Making a deal to sell your film

If you make art of any kind – film, music, fine art, etc… – and do it well, or even if you don’t, at some point, someone might see a way they can make money off of your creations. At this point, a deal needs to be made. I just came back from the Guadalajara Film Market where I only made one deal. I went up to a table where they were selling a ton of DVDs and asked if she could sell 8 DVDs I happened to have on me. She told me she would and would give me 100 pesos for every DVD she sold and keep 20 pesos for herself. She said before I leave town, just come over to her table and get the money and any left over DVDs. She sold 3 DVDs, which covered all my meals for the entire trip.

This was the simplest deal ever, but of course not the kind of deal you hope to make at film market. Hopefully, you get your film distributed to the world. But I made some contacts, and – who knows? – something might happen. Meanwhile, we’ve still been working on finalizing our Sundance Channel deal for winning the the Undiscovered Gems showcase prize that was well publicized as providing us $50,000. However, this is not a straight-up prize; we still have to agree to the terms of a licensing deal which can be very complex these days since TV and Internet are converging. So doing deals have been on my mind a lot lately, and I’d like to share some important things to keep in mind when negotiating.

• Always negotiate based on your added value. The benefit that another company gets from your work should be worth a lot more than what it costs you to provide it. Companies will try to minimize you and define you as a commodity, but you can’t let them. Identify all the ways they’ll benefit and be as specific and quantitative as possible. Conversely, make sure the deal specifically offers you something you want and that has value and that they don’t give away for free anyway. Usually it’s money, but sometimes it might be something else you need, like equipment, promotional effort, or some service.

• Make sure that what they want won’t limit you in the future; avoid exclusive deals. For example, if you sell world wide exclusive rights to your film to one company, you might not be able to take advantage of some new service you’d want to be a part of like Jaman.com which lets any filmmaker sell digital downloads and rentals of their film via their free software and website. If you must grant exclusivity, make sure that it’s limited by time, place (e.g., only within the United States) and media format, and that you are compensated for it. As another example, some distributors will offer to provide special promotional services if you agree to grant them exclusivity for a month.

• Creativity, expression and culture can be hard to put a dollar sign on. With Four Eyed Monsters, we’ve made very little money to date, yet we do have all this value that’s hard to put your finger on. Similarly, you might have a piece of music or a painting or a film that has all kinds of value but you just don’t know how to make a deal that attaches that value to it. So you have to let a market decide. The market can be made up of two or more potential buyers that determine between them what the value is by making offers. This is important when you’re selling something that can only be sold once, like an original painting or a TV license deal for a film. It’s okay to seek competing offers and there isn’t anything creepy about doing so. If your buyer makes you feel bad for doing this, that’s just manipulation on their part that you should ignore. They haven’t made a commitment until the deal is signed, so you haven’t either. So if you can get a 30%/70% split in your favor on revenue from one digital download service, make sure you get a similar split when selling through another.

• Get used to hearing the phrase, "that’s our policy." And get used to ignoring it. This is a tactic negotiators will use to scare you away from questioning them. But company policy is not law, and your company policy is just as valid as theirs. Same goes for boilerplate contracts. This is not the DMV; you’re allowed to mark up the forms and propose revisions.

• Finally, make sure the contract specifies terms of payment. Once you’ve fulfilled your terms or when the other party has started to collect revenue on your behalf, they shouldn’t hold on to your money for more than 30 days. If they have everything they need from you, they don’t need to be collecting interest on your money while you’re fighting off your landlord – 30 days is plenty of time for them to cut a check. And don’t be afraid to follow up to collect. Nobody’s gonna volunteer to pay you early, so get an invoice out immediately and stay on top of it.

So those are my thoughts about doing deals. What are your experiences, thoughts or questions? Please comment below with any added useful information or if you have a question another reader might have an answer they can provide. I’ll try to chime in as well, and please take the RSS feed from the comments to this post and put it in your feed reader to track this dialog.