By Jack Rooney

Indianapolis -- 6/1/05 -- When seeking distribution for your film, be careful not to get involved in any "Exclusive" distribution agreements that might make it difficult for you to sell your own work in the future. Remember that copyrights are very long in duration now, 145+ years in some cases. So unless they offer you a substantial cash advance for your film (almost impossible for an indie filmmaker in this market of overabundance), there is no advantage these days to signing away rights to a distributor on an exclusive basis.

Beware, also, the sharks who want you to give them money up-front to promote and distribute your film. Payola distributors, sometimes called "vanity press" distributors, are by and large a waste of time. They include Internet sites that charge membership fees to sell your film at their web site and/or to include your film title in their online catalogue.

Avoid the sharks who say they will sell your film if you will only give them some money in advance of sales to cover set-up, advertising, marketing, or manufacturing costs. No indie filmmaker can afford to play that game. Deal with resellers where the money they make is dependent on performance, on commission. If you give them money in advance of sales, no matter what good purpose they clam, they will have low motivation to make sales. They already have your money (and the money of many other filmmakers who have fallen for the same ruse).

The only sure way to be certain you are dealing with a straight shooter in the distribution arena is to deal with distributors and resellers who work on commission, and avoid all others who try to pick your pocket.

There are exceptions to every generalization, of course, and that is also true here. Sometimes it may be appropriate to pay a small, one-time set-up fee to an Internet film distributor with an established good reputation and good name. I have heard some internet film distributors complain they receive so many indie films they could never afford to pay the staff needed to set up all the web pages from all the films they receive or monitor the content of member-managed web pages. There may be some merit to this argument. But it seems if they were making the sales they often claim, the small costs associated with maintaining their own catalogue would be a non-issue. Their actions seem to betray their words. On the one hand, they claim to sell lots of film media. On the other hand, they must charge the filmmaker an up-front fee to maintain their presence on the Internet. Sounds pretty fishy.

Charging the filmmaker an up-front fee to list a title in a catalogue, to sell copies of your film, prints, tapes, DVDs, or streams and downloads, either through brick & mortar stores, or on the Internet, raises a red flag that says the distributor does not sell enough media product to support its business model on commission only.

These payola based, film-marketing schemes are arising all over the Internet. There is no evidence whatsoever that they actually work for the filmmaker. They rarely, if ever, publish verifiable sales figures. If these site operators can not make enough money to support themselves on commission from sales from all the films in their catalogue without charging "membership fees" or "annual maintenance fees", then neither can you, unless, of course, you have a hot item. But if you have a hot item, you do not need a payola distributor to sell it for you. The major studios will be more than happy to take it.

It comes down to a judgment call for the filmmaker. As long as the charge to the filmmaker occurs only once and is reasonable to cover set-up costs, it is one of those gray areas where a filmmaker would need to exercise their own judgment, and write it off as a marketing expense. But there are hundreds of media portals on the Internet all claiming to be able to do the same thing, sell your film if you just give them a little up-front cash. For the most part, they are selling snake oil. No filmmaker can afford to subscribe to them all, even those who do sell an occasional DVD. Do research. Choose wisely.

But sites that charge "annual (or monthly) membership fees" to list film titles in their catalogue are a scam. They make the bulk of their money from collecting annual membership fees, and not from selling films.

Nevertheless, if you can not persuade a major or sub-major distributor or studio to release your film, all is not lost. There are plenty of ways for indie filmmakers to sell their art without the major studios and without the payola distributors.

You can sell directly through Amazon.com and a number of online resellers who do not charge advance fees, and set up an e-commerce empowered web site and sell directly to your fans with a credit card or PayPal account. Of course, you would need to do all the manufacturing and shipping in-house, and that can be an expensive, time-consuming task if you decide to do-it-yourself. You keep all the money, and you retain complete control of your copyrights, but the trade-off is in the amount of time you spend manufacturing and marketing your film(s), time you might want to spend making more new films. But advances in media manufacturing technology, and an abundance of media manufacturers that make studio-quality DVD copies for low cost, make the process of doing it yourself not as daunting a task as it might seem.

Low cost, high-speed DVD burners are available now for under $149.00 US that can make high quality, error-free copies. The cost of a printer that prints your artwork directly on the surface of printable DVDs and CDs has dropped to under $149.00. They are rather slow and not real rugged, but they do a nice job, and at that price, you can wear it out and throw it out in the alley and buy another every 6 months and still be ahead of the game. Just burn the DVD, print it, put it in a nice hard case with some cool four-color jacket artwork, and mail it direct to the customer by first class mail for $1.29 in postage. You can also outsource manufacturing and get DVDs glass-master replicated just like the studios with hard DVD case and four-color jacket insert for about $1.59 each in lots of 1000.

The major studios have the buying public programmed to believe $19.95 - $24.95 is a fair price for a DVD, even though manufacturing, shipping and handling costs actually run under $4.00 US per unit, so you have a wide price range to work with and still make a good profit. Filmmakers are no longer at the mercy of the major studios or distributors.

Use a marketing strategy that allows you to get the widest exposure for your work for the lowest cost. This is a topic that would require a large volume book to explain in detail, but briefly, free is good. When doing it yourself, look for the freebies first, sites that will list your title for free, links to your site, film reviewers, talk shows, entertainment reporters, etc., to get the buzz going about your film.

Spend cash money on advertising and promotion only when you are certain beyond reasonable doubt that your advertising/marketing dollars spent will provide a greater return on your investment. A full page ad in the Hoboken Daily Gazette will not generate the kind of sales you need, but a ¼ page ad in the Chicago Sun Times might.

In this Internet age, every filmmaker should have a web site. It should contain your resume and biographical information, and a list of your films. It is only common sense to add a "Buy Now" button next to your film title at your web site. You can set up a merchant account with your bank and accept credit cards, or sub-contract the ordering process to a company like Wells Fargo or Pay Pal or any number of ordering and sales fulfillment companies that specialize in making direct online sales to consumers.

Doing it yourself should be viewed as a means to an end, and not an end in itself. It should be used to test the waters, to find out if people actually like what you are doing, to make some sales, to get feedback from your fans, to establish your market niche, and then move on. Ideally, you want to turn sales over to people who do it all the time, the film distributor. And the Internet is full of them, some are more reputable than others, but you should have no problem finding a multitude of Internet distributors willing to sell your work. If you approach a distributor with your verifiable sales figures, orders, invoices, receipts, it proves a market for your work, and you can negotiate better terms on future film projects with the major studios from a position of strength.

Look for distributors who are willing to work on straight commission, with no up-front fees, and no "hidden fees" or "charge backs" that might include the distributor's manufacturing and overhead costs if the film fails to sell a certain number of units. You could end up owing them money, even if the film makes no sales. If the film fails to sell a certain number of copies within a specific period of time, that's the distributor’s problem, a problem of non-performance, not yours. It becomes your problem when the distributor fails to perform and you loose your window of opportunity for new release sales by being locked into a bad exclusive distribution deal. Avoid exclusive distribution deals on the Internet, especially those who want you to give them your film and charge you a fee.

Always have an exit strategy. If you get tied-up with a distributor who is not performing well for you, make sure you have a way out. It is usually too late after the contract is signed. The right of the filmmaker to cancel the agreement after a certain period of time, generally 1 to 3 years for established brick & mortar distributors, or 6 months for Internet distributors, with 30 days written notice is a good exit strategy. The right-to-cancel clause, in some form or another, should be included in writing in the distribution contract, a "limited exclusive" distribution license. It is limited in time and duration, giving the distributor a specific, limited period of time to exclusively market and sell copies of the film, and giving the filmmaker the option to cancel the agreement for distributor non-performance or other reasons once the distribution time period expires or the distributor fails to meet specific, pre-defined sales goals. Have your lawyer look it all over. Distributors usually hand you a boilerplate, pre-printed form contract. That does not mean you must take it or leave it in most cases. Negotiate. Go for a limited exclusive or non-exclusive deal.

The non-exclusive distribution deal may be the best deal for many small indie filmmakers. It allows you the right to license your work to anyone you want under whatever terms and conditions you want, and it should always include an exit strategy. It allows you to play the field. Its advantages are that it allows you to retain exclusive control of your copyrights and reach a wider potential market by allowing for licensing to multiple distributors and resellers. More is better. It has disadvantages in that the majors will not touch it once it is licensed non-exclusive to anyone else. More is not better. So try to approach the majors first for a limited exclusive, then if they are not interested, start licensing your film to as many non-exclusive distributors as possible. If the majors want an exclusive deal, and they always do, ask them to open their checkbook to cover your negative costs, your production costs. If they balk at that idea, and they always do, counter with a limited exclusive proposal. If they balk still, go non-exclusive.

Again, there are exceptions to every generalization, and on occasion and under certain conditions and in certain circumstances it may be in the filmmaker’s best interest to sign an exclusive distribution agreement with a major studio for the prestige value that goes along with having a film released through a major name. This is particularly true of a filmmaker’s first film. But don’t expect to see any money any time soon. The major studios are notorious for their elaborate accounting schemes that hide the profits and make the Enron executives look like the Keystone Cops. Typically, the majors want all exclusive rights in perpetuity. If you are prepared to give it to them, and if you can afford the possibility you may never see a dime, that is your business.

As a filmmaker, it is your job to create; it is the distributor's job to sell what you create, and it is the studio/distributor's job to front the money needed to market, promote, advertise, manufacture, and sell the film, not yours once you license your film to them. You have already invested a good chunk of money in creating the master. Don't just hand over your copyrights, your money, to a distributor for a bunch of blue-sky promises. If the distributor you partner with to market and sell copies is not willing to invest in your creation, who are you kidding?

The only thing we know about the rules of film distribution is that there do not appear to be any rules anymore. The market is wide open, and terms of distribution are as varied and diverse as the imaginations of contract lawyers who fabricate distribution agreements. A good film distribution deal is often whatever you and the distributor can live with and whatever the market will bear.

When you consider nine out of ten studio films fail to make any money, don’t be discouraged if your first (or second or even third) film fails to make any money. It happens even to the best of them. Just don’t bankrupt yourself in the process of doing what you love.

You learn from experience and experience comes from doing. So do what you love and eventually the public may take notice. Then, when you finally score that hot item, people may view your past films in a new light.

Maintain control of your film art, and hang on to your copyrights if at all possible. Who can say what your film will be worth in 100 years?

Jack Rooney

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