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Do Any of These and You're Doomed

Once your movie or documentary is finished, distribution is the next step for most of you. But you should know, it's a landmine out there that must be navigated carefully and strategically. Despite your probable desire to get on to your next film, now is not the time to be cavalier.

With that in mind, here are 5 very common and fatal errors committed by Producers & Directors every week -- that you must avoid making when dealing with distributors. (And distributors absolutely hate that I'm telling you this.)

1. Do NOT Make Worldwide Rights Deals

It saddens me every time a filmmaker tells me they've done this. Or when I hear about it from a colleague. Several times a month I learn about some Producer or Director who's made a Worldwide Rights deal on their movie, giving ONE company both domestic (U.S.) rights and international rights. Everyone: Stop doing this. STOP DOING THIS. When you make this kind of deal, you are doomed (usually), as you may never see any money beyond any advance -- if you even got that.

Making Worldwide Rights deals is an unscrupulous practice by many, many companies. The reason it's unscrupulous, is because there are NO companies (outside of the Studios, Mini-majors and a few others) that distribute directly to both the domestic and international markets. They either distribute ONLY domestically, and then farm your film out to someone else for foreign (and take a piece of your pie there too), or vice versa where they distribute internationally but then farm your film out to someone else for domestic.

Not only does this eat into your revenues and profits, it makes it easier for an unscrupulous distributor to cross-collateralize -- which is a fancy word that allows them to deduct any losses across the globe against any profits, thereby ensuring you'll never see a dime.

The only exception to not making Worldwide Rights deals is if it's with a Studio or Mini-major, who is giving you a nice fat check as an advance for the World, and you're satisfied with that advance. Because that advance is likely the only money you'll see from a Studio or Mini-major.

For more on why you should split up domestic and international rights when making deals, see my article: Film Sales Agents & Producer Reps

2. Do NOT Make Deals That Don't Expire

Once in a while I'll hear about this happening, where some filmmaker made a deal for their film that never expires. The word for this in a contract is "Perpetuity." Never make this kind of deal. NEVER. Why in God's name would you give up the rights to your movie forever? Are you being paid millions of dollars? If so, then maybe you would make such a deal. But absent a very large amount of money paid upfront, don't do it.

Look, your movie or documentary is an asset. A real asset. While the actual worth of any film is subjective to a large degree, building a "pedigree" increases the value of your film. Producers & Directors who understand this important concept, build the perceived value of their films which can then pay dividends for the rest of their lives. (And longer.) Given you're spending two years or longer to make your feature, understand that you're creating a real asset that should not be given away forever.

The other thing to beware of? Those frequent clauses in contracts that automatically renew the agreement, if you don't end them before the auto-renew date. I see this all the time in filmmakers' contracts. DON'T ALLOW THESE CLAUSES IN YOUR CONTRACTS. Remove them, strike them from your deal. If you're happy with the distributor at the end of the contract period, great, then at that time, you can mutually agree to renew that contract. Or mutually agree to negotiate a new contract. But don't allow any contract to automatically renew. (Exceptions: Maybe you make a licensing deal with, say, HBO for 18 months. And in that contract, they could re-license for another 18 months if they so chose, by paying another licensing fee. Fine. But this is not an "in perpetuity" contract.)

3. Do NOT Give Free Reign to Distributors

What does this mean, exactly? It means stop signing contracts that allow distributors to recoup unlimited expenses.

Like the mistakes above, I see this EVERY WEEK. Some filmmaker is thrilled to be getting a contract from some distributor, who has in the boilerplate contract that the distributor can recoup $50,000 or $100,000 or $200,000 in expenses. WHAT? Why does anyone agree to this crap? If you've made an independent movie, without stars, NO ONE is going to actually spend $50,000 or more on marketing & distributing your film. NOT GONNA HAPPEN. And if there are stars in your movie, okay, then maybe they will spend $50,000 -- but that will depend upon the level of stars in your movie, the genre of your movie, and the actual caliber of the distributor. (i.e., A tiny distributor isn't going to take the risk of spending a lot of money.)

Therefore, you must negotiate the boilerplate contract that you've received, and remove these high or unlimited recoupable expense clauses. You must get into the contract, what's called "Expense Caps." Every distributor in the world knows what these are, so when you start negotiating this, no one is going to say to you, "What are you talking about? I don't understand." But it's your job as a film businessman or businesswoman, to know about this and negotiate it. Do not rely on your Producer Rep (if you're using one, and I hope you're not) to inform you, because they won't. Do not rely on your attorney to inform you, because, frankly, many attorneys don't feel it's their job to educate you.

(This is not a slam against entertainment attorneys; just understand that they're hired to review contracts and yes, you're hiring them to help protect you. The really good ones will, and will help educate you along the contract negotiation journey. But there are many who are either lazy, or just don't feel that education is part of their job.)

Here's an extreme example about recoupable expenses that is absolutely mind-blowing. I recently saw a copy of a contract signed by a filmmaker, who not only agreed to a recoupable expense amount of $200,000 in his contract with a distributor, but agreed to a clause that said: IF the distributor does not achieve sales that equals this $200,000, the filmmaker is financially liable to PAY the difference to the distributor, up to this $200,000!!

I am not joking. Sound outrageous? Sound like only an idiot would agree to this? Well, I don't think filmmakers are idiots, but they agree to stuff like this all the time. PLEASE STOP DOING THIS.
For more about Expense Caps, view my 3 minute video on this page: Video Clips
(The video clip is the one titled "Don't Sign A Deal Without This!")

4. Do NOT Marry a Crook

Here's what this means: Do your "due diligence." Check out any distributor that you begin negotiating with, before you get "married" to them. Look them up. Don't just be happy someone's offered you a deal and allow the endorphins in your brain to cloud common sense. Research any distributor you might make a deal with -- before you sign a contract with them -- and make sure they're on the up & up. You do this by looking at films they've handled in the past, and contacting those producers for appraisals. This is a professional courtesy most producers will do for other producers.

Do not bother asking the distributor for references as they'll just give you the good ones. You want to do a random sampling of those films that have been with that distributor for at least one year. (You can determine that by researching the film's release date on IMDB, IMDBpro or Amazon.com.) I recommend contacting the producers of 3 other films, as this will give you a good sampling on how the distributor has performed. Not just in terms of sales made, but of revenues actually received by those producers, receipt of timely reports, and so forth.

You MUST do this. Most Producers & Directors don't. NOT doing this is playing Russian roulette with your movie. Unless you play Russian roulette with your life, WHY would you do it with your film?

(Know what movie this famous scene is from?)

5. Do NOT Hop into Bed Because Someone Says "I Love You"

This is similar to the one above, but here's the issue: More than likely, you've spent at least two years or more making your movie or doc. You're exhausted, you're fatigued. You'd just like your journey to be over -- or at least be on to the phase of hopefully receiving accolades. And herein lies the trap. Some distributor comes calling, praises you and says your film is brilliant. You then immediately fall in love with this distributor, throwing all caution to the wind. You begin dreaming of big paychecks, getting on to your next film, and a career as a Producer or Director. But you don't really know anything about this distributor.

So... don't immediately hop into bed and sign whatever is put in front of you. Do your due diligence -- and as importantly -- moderate your enthusiasm until such distributor checks out, and you get the contract fully negotiated so you're not making a bad deal. I've lost count of the number of Producers & Directors who've made bad deals because they finally had a suitor. Seriously. I'm not making this stuff up. They were so happy to have a distributor court them and tell them they love their movie, that the rational part of their brain -- the frontal lobe -- stopped functioning and took a hike.

If you mess up and make a bad deal and get burned, the likelihood that you'll ever make another movie again drops at least 80%. As it is, the number of filmmakers who move on to a second feature film is already staggeringly low. Bottom line: Do not screw up and make a bad deal. Educate yourself about what a good deal is, AND what a good contract is. They are not necessarily the SAME thing.

Final Words:

You need to build various things into any contract with any distributor, including a "safety valve," so that if things aren't going well and the distributor is doing a poor job, you can get your rights back without having to lawyer up. Most filmmakers don't do this, or even know to negotiate this. Thus my comment above about educating yourself. Unfortunately, too many don't think they need to know any of this. And a number of filmmakers exhibit an arrogance that they don't need to know. OR they think they already know the game when they haven't a clue.

If you're one of these filmmakers, don't allow your arrogance to destroy you or the film you've put SO much heart, time and money into. EVERYONE: Treat your distribution journey with care and diligence. Yes, I know you love the creative part of filmmaking, and this is where you'd prefer to devote all your time. But unless you're a hobbyist who's making films for the fun of it, this is a business, and your thriving as a Producer or Director requires you to learn and embrace all that comes after making your movie or documentary.

Film Producer & Distribution Expert Jerome Courshon has assisted hundreds of filmmakers with achieving successful distribution (with Warner Bros., Sony Pictures, Lionsgate, and many others) through his classes, speaking engagements, and consultations. His acclaimed 3-Day Program, "THE SECRETS TO DISTRIBUTION: Get Your Movie Distributed Now!" also includes a section on Deals & Contracts and contains vital information to assist you in making good deals. More info here: 3-Day Distribution Program.

© 2016 - Jerome Courshon. All Rights Reserved.