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Another Distribution Blog

January 23, 2010

As of this blog post (January 22nd, 2010), there are options for distributing films that didn’t exist as recently as five years ago. I’m sure the day is coming when many – if not most – independent filmmakers are releasing work on their own, rather than going through distributors and sales agents. There are a growing number of people blazing trails in this approach today, but I’m not one of them. This is not because I don’t believe in DIY distribution – I do – I just happened to have done it the other way (so far).

The Importance of Distribution

Many independent films do not fall neatly into a genre, category or have obvious demographic appeal. In my opinion, there’s not much point in making an independent film if it isn’t significantly different from the mainstream fare. This struggle to say something different is why independent films are so difficult to finance and market, but also why they are so loved.

In any the case, indie filmmakers need to do all they can to get their films in front of eyeballs. If you don’t get your work distributed somehow, nobody but your roommates will ever see it. If no one can see it, why make it in the first place?

Most indie films are made on the backs of generous people. I’m talking about the cast and crew, and anyone else who contributes time, money, space, etc. They aren’t working for nothing. Even in no-pay situations, your cast and crew are working for experience, credit, and hopefully recognition for being part of a great movie lots of people see and adore. If the cast and crew busted their asses for you, you really owe it to them to get the movie out there in front of people as best you can. Don’t let them down by blowing off the final stage of the filmmaking process.

To that end, always shoot for the widest release possible – the wider the better. Since we’re talking about independent film here, as opposed to what I term ‘dependent’ film – films that are made to order, with stars and focus groups and ad campaigns – the wider your distribution, the better chance you have of finding an audience for your unusual, different, quirky, never-been-done-before indie.

The process of a film finding an audience takes time, a great deal of grassroots effort, and actual US Dollars spent on marketing and publicity. Marketing is essential to the success of your distribution. There’s not much point of having a movie out if nobody knows about it.

Money

Money

The Distribution Deal

Note: Sadly, most films – indie or not – don’t get theatrical releases anymore. For the purposes of this discussion, I’ll narrow the subject matter to home video and broadcast distribution only.

It’s never too early to think about distribution. If this is your first feature, you can begin seeking a distributor as soon as there’s a decent fine cut of the movie (just be sure to tell them what the missing elements are; temp audio, placeholder music, unfinished gfx, etc).

If you’re lucky enough to have had a film out before, you can leverage fundraising for production with a non-binding letter of interest from your current distributor (this is easy to get from them, assuming they like you). This also puts you in a stronger place to negotiate a better deal with someone else.

Domestic vs International
For the American indie, you’ll ideally have at least two distributors for your film: domestic (North America, Puerto Rico, Canada) and international (everything else). The latter is typically referred to as an international sales agent.

domestic distributor is actually an Honest to God distributor that can guarantee a release. Depending on who they are, they will likely have open-door relationships with retail outlets and aggregators who will basically buy anything they are selling, often in bulk and often without looking at it (see your local video store selection for details).

Domestic distribution contracts tend to be on the simple side, with a straight revenue split, and the deliverable requirements won’t be very stringent (one country, one language, one codec). Anymore, domestic distribution deals come with no advance, so you’ll pay out of pocket for any straggling deliverables that need producing (video formats, audio, legal, etc.), as well as marketing and publicity – smaller distributors don’t really market their no-cast films at all, instead relying on the filmmakers to get press, reviews and interviews they can use for box pullquotes, as well as publicize the actual release of the film.

I can’t emphasize enough the importance of publicity. Without it, very few people will know your film exists. Even if you’re on the shelf of every store, and sitting on every server on the internet, nobody looks for something they don’t know about or haven’t heard of. Again, you can’t depend on your distributor to take care of this. They just won’t.

In general, domestic distribution is a straight forward, one-shot deal. You can expect your distributor to get your film in the stores and sites they regularly deal with. The distributor has the power to negotiate the licensing of your film with each aggregator, and are incentivized to make the best possible deal because that means more bread for everyone. Each outlet obviously has the right to reject a film for any reason, but they are really relying on the distributor to be the gatekeeper for the kind of content they like and can sell, so unless there is something really challenging about the content of your particular movie, you’re probably in good shape.

An international sales agent is exactly what it sounds like – a dude at a convention trying to hock your movie to buyers from all over the world. These big conventions are called film markets, and they are monster events that cost lots of money be a vendor at – this is why your sales agent is probably repping between 50-500 films at said market. The $10,000+ door fee is a drop in the bucket if they can sell even a chunk of their catalog to a hand full of territories.

International sales agent contracts are much more thorough and very deliverables-heavy. When you enter into a sales agent agreement, you are giving them the power to negotiate the deal without your input . Similar to a domestic distributor, but instead of negotiating with Target or Best Buy, the sales agent is negotiating with Italy or Dubai.

It’s for this very reason that your sales agent needs you to fork over so many expensive or labor intensive deliverables: textless tails on the feature, the trailer, any special features, all in NTSC, PAL, DigiBeta, HDCAM, 5.1 audio with split tracks for dubbing, dialogue list with timecode, music cue sheet, chain of title, E&O insurance, etc. Having these materials all at once allows the sales agent to sell the film to any territory at a moments notice, without having to go back to you for anything.

Sales agents almost always charge a film a $40,000ish ‘marketing fee’ off the top of any sales revenue – this is a fictional financial hurdle that the sales agent can use to a) bankroll the marketing of the bigger films they are repping, or b) never pay you because, on paper, the proceeds of your sales never overcame the marketing fee.

If you think this sounds risky, you’re right. The international distribution business is completely honor-system based, and the truth is, any company distributing film is as prone to skimp on a cash payout during the sales process as you, the indie, are in the filmmaking process. I’m not saying it’s right, I’m just saying that’s how it is. In the words of a seasoned producer I know, speaking of a very successful international sales agent who happened to be a friend of his “…if he can screw you, he will.”

Working with bigger, more well-known companies isn’t necessarily going to save you from bad business practices. The truth is, every company, big and small, pays only the bills it has to, betting that the little guy won’t notice/won’t say anything/can’t go after them.  I won’t name names here, but a little research will show you that even the biggest independent film distributors are well known for giving $0 advances, and often never paying out.

If you think about it from the distributor’s point of view, it makes sense not to pay money for no-cast films. Much better to sit on whatever cash comes in and put it towards promoting the bigger projects that can generate more revenue for them. The little guys often suffer the “happy to be here” syndrome and don’t, or can’t, stand up for themselves.

Big Company Inc doesn’t have much incentive to keep the little guy happy. Statistically speaking, most people that make an independent film, don’t make another one, let alone become the next George Clooney. Why would Big Company Inc waste its time handholding Joe Schmo from Manhattan, Kansas when they have Clooney’s new miniseries on deck? A film company is no different than any other corporate entity, and corporate work is all about the smartest allocation of resources, minimizing liability and maximizing profits.

Leverage, or Lack Thereof
If you happen to get shafted by a distributor, you’ll find it’s very expensive to sue them effectively. Legal processes tend to drag on for a long time, incurring more expenses, and delaying life in general.

Legal action is really where the independent film-as-a-business fails. If you make a film for $10-20,000, it’s an amazing achievement to accomplish so much for so little, but the downside is, the financial stakes are very low. Indefensibly low. The issue here is that if the cash investment is too low, it’s simply not cost-effective to sue. Only through discovery could you find out just how much money your sales agent isn’t paying you, and frankly, it’s probably not much. It simply doesn’t pay to spend $50,000-100,000 suing a company over $15,000 in unpaid recompense – and that assumes you can prove they are holding out on you, which may not be so easy to do.

It’s for the above reasons that you shouldn’t license all your rights to just one entity. It’s best to break up the deals with different companies per territory. That could be a lot more variation in deliverable requirements, a lot more babysitting, and while it doesn’t guarantee your not getting screwed, the hope is that at least some of the companies you’re working with will be good to you.

DIY Distribution

Much has been made of self distribution, and not having done it myself, I can’t speak to how much more or less cost effective it is than licensing your rights to a distributor. My feeling is, like most things independent, whatever you save in cash spent, you pay for in extra manhours worked. Perfectly noble and worthwhile, if you determine its the best way to get your movie out. There are, however, some real-world roadblocks that seldom appear in discussions of self-distribution, that I think are worth taking into account if you’re thinking about going this route:

Dealing with Aggregators
Getting your film on the shelves of Target, Barnes & Noble, Best Buy, Netflix, iTunes, etc., requires relationships. Cultivating these relationships is a full-time job unto itself. This is one of the reasons why most filmmakers license their films to distributors, rather than releasing it themselves. Distribution isn’t rocket science, but it is a business. A business built on hard work, delivering good product, and building credibility with vendors. A distribution company offsets operating and production costs by distributing a slate of films all at once, rather than one filmmaker/one film.

I know of amazing, profitable independent artists that wait over six months to get their work on iTunes, simply because they aren’t represented by a sales agent. The same is true for very successful and well known independent films that can’t on Netflix because they aren’t working with an intermediary.

The outlets rely on aggregators (who in turn rely on distribution companies, who in turn rely on film festivals) to act as quality control gatekeepers. Why? Because a) iTunes/Netflix/Whoever can’t or won’t watch all those movies themselves, and b) doesn’t want to negotiate separate deals with a million independent people who may or may not have their work properly protected, vetted, etc. Big Company Inc would MUCH rather negotiate with one entity representing a million films, that can at least affirm to have checked out all the films in its catalog.

It all comes down to the allocation of resources. The unfortunate result is that distribution companies take a percentage of your profits just for, uh… existing.

With DVD/Blu-Ray, its a bit different. The distributor is doing design and packaging work, covering production costs, and ultimately investing time and money in your picture. With online rights, they are simply handing over a drive on your behalf, and taking x% of y% into perpetuity.

It would be fantastic if there was a more streamlined way artists could distribute directly through outlets, but iTunes doesn’t want their catalog to look like a YouTube free-for-all, and they aren’t paying people to watch movies and listen to music all day, and determine production value and merit.

DIY distribution requires breaking through these corporate walls, building relationships with aggregators, and getting the work everywhere people look for movies. Otherwise, you’re relegated to a few fringe outlets and your website, which narrows your marketplace exposure.

PR/Marketing
Note: This responsibility applies to films released by distributors, as well as DIY-distributed. These days most distributors put the marketing onus on the filmmakers. Even if a distributor says they’re marketing your film, they really aren’t.

There are two types of films: films you’ve heard of and films you haven’t. A professional publicist will organize a promotional campaign, get screeners to movie publications, film blogs, local press, etc., and give you guidance on how to maximize exposure of your release. You should hire the publicist as soon as possible. Even if your release date isn’t official yet, start looking for the right person early. This gives you time to defining job expectations, talk strategy, and negotiate a fee.

There is no limit to the amount of money one can spend on PR, but it’s the difference between people knowing about your film, or not. It costs real money, not only to hire a professional, but to pay for production of screeners, presskits, postage, and hopefully a theatrical premiere event – even a three-day run at a local arthouse theater can garner mainstream press, versus a direct to DVD release.

Publicists trade on their relationships with the media, and have the ability to pitch your film to the right people in the right way. A good publicist has worked on films you’ve heard of. If you haven’t heard of any of the films on their resume, you should probably pass.

Art and Copy
Branding and identity, posters, DVD/Blu-Ray disc menu and jacket design, EPK and promotional print materials, all should be done by an actual graphic designer (re: someone that does it for a living).

Amateur design is extremely offputting, and tells people right off that they are looking at something cheap. Normally a distributor would handle this (to varying degrees of competence), so this is something you should put a great deal of care and thought into.

We can assume if you managed to get a script written, you’ll be able to write a summary of your film, a long synopsis, and a bio. Remember that the copy you put in your presskit is ad copy, not literature. Make it punchy and direct and as compelling as possible.

Mass Production / Inventory Management
Once you have your master files prepped, you can farm out mass production of DVD and Blu-Ray discs and packaging. This can be costly, but the more you produce, the cheaper it gets. You’ll also need to have a variety of digital encodes of your film, trailer and special features in several codecs – or at least the ability to manufacture them at will (ie, cozy relationship with a post house with lots of decks). If you’re offering your film as a digital download on your own site, bandwidth/hosting fees could be significant.

The above should satisfy a solid North American release of your indie, but you won’t quite be set up to sell international territories, arguably ‘where the money is’.

For selling international rights, you’d need all the standard international deliverables, documentation, etc., plus access to a film market or two. That means the pricy film market buy-in, setting up a booth, and doing the carnival barker routine.

I’ve known a couple people who have taken their indie to film markets like Cannes. One (who is so well versed in licensing and contracts, he may as well be a lawyer) sold every territory himself, and made very good money for his trouble. The other one spent thousands and thousands, and crashed and burned. Why? Because buyers don’t want to deal with the filmmakers. We usually don’t have a clue of how things are bought and sold, we don’t have the right deliverables, we don’t have E&O insurance, and most of all they don’t know us.

Taking on international sales, DIY-style is no joke. I’m sure people do it, but my suspicion is that its not for everyone.

Conclusion

Whether you’re dealing with a small domestic DIY release, or licensing worldwide rights to a distributor or sales agent, consider questions of marketing costs and expensive deliverables through the ROI lens – what it’s worth versus what it costs.

If you’re negotiating deliverables with a distributor or sales agent, don’t be afraid to push back, or force them to justify or delete a line item – they often bend or break on points of contention if it’s the difference between getting or not getting a film they want. Remember, it doesn’t cost them anything to tell you they need everything under the sun. How dumb would it be to mortgage your grandchildren’s kidneys to produce some obscure deliverable your distributor never even uses?

If the distributor isn’t paying you an advance – and these days they aren’t – you’re already doing them a huge favor giving them your film. Remember that. They work for you. If they really want your film, they will do what it takes to accommodate you, but only if you demand accommodation.

If you’re doing things on your own, there are major hurdles, but as with all things independent, there are infinite solutions to every problem. Everything you want to do has been done by someone else at least once before. You may not be able to duplicate their success exactly, but if you commit to making it happen, you’ll surely spot a path along the way.

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3 comments

  1. Excellent piece. Good info.


  2. Good piece. I’ve been in distribution in U.S. for 18 years and am somehow still at it. I thought your piece was an unusually accurate portrait of distribution. I’m awash in the tsunami of technological change as much as any one, and while as a producer the idea of everyone being their own distributor is attractive, the idea of sifting through tens of thousands of features to find something worthwhile is daunting. One idea I’m pushing is the idea of driving up our Netflix numbers by having indie filmmakers all queueing each others films. Another potential idea is to create a very low cost web store for indie dvds that would offer new films for the cost of a rental price. Under $5.
    Steve
    leofilms.com


    • With a low-cost online store, and no professional PR, you’re just making a ghetto for the unseen films to sit unwatched. There are tons of places like that already all over the web.

      The notion of your filmmakers working together to juke the Netflix system is probably not going to make more money or generate much awareness for anyone, assuming you could get them to cooperate in the first place (we’re a competitive group).

      How about a publicity fund? Create some kind of major incentive to get major PR firms to take on one or two truly independent films a year, pro-bono for a 3 month ad campaign leading up to their release.

      Perhaps the major aggregators would be more inclined to accept a film that was properly publicized. Even if they weren’t, with true awareness, it won’t matter where the movie is available, people will go wherever it is and get it – assuming it looks good!



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