A very practical primer on international distribution contracts caught my eye at MIPTV.
It was moderated by experts Catherine Buresi and Brian Levine under the Creative Europe MEDIA umbrella, with Pauline Mazenod, the CEO of Windrose.
Here are the highlights:
Distributor vs Sales Agent
- A distributor differs from a sales agent in that they make unilateral decisions: the distributor legally licenses your product and sells it in their own name.
- By entering into an agreement with them you are giving up your own selling rights.
- International distributors may work with local sales agents in certain markets.
Contract
The basic components of the rights outlined in a distribution contract are:
- Mode
- Exclusivity
- Territories
- Linguistic version (s)
- Dates and length of agreement
Exclusivity
- Most of the time distributors need to get exclusive rights because they are selling exclusive rights, and need international rights because they close multi-territory contracts.
- The business model of distribution companies is to get all of the rights except for the ones sold to finance the film as well as a few specific rights the producer wants to exploit himself (for example, public screening rights).
- It is a good idea for a producer to keep non-exclusive public screening rights, for example to show at a festival or for an association.
- Each type of buyer has different standard extended rights associated with it – for example, selling to TV stations or DVD publishers always includes giving up VOD rights.
- It’s almost impossible to try to keep VOD rights – almost all buyers request these.
Term
- Standards in setting the contract term differ – in France, seven years is typical, in the UK shorter, in all cases it is negotiable.
- A longer term allows the distributor to give the program a second life after the first sale expires.
After the term, the distributor:
- Can have a re-sale right.
- Has remuneration rights arising out of the current license agreements.
- Can be allowed to sell (negotiable) for another year to an exhaustive list of prospects, shared with the producer
Sales Agents
- International distribution rights typically include the right to substitute any third party (e.g. national sales agents).
- The need to use third parties for sales is constantly shifting in various territories, so the distributor needs blanket flexibility to do this.
- Contracts typically include right to re-version/shorten, a right demanded more and more often by broadcasters. The producer gives up all control over this.
Outside the Palais
Don’t Micro-manage
- You give your distributor the right to sell your product and you shouldn’t try to micromanage them; the important thing is to trust them before you sign with
- You can establish trust by asking them challenging questions before you sign, by checking their reputation with third parties and by observing them at work.
- The producer has various obligations, including materials and documentation to provide, deadlines to meet and rights to clear.
- Not meeting these can result in penalties to the distributor, which are passed on to the producer.
- Get the help of a lawyer if needed to make sure you met all of your legal requirements and authorizations.
- Who is assigned to promote at festivals is a point of negotiation.
Managing The Waterfall
- Net producer revenue = Gross Receipts – Commission – Distribution Expenses – Sales costs if any.
- It is essential that sales costs are listed in the contract, that they are precise and exhaustive.
- This is where producers can lose a lot of money.
- This is more important to negotiate than the distributor’s commission or even the rights!
- Giving your distributor a high commission only motivates them.
- Request an MG (Minimum Guarantee – money in advance) for films with high commercial potential, such as fiction series, paired with a low commission.
- For harder to sell films, raise the commission and don’t expect an MG.
- Check up on your distributor by asking for invoices for sales costs and making sure they fall under the agreement.
- Make sure your contract includes deadlines for payments from the distributor.
- The important thing is to get your revenues, and to get them fast!
Read More
- For more information, or to see a standard contract, get in touch with Pauline at pmazenod@windrose.fr.
- Case Study from Windrose : A Boutique Documentary Distributor Prepares for MIP.
The Windrose stand
Editorial Assistance: Paisley Millhausen