INVESTING IN HOLLYWOOD PROTECT THE MASTERS    The moviemaker or production company should retain possession of all master elements. Original film negatives, video masters, sound masters, artwork, still photos and slides should not be delivered directly to a distributor. Instead, the distributor should be given a lab access letter permitting the distributor to order copies of the film to fulfill orders. There are numerous reasons why a producer should retain possession of master elements: 1) Masters may be irreplaceable. If lost or damaged, the producer will incur a substantial expense to replace them, if they can be replaced. 2) In the event of a dispute, it is best for the producer to control the materials. If the distributor has defaulted, for instance, the moviemaker may have a right to terminate the agreement and seek a new distributor. The moviemaker will need access to the materials, however, to make delivery to a new distributor. 3) If the initial distributor goes bankrupt, the moviemaker will not want to have to go to court to extricate materials from bankruptcy proceedings. 4) Several distributors may need access to the materials. Typically, independent filmmakers enter into multiple distribution deals. Often, one deal is concluded with an international distributor (a.k.a. foreign sales agent) to distribute the film outside North America, and one or more deals may be made with a domestic distributor for distribution in the United States and Canada. The best solution, when dealing with multiple distributors is to place the materials in a professional laboratory. Each distributor is granted a lab access letter enabling the distributor to order copies. 5) One can discourage cheating by keeping masters in a laboratory and having the lab report to the filmmaker how many copies have been duplicated. Suppose that at the end of one year, the lab reports that 10 film prints have been made. The producer report only indicates eight sales. This is a red flag alerting you that sales may have been made that were not reported. Most filmmakers would not know if their film had been licensed in Malaysia. Distributors do not order copies of films without an order in hand. Typically, they receive full payment for the film before they manufacture a duplicate and ship it. The lab access letter should include language permitting the filmmaker to receive copies of all invoices or reports disclosing the nature and amount of duplication performed. Some moviemakers insist that the laboratory ship all copies directly to the territory buyers. back