I was doing some websurfing on distribution. I just wanted to write down some key points that I learned for everyone’s benefit:
One of the key terms to look out for when dealing with a distributor is “Minimum Guarantee,” or MG. This is the amount that your distributor pays you upfront. When a distributor pays you upfront, that means they think they can make money off your film, and that’s why they are willing to accept this upfront cost. If there is no mention of a minimum guarantee, it is an indication that they don’t really value the prospects for your film. Perhaps they want your film just to add it to their “library” of films, and then it sits on their shelf. They get to brag about how they have 1001 movies in their library, but nothing really happens to your film.
Distributors will tell you how much they love your film and how well they think of you and your prospects, and they want to give you 80/20 in your favor of the profits that the film makes. Now that sounds great. But the key thing to understand here is that they’re offering you 80% of the “profits.”
Profit = Sales – Costs
If they include every airplane ticket and every lunch bill and every car rental, and tack it on as a cost to your movie, whatever the sale, costs are always going to be higher than sales, and profits will always be negative. That 80% amount in your favor will always be worthless.
So if you’re accepting any backend deal, make sure that the backend, whether it’s 80/20, or 60/40, or 40/60, or 20/80, that it’s based on “sales” or “revenue,” not “profit.” If it’s based on profits, somebody is trying to dupe you. If they insist on “profit,” just don’t accept the deal. You’ll never see a dime. Throw your film into the river, but don’t give it to a distributor who doesn’t have your best interests at heart.
I’ll update this page as I find out more. So keep checking in.