How Film Festival and Distribution Deals Kill Independent Film, Part 1

(First publish on February 3rd, 2009 at The Art & Business of Making Erotic Films)

Back in 2001 when I shot MARIE AND JACK: A HARDCORE LOVE STORY I was, to put it mildly, rather naive about the indie film game. Silly me, I thought in a world where a serious approach to sex on screen was defined by aggressively sex-negative films from directors like Gaspar Noé and Catherine Breillat, the guileless earnestness and sincere eroticism of MARIE AND JACK would be a welcome breath of fresh air. I thought that film festivals were about putting provocative new works in front of cinephilic audiences, and that a film that made audiences feel good about seeing true love in all its glory was about as provocative an idea as a filmmaker could have about sex and cinema.

Silly me. I hadn’t yet learned about the “intent to arouse” doctrine. I didn’t yet know that in Utah, home of the Sundance Film Festival, sales of a film like MARIE AND JACK are prohibited by law. I didn’t know about these sorts of things and how they still affect the way that people — including festival programmers — think about what they can and should put in their festivals. After 18 months of sending off screeners to every festival I could think of, I had more or less struck out. Not even a no-name festival in my hometown was interested in screening MARIE AND JACK. (Yes, I know, there are laurel leaves on the box cover. The very few venues we played were very different festivals with a very different mandate and mission. More on the value of these sort of festivals in a post DVD world in the next entry.)

But as ignorant as I was about the social and legal climate that dictated our collective understanding of what it meant to be “serious” about sex and cinema, I was even more ignorant of the business of independent cinema; by business I mean quite plainly box office grosses, DVD units, and how much money ends up back in the pocket of a film’s producers.

The fairy tale narrative goes something like this:

Scrappy gang of young artists put together a film on a shoe-string budget. Invariably a key to their success is a just-now available to consumers product (high limit credit cards, “prosumer” video cameras, desktop video editing, etc.) Said shoe-string budget film goes on to be the darling of the film festival circuit. From there it’s a distribution deal for the film, and a three picture deal for the film’s director. The film pulls in about $16M at the box office. Not a big deal by Hollywood standards, but a stunning 50:1 ROI. Another rags-to-riches, hard work and derring-do success story!

Thank God my ignorance saved me and my films from such success. Here’s how it really works.

Naive young artist makes film. If she’s smart, she uses whatever the shiny new prosumers gizmo is in her production. This is important because if she uses (for example) the new Sony HDV camera and makes something that isn’t crap, Sony will give her a lot of free publicity. The shiny new gizmo could be FinalCutPro, MagicBullet, or a Panasonic HDX 200. The important thing is that it’s not the shiny new gizmo that everyone already has. There’s no marketing value for Sony in cheering a film shot on last year’s model. Next stop, the film festivals.

When you stop and think about it, film festivals are some kind of amazing. They get their films for free. They get a lot of volunteer labor. They get sponsors and underwriters. In some countries they even get government funding. Ticket prices are often higher than regular films at for-profit theaters. Overwhelmingly they are non-profit and get special tax treatment.

Yet in spite of all these advantages, film festivals can’t seem to find a way to pay filmmakers for showing their films. Oh maybe there’s money to fly you in, maybe even a hotel to stay in, maybe even a token screening fee. But mostly “doing the festival circuit” is a big financial drain. If your film is a “success” on the festival circuit, hundreds, even thousands of people will see your film, and you won’t see a dime.

So why do filmmakers participate in a system that is gamed against them? It’s all in the hopes of getting a coveted a “distribution deal,” with all the fame and fortune that goes with it.

Fame? Maybe a little (anyone remember Daniel Myric and Eduardo Sánchez?) Fortune? Most certainly not. Here’s how it works:

By the time you get to the end of the “festival circuit” you are dead broke. Maybe you shot your film on a cell phone in a favela in Brazil, but the airline tickets and hotel rooms and meals for the circuit take cash money. Plus if you’re “out on the circuit” you’re not working. Unless you’re a trust-fund baby, you arrive at negotiations with distributors in the weakest possible position.

So there you are. In spite of a well-received festival run, you’re in debt and a large portion of the cinephile audience has already seen your film. Of course your film isn’t available on DVD, because film festivals don’t play films that are already available on DVD, so people who read about your festival success, (the best press your film is ever going to get,) can’t give you their money. Things are bad. But they’re about to get worse. You’re about to get offered a $50K advance for your film.

Of course that’s if you took the grand jury prize at Sundance. If your film wasn’t quite so successful, you’ll get offered less. But just wait till you hear the terms.

“Advance” has a nice ring to it, doesn’t it? It sounds like it’s the beginning of the money; something to tide you over until the royalties start rolling in. Maybe you’ll use it to take a long and well-deserved vacation to St. Barts and by the time you get home, your first statement will be waiting for you; and more importantly your first check. But that’s not the way it’s going to work.

Your film is about to become the bubbly brown liquid in a giant marketing and hype machine. As essential as it is, that magical combination of water, sugar, and carbonation is a financially trivial part of what makes Coke Coke. Your film is about to get the same treatment. Here’s why.

Big budget Hollywood movies run on about a 3:2 production to marketing ratio; the figure I’ve read is that the average Hollywood film has a production budget of about $60M and a marketing budget of about $40M. But for independent films, the marketing ratio puts makes the film a much smaller part of the financial equation. Harvey Weinstein once said that even if he got a film for free, he’d still have to spend $20M on marketing, and “break-out” indie films (films that might make $10m-$20 at the box office) routinely have marketing and promotion budgets that are 10 or 20 or even 50 times greater than their production budgets. So much for the ROI on a half-million dollar picture. And so much for those royalty checks.

Read the hype and you’d think that the film is a big hit. In fact all the “profit” has disappeared into advertising, press agents, photocopies, and a zillion other expenses (if you think $4 for an aspirin on a hospital bill is outrageous, just wait till you see a distributor’s expense report!) Once the distributor is finished tallying up the score, the theatrical run will turn out to be a loser; a bunch of hype in the hopes of broadcast and DVD sales. And guess what, before a single royalty check is cut, the TV and DVD sales have to fill in the financial crater left by the theatrical run. The filmmaker with the “breakout” hit is never going to see another dime.

And that “three picture deal”? That’s not a guarantee of financing for your next three films. That’s an option for the distributor to get first right of refusal, at a price they set, on your next three projects.

Next. Part 2: A Tale of Two Indie Films