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Rights and Royalties: What Independent Producers Need to Know

Rights and Royalties: What Independent Producers Need to Know

Articles - Moviemaking

Rights and royalties have not traditionally been a priority for independent producers. Why should they be when between them and the first dollar stands a chain of exhibitors, distributors and agents to manage that area. Yet producers are now taking more of an interest in these arcane legal and bookkeeping matters. Why? Quite simply, the industry has changed; there is less money, fewer companies to pitch and a new generation of moviemakers and producers challenging the concept of copyright and bypassing traditional windows for distribution.

Independent producer Stewart Le Maréchal (Wondrous Oblivion, Deep Water, The Infidel) gives the UK perspective: “Five or so years ago, for a $7 million production, we could have secured 30 percent from a sales agent and 10 percent from a UK presale. No one is going to pay that now. Compared to countries like France, it is harder to hold on to your rights.” He adds, “You’re giving them up for 15-20 years, sometimes in perpetuity.”

Even so, whilst Le Maréchal continues to retain a contractual net profit position, he is realistic about the number of films that have a chance of recouping. Unfortunately, many moviemakers negotiate rights agreements confident that their films are a guaranteed success. I often find myself evaluating profit participation clauses that cost more money in legal fees to agree to than they would ever process. The changing marketplace needs innovative realists, moviemakers such as Sacha Gervasi who brought us Anvil! The Story of Anvil in 2009. “I still hear these filmmakers who sell their films to distributors for $25,000 and complain that they never see another penny,” Gervasi observes.

No one disputes that the industry has changed. “The whole landscape has changed,” says Gervasi of the U.S. market. “It’s a very different world out there… the market has become completely polarized—Anvil! to Transformers—and the middle is disappearing.”

Le Maréchal’s company, APT Films, has cycled through medium-, micro- and high-budget models, but his consistent goal is to retain a library of rights to generate future income and company value. However, he also believes that cutting budgets to retain more rights can be a false economy. “I think about $4 million is right,” he says. “Below that you’re risking not finding your market, at which point, keeping hold of the rights becomes meaningless.”

Alongside efforts to refine existing models, the industry must also find a home for the next wave of moviemakers who learn their craft with zero budgets, self-distribute online and have no loyalty to the status quo.

Take moviemaker Ric Gray. He distributes short films on his YouTube channel and other sites, one of which even pays for the views his films receive. He may still be a film student at Canterbury Christ Church University, but he’s receiving royalties, albeit only pennies.

Gray’s films may be all his own work, but the same cannot be said for the content he uses. He has neither the money nor the inclination to clear any third party content that he employs in his films and he has never heard of a sync license, but he believes his usage is reasonable.

“I don’t think it should be illegal,” he insists. “If you are using an excerpt rather than a full music track, then it shouldn’t be considered a bad thing. I am only using their content to move my message forward… I don’t know anyone that has any qualms about using it.”

Gray knows that content owners don’t agree and he has already experienced his films being removed. Of course, he now has his own library of content and I wondered if he’d protect his rights if he found his content used elsewhere.

“It has already happened,” he notes. “Someone uploaded one of my films in its entirety.” Did he make them take it down? “Of course.” Pause. “If they’d only used some of it for their own artistic vision that would have been fine.”

Gray understands that he has to accept the “mentality of the industry towards copyright.” He has made short films for competitions which insist on entries being clear of copyright infringement, and he adheres to those limitations. “Recently I’ve been learning about silent film, which removes the issue of sound copyrights,” he observes. “If you have an idea you can use whatever you have in hand. There is always a way if you have an ambition to do something.”

If you’ve bought John Landis’ An American Werewolf in London on Blu-ray, you may have watched the documentary Beware the Moon, which is included as a special feature. The short film is deserving of its own “making of” story. Paul Davis spent three years interviewing the cast and crew of Landis’ film, only to be told by the director himself that he couldn’t exploit his final product as Universal held the rights to the copyrighted content he used.

Davis realized that trading the documentary with Universal as a DVD bonus feature was his best option and had previously approached the studio with that offer, but was rebuffed. As he had secured permission for all filming locations and release forms from all interviewees, he inquired about clearing the rights for the film footage himself. ”I called the licensing department and asked how much 25 minutes would cost,” he recalls. “It was astronomical.”

However, this indirect approach prompted interest as his licensing contact asked to see the final product. “So we told Landis and he said he was in London in three weeks and to come and see him,” Davis recalls.

With Universal interested and Landis now a contributor, Davis was back in business, but Universal insisted on all rights being cleared. Fortunately, Landis stepped in to convince them to fund a post-production facility to bring the film up to industry standard and clear the rights. New Wave Entertainment was brought in and Davis’ version survived almost intact with the exception of a Jack Nicholson poster from Wolf, David Naughton’s Dr. Pepper commercial and a Michael Jackson piece.

Universal produced a 17-page document of clearances, identifying content mainly owned by them. Inevitably, the rights passed to Universal in perpetuity with no royalty provision. However, since the aim was to reach an audience for the project, Davis is pleased with the outcome. He still receives requests for his film from festival programmers, whom he refers to Universal. They often report back that no one at Universal seems to know that they own the rights to the documentary. ”I think the only people who actually watched it were the lawyers,” Davis says.

One argument I hear when promoting new models is that they are limited to certain sizes and types of films. This leads me back to Sacha Gervasi. Despite being at home in the Hollywood blockbuster factory, Gervasi’s approach to independent production shows a refreshing understanding of the market for his film and an appreciation of the role controlling his rights plays in delivering his vision.

Having spent three years on Anvil!, it made no sense to hand over the rights for $50,000. With sales in place for the UK, Japan and Australia, Gervasi could turn down U.S. offers that didn’t feel right. As he still wanted to secure a U.S. theatrical release, he opted for self-distribution and appointed the best independent consultants available. A sale of the DVD and television rights to MTV Paramount allowed him to benefit from MTV’s advertising for the film. But the real key was Gervasi’s viral marketing campaign, which generated an online community of “25,000 marketeers, all promoting the film,” claims Gervasi. That effort eventually mobilized Anvil’s fan base, who helped drive the film to out-gross The King of Kong, a similarly pitched documentary on which New Line spent around $2 million in 2007.

Traditional distributors have a role to play for Gervasi, but he retained rights he could exploit more effectively himself, including theatrical live broadcast rights in order to create a publicity- and revenue-generating theater-going experience for which an illegal download would be a poor substitute. While he understood the position of the distributors, he refused to settle for less. “The era of March of the Penguins had passed,” he notes. “Music documentaries had not worked. Our film was about the triumph of the human spirit. Distributors are very simple: ‘Who’s in it and how much does it cost?’ We had distributors who were our main targets who were never in the running. We nearly did a deal with Warner Independent. Thank God we didn’t, because it closed.”

Gervasi made the film, controlled the rights and involved others when he felt they would contribute to his vision for his film and its audience. “This is fully packaged moviemaking,” he concludes, “budgets—including the marketing and theatrical distribution costs—to get it all the way from production through to release. This is a generation of filmmakers who will embrace marketing as part of the production.”

If that generation arrives and follows that vision, we can expect more films that will connect with an expectant audience happy to pay for the content, and hear fewer complaints about unreleased or mishandled films from moviemakers who gave up their rights earlier in the process.

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