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Negotiating Digital Distribution Agreements

Business and Legal Issues to Watch in the Era of Netflix, Amazon, Hulu and VHX

By Simon N. Pulman

Digital and direct distribution options have created new opportunities for producers seeking to leverage multiple platforms to find new revenue streams and audiences for their work. While the traditional “all rights” deal will continue to exist as long as there are major distributors willing to pay a minimum guarantee and give a certain exclusive category of films a theatrical push, many producers are now looking at entering into (and understanding) two or more concurrent distribution deals with different and hopefully complementary partners. The goal for many of these producers is to maintain greater control over distribution and marketing, maximize value for investors and unlock the potential of growing digital platforms such as Netflix, Amazon and Hulu to benefit both the individual film and the longer-term career of its producer.

It is now not unusual for the producer of a moderately budgeted film to have separate agreements in place for theatrical, traditional home video (i.e. DVD and Blu-Ray), television and video-on-demand, plus an additional agreement with a foreign sales agent with respect to international rights. Moreover, some filmmakers who are willing to do some of the marketing and distribution legwork may also seek to “carve out” the right to directly distribute their films through streaming sites such as Vimeo and VHX (the subject of a recent Indiewire article here). These direct distribution sites allow producers to retain the lion’s share of receipts from their films, but also push most marketing and promotional responsibilities onto the producer.

Faced with many potential options – and rights issues – what do filmmakers need to know about distribution agreements? At CDAS, we represent many filmmakers and other content producers entering into distribution and sales agreements with major and mini-major studios, sales agents, aggregators and service providers. Here are a few threshold issues to consider based upon the many deals that we see:

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