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Other People’s Money
How to make a living while building a name in Hollywood
You’ve graduated from an accredited film school and made an award-winning short. You’ve waited for doors to open. You’ve posted your availability on Craigslist and quickly realized that no one—absolutely no one—is recruiting. Warner Bros. ain’t hiring, William Morris isn’t looking for new talent, NBC is cutting back, Disney just laid off 200 people and HBO wants big names only. Plus, your 532 MySpace friends are all broke and not one of the 76 production companies in attendance at AFM would even talk to you about your killer bird flu flick, even though it’s set in one room and could be shot in a single weekend. Law degree from Stanford, master’s degree from Harvard, engineering degree from Berkeley… they’re recruiting. Award-winning filmmaker? No one’s interested.
You’ve learned how to block a scene, move a dolly, mix a soundtrack, cut a negative, color-correct a work print, watch Hitchcock and critique Spielberg—but you don’t know how to make money and you’ve got rent to pay. You want a job and you want an Oscar (you’ve got parents to thank).
Bottom line: You need money! So let me teach you how to profit as a moviemaker.
Epiphany #1: Nobody hires a “filmmaker!” I won’t even let my daughter date a filmmaker. Everyone knows a filmmaker is a person who spent his or her money on a short (Epiphany #2: No one buys shorts) and is looking for a job. My daughter only dates producers. A producer is someone who has produced a movie (a.k.a. a feature film with a 90-minute running time) that has gotten into Sundance, Toronto or Tribeca and has a three-picture deal. Thus, let’s assume that you have made your first independent, 90-minute feature film that got accepted into a major film festival (Cannes, Berlinale, Telluride, etc.) Now, with this big assumption, allow me to show you how to make some money.
1 Producer’s Fee: When starting your career, think salary and calling card. Stop thinking you’re a big frickin’ mogul garnering seven-digit figures and start thinking of it as a job. Film school textbooks state that a producer receives a salary (a.k.a. a producer’s fee) that is equal to 10 percent of a film’s budget. If this is true (and it is true for studio features), you must take into account that that 10 percent is further divided amongst all of the producers (co-producers, associate producers, line producers and the production staff and office). Thus, after all is said and done, you should be happy with a four percent producer’s fee.
What about for a low-budget ($10,000 to $300,000), independent feature film that is closer to reality? Then your salary will range from $400 to $12,000. Bottom line? It’s not big bucks, but it’s better than nothing—and hopefully just enough to pay your rent while you make your first feature film, which is to be thought of solely as your “calling card.”
2 Theatrical Profits: Let’s assume that your first feature film, your “calling card” film, gets picked up at a festival for theatrical distribution. Then you should get more money, right? Wrong! About 95 percent of all “calling card” features discovered at a festival by a distributor’s acquisition executive receive what is called the “50-50 net deal.” This pencils out to the distributor saying “We’re partners, and you’ll get 50 percent of net profits… after expenses. Oh, and by the way: There ain’t gonna be any net profits… after expenses.” As 50 percent of nothing is nothing, never accept a theatrical distribution deal without seeing some cash (a.k.a. an advance) up front, which can be applied to or recouped from the profits, unless you totally accept that your film is just a “calling card” that will get your name out into the industry to secure you a Big Five agent (William Morris, ICM, CAA, UTA or Endeavor) who will get you big-budget deals with fat producer’s fees.
3 Window Sales: There are ancillary revenues to be derived from your “calling card” feature film if—and only if—you have a theatrical distributor who places at least 25 prints in 25 theaters in 25 major markets (New York, Los Angeles, San Francisco, etc.) for at least three weeks along with a minimum advertising budget of $150,000. This is enough exposure to make 65 percent of America believe that this thing actually is a “movie.” (Epiphany #3: A film becomes a movie when it’s in a movie theater, with a paying audience). Thus, to make money, take your film to a distributor, have them put in the P&A (print and advertising) money and give them a 50-50 net deal that will likely show you no theatrical profits but will make you the proud owner of a real movie. Now that you have a movie (not a film), you can cash in on your six ancillary sales, allowing a vendor in each industry (on-demand, video/DVD, pay-per-view, pay cable, basic cable and broadcasting) a one- to four-month exclusivity period (a.k.a. window) to maximize its revenues.
4 Foreign Sales: There are 35 nations and/or territories that purchase films from America, even if the film has never been released theatrically. This is commonly known as the “made-for-foreign marketplace.” To ensure that you procure these 35 sales (Italy, Japan, Korea, Brazil, India, etc.), negotiate a “split rights” deal with your theatrical distributor at the film festival where you were discovered. “Split rights” means exactly that: You are splitting the world rights (a.k.a. the ability to procure global revenues) from your film between two distributors, one for North America and a second for foreign territories. Therefore, at the festival, don’t obsess over either theatrical profits or window revenues from North America (let the theatrical distributor have all of them), but retain all foreign rights. Then monetize this by either licensing them one by one at a film market or discount all 35 potential sales to one distributor who is at that film market and walk away with a fat check.
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This story was published in the -- 2007 MovieMaker Magazine. The headline was:
Other People's Money/How to make a living while building a name in Hollywood
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