One key point on film sales
In light of the American Film Market just wrapping up and Sundance on the horizon, we thought we would devote some time to explaining how film sales works and what the landscape is looking like for independent films at the moment. Many of you may not truly be aware of how a sales agent relationship works. Indeed, by conversations we’ve seen on forums and in social media spaces, many newer filmmakers do not understand the repercussions of signing a sales agent agreement for their films.
Typically sales agents do not act like real estate brokers, but more like intermediary distributors. What I mean is they do not facilitate a deal that a filmmaker does directly with third parties and then charge a commission that gets paid out as does a real estate broker. Typically, sales agents first license all the rights from a filmmaker (meaning they then possess all the rights, meaning the film isn’t yours to control during their agreement term) and then re-license them per territory or in a worldwide deal depending on the territory they have been assigned to sell in contractually. The agreement is between the agent and the buyer, not between the filmmaker and the buyer. Often sales agents’ terms are 20 years, or 15, 12, 10, 7, but rarely less than 7 and the more old school ones are longer. The reasoning is that they need the rights to be able to sell the rights. So for at least 7 years, the film is no longer in your possession and by the time you get control of it again, it is indeed considered an old title.
Film sales office Asian Film Market
There are some advantages to working with a sales agent of course. They will spend money traveling to markets, producing sales materials, courting buyers and they handle all delivery and oversee the distributors they’ve signed agreement with, keeping a watchful eye and monitoring accounting. Sales agents usually have better buyer contacts than most filmmakers and more leverage, and they have more market intelligence. Bear in mind that they front this money for the film (that they own for a time), but it all must be recouped from the sales revenue with sales commission before any is passed back to the filmmaker. There are also times when the delivery items (also known as deliverables in a sales agent agreement) must be completed and paid for BEFORE the agent will take it out to buyers. In some cases if this hasn’t been delivered upon signing the agreement, an agency may pay to have these items fulfilled if they find a buyer who requires them (like 35mm prints) and the deal is large enough to recoup this additional cost plus commission.
The taking rights component is an issue because these agreements last for a number of years and the filmmaker is shut out of much or all of festival distribution and the ability to conduct direct distribution efforts (internet distribution) plus all the rest. I’ve written all this before; and many seasoned filmmakers already know it, but I write it again to remind of one key thing during this AFM/film sales season: DO THE MATH.
At The Film Collaborative we do sales too, sometimes, in a very boutique fashion. We spend little at markets; we sell only certain strands of films that we have lots of experience in handling. We do NOT take rights ever and the deals are, almost always, between the BUYER and the FILMMAKER. Rare exceptions are when we are doing a bulk TV deal and even then filmmakers still have 100% approval and collect within a few days of us having collected from the broadcaster.
There’s more that can be said about the specifics of sales and samenesses v. differences between our model and the traditional one, but the point is to remind of this one key point: Oftentimes the potential deals that a traditional sales agent can do for you and what you can do for yourself or with us are the same, but the math (because of fees and expenses) will net you less.
There are times when certain types of films have a certain sales potential that may be better served by a motivated sales agent who has the cash to augment the deals and can command more and stand better to collect etc. But most of the time, for indies, the deals these days are so few and far between and for such small prices that if one does not pick a company that follows our model, one will get screwed. Sometimes, the screening fee from festival distribution is the same or more than the sales money (yes, screening fees can be negotiated!). Sometimes the benefit of DIY distribution by the filmmaker can net more than an MG on a sale. Sometimes there are no sales. Sometimes the expense recoupments due to a sales agent exceed the sales revenue. So the key is get real sales projections, back up with corroborating information, and DO THE MATH. Admittedly, this is no easy feat these days and sometimes the sales potential isn’t pretty.
Sometimes films represented by veteran agencies do the exact same deals we do, but instead of the filmmaker getting the money directly from the buyers, it passes through a sales agent who recoups expenses and higher fees such that the net is ultimately less to the filmmaker, who cannot even exploit any rights to her own film.
Before signing agreements with sales agents, ask the agent about the sales potential of your film, the one they are asking to represent (and own for a time). Ask to see the projections in writing and analyze that they really are comparable films (genre, actor names, topic, timeframe of the sale should be in the last year or two, not 5 years ago when the film world was very different). Ask about their intentions for marketing your title, beyond designing a one sheet and perhaps a new trailer. Ask how many films they are representing this year at the markets and will your title get its proper attention. Beyond the markets, will your film be promoted in any other way (publication coverage, special screenings, social media outreach, highlighted on their website and in their weekly email blasts)? Think if it will be worth it to relinquish all rights to your film for at least 7 years. Be in reality about the real sales potential of your film, do the math, and make your decisions accordingly.
Orly Ravid November 13th, 2012
Posted In: Distribution, International Sales
Tags: American Film Market, film buyers, film distribution, film distributors, film markets, film sales, film sales agent, film sales agreements, Sundance Film Festival