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THE MYTH OF THE SEVEN THOUSAND DOLLAR FILM
Overcoming the Deliverables Process

by Anthony Bregman and Mary Jane Skalski

If you’re like most low-budget filmmakers, the word "deliverables" probably ranks somewhere at the very bottom of your List of Major Concerns, below "Outline my next film" and above "Pay back Uncle Mort’s $1,000 loan." And rightly so; when you’re consumed with worries about scraping together cash to buy stock or about getting through the mix before the festival screening, what’s the point of worrying about abstract future concerns like E&O Insurance, Chain of Title documentation, and internegative checkprints?

But unlike Uncle Mort, deliverables will come back to haunt the unsuspecting independent filmmaker like a hidden line item threatening to dwarf the rest of the production budget. As producer James Schamus says, "When you’ve finished your film, you’re just about halfway through." In other words, after the rude awakening of deliverables, you might find yourself crawling back to Uncle Mort to beg him for another $30,000 to $80,000 to provide you with the means to actually sell and jrelease what used to be your miraculously produced no-budget film.

Creation of deliverables is a huge and consuming process that accompanies any film lucky enough to get any level of sales or distribution. From the distributor’s perspective, a timely and high-quality delivery is the backbone of a film’s release. But from the producer’s perspective, delivery can make the difference between a film’s profitability and further debt. And for the low and no-budget filmmaker who has already plumbed the depths of fundraising and charity, the creation of deliverables can be a desperate struggle.

"The filmmaker always expects the distributor to pay for all the delivery items, and it becomes the biggest area of friction," says Marcus Hu from Strand Releasing, which has released the low-budget art house films Crush and Grief. "But on a borderline film, if the filmmaker balks at creating necessary delivery materials, we may decide not to distribute the film at all."

Unfortunately, there’s no way around delivery, no El Mariachi-no-budget shortcut, but there are a few hints about how to cash flow the process and juggle the elements so that a producer can ensure that the film does get delivered, and maybe with a few bucks left over afterwards.

 

Deliverables Defined

Simply put, deliverables are the materials that a distributor needs in order to release a film. Without a negative of some sort, the distributor can’t create theatrical release prints. Without a color-corrected video version, the distributor can’t broadcast it on TV or release it to your local video chain. Without a legal trail proving that the producer in fact owns the film and all its elements, the distributor won’t undertake the legal risk of releasing it. And without a good many color slides, black-and- white prints and quirky anecdotes about the shoot, the distributor won’t have the means to publicize the film’s release. Deliverables fall into those three categories: print materials, legal documents, and publicity materials, and the bulk of the expense for the deliverables process lies in the first of them.

 

Print Materials

Print materials are the means for the distributor to create theatrical release prints, the trailer, television and video versions, soundtracks, and other methods for people to view and listen to the film. Exactly which and how many print materials are needed will depend on the scope of the film’s release, but at the very least, print delivery will include access to the original cut negative and optical negative, a number of release prints, and a color-corrected video transfer of the film. For release in a foreign country where dubbing is required, print materials will probably also include M&E tracks, which have cleanly separated music, effects and dialogue tracks. Keep in mind that the most efficient way to accomplish this is to record each character’s dialogue and location effect separately, otherwise, you will have to re-record every effect that tramples on dialogue and re-record each character separately when their dialogue tramples on the others in the production track. And for a release involving more than a small number of prints, a producer will probably choose not to endanger the original negative and will create an internegative which can travel more freely and which can strike large numbers of release prints safely. But the creation of an internegative calls for the creation of an intermediary element, the interpositive, as well as a checkprint (combined cost for the three is typically $25-30,000), and the creation of acceptable M&E tracks can involve an extra sound edit and mix which can easily run $5,000 or more. Since pretty much any territory sale will include video and television rights, a filmmaker will be required to create a D1 or D2 color corrected video transfer, which for a typical feature can take from eight to 30 hours of transfer time at anywhere from $300-800 an hour.

A filmmaker may also have to provide what’s known as a spotted dialogue list. This form lists the film’s action and dialogue in feet and frames for dubbing and subtitling purposes. Professionally done, it can cost in the thousands of dollars. Some smaller distributors without in-house editors might require the filmmaker to come up with the trailer, but for the most part this would be the limit of the major print delivery expenses. The remaining print deliverables merely involve giving the distributor access to already existing materials the filmmaker utilized to make the film: from original location sound and erstwhile useless negative cutouts, to sound mix cue sheets and copies of the original score, to the optical overlays of the credit sequences and the negative of the textless credits sequences. Everything you thought you’d never need again might return to your attention as the crucial linchpin of your distributor’s deliverables list.

 

Legal Materials

Like print deliverables, the amount of legal paperwork required to release a film will vary from distributor to distributor. In general, though, legal deliverables are less expensive and less complicated than print deliverables, so long as the process has been anticipated from the very beginning of the film shoot. Well-conducted production legal work will include signed releases and contracts for every cast and crew member who worked on the film, for every poster and labeled bottle appearing in the frame, and for every song played on the soundtrack, and copies of all of these licenses and deal memos and releases must eventually be delivered to the distributor.

Additionally, filmmakers should expect to provide the distributor with a Chain of Title, which is a set of documents that trace each step of ownership of the film from the original screenplay through the producer and sales agent right up to the distributor, and which include copyright certificates, title searches, and certificates of origin. Though Chain of Title documentation can be complicated enough on its own, expect it to vary from territory to territory as each country’s bureaucracy grapples with its own idea of authenticity.

However, there are two additional legal deliverables which are invariably expensive though not always required, especially by the smaller distributors. The first of these is an MPAA ratings certificate, the cost of which is pegged into the annual sales of the company submitting the film. As such, it is invariably cheaper for a small producer to submit the film for the rating than it would be for a larger distributor with sales in the millions. The cost of an MPAA screening, even if the rating is not ultimately accepted or used by the distributor, will be upwards of $2,500.

Errors & Omissions Insurance, another costly legal deliverable, is an insurance policy which protects the distributor from any potential lawsuits looming in the future. Smaller distributors may not require this until they make a video sale. but larger distributors will want this immediately. A standard policy is $3 million worth of insurance for 3 years, and this can run between $8,500 and $10,000. Most of the remaining legal deliverables are relatively simple and straightforward – short form transfers of rights, access letters for lab materials, statements of dubbing or editing restrictions, etc.

 

Publicity Materials

If you’ve already prepared for a festival, you probably have a good base for all the publicity materials you need: photos, slides, pressbooks, synopses, biographies of key talent and creative crew, and sometimes poster ideas and electronic press kits. Most important on this list is the photos and slides: a filmmaker should be prepared to hand over all production slides and color transparencies to the film’s largest distributor (which probably means the film’s U.S. distributor), but should remain cautious because the smaller distributors will also require a smaller, but complete selection of these materials. Generally, the best scenario is to give your U.S. distributor a chance to see everything you have, and then ask them to duplicate the materials they prefer. From their selects (60-200 color slides, 15-100 black and white photos), you choose a smaller batch for selects for all the other territories (20 color slides and 10 black-and-white photos). No matter how astute and intelligent you are when selecting slides, all the distributors will latch onto one single image that they love. Because most of your European distributors will want to follow the U.S. campaign, they will often choose the same image. The point is, don’t make 300 copies of your favorite slide; trust your distributors to know their market and your film, and supply enough materials for them to do their job.

Other publicity materials include biographies of all key crew and cast, a summary of the film, and a few pages of material about production. Any information that can help your distributor fashion a "hook" to entice publicity is helpful. If the entire process was a miserable one, invent something. Often, press will not have seen your movie before interviews and will ask questions solely based on the notes you or your distributor have provided, so make sure your notes open up platforms to speak from and address issues that are enticing and marketable. Keep in mind that the El Mariachi hook of how low the production budget was is no longer interesting. Most independent films are made on a shoestring, and moviegoers don’t plunk down $8 to see how thrifty and ingenius you are anymore.

 

Delivery Shortcuts

The best shortcut to inexpensive and efficient delivery is anticipating the process from the very start of the production. While some of delivery expenses are unavoidable, many of the horror stories from the front lines of delivery involve inadequate preparation during the shoot and postproduction. Other shortcuts involve ways to handle the deliverable process itself. Following are a few basic mantras:

Never use anything you haven’t cleared. The cost of reshooting a scene with a different extra or in front of a different billboard, in the few instances where it’s even possible, can be enormous. More common, but no less damaging, is the inclusion of musical tracks in the mix before obtaining proper clearances. Clearing only the right to exhibit the film at festivals could be a great way to gain a bargaining chip with the record companies, but it can also be the producer’s worst nightmare. In the best cases, having a certain song in the film may attract the distributors’ attention, and the possibility of having the band’s music in a motion picture with a committed P&A budget may appeal to the record company, too. But an easy worst-case scenario is when the distributor loves the music, the director loves the music, but the music is only cleared for the festivals and the record companies will not negotiate a rate low enough to clear all media for the distributor. The moral is anything that isn’t cleared before exhibition is a gamble.

Pay attention to what’s happening on set. Careful attention on set will save a lot of headaches when time comes to obtain an errors and omissions policy. Be wary during production of any recognizable name, and keep in mind that recognizable doesn’t always mean famous. In one case, a producer needed to track down residents of a suburban western town who had the same name as the character in a movie. The producer’s lawyer asked them to make sure that the real people could not claim harmful similarities if their story was similar to the fictional character’s story. (The irony was the writer had crafted a name hoping to be completely generic.) Other things to be wary of: casting aspersions on trademarks by associating them with unpleasant activities. For example, don’t have your serial killer eat a McDonald’s Big Mac before a killing spree or your E&O carrier may exclude that from the coverage. Remember, what you don’t notice on set, a hungry lawyer will notice at a movie theater.

Hold onto everything you can. Never throw away anything. Never lose anything. Unused shots, failed foleys, recordings of the musicians rehearsing, letters from disgruntled caterers, keep ’em all. The most unlikely materials may eventually be required by a weird and rapacious distributor. And in such a case, the cost of recreating materials will most certainly outstrip the cost of a storage facility.

Hire a professional, reliable stills photographer. Unfortunately most producers learn the hard way just how important it is for a professional still photographer to be on set. "At Strand, we ask now before the deal is signed to see the selection of stills. It’s the single most important publicity item distributors need. Creating stills after the fact is usually impossible and pulling from a frame of the film is disastrous." Oftentimes, unit publicists working on big-budget Hollywood films will read the script before production and identify major scenes where a good still will be an evocative selling tool. The unit publicist will then identify those scenes to the producer and unit photographer. Planning, professionalism, and attentive logging and care of the materials are all incredibly important during production. Make sure your key scenes, lead actors, and shots of the director on set are all covered.

Juggle the deliverables. Plan international releases carefully so that not all items will be needed everywhere at the same time. Very often, distributors around the world will release a film around the same time; that being the case, it’s very important to coordinate the international journeys of the film’s elements so that it doesn’t become necessary to create multiple internegatives or M&E tracks. The interpositive of a film will be used to create the trailer, the video transfer (unless you make a low-con print, which some transfer houses prefer), and the film’s internegatives; these activities must therefore be spaced out well in advance. A key to successful delivery is in evaluating everyone’s needs and concerns and crafting a solution everyone can live with

Use the organic deliverable – the Director. It may not appear in any contract, but the time demands made on the director will be enormous. After you sell the film, it will take your distributor at least three to six months to prepare for release. Many independent films are platformed, meaning they open in a few major markets and then expand to a wider audience. The European markets will generally follow the American release by a few months. This means that from selling the film to putting the film to bed can take about twelve to 24 months to get the film out to all territories. The primary selling tool for an independent film is the director. Interviews, by phone and in person, will continually occur. Most distributors will want the film to participate in a festival in their territory and will want the director to attend and do press. The director should be ready, prepared, professional and pleased, even though they are being asked the same questions day after day for months on end. Distributors remember who works a film and who can’t be bothered. You’ll never know how much your visit boosted ticket sales, but when you come knocking on the distributor’s door with your next film, they will remember. It’s good for the film, and good for the director.

Be wary of distributors creating the deliverables. Larger distributors might offer to create the materials themselves, often at lower base prices than you can because of the relationship they have with their own labs. On the other hand, they will add a service fee of 20-40% to the cost, which will be subtracted from the income the distributor makes on your film. On the third hand, if your film has only been sold for a modest advance, you may want the distributor to create as many of the materials as they are willing to, the logic being that you may never see any overages beyond your minimum guarantee, anyway. On the fourth hand, if your North American distributor (who generally needs the most delivery items) creates all the materials, who will service your international distributors? Will they charge a fee to the foreign distributors for access to the interpositive and internegatives they create?

Go for a Gross Corridor deal. If your distributor can’t offer you an advance to help defray the costs of delivery, ask for a gross corrider deal with your distributor, which essentially means that a portion of money received from the box office and ancillary markets will revert directly to the filmmaker. This allows money to come back to you more quickly in order to pay for materials. The downside is that less money is going to your distributor, who may need it to publicize and distribute your film.

And if you’re feeling lucky... Smaller distributors may only want an initial run of four to seven prints, which is a number that seems high to run off your original negative, but not large enough to warrant the expense of an internegative. An intermediate solution would be to create an interpositive of the film and then run prints off the original cut negative. If damage occurs, the interpositive can be used to create an internegative, and additional prints can be struck. The drawback of this method is that it’s still a tremendous gamble: Without creating an internegative and a checkprint, there’s no way to make sure that the interpositive is any good.

 

The Myth of the Seven-Thousand-Dollar Film

"A film without delivery items isn’t quite a film yet," says Samuel Goldwyn’s Tom Rothman, which leads one to wonder whether deliverables should be a part of every film’s production budget, just as essential to a film’s creation as actor fees, equipment costs and music licensing. While deliverables are not strictly part of the script-to-answer-print process, they are definitely a part of the equation of how and whether a film breaks even or makes a profit, and their exclusion from a production budget can be somewhat misleading to a potential investor. On the other hand, it’s wildly inaccurate to predict the extent of a film’s release at the time of budgeting, so it would be difficult to anticipate how many of which deliverables a film might need. It would probably be safest to include one full set of deliverables in a production budget, but it’s even more important for producers to be aware of the cost necessary to create delivery items and weigh those costs during production. It is, for example, crucial to recognize early on that a 16mm film is virtually impossible to release theatrically anywhere outside the United States, and as such will probably have to be blown up to 35mm (a process which involves interpositives and internegatives as well as a substantial blow-up charge). It will also keep you from cutting corners by letting your cousin Sara, who takes pictures for the high school yearbook, from being your part-time, afterschool unit photographer. It will make you insist that production sound tracks be as clean as possible. And it will make you track down that charming street musician who sold your director a homemade tape in the subway, one of whose tracks has somehow worked its way into the production track.

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