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Old February 13th, 2009, 09:54 AM   #1
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Standard distribution deal for short films?

Is it customary for a short-film distributor to get 50% of NET revenues (i.e. after expenses)? It seems a little high, especially the "net" part.

I searched the distributor's name on the internet (Ouat! media) but could find nothing except cut-and-pasted press releases singing the praises of the distributor ("journalism" indeed...).


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Old February 13th, 2009, 10:31 AM   #2
 
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Here's their web site. Found it using Google.

Ouat! Media

In answer to your question, I would not sign such a contract.
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Old February 13th, 2009, 11:03 AM   #3
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Here's their web site. Found it using Google.

Ouat! Media

In answer to your question, I would not sign such a contract.
Right, sorry, I knew about their web site. Should have specified that. I was looking for comments but couldn't find anything (other than endorsements from clients).

What is a customary distribution deal for shorts? What would be acceptable?

I've seen this "50% of net revenues" from other distributors before, mainly in contests where you "win" an exclusive deal with the organizers. It sounds like thinly-disguised exploitation, but I have no idea what is customary in distribution.


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Old February 13th, 2009, 12:10 PM   #4
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Jacques, sadly 30-50% of GROSS revenues paid to the distributor with a cap on expenses by the distributor is industry standard.

DO NOT ever sign a deal based on NET revenues. With creative accounting NET revenues can be non existant.

I have seen deals that offered even less to the producer. It is amazing but in the video/film world just like other businesses the distributors make the most money for the least work while content creators get the screws. Stock footage is worse with as much as 60% going to the footage creator and DVD deals can pay less than 20% to the creator.

Welcome to the excitement and glamor of the video/film world and if you're being offered a deal based on NET revenues run away.
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Old February 13th, 2009, 12:18 PM   #5
 
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Originally Posted by Jacques E. Bouchard View Post
It sounds like thinly-disguised exploitation...
You're right. That's all it is.
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Old February 13th, 2009, 12:42 PM   #6
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Jacques, sadly 30-50% of GROSS revenues paid to the distributor with a cap on expenses by the distributor is industry standard.

DO NOT ever sign a deal based on NET revenues. With creative accounting NET revenues can be non existant.
I know, but the contract does define film expenses (gross - film expenses = net) as the cost of creating copies, promo material, shipping, advertising the film etc. and excludes "expenses related to the general overhead costs of Distributor". They also limit expenses to a maximum of "25% of Gross Film Revenues".

Unless this is way off, it seems that this contrac is simply on the high end of customary.

I am a little worried about their editorial rights, however:

"Producer grants Distributor the right to edit and modify the Film, use excerpts of the Film and combine the Film with the work of others for the purposes of time integration, censorship, insertion of commercials, creation of compilations, and promotions of the Film and Distributor and its affiliated and related companies and licensees and assigns, and Producer hereby waives any moral rights it may have in the Film".

Forgive me if I walk funny here... ;-)


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Old February 13th, 2009, 02:50 PM   #7
 
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"Producer grants Distributor the right to edit and modify the Film, use excerpts of the Film and combine the Film with the work of others for the purposes of time integration, censorship, insertion of commercials, creation of compilations, and promotions of the Film and Distributor and its affiliated and related companies and licensees and assigns, and Producer hereby waives any moral rights it may have in the Film".
If that's not a deal killer, I don't know what would be.

Evidently, people are signing the contract, but I can't for life of me imagine why.

There are other film distributors!
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Old February 13th, 2009, 02:59 PM   #8
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My agent is proposing changes to the Rights and to the percentage. We'll see what happens.

Thanks for everyone's advice. I know plenty about screenwriting contracts, but nothing about distribution.
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Old February 13th, 2009, 03:16 PM   #9
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If that's not a deal killer, I don't know what would be.

Evidently, people are signing the contract, but I can't for life of me imagine why.

There are other film distributors!
I understand that, but so far everyone I've spoken to, including a few filmmakers, seems to think this is standard (although on the outrasgeous side).

I'd be interested in hearing about the distribution deals other people have signed.


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Old February 13th, 2009, 04:14 PM   #10
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Originally Posted by Jacques E. Bouchard View Post
the contract does define film expenses (gross - film expenses = net) as the cost of creating copies, promo material, shipping, advertising the film etc. and excludes "expenses related to the general overhead costs of Distributor". They also limit expenses to a maximum of "25% of Gross Film Revenues".
You missed my point. For example let's say gross is $4K, distributor expenses max out at $1K, then you get half of the remaining $3K or $1500 OR 25% of the gross. It's a lousy deal. Don't make deals on NET. I've licensed several docs for international distribution so I'm not making this up.

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Originally Posted by Jacques E. Bouchard View Post
"Producer grants Distributor the right to edit and modify the Film, use excerpts of the Film and combine the Film with the work of others for the purposes of time integration, censorship, insertion of commercials, creation of compilations, and promotions of the Film and Distributor and its affiliated and related companies and licensees and assigns, and Producer hereby waives any moral rights it may have in the Film".
Pretty standard really. Different countries need different lengths for their shows, put commercials in different places and may cut up your piece for promotions, etc. though the moral rights thing is new and a little disturbing.

Stay away from whatever company is offering this deal. It sucks!
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Old February 13th, 2009, 06:56 PM   #11
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You missed my point. For example let's say gross is $4K, distributor expenses max out at $1K, then you get half of the remaining $3K or $1500 OR 25% of the gross. It's a lousy deal. Don't make deals on NET. I've licensed several docs for international distribution so I'm not making this up.
So it should be 50% of gross minus expenses? But wouldn't that be worse? I.e., 50% of 4K = 2K - 1k expenses = 1K?

Or is it the cap on expenses that's set too high here?


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Old February 14th, 2009, 04:30 AM   #12
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I don't think that the length of the film has been given? That's significant ie it takes the distributor as much effort and expense to sell a ten minute film as it does to sell a one hour film but the revenue will be a lot less because it's a shorter film.
So, if it is a ten minute film 50% would be reasonable. If it is one hour 50% would be high - for the broadcast market.
If the film is being distributed in another market eg the educational market then 50% could again be reasonable for one hour film because the cost of handling each transaction is high in relation to revenue earned from the transaction.
Most distributors would deduct expenses and if they specify what these are then that's reasonable.
You can always try to negotiate about what counts as expenses. If they are direct costs ie making a flyer to promote your film I'd say that's reasonable but if they are indirect eg percentage cost of a stand at a programme market, I think I'd look elsewhere.
It is in your best interests not to discourage the distributor from making good publicity material and sufficient viewing material etc for your film. If he can't set these costs against revenue he is more likely to do it cheap and therefore undersell your film.
The clause regarding modification of the programme is standard eg because broadcasters will want the right to insert commercials. But it seems a bit extreme. I've never seen the moral rights waiver in this clause before but I can understand why it is there ie you could veto modifications to the film that the broadcaster etc makes in order to comply with their schedules. It sounds do-able in theory but in practice no broadcaster is going to accept that because it is too much hassle.
BTW ask around to find producers who are happy with their distributor rather than pick someone off the web who you know nothing about. For instance you wouldn't pick an editor like that would you?
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Last edited by Richard Gooderick; February 14th, 2009 at 10:59 AM.
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Old February 14th, 2009, 05:43 AM   #13
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Originally Posted by Jacques E. Bouchard View Post
So it should be 50% of gross minus expenses? But wouldn't that be worse? I.e., 50% of 4K = 2K - 1k expenses = 1K?
Or is it the cap on expenses that's set too high here?
Everything is too high. 30-35% of gross with a cap on expenses in dollars not a percentage would be more inline with industry standards OR 50% of gross and the distributor includes expenses in their 50%. Last time - it's a bad deal.
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Old February 14th, 2009, 10:53 AM   #14
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Everything is too high. 30-35% of gross with a cap on expenses in dollars not a percentage would be more inline with industry standards OR 50% of gross and the distributor includes expenses in their 50%. Last time - it's a bad deal.
Yeah, I get that you think it's a bad deal. You made that clear. But I'm getting a lot of conflicting opinions on this, which is why I'm always interested in hearing what people who have signed distribution deals for short films are actually getting in real world conditions.


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Old February 14th, 2009, 11:04 AM   #15
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I don't think that the length of the film has been given? That's significant ie it takes the distributor as much effort and expense to sell a ten minute film as it does to sell a one hour film.
So, if it is a ten minute film 50% would be reasonable. If it is one hour 50% would be high - for the broadcast market.

[...]

BTW ask around to find producers who are happy with their distributor rather than pick someone off the web who you know nothing about. For instance you wouldn't pick an editor like that would you?
Thanks for the info, Richard. Very helpful.

The short films are 6 and 8 minutes in length. I sent them to a satellite specialty channel who then offered to broadcast them, but they said they only deal through distributors (even though they openly invite people to submit on their web site). And as luck would have it (!!) they have their own distribution service. That's where the offer of distribution came, not because I picked them at random off the web.

I was wary of them from the start because of their bait-and-switch (open invitation, then ask that you go through their distribution), so I wanted to find out what normal terms are for distribution. I'm going to call a few more distributors Monday to try and get a better deal once I know what to expect, and so far most people have been helpful. What I take from this is that the terms are high, but not improbable.

I googled this particular distributor, but all I could find was glowing praise from independent filmmakers who were probably too excited to get signed to look closely at the terms (and industry standards).

BTW, here is the definiton of "expenses" in the contract:

"Film Expenses means all reasonable amounts actually incurred by Distributor in connection with the exercise of the Granted Rights that are identifiably attributable to the Film as a standalone Film, to a maximum amount equal to 25% of Gross Film Revenues. By way of example only, Film Expenses: (i) include the costs of creating versions and copies of a Film (including, without limitation, authoring and manufacturing costs related to a DVD and the costs of manufacturing ancillary products), shipping costs, advertising expenses related solely to the Film; but (ii) do not include expenses related to the general overhead costs of Distributor."



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Last edited by Jacques E. Bouchard; February 14th, 2009 at 12:14 PM.
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