If you want to thrive in the independent film world, this is a term you need to become familiar with. It’s an agreement made between a distributor (usually foreign and specific to only one country) and the production company before the film is completed and often times even before production of a film has even commenced. This is a strategy that producers use to get their film financed. You may here that a producer financed a film via foreign presales alone. This means that a distributor will pay for the distribution rights in their country before they even see the finish product. In return, they will get to pay a significantly reduced cost for these rights as opposed to if they waited to buy the rights to the film in the open market upon completion. They are banking on the film doing well in the box office based on the script, director, producer and actors that are attached to the film. Some presale agreements involve the distributor and producer agreeing – prior to production – on a fixed amount to be paid upon delivery of the film. This is called an advance or a minimum guarantee.
When we here this term, we normally think arthouse, film festival, and cheap. This can be true for most independent films, however, not all independent films will share these characteristics. To put it simply, an independent film is a film that is financed outside of the traditional studio system. In other words, the money to finance the film came from a place/person other than a studio. In most cases, independent filmmakers have to find distributors on their own. This could be a major studio, but often times independent filmmakers have to find other means to distribute their films.
This is the fee charged by a studio/distributor to the exhibitor in order to have their film distributed. This is usually in the form of a percentage of revenue generated in any given market. This percentage can range from as low as 10% all the way up to 50%. A typical distribution fee is 30%.
NOTE: When it comes to accounting numbers, distribution fee is not factored in as “revenue” or “earnings” even though the money goes straight to the studio/distributor. This is just another one of those strange accounting principles practiced in the movie industry.