BY:NEIL J. ROSINI
This Q&A was originally published in the Spring 2020 issue of Documentary magazine, a publication of the International Documentary Association, a nonprofit media arts organization based in Los Angeles.
Assuming you have the choice, the answer depends on a number of factors, including whether you want all distribution in all media handled by a single entity (through a distributor) or to have digital rights exploited independently (by an aggregator), and your strategy for making the most of your film.
Before the dawn of internet access, distributors were essentially the only way to get an independent film exploited. Then, as now, they often (but not always) offered an advance or guarantee and assumed the exclusive right to exploit the film for a relatively long time in most or all media for a broad territory.
The term of a distributor deal is typically seven to 10 years. The distributor will get all forms of digital media, including TVOD (transactional video on demand, like pay-per-view), AVOD (advertising-supported video on demand) and SVOD (subscription video on demand like Netflix, Hulu and Amazon Prime). Television rights, videogram rights (such as Blu-Ray discs and other hard copies), non-theatrical rights (which include educational institutions, libraries and other institutions by all means of exhibition), and theatrical rights also go to the distributor. The territory of exclusivity is often the entire world in all languages, but deals that cut the territory back often limited to North America (US, Canada and possessions, etc.) plus the Caribbean, Bahamas and Bermuda, as well as military bases, oil rigs, buses, ships, planes and other transportation in those locations or flying their flags can also be found.
If the numerous distributors see great potential in your film (or better yet, multiple distributors see great potential in your film), an advance or guarantee that substantially exceeds the cost of production should be expected. Often, however, the advance or guarantee on offer is considerably more modest and any further proceeds to the filmmaker depend both on the success of the film and how the distributor’s compensation is determined. A distributor generally assumes responsibility for marketing and may commit to a marketing plan in consultation with the filmmaker.
Typically, a distributor will take a distribution fee off the top, which is often in the range of a quarter to a third of gross income that it receives. The distributor will then deduct miscellaneous costs (e.g., refunds) and its own distribution and marketing expenses, which can be substantial and from the filmmaker’s perspective are best “passed through” without markup, interest or overhead, and capped at some percentage of gross. The remainder, if any, generally will be split between distributor and filmmaker, (e.g., 85/15), with the distributor recouping any advance paid to the filmmaker from the filmmaker’s share.
Aggregators, which only cover digital rights, exist partially because big platforms willed them into being. With some exceptions, platforms like iTunes, Netflix, Google Play and Hulu will not accept films directly from independent filmmakers, having recognized the efficiency of making deals with a limited number of vetted middle-persons rather than a multitude. There are other practical benefits for them as well, such as having their delivery requirements—including individualized encoding—overseen by dependable intermediaries.
Aggregators do not pay advances or guarantees, but the financial terms of their deals are relatively simple. They will charge flat fees per platform, often with a higher fee of about $1,000 for the first platform and smaller fees for the rest. Some, but not all, aggregators also require a revenue share based on gross receipts (e.g., 10-20%), which may have the effect of reducing up-front fees. The terms of their deals are relatively short (e.g., three years) and in some instances, early termination is permitted. Apart from offering films to digital platforms, aggregators do not get involved in marketing.
The platforms for which an aggregator is engaged to render services often can be selected by the filmmaker—across the board exclusivity in all digital categories for all digital platforms is not a necessity. But aggregators will want exclusivity for the specific platforms agreed upon. They also may want certain holdbacks, for example, for TVOD until the platforms with which they have made deals first make the film available. And they may require that their TVOD pricing not be undercut in deals made by the filmmaker. Territories are not necessarily as broad as distributors tend to demand and may be limited even to USA domestic.
Apart from these considerations, deciding whether a distributor or aggregator is right for your film depends on other factors such as the nature of the film, its prospects for success, whether or not theatrical and hard-copy distribution is very likely, whether self-marketing sounds better than entrusting it all to a distributor, and whether a one-stop deal with a distributor or piecing together different deals for different media in different territories makes the most sense.