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1. WHAT SORT OF DISTRIBUTOR ARE WE LOOKING FOR?
Obviously the requirements for success in any given market can vary from country
to country according to many factors including the size of the market, the nature
of the specialist aspects of the market and the established methods of video
distribution. For example, is the market dominated by video libraries or by
direct mail, or simply by piracy?
On a general level, however, we would look for some or all of the following
qualities in our ideal distributor.
1.1 COMMITMENT
Firstly we look for a degree of commitment to our specialist product range.
This need not necessarily be a purely financial commitment, but will also involve:
the relative level of importance attached to the video marketing operation
within the company's existing activities,
the amount of research undertaken prior to entering into a commitment with
us,
the approach to the marketing strategy for our titles in a given country.
1.2 EXPERTISE
The degree of expertise, which a distributor can apply to our products, is obviously
very important to the success of the operation, both for the distributor and
in the long term for us. In addition to the obvious administrative and financial
skills necessary we look predominantly for marketing expertise whether this
is 'in-house' or brought in from outside via a marketing consultant. It is vital,
in our opinion, that any of our overseas distributors selling to the specialist
markets are able to undertake the following:
successful press advertising,
literature for both consumers and trade,
some PR work, for e.g. Issuing press release to national magazines and newspapers
in the territory concerned.
Finally, the ability or aptitude of the distributor at setting up distribution
networks is also important. When a distributor has purchased master tapes from
us and is paying licensee royalties, there is no financial reason why he/she
is not able to profitably supply other wholesalers or sub-distributors in the
territory.
As a minimum, all our distributors who have exclusive rights should be buying
at low enough prices to be able to sell onto retail outlets, thereby extending
the distribution chain to video shops and, of course, speciality stores like
motorcycle shops (for the bike tapes) and car accessory shops (for car tapes).
There is also scope for selling powerboat and boardsailing tapes to motorboat
and sailing shops, and chandlers, ski tapes to sports shops and so on.
1.3 EFFICIENT ADMINISTRATION
We require prompt submission of sales returns in the case of royalties and also
find it beneficial if, for instance, overseas distributors have access to a
fax or e-mail for the placing of orders and raising of queries etc. If nothing
else, this speeds up ordering and reduces the risk of errors being made on the
telephone so that the service to end-users is in-turn both efficient and speedy.
Along with efficient administration we also require speedy payment where credit
facilities have been granted.
2. PURCHASING OPTIONS OPEN TO POTENTIAL DISTRIBUTORS
2.1 NON EXCLUSIVE RIGHTS
Assuming exclusive rights have not been granted to anyone else in the same territory
(or for a particular language version), a distributor may simply buy from our
trade price lists most of the titles we offer. However, some titles in our mail-order
catalogue are NOT available at all for secondary distribution outside the UK.
Please note the following important points:
The initial order must be for a minimum order value of £1,000
Subsequent orders will have the following discount structure automatically
applied:
Order Quantity
5 units + Retail Price
10 units + 10% off Retail Price
25 units + Trade Price
50 units + 5% off Trade Price
100 units + 10% off Trade Price
Shipping charges will be added separately at cost
Even if you have been purchasing from us on a non-exclusive basis for some
time, we will cease direct supplies if another customer in the same territory
purchases exclusivity for that territory (or language). In such a case we would
of course do our best to arrange on-going supplies to you via the new 'exclusive'
distributor.
If you are only distributing on a non-exclusive basis you are not authorised
to sell onto other distributors unless specific agreement is obtained in writing
from us and/or the producers we represent.
All orders must be paid before goods are shipped
2.2 EXCLUSIVITY IN INDIVIDUAL TITLES OR GROUPS OF TITLES
The above can be obtained by agreeing to purchase the master tapes which can
be supplied for the PAL, SECAM or NTSC systems although NTSC and SECAM system
masters cost more that PAL.
The master tape format we offer you will depend largely on the original format
utilised. Thus if the programme was shot on 16mm film and telecined onto one-inch
video tape, then we would generally suggest you take one-inch to maximise the
original quality. If however the programme started life with origination on
Betacam SP then there is no point in paying a premium for Digital Betacam or
a one-inch master.
Purchase of distribution rights may involve one or two different methods of
purchase:
agreeing a FIXED ROYALTY PER CASSETTE SOLD which can vary between £1.00
and £5.00 per cassette sold (depending mainly on the retail price of the
cassette in the territory). An advance against royalties payable is negotiated
according to various factors including the size of the potential market for
the particular title, the financial requirements the producer places on us as
(in some cases) his marketing agent and the length and quality of the material
agreeing a ROYALTY BASED ON A PERCENTAGE OF SALES VALUE. This can vary between
12.5% and 27.1% and is calculated on the gross invoice value (excluding government
taxes) of each tape sold in the territory. Thus if total sales of a title amount
to 300,000 Spanish Pesetas in a quarter and the royalty percentage is 20% of
sales value, then the royalty due is (300,000 x 0.20) x £ sterling exchange
rate at quarter end date (see Appendix II).
Please read paragraph 3.4 ref. exchange rates to be used.
N.B. Please read paragraph 3.3 below.
2.3 EXCLUSIVITY ON ALL OR MOST OF THE DV RANGE
The above can be purchased via one of the following methods:
2.3.1 Substantial Initial Order
Such an order may involve purchase of mainly finished cassettes, which would
be sent direct from the UK combined with certain titles being purchased on a
'master & royalty' basis. Either way, if the level of financial commitment
in the initial order is sufficient, we may be prepared to 'throw-in' exclusivity
on extra titles from the range as part of a package deal (i.e. Without you having
to either buy the normal quantity for exclusivity or pay for master or advance
royalty on the 'thrown-in' titles).
2.3.2 Heavy Overall Commitment
If it is evident that a genuine and substantial (and financially successful!)
overall commitment is being made to our product range then exclusivity may follow
automatically. For e.g., if you have 10,000 shops in your existing distribution
network and you are prepared to produce and send a 30 page catalogue to each
shop along with a sales call then we will be duly impressed.
3. IMPORTANT POINTS
3.1 COPYRIGHT
The international copyright in the videogrammes distributed by DV is vested
with the film producer or owner of the copyright. In some cases DV itself owns
copyright, but copyright in the majority of the titles distributed by DV is
owned by one of the 15 or so producers from whom DV buys the 'HOME VIDEO DISTRIBUTION
RIGHTS'.
We must stress that DV's main business involves DV in supplying HOME VIDEO
DISTRIBUTION RIGHTS only.
Unless specifically contracted, the purchase of Home Video distribution rights
does NOT include any of the following rights:
TELEVISION 'BROADCAST' RIGHTS
'GROUP VIEWING ' or 'NON-THEATRICAL' RIGHTS.
'PROMOTIONAL' RIGHTS (for e.g., use of a DV videogramme on an exhibition
stand to promote the commercial interest on the stand is NOT home video use).
'THEATRICAL' or 'CINEMA' rights whether an entrance fee is charged or not.
DVD or other format rights unless specifically agreed.
Sale of and/or use of DV videogrammes for any of the above (a), (b), (c) (d)
or (e) is breach of international copyright and may result in legal action being
taken by the copyright owners against the party or parties causing the breach.
Above all, it is all important that if any DV distributor has doubts about
the use of DV videogrammes for anything other that obvious 'home video` use
then the distributor should contact the management of DV for clarification and
guidance.
DV and the copyright owners generally approve the following use of DV videogrammes.
Sale by the distributor direct to the public (via mail order, over-the-counter
sales, or comparable distribution method) including motor clubs or other specialist
interest and non-profit making clubs.
Sale of videogrammes on exhibition stands where the primary purpose is to
promote the sales of DV videogrammes from the stand where the tape(s) are played.
3.2 REGISTRATION OF PROGRAMME TITLES AND/OR EVENTS NAMES
Responsibility for formal registration of event or programme titles in a particular
territory rests with the distributor in that territory. DV cannot guarantee
that the title of a DV-branded product is available for registration (where
necessary) in any particular country. If formal registration of a title is necessary
by law in a particular territory, then distributors are advised to check with
the registration authority prior to agreeing contract terms with DV for purchase
of the title.
Similarly, it is possible that the titles of certain events, for example, 'Le
Mans', may be registered in a territory as a trading name. In such instances
responsibility for clearing use of a particular event name or registration of
the name in the territory, rests with the distributor.
3.3 ROYALTY RETURNS AND PAYMENT OF SUBSEQUENT ROYALTIES
Royalty returns should be submitted to DV quarterly and give details of sales
of each DV title during each quarter ending 31st March, 30th June, 30th September
and 31st December (See Appendix 1). Royalty returns and payment of any subsequent
royalties due must be sent to DV no later that 30 days after each quarter end.
Failure to submit royalty returns and payment within 30 days of quarter end
places a distributor in breach of contract and can lead to any or all of the
following consequences:
immediate loss of rights to distribute any titles affected
resale of the titles affected to another distributor
loss of first option benefit on any new releases issued by DV
legal action by DV to recover unpaid royalties and return of relevant masters
3.4 SUBSEQUENT ROYALTY PAYMENTS
If royalties are calculated as a percentage of sales value then the exchange
rate to be used when converting local currency values to £ Sterling is
BARCLAYS BANK LONDON MID-RATE (i.e. the median of London interbank buying and
selling rates) AT 1700 HRS GMT ON THE LAST DAY OF THE QUARTER FOR WHICH ROYALTIES
ARE DUE.
DV will advise all distributors who submit royalty returns of the rates applicable
immediately after each quarter end.
4. MARKETING SUPPORT FROM DUKE VIDEO
4.1 SLEEVES
Our initial and primary support is in the provision of colour printed sleeves
for all titles whether purchased as finished cassettes or on a royalty basis.
It is a condition of distribution rights being granted that all DV titles are
sold in the territory in our sleeves unless specifically agreed otherwise in
writing. Self-adhesive cassette labels are also provided by us for each title.
DV sleeves may not be modified without permission. The DV logo and the film
producer's logo must never be covered up in any way.
There is no charge for sleeves supplied with royalties. As a general guide
we will provide one free sleeve per £1.50 paid in royalties. A charge
of £0.20 per item is payable however, for sleeves supplied subsequently
for promotional purposes or for use with merchandise.
All sleeves and other publicity material are provided FOB UK. In other words,
all freight costs incurred in shipping such material (whether the material is
provided free of charge or not,) to the distributor are to be paid by the distributor.
Where a distributor requires further quantities of sleeves, these will be provided
free of charge only on condition that subsequent royalties are being paid within
the due dates. If a distributor is not up-to-date with his submission of royalty
returns, then no sleeves will be provided. Where a distributor purchased the
rights to sell a title on an outright basis, sleeves will be provided at a cost
of £0.20 per sleeve (FOB UK as at June 1989).
4.2 POINT OF SALE MATERIAL
At varying times of the year we can also offer point-of-sale items for our products.
These may include posters, catalogues (or catalogue covers), stickers etc. We
try to design such items with our international distributors in mind so that,
for instance, overprinting of the distributor's name can be easily arranged
for a particular territory.
A basic quantity of such publicity items will be offered to you free of charge.
Any further quantities are available at cost price.
4.3 ADVICE
If required we are available as a source of marketing advice and above all,
as an 'idea interchange' for all of our overseas distributors. Quite often a
good marketing idea will work well in another country.
On a general level we can of course give information about the relative popularity
of different titles in the UK and other markets, although not all territories
exhibit comparable buying patterns for all titles. We can also advise on marketing
policy and strategy including choice of advertising media, setting up, using
and maintaining mail lists, content and targeting of press releases, use of
magazine competitions as a publicity medium etc. As a footnote to this paragraph,
please note that we also welcome ideas and advice from distributors!!
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