How does money work in film?

Understanding Money

7/27/2016

Photo Credit: Pictures of Money Via Flickr: Mods: Added text, logos, and background behind text.

Independant film producers are forced to wear many hats. We have to be marketers, fundraisers, public personas, therapists, mediators, accountants, negotiators, hustlers, and logistically minded magicians. [Although I know an app to help with that last one.] There are certain backgrounds that help more than others for this multifaceted skill set. There is some variance depending on which type of producer you intend to be, but they all have one thing in common. Every Producer must have a deep understanding of Money, and the incentive systems that enable it to flow between different hands.

Since my background is at the Institute for International Film Finance, and I put in a year at Global Film Ventures. I get a lot of filmmakers contacting me asking me to help them fund their films. Some of them are good pitches, most are not. Getting investment for you film is incredibly difficult, some would say near impossible. There are many reasons for this, but one that is not often talked about is the fact that many filmmakers fail to understand the value of money, and the work it takes to get it. Far too many filmmakers approach investment with the mindset that money shouldn’t come with strings, and that all they should need to worry about is making the film. My apologies, intrepid filmmaker. All money comes with strings.

There’s this attitude filmmakers have that someone should just give them a check then go away so they can make the film. I’ve had many filmmakers tell me that flat out. The ignorance involved in that statement is incredibly disturbing. There’s a lot more to investment than just writing checks.

Angel investors didn’t get their money by giving it to just anybody. If they did, they wouldn't be able to stay a qualified investor for very long. Additionally, the expertise they've gained from amassing the wealth necessary to be a qualified investor may well be very valuable to you.

Related: Why Film Needs Venture Capital

Additionally, Investors generally do quite a lot of legwork to research those who they invest in, and they’ll never invest in someone they don’t trust. This attitude of “just give me the money and let me be” is a huge red flag. If an Angel Investor doesn’t trust you, they won’t invest in you. People in the film industry have a bit of a reputation for dishonesty and a lack of transparency. Especially when it comes to money.

Once you take money from someone, you have a responsibility to them to send periodic updates. You absolutely need to let them know how everything is progressing. You need to be available to take their calls at most any reasonable time, and always return their correspondence within at most two business days. All money has strings, and you can’t expect an investor to just write you a check then never check in on you.

That said, an investor should not be without limits. Just as your investors are vetting you, you should vett them. I've seen projects killed by overzealous executives convinced their product is worth more than it is. It should be clear when and how decisions regarding distribution and monetization are made, and there should be some level of informed expert on your team to help you ensure the film makes the investors money back.

Another attitude problem a lot of filmmakers have is that they feel they don’t need to understand business. Many feel just need to make the best film possible and money will come to them. While there’s a kernel of truth in that, relying solely on making the best film possible is a great way to end up broke with a film that never goes anywhere. The best product without a marketing team will never make money. Filmmakers do need to make a great film, but they also need to understand at least the basics of how to promote a movie and how it will see revenue.

Distributing a film, promoting a film, and selling a film are all incredibly different skill sets that require decades to master. Filmmakers can’t be expected to be experts on every job involved in making a movie. They do, however, need to understand what they don’t know and compensate for that by getting people on their team that do understand how to do those jobs. Filmmaking is a collaborative process, and you need team members who are hyper-focused on Financing and distribution.

In essence this is the difference between a producer and a production manager, or the difference between an executive producer and a line producer. Line producers and production managers are great at understanding how to manage a crew and get a film in the can. Producers need to have a good understanding of business, negotiation, deal making, finance, and distribution. Executives do the latter almost to the exclusion of everything else. Every film needs at least one of each of these people, and really they shouldn’t be the same person filling multiple roles.

Every film needs people who understand money, how to raise it, how to make it back, and creative ways to save it. Filmmakers of all kinds can be excellent at the last part of that. Innovative bootstrapping is a skill perfected by many guerilla filmmakers. That said, you still need money, and people who understand how to make a film see revenue on your team. You also need people that understand there's more than one way to finance a film, and that it shouldn't all be funded by private equity.

Related: The 9 Ways to Finance your IndieFilm

Even if you find an intermediary who can help you get the money from angels, you’re still going to have to have regular phone calls and meetings with that intermediary.

In fact, that intermediary is probably going to have more contact with you than an investor would because they understand both investment and filmmaking. You need people like this on your team, and you need to understand that you’re creating more than just a film. Every film is in essence a business, and in order to run a successful business you need skilled business people just as much as skilled artists and visionary directors.

Whenever you seek investment, it is into your business. You need to understand that while film and media are artistic pursuits, they also require good business sense, excellent branding, and a fantastic marketing team. You as a filmmaker need to have an appreciation and at least a basic understanding of what it takes to build a successful small business. Because after all, every film you make is like a new product. This should not be your sole consideration, but it does need to be part of your plan when creating a film. You should not pitch your film solely on how great a story you're going to tell, you also need to tell an investor how you'll get people to listen to your story, and how watch it.

So readers, if you’ve ever thought that all you need is someone to write you a check; remove that notion from your head. In order to get money, you need to understand money. Only by understanding money, can you get people to give it to you.

Understanding money is one thing, but it's an entirely different thing to understand what it takes to be a full-fledged executive producer. That's why I've launched my Executive Producer Expressway Program. In the program, you'll learn everything you need to know about packaging, financing, marketing and distribution. It all starts with a completely free hour long strategy session where we assess where you are and how to get you where you need to be. Sign up for your strategy session today!

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