Sunday, January 9, 2011

Distributing the Machine

So, maybe we've been very lucky, or maybe we've been unlucky. I can't really tell. But we've never had a foreign sales agent (which means someone who sells to non-North American markets) take out expenses from any sales we've made. Contractually there have never been "recoup-erable" expenses in any of our agreements.

Now, we pay a rate that is much higher than rates you usually hear of. Think twice as high. But our rep's only expense that he charges against us is the cost of making the actual DigiBeta deliverable tape for the customer (and yes, that cost comes directly out of our money from the distributor).

An oldie but a goodie.
Distro411 is a new blog about, well, distribution. Again, their experience doesn't reflect our own experience with overseas sales. We have, for instance, always had approval power over any deals the sales rep signs for us. Considering that a tape costs about $250, any deal over about a thousand dollars is a net positive gain. Not that we want to be signing any thousand-dollar deals, I'm just sayin' that we would actually see positive cash from such a deal.
Joe Bob Briggs is looking for screenplays. If he's seriously considering making features budgeted at anything close to $100K a piece then we still win the "smallest micro-studio in New York City" award.


Cunningham said...

Let me throw this stone into the pond - it is standard practice for your rep to charge the territory for the cost of making that digibeta.

That means - if your rep is following general industry standards and practices he is getting paid by the distributor in the territory and being paid by you for that digibeta.

In effect, twice.

I would double-check this ASAP.

Andrew Bellware said...

That's not the way we have it in our contract. We pay for the tape.
I don't know how standard having the territory pay for the DigiBeta is, most deals I've seen it comes out of the producer's share. Actually, a link inside one of the above links even talks about that, sort of implying that it's fairly common that the cost of tapes comes out of the producer's share.
For us, though, the most important thing is that we get paid out of the first dollar which comes in, rather than waiting for expenses to finish getting charged to the picture first.

Kangas said...

I've only personally sold the one foreign territory, and we paid for the PAL master, but they paid for the copy we sent them of it.

I think the AFMA standard licensing agreement actually says they should pay for it in the contract, but without hunting it down I couldn't confirm it.

Andrew Bellware said...

We have an IFTA contract. So that might be different. We only make an HD master and they copy off whatever format they want (PAL or NTSC, HD or SD.)

joe said...

what if one just touches it a little - would the kitten be spared?

Andrew Bellware said...

Mmm... you better get a friend to touch it, then the kitten will be spared... ;-)

Cunningham said...

You as the producer provide the master tape and keep it at your lab or your distributor's lab. The individual territory's distributor (the sub-distributor) pays to make a copy of that master for their territory.

I have NEVER heard of the producer being charged every time a sub-distributor makes a tape for their territory. THEY pay to have the copy made. It's part of their contract when they pay the license fee and the materials fee.

Something sounds extremely fishy.

Andrew Bellware said...

A sales rep of course never has the incentive to include the duplication costs. ;-)
I don't know that there's anything "fishy" about it, that's just the deal we have. It costs about $250 on each sale. And most importantly we see cash from the first sale made.
So we could pay a theoretical 15% or even 10% sales commission but get backcharged for every expense, or we could pay a much higher commission (and $250 for the tape) and get paid as soon as the sales come through.
My landlord prefers the latter scenario.
He told me that. ;-)

Kangas said...

I think the more important thread to be answered here is why isn't DisContent being updated to keep me knowledgeable? :)

Andrew Bellware said...

He has plans. Evil evil plans. To take over the WORLD! ;-)

Cunningham said...

All right, all right. I hear you.

Here's the problem with your point, Drew:

You always get paid right away as soon as money comes in on a deal like yours. That's why you're paying the higher rate.

And because you're paying a higher rate you shouldn't have to also pay an expense on top of that.

That's where the fish smell is coming from...

And yes, I am taking over the world. A pixel at a time - but it is happening.

Andrew Bellware said...

Yes, you're right. At the same time we could spend a lot of time negotiating this... and it's only a couple hundred bucks. Which is why we don't.
What we DO need to do is get our North American covers to be orange so we sell more copies.
Yeah, I have no idea why that's true...