In the entertainment industry, one of the major problems that plague projects is financing. Finding the right investors or partners can be difficult, especially if a project requires immediate capital. Specifically, in film/movie production, producers can receive funding through away called the negative pickup deal. These are deals that occur prior to the production of the film and are contracts between independent producers and studios. The contract states that on a specified day, the studio will pay a certain amount to the producer for the negative of the film.
Negative pickups are incredibly beneficial to producers. They are guarantees that once the negatives are received by the studio for distribution, the producer will receive the exact amount of financing as in the contract. Along with a negative pickup, other deals can be made between other distributors and investors, allowing for the independent producer to fully round out their budget.
When entering a negative pickup, both the independent producer and the major studio should have proper legal advice so that the contract is air-tight. For a producer, they will want to ensure there are no contractual loopholes that will allow the studio to refuse to pay the producer in the future. A producer will have gotten a loan for the amount they believed they would be paid, and if that amount does not materialize, the issue will pose as a significant financial problem to the producer. On the other hand, the studio will want to sign a contract that allows them to have some sort of say in the creative process. Otherwise, the producer can fully control the creative direction, and this may lead to differences in expectations between the independent producer and the studio. Once the project is completed up to the point of the delivery of negatives, the studio will then own the film and gain rights to the work. At this point, the project will begin to distribute in designated territories.