What is a normal distribution deal?

theceo wrote on 1/27/2005, 11:02 AM
I've got the president of a major film company interested in some films we did. Anyone with experience in such matters? They want 'exclusive rights' to a large western country for our films. What is normal for an Indy film company to ask for in return for giving another company 'exclusive rights' to a country? Money up front? A guarantee? What percentage do they normally get?

Comments

filmy wrote on 1/27/2005, 11:21 AM
Depends on which country. Price varies from country to country, it also depends on actors involved - "A" list will get a lot more than "C" list, or total unkowns. Shot on video will get a lot less than shot on film, or even film look. One of the BIGGEST issues will be delivery materials. By that I mean you will have to turn over much more than just a finished product - you will need M&E's and a composite. You will need chromes on select scenes along with dialog list and cue sheets. Copies of *all* contracts and release forms. (If you don't have a lawyer you really need to get one now.) And take it from me - Germany is extremely demanding and anal about delivery materials.

Bottom line is you need a lawyer who deals with this sort of thing, on top of that you need someone who is aware of the market in various territories. It is very possible that you could deal with a country that only will pay $5,000.00 (US) for "rights in all media" and that might be a very high price for that market. On the other hand you could deal with a company in, say, Canada, who might offer $30,000 for only video rights. It is very hard to give any sort of direct answer to your question as asked. If you are going to do more of this sort of thing I would highly recomend joining the AFMA (Which recently changed it's name to the IFTA, or Independent Film & Television Alliance) because they can assit you grealty. However their rules and legal help wouldn't apply to non-AFMA members. However you can, without being a member, get a good start with research to your question here: AFMA Forms and here: Royalites.

Also you can check to see if the company you are dealing with is a member: AFMA Member list
theceo wrote on 1/27/2005, 11:43 AM
The works are film/documentaries for the paranormal field, like Chartiots of the Gods and that Orson Wells Nostradamus film. There are no actors perse other than voice talent. We use in house created 3D animations and images as well as photos and stock videos to tell the stories.

Most music is from our own catalog (we have several music cds in our music division), we also use stock music.

The films all had scripts, the effects were either stock or in house.

I originally saw them as studio to DVD store projects eventually, but the main reason I created them was for premium content on my own network of para sites. All the films are based on top selling eBooks we already sell.

What material is used to make a composite for film release? Is it done from a DVD or from MPEG2 files or ?

Do chromes have to be film, or will a 300dpi jpeg do?

The company involved is outside the USA in a major market, they have a major film out right now and they do DVDs and TV as well. I don't see them at IFTA but they are not an 'Indy' company, or at least what I think of as an Indy company.

Thanks for input.
filmy wrote on 1/27/2005, 12:41 PM
>>>Do chromes have to be film, or will a 300dpi jpeg do?<<<

It will depend on what the requirements are. It was standard from chrome to be chrome...if we didn't have any production shots we would pick out frame of the print and make slides from the negative. In the case of computer material we would send a file to a place on Melrose (in Hollywood) to have them output a 3x5 transparency. However times have changed - I spent some time neogtiation a domestic DVD deal for about 5 features with Simitar several years ago (before they went under) and they requested chromes but after talking I found out they did layout with Quark Xpress so we changed it so we had supplied them a Quark layout with all artwork on a SyQuest disk. (One per film) In that case it was 300dpi TIF's on the disk. But, again, this was per their specs.

One of the other art requirments is normally the advertising material - or, at the least, sell sheets and various posters, as either a 4x3 or 8x10 transparency - sans credit block.

>>>What material is used to make a composite for film release? Is it done from a DVD or from MPEG2 files or ?<<<

See my response in your other thread.

As for the other info - the chain is still the same as far as what you need. Price wise in general documentaries get a lot less. Perhaps 50 - 80% depending on the market. There are exceptions to the rule, as always.
Jay Gladwell wrote on 1/27/2005, 1:27 PM
No such thing as a "normal" distribution deal, especially with an independent. You will want to hire an entertainment attorney with experience in distribution to working things out for you. You try to do it yourself and you'll get taken to the cleaners!

Jay
theceo wrote on 1/27/2005, 2:59 PM
Actually I was wondering if certain things are custom.

Like an advance fee for dist. rights and a per unit sold for dvd or a percentage of gross for theatre, etc.

There should be some standard guidelines as to how deals are 'usually' done, with a variance in fees up front and percentages of gross or unit, etc.

I guess the main way they could screw someone is in a net/net figure, you know less any and all costs to 'promote' the film. Guess such a deal would mean no matter how much it grosses expenses are added in to eat up profits so there is never a 'net'.

One of our partners in-house is a lawyer who has argued in three different supreme courts already, and his expertise is contracts, so I'm sure he'll catch most problems in any potential contract. I know we have a major IP lawyer that has done work for us as well. Personally I'd like to keep it real simple, they give us X dollars and we allow them to sell dvds of the films in their country. We get X amount per dvd, they run their costs from their share. We would probably want to control production of dvds and ship to their clients.

They would have rights to our catalog as long as X amount of units are sold per year. If they don't meet a quota, then their rights end or a nominal fee is paid to keep rights going.

Right now we're talking films, books and music to them, since they are owned by a major company with book and music stores in that country.

It will be interesting to see what their offer looks like if we come to terms.



theceo wrote on 1/27/2005, 3:09 PM
Interesting read about tricks of the trade

http://www.homevideo.net/FIRM/distprac.htm
Jay Gladwell wrote on 1/27/2005, 4:26 PM
Don't fool yourself. Distribution contracts are unlike any other contract out there. Don't be cheap. If you are, it'll wind up costly far more than the expense of a good entertainment attorney who specializes in distribution contracts. Then again, if you like swimming with sharks, jump right in, my friend!

Jay
theceo wrote on 1/27/2005, 6:27 PM
I'll see when the first contract comes in, if it does. The company is owned by one of the largest publishers in the world. TV - Films - Newspapers - Music - Books - Internet

Plus they're a public company.

I doubt their contracts are too bad.

Plus I'm talking about a cross media deal, my five films (and five more in post prod) my music rights, my books rights, etc.

apit34356 wrote on 1/27/2005, 6:48 PM
You should really take filmy and Jay's advice seriously. The profit margin is very small on small releases, if any. Big corps do not run charity operations. They make money on volume, whether its volume in number of deals or in sales of product. They know that you need them, don't expect a fair deal.
theceo wrote on 1/27/2005, 7:11 PM
Well the way I look at it is, one of the largest publishing companies in the world came to me asking for distribution rights. You ever hear of the president of a major film company going to an Indy studio and asking can they have distribution rights to a large country as the first contact?

I can see them realizing the info I have created if pushed by mainstream media which they control and own could become over night very marketable material.

I have a feeling if I do a deal with this huge company, they will break the news about Ufos and stuff we have and make it mainstream info.

Why else would the president of a major film studio owned by one of the worlds largest publishing companies come to me asking can they have rights to the main country they control the media in?

The major media starts discussing my info and whoever owns the rights makes a fortune.

They know what I have and that's why the president of the company came direct to me instead of some VP of acquisitions.

rextilleon wrote on 1/27/2005, 7:33 PM
Get yourself a good lawyer who is savy in intellectual property rights----at least get a consultant----Remember this is show biz and you can believe about 2% of what you they tell you. Good luck!
apit34356 wrote on 1/27/2005, 7:57 PM
You should check to see if the company has a project in progress that is similar to your work, maybe the project is too similar to your work. Since your work has been on the internet for a while, they may "content" issues......... plus more legal issues, like the director/writer used your ideals and used your internet movie as an example in pre production design, ( this would be really stupid, but wouldn't be the first time).
theceo wrote on 1/28/2005, 10:11 AM
Right now the President of the Film company says he wants 'exclusive' rights to our films in a major country (not USA). He came to me about a film we just released on the Net and that we sell via DVD. So I tell him I also have four other titles that have just been released in the past couple of months. So I say what titles do you want to see screeners on. He says ALL OF THEM they all sound good and he wants to be exclusive distributor for our catalog in his country. We also discuss how his parent company can handle our book catalog and our music catalog as well.

So, it looks like he'll be sending me an offer or contract, since his company is a PUBLICLY TRADED COMPANY and literally owned by one of the largest publishing businesses in the world, I'm sure they have a standard 'distribution' agreement.

Of couse I'll have some lawyers look before I sign, but since they are such a major company I don't think they're out to rape my company.

If we do a deal, it'll be a major thing. So we'll see what the response is to the stuff I'm sending.

Jay Gladwell wrote on 1/29/2005, 4:46 AM
Frankly, I don't think he's the least bit interested in advice. Each time anyone has given any it's brushed off with comments of what he's done, who he's talking to, what he plans to do. Seems rather defensive, actually. So I don't think seeking advice is true intent of these posts.

Anyone who thinks "a major studio" is incapable of taking gross advantage of on "Indy" who refuses to exercise the gumption to hire an experienced attorney in entertainment contracts is horribly naive. Giving any more advice would fall on deaf ears (or would it be blind eyes in this case) and be a waste of time. Some people have to learn the hard way.

Jay
theceo wrote on 1/29/2005, 8:30 AM
Unlike the people giving 'advice' I have used over the years many of the top firms for legal matters from IP lawyers to trial attorneys and such. I already have several top entertainment firms alerted to my needs. I've already found what I needed as to the original question and the info didn't come from this forum.

There are 'standards' in distribution deals.

Yet no one here could offer what they are.

filmy wrote on 1/29/2005, 9:38 AM
>>>I've already found what I needed as to the original question and the info didn't come from this forum.<<<

Any "standard" that you might have found may be a "standard" for the company that you refuse to tell us and for the country that you also refuse to tell us. There is no such "standard" that exists worldwide. Period.

I have delt with domestic and international buyers and sellers, been at AFM and have had films at AFM, Cannes, MIFED and others (including dealing with domestic video distribution and being a member of the VSDA and attending the VSDA and ECV trade shows) and each country (and each distributor) has different "standards" and, depending on what media rights are being asked for, the price also varies. Anyone who would tell you or advise you that there is a worldwide "standard" I seriously doubt has any real clue. I offered up the best advice with the general question you asked...yes the AFM has somewhat of a "standard" contract their members use when closing deals however the price, media rights and delivery requirements are not "standard" by any means.

At this point I would have to agree with Jay. You didn't really come here looking for any sort of advice, you came here with some sort of "my deal is gonna be better than your deal" flame war in mind.
apit34356 wrote on 1/29/2005, 10:24 AM
Filmy and Jay, you have excellently pinpointed the issue there. Maybe a little self promotion going on here. International deals are not for the weak hearted. There are general forms out here, many lawyers share a common database of "standard" contracts, but they are strictly "boilerplate" documents and are not usually "current", and usually lacks the details of the "contract document" that the lawyer in the field has just to start with. Any ways, Filmy and Jay , you guys have given some serious advice for free, some people just need to swim with the gators and the sharks...... they feel the need to be part of the food chain.
theceo wrote on 1/29/2005, 10:34 AM
there are standards, the numbers just change

a company can offer many things that are 'standard'

amounts may change and percentages

if I said the country how hard would it be to figure out the largest dist. in that country?

the deal isn't done yet, and until then no one gets to know the country or the company

after the deal is done, I doubt I'd be wasting my time talking about it here

what is 'standard' in dist. deals?

if it's for a film there are many standards

if it's only for dvd rights thare are many standards

the films were made for internet content and dvd dist.

now a major film company is asking me for rights to all my films

what will they do with them?

maybe they want to dist. them first as films in that country

there are standards as to what they should offer if that is the case

maybe they want it for their network to show on cable or tv

maybe they want it for dvd dist. in their video stores

the company is one of the largest publishing companies in the world

it's not US, but it's a major market

Let's see, who owns a major film company, a major network of stations, a major cable company, the largest book publisher in their country, many news papers, a large chain of video stores, music stores and book stores?

Surely some 'expert' here should figure it out

p@mast3rs wrote on 1/29/2005, 12:03 PM
Personally, I think this guy is full of shit. He refuses to give any info. He doesnt want to reveal the movies because he doesnt want a bunch people flocking to the site. Every advice that was given to him was blown off. He says he has IP lawyers etc....but still asks questions here.

"the deal isn't done yet, and until then no one gets to know the country or the company
after the deal is done, I doubt I'd be wasting my time talking about it here"


So why bother talking about it now? Why not save us all the crap and stop "wasting your time here" talking about it? Dude, sometimes I know I come off as clueless and a dreamer. But I seriously doubt some paranormal flicks, much less 10 are gonna create this bidding war. But if this "huge" company owns all this crap, why bother asking us what you should do?

The more I read, the mroe this sounds like porn.
Spot|DSE wrote on 1/29/2005, 12:18 PM
Be grateful for porn. If it weren't for porn, you'd not have the internet, you'd not have VHS, and you'd not have any number of developments in the industry. Porn is not a small percentage of the entertainment export.
I for one, am glad that theceo is asking the questions he's asking regardless of his motive. It got Dave talking a little, and he knows his biz pretty good. Regardless of my own personal experiences, I almost always learn something from him. Maybe it's an east coast/west coast thing. :-)
So what if he's full of crap? Patrick, your stuff comes off sounding the same way sometimes. But no one has called you "full of crap." Whatever happened to the huge deal you had selling your scripts? That sounded about as surrealistic as this stuff does, and you were equally secretive in the public view. But most people have supported you in your chase for the grail.
We all have dreams, perceptions of realities, and we're all the stars in our own life movies. Perception is everything, and if this is what theceo is perceiving is happening in his life.....more power to him. Dreams are just dreams until they become empowered by action. Maybe this is his mechanism to action.
filmy wrote on 1/29/2005, 12:52 PM
Wow - thanks for the props Spot. :) Nice to know someone that I feel also knows the 'biz' pretty well can openly say they are not too much of an old dog to learn something from lil ole me. He he.

My last comment on this topic (in this thread anyway) - below is an extremly 'standard' distribution deal. And as there are no 'standards' really, theceo will need to have their lawyers and "one of the largest publishing companies in the world" lawyers fill in all the blanks and argue amongst themselves as to other things that may need to be added.

1> Distribution
2> Compensation To "theceo"
3> Advance
4> Contingent Compensation For "one of the largest publishing companies in the world" Territory "A", "one of the largest publishing companies in the world" Territory "B" And "one of the largest publishing companies in the world" Territory "C" (add other territories as needed)
5> Home Video Receipts For "one of the largest publishing companies in the world" Territory "A" And "one of the largest publishing companies in the world" Territory "B" (add other territories as needed)
6> Home Video Receipts For "one of the largest publishing companies in the world"Territory "C" (add other territories as needed)
7> Contingent Compensation For "one of the largest publishing companies in the world" Territory "D" (add other territories as needed)
8> Cross-Collateralization
9> Third Party Participations
10> Delivery
11> "one of the largest publishing companies in the world" Distribution Control
12> Representations And Warranties
13> Publicity Responsibilities Of "theceo"
14> Copyright
15> Press Announcements And Previews
16> Errors And Omissions Insurance
17> Security Interest/Copyright Mortgage/Completion Bond
18> First Negotiation To Extend Term
19> Waiver Of Injunctive Relief
20> Third Party Beneficiaries (if any)
21> Governing Law
22> Assignment
23> Confidentiality
24> Payments


*EDIT* - just an add-on here. Mark Litwak, who I have mentioned in some of my other posts, has a good little suggestive list for how to get potential distributors interested - a snipped version is below.

1> NO SNEAK PREVIEWS: Do not show your film to distributors until it is complete. Executives may ask to view a rough cut. [SNIP] They will view an unfinished film and think it amateurish.

2> SCREEN IT BEFORE A CROWD: It is usually better to invite executives to a screening than to send them a videocassette. If you send a tape to a busy executive, he will pop it in his VCR. Ten minutes later the phone rings and he hits the pause button. Then he watches another ten minutes until his secretary interrupts. After numerous distractions, he passes on the film because it is "too choppy."

3> MAKE THE BUYERS COMPETE AGAINST EACH OTHER: Screen the film at the same time for all distributors. [SNIP] They may be annoyed to see their competitors at the first screening. But this will get their competitive juices flowing.

[SNIP]

5> SELL YOUR FILM WHEN BUYERS ARE HUNGRY FOR PRODUCT: Distributors that acquire films for foreign distribution plan their activities around a market calendar. The major film markets are 1) AFM in late February in Santa Monica, 2)Cannes in May in Cannes, France, and 3) MIFED in late October in Milan, Italy. Some distributors sell at the Berlin market which has a reputation for showing art films. In addition there are a number of important television markets including NATPE in the U.S., and MIP and MIP-COM in France. [SNIP] The best time to approach distributors is 60-90 days before a market. Assuming a distributor wants your film, it may take a month or more to negotiate the deal.
=============

And Spot's post below notes "Cross-Collateralization" - Mark has a good explination of it, for those of you without in-house access to a "major IP lawyer":

When expenses are cross-collateralized, expenses and revenue from different territories are pooled. For example, suppose a film generates revenue of one million dollars abroad. The distributor has incurred $100,000 in recoupable expenses. The distributor is entitled to retain 20% of gross revenues, or $200,000, as a distribution fee. The remaining $700,000 is the filmmaker's share of revenue.


Spot|DSE wrote on 1/29/2005, 1:18 PM
8> Cross-Collateralization

Scariest words in the entire biz, IMO. Can really sink someone quickly, and can be hidden easily from a novice who is expecting to do more. Sunk Steve Miller, Huey Lewis, and many a fairly experienced creative person.
Great list though, everyone should mark or save this particular post if you're planning on going down this road.
p@mast3rs wrote on 1/29/2005, 1:25 PM
Spot,

I never had a deal to sell my scripts nor did I ever post such. The extent that I have posted was that a director said that my script has a lot of potential to be big if done correctly.

My point in my response is that this joker comes here asking for advice and when it is given to him, he blows it off saying he has lawyers that cover it for him. So why need our advice?

I simply asked what the name of the movies were to learn more about the topic he is selling. and he came back with some lame ass excuse about not wanting to create more traffic to the site. Um, I think thats called advertisement or as he calls "spamming" which will only generate interest in his offerings.

Look, wilel I may have big dreams, I may sometimes let the mind run wild as to what can be accomplished. However, when advice is given, I listen to it even though I may not take the advice that was given. But I dont come back with the attitude that I know more than every one else.

Furthermore, I dont have to be grateful to porn. Sadly, I thought you would be one of the last to even advocate any appreciate for that type of material. While I am thankful for technological advancements, I dotn have to appreciate the filth that continues to contribute to our moral decay in society. Maybe that crap flies on your reservation but it doesnt on mine.

I have no problems with the guys dreams. Good for him. But to sit here on a forum and act like the advice given to him is worthless and then follow it up that once the deal is done he isn't going to waste his time talking about it here on the forum.

But maybe someday, I'll win a grammy for indian music and then I can sit around here on the forum and pick and choose which people I want to support and piss on the ones that I dont.
mrjhands wrote on 1/29/2005, 1:40 PM
To "theceo"...from a prior thread of yours...

"I don't really want to promote them (your 5 video titles) on this board, some may consider it spam. The films/documentaries are related to major paranormal topics. I run over 300 content sites and some of them are the busiest paranormal sites around for their topics."

"If you really want to see them, use Yahoo and start looking up major paranormal topics like Nostradamus, UFOS, etc
You look at the first few sites listed and when you see links to new movies on those topics you'll find us."

Is it....Adoninet.com?

Looks like to me it fits all of your covert descriptions for your company to me.

Personal opinion, robust site, lacks somewhat aesthetically in the artistic dept., all around....