ATENEO PRESENTA CINE SIN PANTALLA

in most cases. For independent filmrnakers who are king it for the frrst time, you make a classic picture that has all that, you're gonna have a successful release, and you'll have another picture to make. José Martioez: Also, it helps if sometimes you have the director with you on a pitch, because then you see if the director is able to sort of paint a picture, give you an idea ofwhat be or she is going todo with tbe film. And that helps quite a bit as well, because you're ultimately investing in the director. Y ou're really giving the money to the director, letting him or her put their vision of their movie on the screen. You really wanna get in touch with them, quickly and early. Ramón Almodovar Ronda: Habfa una pregunta a mitad de ... Audience Member C: Y es. Hi. l'm a local attomey, and 1 thank you for being bere. The infonnation you're giving is really, really interesting and everybody's gonna benefit from it, and you obviously know what you're talking about. I have so many questions to ask you, so if 1 stutter, pardon me. rm gonna fragment my questions into two. First of all, as producers, when they come into your office and ask you, "well, yay, 1 wanna (sic) start a film, what are my best venues to find income?" 1 mean, I get that question a lot. And second of all, what can you tell us about none-disclosure agreements in the film industry? {AKWARD PAUSE FROM PANELISTS) There's two questions, 1 know they're complex! Man: Jacobson: The best venue to fmd ... fmancing? Audieoce Member C: Yeah, exactly. People come in and say "how can I start my film, where can I get the money, how do 1 start a proposal, where do 1 go"? lt's a tough question, 1 know, but ... Marc Jacobson: Come on up. Talk to me later. (AUDIENCE'S LAUGHTER) The way to fmd it, in our experience, is friends and fitmily first. Y ou need to get that off the ground. lf you're a first time filmmaker, you have to go knocking on doors. We were retained on Wednesday ... Tuesday, by a client wbose next-door neighbor is a patient of Chaz Palrninteri's dentist. He delivered the script to bis neigbbor, who delivered it to the dentist, who gave it to Chaz, and Chaz made an offer on the picture. (LAUGHTER) OK? So, 1 don't know the answer. Tbe answer is ... but, part of it is, and people say -that's typicalty the second question, "how do I get an attachment, how do 1 get tbe director attached, how do I get the star attached"? And the answer to that is: not through the agent and not through the manager. Any other way works. Tbe reason you don't go through the manager or the agent is they'll only talk to you if there's money on the table, because that's how they get paid. So if you delíver it to the next-door neigbbor whose patient is the dentist of Chaz Palminteri, and that's wbo you wanna (sic) give it to, that's how you get it to him. (Unintelligible comment from an audience member) Yeah. Read the obituaries if you want to rent an apartment! Exactly! {LAUGHTER) So if you get the attachments, then you go out and say to people, "well 1 have Chaz Palminteri attached to it, or 1 bave ... whoever you bave, 1 have Alfonso Corleone", or whatever you have, he's interested in the property. You get a little letter of intent that says, "subject to every conceivable thing in the universe that might interfere with my being involved in this picture, I'm interested in doing this picture". That's what the piece of paper says and that's enough for guys like that to say, "oh, he's interested, let's see if we can put it together". But you need to say to the person who's committing to you in this tener of intent, that you're not really committing. lt's all subject to everything under the sun, "including what we're gonna pay you, whether you're available, whether you feet like doing it, whether you're talented", whatever you wanna say. Just say, "I'm interested in producing the film". Getting that letter is worth money. And there are lots of people who don't sign the letter, because they know it's worth money, and they know you're going to take their name and use it to raise money, and then they may not get the picture, for whatever reason. You may decide not to use them or they may decide not to do it. So tbere's a lot of factors that go into it. The second thing about non-disclosure agreements ... if you mean to say that, if you submit a property to these guys, and they send you a document that says you release them from everything under the sun, "or we won't look at the property", you ha ve to sign it, or they won't look at the property. lt's kinda (sic) like black or white. If the party giving them the property is somebody who's known to them, like US, or ICM, or CAA, they may take it without that. But that's a discretionary thing with them and, yes tbe document says that they're working on a project similar to it, you're screwed. And guess what? If you don't sign it they won't release it. It's just the way it goes. (To panelists) Did l mistake that? Guys? Bill Thompson & José Martínez: No, no, no (they Jaugb). (AUDIENCE'S LAUGHTER) Bill Thompson: We bave a standard form that we send out all the time, that if we get unsolicited scripts, we just will no read them. We just return them witb a standard fonn, unless it's from somebody we know, oran agent, or somebody that we've dealt with before. It's very rare that we would entertain it. Man: Jaeobson: The reason for that goes back to something that people were alluding to before and, in particular, Bill was talking about it. The business ís built on relationships. OK? So that if 1 submit a property to Bill and then 1 tum around and sue him, he's never gonna take anything from me again ever. Ever. He's just not gonna bother. Just like the business between Wamer Bros. and Regal is really good 'cause they have a relationship and the films keep coming every three weeks.

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lt's a very, very different opportunity. So, finding that access is important so that you can have as much fi't». dom as you want. 1'11 answer the next question. No, we don't shop scripts. (AUDIENCE'S LAUGHTER) Ramón Almodovar Ronda: 1 gotta question. I would like to hear sorne comments on how the digital age is gonna transform all the distribution process. We've heard a lot about projecting, you know, and DVD, but l've read that it's still very expensive. Is that gonna take a while? Because, there will be sorne costs that will come down if you distribute in DVD instead of 35mm. So what do you think is goMa happen in the next two or three years that (sic) the digital revolution will affect the distribution ofthe film industry? Bill Thompson: Well, this has been the next big thing for severa! years, and it's still the next big thing, and it clearly is the next big thing, but it's not here yet. There are two major conventions in our business, Show West and Show East, and every year they come in with the newest technology in digital projection, and it's absolutely lt is teiTific now. There's no doubt that the technology is there and for a distributor it's great, because if you only have to produce a DVD, or a satellite transmission -as opposed toa 35mm print, that can cost 1 ,200 or I,SOO, or more, depending on the length of the fihn, there's obviously great cost's savings on the part of the distributor. What they haven't shown is why an exhibitor would do it, because they haven't shown that there's any great advantage to an exhibitor to pay the 75 to 100,000 dollars to convert a 35mm projection booth to digital, and until they can show an exhibitor why there's an advantage to him to do that, he's not goMa do it. And they have a group now working on a proposal between the major studios and the major exhibitors, as to how they can share these costs. Eventually, over sorne period of time, they will work that out. But until then, there's still a ve¡y, very small percentage of theatres that can do a video projection of these fihns. It's growing every year. Each year there are a few more that have made the conversion and with a lot of new theatres being built, sorne of them are being built with video equipment, or digital equipment, but it's still a very small percentage. So maybe with George Lucas .. .ifthe next Star Wars film, ifhe said, "you have to show it digitally", then Fox would have to work out something with exhibitors, saying "if you put in this equipment, you can deduct a certain portion of it from your film rental", or something. Maybe something like that will spur everybody on to do it. But otherwise, so far, there hasn't been any clear showing of why an exhibitor should go to that extent to pay, what are now enormous costs, to convert from one system to the other. There are a number of films ... well, a lot of major studio films that opened in New York, will open in theatres where it's being shown both digitally and on film. And so there are theatres that, ifyou look in there, in the display ads in the papers, they will say, ''these theatres are showing it digitally, and these theatres are showing it regular" and, so far, nobody has been able to show that tbe audience cares. They're stiU going by what is the most convenient show-time. So there's no clear indication that people are going to see it digitally, and so there's still no clear incentive for an exhibitor to tinance these costs to convert to another system. Marc Jacobson: We've been approached by somebody, actually, to represent them in connection with providing hundreds of theatres with the digital equipment necessary, at no cost to the exhibitor, and no cost to the distributor. Where does the money come from? We're all gonna love it, but it comes from advertizing. So the advertizing that would ordinarily be ... that you get before you see a picture for twenty minutes sometimes, will be provided by this company, digitally, as alead-in to the picture, and the advertizing revenue would be shared between the company that's fmancing the equipment and the exhibitor, as a means to encourage them to put in the equipment Bill Thompson: So on those screens, the only show those ... their adverti.zements? Jacobson: So that's the concept. So far the check hasn't crossed the table, so 1 don't know if it's really goMa be real. (AUDIENCE'S LAUGHTER) Bill Tbompson: Well, it would take something like that to get it done. Marc Jacobson: But the problem with that, in my view is, if you remember the Internet from the late 90's, it was all advertizing based and it didn't work. So ... Elia Enid Cadilla: By the same token, from what you just said, if people will see (sic) digitally the same as in 35mm, there is no objection whatsoever to have it digital-based. People will accept both mediurns just as well. Bill Tbompson: Right, right. Marc Jacobson: Goking) He wants that desperately. (AUDIENCE'S LAUGHTER) Bill Tbompson: No,no. 'Cause the technology is good enough so that, for the average moviegoer ... when you walk in and see it on the screen, you're not necessarily goMa know, whether it's ... Elia Enid Cadilla: (intenupting} witl say (unintelligible}, but most people won't care. Marc Jacobson: Right. Bill Thompson: 1 mean, there are still people like Roger Ebert out there, saying 'film is the thing, it's gotta be film, it's gotta be the depth, and the color, and everything is better on fihn". But for the average goer, 1 don't think they care. l mean there was, this cent case of Madstone theatres who had gone into business with the idea that they were going to have a series of art theatres around the country, each of which would have one screen that was going to be (sic) digital projection. They were also then going to produce fihns digitally, and then they would show them on these screens

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around the countty. Now maybe they were just ahead of their time, but it certainly did not work. And for the audience it's still content; if it's a good film, they'll go to see it, if it's a good film, regardless of how it's projected. lf it's not, if it's not a good film, it doesn't matter whether it's digital or not, they're not gonna go to see it, just because of that. Elia Enid Cadilla: (unintelligible audio for frrst portion of question, regarding illegal copies of material) ... Tiús must be stupid. Don't people realize that if the profit is nonexistent for the producers, they will not produce? Marc: Jacobson: No, they don't realize it. Bill Thompson: Right. Marc: Jac:obson: End of story. Elia Enid Cadilla: So you're just gonna keep on going through all this pain and all th.is sorrow, to produce something that you will never get the money from. Marc: Jac:obson: Let me turn that around. How many of you have downloaded a song from Kazaa? (SILENCE) Go on, tell the truth, no one's gonna sue you. Only one, two? 1 don't believe you. (AUDIENCE'S LAUGHTER) OK? l just don't. There are bundreds of thousands, of millions of peopJe who have done it. They don't care. Thay don't think about the fact that when Wamer Bros. was sold from ... Wamer Bros. Records was sold by Time Warner to Edgar Bronfram, then he sat down and he laid off 1,200 people in the first week. They don't think about that. That's how they're gonna make money; they lay people off, they lose their jobs. Don't get me started. José Martfnez: See, actualty, you know what Mar? 1 personally don't have much of an objection to it. l personally don't. We're actually in the music business as well, and 1 don't think the argument actually stands that companies are losing money because people are pirating the material. 1 think companies are losing money because they're spending money on bad music. They're spending all their money on Britney Spears, and they're advertizing, and they're over-saturating the marketplace on, you know, basically not very good music. The same thing with films. 1 mean, people have been copying films on VHS for years. People have been copying records, 1 mean, taping records, for years. lt's never hurt the industry, it's just made the industry grow. So 1 don't think ... 1 think the whole piracy thing is really just the studios and the main record labels, sort of like, attack (sic) or try to control sorne quarter market share and, in my opinion, pass the blame on the people, you know, the regular people who buy the records in any event, when in fact they're not the ones doing proper business. I mean personally, we give stuff away. Por us, anybody who's watching our movies or hearing our music is good for us, because it's all about getting our name out there and getting our bran out there. So sometirnes you've got to give everything away. I mean, if you think about the Internet, all of the browsers are free. They're free on your computer. Look at Microsoft vs. Macintosh. Microsoft basically gave their licenses to everybody, for everyone to use on their computers. Now they own 95% ofthe market share. Macintosh is very ... they kept everything really close. They have one percent of the market share. So 1 think it ultirnately helps to get your product out there. 1 don't think it's that big of a deal. 1 really don't. Bill Thompson: I don't know. On the streets of New York ... (AUDIENCE'S LAUGHTER) On the opening day of any film, you can find a video on the streets of NewYork ... José Martfnez: Exactly. Bill Thompson: lt drives me crazy. (LAUGHTER) (UNINTELLIGIBLE AUDIENCE CHA TIER) Oh, absolutely. No, every film that opens in New York, the opening day, there are sorne times days befare it opens, it's already out on the streets, on DVD. Ramón Almodovar Ronda: Eh, y después a Gustavo ... Fernando Allende: Good Moming. My name is Fernando Allende. 1 wanna (sic) welcome all of you to Puerto Rico. Thank you for your guidance. We really need it. This is a growing industry. Lots of people believe in it. There's wonderful talent: actors, actresses, great teclmicians, beautiful scenery. 1 moved to Puerto Rico two years ago, and so far l've produced three films, and it connects with what you were just asking. My question to you is, when we go .. Jet me rephrase myself. l strategically design m y films not for theatrical release. Because 1 felt from the very beginning, that we were lacking, on television, good quality material. Therefore strategically l've been designing my films to have 96minutes, to cover two hours for television. I've been filming on fibn, and then editing on Beta, on video, as usual, to go straight to DVD. We (sic) been doing great. 1 mean, it's been a great success. We've gotten, you know, 27-28, points of rating, thirty-share for two hours. I mean, they really love what we're doing. The three companies are buying our product. But connecting to your question, I'm considering how irnportant it is (sic), the movie festivals, to allow the critics and the audience to review your film, and gíve you the promotion, that will give the attention for the distribution. My question is, in all the thousands of festivals around the planet, is there any festival that will "!llow material like the one 1 have, to be shown. Meaning, uh ... this is the recent one. lt's been doing great coast-to-coast in the US. It's been twice at first place in Puerto Rico and, you know, severa! ofthe actors are here. We're very proud of this product. Where do 1 take my film to be promoted intemationally? Which festival would allow me to show my film, no, not in the fonnat of a feature, but in the fonnat of, you know, what you were talking about, DVD? ls there any festival that you know they would recommend for me to go? José Martfnez: Well, a lot of the festivals also have

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markets, like Cannes, for example. Sundance is really just a festival, but a lot of the festivals have markets where you can actually go in and like buy a booth or rent space and put your wares out. And then, people líke us go and we look and we see wbat you have, or what types of fibns do you have. Ifyou're able to screen them for acquisition's people, that helps a lot. So, 1 would look at the festivals like Toronto; they have a marketplace. Berlín has a great market, it's a festival, but it's also just a big room with all of the salespeople selling their filrns, sometimes ít's stuff that's showing, other times it's stuff that's not showing, stuff that they've had that hasn't sold for a couple of years. 1 would look into those festivals. Fernando Allende: ls the proper way to .. .l'rn sorry. Bill Thompson: Mífed, in Milan is another one that has a huge marketplace with it, selling all sorts of things: theatrical films, television films, aH dífferent rights, al! sorts of things. José Martinez: There's Cinevegas, is it? Bill Thompson: Uh,yeah. José Mardnez: There's the BFDA. Marc Jacobson: And for television there's MJP and MIPCOM. 1 mean, there's dozens and dozens of places. MIP is in Cannes, twice a year. One is called MIP, and the other one is called MIPCOM. Fernando Allende: ls the proper way to do it (UNINTELLIGIBLE AUDIO)... should you go yourself ... Marc Jacobson: The right way to do it is the one that gets you money. So, we can't answer that. Every way, is the ríght way to do it. Bill Thompson: No but, there are people who know these markets and may know the intemational buyers and acquisitions people, and if you can find one of those people to represent you, 1 would (sic) assume it would probably be to your ... José Martínez: (interrupts) Yeah, there's (sic) a lot of sales agents who you should get in touch with, and they'll be able to look at your film, and they'll say, "OK, well, this film should be sold to that company," because that's the type of flhns that they put out, or that they're good at doing. It helps you a lot. You don't have to leam as much. You hire them ... (AUDIENCE INTERRUPTION) Exactly. And (sic) that they have the relationships and they can call up someone and say, "Hey, José, I've got this type of film that you guys like, we like music films, so here's a film about music that pertains to so-and-so"; and we'll say, "ship it over to us and we'll look at it right away". Marc Jacobson: I was about to suggest to you, again (sic), I'd go back to the Independent Feature Project. lt's called IFP .org. 1 think they bave a chatter in Miami, which is relatively close. And they provide ... ifyou can make the most of that membership by simply calling them with your questions, they'll introduce you to everybody you need to know, because that's what they do, Independent Feature Project; the website is www.ifp.org, and there are people that l've sent to them, who are not members, who've been i.ntroduced toa festival consultant in New York, who tells them: "This festival is the rigbt festival for your film, this festival is the wrong festival for your fibn. If you wanna (sic) focus on TV, this is the place to go, that's the place to go". José Martinez: It's a great organization. I mean it's really worthwhile to join in, if you're interested in pursuing this career. And they have a chapter in New York, a chapter in California, a chapter in Minnesota. Ramón Almodovar Ronda: Si, ¿Gustavo? Gustavo Nieto Roa: OK, thank you. Well, rny name ís Gustavo Nieto Roa. I am here from .. .1 carne this time from Colombia, but 1 also have a distribution office in Mi ami and we're going to talle this aftemoon. But I just wanted to refer to something that you mentioned about the new technology and wbat is happening, and how we could tak.e advantage of it. And 1 just wanted to share with you a recent experience we had in Colombia. We produced a feature-docwnentary and we were not sure if we could malee it in the theatres, so we didn't want to invest in 35mm prints. So we decided to talk to the exhibitors and we made a deal with them, which consisted in ... we would go and buy video prints and we would set them up in the theatres, and if the people carne the farst two days, they would keep showing the movie and, if not, they kept the projectors, and we lost the chance. So we got ten projectors; they cos.t us $1,500 each. A release print in 35mm would have cost us the same amount of money, more or less. So, we opened this feature documentary called Los Archivos Secretos de Pablo Escobar, in ten theatres, and we have made (sic) over 100,000 spectators. We made a fantastic business, because we kept the projectors, the theatres made rnoney, we made money. So 1 think that there is a future in this. You k.now? Marc Jaeobson: Are the rights ... (TAPE ENDS) IVAM Gustavo Nieto Roa: (tape starts abruptly) ... uh, video. There were a great deal of archives from betacam, regular Hi8, regular eight mm, and people didn't care. People were just fixed on the story and the development of the story. And also, 1 am involved in the Latín Film Festival of Miami. This year we made the festival, it was a great success, and Regal Theatres in Miami agreed to show all the films that were participating in this festival, in video, in Mini Divicam. So, in the regular Regal Theatres of Miami, we made the film festival, and it was all shown in Mini Divicam. And we had many people from Brazil, Argentina, that said, "No, no, no, we will not particípate in that festival because is (sic) in Mini Divicam. How are we going to put our 35mm prints into a small tape for you to show it in a festival?" We said, "OK, if you don't want to send it in Mini Divicam, weU don't send it, and don't participate." But the

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films that participated were ... did very well, and the audiences didn't care if it was in Mini Divicam projection, or in 35 mm. They just enjoyed tbe movies that they liked. Well, that's it. Thank you. Marc Jacobson: Let me ... l have a question for you (laughs). (AUOIENCE'S BELATED APPL.AUSE FOR NIETO) Gustavo Nieto Roa: Sure. Marc Jacobson: First, 1 think what you did was brilliant. The question 1 ha ve is, did you have to guarantee the theatres any mínimum? Did you effectively forewall it by rentíng the theatre? Gustavo Nieto Roa: No, no. We went on a straight percentage, just as a regular distributor ... Marc Jacobson: (interrupts) lt's just, let's see if this works. Gustavo Nieto Roa: Right. Marc Jacobson: Brilliant. Gustavo Nieto Roa: 1 think we can do it here in Puerto Rico, also. (AUDIENCE APPLAUSE) Anywhere. José Martfnez: 1 think also, it just sounds lilce the film was interesting, an 1 think that's what helped. Ramón Almodovar Ronda: With that theme in Colombia ... yeah, you expect it to have a very good audience. Bien ... José MarUnez: l'd like to get a copy of the film (laughs}. Ramón Almodovar Ronda: Bien, vamos a continuar. Nos queda un ratito todavfa. Vamos a aprovechar. ¿Algún comentario adicional, alguna pregunta? Any questions? Any comments? Additional things you want to comment? Audience Member D: (unintelligible audio) ... The digital projection. is that an actual DVO that they just put in a machine and play it, or what format do they play? And if in the future you're willing to release a film, saying, "listen if instead of sending to Puerto Rico 35 mm prints, here ha ve a DVD, play it" ... José Martfnez: Y eah, we've actually released films where we actually have sent a DVD to the theatre, to project. Usual! y we do that on films that wc don't want to spend too much money on, 'cause we don't thin.k they're gonna make that much money. I mean we !ove it, because we can literally sit in our office and make ten copies, twenty copies, and send them out to theatres to show it. So we're totally for that. Marc Jacobson: The large-scale theatre chains are looking at it, not ... 'cause you still haven't added shipping costs. What distributors are looking for is to avoid all those costs. And they simply do it by satellite, when you're (sic) doing it in a large number of theatres. You upload it, and they download it by satellite, and there's no pbysical shipping. So that's the other way it gets distributed. Audienee Member E: (unintelligible audio) ... You guys made the Spike Jones ... José Martfnez: Yeah, Spike Jones. Audience Member E: (unintelligible audio) .. .ls that working right now? José Martinez: You're referring to ... we have a series of films, OVO Projects, (sic) that are straight to OVO, caBed the Directors' Series, where we get together with directors, like Spike Jones, Michel Gondry, Chris Cunningbam, we put togetber a lot of their music videos, sorne of their short films, and sorne of their commercials, 'cause a lot ofthese guys actually made corrunercials, and yes, they are working for us. lt's been a very great success for us. We're actually working on the next three, which l'm not allowed to disclose the names of the directors yet, but it's been a very successful venture for us. Generally speaking, 1 think it's difficult to sell short films, because there really just isn't an audience, we've found. 1 think that for film festivals it's nice to see a short film, but in terms of just putting together twenty short filrns by filrnmakers that are unknown, it's hard to sell. But íf you do get somebody that's well known, and you do get their projects involved, it's a little bit easier. We actually have another compilation of DVD's that we cut out, it's called The Res. We have a film festival called Res Fest. It travels all around the world. Tbat's also part of Palm Pictures and we do do (sic) a Best ofThe Res, whicb is available. Ramón Almodovar Ronda: ¿Un comentario adicional, antes de cerrar la sesión de la maí\ana? (UNINTELLIGffiLE QUESTION FROM AUDIENCE MEMBER) Bill Thompson: Well, it's not easy. 1 mean it's a question of knowing the theatres to go to, of knowing who the contacts are to get into those theatres, working out a deal with each of tbose theatres, and then being able to collect the money afterwards. lt's a little easier if you go in and forewall a theatre. And then you simply rent the theatre and you take in all the money that comes in at the box office. There's a filrnmaker named Henry Jaglom, who has been doing that for years, and he comes out with a new movie every year or two and through his company, they forewall theatres all over the country, and he's stil1 doing it, so 1 assume he's making money off it. But it's difficult, because you ha ve to have the expertise that you nonnally would hire a distributor for, and tben you have to know all these tbeatres around the country, and who the contacts are at each ofthese places, and tben work out a deal individually with each one of tbem. So it's not impossible, it has been done, but it's not easy. José Martínez: lt's difficult too, because you know, when you're placing ads and you have to advertize, a lot of times, for example, you hire a publicist, or if you have an in-house publicist, and he or she may have a special arrangement, where they get discounts on ads. Where as ifyou call yourself, they might give you like, "this guy's calling off tbe streets, let's charge him double." There's (sic) a lot of things, a lot of obstacles

you could run into, that if you don't know what you're doing, they may get very difficult. Although it's been done. I forget the name of this film, there's three sisters, the Hannah sisters, 1 think, 1 met them in Mexico City, who had great success with their film. They went out on a van, and literally showed their film all throughout the middle of the United States. They made great success, so it's been done. But, you know, they spent ayear of their life doing it. Bill Thompson: But sometirnes it's worth it just to get sorne theatrical exposure to a film. If you can go into New York, fore-wall a theatre for a week, even, invite the critics to see your film, pay for the advertising ... 1 mean tbere's a big expenditure there, but at least then you will ha ve had reviews in the papers so that you can then go to a video distributor and say, ''we did release the film, we did get tbese reviews", it does have that much more credibility if it worked to any extent. So sorne people are going to do it on that basis. Audience Member F: How about cross-collateralization? You know, if 1 take my film to you guys, would we be dealing strictly with expenditures and revenues of that particular film, or are other films in your catalog going to affect my earnings and my expenditures? José Martfnez: You better get a good lawyer. (LAUGHTER) M are Jacobson: Let me answer that. If you're gonna do a one-off film, cross-collateralization ... Suppose you bring your film, and José pays you a $50,000 advance, and he decides he's gonna put it in theatrical release, he's gonna put it on TV, he's gonna put it out on OVO. He's gonna recoup the $50,000 from everywhere, so the media are cross-collateralized. lfyou're good enough to get a free picture deal from hlm, where he picks up your frrst picture, and guarantees he picks up the next one, and the next one, his position is gonna be, "if 1 pay you $50,000 per picture, 1 get to recoup from all three films". So that's cross-collateralizing against films. If you're going with a you're gonna ralize by media. Ifyou're going with three films, you're gonna cross-collateralize by media and by you, across all three films. In a record deal, when you sign to a record company, if you sign to Palm Pictures as a record company, they will say, "we're gonna release your first cord; we have an option on your second, third, fourth, your frrst-bom, your second-bom, and your third-bom, and then we're gonna cross-collateralize all revenue from all sources in the universe against your advance, and your 12% royalty will pay for all ofthat, and we'll keep the rest." So the record business, in terms of it's crosscollateralizing and recoupment, is a thousand times worse than the film business, because the little royalty that you get as the artist on a record, pays for the wbole thing. Where as in the film business the revenue is split on a much larger basis. You really have to understand this. If it costs a hundred thousand dollars to make a record, and they give you the hundred thousand dollars, the record company recoups the hundred thousand, not from a 100% of the revenue but from your royalties. They still keep tbe rest. And they own the master, even after you pay for it. So it's a thousand times worse than the film business. But the cross-collateraliz.ation concept exists across in every mediwn, in every part of the entertainment business. Ramón Almodovar Ronda: 1 got (sic) a question. You've been talking today and you said that it's important that a production, a film, that can be in festivals so they can use that information wben they sell. So it is irnportant that they have been in this festival or that the critics said something positive about the film. My question is, people that see and rent, or buy, DVD's, are they actually aware of that? They buy according to what the critics say, accorámg to the festivals that the picture has beento? José Martfnez: I tbink .. .1 mean we actually use the laurels, the film festivallaurels as a marketing tool on our OVD's. For example, whenever films ... The Believer was a Grand Jury Prize winner at Sundance, and we plastered that all over the place. 1 think filmgoers, the audience ... the film festival becomes such a big part of the film industry, that people are aware offilm festivals. Everybody's heard of Sundance. Everybody's heard of Cannes. When they see those brands, it helps to sell tbe film. And the same thing with critics, you know, ifRoger & Ebert (sic), give a thwnbs-up, you know .. .If Roger & Ebert (sic) like it, 1'11 rent the film. Ramón Almodovar Ronda: So they are very useful marketing tools, those ... Martfnez: (interrupts) Yeah, absolutely, absolutely ... Ramón Almodovar Ronda: Tbose labels, to have them on theDVO. Bill Thompson: But actually, what l've been speaking about more was for you to try to sell the film to a distributor. That if you can say, ''we've been accepted by these different film festivals and we may have gotten these reviews along the line, it may help your chances of getting a distribution deal on the film. So ... José Martfnez: Yeah, it helps you on botb ends, because ultimately if we're selling the OVO on your behalf, or for you, you're going to receive money. And, you know, when you're selling it to us, if you have all these festivals and positive critics' reviews, it helps you get more money from us up front. (UNINTELLIGWLE QUESTION FROM AUDIENCE MEMBER) Marc Jacobson: The question was, he's been hearing DVD all morning, is the word video absolutely dead? José Martfnez: Well 1'11 tell you, we actually put out DVO's and VHS's still, because we fmd that people still rent VHS's. However, there's two marketplaces, in terms of selling. There's the marketplace when you (sic), people huy OVD's to own, and then there's the marketplace where people rent DVD's. People don't buy VHS's.

They rent VHS's. So we don't make VHS's for sale anymore. So, in that sense, it is dead, I think the VHS will eventually disappear, but not just yet. Marc Jacobson: And part of that, at least from the statistics in the US, is the function of penetration. DVD penetration is around 50%, and VHS penetration is upwards of 85 or 90. So, that's really what it's about. But the clients I was referring to actually sell DVD's, at a price which is frankly lower than the cost of a CD, and so they don't involve themselves in the rental business at all, and they don't make VHS. José Martfnez: And if you think, DVD's and DVD players are so inexpensive nowadays that you can actuatly go to a ... you know, we have a store in New York called J&R. You can buy a DVD (player] for $39, which is incredible. And the quaJity versus VHS, in DVD, and the extras you get on DVD, wby would you buy a VHS player? Bill Tbompson: And you can see it in your local Blockbuster or video store, just the amount of sbelf space devoted to DVD, as opposed to tapes, has just shifted so dramatically over the last couple of years. It's pretty obvious which way it's going. Audience Member G: 1 was wondering if anyone has put together a manual that would be called, "How To Place Your Movie in a Festival, for dummies"? (AUDIENCE'S LAUGHTER) José Martfnez: 1 think there are. 1 think that. .. Marc Jacobson: Go to Amazon.com. Bill Thompson: Yeah, there are books out there that list every festival in the world. Major bookstores, or you can get online ... I'm sure there are thick books with every festival listed, and also, the IFP again, is a resource that (sic) they know all these festivals, and who the contacts are at all these festivals. Ramón Almodovar Ronda: There's a book, of (sic) Pedro Zurita, he's a distributor in New York that speciaIizes in Latín American films, and it's called "Como distribuir tu pelfcula sin morir en el intento" (AUDIENCE LAUGHTER). "How to Distribute your Film Without Dying in the Intent (sic), Attempt", you know. Marc Jacobson: There's also ... (uninteJligible) an "Ultimate Film Festival Handbook". You can find it at Amazon .. .It tells you not only what is (sic) the best festi vals, it has a whole list of them, but ít also te lis you how to promote your film at the festival, how to prepare yourself. José Martfnez: Could you repeat that? Marc Jacobson: "The Ultimate Film Festival Handbook". Ramón Almodovar Ronda: Bueno, ¿algún comentario más? ¿Aiguién quiere hacer una pregunta, un comentario, alguna aportación? Les recuerdo que la sesión de la tarde va a ser aquí mismo a las dos. V amos a estar orientados más hacia el producto latinoamericano y como se está vendiendo a nivel internacional. ¿Bien? ¿Todavía? Elia ... Elia Eoid Cadilla: No, don't worry. If nobody else has any questions, I just wanted to say, our remark here, is that this has been an excellent opportunitY for us to leam a Jot of very valuable infonnation. José Martinez: Thank you. And keep rnaking movies, we like movies. (LAUGHTER) Marc jacobson: I just warma say one thing to you folks, this has nothing to do with distribution. This is a question that gets asked every time, and we're only focused on distribution, we didn't tatk (sic) it. Every piece of music in your film has to be cleared. OK? (LAUGHTER) Every single piece of music in your film has to be cleared. Every piece of music in your film has to be cleared. There's no free-bar exception. There's no thirty-second exception. There's no exceptíon for documentaries. There's no exception. OK? An<l there's two layers of clearance on every piece of music. Not one, there are two Jayers of clearance. There's a clearance for the manner in wbich the music is performed, which is typically the master ifyou're gonna license from a third party, or if you're gonna actuatly record it; that's your recording. And then there's the underlying composítion, whicb is owned (ypically by the publisher. Every piece of music has two layers of clearance. Every piece of m usic has to be cleared in your film. Don't show it to them unless it's cleared. BiJJ Thompson: That's one of the frrst questions we ask, is "do you have all rigbts to everything on these films?" And they often kind ofsay, "well, yeah, generally we do". But a lot oftimes when you pin them down they don't have everything, and that can just delay the deal endlessly. José Martfnez: We buy a lot of music-based films. We bougbt a film called Scratch, which was about the history of DJ's, the tum-tablism, and the, wow ... The c)earances on that took ayear, to get it all cleared up, because there were so many sarnpJes, and this-and-that. Even with the Directors' Series, that took us a long time because, Man Wright...you have to call up like, the publisher, it takes them a while for them to get back to you, and then they're like, "Five-thousand dollars!, click". And you have to call and try to negotiate with them, to get a better price. You know, typically that's your job, and we wiU not buy your film, unless you deliver cleared music. Unless your film is so good that you're able to convince us that, "why don't you guys do it, or help me pay the money to get it"? And sometimes we do that. Audience Member H: What's the deal with public domain? Marc jacobson: It depends on what you mean by public domain. it's sort of complicated. OK? Give me a second, here. The underlying composition, if it's in the public domain, you don't have to clear it, in the United States. But every territory has a different tum of public domain. Every territory in the world has its own