Filmmaker says: The distributor was very excited about our documentary and seemed to really “get” the subject of the film and the audience. They enthusiastically believed the movie had more potential than even we had thought, and we talked about some big names to try and sell it to including YouTube Red, HBO, Netflix, and Hulu. We suspected that interest from any one of those platforms, because we had made the movie on such a shoestring budget, would mean recouping our investment and perhaps even being able to pay ourselves as well.

In retrospect, we did achieve our original goal of seeing if we could make a documentary and getting it out to the world. Unfortunately, along the way, our goal got sidetracked and became more about making our money back and the possibility of making a profit. We should have curbed our enthusiasm a bit and really tried to understand what we were getting into when we partnered with a distribution company. We were so blinded by the promises that were made and the potential to make a profit that we didn’t hire a lawyer or try to negotiate. We knew going into this that our film was not likely a Hollywood blockbuster, or even a profitable documentary, but we just wanted to make a documentary for the sake of making a documentary.

For any filmmaker choosing whether to self-distribute or partner with a distribution company, the key takeaway from our case study should be the importance of understanding the documentary market and the potential profit or loss from working with a distribution company. In addition, it’s important to really understand what specifically that distribution company does and does not do when it comes to distribution.

Distributor says: There was never a “promise” in a major licensing deal. This is something that I am incredibly conscientious about and would never lead a filmmaker in a direction without being realistic. We absolutely work directly with all platforms the filmmaker has mentioned; however, with any filmmaker we work with, we are always very clear that we will absolutely pitch, but there is no guarantee in securing a major license deal, especially since most major platforms tend to change their acquisition mandates like I change my socks.

With this particular film, as it had a consistent theme of sincere optimism and positivity, we had very high hopes, particularly with one major platform that were looking for these types of feel-good titles at the time. We initially pitched and had an interest in deep review from the major platform. We will always tell the filmmaker when there is deep interest and hope, but ultimately when this platform passed, we too shared disappointment and moved onto the next platform.

What filmmakers tend to forget is that unless there is a service deal in place, a distributor is basically working 100% off commission. By all means, we do want to make a sale on your film and don’t typically have time to waste on films that we don’t have confidence in any degree. We want to explore every sales channel that we can, but we also want to make sure that we aren’t “spraying and praying.” For example, if a major platform is strictly looking for true crime documentaries, we will not pitch them a nature documentary. We tend to take on films that can fit as many silos as possible toward the major platforms’ current mandates.

TFC says: It’s a filmmaker’s right to regret a deal they signed, but not to blame a distributor for the outcome. The sentiment that the distributor “didn’t do much,” which The Film Collaborative hears all the time, is unfair, yes, but more importantly, it does not take into account that the filmmaker has a responsibility to be aware of what is happening in the industry right now, and that nobody was holding a gun to their head when they signed the distribution deal.

Although Netflix is not the only platform that one can license to, let’s not pretend that it isn’t common knowledge that they are not taking much these days. (Don’t take our word for it… check out “what’s coming out on Netflix “ each month…the only films on the list for February 2021 that have come with 10 feet of a film festival are Monsoon (LGBTQ film set in Vietnam with Henry Goulding, released by Strand) and Rocks (a British coming-of-age drama film directed by Sarah Gavron [Brick Lane, Suffragette], which premiered at TIFF in 2019)—not a documentary in sight.)

When you enter a deal with a distributor, the hope is that you are availing yourself their expertise. Sometimes, that expertise can get you onto platforms you cannot get to on your own. Other times, the expertise cannot, and the film is passed on by the platforms. When all the dust settles, the end result of their strategy ends up looking a lot like what one could have ultimately done via self-distribution, and the filmmaker is disappointed. And sometimes that disappointment can erase any sense of gratitude regarding all the hard and real work a distributor might have put in.

And yes, sometimes distributors put in a lot of work and it all ends up amounting to nothing. That is the risk they are taking when they take on a film where, as the distributor said, there is no service deal in place. So, if they do not license the film beyond some basic TVOD platforms, they are also taking the risk that if they sell less than the hard distribution costs they put it, they have to eat those costs.

Both sides signed up for this, and understood what they were getting into, for richer or poorer.

The best way to figure out what a distributor might be able to do for you that you cannot do on your own is to look at their slate, see what they ended up doing for other recent films with similar content/pedigree…and if you can’t figure it out by mere research, reach out to your fellow filmmakers on that slate and ask.

Filmmaker:  We were informed that this distributor was known for their DVD sales. The distributor believed that a large DVD component, in addition to a VOD/Digital one, would be another potential way for us to make money from the documentary. So, with all this in mind, we signed the contract they sent over. Once we signed, we thought our work was done. Turns out, our work was just beginning. They informed us that one of the first things we needed to do was to make DVDs for them to sell. We were very confused as to why they didn’t make the DVDs via a print-on-demand model [that was an option in our agreement] but they informed us that this was how they do it and that we would make our money back. So, we spent around $1K of our own money making, designing, printing, and shipping 500 DVDs to them to sell to retailers. We repeatedly asked them if 500 units was too many. We were told that not only was it not too many, but it was probably the first of many 500-unit orders. So, we put in couple more weeks of work in order to make our DVDs to distribute to the masses who shop for documentaries at Barnes & Noble, Walmart and Best Buy, masses whom we were assured actually still exist!

[In the end, the reason why the filmmakers were so upset, was that the majority of DVDs were returned from the retailers, unsold.]

Distributor: For the record, we act as a DVD wholesaler and do not take those rights, we simply help extend sales to wholesalers and retailers within the marketplace, which is why the filmmaker optionally creates their own units. As someone that has sold DVDs since the Blockbuster Video days, we have a firm understanding of this market.

When it comes to replication, BULK is immensely cheaper than MOD (manufactured on demand). In fact, cheaper by about 4x-5x a unit. A MOD unit will cost, on average, between $4-$5 per unit, while bulk DVDs will cost a little over $1.00-$1.50 per unit (when getting standard 500-1,000 units run). If you are debuting your film for the first time on DVD, BULK makes the best sense on initial investment. If you have a catalog film that is several years old and limited marketing to move in the marketplace, then MOD makes better sense on this end.

The highest cost for making a DVD is the glassmaster. The creation of the glassmaster is several hundred dollars to create at any accredited replication house. After that, the difference between quantity is nil, with the most expensive per disc amount being at lower-end quantities. In most cases, it is about a $50 difference between 300 units to 500 units, so I always recommend getting the higher amount in case units sell out immediately, and you have to pay the glassmastering fee and higher-end BULK charge all over again.

I am glad they did as we moved approximately 440 units of their 500 unit run through all of our initial purchase orders in this particular case.

[In the first draft of the Case Study, TFC snark-ily wondered who is buying independent film documentaries on DVD at Walmart.]

Now, a riff was made about DVDs moving in WalMart, I couldn’t agree more with this. DVDs are most certainly moving more with E-Commerce accounts than brick and mortar, though will, of course, appear on WalMart.com, BN.com (Barnes & Noble), Target.com, amongst dozens of other online stores.

As this filmmaker [had something in their film that caused many viewers to search for certain product(s) on Amazon], we had a high DVD order from that platform for several hundred DVDs. Amazon uses an algorithm for consumers searching for the title in their system before placing their order. Amazon keeps the product in their warehouse as a consignment order, prepping for the number of consumers that searched the title to turn over with sales quickly.

As marketing to Amazon went down from the film’s subject, so did the interest in DVD and several months after release, Amazon then released the several hundred units that they had in their inventory, hence leaving massive overstock. Something we as a distributor never want to deal with, either.

While we absolutely hate returns on DVD, unfortunately, they are inevitable, since the dawn of disc. The “DVD only” days were profitable but always a bit scary as distributors sometimes had no idea when that significant return was coming. We always explain this to our filmmakers ahead of time if they want to have a proper positioning in the DVD retail marketplace.

Some accounts are one-way sales, but this is mainly for rental (Redbox, Netflix DVD). The safest “rental stores” are in the public library sector, so we aim to sell to that as much as possible.

It is also not possible to do a “one-way sale only” DVD release if we want to sell a film properly in the marketplace. This is because you cannot tell a large DVD wholesaler that they can only sell to some accounts and not others. Unfortunately, the return risk lies whether you are with a brand-new distributor or a major studio.

TFC Says: We have questioned the efficacy of selling consumer DVDs at all, because…it’s 2021. But at the same time, if distributors weren’t still making money from exploiting this for certain projects, they would stop, and, as the distributor mentioned, libraries still request them for educational distribution. We usually tell filmmakers doing self-distribution that if they want to have a way to sell DVDs, they might consider simply doing MOD on Amazon. But even with that, the filmmaker has to pay somebody to make them an .iso master disk image. At the end of the day, how much extra was it to have 500 DVDs physically made? Doesn’t seem worth fighting about. This was not previously explained, but it was wise of the filmmakers to refuse to manufacture a second round of 500 DVDs before seeing reporting on the DVD sales from the first batch, which brings us to:   

Filmmaker: Unfortunately, in our excitement, we did not hire an agent or a lawyer to look over the contracts and signed without much advice or negotiation. The “deal point” we cared most about was “access to the numbers” which we were told would be no problem. Having access to the numbers was extremely important to us because one of our main goals was to understand the documentary marketplace and know who bought the movie, what platform they bought it on, track in real time and see how and if marketing a documentary works and be able to work with our subject in real time to promote and do press in order to drive views. After being assured we would get that access, I signed the contracts.

We believed that as soon as we got access to the numbers, we could build a real-time strategy to work with our subject and promote the film. We were even prepared to pay for marketing. Unfortunately, that access never came. Even though we were continually assured that the numbers would be coming, we were never allowed to see or have access to downloads stats or sales data of any kind. Even with constant pestering, the first time we got to see an overview of the numbers was 6 months after the movie was released.

We were initially promised that we would see our first check within 90 days after release. We marked that date on our calendar and waited for information. When 90 days came and went and we didn’t hear back, we started getting concerned. It then took another three months to get any sort of information on the money and revenue for streaming and DVDs. Eventually we were able to get our first accounting report almost 10 months after the documentary was released.

Distributor: In terms of this filmmaker needing a platform where they get access to real-time numbers, unfortunately, this was never promised as we simply don't have this type of backend built in-house. We wish we did; however, alternatively we told the filmmaker that whenever they wanted particular data on a platform that we had readily available, we would always let them know upon request. The best we can do!

Another mistruth is that the filmmaker was never given numbers ahead of time, and I can assure you they were always given numbers on accounts we had immediate access to or had easy reporting in hand at the time and when requested.

Reports are generated per payment threshold. As this film was negative, our system did not flag reports for payments, so we went ahead and created a custom report for the filmmaker when asked as promised from Day 1.

As the film was very negative after platform costs, I then gave accounting approval to cover some of the costs out of pocket on our end, so we could help bring the filmmaker into positive territory. We have not had many negative balances in the history of our company (the amount I could probably count on one hand) as we are careful with expenses, but this title ended up being one of our worst underperformers of all time, which had me take special notice to help.

TFC Says: There’s obviously a factual disagreement here about whether reporting that was promised, or asked for, and whether it was provided and received.

Let’s take a bit of time to review how reporting works on a granular level.

Distributors can put in an agreement that they will start reporting 90 days after a film goes live, but they are not in control of when the platforms report, and they also need some time to split their reporting up so that a filmmaker only sees their own numbers and not those of other films (although we were flabbergasted to have learned recently that, as a sort of update to our first case study on Find Me, Indie Rights divulges earnings of all their films to every filmmaker—perhaps either to rub it in or as incentive, depending which end of the list one falls, but we digress…).

Here at TFC, we are almost in the month of February and just got reporting from our aggregator with Amazon numbers for September (iTunes and GooglePlay are up to November). So, each platform reports at different times. And Distributors have a bad habit of not reporting when there’s nothing (yet) to report. So that explains the silence filmmakers often feel when they wait months and months and hear nothing.

But filmmakers tend to look at things only from the vantage point of their own film. For Distributors, they have tons of films that did receive earnings, and are focused on getting those films reporting. And the films with no revenue are swept to the side until the next reporting period. That’s why the distributor said they had to create a custom report for the filmmaker.

Once reporting starts coming, however, it is extremely rare for a film to receive zero earnings on any TVOD platform in a given quarter in the first year of the release, and even more rare when they are on any sort of SVOD or AVOD.

If we are discussing real-time transactions, however, we aren’t really talking about reporting. A few key platforms have a back end where one can see what they call “estimates,” which usually come in on a daily basis. This is different from reporting, because those numbers can vary, for example, if someone complains and tries to return a purchase. Distributors usually do not divulge—probably because filmmakers don’t know to ask—whether they are set up to receive these estimates, the availability of which varies from platform to platform. In this case there may have been a misunderstanding about whether “estimates” or “reporting” was the thing that was promised. While the former can help you plan a marketing strategy in real time, the latter cannot, and we think that is part of the problem here.

When the distributor said they “simply don't have this type of backend built in-house” and “wish they did,” are they saying that they don’t have a way to spit out a report? Or that they don’t have time? It would only take a few minutes to log in, simply look, and report back anecdotally. Real-time numbers are readily available on iTunes Connect and Amazon Video Direct, the two back-end tools offered by the top two platforms, and TFC has personally done this for filmmakers on occasion. I know they can’t make a habit of it, but especially after that Amazon Prime SVOD fiasco, and the fact that the filmmaker asked about this ahead of time, it seems to us that better communication and a tiny bit more effort would have gone a long way here.

To the extent that distributors as a whole do, in fact, have access to some daily estimates, there is something really irksome going on here, and it is this: that a) Distributors really don’t have the time to be looking up real time numbers for filmmakers, and they know this and don’t promise it. And yet, at the same time, b) they expect the filmmaker to do all the marketing for their film knowing full well that without any numbers, the filmmakers will be doing it blind. It’s an impossible situation.

How have other filmmakers dealt with this, then? This issue also came up in our Find Me case study. We asked Tom Huang how he was able to know what he was doing with the Facebook ads when he didn’t have the numbers. Because his film started engaging people, he could see via the social media metrics that there was some buzz. However, in this case, it seems that the team didn’t gain sufficient traction in whatever they did to be able to tell whether or not their efforts were paying off. And now that Amazon’s rev share is as low 1¢ per hour, as Tom noted in his case study, it’s sort of impossible to define success on that platform on a daily or weekly basis, because we are often talking about sums that are close to zero.

Filmmaker: Once all our digital assets were made and ready, the distributor gave us a release date and we waited with bated breath. The strategy that the distributor had told us from the onset was that our initial large chunk of money was going to come from our subject’s built-in audience, who would buy or rent the movie on Amazon or iTunes TVOD when it came out. We worked with our subject in order to have that audience ready to buy on our release date. However, when release day came, it accidentally ended up on Amazon Prime SVOD, which is free to watch, and hundreds of our subject’s fans posted about watching the movie without having to pay for it.

Even our subject was confused and posted that the movie was available for free to watch on Prime. Of course, we immediately called the distributor and informed them of this mistake and were assured it would be fixed. Unfortunately, it took approximately 8 days for them to take it off of Prime, by which time most of our subject’s core audience had already watched the movie, or lost interest. Our subject’s fans were our only “guaranteed” built-in audience and the distributor had mistakenly given them the movie for free.

Distributor: We do take responsibility and apologize for lighting up Amazon Prime streaming sooner than expected. There was a lot of back and forth behind this film as to whether we would light up for streaming right away, and we had an employee where this was unfortunately lost in translation, and the hit of a single button accidentally lit up the film.

A platform going live sooner or later than expected is something every distributor deals with on a day-to-day basis as there is an awful lot that is out of our hands after delivery. After noticing the film was live on Prime, we immediately went to update this on our backend to take down.

[But it did not come down right away.]

I went back to look at emails between staff as everyone was distraught that Amazon was not removing the film from Prime immediately. We then went to contact our Amazon reps, who had to put in requests with their programming team. Amazon is, unfortunately, the 500 lb. gorilla, and my other fellow distributor friends will often vent on mass emails on how tough they are to control as well. Sometimes we are lucky and can get a change right away. Other times, it may take a few days for Amazon to listen and finally remove or make any sort of update we need.

TFC Says: Regarding accidentally putting the film on Amazon Prime SVOD instead of the planned TVOD is unfortunate, but truth be told, it has happened to The Film Collaborative once or twice, and we never knew whether this was the fault of our aggregator or Amazon. We were able to clean it up within a day or two, so eight days does seem like a long time…but we’ve had other, more minor problems with Amazon that have taken months to fix. But, as the distributor said, dealing with platforms when something goes wrong can often be tricky, and it did get fixed. And one can never really know if those views would have translated into actual purchases. The most generous interpretation is that delivering to SVOD right away was an unfortunate situation that happened to befall these filmmakers, and they have every right to be a little frustrated.

Filmmaker: When we calculated what would have been the cost of self-distribution vs. partnering with the distributor, including the potential revenue from Vimeo in that first week that was lost to their “Prime” mistake, as well as the fact that we would have never printed 500 DVDs, would have kept 100% of all sales, and would have limited streaming cost to fewer platforms (merely iTunes and Amazon), we realized that it ended up costing us upwards of $5K-$10k in lost revenue and fees to not self-distribute the film, not to mention the stress and frustration during all the back-and-forths.

There are of course a lot of factors that go into distribution, and we will never know exactly what would have happened had we self-distributed, but we were left with a sinking feeling that wholly partnering was not the right choice for us. Perhaps we would have felt differently if the distributor had been able to sell the movie to one of the SVOD platforms they brought up in our initial meeting. But we firmly believe that not self-distributing our film was a mistake.

And, ultimately, we would also suggest really taking a hard look at yourself and what you want from the partnership. Are you the type of filmmaker who wants to make a movie, get a distribution deal, and walk away (and, hopefully, wait for the money to roll in)? Or, are you someone who wants to be extremely active and involved in every minute detail of the distribution of your own movie? The more you know yourself and what kind of relationship with a distributor you want, the easier it can be to decide if self-distribution is for you.

Distributor: Would the filmmaker have made more money going to an aggregator? Probably not.

Creating DVDs aside, when looking at their digital sales, they would have had the same outcome with the same numbers, and while we do take a commission, the cost of an aggregator would have been greater than fees we had to credit onto the account.

On top of that, a distributor is responsible for getting placement for a film. For this particular film, we reached out to our iTunes reps and were able to secure prime placement, including a $9.99 sale as well as New Release/Recently Added sectors. I still have these screenshots, which I went back to for confirmation. We were also able to get this onto the New Release carousel at Amazon.

We did this on top of social media and marketing push. We participated in and promoted a Facebook Live launch party with the subject of the film. We even helped this filmmaker by telling them of a certain pre-order threshold they needed to hit on iTunes for placement, and if they had friends buy these pre-orders to send us the receipts and we will reimburse them 100% and make sure we did not take a commission. This is extra work a distributor does not have to do and certainly something an aggregator would not do as they have zero stake in how much you sell.

We look at both ends of the spectrum, and every film that a distributor takes on is a risk no matter which way you slice it. It is a tough balance to take on films you love vs. films that will just have a much better leg up in the marketplace. We still love this film and have no ill will toward the filmmaker. As the filmmaker was not happy; we had no reason to continue to hold up their baby, so we were happy to end our agreement with the filmmaker early and give them back their rights.

We are distributors because we love and understand indie film. It is also always a very tough balance to deal with art vs. commerce, but this is not an industry where one should take advantage of either end. We open up opportunities, and we are sad when the opportunities don't pan out into the viewership and profits we had hoped. On the flip side though, we have had many films that have overperformed and had the "dream" license deal that we were able to get for them, and those are what makes our very tough job consistently worth it.

TFC Says: Is there anything more to say? Perhaps not. But here are some general tips for filmmakers thinking of entering a distribution deal.

The first lesson is: read your agreements carefully before you sign them. Yes, it’s great to speak to a lawyer, who, by the way, should be an entertainment lawyer, not your uncle or best friend’s sister who practices another kind of law. But even they are not going to explain an agreement to you line by line. A deal memo might not contain everything that’s going to be in the agreement, but the full agreement should, so if the distributor required 500 physical DVDs as part of the deliverable package, that should have been clearly spelled out. It seems like both a consignment option and a manufacturing on demand option were outlined in their agreement, yet when the filmmakers apparently asked if they could avail themselves of the MOD option, they were rebuffed and steered into the consignment option, where they had to produce the physical DVDs upfront. This is also a communication issue that could have been avoided. If an option is not right for a certain project, why include it in the agreement? And if filmmakers were really that upset with spending the money, should they have pushed back more?

The second lesson is: don’t believe everything they tell you. Distributors (and Sales Agents) will always know more than you do. They do this all day, every day. They know what’s in their contract and what is not, and they deal with filmmakers all the time. And while they may be truly excited about your film, they might just be trying to “sell” you on the idea of working together. This includes telling you what you want to hear: that they will try and get a licensing deal with Netflix, Hulu, or other SVOD or broadcast platform that carries a meaningful sum. Perhaps they truly believe they can achieve this based on their past successes. But in this case, if the filmmakers had asked The Film Collaborative at the time what chance we thought this distributor had of landing this type of deal, we would probably have said “slim to none.” Why? Because other similar films with much better festival pedigrees are not getting these deals either. Some are, for sure, but most are not. As long as there is a slim possibility that such a sale might occur, distributors have plausible deniability. Furthermore, they are also insulated as they can recoup their costs for even pursing these deals. So, look at what the contract will allow in terms of recoupable expense caps.

But the bottom line is, the minute you add middlemen into the equation, there are benefits, and there are costs. Sometimes things go well, and sometimes, they don’t. Ultimately, these grievances here seem to be more about a breakdown in communication than an actual dispute about money.