This article first appeared in the December 2000 issue of Dox Magazine . Reprinted with permission from the author.
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When I started out in the international documentary sales business in the early 1980s, the world was simple. Our clients were a group of friendly and well-organized public television stations, which existed in every major country. It was relatively easy to sell to them. The borders of the licensed territories were clearly defined. The contracts were just two pages long and the deals were generally good, at times even quite BIG. If you got yourself a BBC, Channel 4, WDR or Canal Plus sale as an independent filmmaker your year was made, as they all paid good money in return for license terms of up to seven years – sometimes for as many as five broadcasts. We did not really worry about the future. With such good terms and so little competition (the MIPTV guide was not even an inch thick), why should we?
Then in the early 1990s our work became more complicated. This was due to several factors. Privately owned commercial television started to take off. More importantly, we witnessed the advent of a totally new phenomenon: thematic specialty channels, which began to spread rather quickly across the globe via cable and satellite. Signals started to reach across national borders. These thematic channels began to segment the market. Instead of offering a broad range of information and entertainment to a large audience – traditionally the task of the public stations (and what they still try, or are supposed to try, to do) – thematic channels introduced narrow, theme-driven programming geared to the specific interest of smaller audiences.
We, the sales agents and filmmakers, were forced to accept the lower license fees of the cable and satellite market, the argument being that they were new, had low budgets to start up with, etceteras, even though they sometimes penetrated larger geographical areas, covering more countries with potentially far greater audience!
The common practice in which buyers bought a film simply because they liked it, worrying later where to program it, became less and less the norm. Buyers were now sent out into the field with specific directives from their program schedulers and net managers. If the sales agent or independent producer did not have what the buyers were looking for, then no deal. It became a strictly ‘buyers’ market with the terms set by the stations. If you wanted to sell films to them you were forced to play by the new rules.
The notion of exclusivity grew in importance as it became clear that documentaries could be sold for a second time (after their first window).
Then in the mid- ’90s, due to the continuing rise in popularity of thematic channels and the subsequent increasing global demand for documentary, the genre became a hot item. International film festivals started to pay more attention to their doc programming as they realized that great docs perform well with their audiences. Documentary festivals gained more prestige, attracted new audiences and established new event formulas to cater to the documentary production community, such as the Financing Forums in Amsterdam (IDFA) and more recently Toronto (Hot Docs!).
The terms ‘factual programming’ and ‘factual entertainment’ were introduced to reflect this phenomenon. Factual, which for so long was hidden away in the far corner of daytime and late night scheduling became a key word in the international television community. Markets like MIPTV, NATPE and MIPCOM, where documentary had always been a sideline, became major exchange points for the new industry.
Today the independent documentary producers who have carried the torch of the Documentary Art Form throughout the century are suddenly at a loss. ‘Lots of interest, fewer sales’ is the disquieting situation that I am seeing.
What has happened? Without a clear announcement or loud bang the market for documentaries has split into two distinct areas, each with very specific demands and rules. One is clearly shrinking and the other is experiencing healthy growth.
The primary area is what I call the FIRST MARKET. The first market is broadcast via the principal terrestrial public and private networks in each country. For example, in Holland this is NPS; in Denmark this DR and TV2; in Sweden SVT and TV4; in Finland it is YLE 1 & 2, MTV; in Germany ARD and ZDF or Spiegel; in France TF1, F2 and F3, Canal Plus and La Sept/ARTE. In the U.S. where the networks ABC, NBC and CBS rarely play documentaries, the first market is composed of PBS and the major cable players such as HBO, A&E, Bravo, Discovery, TLC and more recently CourtTV. In the UK it is the BBC, Channel 4 and Channel 5. The first market generally ensures a doc good placement, exposure, reviews and decent (or good) money.
The films that are usually sold into the first market are generally high profile, treating international subjects, impeccably made, internationally promotable, award-winning, edgy, strong story or character driven documentaries that have usually a TV hour length, although feature docs are not excluded here.
Then there is the more recent second market, now firmly established and consisting of the ever-growing cable (basic and pay) and satellite channels. Examples of this market are: Canal Plus in northern Europe, GloboSat in Brazil, Rai-Sat and CNI in Italy, HBO in Eastern Europe, Noga in Israel, TV1000 and TV3 in Scandinavia, stations such as Planete Multi-thematiques, Histoire, Voyage, Discovery in France, Germany and Italy, Documania in Spain, Discovery Channel, Bravo and HBO in Latin America and Asia, National Geographic worldwide and so on.
This second market has become very documentary-hungry and quite eager to get strong first market films, as these titles serve as locomotives in their programming. But they pay significantly lower rates per hour. In order to effectively strategize and maneuver through the windowing from first to second market it has become quite a puzzle requiring considerable experience. In this second market there are considerably more slots for documentary series.
Working in the second market often involves even longer contracts with unlimited plays. In many cases, since signals are receivable in more than one territory and these sales infringe on previously sold licenses in neighboring territories, making them complicated to execute. There is also a lot of servicing work involved that is labor-intensive and can be very time-consuming. A typical example: since they need a lot of programming, second market buyers often ask for 20 to 30 preview tapes, then take six months to decide and ultimately only buy six films, each with a different delivery date. (aaarrghhhh!)
On top of all this, another unsettling change has recently occurred in the second market, but also more and more in the first market. While previously never discussed, some clients have begun to ask sales agents and filmmakers to pay for certain costs. For instance, with an $800 sale in the second market the independent filmmaker sometimes has to provide the broadcast materials (a $200 Beta tape), pay one-way of the transport ($100), accept withholding tax on licenses and royalties. Many clients deduct between 10% and 15%. This is like an income tax because you are earning income in a foreign territory, and the tax people are not so sure that you will voluntarily report it. Finally, if you have a sales agent he or she requires a 25% commission. In the end, adding up all these costs leaves the filmmaker with almost nothing. It is like GIVING your film away!
Many second market sales result for us (sales agents) in commissions of $200 or even less, leaving one to seriously consider whether this is a solid basis on which to run a company. This sad state of affairs is underscored by the tragic closing down of Jane Balfour Films Limited earlier this year. A fellow independent sales agent (and highly respected I might add), Jane represented the largest number and broadest range of documentaries. She took on numerous second market films as well as first market ones, providing a strong sales infrastructure for many independent filmmakers. She unfortunately found that the exorbitant costs of handling the second market with so little return proved prohibitive.
Given the above, it is therefore obvious that sales agents prefer to acquire first market films, as this is where the real money still is. Producers have no choice but to try and produce first market films if they want to recoup their production investment (not to mention eke out a small living).
Here is what I see happening:
The enormous increase in worldwide interest for documentary and the greatly reduced costs of filmmaking equipment has caused hundreds of new producers to enter the buying and selling arena. While available slots for their documentaries are significantly on the rise in the low paying second market, there is almost NO increase in the independent doc slots in the first market, and I even cautiously argue that the number of slots is actually on the decline. Further impacting this problem is the fact that in some cases even the first market no longer pays enough to cover all the costs for high quality docs. The recent difficulties of well-established UK doc producer Café Productions illustrates how the market for serious, blue-chip, properly budgeted docs is shrinking.
I believe that the establishment and consolidation of the second market is actually what has caused the first market to buy fewer docs. They (first market buyers) sometimes say that the second market takes care of this programming element now. But, as mentioned, the economics of the second market are a killer for the independents.
Consequently, the competition for first market programming slots has become fierce. Additionally, the tendency of the first market to commission from and co-produce with their own home-based filmmakers is becoming more prevalent, with the often heard argument that their viewers want home-grown and indigenous stories. It is an interesting argument that the internet will provide us with the possibility to learn about each part of the globe, while national television stations might re-focus more and more on national issues.
All of these elements diminish the sales potential for internationally operating, highly talented independent documentary filmmakers.
Today, many filmmakers who have produced a decent doc, achieved some visibility and won some nice awards still find that first market sales can be few and far between, with the bulk of sales in the low-paying second market. However, since the financial side of the second market is completely out of sync with the cost of making these docs, this is a very serious dilemma! Here’s an example: a filmmaker spends four years of his or her life and $300,000 or more (of mostly borrowed) dollars, getting at best 10 sales each worth between $750 and $2,000, most for a minimum of three years and unlimited runs! This just does not make economic sense.
And in the first market we are being forced to accept shorter deals, which would be fine if they paid the same money. But they don’t. Where the deals were $50,000 and up for five years, four runs, today we get offers of $20,000 for one or two years with one or two runs. Yes, you will get the rights for your film back quicker and it will become available sooner for the second market, but for what kind of second deals: a $2,000 contract with unlimited runs?
There are those who think that producing for the second market offers work opportunities to the independent production community, but I am of the opinion that this is an illusion as you are entering an incredibly competitive market with more and more production run in-house. Whereas many of the second market channels still (and will continue to) buy lots of documentaries, they are also launching cheap – excuse me – low cost in-house production. This way they can control (branding!) content and will own the copyright. With an eye on the future, ownership of content is going to be a key issue. Controlled, formatted, indigenous and low cost production of documentary is where we are headed. And, since there are many young and eager men and women who are willing to work for little money for what looks like a ticket into the industry, it appears there will be no shortage of personnel for these productions. Sadly, these filmmakers are often hired guns that are given little artistic freedom, impossible production schedules and heavy budget constraints. While the word ‘industry’ was always used exclusively for the feature film business, second market documentary production is fast becoming a strong industry in its own right.
Bottom line: The high end market has too few sales, but the low end market has become too cheap!
Maybe without realizing it, The second market is playing with fire by being so ‘cheap’. Since, as stated before, the second market needs volume to subsist, the channel owners are also increasingly buying themselves into production companies to secure volume and ownership, blocking volume access to other, competing channels in their territory. But, the need for so much supply means they will, to a certain extent, continue to rely on picking up films from individual filmmakers.
Sales agents are looking at the costs involved in supplying volume and are increasingly asking themselves if this is worth it from a business point of view. A number of bigger sales agents have recently started to refuse further developing and supplying the second market. A sales agent noted to me the other day that maintaining a large catalog with films that come from individual filmmakers and producers is simply becoming too expensive (legal costs, logistics of delivery materials, reporting, etceteras), and added that there is no point in maintaining such a big, costly catalog given the revenues from the second market.
I predict that many filmmakers who are producing their own films will increasingly find themselves without sales agents since we will be interested only in first market films. Consequently, hundreds of titles that are second market films will go without representation.
This means that eventually the second market buyers will find themselves short on supply. What can be done about this? Second market buyers simply must decide to pay better prices in order to keep supply steady.
Another prediction I feel confident to make is that many less-mainstream docs will increasingly find it more difficult to obtain a place within the first market. In order to penetrate the first market, our films must be more high profile, more universal and more unique than ever.
Dear filmmakers, I know it is tempting, but think twice before making another film about yourself and your families. It is just not working anymore in the world market. Obscure subject matters will almost immediately condemn a doc to the second market.
I believe that although it already is important, it will continue to become even more so for first market films to enter internationally prestigious competitions, to win awards, or at least get nominations for the big ones: Oscars, Emmys, Prix D’Italia and the Joris Ivens Award at IFDA. They will have to be seen throughout the international film festival circuit so they become well known and unavoidable – those docs that everybody wants to buy. There are not a lot of them out there.
For smaller sale agents like myself (who do not own the docs we sell), creating volume for the second market is clearly not the answer. To survive and make money for the filmmakers we represent, we will have to be more and more selective in the films we take on. While many of my company’s feature docs do play for sometimes more than a year in the international film festival circuit – often starting at Sundance, Amsterdam or Berlin – this form of exposure will become an even greater priority.
Many independent filmmakers will be forced to go back to selling their own films (which generally isn’t their forte or great interest). They will find that there will be less first market opportunities for them, and I have just addressed how difficult, time consuming and costly it is to maneuver your way through the second market…
Sales agents (and self-distributing filmmakers) will have to work day and night to promote the heck out of their documentaries, create better promotional materials, and continue to master the ever-changing market. We will have to invest serious time and money. We will also have to be more flexible about different lengths, as clients are more and more in need of different versions.
The documentary meeting places, conferences and festivals are increasing in their importance. We must support them, as we need those platforms to gain exposure and sell our films. The commissioning editors and buyers must become our friends and allies, and we must ask them to help defend Auteur documentary inside their stations, fighting for increases in slots and license fees. We in turn have to give them those high-caliber, great and inspiring docs, thus handing them the ammunition to make our point that a great documentary can have a great (and big) audience and can be competitive in today’s so important and unavoidable ratings.
When asked for advice from young filmmakers here is what I say: There is plenty of work in the industrial part of the documentary world, go and get it! The more one works, shoots, edits, directs, the more one gains experience and real talents emerge.
For all filmmakers I offer this advice: If you do want to aim for the first market and hope to make one of those unforgettable, award-winning documentaries, you need to very seriously consider your subject, as many stories have been told before. Additionally, the bar has been raised regarding cinematic and technical quality. Finally, these films need strong individual voices and must not underestimate the intelligence of the audience. To make a great documentary, one must choose strong stories about exceptional people and/or extraordinary events that surprise, teach and entertain us. Without all of these elements one just has ‘a nice little movie’ that will at best find its place in the second market and at worst will remain unseen.
Jan Rofekamp ©
Films Transit International
Thoughtful input given by Marc Glassman in Toronto and Barbara Truyen in Amsterdam.