ASK & DISCUSS
INDEXTerms of a Distribution Contract
5 years, 7 months ago - Giulio Gobbetti
Hello! Once again, I'm here to ask the help of the SP community.
In the last three years I embarked in a journey that led me to produce and co-direct a mid-length documentary, which is now on its festival run. It did considerably well so far, and yet, as you may know, it is difficult to distribute a mid-length film (44 minutes).
We are now in touch with a start-up that built its own distribution platform. Their concept is based on community screenings. They built a Netflix-like catalogue where community hubs can search for films, but they also target communities individually, trying to sell them the film. Once they made a sale, the community centre/hub pays a reasonable flat fee, and they can download a file that is easy to play and yet protects us from piracy (I won't go into details as it's a bit complicated!). They're very new, but they spotted our film at an international festival and they're interested in working with us - and we're thinking about it, as our film has quite a strong community appeal.
Since they have not launched the platform quite yet, they offer what I think are reasonable contractual terms: non-exclusive distribution, flexibility with territories (ideally worldwide, but we can exclude territories and even withdraw some at a later stage). What I am not entirely sure about is the percentage they take, which is 50-50. As far as I know, sales agents usually have a fee of 20-30%, surely not more than 35%. I have no experience so far with streaming platform, but they seem to be at the other end of the spectrum (ie the filmmaker makes less and less money).
What do you think a reasonable split would be? Do you have any comparable experience? We are keen for people to see the film. Still, we have invested quite a lot of our own money in this film, so it would be good to have a fair deal.
Thank you for your help!
Giulio
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5 years, 7 months ago - Paddy Robinson-Griffin
Big question will be 20, 30, 50% of *what*? Gross or net? Makes a huge difference. What will the be doing for their 50%? If they are aggressively advertising the film and creating sales you'd never make, well it seems a decent deal. If they are taking 50% of net, that would be a pretty awful deal.
I'd be inclined to try a short-term trial run - if they can't sell x streams/plays in 6 months then you get to break the agreement.
Response from 5 years, 7 months ago - Paddy Robinson-Griffin SHOW
5 years, 7 months ago - Paddy Robinson-Griffin
Edit gross/net clarification -
Let's say they spend $500 on direct expenses to advertise the film and get $1500 in sales - 50% of gross would mean you get $750 (they would make a profit of $750-500 = $250). If 50% of net, you get $500 ($1500-500 costs leaves $1000 profit, which you spilt).
However if the film takes $1000 in sales on $500 costs, they would make no profit on a gross split, and you'd get $500. On a net split, you'd both take $250.
Gross split means they actually take some financial risk/stake.
Response from 5 years, 7 months ago - Paddy Robinson-Griffin SHOW
5 years, 7 months ago - Giulio Gobbetti
Hi Paddy - thanks for the reply, and very good point. From reading the contract, my understanding is that it is 50% of the gross (ie 50% of the flat fee that we set for a sale in that specific territory).
As for what they do with their share, than your guess is as good as mine. They're a start-up that is launching soon, so my assumption is that they would try to push their catalogue a bit to make some profit and grow, at least at the very beginning, but how far they would go I would not know - and I think in these cases you ought to assume the worst.
As for a trial period, the contract, as it stands now, is very easy to get out to, so we can always drop out if we get a better offer that demands exclusivity. It sounds like relatively low-risk, and that is why we're inclined to give it a try.
Response from 5 years, 7 months ago - Giulio Gobbetti SHOW
5 years, 7 months ago - Paddy Robinson-Griffin
If it doesn't limit your options at all, no harm in giving it a go, I guess! If the actual promotion part is on them, so they earn by making you money, job's a good'un.
Response from 5 years, 7 months ago - Paddy Robinson-Griffin SHOW