Legal Tips for Filmmakers

By The Film Collaborative Legal Counsel Cherie Y. Song, Esq.

 2257 Regulations

§ 2257 of Title 18 of the U.S. Code, the enforcement guidelines for the Child Protection and Obscenity Enforcement Act of 1988, requires producers of visual depictions of actualsexually explicit conduct to maintain records to ensure that actors in such depictions are not minors and to label materials containing such depictions with the location of the records.  In 2006, Section 2257A broadened the record-keeping and labeling requirements of 2257 to visual depictions of simulated sexually explicit conduct.  Failure to comply with either is a criminal offense.

What does this mean for the indie filmmaker?  Practically speaking, if your film contains at least one simulated sex scene, regardless of genre, and the film’s original production commenced after March 18, 2009, then you may be subject to the record keeping requirements of Section 2257A unless you’ve timely filed what’s called a “safe harbor” exemption letter with the U.S. Attorney General certifying, among other things, that in the regular course of business, you collect and maintain IDs of all performers and give the statutory basis for eligibility for the safe harbor.

Because distributors, as “secondary producers,” may be required to maintain records that identify the filmmaker for any depiction and that verify the filmmaker checked the legal age of performers prior to the date of original production, a growing number of them are requiring such safe harbor letters from filmmakers to minimize their liability.  Obtaining a safe harbor letter may be a condition to close the deal, so make sure you look into this in advance.

Terminate and Revert.

You’re sick and tired of waiting for him to live up to his promise, and you remind him and remind him a second time, and he still forgets.  You’ve had it and want out.  Where do you go from here?  In the context of a distribution deal, you want your contract to contain a clearly written default/termination provision that allows you an “out” if the distributor fails to do something material, say pay you overages or send you statements.  Make sure your rights automatically revert to you upon termination (but subject to any pre-sold territories).  In addition, make sure you have an “out” if the distributor files for bankruptcy or assigns the contract to an unaffiliated third party who may not necessarily be able to live up to the promises the distributor made.  Then you can take your film and try to monetize it in any unsold territories, which may be difficult, but it’s better than the alternative, which is to be stuck in a bad relationship.

Terms Should Be Defined.

It’s not uncommon – in fact, it’s the norm – that distribution contracts contain undefined terms, or better yet, terms whose definitions are to be given meanings “in accordance with industry standards.”  Some filmmakers prefer the IFTA definitions because they are believed to be on their faces more “fair” than the definitions contained in some distributors’ contracts.  Read the definitions carefully, and make sure you’re not inadvertently giving your rights away.  For example, if you want to stream your film on your website(s) or social networking pages, make sure the definition of “Digital Rights” in your contract excludes this right.  You may want to consider putting in a reservation clause as follows:  “Notwithstanding anything to the contrary contained herein, Licensor shall retain the right to [list reserved rights].”  In all cases, you should have a qualified distribution attorney review the contract to make sure it reflects the deal you made.

Please also refer to TFC’s Digital Distribution Tips in regard to definitions of digital rights. Technology of delivery is not the only factor that should be considered in defining and categorizing rights. One must consider payment methods and potential modes of receiving content.

Payment Triggers.

If you’re getting a minimum guarantee (usually paid out in installments), your contract should contain clearly defined triggering events for payment(s) and a time period within which such payment(s) should be made.  If distributor fails to pay the full MG within a certain time period following complete delivery, you should have the right to terminate the agreement, get any materials in distributor’s possession returned to you and all rights granted to the distributor should revert to you so you can take your film elsewhere.

Disclaimer:  This article contains information of a general nature that is not intended to be legal advice and should not be considered or relied on as legal advice.  Any reader of this article who has legal matters involving information addressed in this article should consult with an experienced entertainment attorney.  This article does not create an attorney-client relationship with any reader of this article.  Cherie can be reached at CherieSong@me.com

 

October 24th, 2011

Posted In: Uncategorized

Digital Distribution Tips by Orly Ravid of The Film Collaborative.
These digital distro tips were posted on indieWIRE
and I wanted to add a tad about the cool new digital platform PRESCREEN www.Prescreen.com which launched after I composed the tips.

1. CARVE OUT DIY DIGITAL:
Distributors and Foreign sales companies alike often want ALL RIGHTS and including ALL DIGITAL DISTRIBUTION RIGHTS.
What to watch out for overall is not the purview of these tips however this is: No matter what, at least CARVE OUT the ability to do DIY Digital Distribution yourself with services such as: EggUp (http://www.eggup.com/), Distrify (http://www.Distrify.com/), Dynamo Player (http://site.dynamoplayer.com), and/or TopSpin (http://www.topspinmedia.com), off your own site, off your Facebook page, and also directly to platforms. Several of our case studies employed or will now employ these options even when sometimes also engaging in traditional distribution (e.g. Adventures of Power, Violet Tendencies, American: The Bill Hicks Story to name few). Platforms and services can almost always Geo-Filter thereby eliminating conflict with any territories where the film has been sold to a traditional distributor and often times a distributor will not mind that a filmmaker sells directly to his/her fans as well in any case. ADDITIONALLY, since I wrote this blog Prescreen, www.Prescreen.com launched its platform and we used it and so far it seems like really a great way to boost the profile of a film and jumpstart one’s digital distribution. It worked well for How to Start Your Own Country and we are trying other films now as well.

2. PLATFORMS ≠ AGGREGATORS ≠ DISTRIBUTORS:
Platforms are places people go to watch or buy films. Aggregators are conduits between filmmakers/distributors and platforms. Aggregators usually focus more on converting files for and supplying metadata to platforms and that’s about it. Marketing is rarely a strong suit or focus for them but it should be for a distributor, otherwise what’s the point? Aggregators usually don’t need rights for a long term and only take limited rights they need to do the job. Distributors usually take more rights for longer terms. Sometimes distributors are DIRECT to PLATFORMS and sometimes they go through AGGREGATORS. It makes a difference because FEES are taken out every time there is a middleman. Filmmakers should want to know the FEE that the PLATFORM is taking (because it’s not always the same for all content providers though usually it is other than for Cable VOD, for example) and know if a distributor is direct with platforms or goes through an aggregator. Also, filmmakers should have an understanding what each middleman is doing to justify the fee. On the aggregator/distributor side, we think 15% is a better fee than 50%, so have an understanding of what services are included in the fee. If a distributor is not devoting any time or money to marketing and simply dumping films onto platforms, then one should be aware of that. Ask for a description in writing of what activities will be performed. Companies such as New Video (worked on our case studies Bass Ackwards and Note by Note) function well as both a distributor and an aggregator.

3. THINK OF DIGITAL PLATFORMS AS STORES
A film should try to be available everywhere however sometimes that is too costly or not possible and when that is the case one should prioritize according to where the film’s audience consumes media. Think of digital platforms as retail stores. Back in the DVD days (which are almost gone), one would want a DVD of an indie film in big chains such as Blockbuster and Hollywood Video but especially a cool, award winning indie would do well in a 20/20 or Kim’s Video store because those outlets were targeting a core audience. With digital, it’s the same. While many filmmakers want to see their films on Cable VOD, some films just don’t work well there. Some films make most of their money via Netflix these days and won’t do a lick on business on Comcast. Other films do well on iTunes and some die there whereas they might actually bring in some business via Hulu or SNAG. Docs are different from narrative and niches vary. Know your film, its audience’s habits and resolve a digital strategy that makes sense. If money or access is an issue, then be strategic in picking your “stores” and make your film available where it’s most likely to perform. It may not be in Walmart’s digital store or Best Buy’s. Above all, if you dear filmmaker have a community around you (followers, a brand), your site(s) and networks may be your best platform stores of all. Though there is something to be said for viewing habits so I do recommend always picking at least a couple other key digital storefronts that are known and trusted by your audience.

4. CABLE VOD LISTINGS
By now many of you may have heard that it’s hard to get films marketed well on Cable VOD platforms. Often the metadata either isn’t entered or entered incorrectly and it’s nearly impossible to fix after it goes live. Hence, oversee the metatags submitted for your film and check immediately upon release. Also, since genre/category folders and trailer promotion are not always an option for every film, it is the case that films with names starting in early letters of the alphabet (A-G) or numbers can perform better. Then again, there’s a glut of folks trying that now so the cable operators are getting wise to this and not falling for it. All the more reason to focus on marketing, marketing, marketing your title, so audiences are looking for it and not just stumbling upon your film in the VOD menu. There are only going to be more films to choose from in the future, not fewer.

5. ART must work SMALL
Filmmakers, if there is one thing I must impart to you once and for all it’s this: TAKE GOOD PHOTOGRAPHY!!! Take it when making your film. Remember, most marketing imagery if not all for digital distribution (which will be all of “home entertainment”) must work SMALL so create key art and publicity images that also work well small and in concert with the rest of your campaign. Look at your key art as a thumbnail image and make sure it is still clearly identifiable.

6. KNOW YOUR DIGITAL DISTRO GOALS
This harkens back to Jon Reiss’ points. I have seen distribution plans wasted because a vision for the film’s path was not resolved in time to actualize it properly. If your film is ripe for NGO or corporate sponsorship and you want to try that, you will need loads of lead time (6 months at least!) and a clear distribution plan to present to potential sponsors (who will always need to know that before agreeing). If making money is a top concern, then know how YOUR FILM’s release is mostly likely to do that and plan accordingly. It may be by collapsing windows or it may be by expanding them. All films are different and that’s why our case study book has different examples to look at. American: The Bill Hicks Story for example did Day & Date Theatrical/VOD with Variance & Gravitas. That strategy can increase revenues, but is not for every film so know what sort of release makes sense for the film before starting so you don’t inadvertently lose out on options. With Prescreen now an option, if interested, one needs to carve out that window before EST (electronic sell through) / DTO (digital download to own) and streaming digital rights are sold. TFC is doing this with the film HOW TO START YOUR OWN COUNTRY for example. If showing the industry that your film is on iTunes matters to you for professional reasons more than financial then know that is your motivator but know that getting a film onto iTunes does not automatically lead to transactions, marketing does.

7. TIMING IS EVERYTHING:

Digital distribution often has to be done in a certain order if accessing Cable VOD is part of your plan. That is not the only reason to consider an order and an order is not always needed, but it can be a consideration. Sometimes Cable VOD is not an option for a film (films often need a strong theatrical run before they can access Cable VOD) and, in this case, the order of digital is more flexible and one can be creative or experiment with timing and different types of digital. However, Cable VOD’s percentage share of digital distribution revenues is still around 70% (it used to be nearer to 80%) so if it’s an option for your film, it’s worth doing, at least for now.

It is very often the case that if your film is in the digital distribution window before Cable VOD (on Netflix for example), that will eliminate or at least dramatically diminish the potential that Cable MSO’s (Multi System Operators) will take the film or even that an intermediate aggregator will accept it. There is more flexibility with transactional EST (electronic sell through) / DTO (download to own) / DTR (download to rent) services such as iTunes but much less flexibility with YouTube (even a rental channel) or subscription or ad-supported services such as Netflix (subscription) or Hulu (which is both). Films that opted to be part of the YouTube/Sundance rental channel initiative (such as Children of Invention) could not get onto Cable VOD after. The Film Collaborative has to hold off on putting films in its YouTube Rental Channel if cable VOD is part of the plan. Of course, there are exceptions to every rule due to relationships or a film proving itself in the marketplace, but better to plan ahead than be disappointed.

Companies such as Gravitas are also programmers for some of the MSOs so they have greater access to VOD, but they too discourage YouTube rental channel distribution before the Cable VOD window and they do Netflix SVOD (Subscription Video on Demand), distribution after. In general, people often do transactional platforms first and ad-supported last with Netflix being in the middle unless it’s delayed because of a TV deal for example. This is not always the case and some distributors have experienced that one platform can drive sales on another but in my opinion it depends on the film and habits of its audience. You should know that Broadcasters such as Showtime will pay more if you do your Netflix SVOD after their window rather than before.

The question you have to resolve is what value does each option have and what is the best order for your film given your resources.
This tip was written for the Sundance Artists Services initiative: http://bit.ly/ArTiSts

8. THE DEVIL IS IN THE DEFINITIONS

This tip and the one above were originally written for the Sundance Artists Services initiative (http://www.sellingyourfilm.com/blog/2011/08/25/the-devil-is-in-the-definition-know-what-vod-means/). For full details on this, visit the site.

There is no standard yet for definitions of digital rights. IFTA (formerly known as AFMA) has its rights definitions and for that organization’s signatories there is therefore a standard. But many distributors use their own contracts with a range of definitions that are not uniform. When analyzing distribution options, be aware that terms such as VOD can mean different things to different people and include more or fewer distribution rights and govern more or fewer platforms.

Consider the term “VOD”. In some contracts, it’s not explicitly defined and hence can mean anything and everything. IFTA is clear to categorize it as a PayPerView Right (Demand View Right) and limit it to: “transmission by means of encoded signal for television reception in homes and similar living spaces where a charge is made to the viewer for the rights to use a decoding device to view the Motion Picture at a time selected by the viewer for each viewing”.

However in some contracts, it’s defined as “Video-on-Demand Rights,” meaning a function or service distributed and/or made available to a viewer by any and all means of transmission, telecommunication, and/or network system(s) whether now known or hereafter devised (including, without limitation, television, cable, satellite, wire, fiber, radio communication signal, internet, intranet, or other means of electronic delivery and whether employing analogue and/or digital technologies and whether encrypted or encoded) whereby the viewer is using information storage, retrieval and management techniques capable of accessing, selecting, downloading (whether temporarily or permanently) and viewing programming whether on a per program/movie basis or as a package of programs/movies) at a time selected by the viewer, in his/her discretion whether or not the transmission is scheduled by the operator(s)/provider(s), and whether or not a fee is paid by the viewer for such function/service to view on the screen of a television receiver, computer, handheld device or other receiving device (fixed or mobile) of any type whether now known or hereafter devised. Video-on-Demand includes without limitation Near VOD (“NVOD”,) Subscription Video-on-Demand (“SVOD”,) “Download to burn”, “Download to Own”, “Electronic Sell Through” and “Electronic Rental,” for example. This example includes everything and your kitchen sink.
One has to ask if a definition of VOD or another type of digital right includes “SVOD” (Subscription Video on Demand) and includes subscription services such as Netflix and Hulu Plus. Why does this matter? Well if the fee to the distributor and/or to you is the same either way then it may not matter. If there’s a difference in fees depending on the nature of distribution, then it will. Recently an issue in a deal came up with respect to distinguishing ad-supported specifically from general “free-streaming”. Is ad-supported governed by a “free-streaming” rights reference? Why wonder, Just spell it all out; better to be safe than _____.

Another example, if a contract notes a distributor has purchased “VOD Rights” but does not define them, or defines them broadly, then do they have mobile device distribution rights as well? The words “Video-on-Demand” sometimes are used only to refer to Cable Video on Demand and other times much more generally. In a “TV Everywhere” (and hence film everywhere) multi-platform all-device playable universe, the content creator needs to know.
The devil is in the definition which you must read carefully BEFORE you sign on the dotted line. Know what you want for and can do for your film in terms of distribution and carve it up and spell it out.

October 10th, 2011

Posted In: Uncategorized

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