Sunday, May 15, 2016

Learning More About Distribution

I've been daydreaming about doing a feature film lately.  Nope, no immediate plans.  But in the spirit of planning ahead, lots of things touching on finance and distribution are catching my eye. In case I suddenly move something into production, you'll want to be getting my four times a year newsletter.

On May 14th, as part of the Longleaf Film Festival at the NC Museum of History, there was a session on the subject of film distribution.  I found it enlightening and fundamental.  I needed to share my learning with a couple of different folks and as I started to write up my notes, it seemed like a blog post was the best way to do that.

The session consisted of Thomas Varnum, an entertainment lawyer with the firm of Brooks Pierce based in Wilmington, NC and Vernon Rudolph, a filmmaker/cinematographer based in Raleigh and operating as Sky Grass Media.  The two presenters alternated with Rudolph presenting his experience, good and bad, and Varnum commenting on some of the issues raised, and pitfalls to be avoided (or to be fallen into).

Rudolph has worked on several features. He produced and shot Phin (2013), directed
by his friend Patrick Chapman. Phin was their first feature film.  Two years later, Rudolph shot ToY, written and directed by Chapman. Rudolph based most of his remarks on this experience with these two films.

Phin was a labor of love feature, shot in six days for a budget of about $30K. After modest festival success, the filmmakers hit the street and contacted every distribution entity they could. They got a lot of rejection! Eventually they signed a deal with a Canadian distributor. The deal, Rudolph lamented, was for twelve years, exclusive and worldwide for all rights. Essentially the film sat on the distributor's shelf and added to the credibility of the distributor's catalog but did nothing else.  In hindsight, even though the deal was a bad deal on the face of it, it still represented a step forward for the filmmakers.

Having gotten the first film out of their system, ToY was calculated to be a moneymaking film. The budget was $110K (but ballooning to nearly $200K to complete all the deliverables in post) and they had two name actors (Briana Evigan and Kerry Norton from Battlestar Galactica) which made a big difference.  Eventually, they were able to pick among several distribution offers, signing with Taylor & Dodge, an international sales agent. This deal was a much better deal than with Phin, with a duration of only five years. So far the film has been sold in South Korea and Germany and appeared on iTunes through Gravitas on May 13th!

Varnum talked about the general issues around the development part of the process. Memorably, he said, "Every film is a startup company, just like high tech. You must have a financing plan, a revenue plan and an exit strategy." First, he emphasized the need to get all agreements for locations, talent, music, use of products, and so on, signed and sealed during production. You will not be able to get the essential E&O insurance without all that paperwork. In effect, the end goal of production is to be able to get E&O insurance. Varnum suggested that the cost typically ranges from $3K to $6K but can be higher. If the film contains a lot of elements claimed as "fair use" for copyright purposes, you will need a written opinion from a lawyer versed in fair use to substantiate the claim for E&O insurance and the cost will go up accordingly.

Varnum also stressed the need for early stage publicity. Rudolph emphatically agreed, citing the moment when they were able to sign known talent to the project. That moment is the only real opportunity to get PR benefit from signing the talent. Luckily, they had a publicist working on that kind of stuff for their second film. Rudolph was pleasantly surprised to see a short mention in The Hollywood Reporter about their signing.

Once a film is complete, there are, of course, several possible ways to try to commercialize the film. You can go the film festival route but they cautioned that this is both unpredictable and potentially expensive. The American Film Market (AFM) and similar film markets are another major avenue.  Emerging in today's Internet environment, both presenters were optimistic about Distribber and Tugg as distribution alternatives.

Varnum made a couple of very valuable specific points about distribution agreements. First, he talked about separate rights. This means separating the various possible distribution modes.  For example, selling worldwide theatrical rights but retaining rights to sell DVDs or retaining domestic theatrical and selling rights for the rest of the world, etc. In today's environment, many different combinations are possible and few sales agents or distributors are good at everything.

Second, he recommended a "reversion" clause, meaning that if the distributor or sales agent does nothing for eighteen months or two years, all the rights revert to the filmmaker. Or, all the rights become non-exclusive, allowing the filmmaker to do whatever might be possible.

Third, he recommended an emerging practice, having a "meaningful consultation" clause in any contract. This essentially means that the distributor or sales agent must consult with the filmmaker, must hear the filmmaker's thoughts (or objections) to any substantive commercial proposal. The decision-making authority remains with the sales agent, but at least the filmmaker must be consulted. Essentially it provides the incentive for a collaborative relationship.

Rudolph stressed the need to conduct due diligence about any organization, especially one making an offer. IMDB Pro is a great resource for networking to folks who have dealt with any sales agent or distributor and most filmmakers are quite willing to share their experience confidentially.

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