More on Movies, Net Profits, and Authors

Well, I've just been pointed to another LA Times piece that goes over the numbers a bit more:

• Olivia Goldsmith, author of The First Wives Club, was paid $250,000 for the movie rights, although worldwide gross for the film was reputedly $181.4 millon.


• Winston Groom was promised $350,000 and 3% of the net profit for the movie rights to Forrest Gump. He got ... $350,000.


• Alice Walker, who was supposed to get 3% of the gross for the movie version of The Color Purple, eventually got something, but only "a fraction" of what she thought she was owed.


• Art Buchwald sued Paramount Pictures for what he said was theft of the concept from his treatment for the idea of Coming to America. He won in court, after being told by the studio that although the movie grossed $350 million, there wasn't any money to pay net profits. Must have been a catered lunch or two that put them in the hole that completely.

The story has a great quote:

Ernest Hemingway once noted that authors should drive up to the California border and throw their books over a fence while studio officials throw bags of money back over the fence. That, he said, should be the end of the transaction.

Net Profits Screw Book Author

A studio taking advantage of an author - I know, it's hard to believe, eh? Thanks to a reader pointing to Sarah Weinman's blog, which pointed to this LA Times piece, we have a story of an author, Deborah Gregory, who wrote a popular line of books for girls: The Cheetah Girls. But when she signed on for a cut of net profits of the movies, CDs, DVDs, and even concerts that Disney has sold, she didn't realize she was also signing on for Hollywood accounting:

Her breezy, street-smart tales of five girls chasing pop music careers were turned into two hit television movies, and a third is now being filmed in India. Cheetah Girls CDs and DVDs have sold in the millions, and concert tours have hit more than 80 cities. Meanwhile, Disney's fabled merchandising machine flooded the market with Cheetah Girls shoes, dolls, toothbrushes, video games, backpacks, note pads, pillows, posters, T-shirts and the like.

Gregory expected to get a piece of the action when she signed a 2001 contract promising her 4% of the net from all of this activity. But like many other authors who have signed away dramatic rights, she says she never got a penny of the profits. Unlike screenwriters, who were backed by a strong union in their recently ended strike, most literary writers are at a disadvantage when negotiating with Hollywood. And it is difficult, if not impossible, for them to crack the safe.

According to the story, Gregory has seen $125,000 total in the last nine years. She's never gotten a "net profit participation statement" from Disney, although she's been asking. She lives in a studio apartment in Manhattan.

"This is an old, old story in Hollywood," said literary agent Nicholas Ellison, who has represented numerous clients in book-to-film negotiations. When studios are asked why an author has not received any net profits, he said, they often point to expenses that have grown larger than expected and contend that a hit picture has not, in fact, made money.

It's called "Hollywood accounting," and in some cases studios may be on solid ground, citing legitimate costs such as promotion and development. But in other cases, contracts contain definitions of "net profits" that make it all but impossible for an author to collect money that once seemed tantalizingly at hand.

No kidding. According to the WGA, 43 percent of Hollywood movies over the last five years were adapted from books, articles, and other writing. As Paul Aiken of the Authors Guild said, "The best advice we give is that you should try to get as much of your money upfront. You can't count on net profit deals for anything." And apparently the studios are ready to walk away from writers, including ones that aren't big names, because there are always other books available.

But don't think this is restricted to Hollywood. I've often found these "net profit" clauses in both book and magazine publishing contracts. Writers assume they're getting something real, rather than asking just what the hell gets taken out before you get to "net." It makes me angry - really angry - because this isn't some accident, or just a poor choice in wording, or even contract terms taken from some other kind of contract and assumed to be applicable, as happens often in publishing agreements. This to me reads as the deliberate intent to trick a writer into the assumption of getting one thing, while offering an opportunity to play with definitions to deliver a great big fat zero.

Let me ask you: Have you ever signed a contract that provided for participation in net sales through syndication, or licensing to overseas magazine titles? Now, I've known a couple of writers who have gotten extra money from Hearst, but other than those couple of cases, I've never heard of anyone getting money down the line.

This suggests that writers should absolutely push back on these net deals. Either the publisher isn't using the rights you grant and there is no money of which to get a cut, in which case this is opportunity wasted, or they do make sales and come up with ways of not paying. Do you ever get notification of other sales? Is there a clause, as in the book publishing business, where you could audit them? Nope, and I'm betting that's for a reason, though I cannot bring myself to calling it good. According to the story, Gregory wrote 16 novels in the Cheetah Girl series, sold 2 million copies, and got $180,000 in advances. Think that's good? Do the math: it's $11,250 per book. You could write how-to series titles and probably do better. As for the pittance she saw from what Disney got, I guess their expenses were inordinately high:

The first movie was broadcast in 2003, drawing an estimated 6.5 million viewers on its first night; the second aired in 2006, attracting 8 million. Two CD soundtracks sold a combined 3 million copies. National concert tours in each of the last three years have played to sold-out crowds. Merchandise made by a flurry of companies who leased the rights from Disney began flooding into malls across the nation.

Hollywood is again courting Gregory over a new series she's written. And this time she's not depending on just her agent, which is William Morris these days, but is independently hiring an experienced entertainment lawyer to represent her interests. You and I can't do that with magazine contracts, so maybe a "get this out of the contract" approach is what is necessary. And if the publisher insists that it needs the rights, then tell them you want something in there about being able to audit the results and to get notification of when these deals happen. Oh, and a definition of exactly what comes out between gross and net.

Hollywood Writers End Strike

The screenwriters have voted to end their strike, with 92.5 percent voting in favor of calling it off. Congratulations to the WGA members for holding out and getting significant concessions from the studios.

Screenwriters Deal Looking Good

The Washington Post and other papers are carrying news that screenwriters are strongly in favor of the tentative agreement with studios:

On the key issue of compensation for work streamed over the Internet, both sides gave a little. The studios and their network allies originally asked the guild for time to study the issue and declined to offer any residuals for digital media when talks broke off in early December. The guild, in turn, held fast, arguing that writers had to share in the profits of what may become the preeminent way to view filmed entertainment.

Under the proposal's terms, the studios would have a "window" to display programs over the Internet or other digital media without having to pay writers residuals. The window for an established show would be 17 days; the window for a new show would be 24 days. In the deal's first two years, writers would get a maximum fee of $1,200 for streamed programs.

Those windows were the biggest point of contention in Los Angeles on Saturday night. "Everybody thinks this is going to set a bad precedent," Galvin said.

In the third year, things get interesting, because writers actually get a small percentage of the gross revenue - something that the directors did not get in their recent negotiations. This sets a precedent for everyone. I hope to be able to take down the banner at the left of this window shortly on a ratified agreement.

Studios Play Hardball with Writers and Producers

The big studios are starting to cut loose writers and producers who were on long-term deals, according to Variety. Maybe the studios think they are saving money, but more likely they're trying to send a message. However, it might backfire, particularly as at least one person found out by reading online that his deal had been terminated. Maybe the studios think that they can completely settle on reality television. It might work in some cases, but eventually all "reality" all the time is going to seem pretty damned identical. In any case, I wonder if the studios realize just how strongly they are signaling that they want the writers to go away for good. You'd think that it would take an idiot not to realize what this collection of actions communicated, but then, corporate bigwigs sometimes do seem far removed from all realities except the programmed television type.

Striking Writers Talk to Venture Capitalists

Thanks to reader Debra Cash for pointing out this LA Times story: writers are talking to sources of money to see if they can create their own web site outlets:

At least seven groups, composed of members of the striking Writers Guild of America, are planning to form Internet-based businesses that, if successful, could create an alternative economic model to the one at the heart of the walkout, now in its seventh week.

Three of the groups are working on ventures that would function much like United Artists, the production company created 80 years ago by Charlie Chaplin and other top stars who wanted to break free from the studios.

Oh, this is smart on two levels. At the most basic, writers need to find ways to lessen their dependence on studios. That means going into business and developing their own production outlets for their scripts. Although venture capital firms have shied from pure entertainment plays in the past because of their risk, the money plunked down for YouTube has got them reconsidering. Their business model is fund something to get it going and then either take it public or sell it off to make their profit. And theater has often gone to wealthy individuals to bankroll shows on Broadway and other places. When the backers have enough money, they don't miss it much if it doesn't pan out, and, oh, the parties they get invited to. So now is the time for all writers to be considering how they can take what they have and make a "product" out of it. For the purists among us, don't forget that at one time, virtually all art and music was possible because of the generosity of patrons.

The other reason this is a smart move is purely negotiation. Studios stall on talks when they think they will get more leverage that way. But when they see that someone might be making money without their getting a cut, the situation becomes a powerful inducement for a rapprochement.

NBC Show Crosses WGA Strike "Line" - Looks for Scabs

From the oops-thought-I-had-posted-this department comes an entry that was written in a timely manner, if not posted in the same vein...

Carson Daly's show on NBC is going back into production, sans writers, according to the Associated Press. Daly isn't a member of the WGA, and apparently has asked pretty much anyone to send in jokes as a "fun collage" not meant to "make fun" of striking writers, according to the Smoking Gun. Given that he needs the help, maybe he should wait to go back on until the strike is over so professionals might have a chance to make him sound amusing.

Another View of the WGA Strike

Here's an interesting take on the writers' strike from an industry analyst viewpoint. Seems that some number of industry people may actually agree with the writers. The really intriguing point, though, is that the strike could have some unexpected results, like causing the studios to spend less on speculative ventures (and they put a lot of money into those), which could, ironically, turn into less money for the writers. Instead, writers will end up becoming the entrepreneurs.

Better Way to Web Pay Writers Say

The Writers Guild of America, both the East and West divisions, are the major professional organizations for those who write movie and television scripts. And the entire organization is pushing for writers to get a cut of what the studios will be making online, according to an LA Times story.

The studios are calling the stance an attack on the entire business and further demanding that the industry revisit how it allots residuals - the money paid for reruns and reuse of same movies and TV shows. They only want to start paying after a show breaks even.

Let's take this argument apart a bit. Here's something from the story:

Chief studio negotiator J. Nicholas Counter, president of the Alliance of Motion Picture and Television Producers, called the demands an "assault on the entire industry."

"We are committed to making a deal — one that is fair to both sides … one that is realistic, reasonable and respects our contributions and our business needs as well as theirs," he said.

So, is the negotiator tacitly admitting that a percentage is fair and only disagreeing with the amount? Or is he pulling what newspaper and magazine publishers still claim to writers: that there's no revenue to be had from the Internet? If that's the case, then obviously there should be no problem in offering a percentage of the nothing they get. If there is revenue, it's unreasonable for the the studios to divert everything into their own pockets.

As far as residuals, when does "break even" happen? Anyone who has watched chronicles of the business dealings in Hollywood knows that the answer is often never, after the accountants are through with such things as deducing the money that the studio would have made had it invested in something else instead. After all, not not only are there expenses from money the studios spent, but from what they didn't spend. And are these people suggesting that they get free air time, free engineering, free ... everything, until they decide that they've broken even? Tell you what, as we're only writers, let's make it simple to understand and leave the high finance out. If the studio heads want writers to forgo their share of these new revenue streams, that's fine - so long as the studio heads have their entire compensation cut equivalently. I'm sure that will work; I hear that climate change is going to bring a freak snowstorm to the ninth circle of hell.