The 7 Main Indiefilm Distribution Deal Points
A lot of people are afraid of the complexity of deals with sales agencies. They have a reputation as being very dense, and difficult to understand. While there is truth to this, there’s also a general layout every filmmaker should understand. Many of the pitfalls for distribution can be avoided by knowing these 7 major deal points. That said, you should always have a lawyer or a producer’s rep look over your contract.
This list is not meant to be complete, but it does cover the most important aspects of the deal.
1. Term
This is not really different all that different from the standard legal definition of the term, it’s simply how long the contract will remain in place.
For film, a good term is anywhere between 3 and 7 years. The sales agent will generally be able to sell the film to third parties [i.e Buyers] for terms that extend beyond the contract with the filmmaker.
2. Territory
The territories are where the sales agents have the right to sell your film. These rights can be both exclusive and non-exclusive, but if you’re selling to a sales agent without the help of a representative or a lawyer, you’ll likely be selling them all rights.
Generally, territories are broken out by both region and country. For example, Germany would be considered a territory in the Western Europe Region. This can get confusing, in that Latin America is both a territory and a region. The Region also contains Mexico, Brazil, and a few others.
3. Languages
One must keep in mind that the business of international sales a global one (as the name would imply.) As such, it means dealing with both cultural and language barriers. Often, a territorial sale is heavily influenced by language. For instance, France is often sold with French Canada.
4. Media Rights
Media refers to the different Delivery methods that a sales agent can sell your film by. Different rights would include the following.
1. Theatrical
2. DVD/home video
3. PayTV
4. Cable/NetworkTV
5. VOD [Et Al]
Read more: The 5 Main Indiefilm Media right types
Generally, a sales agent will sell by any combination of these three types of rights. Most of the time, these rights will be exclusive, but sometimes they will be non-exclusive. This is more common for VOD deals, with some notable exception for SVOD deals. These deals are also subject to a term.
Exclusivity is necessary, and does help the filmmaker as well. Without exclusivity is the only thing that creates value when the thing you’re selling can be replicated infinitely. If the supply is infinite, there’s no way to have enough demand to increase the value of the content. Exclusivity helps maintain the value of the content.
5. Revenue Split/MG
A Minimum Guarantee (MG) would be the payment a filmmaker receives upfront. These are something that filmmakers can receive, but it’s somewhat rare. Generally, you’ll need recognizable talent and a hot genre in order to get one.
The revenue split the Sales Agent takes, as opposed to what the Filmmaker takes.
These splits generally vary between 20% and 35%. Generally, sales agents don’t like to negotiate this deal too much. There are other ways to negotiate these deal points.
6. Recoupable Expense
These are the expenses a distributor can charge before paying a filmmaker. Travelling to film markets gets quite expensive, often costing in the mid-5 figures to the low-mid 6 figures. As such, film they should always have a cap. If there was an MG, this would be part of the Recoupable Expenses.
Generally, these should be somewhere between 20 and 50 thousand, that’s not including any MG. That number could also be substantially higher if there’s a theatrical release involved.
7. Exit Conditions
This is how you exit the contract should things not go well. This is much more complex than simply including an arbitration clause. If The arbitrator only arbitrates based on the initial contract, so if you don't have exit clauses you're not in a great place. There are lots of different provisions for this, far too many for a blog post, but here are a few things you could include.
Optional Reversion if X% of the budget not meant by 18–24 months after deal signing.
This would mean that if you haven’t made a certain percentage back by a certain date, then the rights would revert to you. Generally, you’d put this number at 30–50%.
In an all-rights deal. It’s your film, you deserve to get paid.
While you deserve to be paid, this clause is harder to negotiate in than it once was.
Optional Reversion if the company is wholly acquired by a third party, or goes bankrupt.
International sales is a risky game, and often the newer players in it don’t last long. Because of this, it’s important to make sure that you include this clause.
As I said at the top, I’m not a lawyer and this isn’t leagal advice. These are simply the best practices I’ve learned from a decade in distribution. If you found this useful want to better prep for success in film distribution, you should make sure you grab my FREE indiefilm business reseource pack. It’s got distributor contact tracking templates, research guides, deck templates, and a whole lot more. Get it for free below.
