Sales Agents: Are they Distributors or like Real Estate Brokers?

Our friend and beloved social network marketing guru Sheri Candler posed a question to me today. She noted that filmmakers are often confused by this issue of “what is the difference between a sales agent or distributor selling a license to your film or selling your film outright for 15 – 20 years?”. She posited a real estate metaphor. So here I go: Sales agents are *not* like Re-Max brokers who only have the right to sell your house for you, if you approve. Following the metaphor still: They usually take your land and then resell it and its territorial clones all over the world, or as much as they can. Meaning, they first take the rights and take delivery (at least usually that is the way they do it) and then they license those rights territory by territory for a term, a minimum guarantee, and usually a royalty split. Sometimes all rights deals are done and sometimes rights are split.

I just did a redline to a sales agent’s deal/contract for a documentary we are consulting on. We do our best to protect filmmakers in these deals. We also do foreign sales so we do both the contracts with the filmmakers to handle their sales and we help them do contracts with other companies handling their sales. Here’s how it shakes down usually:

Many foreign sales companies do deals as if they were actual distributors in that they take rights. One is actually licensing them rights full on, in all media usually, for a very long time which is yes, sometimes as much as 15- 20 years. This is very much the old standard and I started in foreign sales twelve (12) years ago and saw it shake down even on napkins in Cannes.  The sales company gets the rights to the film for a long time (though to be fair to them, often they pay producers up front for that though less and less these days).  The sales companies also spend money shopping the films, but they also recoup expenses against any income that comes in and those expenses are not always actual and even when they are, they are not always sensible to put it mildly. It may be a bunch of films that are all paying for the same expenses, over and over again if you get what I mean. Not all companies are that way of course but we have seen statements from sales companies that will make your hair curl if it’s straight and straighten if it’s curly.

So, those companies like to take ALL your rights for a big fat TERM of 10, 12, 15, 20, 25 years and they will usually just resell those rights to a distributor who takes all rights for a particular territory (e.g. Germany and German Speaking Europe, or Korea, Japan, Greece.. you get the idea)  in a market or via phone / email. They may also use those rights directly let’s say for Broadcast deals or DIGITAL platform deals (for example MUBI, or Content Republic or Love). Once the sales agent or sales company has those rights the rights are THEIRS to do what they want, unless you are contractually resolved otherwise.

The Film Collaborative does foreign sales in house and also with its partner Ariel Veneziano or Recreation Media. We do NOT take rights, our deals are done directly between BUYER and FILMMAKER almost all the time (exceptions only when buyer insists because they only want to work with companies). We are even offering a low fee program to have films positioned for sale at markets, again, no rights taken and filmmaker makes all decisions. TFC also helps filmmakers do deals with other sales companies / sales agents as I said above.  Not all companies are quite as transparent and filmmaker friendly but they can still be worth doing business with because they have certain relationships that you don’t and they are going to markets that you aren’t and they have leverage with buyers to get paid because they have a steady stream of ‘product’. So we don’t say not to all those options. We do however say this:

Do not do a deal for such a long term as 15 or 20 years or even 10 for that matter. Put in performance clauses and of course there are loads of other needed protections that should be part of any deal that are beyond the scope of this blog post. You can let them enter into longer deals if necessary and for the right price but there is no reason they should have such a long deal. Also try to let them have buyers pay you directly, though most won’t do that.  At least get approval rights for deals and get complete accounting. Approve and CAP (i.e. limit) expenses. Get references before you get into a deal to see if you have some hope of seeing any revenues. Do not give or license rights to them if you can help it but rather give them the right to enter into deals licensing rights and have you be a party to those deals (if you can do that). Many sales companies won’t play ball this way but we do and we recommend you try hard to do it this way so that you don’t live in regret watching your sales agent travel the world and eating well at film festivals while you get tiny checks, if any at all.  I heard an amazing story of a sales agent who called a filmmaker and thanked her for making her (the sales agent) millions, so many that she was now retiring in the South of Spain. The filmmaker never made a dime over the advance. That’s the other thing, if possible, get an advance, always, that may be all you see. Of course that may not be possible so you have got to do your best in negotiating and being protected. In any case, save the direct distribution for yourself if you can unless there’s a great deal your sales agent can get you that you cannot do yourself but have the right at least to approve that. And as technology changes, you will able to do more and more yourself. The pirates manage to do it all, including subtitling and getting film seen around the world so surely, so can we.

TAKE HOME: Do a deal with a sales agent as close to the real estate model as you can, because if you don’t, you may end up as just a part of their library being monetized for their sake, and not yours.

Orly Ravid September 16th, 2010

Posted In: International Sales, Uncategorized