The Problem with the IndieFilm Distribution Payment System
A lot of filmmakers I’ve worked with don’t know enough about distribution to really make a career making creative content. This shouldn’t be a surprise, as it’s something film schools tend not to teach. That being said, there’s a part of the equation most people just don’t talk about, and WHY it takes so long for filmmakers to get paid? This blog addresses that.
As an aside, this is laid out from a financial perspective in the blog below. However, we will also be tracking how much of the money goes away throughout this blog. This will admittedly be very much oversimplified, but we’re going to be tracking it as a single dollar for ease of understanding.
Related: Indiefilm Waterfalls 101
How long it takes for the platform to pay the aggregator
I talk about this in workshops quite frequently, but each different stakeholder takes a while to pay the next person in the pay chain. Most of the time, this starts with the platform and aggregator relationship. In general, this is the first section in the chain.
Normally, the platform will take 30%-35%. This should include credit card processing fees. So if the consumer gave 1 dollar, then we’re down to 65-70 cents.
While exceptions exist, the platform most often pays the aggregator on a monthly basis. After that, the aggregator will need to pay the distributor. If you’re self-distributing, that distributor is you, but not all aggregators will deal with you in the fashion you’d prefer, for more information, read the blog below.
RELATED: What platforms should I release on?
How long it takes for the aggregator to pay the distributor
Once the aggregator is paid, the money will flow to the distributor. As I stated, this may be you. Depending on what aggregator the distributor is using, payments will be either monthly or quarterly. Sometimes the aggregators that pay quarterly have lower overheads, so it might make sense to wait. That said, I think the most current data you can get is necessary to make smart marketing decisions.
If you still don’t know the difference between a sales agent and a distributor, check the link below. Most aggregators operate on more of a flat fee model, so we’ll assume that the money is passed through. If you worked with an aggregator, you end up with about .70 cents for every dollar the consumer spent, but you also probably had to put the aggregation fees in yourself, so you’ll probably need to sell around 2100 copies (assuming they sell for 2.99 each) to break even. You’ll also get insights within 2 to 4 months.
Related: What’s the difference between a sales agent and a distributor?
How long it takes for the Distributor to pay the Sales Agent
Most distributors don’t deal with filmmakers directly. They’ll either deal with a Producer’s Rep or a Sales Agent. Generally, Distributors pay quarterly to start and sometimes will move more towards bi-annually after a few years. This can be arduous, but it’s very difficult to negotiate.
Generally, the distributor will take 30-40%. (As of publishing this, I take 25% for direct US Distribution.) So of the 65-70 cents, we had after the platform. That means that after the distributor takes their cut, there are between .39 and .49 cents left to the filmmaker. (or around .52 cents if you work with me)
Also, even though I am a distributor, I work directly with filmmakers. So you’d keep .52 cents on the dollar, and be paid around 4-5 months after the initial sale is made. (I time my reports to work with my aggregator to minimize wait times. Plus, I cover aggregation and the majority of marketing and publicity fees.
Related: What does a producer’s rep do anyway?
How long it takes for the Sales agent to pay the production company
Finally, the sales agent pays the Producer’s Rep and production company. This is also generally on a quarterly or Bi-Annual basis, although there’s more room for variation here. After that, the filmmaker uses the money to pay back debts, then investors, then whoever else is left to pay back from the production.
The Sales Agent normally takes between 20% and 30%, but they sell territories across the globe. A Producer’s Rep will normally take 10% of the money paid to the filmmaker, and will normally be paid in line with the sales agent.
So, following the chain we talked about before, by the time the sales agent pays the filmmaker, we’re looking at between .27 and .39 cents on the dollar without a producer’s rep, or between .24 cents and .35 cents with one. That’s not a great representation of what a good producer’s rep will do for you though. (including the potential to get you paid immediately from the first sale) I’ve painted these deals in the most simple possible light to help you understand, but there are lots of single-line items that can screw you if you’re not careful. So, while the producer’s rep may take a small piece of the pie, (.03 to .04 cents on the total dollar) they can help you make the whole pie a fair amount bigger.
Thanks so much for reading! If you have any questions for me, you might want to check out my mailing list. I send out monthly blog digests including ones JUST LIKE THIS, plus you get lots of great resources like templates, links to money-saving resources, and a whole lot more! Or, if you’ve got a completed project and you’re looking for distribution, submit it using the link below. You can also learn more about services for early-stage projects using the other link. I’ll review it and reach out soon.
