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Old 04-27-2004, 01:09 PM   #11
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Get a lawyer to negociate your deal - you're going to need one anyway. Ask the producer to suggest an agent for you, too. But for a new writer, what you get paid is similar to what something sells for on e-bay. If lots of people want it, the price goes up. If nobody wants it, you get the minimum price. No one spends more than they have to for a script - why should they?

And don't think of it as being ripped off - if they buy your script you'll have people all over town wanting to meet with you. Lots of job possibilities. Lots of places to sell your other scripts. And the *worst* deal you'll get will still be for WGA minimum, which is more than you're making at your day job (more than I was making). And all of those doors will be open to you for a while.

- Bill
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Old 04-27-2004, 01:55 PM   #12
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Thank you. I feel like my question has been throroughly answered and I'm quite sure that I will not be needing any of the info, now that I've jinxed the entire operation.
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Old 04-27-2004, 05:59 PM   #13
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Ah, I need for you to enlighten me, because I used to draft option agreements, as well as writer and producer agreements, at a studio and elsewhere (for prod co's). And optioning was absolutely the norm. In both TV and features.

One of the most important things people like me did was to "track" those options; i.e., continuously notify development and production execs which options were approaching expration. You'd give a 1-month warning (and maybe even earlier), a two week warning, 1-week warning, 3-day warning, etc. You have to let them know when the option expires, whether there's an extension available, how much it costs and how long the extension would be, usually how much money has already been invested in the project, and what elements, if any, may have been attached (and what the company's obligations to them are).

Presumably, those people confer about it if they haven't already, then the person who gets to make the decision lets B/A know whether to let the option expire (dropping the project), exercise the extension, perhaps negotiate another extension if there isn't an unused one in the agreement, or, sometimes, the decision is made to exercise the option, even if the project hasn't been greenlit yet -- that means paying the purchase price (less applicable amounts previously paid), so the company owns the script; i.e., its copyright.

Technically, the option usually needn't be excercised until the first day of principal photography.

I'm confused by your statement that (sorry, can't quote, I can't see it from this screen) spec scripts aren't usually optioned. They're the only ones that can be. If you're writing on assignment, the company already owns the rights (or has optioned them from someone else, if you're re-writing) and you're a writer "for hire," which confers no rights on you.

Since so many companies tend to develop far more projects than they actually produce, it makes sense for them to hold off paying a full purchase price until it's necessary.

There are writers who've sold options on the same scripts (novels, too) several times; the options don't get exercised for one reason or another (company can't get a rewrite they like well enough; the actor/director pair they optioned it for are no longer interested, etc.), so when the option expires, the rights revert to the writer, who's free to sell another option. I knew one of these guys once -- never actually sold a script, but lived quite well off his multiple option deals for a few projects. I think his agent usually managed to sell each option two or three times. Guy got discouraged, tho.

And Billy! Chin up! You have not jinxed it. You only jinx it when you brag to your best friend. Because (s)he will eventually turn on you and let you know in no uncertain terms that you're a nothing. Worse than nothing. You had a chance and you totally blew it. You're no good. Oh, the other sure jinx is telling your parents, who won't distinguish between an option and seeing your name on the screen real big, real soon, and they'll have all their neighbors watching the movie ads in the paper, week after week after month after year.
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Old 04-27-2004, 06:49 PM   #14
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Default Jinxing --

Ah, the 'writer's jinx'... is anyone of us not sucked into that one once in a while?

Bill, it may or may not happen -- but enjoy the ride while you can.
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Old 04-29-2004, 03:27 PM   #15
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Lulu, I can't enlighten you because I said similar last month -- I was under the impression that the majority of script 'sales' to studios were actually hefty options. I also stated that the official purchase price was often paid in the backend (as compensation for formal transfer of copyright) which may be incorrect regardless.

A received some thorough clarification to my question a few pages back on this board:

Set-up deals & purchase options:

my original comments in thread:

Six-figure option deals??:

I have a feeling I'm probably taking you the wrong way and that the majority of the sales on or in the trades or not options, but those (comparatively) rare occurrences you speak of when a script is acquired outright by a studio?
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Old 04-30-2004, 04:45 PM   #16
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I checked the links you provided; kinda confusing stuff some people have written. And kinda frustrating.

The term "backend" refers to money that comes in after the picture is released. A writer's backend is his share of profits, and/or bonuses based on box-office performance.
Standard profit participation for most begining writers is 5% of the net. If another writer is involved, you each get 2 1/2%. (And due to the nature of studio accounting, on many pictures -- certainly on one with a major star who's got a percentage of the gross -- you really can't expect to see this money because the studio numbers will indicate that there is no net.)

The purchase price must be exercised before the picture can be shot; thus, the first day of principal photography is the deadline used contractually. (Whether this is a WGA deadline or just custom, I don't know.)

If a writer is entitled (via negotiation) to a production bonus, the first day of principal photography will usually be the trigger for that, too.

Let's say I'm a studio. I option your script for 1 year for $150,000; I (typically) negotiate for an option extension (a 2nd option period) -- for another year -- for $100,000. The purchase price we agree on is $700,000. Your option agreement specifies these amounts.

The deal is likely reported in the press as $150,000 against $700,000. Why? Because you're getting a minimum of $150,000 and the total you're going to get for the rights is $700,000.

(Actually, if you've negotiated for a production bonus, sometimes that will be added to the $700,000 for the purpose of a press release. It's me saying "Hey, I'm paying really big bucks for this, because it's soooooo great, don't all of you other studios out there feel just awful that I've got it and you haven't?" And your rep might like it reported that way, too, to build your reputation. But, in fact, since the bonus will depend on production, and I may never actually shoot your script, it's kinda cheating to include it this way.)

As soon as you sign your option agreement (and the accompanying paperwork; i.e., Simpson-Rodino, tax form, writer's certificate, etc.), you get a check for $150,000.

A year goes by. I haven't yet greenlit the project, but I will as soon as I get a commitment from a director and star I want to go with. So I exercise the option extension, because I want to hold onto the option. The letter with which I formally exercise the option, includes a check for $100,000. That buys me another year to get this thing in front of the cameras.

I get the actor/director pair I want; I greenlight. We go into pre-production. If the 2nd option period is about to be up, I will exercise the option to buy; otherwise, I loose your script. But if the end of that 2nd option period isn't nearing, I may wait until 1st day of principal photography, so I don't have to take that money out of my revolving credit fund just yet; this minimizes the interest I'll pay on that money.)

When I exercise the option to purchase, I send you the $700,000 minus the $150,000 I've paid you for the 1st option period; i.e., you now get $550,000. I am deducting that 1st option amount because like most option agreements, yours deems that 1st option money "applicable against the purchase price." However, if I've exercise the extension, the amount for that (here, the $100,000) is, in your agreement as in most of them, deemed "not applicable," so I can't deduct that. Thus:

If, at the end of the 1st option period I decide I no longer want your script, I drop the option (i.e., I neither purchase it nor exercise the extension); you have pocketed $150,000, and you still have all the rights.

If I exercise the extension but then decide I no longer want your script, I drop the option (i.e. don't purchase); you have now pocketed $250,000 and still have all the rights.

But if I want to go ahead and shoot it, I've got to pay you your production bonus by the commencement of principal photography.

If I want you to re-write, your writing fee may or may not be included in the option amount. It depends on the numbers. To include the writing fee, an option amount would have to be large enough to include both WGA minimum for the option (which used to be 10% of the purchase price, don't know if that's changed) plus your at-least-WGA-minimum writing fee. Enormous option amounts almost always include the writing fee -- unless, of course, the spec writer is not being engaged to re-write, but was able to get that huge sum up front just because his script is that hot. Sometimes when figures are released to the press, the "option" money will include the writing fee. So, you can't necessarily tell from the "x against y" quoted in the trades what exactly has been included in that "x."

Lots of times writers will say they've "sold" a script when they've really sold just the option. They're thinking positively. Similarly, studios or producers will say they've "bought" a novel or script but they really have just optioned it. That's one of the reasons why it's hard to pin down actual fact from press releases, stories in the trades, etc. And in fact, occasionally you'll find a piece in one of the trades written by someone who's got his numbers screwy -- someone who apparently doesn't understand how this works, or who has gotten the numbers switched around. And you know that when he interviewed the producer his notes must have been a mess.

That's one of the problems of trying to figure out how much other people are making,and why when a producer/studio does a deal with a writer, someone in Business Affairs gets "quotes" for him -- they don't rely on what's been reported, or on his agent. They call the other companies he's worked for recently and get the actual contractual terms; i.e., not just the option amount, but whether that included writing; triggers for bonuses, if any, etc.

Sorry to be so long-winded. I've gotta get out more.
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Old 04-30-2004, 08:14 PM   #17
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Lulu, wow... Thanks, greatly appreciated. You've certainly cleared up my confusion about precisely how these deals are structured. Sounds like studio options are not so unusual afterall, and can be a little more than 5 to 20 percent of the upfront amount, which was my original (but far more limited!) understanding. I've got a lot out of these threads. Thanks everyone.
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Old 04-30-2004, 08:59 PM   #18
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"How do I get my book published, find an agent, write for television, etc.? I am often asked for advice and I must tell you frankly that I have none to give. There's a reason. If you want to become a lawyer, there is a path you follow and it is definable. And that is true for many sorts of jobs. But the entertainment business is different. There is no defined path.

Everybody comes to it a different way. And the truth is that everybody has to find their own way. This is a business that demands aggressiveness and individual get-up-and-go. So in the end you'll have to do what I did, and eveybody else you can think of did. Figure it out for yourself and make it happen.

However, I will say this: the first step is to stop asking for advice. "

Michael Crichton
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Old 05-01-2004, 01:06 AM   #19
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I just want to add one thing. I should have edited to correct this earlier, but I wasn't thinking quickly enough.

I think that strictly speaking, "backend" money doesn't have to come in only after the picture opens or is made. Ancillary income is considered backend -- free and cable tv, dvd/home video, etc. So if I'm producing and I pre-sell dvd/home video before we shoot, I may use that money to help meet my budget, but I think it's still considered "backend." Doesn't affect what or when the writer is paid, but I wanted to clarify just in case someone wants to beat me up later for the slip.
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Old 05-01-2004, 11:17 AM   #20
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I'm someone who has both optioned and sold to studios.

In the previous discussion on this topic, I think I was answering someone who said that spec script acquisitions are almost never outright sales, but almost always options.

And that has not been my experience.
Not that there aren't a lot of options, because there are.

And options are not always a good deal for the studio. When the option period runs out and the studio has to negotiate a new option, the writer can choose instead to walk away. I have a good friend who just recently did that because he didn't like the direction the rewrites were taking.

So the studio is out the money it paid him, and two sets of expensive rewriters, because it no longer controls the underlying rights and cannot move forward on the project.

But as to the basic question -- how do you get big money for a project? My method was to have a project that was wanted by more than one buyer. Getting into that position required both a certain kind of project, and careful work by a good agent. Sometimes you don't actually have to have multiple buyers -- just one buyer who feels strongly that if the script goes out to the open market, others will bid on it. To stop that, the first buyer makes a preemptive offer, which has to be high enough to make it worth the writer's while to sell it without further shopping.

If a producer shows serious interest in purchasing your project, you need to get hooked up with a reputable agent and a good entertainment attorney.

By the way, "serious interest" from a producer often translates to the producer taking your project to his or her studio, and at that point it goes through another layer of readings and approval. A producer can love a project and it will still get shot down by the studio.
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