In the documentary on legendary producer Robert Evans, The Kid Stays in the Picture, Evans explains early and often that the key to success in Hollywood is to strive to hold on to the rights to a project when those all around you are trying to obtain those rights for themselves.
Time and again, unrepresented creators fail to understand the true nature, scope, and value of their rights. That results in those creators giving away their one lottery ticket to financial success. It’s only after their project becomes a success that many first realize what they unwittingly gave away, and, in so doing, threw away their own winning lottery ticket.
Money Is Always Tied To Rights
Once your project becomes a success, that’s when the true value of your project agreements are determined. When the ancillary rights become “in demand,” you may discover what key points from your contract are missing, and whether or not you have the ability to profit long down the line as sequels, merchandising, or other ancillary content bring money into the revenue waterfall. You need to strive to always be a part of that waterfall. So, step one: Stay attached to your rights.
You can become attached to rights in a number of ways. If you draft an original screenplay based on nothing other than your imagination, then you own 100 percent of the rights in that screenplay and all of its potential ancillary rights. “Ancillary rights” means everything that is derivative of, or inspired by, the screenplay. Everything—that means all sequels, prequels, spinoffs, remakes, merchandising, books based on the film, theme park rides, video games, stage plays, etc.
When you’re the original screenwriter, it’s important to give away only those rights that are absolutely necessary to the producer who’s ultimately acquiring your project. The original screenwriter should strive to “reserve” as many rights as possible. Typically, if you’re dealing with an established player in the industry, only a very few items will be capable of being reserved. For example, you should reserve your right to draft the first re-write if the producer wants changes to the script. You should likewise reserve the right to draft the sequel, prequel, or spinoff. You might also try to reserve the right to draft traditional books (including books published online) and you may also be able to reserve the right to convert the story into a stage play.
Whether you’re the screenwriter or the person who found the project and is planning to hire a screenwriter—and your work is based on an existing property, such as a book or a video game—your rights may be limited by what the existing property owner is willing to give you beyond the right to draft a screenplay based on the property. But, that’s not what you want—what you want is to follow the business models that many successful producers have followed before you. For those players, the plan was to secure the rights in pre-existing properties. Like Bob Evans, if someone wants to exploit those properties as a film and beyond, you should insist that they take you along for the ride because you control the underlying rights.
Convince Buyers You Must Remain Attached To The Project
Producers need to secure rights. Sometimes, producers will “find rights” that people, if they were more diligent and questioning, would realize are tenuous at best and wholly unnecessary at worst. Think about every time a group gets stuck in a cave: The story plays out on every newscast and everyone knows the story, but inevitably Disney will make a broad public announcement that it has secured the rights to all of the trapped cave people almost instantaneously with their release. In reality, anyone could produce a film about that story. But, by securing the life rights of the folks in the cave, Disney tells the world, “Back off, we’re doing it first.” Many people in the industry will believe that their holding the life rights of the folks in the cave means no one else can do the story. Others realize that all that a life rights contract means is that those cave folks can’t give interviews or share their diaries with anyone other than Disney.
Recall, over 20 years ago, the love triangle in which Amy “Long Island Lolita” Fisher shot her much older lover Joey Buttafuoco’s wife Mary Jo in the face. Every news outlet covered the story. Three television movies were made by three different networks. One network secured Amy Fisher’s life rights, one secured Joey Buttafuoco’s life rights, and one secured the rights of the newspaper columnist that covered the story more extensively than anyone else.
If anyone can make a film on the subject, does having rights help in any way? The real value is supposed to be that you’re getting inside information that no one else is getting from the person whose life rights you have obtained. But in a more practical sense, studios simply feel at ease when some rights—any rights—have been secured. When you begin a pitch by stating that you hold rights, third party buyers’ ears naturally perk up and they take the pitch more seriously.
Rights Are Always A Commodity. Always Be Aware Of What’s At Issue And What You’re Giving Away
If a big company is providing the financing for your project, then they are going to want to secure the entire copyright, including all ancillary rights. Your goal is to carve out little pieces to make sure that you, too, are a part of those ancillary rights. But what’s always shocking is when a small distributor, or, say, a foreign sales agent, presents an independent moviemaker with a sales agency contract, and the language in the contract grants that foreign sales agent “rights in all media and formats presently known or hereafter created, including ancillary and derivative rights throughout the universe in perpetuity.”
While this language makes perfect sense in a situation where a studio is fully financing your project, it’s absurd when the sale agent is merely picking up the film after its been made, and only for a term of years during which he or she tries to find different territorial buyers for your film. Under these circumstances, why would the sales agent have any rights to a sequel or remake? None of the ancillary rights should be on the table with that type of buyer.
Securing The Rights Is Everything
I had the privilege of representing Charlie Wachtel and David Rabinowitz, the primary screenwriters of Spike Lee’s 2018 feature BlacKkKlansman. Wachtel and Rabinowitz have keen business savvy that allows them to spot great story ideas and secure those rights early for themselves. They found the obscure 2014 autobiography of Ron Stallworth, the African-American Colorado Springs police detective who infiltrated the Ku Klux Klan in the 1970s, at a time during which it hadn’t generated much buzz among literary critics or made its way to the bestseller lists. Still, the screenwriters recognized that the book would make a great film, and more importantly, they were able to reach out to the author directly and secure the rights, ensuring them the ability to take the first crack at writing the script and obtaining co-producer credits.
Producer David Klawans has developed a winning business model by hiring writers to pen compelling, yet somewhat obscure stories he plants to entice movie backers. For example, it was Klawans who recruited L.A. Weekly staff writer Joshuah Bearman to write an article for Wired in 2007 about a CIA mission during the Iran Hostage Crisis, which Klawans and Bearman sold to Smoke House Pictures, and which ultimately became the 2012 Best Picture Oscar-winning box office hit, Argo. Presently, multiple films based on articles that Klawans either read or commissioned are in development. These projects include Uncatchable, based on an article about a modern day Robin Hood, and Jailhouse Rock, based on an article about a prison guard who organized a singing contest for inmates.
Finding these diamonds in the rough and developing them, or having the knack to sell industry financiers on a unique vision as to how these projects can be exploited, can result in success. The only thing a producer has to do is spot the right projects and fight to hang on tight to his or her control of the project as it gets further developed down the line.
Purchase Rights Up Front
So, how do you go about securing rights?
If possible, you can always outright purchase them from the original rights holder. If a small author or magazine writer has a story and you approach them, wanting to convert it into a screenplay, some people are so tickled by the notion that they may outright sell you those rights for cheap. Perhaps they’re willing to sell all rights for $20,000 plus five percent of the profits you make from the film. Perhaps they want a bit more, or perhaps you can buy it for less. The fact is, if the writer has neither savvy representation nor ties to a big publishing house that understands what traditional Literary Option Purchase Agreements look like, you may be able to carve out terms for a straight-out purchase of the rights for a dollar amount that is within reach. The advantage of a straight purchase is that you’ll forever control those rights until you decide to option or sell them, and you’ll never be under a time limit for which to make the film, as is the case when dealing with a traditional Option/Purchase Agreement. With more books being self-published and the ease with which the Internet helps authors engage in self-publishing growing each year, straight purchases are more viable today than they’ve ever been.
The Trusty Literary Option/Purchase Agreement
Under a Literary Option/Purchase Agreement, a producer pays an upfront fee for the writer to give the producer the exclusive assignable right to produce a film based on the property being optioned. If the producer is successful and capable of commencing production (or is otherwise ready to pay the purchase price) before the option expires, then the producer (or his or her assignees) will own the project.
Options usually have an initial term of one year and that term can be subject to multiple extensions in exchange for more option payments. The initial option payment is usually applied against the ultimate purchase price, but the extended options are generally not applied against the ultimate purchase price. The Writers Guild of America (WGA) mandates that the minimum option payment paid upfront must be at least 10 percent of the ultimate purchase price. The WGA has some exceptions for low-budget films under their low-budget agreements.
Shopping Agreements: The Ugly Bastard Child Of The Traditional Literary Option/Purchase Agreement
For those producers for whom a $10,000 Option Payment might as well be a $100,000 Option Payment, the industry has, to the chagrin of the WGA, developed a producer cost savings technique that is the ugly bastard child of the Option/Purchase Agreement—a “Shopping Agreement,” or “Producer’s Attachment Agreement.” These agreements give a producer a certain amount of time to try and find financing for the project in exchange for little to no money paid up front to the owner of the rights.
Shopping and Attachment agreements are usually for less duration of time than Option/Purchase Agreements—say, six to nine months. Shopping and Attachment Agreements also should differ from Option Agreements, in that there should not be a purchase price set at the start of the Shopping or Attachment Agreement. Rather, a proper Shopping Agreement should permit the Rights Holder to negotiate his or her own deal with the ultimate financier, but with the condition that no deal can be entered unless the producer is attached.
Collaboration Agreements And Joint Ventures Are Great Ways To Secure Rights When Short On Cash
Finally, if a producer cannot afford a straight purchase or traditional option/purchase, then the producer should consider pursuing securing rights to existing stories and developing them into film projects based on a business model that utilizes a “Collaboration Agreement” or a “Joint Venture Agreement.” These types of agreements recognize that the person with the great story has as much to offer as the person looking to produce that story.
Therefore, if money is not going to be paid out for the exclusive option to control the property for a certain period, then the parties act as partners. The person who holds the rights contributes those rights to the collaboration or joint venture, and the producer contributes his producing skills and financing abilities to the collaboration or joint venture.
In turn, both parties will be deemed 50-50 rights holders of the property, and the sale of the property to a third party will be split 50-50, with each side being fully aware and fully involved in the transaction. The writer will usually get some type of producer credit and profits will be equally shared. Yes, the producer is giving up more than he or she would otherwise give up if a traditional straight-out purchase or traditional WGA governed Option/ Purchase agreement were affordable. But, if the producer is unable or unwilling to pony up the proper dough, things need to be balanced out for the rights holder in other ways.
Such collaborations are fair to both sides, and good karma generally comes to such productions that utilize this method. But the fact remains that many agents and attorneys presented with a fair, 50-50 deal are not accustomed to seeing fair deals, and their initial reaction is often to put the kibosh on it. Many savvy producers have profited from adopting a business model that involves securing rights from many different sources. The world is filled with fascinating life rights from individuals worthy of having a film made about their unique experiences, and there are countless books and stories waiting to be converted into film scripts. Make a call or send a letter to the original people that control those rights without any connection to the film industry. Even if it comes from an unknown producer, it won’t go unappreciated. Today’s inexpensively optioned story could be tomorrow’s wave-making adapted screenplay and lucrative payday. MM
David Albert Pierce, Esq. is MovieMaker’s long-running entertainment law maven. He is also the Managing Partner of his entertainment law firm in Beverly Hills, Pierce Law Group, which specializes in representing independent moviemakers.
This article appears in MovieMaker’s Winter 2019 issue. Featured image illustration courtesy of Shutterstock.