Understanding the difference between an LOI and a Pre-Sale

A few weeks back I did a post on how to get a Letter of Intent from a Sales Agent.  You can read that post here.  However, I realized it might not be a bad idea to step back and examine the differences between a Letter of intent and a Pre-Sale.  While I touch on it in the Rules for Getting a Letter of Intent blog, It seemed like the topic was worth a little bit more explanation.

At its core, the primary difference between the two is that a pre-sale is a document that has a tangible value, and an LOI does not.  It’s a document that says once you deliver the completed film to the sales agent/distributor you will receive a check for an agreed-upon amount.  Generally, they’ll come coupled with a completion bond.  If you get a presale from the right sales agent/distributor, then this document is serious enough that you could take it to an entertainment bank and take out a loan against it. 

A letter of intent is a much less serious document.  It essentially guarantees that a sales agent will review a film once it’s completed and if it passes quality concerns, they’ll make an offer to represent the film at that point in time.  This document has no monetary value but proves to investors that you have access to distribution.

RELATED: 5 RULES FOR AN LOI FROM A SALES AGENT

The reality is that while pre-sales still happen, the likelihood of getting one isn’t very high for the vast majority of filmmakers. 

In an ideal world, every filmmaker would be able to get presales and fund most if not all of their movie on them.  Unfortunately, we do not live in an ideal world.  With the glut of content currently being produced, most filmmakers should consider themselves lucky to get a Letter of Intent. 

The reason a Sales Agent or a Distributor would pre-buy a movie is so they know they’ll be able to fill the programming slots when the time comes.  It used to be that if they pre-bought content, they could get it at a lower cost than when they bought it after it was completed. 

Unfortunately, due to a glut of equity financing in the market that is no longer the case.  With how many films are being made every year, the likelihood of them being unable to find suitable content is slim.  That’s why the only people still buying content require reputable directors and recognizable name talent. 

Now as then, the only reason to pre-buy is so you can get the films you need when you need them.  Given the glut of content filling the marketplace at the lower levels, the only films worth pre-buying have to be very high quality, with very high-quality assets.

​In order to get a presale, you need 3 things:

• The director must have a proven track record of 3+ films in a similar genre to the movie you’re producing now

• some level of recognizable name talent,

• The film must not be execution dependent.

All of this really boils down to distributors wanting to know that the movie they’re buying before it’s made will meet the needs of the outlets the distributor intends to release the film on.

That’s why the director’s track record is so important, and the notoriety of the cast is also a huge selling point.  It’s also where the idea of execution dependence comes in.  By Execution dependent, I mean that the film must not rely on the intricacies of good execution to be profitable.  Something like Moonlight is very execution dependent, whereas The Expendibles 4 is not.

Pre-selling your film is also if the film is based on well-known existing source material.  This could be a long-running series of books that might have flown under the radar of other movie producers, a recognizable web series, or even a video game.  Uwe Boll made his career by pre-selling terrible movies based on video games.  Of course, he also had the help of some very lenient German Tax incentives.

Letters of intent are much easier to get, as they’re a much less severe document.  If you have a strong relationship with a filmmaker, it’s very possible you could get a letter of intent. It’s also possible that if you or your producer’s rep know what they’re doing, they can work with the right sales agents to escalate the document into a pre-sale once the package comes together.

Thank you very much for reading. As always, there’s a lot more to this than I could explain in a 600-word article. If you want to get more support in getting an LOI, you should go ahead and grab my free film business resource pack. It’s got a free e-book, lots of templates, money and time-saving resources, and even a monthly digest of content segmented by topic to help you continue to grow your career on a manageable schedule. Get it via the button below.

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5 Rules for Getting a Letter of Intent (LOI) From a Sales Agent for Your Film.

In order to properly package a movie, you need three things.  Recognizable Name Talent, First Money in, and at least a letter of intent from a distributor.  I’ve covered steps for preparing for calling agents in the Entrepreneurial Producer, (Free E-Book Here.) I’ve covered some of the ways you can get first money in this blog.  So now, I’ll cover some rules for approaching sales agencies in the blog you’re about to read

The reason you need an LOI is that the cause of films not recouping their investor’s money is that they can’t secure profitable distribution.  Your investors want to know you have a place to take the film once it’s done, so they can begin to get their money back.  Before you start thinking that you’ll just try to start a bidding war after the film is done, you should be aware that generally doesn’t happen. 

Before we begin, This Packaging concepts blog series was recommended by my friend Brittany, in the Producer Foundry group on facebook.  I occasionally look to answer questions people have there, so if you want me to answer something join the group.  Or, if you want definitely want to get some questions answered, you should join my Patreon.  I’m very active in the comments. ​

1. This document isn’t a Pre-Sale.

It’s important to note that there’s a big difference between a Pre-Sale and a Letter of Intent.  A Pre-Sale is something that you may well be able to take to the bank to take out a loan against.  That is, if you’ve got a presale agreement from a reputable distributor or sales agency.  If you’re working on making your first film, that’s probably not going to happen though. 

To get a Pre-sale, you need to have a known director with a proven track record, a film that’s not Execution Dependent, and likely some noteworthy cast.  Even then, the Pre-Sale often only covers the cast.

An LOI is a much less serious document.  It’s essentially a letter guaranteeing that a sales agent will review the film on completion, and if it fits their business needs they will represent the film.  Generally, the producer will give the sales agency an exclusive first look for the privilege of using their name to help package and finance the film.  Sales Agencies can’t just give these to everyone, as it waters down their brand.  You’ve got to compensate them in some way for taking a risk on you. 

This is not the final document, you’ll negotiate a distribution agreement once the film is done.  Don’t try to negotiate one at this point, since you’ll be in an inferior negotiation position. ​

2. Make sure there’s a time window on the sales agent’s first look

If you fail to put a time window on the sales agent's first look, you can lock yourself up and potentially lose the first window on the film.  Generally, I’ll say something like 14 or 30 days from initial submission on completion of the film.  This gives the sales agency time for review but doesn’t hurt the filmmaker’s options if they take too long.  This also prevents them from tying you into a contract. ​

3. Only approach agencies that sell films like the one you want to make.

This may sound obvious, but if you’re looking for an LOI for a horror film, don’t approach sales agencies that deal primarily in family films.  If all goes according to plan, this sales agency will be distributing your film when it’s done.  You want to make sure they’re well-suited to sell your film when the time comes. ​

4. Look at the track record of the agency you want to work with

You need to look into what films the sales agent has made in the past, and how widely those films have been distributed. At this stage, doing this isn’t as important as when you negotiate the final distribution deal, but it is something you should know when going after a letter of intent. 
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Also, the track record of the sales agency or distributor has a direct impact on how valuable the LOI is.  An LOI from Lionsgate means a lot more than an LOI from someone on the third floor at AFM this year.  Looking at the track record can help you more accurately assess the value of the document you hold, so you can better present that information to potential investors. ​

5. Getting an LOI is Heavily Dependent on the Relationship with the Sales Agency.

If you walk in cold and start asking for an LOI on the first meeting, you’re not likely to be successful.  It takes time and a fair amount of correspondence to get to the point where a sales agency is willing to take a risk on you. ​

​If you don’t want to spend the time and money to establish these relationships by going to markets and having calls and emails with the sales agency, you may want to consider a Producer’s Rep. 

Most producer’s rep will require some level of upfront payment for this sort of work.  I charge a relatively small amount upfront and a larger amount on success for this sort of work.  That said, I’m relatively selective about what I take on.  If you’d like to find out more click the links below to submit your project, or book a call with me on Clarity to pick my brain about the next steps.  Alternatively, you can sign up for a free strategy session and talk about what the best next steps for you would be.  I also offer educational programs that will teach you how to get these for yourself.  Those start with a one-hour strategy session.  In this one-hour strategy session, I'll help you figure out where you are, what the next steps for you are, and what the best course of action for helping you get there would be.  

Thanks so much for reading! This is only a primer, and in order to succeed you’ll need a lot more information on the business of indie film. If you want help getting that, you should check out Guerrilla Rep Media’s independent film business resource package. You’ll get a free-ebook, lots of templates, money-saving resources, and even a monthly content digest delivered to your inbox to help you grow your indie film company and premier. It’s completely free and linked in the button below.

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5 Ways to Market Your Movie Besides Social movie

There’s a lot of advice on the internet, as well as on this blog about marketing your film using social media.  That’s with good reason, Social media is among the most cost-effective ways to market your project if you do it properly.  Further, it helps you maintain a long-term relationship with potential customers.  That being said, it’s not the only way to market your film.  It might not even be the most efficient way when it’s the only thing you do.  What follows are 5 ways to market your film other than social media.

For this blog, all 5 of these tactics can and should be used in conjunction with each other, and can greatly augment your social media marketing.

Before we begin, every once in a while I’ll take a question I get on Twitter and turn it into a blog.  This question came @AmandaVerhagen a while back, but I’ve not had time to adequately address it until now.  If you have a question about film distribution, marketing, financing, or sales, feel free to @Mention @TheGuerrillaRep and I might just write a blog to answer your question.  

Events

Hosting an event to spread the word about your project can be a great way to build excitement and generate interest in your project.  This can be something as simple as a happy hour at a local bar where you buy a few drinks for strong supporters, or as complex as renting an event space, supplying the booze, and having some people say a few words.  Ideally with entertainment.

What you do really comes down to how much time you have to organize and what your budget it.  The importance of the milestone you’re celebrating also plays a factor, although any milestone worthy of an event is also likely worthy of some time to organize it

Festivals

Shocking, I know.  However what does bear mentioning is that festivals are only as useful as you make them.  Getting into festivals can be a great way to expand your network and grow the reputation of the film, however the effect that will have will be limited unless you learn how to work the festival. 

Essentially, getting into a festival provides you a space where you can utilize every other item on this list to grow your notoriety, your film’s reputation, and your professional network. 

​Flyers/Givaways

​Having something tangible you can give away to people at events in festivals will help people remember you.  They’ll remember you even more if you attach something to the card that has some immediate value beyond the information you’re handing out.  This can be as simple as a tiny piece of chocolate attached to a card, a bottle of hand sanitizer, or even a small bottle of alcohol( if the demographic is right.)

Adding a giveaway will help you stand out in the minds of whoever you give your giveaway to .It’s easy to get lost in a pouch of postcards and flyers, but something as simple and cheap as a piece of chocolate can make all of the difference in how you’re remembered by the event goer. 

​Stunts

Pulling some sort of marketing stunt can be a great way to stand out and attract a bit of press.  Whatever you do, you’ve got to make sure you do it safely though. 

One of the most famous stunts at Cannes was when someone lit themselves on fire (in a fire suit) and then after they were put out, it was revealed to be an attractive your woman in a bikini who starred in the film she was promoting.  Rumor has it the woman later lost that bikini while being interviewed, but that’s another matter.  Also, that happened in the late 80’s/early 90’s, so the culture was different.

Your stunt doesn’t have to be as outlandish as that, but should be as memorable.  If you have a  war movie, you might want to consider throwing toy paratroopers from a rooftop you can gain access to.  If you’re promoting at Sundance, a woman in a bikini making a quick walk through the cold with premier tickets would certainly grab some eyeballs and some attention.  Especially if you can work in a joke about accidentally packing for Cannes. That said, make sure you have a trenchcoat and hot drinks on hand to help her out when she inevitably gets cold.

In any case, the goal of the stunt is to get eyeballs in a safe and legal way.  It’s to help you and your movie be memorable and to ideally attract a bit of the final item on our list. 

​Publicity

​Publicity is almost always the most cost-effective way to spread the word about your project.  However, it’s not always the easiest thing to get.  Generally, you’ll need a relationship with an outlet, something truly eye-catching, or a good publicist to get any substantial amount of coverage.  Sometimes you’ll need all three. 

There are a couple of ways you can disseminate a press release.  PRNewswire.com is relatively affordable, but it’s unclear how much individual press coverage you’ll get out of it.  It does still help with your SEO (Search Engine Optimization) to at least a degree though.  

Generally, if you can afford a publicist, it’s the best way to go by far.  My favorite publicist is October Coast, they’re very cost-effective for the value they provide. While it’s possible to get big marquee press coverage from October Coast it’s unlikely. This means you probably won’t get you the big outlets like Deadline, Variety, or THR, but you will get dozens of relevant niche blogs. In general, you’ll need a higher-cost publicist, or if you’re lucky your distributor, sales agent, or producer’s rep will handle this for you.

EDIT FROM THE FUTURE: There may be a few more things I’ve learned from Running Mutiny that I’ll share in a new blog around the efficacy of paid ads and sponsorships. Comment if that’s of interest.

Thanks for reading! If you want more help financing or distributing your movie, the best place to start is my film business resource pack. It’s got templates, an e-book, and a whole lot more to help you grow your indiefilm company and career. Oh, it’s completely free, get it below.

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The 5 Windows of DIY Distribution

Not every film is well suited for traditional distribution. Most market distributors have a saying for what they’re looking for, “Bullets and Babes.” So if you’ve made a film that doesn’t fit the hot genres and doesn’t have any notable talent, you’re going to need to plan your distribution carefully. Luckily, there are tools that can help you make the most out of your DIY distribution. Here’s a top-level view of them.

Window 1: Promote and get Partners to help you

Whether we’re talking about traditional distribution or self-distribution, phase one is always to spread awareness of your film. It’s generally best for this to start in the early stages of making your film. However, it’s never too late to get started.

First seek out partners with expertise in traditional distribution, online marketing, and festival promotion. They can help you minimize costs and maximize your efficacy. They’ll also help you build and engage with your community. You should also retain a publicist if you can afford it, as it’s generally the best marketing money you can spend.

After that, start submitting to smaller festivals and those that fit whatever niche your film falls into. If you made a film about environmental issues, there are a lot of green film festivals. If you happen to be an Asian American there are festivals that were created for you as well, including CAAMfest. If you made an LGBTQ film, then there are quite a lot of festivals available to you. If you’re in SF, the big fish is Frameline.

No matter what, make sure to submit to your local festivals. You can start a loyal fan base and grow hometown recognition by submitting to these festivals. Often, they’re easier to get into. This is less true if you’re in San Francisco or a major hub. If you are, you might want to target the newer film festivals.

These festivals won’t do much for you in terms of traditional distribution. The only ones that will are the top tier festivals, I.E. Cannes, Sundance, Toronto, Tribeca, and SXSW, and most of the top 20 Genre festivals like Frightfest, FantasiaFest, or similar. If you can get into any of those, then your chances for traditional distribution go up substantially. Although, it’s not likely you’ll get in. Here’s a chart on Sundance submissions vs. acceptances for documentaries as it’s the best image I could find. The numbers for the narrative are in the same ballpark.

Feel free to submit to the next top tier festival that’s coming up. The submissions are not incredibly expensive, and if you get in the career boost is substantial. Since they require premier status, you might even want to hold back accepting a place in any of the other festivals. That said, if you don’t get into that first one don’t wait for the next one. Start taking festival spots, once they’re more than a year old, they’re a lot harder to sell. Films are not evergreen. ​

Window 2: High Touch PPVOD and DVDs in Store

​As soon as you get into a single festival, get your film on Allied Vaugn, VHX, and Vimeo On Demand. There will be an up front cost for most of those. Potentially as much as about 300 to 500 USD All in.

Vimeo On Demand and VHX (Now Vimeo OTT) are VOD platforms that merged a while back. I prefer VHX, but we’ll see what happens in the coming months after the merger. They’re both 90/10 splits, with the 90 going to the filmmaker. Vimeo requires up front fees, VHX currently does not, unless you upload A LOT of content. That said, they’re not available on as many platforms as accessible as something like iTunes or google play. Additionally, they’re not great about helping with Marketing. But retaining the 90/10 split is much better to earn some money for your creation. VHX also lets you keep track of people who buy your video and even add their emails to your list.

Allied Vaugn is a DVD wholesaler. It’s the platform used by booksellers large and small, as well as many other brick-and-mortar content-selling businesses. You’d be surprised where you end up with your content on Ingram. *COUGH*

This window should be done concurrently with the first window. When your project gets into a festival, make sure to call local DVD retailers and bookstores to let them know that your film is in a local festival and they can get your DVD on Ingram. Make sure you include local stores with your DVD on your handouts, as well as the VHX and Vimeo URLs. You’d be surprised what support you can drum up. You could include a QR code, but hardly anyone uses them.

Window 3 –Broad TVOD

Around the same time of your initial VOD release, towards the end of your festival run you should consider hiring an aggregator and getting your film on iTunes and Google Play. Depending on which aggregator you use, you may want to do Amazon Video Direct yourself, since it’s relatively easy.

It’s nearly impossible to get on iTunes without an Aggregator. You’ll want to pick your aggregator carefully since some have been guilty of severe financial mismanagement.

It will take up to 6 months to get it placed on most TVOD services, so plan accordingly. Amazon Video Direct is pretty quick, with a turnaround of only a few days or at worst weeks the last time I did it.

Make sure you do your research on aggregators, In general, I’ve found Filmhub and Bitmax to be the best, but that might change by the time you read this. Allied Vaugn can get you on some TVOD platforms and more AVOD platforms as well.

Window 4 — SVOD

After about 6–9 months on Broad TVOD, it’s time to boost your brand by getting your film on Netflix, Amazon Prime, Hulu, Paramount+ some others. You won’t get much money for this, but you will get a lot of visibility. You’ll need connections through Distributor, Producer’s Rep, Talent Agent, or maybe a sales agent for this one, as they don’t take open submissions. Additionally, this is far from guaranteed, they generally only take fewer than 1 in 10 of the films they’re pitched.

The real point of this is to build your brand for your next film. If you want to build something better, telling investors your last film is on Netflix helps them understand that you are experienced and tested.

Window 5 — AVOD/Loss leader

If you can’t get an SVOD Deal, or once the exclusivity period expires you should work with your aggregator to get the film on as many Ad-Supported Video On Demand outlets as you can. This can often be the most profitable window for independent films, at least as of this writing. Again, as of this writing, Tubi has the most viewers and as such tends to pay the best.

You’ll need to go through an aggregator, distributor, sales agent, or tastemaker who has a vendor license with Tubi or whatever platform you want to be on. You should consider giving the film away for free on your website, and perhaps even youtube or regular Vimeo.

This window is likely to be 3–4 years after release. Personally, I prefer giving away streams in exchange for an email. This will help you if you want to crowdfund a movie, or when you release your next film for windows 1 and 2. If you want to know how that would work, it would probably look really similar to the process you’ll see from signing up for my resource package down below! Take yourself through it for a UX guide, and you’ll also get some templates and a free e-book for doing so. It’s truly a Win-Win!

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The 7 Main Indiefilm Distribution Deal Points

A lot of people are afraid of the complexity of deals with sales agencies. They have a reputation as being very dense, and difficult to understand. While there is truth to this, there’s also a general layout every filmmaker should understand. Many of the pitfalls for distribution can be avoided by knowing these 7 major deal points. That said, you should always have a lawyer or a producer’s rep look over your contract.

This list is not meant to be complete, but it does cover the most important aspects of the deal.

1. Term

This is not really different all that different from the standard legal definition of the term, it’s simply how long the contract will remain in place.
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For film, a good term is anywhere between 3 and 7 years. The sales agent will generally be able to sell the film to third parties [i.e Buyers] for terms that extend beyond the contract with the filmmaker.

2. Territory

The territories are where the sales agents have the right to sell your film. These rights can be both exclusive and non-exclusive, but if you’re selling to a sales agent without the help of a representative or a lawyer, you’ll likely be selling them all rights.
Generally, territories are broken out by both region and country. For example, Germany would be considered a territory in the Western Europe Region. This can get confusing, in that Latin America is both a territory and a region. The Region also contains Mexico, Brazil, and a few others.

3. Languages

One must keep in mind that the business of international sales a global one (as the name would imply.) As such, it means dealing with both cultural and language barriers. Often, a territorial sale is heavily influenced by language. For instance, France is often sold with French Canada.

4. ​Media Rights

Media refers to the different Delivery methods that a sales agent can sell your film by. Different rights would include the following.

1. Theatrical
2. DVD/home video
3. PayTV
4. Cable/NetworkTV
5. VOD [Et Al]

Read more: The 5 Main Indiefilm Media right types

Generally, a sales agent will sell by any combination of these three types of rights. Most of the time, these rights will be exclusive, but sometimes they will be non-exclusive. This is more common for VOD deals, with some notable exception for SVOD deals. These deals are also subject to a term.
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Exclusivity is necessary, and does help the filmmaker as well. Without exclusivity is the only thing that creates value when the thing you’re selling can be replicated infinitely. If the supply is infinite, there’s no way to have enough demand to increase the value of the content. Exclusivity helps maintain the value of the content.

5. Revenue Split/MG

A Minimum Guarantee (MG) would be the payment a filmmaker receives upfront. These are something that filmmakers can receive, but it’s somewhat rare. Generally, you’ll need recognizable talent and a hot genre in order to get one.
The revenue split the Sales Agent takes, as opposed to what the Filmmaker takes.
These splits generally vary between 20% and 35%. Generally, sales agents don’t like to negotiate this deal too much. There are other ways to negotiate these deal points.

6. Recoupable Expense

These are the expenses a distributor can charge before paying a filmmaker. Travelling to film markets gets quite expensive, often costing in the mid-5 figures to the low-mid 6 figures. As such, film they should always have a cap. If there was an MG, this would be part of the Recoupable Expenses.
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Generally, these should be somewhere between 20 and 50 thousand, that’s not including any MG. That number could also be substantially higher if there’s a theatrical release involved.

7. Exit Conditions

This is how you exit the contract should things not go well.   This is much more complex than simply including an arbitration clause.  If The arbitrator only arbitrates based on the initial contract, so if you don't have exit clauses you're not in a great place.  There are lots of different provisions for this, far too many for a blog post, but here are a few things you could include.

• Optional Reversion if X% of the budget not meant by 18–24 months after deal signing.

  • This would mean that if you haven’t made a certain percentage back by a certain date, then the rights would revert to you. Generally, you’d put this number at 30–50%.

  • In an all-rights deal. It’s your film, you deserve to get paid.

  • While you deserve to be paid, this clause is harder to negotiate in than it once was.

• Optional Reversion if the company is wholly acquired by a third party, or goes bankrupt.

  • International sales is a risky game, and often the newer players in it don’t last long. Because of this, it’s important to make sure that you include this clause.

As I said at the top, I’m not a lawyer and this isn’t leagal advice. These are simply the best practices I’ve learned from a decade in distribution. If you found this useful want to better prep for success in film distribution, you should make sure you grab my FREE indiefilm business reseource pack. It’s got distributor contact tracking templates, research guides, deck templates, and a whole lot more. Get it for free below.

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How do we Get More Investors into Independent Film?

Throughout writing this blog series, I’ve been told more times than I can count that film is a terrible investment, and no one besides hobbyists would consider it.  Many want to leave it there, without bothering to look at what’s causing it.  Last week we thoroughly examined the issues plaguing the film industry, and what keeps investors out.  The issues aren’t pretty, but they may be fixable.  What follows is a list of what could be done to fix this problem and some of the ways organizations that are implementing these tactics.

Greater Transparency

One of the biggest things stopping film investment is the perception that it’s unprofitable.  All too often that’s not simply a perception.  Another thing stopping independent film as an industry from being profitable is the fact that many sales agents don’t accurately report the earnings of the films they represent.  Others charge too much in recoupable expenses, so it’s unlikely to recoup.  Some take an unreasonable portion of the revenue or simply hide sales from filmmakers. 

One necessary problem to fix is the lack of transparency within distribution.   There are rights marketplace solutions like Vuulr and RightsTrade emerging thanks to recent technologies for international distribution. Aggregators like BitMax and FilmHub have been around for a while already.  The issue that these platforms have yet to solve is that of both audience and industry awareness of their project. If a filmmaker can market or receive help with that audience discover and marketing, then in theory the entire process can be disintermediated and filmmakers can sell directly to customers using a marketplace.  Unfortunately, this discovery issue is still both time-consuming and expensive.  

What about a hybrid system?  One where a skilled group works with distributors and sales agents to sell the completed films at the maximum possible profit to the investors and production company.  What if those groups were directly linked to protecting the investor’s interests, and gives sales agents capital for growth and new projects?  Then the sales agents would have much better incentives to ensure the companies that license their content to them get a strong return.

That would seem like a solution, but we’ll get to it.  There are other problems to delve into first.

Better Business Education for Filmmakers.

I touched on this in my last blog, but filmmakers don’t understand the business well enough to function as media entrepreneurs.  Traditionally, specialists such as executive producers, PMDs, and true producers focused on the marketing and supported projects so that the writers, directors, creative producers, and line producers could focus on making the project.   With film sets getting leaner, there aren’t enough of media entrepreneurs doing their jobs. ​ (although I take on this role from time to time.)

In essence, there isn’t enough of a skilled entrepreneur class capable of making and selling films as a product either directly to consumers or to distributors, sales agents, and other industry outlets.   So long as filmmakers don’t understand business, they’ll never be able to break out and get what they and their films are worth.  If filmmakers don’t endeavor to understand business, they will be unable to communicate with investors and understand where they come from well enough to make a sustainable living in film.  This issue is exacerbated by the fact that film schools don’t teach any of these skills as well as they should. ​

Filmmakers want to make the movie, and they will stop at nothing to get that done.  As a result, promoting the film becomes an afterthought far too often.  What would be ideal is if these educational organizations could tie into an angel investment group or community.

But what about integrating with an investor class and/or investment group?

Educated Investor Class

Investors generally understand business, but the film industry is ripe with its own nuances and idiosyncrasies.  Investors need to know how money flows from them to create the product, then to take the product to market through various forms of distribution, and how that money eventually gets back to that same investor. Investors need tools to tell when someone is offering a con instead of an investment.  It’s not the easiest thing to find information on, and when they do it’s focused more on the filmmaker than the investor.  

If an investor doesn’t understand the issues within the film industry, then it’s less likely they’ll be able to properly vet an investment.   If that same school that teaches filmmakers business, could teach investors about the nuances involved in the film industry, then there could be something of a connection point at a different sort of event.  

Curators and tastemakers with Access to MEANINGFUL Distribution.

Just because an investor knows about how money comes in and out of the film industry doesn’t mean they can find quality films in which to invest.  Being a professional Investor is all about quality deal flow. Indiefilm success tends to make less money than a successful technology startup, so curation and guidance is even more important.  

Sure, nobody knows everything, but a curated eye can help separate the wheat from the chaff.  Most investors don’t have a trusted source to review projects for feasibility and potential returns.  Investment is about more than just money.  Investors often act as business advisors.   Unfortunately, not enough angel investors understand the industry well enough to do that effectively.  However, if the curation board also acted as advisors on the projects, then the potential returns get much higher.   

As an example, if that board had access to distribution, then you could cut out the biggest risk of investing in film.  A member of the curation board could get the films to the proper PayTV, TVOD, SVOD and other distributors to help the fund managers.  ​

A way of Discovering new talent

It’s always been a problem to find the next Quinten Tarantino, Jennifer Lawrence, or Jason Blum.  Everyone has heard stories of how everyone in Hollywood is related.  While it's more true than anyone wants to admit, the on set path to grow your career has become more difficult and less sustainable than it once was.  

It's not an easy problem to solve.  It’s difficult to tell the difference between that person who’s DEFINITELY going to be the next big thing but ends up washing cars two years later and the dweeby 20 year old who no one thinks will ever make anything of themselves makes millions at the box office on their directorial debut. This problem may be the most difficult of any listed.

Making your first film is incredibly difficult.  It’s also very difficult to get it financed.  From an investor perspective, they put in all the money up front ant they’re the last to be paid.  It’s incredibly high risk with little reward.

Marketing a film is also quite difficult, and generally involves additional expenditure when the coffers are dry.  This has killed many films before they saw the light of day.  If a fund were to offer finishing funds to new filmmakers, they keep their risk incredibly low while opening up new discovery options.   

Sure, it doesn’t help get the film made in the first place, but it can help get it finished and out there.   The barrier to entry of having a nearly completed film also cuts down on the pool of potential applicants in a way that necessitates them showing they have the mettle to actually make something. That fund could also give preference to successful filmmakers for their second, third, and fourth projects.  Such a system could enable a fund to retain the quality people they need to make a successful organization, while still opening the ranks for discovery.

Staged Financing

Investment in film is inherently speculative an as a result incredibly high risk.   But the risk could be made lower by borrowing some techniques from Silicon Valley VCs.  Instead of funding 100% of a film upfront in equity, an investor could stage their investment over the course of the film, at key points where the filmmakers would require more money.   

It’s not something that could be done with a  simple line in the sand due to the difficulty in getting recognizable name talent on board the project, but there are systems that could be used to mitigate risk while maintaining the ability to make high-quality name-driven projects that have a higher chance of financial success than directorial debuts with no names attached.  It’s not a magic bullet, but it could mitigate the problem enough for other solutions to be more possible.  

Staged financing would make it much more approachable for investors, since the risk to the individual investor is significantly smaller.  But there are ways an organization could further limit the risk. How you ask?

Same Funder Providing different securities. ​

As mentioned in part 6 of this series, equity investors are the last to be paid on most projects due to where they fall in the waterfall in relation to Platforms, Distributors, Sales Agents, and the like.  This is due in part to filmmakers needing to secure debt-backed securities from different funders in order to complete the project. These debt-backed securities must be paid before the investors are, which further disincentives the equity investment from the original investors.   

But what if the different securities were made available from the same group? That way a fund could offer the same pool of investors the last in first out debt in order to protect the interest in their equity position. From my vantage, that would seem to protect both the investor and the filmmaker by enabling the investor to mitigate risk and the filmmaker to maintain greater ownership of their projects, and a higher profit share once the debt is paid off.

Thanks for reading. This one required A LOT of rewriting as part of the archive transfer/website port. If you made it this far, you should sign up for my email list to get my free film business resource pack. You’ll get blogs just like this one segmented by topic, as well as a free e-book, investment deck template, contact tracking templates, form letters, and more!

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the 5 Main Types of Indiefilm Distribution Media Rights - Redux

Distribution deals tend to confuse and confound many filmmakers. While there are a lot of complicated places that revenue can get lost, the essence of distribution deals is quite simple. They’re essentially just parsing of different media rights to various territories around the world. However given the Black Box that is the world film distribution, it’s often unclear how these rights get structured. So with that, I thought it prudent to share some of the structure of these deals.  

Generally, these rights are broken up both by territory and by media type.   This post is by type, there will be a future post based on territory. Generally, you’ll need a very skilled Producer's Rep or a sales agent to sell these territories for you.  Click here to find out the difference between those two.

Type 1: Theatrical

This should be fairly clear. Theatrical rights are for the rights to release in theaters.   Again, this is usually done by territory. Producer’s Reps may help with this domestically, but you will generally need a sales agent to sell it internationally if you want a hope at getting any significant number of screens. You’ll also need a genre film to get a screen guarantee from a distributor.

There are a few other types of exhibition that would fall under this right umbrella. Education rights with classroom or school screenings are an example, as are community screenings that would take place at a venue other than a traditional theater. This right is generally quite easy to negotiate a distributor taking non-exclusive rights so you can exploit it yourself.

Type 2: Physical Media (I.E. Home Video/DVD/Blu-Ray)

Believe it or not, there is still a market for DVD and Blu-ray. A lot of it is international, but there are still major retailers like Wal-Mart, target, and occasionally Redbox.   These are as they sound, and are most often sold to a sales agent who then sells them to wholesalers. There are also outlets that can help you self-distribute those rights, Allied Vaugn will even let you sell through major online storefronts including all the major places you can think of. These deals are normally done through a process known as Manufacture On Demand, or MOD. In general, if you can only find a title online, it’s probably fulfilled through a MOD process.

Type 3. Television Rights

In General, these rights are broken out into 3 sub categories, PayTV, CableTV, and FreeTV.

PayTV

Pay TV is essentially Premium TV. These are places like HBO, Starz, Showtime, etc. These deals are generally exclusive, and will often also include a Subscription Video On Demand (SVOD) license.   This is so that the network can include the offering on their associated SVOD platforms and extensions through third-party services like Hulu or Amazon Prime.

For instance, this allows HBO to put the content on HBOMAX or Discovery+. There’s an ongoing shakeup in the SVOD space, but that’s better left for the SVOD section.

CableTV

Cable TV is as it would sound. It’s any channel accessible via terrestrial cable or satellite television. These providers have been largely consolidated and tend to pay significantly less than payTV outlets for independent films, although there are some notable exceptions to this rule. These outlets are less likely to take SVOD rights, but they’re not at all uncommon to be included in such a license.

More commonly, these outlets will take Free Ad-Supported Streaming Television Services (FAST) or Ad-supported Video on Demand (AVOD) rights. More on that in the VOD section.

In general, these networks survive on ad revenue and carriage fees. Ad revenue should be clear if you’re reading this, but carriage fees are a fee paid to each individual channel from every single cable subscription which includes that channel in its bundle.

Free/Network TV

As it would sound, Network or Free TV is for the major “Over the air” networks. In The US, These would be ABC, NBC, Fox, and CBS. Most of the time these channels will be accessible solely with an antenna. These are almost entirely supported by ad revenue, but they do get carriage fees from cable providers as well.

Type 4: VOD

VOD stands for Video On Demand. There’s more than one type of Video on Demand Service, and each type has different providers.   Here’s a very brief outline of what the different types of VOD are, and some samples as to the people who provide that service.

-TVOD

This stands for Transactional VOD. This has largely replaced Pay Per View television rights and is generally the most accessible form of VOD. There are many platforms for PPVOD. The most obvious would be iTunes, Google Play, Amazon/Createspace, and Vimeo On Demand. Amazon is far and away the largest TVOD platform in terms of gross sales. Most films I worked on had between 60 and 80% of total TVOD sales come in through Amazon.

-SVOD

Subscription Video on Demand – [SVOD] is for VOD platforms that run on a subscription basis. This would be platforms like Netflix, and Hulu Plus, as well as extensions of PayTV and regular TV channels as mentioned above.

-AVOD/FAST

Ad supported Video on Demand (AVOD) are apps where you can watch content on demand for free with ads. Platforms for this are Tubi, Vudu Free, or even YouTube. (you should check me out there, ;) ). Free Ad Supported Streaming Television Services (FAST) aren’t technically VOD, as they’re not on demand. These platforms continually stream channels of content similar to cable television but deliver over the internet as opposed to being bound by terrestril cable or satelite. The most notable example of this is PlutoTV.

Type 5 - EST & Ancillary

EST refers to Electronic Sell Through. This is functionally what used to be known as Pay Per View, and is generally when you rent a movie through a cable or satellite box. Comcast InDemand and driectTV are good examples. Ancillary rights rever to any method of watching content outside of the standard methods listed above. Airlines and Cruise Ships are common examples. Airlines and cruise ships tend to exist outside of territorial rights though. Hotels, academic, or library rights may be considered ancillary right types as well.

Thank you so much for reading! In the process of porting my old website over to my new host, I realized this blog in particular needed A LOT of updating, so I hope you enjoyed it. If you did, please share it with your filmmaking community.

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If this is all a little intimidating and you feel like you need a guide to navigate distribiution, you should check out guerrilla rep medi services. If you want something even more in depth, we have books and courses you can check out, and if you just feel like more of this information should be be widely available, support me on substack or patreon. My main gig is actually financing and distributing films, so having a bit of money coming in helps keep me writing content just like this. Thanks so much!

What’s the Difference between a Sales Agent and Distributor?

As a Producer’s Rep, one of the questions I get asked the most is what exactly do I do?   The term is somewhat ubiquitous and often mean different things to different people.   So I thought it might be a good idea to settle the matter.   In this post, I’ll outline what a producer’s rep is, and how we interact with sales agents, investors, filmmakers, and direct distribution channels. But first, we need a little background on some of the terms we’ll be using, and what they mean.   These terms vary a bit depending on who you ask, but this is what I’ve been able to gather.

Would you rather watch/listen than read? Here’s a video on the same subject from my Youtube Channel.

Like and Subscribe! ;)

​DISTRIBUTOR / BUYER

A distributor is someone who takes the product to an end user.   This can be anything a buyer for a theater chain, a PayTV channel, a VOD platform, to an entertainment media buyer for a large retail chain like Wal-Mart, Target, or Best Buy.  The rights Distributors take are generally broken up both by media type and by territory.  

For Instance, if you were to sell a film to someone like Starz, they would likely take at least the US PayTV and SVOD rights, so that it could stream on premium television and their own app which appears on other SVOD services like Amazon Prime, or Hulu. They make take additional territories as well. 

Conversely, it’s not uncommon to sell all of France or Germany in one go. It should are often sold by the language, so sometimes French Canada will sell with France. This is less common as of late.

Generally, these entities will pay real money via a wire transfer, and almost deal directly only with a sales agent. Although sometimes to a producer’s rep, and VOD platforms will generally deal with an aggregator.   The traditional model of film finance is built around presales to these sorts of entities, but that presale model has recently shifted.   

Recently, more sales agents have begun distributing in their territory of origin. XYZ is a good example of this. Some distributors have branched out into international sales. This is something that we did while I was at the Helm of Mutiny Pictures, to allow us to deal with filmmakers directly in a more comprehensive way.

Sales Agents

A Sales agent is a person or company with deep connections in the world of international sales. They specialize in segmenting and selling rights to individual territories. Often, they will be distributors themselves within their country of origin.   This business is entirely relationship based, and the sales agents who have been around a while have very long-term business relationships with buyers all around the world.   That’s why they travel to all of the major film markets.

Examples on the medium-large end would be Magnolia Pictures international, Tri-Coast Entertainment, and Multivissionaire. WonderPhil is up and coming as well, as is OneTwoThree Media.   Lionsgate and Focus Features would also be considered distributors/sales agents, but they’re very hard to approach. They also both focus on Distribution over sales.

​Generally, these sales specialists will work on commission. They may offer a minimum guarantee when you sign the film but that is not common unless you have names in your movie. Generally, they will charge recoupable expenses which mean you won’t see any money until after they’re recouped a certain amount. In general, these expenses will range between 10k and 30k, with the bulk falling between 20 and 25k. If it’s higher than 30k without a substantial screen guarantee, you should probably find another sales agent. There are ways around this, but I’ll have to touch on this in a later blog [or book].

​A sales agent commission will be between 20% and 35%, this is variable depending on several factors, but generally 25% or under is generally good, and over 30% is a sign you should read more into this sales agent. Lately, this has been trending towards 20% with a slight uptick in expenses.

Aggregators

​Aggregators are companies that help you get on VOD platforms.   The most important service they provide is helping you conform to technical specifications required by various VOD platforms. This job is not as easy as you would think it is, which is why they charge so much.   Additionally, they have better access to some VOD platforms than others. These days, it’s very difficult to get on iTunes or most platforms other than Amazon’s Transactional section without one.

Generally, aggregators charge a not insubstantial fee to get you on these platforms, and they offer little to help you market the project. Companies like this include Bitmax and arguably filmhub or IndieRights.

There are merits to going this this route, but they can be expensive, often costing about one thousand USD upfront and growing from there. If they operate on a commission like Filmhub or Indierights, they won’t help you with marketing so you’ll have to spend a decent amount there in order to get your film seen.

Producer of Marketing & Distribution (PMD)

​In the words of Former ICM agent Jim Jeramanok, PMDs are worth their weight in gold. A PMD is a producer who helps you develop your marketing and social media strategy, your Festival strategy, and your distribution strategy.   They’re also quite likely to have some connections in distribution.   They’re there to give your film the best possible chance at making money when it’s done.

Generally, they’re paid just as any other producer would be, but if they’re good, they’re worth every penny. With a good PMD on board, your project’s chances for monetary success are exponentially better.   

​If you’re an investor reading this, you want any film you invest in to at least have access to a PMD or Producer’s Rep, if not a preferred sales agent or at least domestic distribution. (Not Financial Advice)

Executive Producer (EP)

In the independent film world, these are producers who are hyper-focused on the business of independent film. They either help raise money to make the film, or they help bring money back to those who put money into it in the first place. As such, the traditional definition in of an indiefilm executive producer is someone who helps you package projects by attaching, bankable talent, investors, or other forms of financing.    They’ll also help you design a beneficial financial mix, [I.E. where can you best utilize tax incentives, presales, brand integration, and equity, and gap debt.] in order to help your project have the best chance of success. They can also play a significant role in distribution. The latter is where most of my EP credits come from.

Often, they’ll take a percentage of what they raise or what they bring in. sometimes they’ll require a retainer, but most of the time they should have some degree of deliverables such as business plans, decks, or similar as part of that.   These fees should not be huge, but they will be enough to give you pause due to the amount of specialized work involved in doing these jobs.

Producer’s Reps

I’ll go into this much more deeply next week, But Producer’s Reps are essentially a connector between all of these sorts of people and companies.  Producer’s Reps will connect you do sales agents, aggregators, buyers, and investors. But more than that, a good one will help you figure out how and when to contact each one. Most often, they’re credited as an executive producer or a consulting producer as the PGA does not have a separate title that applies to this particular skillset. For a more detailed analysis of what exactly a Producer's Rep does, Check out THIS BLOG!

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