Back End Deal

And also if he has paid you any Advance.

After removing all these amounts…the remaining amount is called the NET Income

Which comes to the Producer or the Production Company.

Dividing the Copyright:

Films make money by exploiting the copyright

Your copyright can be divided up and licensed (or sold) in a number of ways. Rights are granted and divided up by:

1. Medium (TV, Film, Book)

2. Exhibition (DVD, Theatre, Internet, Blue ray)

3. Territory (Middle East, Domestic)

4. Duration or Time (7 yrs, # Broadcast, perpetual)

Medium – Media

· A medium is what ever an artist is using to make their art out of/ or

· Media is the ways of communicating with may people

· Film, Television, Books, Novels, Stage Plays, DVDs, Video Games, Literary work

· *any later developed medium (for the new mediumin future)

Exhibition and/ or Distribution

· Theatre

· Cable

· Satellite

· Broadcast TV

· Internet Download

· VOD (Video on Demand)

Duration

· Specified Time (7 years)

· Specified number of broadcasts, performances, etc.

· Perpetual, in perpetuity (forever)

Territory

· Country

· North America

· Middle East/ the Scandinavian countries

· Language (the German Speaking territories)

· Domestic, International

Consideration/ Compensation

Or how do I get paid??? Make Money???

Compensation

· This critical section specifies how people get paid usually the most heavily negotiated section.

· Fixed Compensation: a guaranteed sum – this is usually the only money you can actually count on

· Example for writer: half up front, other half when craftsman like work.

Contingent Compensation

· Contingent means something else must happen first before you get paid this money.

· Contingent Compensation: money you will receiveif the film is made and sold. (iffy)

· Example: writer might get 10% of net profit if the film crosses 10 million net profit.

· Bonus: Money paid when a certain goal isreached

Back End Deal

· Back-end referes to a film’s profit from the theater ticket sales, video rentals, and ancillary markets

· There are many ways that actors, directors and producers may be compensated for their work on a film. Often they receive acombination of up front salaries and back end percentages or “points”. (points means percentage, its just another word used in the film industry)

· Sometimes, instead of being paid in advance, they opt to take the gamble of back-end deals in which they receive a percentage of the film’s total revenue after release.

Profit Participation: Money received from net profits. (net profits should be defined in K)

Deferred Compensation: (usually used on low budget film when producer can’t afford to pay cast and crew) Money is not payable unless movie is released and revenue is received.

I will pay you a certain amount only if I make that amount….

Participation: contingent payment to talent (or others) based on a percentage of earnings from a motion picture (participants)

Points: Investor and talents profit participation in the film.

Other Compensation

Residuals: fees payable to a performer when the film is televised, broadcast etc. (unions set minimum rate for these) (non union is often waived).

Royalties: Money paid when the film property is exploited in other ancillary markets.

A note on Unions

· Members of the unions (WGA, DGA, SAG, etc) are forbidden to work for producers who are not signatories.

· You will then be responsible for paying residuals, adhere to the MBA (Minimum Basic Agreement), making pension and health contributions, and have reporting responsibilities.

· But it is the best way to access the skills of professional established talent and production personnel.

Production Contracts

· Contracts help manage production projects because they require the parties to agree on the terms of their relationship up front (before deadlines pass and tempers flair)

· A contract is private law, that is, it is a binding agreement between two or more people.

· If a valid contract, the government (courts) will enforce them (usually through awarding damages – money compensation)

Common Production Contracts

· Contracts for obtaining the Rights:

· a.) The Option and Purchase Agreement

· b.) Obtaining life Rights

· The Writers contract

· The Production Contract

· The Distribution Agreement

· Agreement with Talent, Crew and lawyers

· Releases and permissions (yes, these are contracts)

What is a deal memo???

· A deal memo is a preliminary outline of a contract.

· A deal memo is usually legally binding if signed by both parties.

· A deal memo lists the pertinent details of the agreement-pay, work conditions, and negotiated agreement between the cast and crew and the producer.

· **a long form contract should follow thememo

Components of a Contract

· A contract that does not contain any of these three components is unenforceable:

· Offer

· Consideration &

· Acceptance

· The offer is the fundamental proposal that the producer makes (usually coupled with terms and conditions)

· Consideration – what’s in it for me – usually money, your compensation (barter of OK)

· Each side must do (or refrain from doing) something, that he/she is not legally bound to do.

· Other common consideration in production contracts: residuals, royalties, bonuses, percentages, rights of the first refusal, etc.

· Acceptance: means the parties agree to be bound by the contract terms

· Any change is a rejection and counteroffer.

· Sunset Provision: requires acceptance bea certain date.

· Firm Offer: can be accepted by saying, “yes” before the sunset provision.

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