than I could explain in a 600-word article. If you want to get more support in getting an LOI, you should go ahead and grab my free film business resource pack. It’s got a free e-book, lots of templates, money and time-saving resources, and even a monthly digest of content segmented by topic to help you continue to grow your career on a manageable schedule. Get it via the button below.
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5 Rules for Getting a Letter of Intent (LOI) From a Sales Agent for Your Film.
If you want someone else to finance your movie, you need to prove access to distribution. While a hard presale is best, it’s not always possible. Here’s a guide for getting a Letter of intent form a sales agent.
In order to properly package a movie, you need three things. Recognizable Name Talent, First Money in, and at least a letter of intent from a distributor. I’ve covered steps for preparing for calling agents in the Entrepreneurial Producer, (Free E-Book Here.) I’ve covered some of the ways you can get first money in this blog. So now, I’ll cover some rules for approaching sales agencies in the blog you’re about to read
The reason you need an LOI is that the cause of films not recouping their investor’s money is that they can’t secure profitable distribution. Your investors want to know you have a place to take the film once it’s done, so they can begin to get their money back. Before you start thinking that you’ll just try to start a bidding war after the film is done, you should be aware that generally doesn’t happen.
Before we begin, This Packaging concepts blog series was recommended by my friend Brittany, in the Producer Foundry group on facebook. I occasionally look to answer questions people have there, so if you want me to answer something join the group. Or, if you want definitely want to get some questions answered, you should join my Patreon. I’m very active in the comments.
1. This document isn’t a Pre-Sale.
It’s important to note that there’s a big difference between a Pre-Sale and a Letter of Intent. A Pre-Sale is something that you may well be able to take to the bank to take out a loan against. That is, if you’ve got a presale agreement from a reputable distributor or sales agency. If you’re working on making your first film, that’s probably not going to happen though.
To get a Pre-sale, you need to have a known director with a proven track record, a film that’s not Execution Dependent, and likely some noteworthy cast. Even then, the Pre-Sale often only covers the cast.
An LOI is a much less serious document. It’s essentially a letter guaranteeing that a sales agent will review the film on completion, and if it fits their business needs they will represent the film. Generally, the producer will give the sales agency an exclusive first look for the privilege of using their name to help package and finance the film. Sales Agencies can’t just give these to everyone, as it waters down their brand. You’ve got to compensate them in some way for taking a risk on you.
This is not the final document, you’ll negotiate a distribution agreement once the film is done. Don’t try to negotiate one at this point, since you’ll be in an inferior negotiation position.
2. Make sure there’s a time window on the sales agent’s first look
If you fail to put a time window on the sales agent's first look, you can lock yourself up and potentially lose the first window on the film. Generally, I’ll say something like 14 or 30 days from initial submission on completion of the film. This gives the sales agency time for review but doesn’t hurt the filmmaker’s options if they take too long. This also prevents them from tying you into a contract.
3. Only approach agencies that sell films like the one you want to make.
This may sound obvious, but if you’re looking for an LOI for a horror film, don’t approach sales agencies that deal primarily in family films. If all goes according to plan, this sales agency will be distributing your film when it’s done. You want to make sure they’re well-suited to sell your film when the time comes.
4. Look at the track record of the agency you want to work with
You need to look into what films the sales agent has made in the past, and how widely those films have been distributed. At this stage, doing this isn’t as important as when you negotiate the final distribution deal, but it is something you should know when going after a letter of intent.
Also, the track record of the sales agency or distributor has a direct impact on how valuable the LOI is. An LOI from Lionsgate means a lot more than an LOI from someone on the third floor at AFM this year. Looking at the track record can help you more accurately assess the value of the document you hold, so you can better present that information to potential investors.
5. Getting an LOI is Heavily Dependent on the Relationship with the Sales Agency.
If you walk in cold and start asking for an LOI on the first meeting, you’re not likely to be successful. It takes time and a fair amount of correspondence to get to the point where a sales agency is willing to take a risk on you.
If you don’t want to spend the time and money to establish these relationships by going to markets and having calls and emails with the sales agency, you may want to consider a Producer’s Rep.
Most producer’s rep will require some level of upfront payment for this sort of work. I charge a relatively small amount upfront and a larger amount on success for this sort of work. That said, I’m relatively selective about what I take on. If you’d like to find out more click the links below to submit your project, or book a call with me on Clarity to pick my brain about the next steps. Alternatively, you can sign up for a free strategy session and talk about what the best next steps for you would be. I also offer educational programs that will teach you how to get these for yourself. Those start with a one-hour strategy session. In this one-hour strategy session, I'll help you figure out where you are, what the next steps for you are, and what the best course of action for helping you get there would be.
Thanks so much for reading! This is only a primer, and in order to succeed you’ll need a lot more information on the business of indie film. If you want help getting that, you should check out Guerrilla Rep Media’s independent film business resource package. You’ll get a free-ebook, lots of templates, money-saving resources, and even a monthly content digest delivered to your inbox to help you grow your indie film company and premier. It’s completely free and linked in the button below.
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What’s the Difference between a Sales Agent and Distributor?
Too few filmmakers understand distribution. Even something as basic as the disfference between each industry stakeholder is often lost in translation. This blog is a great place to start
As a Producer’s Rep, one of the questions I get asked the most is what exactly do I do? The term is somewhat ubiquitous and often mean different things to different people. So I thought it might be a good idea to settle the matter. In this post, I’ll outline what a producer’s rep is, and how we interact with sales agents, investors, filmmakers, and direct distribution channels. But first, we need a little background on some of the terms we’ll be using, and what they mean. These terms vary a bit depending on who you ask, but this is what I’ve been able to gather.
Would you rather watch/listen than read? Here’s a video on the same subject from my Youtube Channel.
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DISTRIBUTOR / BUYER
A distributor is someone who takes the product to an end user. This can be anything a buyer for a theater chain, a PayTV channel, a VOD platform, to an entertainment media buyer for a large retail chain like Wal-Mart, Target, or Best Buy. The rights Distributors take are generally broken up both by media type and by territory.
For Instance, if you were to sell a film to someone like Starz, they would likely take at least the US PayTV and SVOD rights, so that it could stream on premium television and their own app which appears on other SVOD services like Amazon Prime, or Hulu. They make take additional territories as well.
Conversely, it’s not uncommon to sell all of France or Germany in one go. It should are often sold by the language, so sometimes French Canada will sell with France. This is less common as of late.
Generally, these entities will pay real money via a wire transfer, and almost deal directly only with a sales agent. Although sometimes to a producer’s rep, and VOD platforms will generally deal with an aggregator. The traditional model of film finance is built around presales to these sorts of entities, but that presale model has recently shifted.
Recently, more sales agents have begun distributing in their territory of origin. XYZ is a good example of this. Some distributors have branched out into international sales. This is something that we did while I was at the Helm of Mutiny Pictures, to allow us to deal with filmmakers directly in a more comprehensive way.
Sales Agents
A Sales agent is a person or company with deep connections in the world of international sales. They specialize in segmenting and selling rights to individual territories. Often, they will be distributors themselves within their country of origin. This business is entirely relationship based, and the sales agents who have been around a while have very long-term business relationships with buyers all around the world. That’s why they travel to all of the major film markets.
Examples on the medium-large end would be Magnolia Pictures international, Tri-Coast Entertainment, and Multivissionaire. WonderPhil is up and coming as well, as is OneTwoThree Media. Lionsgate and Focus Features would also be considered distributors/sales agents, but they’re very hard to approach. They also both focus on Distribution over sales.
Generally, these sales specialists will work on commission. They may offer a minimum guarantee when you sign the film but that is not common unless you have names in your movie. Generally, they will charge recoupable expenses which mean you won’t see any money until after they’re recouped a certain amount. In general, these expenses will range between 10k and 30k, with the bulk falling between 20 and 25k. If it’s higher than 30k without a substantial screen guarantee, you should probably find another sales agent. There are ways around this, but I’ll have to touch on this in a later blog [or book].
A sales agent commission will be between 20% and 35%, this is variable depending on several factors, but generally 25% or under is generally good, and over 30% is a sign you should read more into this sales agent. Lately, this has been trending towards 20% with a slight uptick in expenses.
Aggregators
Aggregators are companies that help you get on VOD platforms. The most important service they provide is helping you conform to technical specifications required by various VOD platforms. This job is not as easy as you would think it is, which is why they charge so much. Additionally, they have better access to some VOD platforms than others. These days, it’s very difficult to get on iTunes or most platforms other than Amazon’s Transactional section without one.
Generally, aggregators charge a not insubstantial fee to get you on these platforms, and they offer little to help you market the project. Companies like this include Bitmax and arguably filmhub or IndieRights.
There are merits to going this this route, but they can be expensive, often costing about one thousand USD upfront and growing from there. If they operate on a commission like Filmhub or Indierights, they won’t help you with marketing so you’ll have to spend a decent amount there in order to get your film seen.
Producer of Marketing & Distribution (PMD)
In the words of Former ICM agent Jim Jeramanok, PMDs are worth their weight in gold. A PMD is a producer who helps you develop your marketing and social media strategy, your Festival strategy, and your distribution strategy. They’re also quite likely to have some connections in distribution. They’re there to give your film the best possible chance at making money when it’s done.
Generally, they’re paid just as any other producer would be, but if they’re good, they’re worth every penny. With a good PMD on board, your project’s chances for monetary success are exponentially better.
If you’re an investor reading this, you want any film you invest in to at least have access to a PMD or Producer’s Rep, if not a preferred sales agent or at least domestic distribution. (Not Financial Advice)
Executive Producer (EP)
In the independent film world, these are producers who are hyper-focused on the business of independent film. They either help raise money to make the film, or they help bring money back to those who put money into it in the first place. As such, the traditional definition in of an indiefilm executive producer is someone who helps you package projects by attaching, bankable talent, investors, or other forms of financing. They’ll also help you design a beneficial financial mix, [I.E. where can you best utilize tax incentives, presales, brand integration, and equity, and gap debt.] in order to help your project have the best chance of success. They can also play a significant role in distribution. The latter is where most of my EP credits come from.
Often, they’ll take a percentage of what they raise or what they bring in. sometimes they’ll require a retainer, but most of the time they should have some degree of deliverables such as business plans, decks, or similar as part of that. These fees should not be huge, but they will be enough to give you pause due to the amount of specialized work involved in doing these jobs.
Producer’s Reps
I’ll go into this much more deeply next week, But Producer’s Reps are essentially a connector between all of these sorts of people and companies. Producer’s Reps will connect you do sales agents, aggregators, buyers, and investors. But more than that, a good one will help you figure out how and when to contact each one. Most often, they’re credited as an executive producer or a consulting producer as the PGA does not have a separate title that applies to this particular skillset. For a more detailed analysis of what exactly a Producer's Rep does, Check out THIS BLOG!
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