Congrats on acquiring that hot new film at the latest market! Too bad you’re going to spend all that time and money on it and not make a dime because it’s too big of a liability risk.
Everyone’s been there. The film’s production value looks way bigger than what you’re paying for it. The best laid plans fall apart when it becomes too big of a risk for the powers that be.
Don’t get caught in that trap. Make sure to require these items in your delivery schedule:
1. Music Cue Sheet
Everyone, everyone, and everyone asks for this. Because broadcasters are on the hook to pay music royalties out and there’s no ifs ands or buts about it. So, they will need the producer (and you) to provide a music cue sheet.
To erase all doubt, you can list the specifics required on the music cue sheet (e.g. duration, publisher %’s etc.). Everyone except experienced music business professionals screw up the cue sheets. But usually saying that the music cue sheet must comply with ASCAP or BMI standards is enough (or the standards of the performing rights societies in your territory). The producer should figure out what those are. They won’t. But at least you warned them.
2. Chain of Title granting all rights in the film to you
Specifically, we’re talking about distribution rights in the film assigned from party to party until it gets assigned or licensed to you. There’s 2 pitfalls here:
a. Not all of the rights are assigned from party to party. You’re specifically looking for “all media”, “perpetuity”, and “universe” or at least the rights you are licensing from the licensor. The problems start when you thought you were licensing the film for 25 years but your licensor only controls it for 20. Or you want streaming rights but the licensor licensed those away to someone else and didn’t tell you.
You paid for what you thought you were getting but find out you’re getting short changed after you paid their minimum guarantee. Make sure that doesn’t happen. It happens all the time.
b. There’s a gap in the chain. If you’re licensing a small film directly from the writer/director/producer it’s not so complicated. But when many cooks are in the kitchen and there’s a lot of changes of ownership or rights then you really need to keep track of all the parties and all the terms.
Heaven forbid your licensor lost the rights a month before you were going to acquire them. And then your competitor snatches it up. It happens all the time.
Needless to say, if you exploit rights you don’t have that’s copyright infringement and you will get nailed to the wall for it. This may be a rare problem but when it’s a problem it’s potentially company-ending. Don’t risk your livelihood over an unsigned amendment that you didn’t catch.
3. Music Licenses
Do you like suing people? Probably not. It’s a pain. You know who loves suing people? Music industry people. They LOVE it.
Y’know who loves it more than them? Their lawyers.
Y’know who doesn’t know a thing about music licensing? Filmmakers.
The #1 liability risk is a music license that either doesn’t grant the proper rights needed for the film or a producer who never paid their music licensor. How would you feel if your life’s work was being used for someone else’s profit and you weren’t compensated? You’d probably unleash a lawyer on them too.
Make sure you get the proper master use and synch licenses, make sure they cover the proper licensor(s), track(s), song(s), term, territory, media, ownership %’s, watch for step deals, make sure it’s signed and make sure the licensor got paid. There’s a lot of bells and whistles to look out for but better be safe than sorry.
4. Clearances
Still photos. Artwork. Product placement. Appearances, etc. etc. Similar to music licenses but often trickier. Online footage and still photo services like Getty Images and Pond5 don’t play. They have legal budgets and will use it very aggressively. Many learn it the hard way. Don’t be that guy.
5. Errors and Omissions Insurance
This may depend on who you’re delivering to, if anyone. But beyond making sure your licensor has it is making sure it complies with industry standard requirements.
Most sales agents and distributors require similar specs but there are some quirks some require that you should look out for or else you may not get paid. Or worse, you get sued and the insurance doesn’t cover the claim.
Require all the bells and whistles because going back to the producer to change it is too expensive or usually too late. And then you’ll have to foot the thousands of dollars to get it so you can close the sale.
There’s more. Many more horror stories than you can possibly imagine.
Above all else remember this:
*Make sure you’re covered from risk
*Make sure you can complete delivery to a buyer so you can get paid.
There are no guarantees in legal delivery.
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Disclaimer: We are a business affairs consulting company and not a law firm. This communication is for educational purposes only, is not legal advice and does not form an attorney-client relationship. You should consult your own independent legal counsel for your specific needs.
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