What is the best way to determine distribution fees for your film?

1 Factors affecting distribution fees

Distribution fees depend on a variety of factors, such as the genre, budget, and quality of your film - which determine the potential audience size and revenue - as well as the market and territory, platform and window, and deal terms and clauses. For example, a low-budget horror film may have lower distribution fees than a high-budget drama. Additionally, different regions have varying levels of demand for films, while theatrical distribution fees are usually higher than streaming distribution fees but yield higher revenues. Lastly, the deal terms and clauses - including the minimum guarantee, royalty rate, recoupment order, expenses cap, and audit rights - affect how much you pay and earn from the distribution deal.

2 How to calculate distribution fees

Distribution fees are usually calculated as a percentage of the gross or net revenues of your film. Gross revenues are the total amount of money that your film generates from all sources. Net revenues are the gross revenues minus the distribution expenses. Distribution expenses are the costs that the distributor incurs for marketing, distributing, and exhibiting your film. They include advertising, prints, shipping, taxes, and commissions.

The percentage of distribution fees can range from 10% to 50% or more, depending on the factors mentioned above. For example, if your film has a gross revenue of $100,000 and a distribution fee of 30%, you will pay $30,000 to the distributor. If your film has a net revenue of $50,000 and a distribution fee of 20%, you will pay $10,000 to the distributor.

To calculate the distribution fees, you need to have a clear and detailed breakdown of the revenues and expenses of your film. You also need to understand the terms and clauses of your distribution deal and how they affect the distribution fees. For example, some distributors might charge you a flat fee or a minimum guarantee instead of a percentage. Some distributors might deduct their expenses before paying you any royalties. Some distributors might have an expenses cap or a recoupment order that limits how much they can charge you.

3 How to avoid common pitfalls

Negotiating distribution fees can be challenging and risky, especially for independent filmmakers. To make sure you get the best deal, you must do your homework and research the distributor, the market, the platform, and the deal terms. Compare different offers and consult a lawyer or an agent to protect your rights and interests. You should also balance the distribution fee with the potential revenue of your film and have realistic expectations. Additionally, secure audit rights in your distribution deal so that you can inspect and verify the accounts and records of the distributor. Hire a reputable auditor to detect and resolve any discrepancies or disputes. Ultimately, by understanding what factors affect the distribution fees, how to calculate them, and how to avoid common pitfalls, you can negotiate a better deal for your film and maximize your profits.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?