Keep in mind that traditional distributors perform an important marketing function that an Internet distributor may not be able to replace. While Internet distribution is of questionable profitability, there is no doubt that the distribution of your film over the Internet can jeopardize agreements with traditional distributors. For the aforementioned reasons, it is prudent for producers to hold onto their Internet rights until the dust settles. At this time it is not clear which Internet sites will prosper and which ones will crash and burn. If you grant exclusive rights to a company that goes out of business, your Internet rights may be tied up in bankruptcy proceedings.
Territory becomes an almost meaningless term when applied to Internet distribution.
Anyone with a computer anywhere in the world can log onto the Internet and download data from computer servers wherever they are located. No standard has been established as to how to divide revenue from Internet distribution. A popular model for Internet companies is to give information away for free, and generate revenue from the sale of advertising and ancillary services. The deals that have been concluded to date are all over the spectrum. The company pays a one time license fee.