Every producer has heard horror stories about productions that grossed tens of millions of dollars, but due to either creative accounting or outright theft the producers saw little or nothing of the revenues.
Tell them the producers a story with a happy ending. For each of the following elements I offer a way for you to offer an honest contrast to business as usual.
Once upon a time, a producer assigned the rights to his feature film to a distributor on a net distribution basis. Since its revenue were maximized by spending lavishly on the theatrical release, the gross revenues (from which the distribution fee were deducted) were high, but the net expenses that the producer received after expenses were deducted were low. Consequently, the distributor made millions while the producer suffered a net loss.
However, this won’t happen to you because you will receive from us a fixed percentage of our total revenues, regardless of the expenses.
b) Offer to include a schedule of minimums in the producer / distributor agreement. This will state the minimum amount for which distributor will be allowed to license the content in each of the 28 largest territories (95% of the worldwide marketplace) without written permission of the producer.
This assures the producer that you will not unload the content for less than its market value.
There is another way in which the schedule of minimums plays an important role. Let us say that a distributor has five films in a package for all television rights in Sweden. Two of the films have been produced by the distributor. But, yours was not and yours is worth all of the other films combined. Since it was not protected by a schedule of minimums, the distributor allocated 35% of the total value of the package to each of their two films, and 10% each for the remaining three titles. Thus, while your film should have received at least half of the money in the package, it received only ten percent instead. Nonetheless, the distributor must have the right to service all license agreements effected before the specified, including collecting money from royalties and their attendant reports. This may seem like an extreme concession. But, if the content is not making money for the producer it is not making money for you.
However, this won’t happen to you because if the distributor does not meet the performance conditions as specified the producer will get his content back. Don’t waste your time trying to convince producers of your honesty. An honest person can only demonstrate honesty by performing honestly. But, making a convincing case for your personal commitment can be as important as proven distribution expertise in acquiring content. A producer will take the schedule of minimums that you provide and will take it to a competing distributor that will promise them higher revenues–without actually codifying these promises in the contract. The producer will then go with the competitor because “they seemed to believe in the picture more” when in reality they were just bigger liars.A producer will make promises regarding delivery materials, pre-sales that it effected but did not report, previous attempts at distribution of the content that you were unaware of and the like. When the truth comes to light they will claim that “they are creative types, no business people, and that allowances should be made for their misunderstandings”. They will flinch with disgust that you did not understand them, and treat you with contempt.
You will have completed distribution agreements on the table waiting for signature–with terms that the producer has agreed to–when the producer will bail out of the agreement in favor of a competitor of yours deemed to have more prestige or promising better performance.
The Fundamentals of Screen Content Distribution.