16+ Thoughts On Picking A Producer's Rep

You've made your movie.  You've even applied to some great film festivals, and maybe they've been encouraging.  Now people are calling you, asking to see it, and offering to license it on your behalf.  How do you determine whom to collaborate with?  What questions need to be asked BEFORE you make a deal? The best thing you can ever do is talk to other filmmakers who have worked with the rep -- and not just the ones that the rep recommends.  Make those calls.  The second best thing you can do is to have a face to face meeting with the proposed rep.  The personal approach matters.  Look them in the eye.  Connect.  Have a beer or a cup of coffee.  Ask yourself if you'd like to have dinner with them a year for now.

Now start to ask some questions, ask for some help, and gain a better understanding of both the process and the individual or company you are considering.

  1. A good Producers' Rep will help you understand the process better.  Have them walk you through how they think the deal will go down.  Beware of the seduction but listen to what they reveal about your film and their thoughts on the industry.
  2. Hopefully they will give you insight into difficult situations.  Where might there be conflict?  How will they protect your investors?  What to do if a deal is better for the investors but seems worse for the film or filmmaker?  What are examples of these scenarios?
  3. Can they give your film the attention it needs?  How many other films will they be handling during this market period?  Do these other films enhance or detract buyers' interest in your film?
  4. Good films sell themselves, they say, but can they be helped?  What do the reps suggest the filmmakers do to further enhance the potential of the film to connect with audiences & Buyers  (i.e not with the film, but with other promotional aspects)?
  5. What can They do to further enhance the potential of the film to connect with festival programmers, critics, and buyers?
  6. Are there any deal aspects beyond advances and fees they suggest we pay close attention to?  Why?  There are a boatload of issues to consider and how the Rep portrays these will reveal a great deal.
  7. What other festivals do they think the filmmakers should consider?  What are the advantages and disadvantages of the various film festivals?  Even if they are only repping US, how do they think the filmmakers should use the international festivals.
  8. Are there press agents domestically & abroad they recommend the consider and why?  Can they help get a better deal?
  9. How would they position this film with buyers?  Why?
  10. What do they see as the marketable aspects of the film?
  11. Which distributors do they see as potential buyers for the film?
  12. Who do they see as the best home for the film, and why?
  13. What are their thoughts for a strategy for the film in North America and world wide?
  14. Is this the right size of film for the Rep?  Some are better with big movies, others with small?  Why are they the right fit?
  15. How do they feel about a hybrid approach for distribution, aiming for separate deals for different forms of distribution? Does it make sense for your film?
  16. Do they have any potential conflicts of interest?  For instance, of the Rep does foreign sales in some territories, how do they make that work for films that they sell?  If they also manage some clients and not others, how do they make that work?

This list is by no means exhaustive.  It is just some thoughts to get the ball rolling.  Please give us more suggestions.

 

Why Good Films Don't Just Sell Themselves

I found that it never was just the film that drove sales, but very much a cocktail of:

  • relationships that the sales company & its executives had (and their product flow),
  • the marketing support/strategy the sales company created,
  • the passion by which the sales company communicates to position the film,
  • the prestige or urgency by which the film is launched,
  • the prestige/popularity of the collaborators,
  • the quality of the film, and
  • the critical response to the film at the time it is released.

If films are not reaching traditional foreign sales percentages, does this indicate that your film is not what you think it is, your sales agency is not serving your film, or that the industry has significantly changed?

Can we even compare apples and oranges?  As another sales agent recently said to me: "It’s very dangerous to compare movie deals in that spectrum of films where none of the films are really comparable."

And of course there is a much bigger question: Is there even a foreign sales business for indie or art film when 30% of the market vanished last year (Italy, Japan, Spain, & Greece)?

The New Model Of Indie Film Finance, v2011.1 Domestic Value & Funding

This was once going to be a single post.  Today is part three.  There will be at least two more to come.  I started it here. And then yesterday we tried to determine the factors for accessing foreign value.  Today, let's look stateside. Until the double whammy of Toronto 2010 & Sundance 2011, it looked like the US acquistion market for feature content had fully collapsed.  No reasonable P&L would have shown more than a modest six figures for US acquisitions.  Hybrid & DIY models have not been developed yet to consistently deliver returns in excess of this amount (or even at these figures).  Perhaps this is now changing, but it would still be foolish for any filmmaker or investor to expect this and we can't budget for such expectation.

How many of the 7500 films produce in the US annually return 20% of their negative cost from US licenses?  Although it puts emerging filmmakers at a great disadvantage, I think the surest determining factor for predicting US acquisition potential is the filmmakers' track record.  If you have found buyers previously, you are well suited to find them again -- and even still exceeding that 20% is the exception and not the rule.

When the US market was depressed, I often had sales agents & finance experts challenge me with the claim that the market wasn't down; it was just that there were no good films.  People like to think that good films sell for good prices.  If 7000 American films can raise money to fund their works and no films are selling, what are those investors thinking when they fork over their cash?  They can't be thinking that are actually helping their children or nephews and nieces when they give them money only to recognize their failure?  They must be thinking that they are making good films, and all 7000 can not be 100% wrong.

Clearly we are at a point in US film culture where the infrastructure is not serving either the investors, the creators, or the audiences.  Good films are getting made but not being delivered to their audience.  Last year I went to a film investor conference. Several other producers were invited and we all asked to pitch projects.  None of us left with funding, but the investors said to me that I was the only one that addressed how we would deal with the reality of not just getting our film to market, but bringing it to the ultimate end-users -- the audience.  As artists build communities around their projects in advance of actual production, they are developing a plan to give domestic value to their films.  It is hard to imagine that any artist will be able to do enough pre-orders to predict 20% of negative costs from the USA -- unless they are working on microbudgets -- but taking a step forward is still a better plan than surrender to the unknown.

So where are we now in the process of getting your films funded?  If you've gotten your foreign sales estimates, and you can somehow reasonably anticipate a 20% of Negative Cost US Acquisition License, you are in great shape.  That is, you are in great shape if you have foolish investors.  The wise ones will still be wondering about how they cover sales fees, sales expenses, and the opportunity costs on the money.  Those numbers are still routinely ignored in many business plans for indie film I find.  If you are working with semi-literate investors, you will still be scrambling to find another 25% or so of your negative costs.

How will you fund your film if you can not predict full recoupment from the combined US & foreign licenses?  Fortunately, if your film is set in America, you can pull in some tax credit relief.  Otherwise, I hope you carry a foreign passport, and qualify for foreign subsidies.  If you plan on cash flowing any of this soft money, don't forget to discount them and budget for the additional legal expense.  From personal experience, I find it hard to justify the costs of cash flowing soft money on the type of budgets we are talking about  -- but that's good news.  In the NMOIFFv2011.1 you are wise to treat this soft money as revenue towards the project so that such aforementioned costs will be covered.

If you are fortunate enough to have all of these rare qualities (foreign value, US acquisition potential, strong team with a track record, soft money qualifications, and cash flow partners) inherent to your project, you probably are still wondering where's the upside.  How do we get to profit?

I think we now have a subject for tomorrow's post.  Stay tuned.

The New Model Of Indie Film Finance, v2011.1, Foreign Value

Today continues my efforts to try to define the takeaway from the two most recent and robust US acquisition markets of Sundance & Toronto.  I (and hopefully we) will try to extrapolate from them where we are today.  How can we use our most recent experiences to determine the reality of our filmed dreams today?  How can we move to a more realistic model of indie film finance? Foreign estimates still set the initial value for films, and it is CAST that is the predominate determinator for this value.  Before a film is shot, there are three types of actors that mean something to foreign buyers:

  • 1) stars that have been in big hits in the relevant territories;
  • 2) stars that have been in popular television shows in those territories;
  • 3) stars that can be expected to generate a great deal of publicity everywhere.

Other than stars, there are a few other aspects of a film that create foreign value.  Stars are another entity altogether from cast or actors -- and it is really the stars that determine foreign value.

Are there any other factors that help shape what your project is determined to be worth overseas? Fortunately, yes!  The track record of the collaborators have impact on a distributor's willingness to consider a project.  Experienced directors and producers have more foreign value, provided they have made films that have fairly recently been well received, either commercially or critically.  Similarly, proven cinematographers, designers, editors, composers, and vfx supervisors can mean something.

When the foreign markets were more hungry for US product, it was partially due to their paid and free television's appetite for it.  Although that has been vastly diminished, if your film will fit well into foreign television programming, you have some security.  It is generally thought that comedies and "urban" (i.e. non-white) content doesn't travel.  Nonetheless I have had buyers get excited about an office place comedy precisely because they feel like television but aren't.  Similarly, as new niche channels develop, new audiences aggregate.  I still remain confident that as much as hip-hop transcended music to become a global lifestyle, "urban" programming can get some international  legs once it gets its foot in the door.

Every international territory struggles with the same challenges of expensive marketing.  When a project comes even with the hopes of decreasing some of those costs, buyers perk up. I have seen those results come both from aggregated audience action (i.e. twitter followers, facebook friends, and data lists) and transmedia builds.  Although there is not yet the model that can be used to demonstrate success, let alone predict it, these first efforts still increase the appetite for acquisition among buyers, and thus potentially also the value.

For there to be foreign value, you need to have the potential to sell.  The things that increase that potential also increase a film's foreign value.  At acquisition markets you see this phenomenon in full play as film's that appear to be headed to a subsequent (and more major) festival, get snapped up far more readily.

Tomorrow Friday, we will look at why a film might hope to get acquired in the USA and where else can funding come from in the states.

The New Model Of Indie Film Finance, v2011.1

I recently had one of the top sales agents explain to me that the only indie film that gets made or sold these days are those projects that make absolute sense.  Okay, granted what he was referring to was only within the mainstream indie business -- the type of films that he and his cohorts commission -- but it is worthy of our time to delve a bit deeper into this.  What indie film project makes absolute sense?

The agent said there was no room for guess work in today's mainstream indie business.  If you want to get your film made, you have to have to make it for a price that all concerned feel it will certainly recoup at.  "Absolute sense" is this regard is a film that will inevitably make back what it cost.  "Absolute sense" can also mean a project that a company feels it has to have, usually due to the people involved or the timeliness of the concept, but those "packages"  are frankly even harder to come by than those that seem to be inevitably recoupable.  You are looking for  the needle in the haystack with either, and need to build it yourself if you want to hope to come close.

My last few projects all were designed to remove any guess work for financiers.  Between foreign sales estimates, tax credit rebates, and the undisputed value or attraction of the stars, if you want to be sure your film will get made, your project needs to read that the value of the work will exceed the cost of creating it.  Value in this regard, is strictly business related, and not cultural (sorry art-for-art's-sake fans, this isn't going to be one of those posts).  As much we can understand or even accept, those words though, what is the math that adds up to this formula? And where do the numbers even get their value anyway?

Even with 39 or 40 (and still rising)  films selling at Sundance this year, the first take away from it is we probably should keep our budgets below $5 million.  Granted the highest sales were the ones that had budgets towards the higher side of the scale, but those were also the ones that had the most to lose.  The films at Sundance 2011 were acquired for reasonable amounts with the US acquisition price generally in the low 7 figures or below.  No one, even the large corporate distributors, can stomach losing a great deal of money these days, and the business is currently designed around this preventative action of covering one's ass (no surprise that several of the corporate funded indies are now exploring the micro-budget field).

If the film business remains in an era of risk mitigation (and how in this economy could it not be?), just as acquisition prices will continue to be reigned in, budgets will be kept to a minimum by most investors.  Let's leave the issue of how to attract experienced producers and directors to a project when you can't afford to offer them a reasonable rate aside, and not worry about how budget effects the quality of the project; instead, let's try to give some greater understanding to what this principal of risk mitigation looks like in practical terms of getting our movies made.

As foolish as it is, the mainstream indie film industry relies on estimates from foreign sales agents to set the value for the films.  It is this "market value" that truly determines the budgets for the films that get made under this system.  Forget for the moment that everyone recognizes that those estimates rarely hold water any more these days.  Let's ignore the fact that international sales have been dropping 20-30% annually for several years.  Dismiss it as anomaly that certain former major territories no longer license films like they used to.  Until we develop the tools and know how to assign valid figures to the other factors that actually determine a film's success, this is the system we have.

Tomorrow, I will get into how foreign value appears to be determined.

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

Guest post by Orly Ravid of TheFilmCollaborative.org 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 only having the right to sell your house for you, if you approve. 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. German & 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 expenses. And 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.

This post was previously posted on TheFilmCollaborative.org.

Orly Ravid is the Founder and Co-Executive Director of The Film Collaborative www.TheFilmCollaborative.org, the first non-profit devoted to distribution. Having started out in the business doing foreign sales and previously served as a distribution executive at Senator and Wolfe, and worked as a Programming Associate at Sundance and Programming Consultant at PSIFF, she also co-owns New American Vision, a boutique B:B marketing services company whose clients include AFI Fest, LAFF, IDA, and Roadside Attractions.

Determining Foreign Sales Fees

The question came up over one of last weeks posts, why foreign buyers base license fees on budget percentages.  I have accepted this for so long, I had stopped questioning it -- but it is one of those things worth questioning, so I am glad it was raised.  Thanks.

It made me feel we should have an ongoing "ASK THE EXPERTS" section over here at Truly Free.  For this one I went to the legend of Glen Basner, a graduate of the Good Machine School of Everything, and the man behind the founding of the new sales powerhouse FILM NATION.  The Baz explains:
There are many factors in determining what a territorial license fee should be – a percentage of the budget is only one. These are standard amounts that are “typical” for an individual territory based on what distributors have paid historically (Yes, the world has changed quite a bit recently!). I don’t believe that they apply in singular fashion unless you are contemplating some form of output deal. 
On a single picture license, a distributor will want to know what the budget level is so that: a) they understand what the production value will be; and b) they can feel comfortable that they are not paying an excessive amount in relation to the cost of the film. These are valid points but what people forget is that ultimately the budget of the film does not necessarily have a correlation with its success at the box office (Blair Witch etc). 
Our approach is to think like a distributor and run estimates – both revenue and expense – for a film in all media to determine a low, base and high value a film is likely to have in any given territory. With these estimates we can back into a license fee figure that would allow for a distributor to make money should the film turn out well. The budget comes into play if the sum total of our international estimates do not raise enough money to finance a film.
Curiously enough, the WSJ has chimed in today on the issue of value of foreign licenses, albeit the lack thereof.  Check it out here.