FILM DISTRIBUTION TIPS

5. FREE TIPS OF THE WEEK

When negotiating a deal with a Sales Agency here's 5 tips to follow:

1.ALWAYS CHECK REFERENCES: When you are about to enter in a business partnership with anyone, you wouldn't think twice about checking the other party's references. Entering into an agreement with a sales agent should be no different. Here's what you want to do – go to the company's website and find a few films or projects they handle that look somewhat similar to yours (in genre, length, style, etc.) and go to the individual websites of these projects (you can find this simply by Googling the name of the film) and then contact the producers through their website. What you want to ask is the following – have they ever gotten paid from the sales agency? Do they get regular accounting reports? Have they been happy with the relationship in general?

2.TRY TO PUT A CAP ON THOSE EXPENSES: You will notice that in every sales agency contract they want to take a certain amount in expenses for marketing your film. The reason why this amount is often so high is because it actually costs a lot of money for a sales agency to market your film properly. Going to all the Film Markets are exorbitant, as well as all the advertising, shipping to international buyers, etc. However, I personally believe that the sales agency should absorb some of these costs (especially the travel costs) as part of the normal costs of doing business. It's not your fault that it's expensive to take your film to the Cannes Film Market! Anyway, you'll probably never get the sales agency to agree to ZERO expenses, but you can negotiate that they be capped out around $15K-$30K.

3.NEGOTIATE A HIGHER FEE IN LIEU OF EXPENSES: Another trick of the trade is to negotiate ZERO marketing expenses, but allow them to take a higher distribution fee as a percentage of each sale. For example, normally the deal is structured so that the sales agency gets a 20%-25% distribution fee on every sale they make in addition to keeping the first $30K-$60K that comes in to recoup their marketing expenses. As an alternative, you can offer them a distribution fee of 30%-35% of every sale, but zero marketing expenses.This won't work every time, but I'veseen it a few times.

4.ASK FOR QUARTERLY ACCOUNTING REPORTS: Nobody wants to deal with sending producers accounting reports too often because 1) it's costly to administer, and 2) they don't want to show you if no sales have been made, etc. Most likely they will put in the contract to send you twice-yearly or yearly accounting statements. I say ask for quarterly, and twice yearly at the least. Believe me, you want to see what's going on every quarter so you can keep track of your sales. Also, make sure they are obligated to send you any monies due with every accounting report. This will insure you get paid more frequently (four times a year versus 1 time a year).

5.ASK FOR A PERFORMANCE GUARANTEE: The beauty of a Performance Guarantee is that it's really a win-win for everyone. Here's how it works – you want to negotiate with the sales agency that if they fail to make a certain amount in sales in the first year of the contract, then the rights to your film revert back to you in year 2, and you can either go to another sales agency or sell it yourself. The reason this works for everyone is because quite honestly, if a sales agency hasn't made any big sales on your film in the first year, then it's probably not a good fit for them anyway. Just make sure you don't set the bar unrealistically high – for example a performance guarantee of $100K is completely unrealistic in most cases. Stick to $50K or lower. Also, don't do it for anything less than a year because remember, everything takes longer than you think and by the time the sales agency completes a full market cycle and closes deals and gets paid, it's at least a year. So set the bar realistically enough so that they will agree to let you have your film back if no sales have been made after one year.

Alright everyone, hope you enjoyed this edition of FilmDistribution's News! Have a great day and we'll see you soon in the Forums through Twitter! ~Kes