6 Tips to manage your Indiefilm Facebook Page

Your social media presence for your company is extremely important.  Likely, the most important piece of it is your presence on Facebook.  Facebook has the largest user base, and if you know how to use it you can tap into a huge part of your target market.  Here are 5 rules that will help you grow your Facebook presence. ​

Focus on a Page for Your Company, not your projects.

When you set up your Facebook page, it’s better to focus on a page for your production company instead of your film.  This way, when you move on to the next film, you’ll already have the audience you’ve created for your film.  You may have to create a page for individual projects, but you should focus on keeping the audience for your company page engaged.

Also, its getting more and more difficult to run a business through a standard profile. You can try it to increase organic reach, but you may end up hurting yourself more than helping yourself.

Always respond to Messages to your page

If you want to keep your reach up, you need to respond to questions and comments that come to your page via messenger. It can also lead to some really notable business opportunities and sales for you. At least, it has for me.

Don’t try to manage too much at once.

Just having a huge Facebook page won’t do you much good.  You have to use it as a way to engage the audience for your projects.   To do this, you have to regularly post content relevant to your target demographic. Finding or creating high-quality, engaging content is a very time-consuming process.  If you want to try to manage too many pages at once, you’re likely to burn out and not be able to continue regularly posting relevant content.

If you let too long pass between posts, your fan base will start to decay.  Further, when next you post, your posts won’t reach as far because Facebook’s algorithm won’t let them.  It’s much better to focus on managing one or two pages at the same time and helping those pages to grow within the platform.

Share useful content to relevant groups

One good way to grow your brand recognition online is to post valuable content to your page, then share it with groups filled with your target demographic.  I do this all the time.  In fact, there’s a good chance that’s how you found this article.  This content shouldn’t just be sales links for your film, it should be free content that provides some value to the group.  You can post the occasional sales link, but you shouldn’t do so more than once per week. 
​

Related:5 Dos and Don'ts for Selling your Film on Social Media

It’s important that you avoid being too spammy while doing this.  I have a list of 5 groups to share to each of my pages on a daily basis, to help ensure I don’t post to the same group too many times.   It takes some time to set up, but it’s the best way to avoid running afoul of group admins.  That’s not something you want to do. Trust me.  (Sorry if you’re one of the admins I’ve run afoul of, just trooping through this.

Always post videos natively

By this, I mean always upload your videos directly to Facebook, and don’t post a Vimeo or YouTube link.  If Facebook sees that the video is coming from Vimeo or YouTube, it will only get about 20% of the reach.  If, on the other hand, you upload it directly to your page, it will actually get a lot of prioritized placement in the feeds of people who like your content and their friends. 

Don’t put your movie on Facebook, put your trailers there and point to Amazon.

Finally, Facebook video is a great place to post a trailer, but not a great place to post your entire film.  First of all, you won’t be paid for posting your video to Facebook like you would be if you posted to Amazon Video Direct or YouTube.  Second, most people just don’t watch full-length films on Facebook.  They’ll watch videos that are only a few minutes long. 

As such, posting your trailer can be a great way to get extra attention on it, and then you can link off to a place where people can buy it or watch it for free.   Doing this can not only increase the number of people who watch your film, but might even increase your total audience. 

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How to Structure Your Production Company’s Entity

I’m not a lawyer, nor an accountant. I get a fair amount of questions about the legal structure of a Production company and a film.  So I thought I would write a blog about how I’ve learned to structure each individual entity, as well as the benefits and drawbacks of each choice. These are

Generally, you’ll want to have one legal entity that exists as your production company, and one legal entity for each project you produce.  Generally, your production company will be a general partner in each project, and when each project has run its course, the entity will be dissolved.   If you’re producing episodic content, you can probably get by with one entity per season.

Before we get started, I’d like to reiterate that I’m not a lawyer or an accountant.  You should definitely talk to one before you proceed in forming a business. ​

LLC>LP

The way I was originally taught was that your production company should be a Limited Liability Company (LLC) and your projects should each be Limited Partnerships (LPs.) In this instance, your production company would be the General Partner, and all of your investors would be limited partners.  This structure offers you better creative control, shields the assets of your investor in case something goes wrong. 

​The way that your creative control is protected is that only the general partner can make important decisions regarding running the business.  As such, any important creative decision remains with the general partner.  In exchange for the limited liability protection, your investors are treated as silent partners, and unable to heavily advise on the day to day operations and decision-making of the company. ​

​Given that the General Partner is your production company, your personal assets are still protected. 

​However, I will admit that I’m just about the only person I know (aside from the teacher who taught it to me) that favors this structure.  Most producers I know favor the following structure.

LLC>LLC

The Production Company LLC being the general partner of the film’s LLC and all of the investors being considered full partners in the film LLC is the most common structure I’ve seen in my time in California.  The big benefit here is simplicity.  Investors are treated the same way that the general partner is, and everyone benefits from the pass-through nature of the entity. 

The assets of your production company are also better protected here if things go awry, but the investors are not forced to be silent.  This can lead to less creative control for the filmmaker, however, if you were going to run into this with the film being a Limited Partnership, it likely would have ended just as poorly as it would end in this scenario. 

S-Corp/C-Corp

Finally, the other primary way you could structure your film is as a corporation.  Either an S-Corp or a C-Corp.  The primary reason you would do this is to issue lots of shares to potential investors. Practically speaking this would mean more than 10-20 individual investors.  This is relatively unlikely for most filmmakers.   

Corporations also encounter additional accounting challenges and in many states additional taxation beyond that of an LLC.  Corporations are subject to corporate accounting, and then payroll is generally issued as an individual check.  For an LLC, you can pass your income through to yourself, which makes tax time much easier.  LLCs provide most of the same benefits that you would actually use as a media production company/media project. You can also do that with an S-Corp, but there are additional filing fees that may or may not be of benefit to you. You could also have an S Corp or C corp own or be the general partner in LLCs or LPs that are responsible for individual projects, similar to the LLC outline above. I have known filmmakers to do this in the past. In certain scenarios, it can be quite advantageous.

Again, talk to your accountant or lawyer, as I am neither. I’m just an executive producer who writes a bit too much.

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The 5 Rules to Running a Successful Crowdfunding Campaign

Since my exit from Mutiny Pictures Most of my work, these days is as an executive producer, consultant, distribution representative, and marketer. However, there was a time when I was a filmmaker and a regular (as opposed to executive) producer.  During that time, I raised a total of 33,000 on Kickstarter for two projects.   This blog gives you some of what I learned from those two campaigns.

​While those two projects never went as far as they could have due to a parting of ways between myself and my former business partner, there’s still a lot of information I learned in running these campaigns in the early days of Kickstarter.  Here are 5 of them.

​#1. Prepare

You CANNOT be successful in crowdfunding without preparation, and that preparation starts early.  Generally, your soft preparation for a crowdfunding campaign will start at least 6 months before you launch your campaign.  This soft preparation will consist more of being an active member of your community.  About 3 months out you’ll need to get ready to shoot your video, and about 2 months later you’ll need to get ready for pre-launch. 

I’ll be releasing a preparation timeline in a few weeks, so check back soon!

#2. Grow Your Network

About 80% of your donations will come from people you already know and interact with regularly.  This is why you need to become active in communities that will be interested in your film.  This can be alumni organizations, groups of people enthusiastic about the kind of film you’re making, and any other group of people that are tangentially connected to the film you’re planning on making.
​

#3. ​It’s a Full Time Job, Plan Accordingly

No matter how much preparation you do, when the campaign starts it will be at least one person’s full-time job.  You’ll need to personally thank everyone who donates, and you’ll need to spend a lot of time emailing basically everyone you know individually.  If you’re smart, you’ll do it twice.  Bulk emails aren’t going to do you anywhere near as much good as individual emails, and individual emails take a lot of time. 
​

#4. Try to Get as Much Press as Possible

The best way to add legitimacy to your campaign is to get mentioned in the press.  In order to get that press you’ll need to reach out to any editors and reporters you can that might cover you.  Note that I say editors and reporters THAT MIGHT COVER YOU.  If you know a reporter at Variety, you probably don’t want to email them about your campaign since they’re not going to cover it.  If you grew up in a small town with a local paper, you definitely do.  You’d be surprised what they’ll cover. 

This is something you can work with your prospective crew about as well.  Maybe you’re not from a small town, but your DP or production designer might be.  This can be a very mutually beneficial arrangement, it puts your crew in the spotlight and raises the profile of the film. 

It would be wise to send out a press release via one of the many press release sites.  This will help you generate at least a few articles on affiliates for NBC, FOX, and others that you can use to grow the profile and perceived legitimacy of your campaign.  It also has some SEO benefits, but I’m not sure that would help too much on crowdfunding. ​

#5. DON’T SPAM

Don’t post your campaign incessantly on all of your social media,  Make sure you continue to provide value outside of asking for money while you’re in your campaign.

If you use Messenger to send your campaign to someone, open up a conversation first.  Don’t just copy-paste a form email with no conversation back from them.   

Say hello to someone first.  Ask how they’re doing.  Then send them info about your campaign when they ask what you’re up to. Taking the time to show you care about what’s going on in their life will greatly increase both your conversion rate and the amount each member of your network contributes.

Thanks for reading!  If you like this, you should go ahead and grab my FREE Film Market Resource Pack. It’s got a free e-book of articles like this one to help you grow your filmmaking career, free templates to streamline investor and distributor conversations, and even a monthly content digest that helps you continue to grow your knowledge base on a schedule that’’s manageable to almost anyone. Get it for FREE Below.

Understanding the difference between an LOI and a Pre-Sale

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 DO's and DON'Ts for Selling Your Film on Social Media

I sell a lot of stuff on social media.  In fact, that’s probably how you’re reading this blog right now.  Since I’m very active, I also get a lot of people trying to sell stuff to me on social media.  This blog is an amalgamation of some of what I’ve found works on social media, and some of the stuff I’ve found does more to harm your brand than build it.

Before you ask, yes I’ve been on both sides of pieces of this article at various times.

DO: Provide Value

Far and away the most important rule of building a brand on social media is to ALWAYS provide Value.  Even when you’re trying to sell something, you should be providing value.  It will take several impressions with a potential customer for them to engage with your content or buy your service, and in that time you’ll need to provide that potential customer quite a lot of value. 

DON'T: Post Nothing But Sales Links

Even if your service provides value to members of a group or your carefully cultivated following.  If all you do is post things like “BUY MAH MOOOVIE!” then you’re failing to provide value, and you’re not going to move too many copies. To be honest, it’s also important to avoid posting too many links to groups in general. I’ve definitely been on the wrong end of that in the past with my 100+ blogs.

DO: Focus on Building Relationships

Building a relationship with your potential customers is the only way to turn them from potential customers to single-time customers, to regular, recurring business.  Essentially, these relationships rely on trust.  In order to build that trust, try posting relevant articles from your blog, behind-the-scenes footage, a piece of press you got mentioned in, or whatever else that gives you a touchpoint with your fanbase without asking them to spend money. 

DON'T: Treat All Your "Friends" Solely as Potential Customers.

If you’re like most people, you have everyone from high school classmates to people you know from the bar to great aunt Gertrude on your Facebook.  Be cognisant of the fact that most of those people may or may not want to actually buy your movie.  Don’t forget to post the standard facebook posts alongside talking about your project.​

DO: Start a Conversation

If you want to share something you’re working on or the movie you just made with someone via a messaging system, start by saying hello.  If you open up a conversation and show genuine interest in what they’re working on, it will be far more likely that they’ll be genuinely interested in what you want to sell them. ​

DON'T: Send a Form Message with a Link to All Your "Friends"

When I say Start with Hello, I don’t mean a message like this.

“Hello! How are you? I hope you’re well. It’s been a while since we talked, but I just wanted to let you know about this movie I just finished called I’ma Spam You! If you could check it out via this link below, I’d be super greatful”

https://imgflip.com/i/23nduh

Doing that is more likely to lose you connections than convince people to buy your content.

DO: Know Who You're Talking To

Are you reaching out to someone you went to High School with?  Maybe you haven’t spoken in years.  If that’s the case, you’ll definitely want to try to catch up before you ask them for money.  If you have powerful people on your social media, you should be careful how you approach them.  I’ve had people try to sell me their unproduced scripts on Amazon, then go off on a fiery tirade when I didn’t want to buy it.  They are now blocked, although a mutual friend said they were still looking for some of the services I offer.  Don’t do that to yourself.

DON'T: Try to Sell Your Movie to Someone Who Has No Reason to be Interested.

Someone you know who is incredibly christian, probably isn’t going to buy your body horror feature film.  Similarly, the goths on your friend list probably aren’t going to buy your faith based film.  Know who you’re trying to sell your movie to, and take note.

DO: Post Relevant Content to Relevant Groups

Maybe you’re putting some content into a filmmaking group.  If you are, you should make sure that whatever content you’re posting provides value.  The long and short of it is: Don’t post irrelevant content and expect people to engage with it in a positive manner.

DON'T: Be an Asshole

This point originally read Don’t be Spammy, but in a way the two are synonymous. They also both very eloquently summarize this entire article. If you’re not sure whether or not you’re being an asshole, then ask yourself the following question. “Am I being an asshole?” if the answer is anything other than “No” you probably are being at least a bit of one.

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4 Reasons Niche Marketing is VITAL to your indiefilm’s Succes

Most people don’t plan to fail, they simply fail to plan.  Similarly, most filmmakers don’t think about anything other than getting the film made until the film is completed.  This is a prime example of failure to plan resulting in a failed project.  In reality, you should be thinking about your target market as early as when you write your script.  If this is your first film, you should be targeting a well defined niche.  Here are 4 reasons why.

Would you Rather Watch than Read?  Here's a video on the same general topic from my YouTube Channel.

Niche Marketing Gives you an audience for your film

I’m sorry to be the one to tell you this, but your film is unlikely to appeal to everyone everywhere.  You’re much better off figuring out what parts of your story will resonate with various groups, and focusing your early marketing efforts on them.  It will put your film in front of the people who it will resonate most strongly with, and it will help you rise about the white noise that every content creator must face, especially when starting out. 

It’s also important to keep in mind that just because your film starts in a niche doesn’t mean that the niche is where it will always live.  If you properly utilize niche marketing, it can actually help you break out of the niche and into the more generalized marketplace. 

Niche Marketing Cuts down on your marketing cost

If you do think that you can target everyone, because your film is just that universally appealing then your marketing expenditures are going to be astronomical.  Also, you’ll be competing directly with movies like Star Wars, The Avengers, and whatever the next Pixar movie is.  Unless you’re a studio head, then you can’t afford to win that competition. 

Utilizing proper niche marketing efforts will dramatically cut down on your marketing expenditure since you’ll know exactly who you want to get your project in front of.  Thanks to social media platforms, you’ll be able to target those people directly using smart advertising buys and strong community engagement from an early stage.

Further, if you do break out of your niche, you’ll already have more noise being made about your project so the costs to market it will be much smaller.

Niche Marketing Can help you fund your film

If you start to get involved in niche communities well before you make your film, then you’ll have a community that you can mobilize to help you raise a portion of your funding through donation-based crowdfunding.  To be clear, if you simply post your campaign over and over to the various communities you want to support your campaign.  You’ll have to ingratiate yourself into them well before starting a campaign.

​The Reason that these people may well be willing to support your campaign is that many niche communities are underserved, and want to have their story shared. 

 They want to see more media made about their interests and themselves as a community.  They want their story told.  Many of them, are willing and eager to make it happen.  This brings us to our final point.

Niche Marketing Gives you advocates for your film

No Films can market themselves completely on their own. They need to get a core group of people to help spread the word. Niche marketing can be a huge help for getting the people who are most likely to be your strongest advocates onboard early. As mentioned above, they’re the people who care the most about your subject matter. They’re the people who will seek out your content and show it to your friends because they identify with it so much.

No one can create advocates, you must find them. The most likely place to find them is within the various underserved niches that have plenty of stories that need to be told. 

Thanks so much for Reading. If you like this and want more, check out my FREE Film Business Resource Pack! You’ll get a free e-book on the business of entertainment, a set of highly useful templates, and a whole lot more. Check it out below.

The Two Main types of Financial Projections for an IndieFilm

As a key part of writing a business plan for independent film, a filmmaker must figure out how much the film is likely to make back.  This involves developing or obtaining revenue projections. 

There are generally two ways to do this, each with its own advantages and disadvantages.  The first way is to do a comparative analysis.  This means taking similar films from the last 5 years and plugging them into a comparative model to generate revenue estimates.  The second way is to get a letter of intent from a sales agent and get them to estimate what they could sell this for in various territories across the globe. 

This blog will compare and contrast these two methods (Both of which I do regularly for clients) in an effort to help you better understand which way you want to go when writing the business plan for your independent film.

Would you Rather Watch/Listen to this than read it? Here’s a corresponding video on my YouTube Channel!

Comparative Analysis - Overview

A comparative analysis is when you comb IMDb Pro and The-Numbers.com to come up with a set number of comparable films to yours.  These are films that have a similar genre, similar budgets, similar assets, are based on similar intellectual property, and are generally within the last 5 years.  If you can match story elements that are a plus, but there are only so many films with the necessary data to compare. 

When I do it, I compare 20 films, average their ROIs from theatrical, pull numbers from home video wherever I can (Usually the-numbers.com), and then run them through a model I’ve developed to come up with revenue estimates.   Honestly, I don’t do a lot of this work.  Most of the time I refer it to my friends at Nash Info Services since they run The-Numbers.com and the brand behind these estimates means a lot to potential investors. 

I will do it when a client asks though, generally as a part of a larger business plan/packaging service plan.  

Sales Agency Estimates - Overview

Sales Agency Estimates are when you get a letter of intent from a sales agent, and as part of that deal the sales agent prepares estimates on what they think they can sell the film for on a territory-by-territory basis.  Generally, they work from what buyers they know they have in these territories, whether or not they buy content like this, and what they normally pay for content like yours. 

These estimates are heavily dependent on the state of your package, who’s directing your film, and who’s slated to star in it.  If you don’t have much of a package and a first-time director, then you’re not going to get very promising numbers.  ​

Comparative Analysis - Benefits

Generally, anyone can get these estimates.  Some people figure out the formula and do it themselves, others pay someone like me or Bruce Nash to do it for them.  There’s either a not insubstantial fee involved or a lot of time involved in getting them. They’ll generally satisfy an investor, especially if Bruce does it. 

Sales Agency Estimates - Benefit

The biggest benefit to a sales agency approach is that if they’re doing estimates for you, they’re probably going to distribute your film.  Also, these estimates have the potential to be more accurate, because they’re based on non-public numbers on what buyers are paying in current market conditions.  Finally, if a sales agent has given you an LOI, these estimates are generally free.

Comparative Analysis - Drawbacks

The first drawback is likely that they’re either very time intensive or somewhat costly to produce.  Also, because VOD Sales data is kept under lock and key, it’s very difficult to estimate total revenue from VOD using this method.  Given how important VOD is, that’s a somewhat substantial drawback.

Further, these estimates are greatly helped by the name value of who made them.  Likely, if the filmmaker makes them themselves, then they’re not as viable as if someone like Bruce or Me does them.  This is not only because we both have a track record in them, (Bruce much Moreso) but also because we’re mostly impartial third parties. 

These revenue estimates can be very flawed if a filmmaker makes them because many filmmakers have a tendency to only pick winners, not the films that lost money.  In business, we call this painting too blue a sky, as it makes everything look sunny with no chance of rain.  In film, there’s always a substantial chance of rain. ​

Sales Agency Estimates - Drawbacks

The biggest drawback to these estimates is that not everyone can get these estimates.  You have to have a relationship with the sales agency for them to consider giving them to you.  Generally, you’ll need to have convinced them to give you an LOI first.  That’s not always the case though. 

If you have a producer’s rep, they can sometimes get you through the relationship barrier, but they’ll often charge for doing so when we’re talking about a film that’s still in development. 

Also, Sales agencies can sometimes inflate their numbers to keep filmmakers happy and convince them to sign.  This does not look good to investors if that money never comes in

Conclusion

Overall, which method you use to estimate revenue depends entirely on what situation you find yourself in.  If you have the ability to get the sales agency estimates, they can be VERY strong, if you don’t, the comparative estimates are reliable enough to do what you need them to do.  That being said, I wouldn’t advise taking a comparative analysis to a sales agency. 

Thanks for Reading! Creating revenue estimates is only part of raising money for your film. There’s a lot more you’ll need to know if you want to succeed. That’s a large part of why I created my indie film resource package, to help filmmakers get the knowledge and resources they need to grow their careers. It’s totally free and has things like a deck template, free e-book, and even specialized blog digests sent out on a monthly basis to help you understand how to answer the questions your investors will almost certainly have. Check it out at the button below.

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IndieFilm Distribution Payment Waterfalls 101 (How Distributors Pay Filmmakers)

I’ve been quoted as saying that investors get the short end of the stick in film investment.  They end up putting up all or most of the money and then are often left with their hands out.  They’re the last to get paid on the production, and the system is structured in such a way that it’s almost impossible to create a sustainable investor class.

I wrote an entire 7-part blog series on WHY film investment is in the tubes, so I don’t need to do that again.  This blog will focus on exactly what I mean about investors being the last to be paid when filmmakers don’t get any profit share until after the investors have recouped.  The answer to this question lies in the standard distribution waterfall

​But before I list it out for you, I should make a point of saying that this is only true if you pay yourself either a stipend or a salary to produce the film.  If anyone is working 100% deferred, then it’s relatively likely that they’ll get paid after the investor.  However if you paid yourself to make the film in any way, then you have been paid before the investor, often using their money. 

So what is a waterfall?  A waterfall is how money from foreign sales and domestic distribution deals flows to the filmmaker.  The top of the waterfall is the money source, and the bottom of the waterfall is the filmmaker.  They normally look something like this, if the buyer is paying an MG or a License fee to the sales agent.

1. Buyer License fee/MG

2. Distributors fees/wire transfer fees.

3. Sales Agents Commission (20-35%)

4. Sales Agent’s Recoupable Expenses (up to cap)

5. Producer’s Representative Fees (If applicable, 5-15%)

6. Production Company fees

   1. Debt

   2. Equity Investor Investor (Until recoupment+10-20%, then 50% of future profits)

   3. Crew Deferments

   4. Producer share

If the buyer is offering a revenue share deal (Rev Share) then the waterfall will look more like this. 

1. Individual Sales (Total)

2. Buyer’s Commission (20-30%)

3. Distributors fees/wire transfer fees.

4. Sales Agents Commission (20-35%)

5. Sales Agent’s Recoupable Expenses (up to cap)

6. Producer’s Representative Fees (If applicable, 5-15%)

7. Production Company fees

   1. Debt

   2. Investor (Until recoupment+10-20%, then 50% of future profits)

   3. Crew Deferments

   4. Producer share

Generally, a Production Company won’t see ANY money until the sales agent has recouped their expenses.  Once they have, that item is essentially removed from the waterfall. 

The four subcategories underneath the production company are generally what happens after the production company receives money from the sales agency.  Admittedly, the investor is at the top of that waterfall (if we exclude the payments made in production) but they’re at the bottom of another. 

Each piece of the Waterfall takes a slice of the film.  For this example, we’ll assume the sales agent has already recouped their expenses.  We’ll assume another 10,000 dollar sale has come in for easy math.  So in the first waterfall, the sales agency takes 20% or 2,000 USD, then the remaining 80% (8000) goes down the line. 

Then let’s say that your Producer’s rep has done their job and gotten a good deal for you.  They charge the average price which is 10%.  So the Producer’s Rep takes 10% of the 8,000 dollars, or 800, and passes the remaining 7,200 on to the filmmaker.  The filmmaker then passes uses that money to back to their investor, settles up with crew deferments, and then pays themselves whatever is left. ​

If that same 10,000 USD was the result of a revenue share distribution agreement, it would look like this.  First, the distributor takes 20%, then passes not he remaining 8,000 USD to the sales agent.  Next the Sales agent takes 20% of the 8000 (1600) and passes the remaining 6,400 to the producer’s rep.  The Producer’s rep takes 10% (640) and passes the remaining 5760 to the production company.

In both these examples I’ve ignored wire fees, but they can range from 1-3%. 

One thing that you might notice is that the Sales Agency Commission is above their recoupable expenses.  This does mean that they’re taking out their commission before they start to pay themselves back their recoupable marketing expenses.  This is common, and while I don’t agree with it it’s a very difficult thing to negotiate.  That being said, it doesn’t make as big of a difference to the bottom line as you might think.  I’ve done the math, and it often amounts to around 4,000 to 5,000 extra for the sales agent.  I know that’s far from nothing, but it’s the comparably small amount means there are better places to focus the negotiation.

There are a few tactics that you can use to get a better deal and change the waterfall around a bit, but those are tactics that I’m going to leave out of my blog, due to them requiring a deft hand to execute properly. 

On that note, you might notice the extra line item for your producer’s rep, if you’re using one.  You might also think why would you pay an extra 10% to a producer’s rep?  The real answer is that a bad producer’s rep won’t really help you that much.  But a good producer’s rep can not only ensure you get the best deal possible but also that it’s with the best company possible for your film.

A good producer’s rep will help streamline the sales agency selection process and occasionally handle domestic distribution themselves.  They’ll also know exactly which parts of a distribution contract can be negotiated, and which ones can’t.  They’ll generally have long-term relationships with many sales agencies, so the negotiations are likely to go smoothly.  In short, a good Producer’s Rep might take a piece of the pie, but they’ll make the pie much bigger while they do. (See our services for more)

So there’s a primer, but there’s obviously a lot more to know. If you want to dive right in and find out what you need to know to grow your independent film company or career, a great place to start is my indiefilm business resource package. In addition to monthly mailings with the content you need to know to grow your career, It’s got an E-book, templates for decks, distributor content tracking, and exclusive updates on Guerrilla Rep Media Releases and content. It’s totally free, check it out below.

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5 Rules for Getting a Letter of Intent (LOI) From a Sales Agent for Your Film.

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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5 Ways to Market Your Movie Besides Social movie

There’s a lot of advice on the internet, as well as on this blog about marketing your film using social media.  That’s with good reason, Social media is among the most cost-effective ways to market your project if you do it properly.  Further, it helps you maintain a long-term relationship with potential customers.  That being said, it’s not the only way to market your film.  It might not even be the most efficient way when it’s the only thing you do.  What follows are 5 ways to market your film other than social media.

For this blog, all 5 of these tactics can and should be used in conjunction with each other, and can greatly augment your social media marketing.

Before we begin, every once in a while I’ll take a question I get on Twitter and turn it into a blog.  This question came @AmandaVerhagen a while back, but I’ve not had time to adequately address it until now.  If you have a question about film distribution, marketing, financing, or sales, feel free to @Mention @TheGuerrillaRep and I might just write a blog to answer your question.  

Events

Hosting an event to spread the word about your project can be a great way to build excitement and generate interest in your project.  This can be something as simple as a happy hour at a local bar where you buy a few drinks for strong supporters, or as complex as renting an event space, supplying the booze, and having some people say a few words.  Ideally with entertainment.

What you do really comes down to how much time you have to organize and what your budget it.  The importance of the milestone you’re celebrating also plays a factor, although any milestone worthy of an event is also likely worthy of some time to organize it

Festivals

Shocking, I know.  However what does bear mentioning is that festivals are only as useful as you make them.  Getting into festivals can be a great way to expand your network and grow the reputation of the film, however the effect that will have will be limited unless you learn how to work the festival. 

Essentially, getting into a festival provides you a space where you can utilize every other item on this list to grow your notoriety, your film’s reputation, and your professional network. 

​Flyers/Givaways

​Having something tangible you can give away to people at events in festivals will help people remember you.  They’ll remember you even more if you attach something to the card that has some immediate value beyond the information you’re handing out.  This can be as simple as a tiny piece of chocolate attached to a card, a bottle of hand sanitizer, or even a small bottle of alcohol( if the demographic is right.)

Adding a giveaway will help you stand out in the minds of whoever you give your giveaway to .It’s easy to get lost in a pouch of postcards and flyers, but something as simple and cheap as a piece of chocolate can make all of the difference in how you’re remembered by the event goer. 

​Stunts

Pulling some sort of marketing stunt can be a great way to stand out and attract a bit of press.  Whatever you do, you’ve got to make sure you do it safely though. 

One of the most famous stunts at Cannes was when someone lit themselves on fire (in a fire suit) and then after they were put out, it was revealed to be an attractive your woman in a bikini who starred in the film she was promoting.  Rumor has it the woman later lost that bikini while being interviewed, but that’s another matter.  Also, that happened in the late 80’s/early 90’s, so the culture was different.

Your stunt doesn’t have to be as outlandish as that, but should be as memorable.  If you have a  war movie, you might want to consider throwing toy paratroopers from a rooftop you can gain access to.  If you’re promoting at Sundance, a woman in a bikini making a quick walk through the cold with premier tickets would certainly grab some eyeballs and some attention.  Especially if you can work in a joke about accidentally packing for Cannes. That said, make sure you have a trenchcoat and hot drinks on hand to help her out when she inevitably gets cold.

In any case, the goal of the stunt is to get eyeballs in a safe and legal way.  It’s to help you and your movie be memorable and to ideally attract a bit of the final item on our list. 

​Publicity

​Publicity is almost always the most cost-effective way to spread the word about your project.  However, it’s not always the easiest thing to get.  Generally, you’ll need a relationship with an outlet, something truly eye-catching, or a good publicist to get any substantial amount of coverage.  Sometimes you’ll need all three. 

There are a couple of ways you can disseminate a press release.  PRNewswire.com is relatively affordable, but it’s unclear how much individual press coverage you’ll get out of it.  It does still help with your SEO (Search Engine Optimization) to at least a degree though.  

Generally, if you can afford a publicist, it’s the best way to go by far.  My favorite publicist is October Coast, they’re very cost-effective for the value they provide. While it’s possible to get big marquee press coverage from October Coast it’s unlikely. This means you probably won’t get you the big outlets like Deadline, Variety, or THR, but you will get dozens of relevant niche blogs. In general, you’ll need a higher-cost publicist, or if you’re lucky your distributor, sales agent, or producer’s rep will handle this for you.

EDIT FROM THE FUTURE: There may be a few more things I’ve learned from Running Mutiny that I’ll share in a new blog around the efficacy of paid ads and sponsorships. Comment if that’s of interest.

Thanks for reading! If you want more help financing or distributing your movie, the best place to start is my film business resource pack. It’s got templates, an e-book, and a whole lot more to help you grow your indiefilm company and career. Oh, it’s completely free, get it below.

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7 Realistic ways to Find First Money In on your Feature Film.

When fundraising for anything, the first money is always the hardest.  Investors don’t want to be the first in due to the investment seeming untested.  So in order for them to feel more secure, you might need to raise some of the money in other places.  Here are the 7 most realistic places for filmmakers to go to get first money in. ​

First money in isn’t meant to be the entirety of your budget.  It’s only meant to be about 10%.  Having raised 10% of your budget helps investors see that you’re serious, and aren’t going to require them to do all of the funding work themselves.  With that in mind, almost every item on this list is not meant to fund your entire movie, but more serve as a jumping-off point to help you raise the funds you need to make an awesome film. 

Highly Related: The 9 ways to Finance your Independent Film

1. Donation based Crowdfunding

I know most filmmakers really don’t want to hear about crowdfunding, but it’s still one of the best ways to serve as a proof of concept for a film.  It’s also a great way to get first money in.  Specifically for this example, I’m talking about donation based crowdfunding.  I’m far from an expert in equity crowdfunding, and while there’s potential in the idea, it’s unclear how it should be executed. 
​
That being said, donation based crowdfunding can be an excellent way to get the project rolling, and get further into development.

2. Tax Incentives

Depending on where you’re planning on shooting, Tax incentives can be a great way to get a portion of your funding in place.  If you’re in the US, then shooting in Kentucky can get you as much as 35% of your budget.  Granted, that will go down to about 30% once you take out a loan against it so that it becomes real money instead of a letter of credit.  That loan will be fairly low interest, since Kentucky’s incentive is structured as cash.

There are a lot of things I could go into about tax incentives, but it’s more than I can cover in this blog.  I might make a future blog or video about it Comment and ask.

3. Grants

There aren’t a lot of development stage grants out there, and as such the few there are tend to be in very high demand.  However, if you can get some portion of you money via a grant from the Kenneth Rainin Foundation or some other development stage granter, then it cuts the risk for your investors and gives you first money in. 

Keep in mind, most organizations that give grants turn you down automatically when you first apply. It can be wise to apply multiple years in a row while you try to get this film, or other films off the ground. 

4. Equipment Loans

An equipment loan is a relatively low interest loan that uses any equipment you own as collateral for the money that’s being lent.  I understand that this is a scary prospect for many filmmakers (With good reason) but it can be a way to get money into the project at an early stage, and serve as your first money in.
​
It’s also important to note that debts are paid off before equity is paid back, so your loan would be repaid and your equipment secured before any future investor got their money back.  Of course, this isn’t always the case, but it generally is. 
​

5. Personal or Business Credit

There are a few people who will loan money for films based on your personal credit.  Sometimes it will be a business loan, sometimes it will be an insanely high limit credit card, but in the end it can be the money you need for development.  It’s not ideal, but it can be a way to get your movie to the next level. 

If you’ve been making corporate videos through your entity for a number of years your business may have enough credibility to take out a moderaate interest loan from a bank against your future corporate video earnings.

In general, this will be a percentage of your previous earnings according to you last few tax returns and whatever debt burden the business has from general operations. This is best used to offset time away from corporate work as an expansion into a new product line, I.E. your feature film.

This would most likely be considered an unsecured loan, which means it’s higher interest than the equipment loan or anything of the sort like that.

If you do go down this road, you should not forget that it often takes 12 to 18 months from delivery to a distributor to start earning royalties, and that’s not accounting for the minimum of 9-12 months to make the film and deliver it to a distributor. The interest over the course of a term like that might be hard to bear.

I should stress I’m not a lawyer or financial advisor. You should check with yours before acting on anything on this list, especially anything that’s debt base.

6. Wealthy Friends and Family

If you’re lucky enough to have accredited investors in your friends and family, then this can be a good way to get your first money in.  Investors normally invest in people as much if not more than projects, so approaching someone you already know is generally an easier ask than someone you don’t.  Since this blog is about getting first money in, having an investment from a wealthy friend or relative can be the quickest and easiest way to get over that hurdle.
​
Of course, in order to raise money from wealthy friends and family, you must HAVE wealthy friends and family.  If your friends and family ARE NOT Accredited investors, then it’s best to include them in a donation-based crowdfunding round.  While the SEC (Securities and Exchanges Commission) has loosened requirements for high-risk and small business investments since the JOBS Act, they’re still very strict when it comes to high risk investments, and it would be better for you to not run afoul of them. ​

7. Equity Investment

Finally, if you don’t have wealthy friends and family, you can chase equity investment.  Normally this means that you would approach the person who owns the car dealerships in your neck of the woods, or other local business leaders.  If you can get a meeting to talk to them about investing in a movie, there’s a chance that the excitement of it might help you raise a portion of your funding. 

Mind you, this is not an easy sale.  It’s going to take a skilled salesperson to pull it off, and a lot of research into why someone like this person who owns the car dealerships would want to invest in your project. 

Thank you for reading! If you found this content valuable, check out my FREE film business resource pack. It’s got a free e-book on the indiefilm biz featuring 21 articles around similar issues covered in my blog. Around half of those articles can’t be found anywhere else. Additionally, you’ll get an indiefilm deck template you can use to create a deck for investors, contact tracking templates, form letters, and a whole lot more! Check it out below.

The Top 11 ways to Support Content Creators as a Fan

A lot of what I write is geared towards helping filmmakers better understand how to make a living in film and media.  But without the support of their community, audience, and fans it’s impossible for a creator to make a living.  So this week thought I’d break the mold and write a post for the fans and followers on how you can support your favorite content creators. 

Since money is tight for most people, the majority of this list will show how you can support your favorite content creators without spending any money, or at least money you wouldn’t have spent otherwise. 

This list is Prioritiized by how much they help the content creator.  If you have a disagreement with me on the prioritization, or if you think I forgot one check #6.  Also, YARRR… that be affiliate links in this article.  I practice what I preach. 

With the qualifiers out of the way, let’s get started.

#1. Consume their content

It may seem obvious, but the most important thing you can do to support a content creator is consume their content.  If a content creator doesn’t have people consuming their content, then they don’t have an audience, and without an audience the creation is for naught.
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But consuming content differently helps them differently.  If you watch their content through AVOD (YouTube, Hulu, anything with ads) or certain SVOD (subsription Video On Demand) providers like Amazon Prime or Fandor then every view pays the content creator directly.  If you watch it through other SVOD platforms like Netflix, NBOGO/HBONow then that also helps the content creator, but not as directly.

If you have to choose a free way to watch your favorite content creator’s work, then Amazon prime is the way to do it. They pay the best. ​

#2. ​Buy their premium content.

If you really want to support an artist or a content creator, show them buy buying their creations, or subscribing to their patreon.  These channels often give the majority of the sale to the creator. 

If you buy their content on VHX or Vimeo on Demand, they make around 80-90% of the sale.  If you buy is from iTunes or Google play, Filmmakers make significantly less, although both are helpful for different reasons.

I make the most money per copy when someone buys a paperback through Amazon, but my favorite way for people to get my book is through their local bookstore, library, or Barnes and nobles.com.   Even though I make about half as much, if someone requests it then it’s more likely to show up to other local bookstores or libraries and it spreads rather quickly.  Plus, I get warm fuzzies helping support indie bookstores and libraries.  Similar recommendation engines happen with iTunes and google play for videos

#3. Leave a review

Other than consuming content, the best way to support a content creator without spending any (More) money is by leaving a review.  Sites like Amazon, Barnes and Noble, Netflix, Goodreads, iTunes, and more have hugely powerful recommendation engines that help consumers discover new content that rely largely on reviews.

Apart from that, most potential customers will read reviews before buying a product.  Some studies have shown that reviews and recommendations are the primary way people decide whether or not to buy a product, especially younger people.

#4. Join their mailing lis

I know we all get too much spam.  However, if you want to support a content creator who’s work you love, join their mailing list.  *Cough*

It’s the most stable way for them to keep in touch with you.  Liking their Facebook page or following them on twitter doesn’t guarantee you’ll see their messages.  Of course, it’s on them to not get too spammy. 

If they do get too spammy, when you unsubscribe try not to report spam.  Just say something like “No Longer interested.”   Spam reports can really damage their ability to send messages that people actually see, so make sure it’s only used when it’s really necessary.  Like, the exact same message multiple times in a week.

#5 Like/Follow/Subscribe their channels

A follow on twitter, a like on Facebook, or a subscribe on youtube doesn’t have the same impact as joining their mailing list, but it still matters.  It means you’re more likely to view their content, and savvy investors or distributors will ask what their social media presence is.

#6 Share their content

If you like a piece of content, share it with your friends!  There are some very beneficial things that happen when it’s shared that go far beyond whatever friends you share it with seeing it.  If you share a sponsored Facebook post, the ad is more effective and reaches more people without the content creator spending any more money.   Apart from that, sharing content helps it get discovered by search engines.

#7 Leave a comment on their content

Leaving a comment on social media will help with SEO, and if they use a plugin for Facebook comments (Like I Do) it will also help make the most more discoverable on social media.  If you leave a comment on a youtube video, it also helps it be discovered by people watching similarly tagged videos.  The more engagement the content gets, the more people the platform will show it to.

#8 Click an Ad on their content.

If you’re on a content creator you trust’s site, and you enjoy the content, you should consider clicking a relevant ad.  You’d be surprised what it pays.  It’s not uncommon I make more money from a single google AdSense click than I do from an E-book Sale of the Entrepreneurial producer.   That’s right, clicking the right ad can support your content creator more money than spending 2.99 on an ebook. 

Most creators use Google Adsense for ads like this, so you shouldn’t get adware from clicking a reputable blog.  I actually disabled ads on my site, but in general most creators use Google AdSense. If you’re watching something on YouTube, letting the ad play also helps your favorite creator.

#9 Participate in their sponsorships/Affiliates

If you see a link for a product you wanted to buy on a content creator’s site, then you should consider buying them through the links on that content creator’s site.   it generally pays them a bit of money for a product, or a decent amount of money for a service.  Some of the common banners will look like this.

​Amazon is far from the only company to do this, but they are one of the most common affiliates you'll see.

#10 Watch an ad all the way through on their content

If you’re watching a video on youtube and you see an ad that’s about 30 seconds long, you should want to consider letting it play.  The amount of money the content creator if the ad plays all the way through is significantly more than the money they get if you only watch the 6 seconds.

#11 Engage with their social media posts

Sharing, Retweeting, Liking, or loving their content on social media has a huge impact on the reach of a post.  this impact goes well beyond the direct expansion to your fan base.   Engaging with your content creator on social media helps them grow their reach much more quickly.

​Thanks for reading, if you like this post, feel free to share it with your friends, fans, and whoever else.  Also feel free to follow me on twitter, like me on Facebook, or check out my book!

Thanks so much for reading! If you liked this content, please share it to help any creators you follow. Also, as stated above, consider joining my mailing list. You’ll get a free E-book, templates to help you finance or sell your film, and a whole lot more!

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The 5 Windows of DIY Distribution

Not every film is well suited for traditional distribution. Most market distributors have a saying for what they’re looking for, “Bullets and Babes.” So if you’ve made a film that doesn’t fit the hot genres and doesn’t have any notable talent, you’re going to need to plan your distribution carefully. Luckily, there are tools that can help you make the most out of your DIY distribution. Here’s a top-level view of them.

Window 1: Promote and get Partners to help you

Whether we’re talking about traditional distribution or self-distribution, phase one is always to spread awareness of your film. It’s generally best for this to start in the early stages of making your film. However, it’s never too late to get started.

First seek out partners with expertise in traditional distribution, online marketing, and festival promotion. They can help you minimize costs and maximize your efficacy. They’ll also help you build and engage with your community. You should also retain a publicist if you can afford it, as it’s generally the best marketing money you can spend.

After that, start submitting to smaller festivals and those that fit whatever niche your film falls into. If you made a film about environmental issues, there are a lot of green film festivals. If you happen to be an Asian American there are festivals that were created for you as well, including CAAMfest. If you made an LGBTQ film, then there are quite a lot of festivals available to you. If you’re in SF, the big fish is Frameline.

No matter what, make sure to submit to your local festivals. You can start a loyal fan base and grow hometown recognition by submitting to these festivals. Often, they’re easier to get into. This is less true if you’re in San Francisco or a major hub. If you are, you might want to target the newer film festivals.

These festivals won’t do much for you in terms of traditional distribution. The only ones that will are the top tier festivals, I.E. Cannes, Sundance, Toronto, Tribeca, and SXSW, and most of the top 20 Genre festivals like Frightfest, FantasiaFest, or similar. If you can get into any of those, then your chances for traditional distribution go up substantially. Although, it’s not likely you’ll get in. Here’s a chart on Sundance submissions vs. acceptances for documentaries as it’s the best image I could find. The numbers for the narrative are in the same ballpark.

Feel free to submit to the next top tier festival that’s coming up. The submissions are not incredibly expensive, and if you get in the career boost is substantial. Since they require premier status, you might even want to hold back accepting a place in any of the other festivals. That said, if you don’t get into that first one don’t wait for the next one. Start taking festival spots, once they’re more than a year old, they’re a lot harder to sell. Films are not evergreen. ​

Window 2: High Touch PPVOD and DVDs in Store

​As soon as you get into a single festival, get your film on Allied Vaugn, VHX, and Vimeo On Demand. There will be an up front cost for most of those. Potentially as much as about 300 to 500 USD All in.

Vimeo On Demand and VHX (Now Vimeo OTT) are VOD platforms that merged a while back. I prefer VHX, but we’ll see what happens in the coming months after the merger. They’re both 90/10 splits, with the 90 going to the filmmaker. Vimeo requires up front fees, VHX currently does not, unless you upload A LOT of content. That said, they’re not available on as many platforms as accessible as something like iTunes or google play. Additionally, they’re not great about helping with Marketing. But retaining the 90/10 split is much better to earn some money for your creation. VHX also lets you keep track of people who buy your video and even add their emails to your list.

Allied Vaugn is a DVD wholesaler. It’s the platform used by booksellers large and small, as well as many other brick-and-mortar content-selling businesses. You’d be surprised where you end up with your content on Ingram. *COUGH*

This window should be done concurrently with the first window. When your project gets into a festival, make sure to call local DVD retailers and bookstores to let them know that your film is in a local festival and they can get your DVD on Ingram. Make sure you include local stores with your DVD on your handouts, as well as the VHX and Vimeo URLs. You’d be surprised what support you can drum up. You could include a QR code, but hardly anyone uses them.

Window 3 –Broad TVOD

Around the same time of your initial VOD release, towards the end of your festival run you should consider hiring an aggregator and getting your film on iTunes and Google Play. Depending on which aggregator you use, you may want to do Amazon Video Direct yourself, since it’s relatively easy.

It’s nearly impossible to get on iTunes without an Aggregator. You’ll want to pick your aggregator carefully since some have been guilty of severe financial mismanagement.

It will take up to 6 months to get it placed on most TVOD services, so plan accordingly. Amazon Video Direct is pretty quick, with a turnaround of only a few days or at worst weeks the last time I did it.

Make sure you do your research on aggregators, In general, I’ve found Filmhub and Bitmax to be the best, but that might change by the time you read this. Allied Vaugn can get you on some TVOD platforms and more AVOD platforms as well.

Window 4 — SVOD

After about 6–9 months on Broad TVOD, it’s time to boost your brand by getting your film on Netflix, Amazon Prime, Hulu, Paramount+ some others. You won’t get much money for this, but you will get a lot of visibility. You’ll need connections through Distributor, Producer’s Rep, Talent Agent, or maybe a sales agent for this one, as they don’t take open submissions. Additionally, this is far from guaranteed, they generally only take fewer than 1 in 10 of the films they’re pitched.

The real point of this is to build your brand for your next film. If you want to build something better, telling investors your last film is on Netflix helps them understand that you are experienced and tested.

Window 5 — AVOD/Loss leader

If you can’t get an SVOD Deal, or once the exclusivity period expires you should work with your aggregator to get the film on as many Ad-Supported Video On Demand outlets as you can. This can often be the most profitable window for independent films, at least as of this writing. Again, as of this writing, Tubi has the most viewers and as such tends to pay the best.

You’ll need to go through an aggregator, distributor, sales agent, or tastemaker who has a vendor license with Tubi or whatever platform you want to be on. You should consider giving the film away for free on your website, and perhaps even youtube or regular Vimeo.

This window is likely to be 3–4 years after release. Personally, I prefer giving away streams in exchange for an email. This will help you if you want to crowdfund a movie, or when you release your next film for windows 1 and 2. If you want to know how that would work, it would probably look really similar to the process you’ll see from signing up for my resource package down below! Take yourself through it for a UX guide, and you’ll also get some templates and a free e-book for doing so. It’s truly a Win-Win!

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5 Steps to Vetting your investor

Just like all filmmakers and Entrepreneurs are not created equal, nor are all “Rich Guys.” Many will jerk you around, and not actually deliver on what they promise. So how do you know if your potential investor is legit? Well, here are a few tips.

Note: This Article is largely in response to a piece by Jason Brubaker at Filmmaking stuff. Overall it’s a good piece, but I felt it lacking a few things so I’m expanding it with my thoughts. You can find the original article here. Even though Jason was a bit too involved with Distribbr and that whole debacle, he did make some good content so my response blog is getting a port.

1. Look them up online (Duh)

You need to know who you’re dealing with, so before you meet with them you should do some diligence. The goal of this step is just to ensure they have money, and get an idea of whether they’ll be likely to spend it.

You want to find out what they’ve done, and where they got their money. Generally start by looking them up on AngelList and Slated. These sites do some pretty deep vetting for to make sure that investor members are accredited. They’ll also list the previous investments of the investor, so you can see how they stack up against yours.

Slated is strictly for film, AngelList is focused on Tech. If they have active profiles on these sites, then you know that they are active investors. Active investors are more likely to invest.

If they don’t have either of those profiles, look at their LinkedIn. Generally Linkedin will show you previous positions, if they have multiple executive positions at companies with more than 15 employees, or list that their company was sold to a bigger company they probably have excess capital to invest.

If you’re too far away from them to see their full Linkedin profile, google them. If they have a profile in Forbes or Bloomberg, you’re set. If they have a ton of lawsuits or if you find something saying they, I Don’t Know, tried to buy a baseball team but were laughed out of the room then lambasted by a major newspaper, maybe steer clear. Totally not at all a real example, by the way.

2.Look at what they’re wearing and what they’re driving.

As Brubaker says, this technique is far from perfect. Sometimes the guy in the three-piece suit has less capital than the girl in the jean jacket and yoga pants. However, there are some things you can take into account. Fashion is highly dependent on the area you live in. Here in Silicon Valley, it’s common for the people in sweats to be worth more and be more likely to invest than the suits. Try to understand the cut of the clothes, and get an eye for designers. I know some people who wear T-shirts that cost more than I paid for my first Armani suit. Admittedly, I bought that suit secondhand.

But there are some constants. Before you look at the clothes, look at the shoes. People, especially men, overlook the importance of shoes to the overall aesthetic, but they’re a relatively constant indicator of wealth. Watches are also a good indicator of status.
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Whatever make or model of car they drive will give you a good idea of how much they’re worth. Generally make is better than model, for example, hybrids are big here in the bay. for a time, a Prius was a status symbol. Now that most luxury brands have a hybrid, the make is generally a good metric to judge by. Teslas are still a great indicator.

​3.Do they pick up the check?

Here’s one that I totally disagree with Jason on. He makes the point that if he can’t pick up a 50 check you’re not getting a 50,000 dollar check from them. Whether or not an investor picks up the check is largely dependent on a few factors. If they’re an independent angel investor, they can take about 8 meetings with entrepreneurs a week. If they always picked up the check, they wouldn’t be an accredited investor for long. Also, most of the rich guys I know are surprisingly stingy.

Generally, if it’s a first meeting I split the check. I pay for my seat at the table, they pay for theirs. A fear of many legitimate angel investors is whether or not the entrepreneur is going to carry their weight, so in a way splitting the check is symbolic of what a good relationship with an investor should be. Future meetings are up for debate.

4. If they’re talking about “Money Coming In” it’s BS.

Jason is completely correct on this one. Unless the startup they were one of the first ten employees at a is about to IPO, (You can google that, and easily fact-check it) that money won’t come in.

However, if they say their money is tied up, that’s a different story. Savvy Rich people don’t let their money sit in a checking or savings account. They invest it. Most of the time, they’ll have a respectable stock portfolio. That means they’ll have to sell something (Liquidate Assets) in order to free up money to invest in your projects. Here’s a tool to help them to do that.

5. Is it too Easy?

It may sound counterintuitive, but if it’s too easy to get the check that should be a huge red flag. I’ve worked in Silicon Valley and Hollywood, and it’s never easy. It requires finesse, charisma, and luck. Just like you need to do your homework, your investors need to do homework on you. They will need a deck, a business plan, and a good relationship in order to give you a check.

This analogy is crass, but the more I play this game the more I realize the truth behind it. Getting investment is like dating. You have to get to know each other first. Then you figure out if you like each other you figure out if you could work well together. Finally, after 3–7 excellent meetings and more phone calls and messages, you get into bed together. Often the more meetings it takes to get into bed, the better the relationship will be. That’s not always the case though.

If you want more like this, you should grab my free film market resource package. It’s got lots of templates to help you talk to investors and distributors including deck templates form letters, and tracking sheets as well as money-saving resources and a free e-book.

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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.
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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.
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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.
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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.

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The 9 Ways to Finance an Indiependent Film

A lot of Filmmakers are only concerned with finding investors for their projects. While films require money to be made well, there’s are better ways to find that money than convincing a rich person to part with a few hundred thousand dollars. Even if you are able to get an angel investor (or a few ) on board, it’s often not in your best interest to raise your budget solely from private equity, as the more you raise the less likely it is you’ll ever see money from the back end of your project.

Would you Rather Watch or Listen than Read? I made a video on this topic for my YouTube Channel.

So here’s a very top-level guide to how you may want to structure your financial mix. The mixes in the image above loosely correspond to the financial mix of a first-time film, a tested filmmaker’s film, and a documentary. They’re also loose guidelines, and by no means apply to every situation, and should not be considered financial or legal advice under any circumstance. This is just the general experience of one Executive producer.

Piece 1 — Skin in the game. 10–20%

Investors want you to be risking something other than your time. The theory is that it makes you more likely to be responsible with their money if you put some of yours at risk. This can be from friends and family, but they prefer it come directly from your pocket.

I've gotten a lot of flack for this.  However, the fact investors want skin in the game is true for any industry or any business.  Tech companies normally have skin in the game from the founders as well, not just time, code, or intellectual property.

However, if you’ve got a mountain of student debt and no rich relatives, then there is another way…
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Piece 2 — Crowdfunding 10–20%

I know filmmakers don’t like hearing that they’ll need to crowdfund. I understand it’s not an easy thing to do. I’ve raised some money on Kickstarter and can verify that It’s a full-time job during the campaign if you want to do it successfully. However, if you can hit your goal, not only will you be able to put some skin in the game, and retain more creative control and more of the back end but you’ll also provide verifiable proof that there’s a market for you and your work. Investors look very kindly on this.

That said, just as success provides strong market validation as a proof of concept, failing to raise your funding can also be seen as a failure of concept. and make it more difficult to raise than it would otherwise have been. Make sure you only bite off what you can chew.

Due to the difficulty in finding money for an independent film, the skin in the game or crowdfunding portion of the raise for a director’s first project is often a much higher percentage of the raise than it will be for their future projects.

Piece 3 — Equity 20–40%

Next up is equity. This is when an investor gives you money in return for an ownership stake in the company. From a filmmaker's perspective, it’s good in that if everything goes tits up, you don’t owe the investors their money back. Don't misunderstand what I mean by this.  You ABSOLUTELY have a fiduciary responsibility to do your due diligence and act in the best interest of your investors to do absolutely everything in your power to make it so they recoup their investment.  If you do that, or if you commit fraud, your investors can and likely will sue the pants off of you. You’ll have an uphill battle on that as well since they probably have more money for legal fees than you do.

Also, you will need a lawyer to help you draft a PPM.  You shouldn't raise any kind of money on this list without a lawyer, with the possible exception of donation-based crowdfunding or grants.  In general, just remember that I’m a dude who produced a bunch of movies who writes blogs and makes videos on the internet. Not a lawyer or financial advisor. #Notlegaladvice #Notfinancialdvice #mylawyermakesmewritethesesnippets.

It’s bad in that if everything goes extremely well, they get a huge percentage of your film. So it deserves a place in your financial mix, but ideally a small one.

For a longer list of my feelings on this topic, check out Why film needs Venture Capital, or One Simple Tool to Reopen Conversations with Investors

Piece 4 — Product Placement 10–20%

Product placement is when you get a brand to compensate you for including their product in your film. It’s more common in the form of donations or loans for use than hard money, but both can happen with talent and assured distribution. If you’re a first-timer, it’s difficult to get anything other than donated or loaned products.

Piece 5 — Presale Backed Debt 0–20%

Everything you read tells you the presale market has dried up. To a certain degree, that is true. However, it’s more convoluted than you may think. According to Jonathan Wolfe of the American Film Market, the presale market has a tendency to ebb and flow with the rise and fall of private equity in the filmmaking marketplace. There’s been a glut of equity for the past several years that’s quickly drying up.

 That said, there are a lot of other factors that will determine where pre-sales end up in a few years. The form has shifted, in that it’s generally reputable sales agents that give the letters instead of buyers and territorial distributors. You then take that letter to a bank where you can borrow against it at a relatively low rate.

Piece 6 — Tax incentives 10%-20%

While many states have cut their filmmaking tax incentives, it’s still a very viable way to cover some of the costs of making your project. It is worth noting that the tax incentive money is generally given as a letter of credit, which you can then borrow against or sell to a brokerage agency. It’s not just a check from the state or country you’re shooting in. This system of finance is significantly more viable in Europe than it is in the US, but no matter where you plan on shooting it needs to be part of your financial mix.

Piece 7 — Grants 0–20%

There are still filmmaking grants that can help you to make your project. However, that’s not something that is available to all filmmakers, especially when they’re first making their projects. Don’t think grants don’t exist for you and your project, because they probably do, spend an afternoon googling it. My friend Joanne Butcher of www.FilmmakerSuccess.com suggests applying for one grand a month for the indefinite future, as when you do so you’ll develop relationships with the foundations you contact which can be invaluable for your career growth.

Grants are much easier to get as a completion fund once you’ve shot your film. Additionally, films made overseas are more likely to be funded by grants than those shot here in the US.

Piece 8 — Gap/Unsecured Debt 10–40%

Gap debt is an unsecured loan used to create a film or television series. This means that the loan has no collateral, be it product placement, Presale, or tax incentive. It used to be handled by entertainment banks for a very high interest rate, I can’t say who my source was on this, but I have heard of interest rates in excess of 50% APR. That market has been largely taken over by private investors loaning money through slated, which did bring interest rates down. Unsecured debt almost certainly requires a completion bond, which generally means that it’s only suitable for projects over 1mm USD in budget.

In general, you should use this form of financing as little as possible, and pay it back as quickly as possible. Again, Not legal or financial advice.

Piece 9 — Soft money and Deferments — whatever you can

Soft money is funding that isn’t given as cash. This can be your crew taking deferred payment for their services, or receiving donated or loaned products, locations, and anything else meant to get your film made. This isn’t so much funding as cost-cutting. It often includes donations or loans from product placement.

If you like this content and want to learn more about film financing, you should consider signing up for my mailing list. Not only will you a free e-book, but you’ll also get a free deck template, contract tracking templates, and form letters. Plus you’ll stay in the know about content, services, and releases from Guerrilla Rep Media.

How do we Get More Investors into Independent Film?

Throughout writing this blog series, I’ve been told more times than I can count that film is a terrible investment, and no one besides hobbyists would consider it.  Many want to leave it there, without bothering to look at what’s causing it.  Last week we thoroughly examined the issues plaguing the film industry, and what keeps investors out.  The issues aren’t pretty, but they may be fixable.  What follows is a list of what could be done to fix this problem and some of the ways organizations that are implementing these tactics.

Greater Transparency

One of the biggest things stopping film investment is the perception that it’s unprofitable.  All too often that’s not simply a perception.  Another thing stopping independent film as an industry from being profitable is the fact that many sales agents don’t accurately report the earnings of the films they represent.  Others charge too much in recoupable expenses, so it’s unlikely to recoup.  Some take an unreasonable portion of the revenue or simply hide sales from filmmakers. 

One necessary problem to fix is the lack of transparency within distribution.   There are rights marketplace solutions like Vuulr and RightsTrade emerging thanks to recent technologies for international distribution. Aggregators like BitMax and FilmHub have been around for a while already.  The issue that these platforms have yet to solve is that of both audience and industry awareness of their project. If a filmmaker can market or receive help with that audience discover and marketing, then in theory the entire process can be disintermediated and filmmakers can sell directly to customers using a marketplace.  Unfortunately, this discovery issue is still both time-consuming and expensive.  

What about a hybrid system?  One where a skilled group works with distributors and sales agents to sell the completed films at the maximum possible profit to the investors and production company.  What if those groups were directly linked to protecting the investor’s interests, and gives sales agents capital for growth and new projects?  Then the sales agents would have much better incentives to ensure the companies that license their content to them get a strong return.

That would seem like a solution, but we’ll get to it.  There are other problems to delve into first.

Better Business Education for Filmmakers.

I touched on this in my last blog, but filmmakers don’t understand the business well enough to function as media entrepreneurs.  Traditionally, specialists such as executive producers, PMDs, and true producers focused on the marketing and supported projects so that the writers, directors, creative producers, and line producers could focus on making the project.   With film sets getting leaner, there aren’t enough of media entrepreneurs doing their jobs. ​ (although I take on this role from time to time.)

In essence, there isn’t enough of a skilled entrepreneur class capable of making and selling films as a product either directly to consumers or to distributors, sales agents, and other industry outlets.   So long as filmmakers don’t understand business, they’ll never be able to break out and get what they and their films are worth.  If filmmakers don’t endeavor to understand business, they will be unable to communicate with investors and understand where they come from well enough to make a sustainable living in film.  This issue is exacerbated by the fact that film schools don’t teach any of these skills as well as they should. ​

Filmmakers want to make the movie, and they will stop at nothing to get that done.  As a result, promoting the film becomes an afterthought far too often.  What would be ideal is if these educational organizations could tie into an angel investment group or community.

But what about integrating with an investor class and/or investment group?

Educated Investor Class

Investors generally understand business, but the film industry is ripe with its own nuances and idiosyncrasies.  Investors need to know how money flows from them to create the product, then to take the product to market through various forms of distribution, and how that money eventually gets back to that same investor. Investors need tools to tell when someone is offering a con instead of an investment.  It’s not the easiest thing to find information on, and when they do it’s focused more on the filmmaker than the investor.  

If an investor doesn’t understand the issues within the film industry, then it’s less likely they’ll be able to properly vet an investment.   If that same school that teaches filmmakers business, could teach investors about the nuances involved in the film industry, then there could be something of a connection point at a different sort of event.  

Curators and tastemakers with Access to MEANINGFUL Distribution.

Just because an investor knows about how money comes in and out of the film industry doesn’t mean they can find quality films in which to invest.  Being a professional Investor is all about quality deal flow. Indiefilm success tends to make less money than a successful technology startup, so curation and guidance is even more important.  

Sure, nobody knows everything, but a curated eye can help separate the wheat from the chaff.  Most investors don’t have a trusted source to review projects for feasibility and potential returns.  Investment is about more than just money.  Investors often act as business advisors.   Unfortunately, not enough angel investors understand the industry well enough to do that effectively.  However, if the curation board also acted as advisors on the projects, then the potential returns get much higher.   

As an example, if that board had access to distribution, then you could cut out the biggest risk of investing in film.  A member of the curation board could get the films to the proper PayTV, TVOD, SVOD and other distributors to help the fund managers.  ​

A way of Discovering new talent

It’s always been a problem to find the next Quinten Tarantino, Jennifer Lawrence, or Jason Blum.  Everyone has heard stories of how everyone in Hollywood is related.  While it's more true than anyone wants to admit, the on set path to grow your career has become more difficult and less sustainable than it once was.  

It's not an easy problem to solve.  It’s difficult to tell the difference between that person who’s DEFINITELY going to be the next big thing but ends up washing cars two years later and the dweeby 20 year old who no one thinks will ever make anything of themselves makes millions at the box office on their directorial debut. This problem may be the most difficult of any listed.

Making your first film is incredibly difficult.  It’s also very difficult to get it financed.  From an investor perspective, they put in all the money up front ant they’re the last to be paid.  It’s incredibly high risk with little reward.

Marketing a film is also quite difficult, and generally involves additional expenditure when the coffers are dry.  This has killed many films before they saw the light of day.  If a fund were to offer finishing funds to new filmmakers, they keep their risk incredibly low while opening up new discovery options.   

Sure, it doesn’t help get the film made in the first place, but it can help get it finished and out there.   The barrier to entry of having a nearly completed film also cuts down on the pool of potential applicants in a way that necessitates them showing they have the mettle to actually make something. That fund could also give preference to successful filmmakers for their second, third, and fourth projects.  Such a system could enable a fund to retain the quality people they need to make a successful organization, while still opening the ranks for discovery.

Staged Financing

Investment in film is inherently speculative an as a result incredibly high risk.   But the risk could be made lower by borrowing some techniques from Silicon Valley VCs.  Instead of funding 100% of a film upfront in equity, an investor could stage their investment over the course of the film, at key points where the filmmakers would require more money.   

It’s not something that could be done with a  simple line in the sand due to the difficulty in getting recognizable name talent on board the project, but there are systems that could be used to mitigate risk while maintaining the ability to make high-quality name-driven projects that have a higher chance of financial success than directorial debuts with no names attached.  It’s not a magic bullet, but it could mitigate the problem enough for other solutions to be more possible.  

Staged financing would make it much more approachable for investors, since the risk to the individual investor is significantly smaller.  But there are ways an organization could further limit the risk. How you ask?

Same Funder Providing different securities. ​

As mentioned in part 6 of this series, equity investors are the last to be paid on most projects due to where they fall in the waterfall in relation to Platforms, Distributors, Sales Agents, and the like.  This is due in part to filmmakers needing to secure debt-backed securities from different funders in order to complete the project. These debt-backed securities must be paid before the investors are, which further disincentives the equity investment from the original investors.   

But what if the different securities were made available from the same group? That way a fund could offer the same pool of investors the last in first out debt in order to protect the interest in their equity position. From my vantage, that would seem to protect both the investor and the filmmaker by enabling the investor to mitigate risk and the filmmaker to maintain greater ownership of their projects, and a higher profit share once the debt is paid off.

Thanks for reading. This one required A LOT of rewriting as part of the archive transfer/website port. If you made it this far, you should sign up for my email list to get my free film business resource pack. You’ll get blogs just like this one segmented by topic, as well as a free e-book, investment deck template, contact tracking templates, form letters, and more!

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6 Things stopping a sustainable investor class in film.

Much of this series has been focused on the numbers behind film investment.  While metrics like ROI and APR are very important when considering an investment, they’re not the only reason that high-net-worth individuals (HNWIs) tend to shy away the film industry. Here are 6 things that are stopping them.  

In order for independent film to develop a sustainable investor class, the asset class itself needs to be taken more seriously.   The reason that no one has yet been able to create a sustainable asset class out of film and media is much more complicated than the numbers not being in our favor.  In this post, we’re going to examine some of the other things stopping independent film from becoming a sustainable asset class.  This list is in no particular order, except how it flows best.

1. LACK OF INVESTOR EDUCATION

Investors tend not to invest in things they don’t know or understand, at least as anything more than an ego play.  The Economics behind film investment is difficult to understand even before you factor in how difficult it is to find reliable information on film finance from an investor’s perspective.  

Even the basics of the industry can be difficult to learn.  Generally, film investors are forced to read older, often out-of-date books on film financing targeted more at filmmakers than at investors.  This industry is in the midst of a reformation, so much of the information is out of date before it’s published.  Most investors don’t really spend a long time learning information from a different perspective which may or may not be correct.  

Whit that in mind, many Investors learn how money flows in the Film industry from the filmmakers they invest in.  Apart from the conflicts of interest, there’s another rather large problem with that strategy.

2. FILM SCHOOLS DON’T TEACH BUSINESS AS WELL AS THEY NEED TO

Film Schools can be great at teaching you how to make a film, but they’re generally not good at teaching necessary business skills.  Even things as basic as general marketing principles, how best to finance a film, or how to make money with a film under current market conditions.  

While film and media are an artistic industry, focusing solely on the quality of the film is not going to recoup the investor’s money.  Film Schools aren’t great at teaching branding filmmakers how to define their core demographic, or how to access them once they have.   

3. DISTRIBUTION ISN'T WHAT IT USED TO BE.

The big risk in film distribution used to be the gatekeepers.  You had to make a good enough film to attract a distributor so you could get your film out there.  However, that problem has been traded for an entirely different one, oversaturation of content. I would argue that a new problem is harder to overcome. 

The old model was that the home video sales would be able to make a genre film profitable, even if it wasn’t that good.  Essentially, if you had access to a wide-scale VHS or DVD replicator, you could make a mint selling the licenses.   There wasn’t much competition, so a cottage industry sprung up around film markets.

That model worked when it was much more expensive to make a film.  Given the high barrier to entry from needing to raise enough money to shoot on film, as well as develop the skills to expose it correctly, there was relatively little competition compared to the demand.  However, now that anyone can make a film with an iPhone and 500 bucks the marketplace has been flooded.   

Additionally, since the DVD Market has all but dried up, it’s difficult to make a return for newer filmmakers.  VOD (Video On Demand) Numbers haven’t risen to the occasion, since most people can get their fix from watching Netflix.  It used to be easy to sell DVDs as an impulse buy at the checkout line.  Now that everyone has hundreds of free movies at their fingertips, Why should they pay 3 bucks to watch something when there’s an adequate alternative I can get for free?  

So the problem is now less how to get distribution, and more how to market the film once you’ve got it.  It’s both hard and expensive to market a film.  Generally, it’s best to create something of a hybrid between these two types of Distribution.  However, there are issues with that as well, and these are less associated with expertise.

4. SEVERE LACK OF TRANSPARENCY IN INDEPENDENT FILM

I’ve written before about the lack of transparency in Distribution, so I won’t go into too much detail here.  In Essence, the black box that is the world of film distribution is very intimidating to many investors.  Investors want to be able to know when their money is coming back, and many filmmakers are unable to make any real promises about that.   However, there’s another issue with transparency from an investor’s perspective.

Unfortunately, many filmmakers don’t communicate well with their investors or other stakeholders.  I’ve spoken with many film commissioners, investors, and others about their frustrations with filmmakers not keeping them in the loop. 

Filmmakers understandably focus on the admittedly difficult task of making the film happen.  Between all of the tasks like scheduling and budgeting the film, finding the locations, confirming the crew, making the shotlist and storyboards, sending out call sheets, and a whole lot more, it’s easy to let communication fall by the wayside.

5. INVESTORS LAST TO BE PAID

Now I know that Filmmakers are reading this thinking “BUT I GET PAID AFTER THEY GET 120% BACK!?!?” To a level, you’re right.  However, unless you waived your producer’s fees, you got paid before they did.   Sure, you did a lot of work for often too little money to make your film happen, but you did get a fee to produce this film.  If your investor wanted to be cynical about it, you produced or directed a movie for hire that you got to take most of the credit for.

Here’s what a waterfall for a film normally looks like.   Investors generally did a lot of work to get their money, and now they’ve paid you to make a film and it’s unlikely they’ll ever get all of their money back.  ​

1.Buyer Fees
2.Sales Agent Commission
3.Sales Agent Expenses
4.SAG/Union Residuals
5.Producers Rep (If Applicable.)
6.Production Company
      7.Gap Debt (+Interest)
      8.Backed Debt (+Interest)
      9.Equity Investor

I may be persuaded to do a financial analysis of what that would actually look like in terms of money. Oh look, I did a blog explaining exactly what this means.  Click here to read it. 

6.LACK OF ACCESS TO TASTEMAKERS AND CURATION

We explored the numbers of why indexed film slates just don’t work in part two.  However it takes a fair amount of training, experience, and a bit of luck to recognize what films will hit and what films won’t.   While William Goldman is famous for saying “nobody knows anything,” there has to be a balance between a dart board with script titles and industry experts guiding the ship.

Developing an eye for what makes a successful film is something that most prospective film investors don’t want to take the time to learn, especially since many get burned on their first investment.  it takes a lot of time to understand what projects have what fit in the market, and that’s generally not something that an investor has time for. 

Having a few sets of experienced eyes looking over what investments would be good to fund is something that could make independent film a more sustainable asset class, and not enough investors have access to it to avoid getting burned.   

So, what is there to be done about it?  Check the next post for the final installment, How do you make a sustainable asset class out of film?

Also, if you like this content you can get a lot more of it through my mailing list. You’ll also get a FREE film business resource package that includes an investment deck template, contact tracking templates, money-saving resources, a free e-book, and a whole lot more. Again, totally free. Get it below.

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Diversification and soft incentves in the film industry.

In this blog series, we’ve been talking a lot about why filmmakers would invest in an independent Film.  Sadly, if you go by numbers alone the answer is that they shouldn’t.  Film investment is an unpredictable, volotile, high risk endeavor.  But, if you’re the type that isn’t scared by that, there are some reasons to considerer it.  Sure, it will probably never make you as much money as tech, but it might has other benefits that aren’t offered by tech investment.

1. Smaller Potential Downside

If a Tech company fails to exit, generally you’re out everything you put in.  Films exit once they’re completed, and investors begin recouping when they do.    Further, a smart filmmaker won’t fund their project solely by equity, si the investor is more likely to get their money back.  So, while you may not have be able to find a decacorn, the potential to lose everything you put in is somewhat less likely.  It can be even less likely if you invest in finishing funds.  

2. Tax Credits

Nobody likes to pay Uncle Sam, most people would rather see their name in lights than pay the government.   Many states offer a tax incentive to get filmmakers to attract productions outside of territory.  Often, those incentives are structures as tax credits an investor could buy at about 85-90 cents on the dollar.   Other commissions offer it as a rebate that goes back to the filmmakers and subsequently back to the investors, if it’s not re-invested to finish the film.  

3. Diversification

A strong investment portfolio is a diversified investment portfolio.  Some industries do better than others when times are tough.  Historically, Film is a sector that’s somewhat reversely dependent on the economy.  That means when there’s a downturn, film investments sometimes do better.  The period of greatest growth was in the great depression, and until recently it’s still been one of the least expensive ways to get out of the house.  

But will that continue to be true?  Perhaps not.  Theater sales are continually declining, and DVD sales are in the toilet.   However, in todays world, most independent films never get a theatrical release.  if they can market themselves to the right audience, they can still make sales to people in their homes, for less than a cup of coffee.  Admittedly that marketing job is no small feat.

Even if you don’t want to invest in social activism, you can enable an artist to create something that brings joy into the hearts of countless people.  Sometimes by scaring the pants off of them.  The arts are more than just storytelling, they help us communicate who we are as a people.  In many ways I know more about Luke Skywalker than I do about my uncle, and more about Harry Potter than most of the people I went to my real high school with.  These cultural touchstones have a huge impact on who we are as a society.  

The US is terrible about helping to fund the arts and culture, so to some degree it comes down to society itself to perpetuate it’s own culture.  If you can afford to help filmmakers make better movies, you should consider it

4. Supporting Arts and Culture

While every cultural or artistic entrepreneur should learn how to make their money back, it’s not the sole purpose of any cultural or artistic endeavor.   It’s about communicating an idea, perhaps for entertainment or perhaps to spend a different level of consciousness.  

If there’s a cause you care about, you should fund some filmmakers looking to do more to spread awareness of that cause.  Then when you tell your friends to watch it to share your views, you also get the benefit of making a sale.  Many ideas were only able to take root through the power of mass media.  ​

5. Non-monetary incentives.

We all have hobbies, most of them cost us far more than they make us.   If you’re the sort of person who can afford to lose 5 figures here or there, investing in films can be very interesting.  if you can’t afford quite that much, you may want to look into different funds.  I’m in the process of starting one, you can find out more here. 

Some of my best friends became my friends because we talked about the money behind the film industry.  These non-monetary incentives might even be useful sooner than you would think.  If you start networking with filmmakers you may even get a deal when it comes time to make your next whiteboard video from the filmmakers you invested in.  ​

6. Do something other people aren’t

I hear you.  that Nerd you were shouting in #4 has been replaced by hipster.  Don’t worry, you’re about to go back to nerd, since I’m going to lay some science on ya.  If we look at the general attractiveness of beards, we learn that as they’re less common, they’re more attractive.  Now, whether or not to invest in film is a multifaceted concept.  I’m not saying ti will help you find a lady, (or gentleman,) but I am saying that it’s almost certain to start an interesting conversation.  

If you’re at a Silicon Valley Networking event, it’s important to seem like a very interesting person.  The same is true for any party.  Attraction is somewhat based on scarcity, so you want to stand out from the pack.  Investing in films is a good way to do that.   You never know how it might help you stand out from the pack and talk to that person over by the bar with their eye on you, be it for your interesting investment or your beard.  

7.   Glitz and Glamour

If you’re a tech investor, you may have made a lot of investments that made you a very good return.  Some of them may have been solely for the strong potential for ROI, or because the entrepreneurs could execute and build something that made a return.  It could have changed the world of B2B Payroll invoicing.  But while those make a difference in the lives of many myself included, it’s not really exciting.  

Film is different.  You get to meet interesting creative people.   You get to talk about things other than how that API with that box shaped thing that processes your payments isn’t working as you planned, or the calendar integration isn’t as easy as it should be.  You get to see what happens on set, or what it was like meeting that guy from that Quinten Tarantino movie for a day.  And when you’re done, you can talk to the people at the tech event and share some awesome stories. 

Thanks for reading.  I’ll be back with more next week about why more people don’t invest in film.   In the meantime, if you want to consider investing in film, try joining Slated.   They’re a great resource to help you find projects that give you the best chance at a return.   While all of the things above are great, they’re not worth losing every cent you put in.  Slated helps you rate your projects, and find the ones with the best chance of success.

This entire 7-part series examines why film is an unsustainable investment.  Part of the reason for the lack of sustainability is the fact that not enough producers understand the investment metrics of the film industry, and not enough filmmakers understand the business side of their craft.  To help counter this, I offer all of these blogs plus a FREE film market resource pack on you can get by clicking below. If you want to take your career to the next level, the resources it has in it are a great place to start. Plus you’ll get monthly blog digests with recommended reading to help you parse through the 100+ blogs on my site and more easily reference them when you need them.  

Which Investment Was More Profitable, Twitter or Paranormal Activity?

Note from the Web Port: Not all blogs are evergreen. This has nothing to do with Elon Musk, or the state of the platform in 2023. This is an older blog I wrote to illustrate tech breakouts vs. film breakouts. The principle remains, but it’s aged a bit like fine milk. I’m leaving it up as a solid illustration though, since this is basically a 7 part thought experiment. If I were to do it again, I’d compare Skinamarink and Outbrain, Bumble, or DuoLingo. If I get some comments requesting it, I will. Probabably as a video.

BEGIN BLOG PORT

Every tech investor is looking for the next Snapchat, Twitter, or Facebook, and every filmmaker thinks their project will be the next The Blair Witch Project, Paranormal Activity, or Insidious.  While there are lots of reasons this ideology is similar, they are far from the same.   This week, we’re going to take a look at what an early stage investor in each of these projects or companies would have walked away with.

Films have breakouts, tech has Decacorns.   While an interesting word, a Decacorn is easy to describe.  It’s a company worth 10 billion or more pre-exit.   

Defining a breakout film is somewhat more difficult.  There are many ways one could describe a breakout film.  In an article for the American Film Market Industry analyst Stephen Follows and Bruce Nash of The-Numbers.com defined it as a film budgeted between 500k and 3 million dollars that the returns to the producer were more than 10 million dollars.  

Another way to look at it would be any film that returned their investors at least 10 times what they put in (10X)  Perhaps with a minimum return around half a million dollars to avoid a 500 dollar film making 5,000 dollars being considered a breakout. Technically, the two examples of highest ROI films most people think of fall outside this realm.
​
​We’ll be looking at the films people generally think of as winning investments, against the tech companies investors would love to have put some money in early on.

​I’m sure every tech investor reading this is thinking a film investment doesn’t really stand a chance.  In most instances, they’re right.   However, purely as a thought exercise, let’s look at the numbers.  

The seed round for Facebook was 500,000 Dollars, and if you’re an aspiring Venture Capitalist or a big fan of Darren Aronofsky, you know that largely came from Peter Thiel of Founders Fund.  By the time he cashed out, his initial 500k investment netted him around 1 billion dollars.   That’s a return on investment of more than 2,000X!  Not all of the money went to him, but a significant portion did.  That’s according to this CNN article.   

I couldn’t find another similar investment profile for Twitter.  Perhaps because no one made a movie about it.  So we’re going to have to extrapolate a bit, and estimate what a Series A Investor would have gotten from their investment using largely standard practices and math.  

Crunchbase doesn’t have an exact amount that any individual invested, but since it was into a Series A round of 5 million dollars with 11 other investors several of them funds it’s reasonable that a single angel investor could have invested around 250k.   Given that 250k investment was against a valuation of 35 million, that means this investor had owned 0.71% of Twitter.   

Now, just because this nameless investor owned 0.71% of Twitter then, that doesn’t mean it stays at that percentage.   Any time new stock is issued, that share dilutes.   Given the valuations of future rounds, we can assume that the 0.71% of the company diluted to around 0.45% of the company by the time the company exited. Given that the company was evaluated at 14.2 billion dollars when Twitter IPO’s in 2013, the initial investment of 250k was worth 65.3MM.  That means a 261X return

A 250X to 2,000X is a phenomenal possibility, and they're not the only tech companies to have offered such gigantic returns to their early investors.   So how does film stack up?

Let’s look at the Blair Witch Project.   According to this article from movienomics, the Blair Witch Project Sold at Sundance for 1 million USD.  Since the Budget was only 22.5k, the filmmakers made a return of 4340%, or 43X.   From the filmmaker side that’s not bad, but it’s not where the story is.  Artisan, the company that bought the rights to the film, spent another 1 million US in a grassroots marketing campaign, and the film went on to gross 248 Million.   That means they had around a 123X return on their 2 million dollar investment. ​

We’re going to look at this two ways.  From being an investor in the film and an investor in Artisan.  If you happen to be that rich uncle who ponied up the 22.5k, you probably would be entitled to around a 20% stake given that almost all of the crew on the Blair Witch worked for free.   So, you investment would return about around 200k, or nearly 9X. 

What if you were an investor in Artisan?  On an entirely hypothetical and not entirely connected to reality basis, let’s just say you were an angel investor who got their money from inventing a new washing machine.  You sold the invention to a big company and now you’re flush with cash.  You’ve always liked movies so you invest 2 million in Artisan.  In return, they give you 20% of their company.  So, with that 2 million dollar investment, you get a return of about 25x.  That’s a very healthy number. 

Paranormal Activity is such a low budget, the filmmakers almost certainly put it in themselves, however for the purposes of this exercise, we’re going to assume the entire 15k budget was put in by a single investor, and they took a 20% stake since the filmmakers clearly raised much more in soft costs including deferred payments and sweat equity.

Even though the first film in the paranormal activity series made about 89 million in theaters, not all of that went to the filmmakers.   The theaters often keep around 50%, then the exhibitor takes another 30-50% of what’s left, and then the filmmakers and investors get a cut.  Further, the distributors tend to recoup their costs first.   

To simplify this, we’re assuming that around 50% of the costs go straight to the distributor, and that they recouped another 2.5 million on in expenses before they paid the filmmakers.  That’s a low marketing spend, but the campaign Paramount did was very innovative and low cost.

So, if we assume everything above, 89 million gets reduced to a bit shy of 43.5 million once it reaches the Production Company.  The investor is then paid out 8.7 million on their initial 15,000 dollar investment, which means a 579X ROI, roughly twice the ROI from the series A of Twitter!

So films are a better investment than Twitter, right?  No.  No they are not.  Paranormal Activity is the highest ROI film of all time, Twitter isn’t the highest ROI tech company within 10 years on either side of it.   Further, the returns I listed from Twitter are relatively well verified, I had to extrapolate the deal points for Paranormal activity based on different deal memos I’ve seen as a producer’s rep. 

More than likely, the filmmakers put in the 15,000 dollar budget themselves.  Even if they didn’t, given that paramount paid around 350,000 up front for Paranormal Activity, the the filmmakers wouldn’t have seen much more from it than that.  After all, on paper Star Wars Return of the Jedi never broke even. If the filmmakers only got 350,000, then the investors ROI would have been more like 4.5X given that in our scenario,  only owned 20% of the film.

Further, in the real world, both of these projects were largely backed by people who owned the project, and there would have been far more players in the waterfalls. So this is a fun throught experiment more than anything, and mainly proves the point that filmmakers should be focusing on other issues aside from potential ROI when selling their film.

Thanks for reading. This blog was a lot of work to port. If you’re browsing these archives and found it, you probably appreciate my work. If so, I’d ask you to sign up for my mailing list, support me on Patreon, or subscribe on substack. Thanks so much!