Many creative projects stall for reasons that never appear in a pitch deck. A deal can look “standard” and still drain value if it transfers practical control over key decisions or inserts payment mechanics that delay or dilute revenue to the people who built the project. In production and distribution agreements, that shift often happens through approval rights, delivery and acceptance terms that affect timing and leverage, and the financial definitions that drive the recoupment waterfall.

A useful way to read these agreements is to treat them like a system. Creative control provisions influence what gets made, delivery terms influence whether it can be exploited or scheduled for release, and payment provisions determine whether revenue arrives at all or only after layers of fees and expenses are recouped. Counsel’s role is to translate the contract into plain-language consequences: who decides, who can say no, who gets paid first, and what happens when the relationship breaks down.

Control: approvals that determine what the audience actually sees

“Approvals” are often presented as operational necessities, but they can function as control levers. Agreements may allocate approvals over scripts, cuts, casting, key crew, budgets, schedules, marketing, artwork, trailers, release windows, and platforms. In some deals, approvals are absolute; in others they are “reasonableness” standards or consultation rights that are easy to misunderstand.

The risk is not only that the other party can block changes. It is that the approval language can effectively re-assign authorship of major decisions while leaving responsibility for delivery on the producer. If the distributor can insist on editorial changes, require re-cuts, or withhold acceptance until subjective criteria are met, the project can enter a loop of revisions that consumes time and money without increasing the odds of release.

Well-drafted approval clauses define exactly what is being approved, how decisions are made (and on what timeline), and what happens if the parties disagree. That clarity matters most when the project hits predictable stress points: an over-budget schedule, a requested re-edit, or a marketing plan that doesn’t align with the creator’s brand.

Delivery, acceptance, and “release” obligations: the difference between finished and exploitable

Many producers learn too late that “delivery” is not simply handing over a master file. Delivery schedules are often built around a delivery list: technical specifications, legal deliverables, music cue sheets, clearances, artwork, marketing assets, and chain-of-title documents. If the contract allows the distributor to reject delivery for deficiencies, especially where deficiencies are defined broadly or include subjective standards, cash flow can pause even when the work is creatively finished.

Equally important is whether the agreement imposes a real obligation to release. Some contracts promise distribution in concept but grant the distributor broad discretion to delay, limit, or even refrain from release based on internal criteria. A project can be “accepted” yet still sit in a catalogue without meaningful promotion. If your financial model depends on an actual release date or marketing spend, the agreement should reflect that reality with specific triggers, commitments, and consequences.

Pay-through risk: how money disappears between “gross” and “what you receive”

Pay-through risk is the practical risk that revenue exists but never reaches the people who expect it, or reaches them far later than assumed. This is not always bad faith. It is often the product of contract definitions: distribution fees, allowable expenses, recoupment priority, reserves, cross-collateralization, and reporting timelines.

Most agreements set up a waterfall in which money is allocated in an order. The early tiers—fees, expenses, delivery costs, marketing expenses, interest, collection costs, can materially reduce the pool. If expenses are broadly defined or if the distributor can, in some structures, allocate overhead, internal costs, or platform fees in a way the producer did not model, the pay-through can shrink quickly. A minimum guarantee or advance may also be recouped “off the top,” meaning the producer may not see backend participation until recoupment occurs, if it occurs at all.

Because definitions do the real work, counsel typically focuses less on the royalty percentage and more on the base: what counts as “gross,” what is deducted to get to “net,” what expenses are capped, and whether any costs require pre-approval. If the agreement includes a reserve (for chargebacks, refunds, or returns), the contract should specify how reserves are calculated, when they are released, and how they are reported.

Audit rights and reporting: accountability without hostility

Audit clauses are often framed as a trust issue. In reality, they are an accountability and clarity issue. Reporting provisions should set the cadence of statements, the detail required, and the timeframe for payment after statements are issued. Audit provisions should address access to records, the scope of review, confidentiality, and the process for resolving disputes.

In distribution relationships, records can be layered: platform reports, sub-distribution statements, foreign territory statements, and aggregator data. Without a workable audit mechanism, a producer can be stuck debating definitions without the documents needed to reconcile numbers.

Remedies: what happens when the deal breaks

When a project stalls or payment disputes arise, the remedy section determines leverage. Termination rights, cure periods, and post-termination consequences are not boilerplate. They decide whether you can exit, whether rights revert, whether a distributor can continue exploiting the work, and how outstanding amounts are treated.

A producer may also need to consider security interests, collection account arrangements, and the handling of deliverables after termination. Clear drafting can reduce the risk that you lose practical control over your project while still carrying reputational or financial exposure.

One high-impact list: what to confirm before signing

• Who holds approvals over creative, budget, marketing, and release decisions, and are timelines and standards clearly defined?
• What exactly must be delivered for “acceptance,” and can rejection be based on objective criteria rather than open-ended discretion?
• How are “gross,” “net,” fees, and expenses defined, and are there caps or pre-approval requirements that protect pay-through?
•  Does the agreement require a release, and does it include any meaningful marketing commitments, or does it permit indefinite delay?
• Are reporting and audit rights practical, and do remedies meaningfully address non-payment, non-release, or material breach?

A practical way to protect the project before the documents lock in

Production and distribution agreements often look familiar because the headings repeat across deals. The risk is that small drafting choice, one standard in an approvals clause, one definition in “net receipts,” one acceptance trigger, can shift control and cash flow enough to stall a project or reduce its long-term value.

Need help reviewing a production or distribution agreement? Our Corporate & Commercial team can clarify approval rights, delivery and acceptance language, royalty and pay-through mechanics, audit provisions, and remedies so you understand the operational and financial stakes before you commit.

FAQs — Production & Distribution Agreements

What is “pay-through risk” in a distribution deal?

Pay-through risk is the risk that revenue is generated but deductions, recoupment priority, or broad expense definitions delay or reduce what is ultimately paid to the producer or creator.

What’s the difference between delivery and acceptance?

Delivery is providing the required materials and documents; acceptance is the distributor confirming those materials meet the contract’s standards. Payment timing and release obligations often depend on acceptance, not delivery.

Should a distributor be obligated to release the project?

If your business plan depends on a release, you should consider whether the agreement includes a clear release obligation, timing expectations, and consequences if the work is not released.

Why do audit rights matter if statements are provided?

Statements summarize results, but audit rights define whether and how you can verify the underlying records and reconcile deductions and allocations.

Can a producer keep creative control in a distribution agreement?

Sometimes, but it depends on leverage and deal structure. Clear “reserved rights,” defined approval categories, and objective standards can help limit control creep