In the world of indie film distribution there is an old scam that still is very prevalent today, it's pretty easy to avoid it for the most-part, but many filmmakers never get paid on their distribution deals. It's a very simple scam, here's how it goes down. A filmmaker finishes their film and send it to a small distribution label, we'll call them Celebrity Flicks International (fictional), CFI agrees to distribute the film and the filmmakers sign and exclusive contract. CFI gets the film setup and is very cooperative with the filmmakers and the film gets released on DVD, VOD and other Digital Outlets. The first reporting period goes by and no sales reports show up.
So the filmmaker follows up with CFI, who's probably far away in a different state, and just gets CFI's voice mail. CFI doesn't return any phone calls or e-mails for weeks. If the filmmaker is really persistent, they'll get a reply and it will usually be one of two responses: "What, you didn't get the report and check, I'll have to talk to my accountant and see what happened. I'll get back to you." or "We're behind on reporting, it will be on your next statement". Well the truth is there is no report or money coming and now your film is out there making money for someone else. Plus, even though your distributor is in breach of contract, you'll have a very hard time getting another distributor to pick it up because your film is already saturated in the marketplace.
How do companies like CFI get away with this? Because for the most part they probably only owe the filmmaker a small amount of money $10k or less. They know most indie filmmakers don't have the money to sue and that they won't travel to another state to go to court. So CFI pockets the money and is there waiting to sign the next naive filmmaker who sends them their movie.
How do filmmakers avoid this? Do some very simple research on your potential distributor. It's so easy today with Facebook, Twitter, Linkedin etc. Look at the distributors catalog and then look up the filmmakers that they distribute. Contact the filmmakers and tell them what you're doing and ask them if the distributor in question worked out for them. Did they get paid? Filmmakers will be more than willing to speak up about their experience with a distributor.
Even with good references this can still happen. We've entered into over ten separate distribution agreements with different wholesalers, retailers and distribution labels. We've only been screwed on one deal and it was this same old scam, and we had checked references. It's not fool proof but has worked for us over 90% of the time.
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