The Movie Business: The Definitive Guide to the Legal and Financial Secrets of Getting Your Movie Made

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Making a movie may be part art and part science, but it's 100 percent business.

In this comprehensive and accessible guide, Kelly Charles Crabb shares the information necessary to understand the legal and financial challenges involved in getting a film from story to the silver screen and beyond.

Drawing on over twenty years of experience in...

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Overview


Making a movie may be part art and part science, but it's 100 percent business.

In this comprehensive and accessible guide, Kelly Charles Crabb shares the information necessary to understand the legal and financial challenges involved in getting a film from story to the silver screen and beyond.

Drawing on over twenty years of experience in the entertainment industry, as both lawyer and producer, Crabb reveals his insider's knowledge on:

  • Understanding copyright and intellectual property law
  • Obtaining financial backing
  • Selecting and hiring the key players
  • Overseeing the filming
  • Locking in the theatrical, home video, and TV distribution
  • Understanding merchandise licensing
and everything else you need to know to make a serious run at producing and exploiting a movie. Offering hands-on illustrations from actual movie contracts to show how the basic deals for each of the many stages are assembled, the author explains in plain and simple terms what the contracts contain and why. It gives the big picture and the finer points of movie making -- from concept to raking in the last dollar after the film is completed.

While it may not transform you into a lawyer or an industry accountant -- and that's not what you want anyway -- it will take you through all the business and legal principles you need to know to be a successful and knowledgeable professional producer.

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Editorial Reviews

Library Journal
This book's subtitle contains a misleading word: that there are "secrets" to getting a movie made. In reality, Crabb, a Hollywood entertainment lawyer, offers up a lot of cold, hard facts ranging over the legal and financial realities of the movie business-material that seems intended for legal professionals seeking a primer on that industry. Crabb, however, lays out her data in a clear and readable way for aspiring filmmakers, defining legal and financial terms, e.g., "letter of intent," "four walling," and "P&A costs," and covering everything from securing stories and hiring writers to finding investors and landing name actors. Armed with this knowledge, filmmakers will increase their odds of getting a film made in an increasingly difficult business. Required reading for every film student in America, this nicely complements The Movie Business Book, 3d ed., edited by Jason E. Squire, often viewed as the standard resource on filmmaking; highly recommended for academic libraries supporting film programs and all general collections.-Michael Tierno, New York Copyright 2005 Reed Business Information.
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Product Details

  • ISBN-13: 9780743264921
  • Publisher: Simon & Schuster
  • Publication date: 4/28/2005
  • Pages: 528
  • Product dimensions: 9.28 (w) x 6.16 (h) x 1.49 (d)

Meet the Author

Kelly Charles Crabb has a master's degree from Brigham Young University and a juris doctor degree from Columbia Law School, where he was a member of the Columbia Law Review. Teaching and lecturing frequently, he currently practices entertainment law in Los Angeles, where he lives with his wife and five children.

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Read an Excerpt


Book One

I Have a Great Idea for a Movie

With the invention of motion photography in the early part of the twentieth century and the rise of the motion picture industry in Hollywood came a new vision of art, glamour, and wealth in America. The drama on the screen often gives way to drama off the screen as each new generation of young treasure seekers try to follow that dream of "lights, action, camera." And every day in America, someone says silently or to others, "I have a great idea for a movie."

Your Quest and Help Along the Way

About This Book and How to Make the Most of It

Since there are always persons (and you may be one of them) for whom the word "hobby" holds no meaning, I decided to write this book. It is for the would-be movie producer (the person who gets the vision, develops the blueprint, assembles the players and crew to make the dream a reality, and then -- if all goes well -- finds the treasure at the end of the rainbow), as told from my perspective -- an entertainment industry lawyer.

What this book is.

This book will take you through the basic transactional steps of movie production -- development, production, and distribution -- and answer many of your questions. It will also introduce you to some fundamental principles of intellectual property law. These are things that you will need to know to get your project off the ground, avoid some potential problems down the road, and give you a shot at realizing your dream.

What this book is not.

It might be helpful to say what this book is not: This book is not about how to come up with a commercial idea, script, ormovie. If I could tell you that, I would be living on a ranch near Jackson, Wyoming, writing movie scripts and collecting big gaudy writing fees and royalty checks.

Likewise, this book is not a technical manual about how to physically create a motion picture. It is not about camera angles, setups, or cinematography. Reading this book won't prepare you for being a "best boy," "grip," or "gaffer."

A word of caution about the contract illustrations.

From time to time in this book I will use more or less authentic contract language to illustrate how certain deal terms and legal principles might appear and are applied in real life. It would be a mistake, however, to assume that the contract language is complete, the best possible wording, or applicable for any and all circumstances. A given term may or may not be applicable to a certain situation, but you will need an experienced attorney to help you, one who fully understands the circumstances. Moreover, I have purposefully avoided talking about the so-called contract "boilerplate" (language that clarifies the choice of law and a number of other things that first-year law students learn in their contracts courses). The contracts are not complete and should not be used or relied on as forms or exemplars.

Passwords and Tokens (Learning the Lingo)

Pay attention to the terminology. You will learn, if you haven't already, that Kingdom Hollywood is like a mystical land with signs and tokens. "Will the studio put up P&A?" a producer might ask. "I'm going to use a negative-pickup deal to finance my movie," another might say.

Like many professions, Hollywood insiders seem to have a language of their own. You will need to learn this language. To help you bridge this gap, I have put certain standard terms and phrases in quotes and have listed them in the index in the back.

A Linear View of the Map: Development, Production, and Distribution

The basic steps of moviemaking are called development, production, and distribution.

Development.

The goal of this step is a "packaged script." The road to a packaged script is often referred to as "development hell," for reasons that are readily apparent to those who have experienced it. Nevertheless, all moviemaking starts with this unavoidable step. The best solution is to do it well and pray for good luck.

Idea. Since you have a "great idea for a movie," you already have accomplished the first development step. Most (note that we will seldom use the word "all" in this book) good movies start with a great idea. How to tell whether your idea is commercially viable is beyond the scope of this (or any) book. I will take it on faith that your idea is "great" (and it better be -- if it is to propel you through the adventure that lies ahead).

Treatment. Once you have your idea, you will need to develop it into a story (usually reduced to writing in the form of a "treatment" or "synopsis"). Treatments can be as short as one paragraph or as long as a novel, with everything in between. You will need a treatment for several important reasons. First, a well-developed treatment or synopsis can be an important tool for introducing your idea to others, such as the writer who will develop a screenplay based on your idea, possible development financiers, and others who might help you get your project off the ground. Second, a treatment is often the first step in obtaining copyright protection for your project. An accurate legal adage of copyright law is "you can't copyright an idea -- only the tangible expression of an idea." Unless your project is based on an earlier copyrighted work, like a novel, comic book, or prior movie, the treatment is the most simple and earliest tangible expression of your idea.

Why all this sudden talk about protection? As you will see, the question "Who owns this story?" is one that should occupy an important place on your ever-increasing list of concerns.

Screenplay. From the treatment, you will develop the "script" or "screenplay" -- a standardized art form. You should learn this form yourself (by taking classes, reading one of the several helpful books on the subject of writing screenplays, or by carefully following the form of an acceptable sample -- successful screenplays are often published; there are also computer software screenwriting programs that guide the writer through the correct format). The screenplay, like the treatment, incorporates the story and is a copyrightable tangible form of expression. The screenplay, unlike the treatment (which is usually a narrative description of the story), is characterized by a series of scenes that form the structure of the story. The screenplay contains the dialogue and describes in order the actions of the characters.

Packaging. Once the script is finished, the ideal next step is to get a well-known actor and/or director "attached." An actor who has credibility at the "box office" or a director who has made successful movies in the past can, in theory, attract the attention of studios or independent financiers. Attaching "elements" (actors, directors, attractive locations, sponsors, etc.) is called "packaging." For reasons explained later, packaging -- especially by an independent producer -- is challenging and becoming more so.

Setup. The happy ending of the development stage is a "green light" for your screenplay (which is necessarily accompanied by lots of other green things -- dollars). If your screenplay (packaged or not) is as great as your idea, someone may either buy it from you -- in which case this book will end for you shortly -- or back you by literally putting his or her money on the line to let you produce the movie. When the money is in place, your project is "set up."

Production.

Production is the process of putting on film (or some digital format that may emerge in the future) the idea expressed in the script. It takes a lot of work and if you are thinking that this is the "fun" part, think again (that's what directors are for -- to have the fun you thought you were going to have). There are usually three phases within the production stage: preproduction, production, and postproduction.

Preproduction. By now, you have set your project up for production by obtaining a commitment for the production money and are ready to start. It's time to get serious about pulling your cast together; hiring a director (if you don't already have one attached) and a crew; finding and securing locations; designing sets; designing costumes; and in other ways getting ready for the hundreds of decisions and problems that are coming your way. You will also want to come up with a budget that will actually work, because along the way you will write a lot of checks. Did I mention the guilds (unions)? Many actors, directors, crew, and even musicians belong to collective bargaining units or unions and if you use guild members you will have to deal with these guilds. You'll need insurance. You'll need an accountant. And, yes, you'll need a lawyer. This is the job you are signing up for. The producer oversees all of this.

Production or principal photography. Then comes that magic day -- the day that "principal photography" (or the "shooting") begins. The script is finished. The locations and sets are ready. The cast is there. The costumes are hanging on the rack. The hairdressers and makeup artists are at the ready. The cameras and crews are poised. The accountants have their checkbooks. The lawyers give a discreet nod. Everything is ready to go. Right?! If you did your job correctly during development and preproduction, you may make it through this.

Postproduction. The film is "in the can" (in other words all of the scenes have been filmed) and the crew and cast have gone their way. Now it's time to finish the job. The film has to be edited and the soundtrack finished. And all the relevant items have to be readied for delivery to the distributor -- and that's when you get to find out if you have been keeping track of the process. Did you remember the legal things? If you start thinking about such things during postproduction, it is too late.

Distribution.

Ultimately, it will depend on the distributor to get this newly created masterpiece to the public and vindicate the hours of abuse you have taken from all those naysayers who said you couldn't do it. Theaters have to be persuaded to show it and the people have to be enticed to come. "Prints" of the now completed movie will be made and the "advertising" process will begin. All of this comes with a cost.

Theatrical distribution. The primary initial goal is to get the finished movie into the local movie theater. The big screen is still considered the best first step for getting the movie out there. The system is geared for this: The critics write their reviews, the ads come out (newspapers, television, posters, etc.), the word of mouth starts to spread, and the box office results are reported. All this publicity helps the launch of the movie along its destined path. A theatrical release can take different forms: A "general release" is designed to cover a wide, national audience; a "platform release" is targeted to a smaller demographic or geographic area at first in order to build toward a wider base. A movie can even be "four-walled" (played in a single theater). If the movie is a certain type, it may also find its way into a specialized distribution network -- the "art" film is the prime example of this.

Video. With the advent of the video recorder (and the legal cases which allowed its use at home2), movies on videocassette and now DVD (and who can predict what the future holds) have become a common feature of our lives -- and an important secondary source of revenue. You can rent or buy them.

Television. Eventually, the movie will find its way to the small screen. Television is also an important and long-term source of revenue.

Ancillary markets. Movies yield a surprising variety of moneymaking possibilities. Sound-track albums featuring the musical score and songs from the movie are one popular source of revenue. Certain movies spawn toys and other merchandise.

There'll Be Help Along the Way

And you will need help. Even a casual observation should teach you that the process of making a movie is one part art, one part science, and all business. Illusion on film is a product of technology, skill, and even daring. The legal and business challenges are no less complicated than in any walk of life. You won't be able to do it alone. Following is a sample of the people who will enter your life:

Lawyers.

Oh, I know, "let's kill all the lawyers." But wait a minute. Years ago, there were a series of television commercials for Fram oil filters. A workaday mechanic appears in the ad making reference to a blown engine. "Too bad," says the mechanic about the unfortunate owner of the car, "if he would have come to me earlier I could have installed one of these" -- he holds up (you guessed it) a Fram oil filter -- "for six bucks, but now it's going to cost him big." Then our mechanic delivers the catch line: "You can pay me now or pay me later."

Unfortunately for you, and lucky for lawyers (like me), there are certain legal issues in the film business that are like the latent motor engine problems that the Fram oil filter was designed to prevent. Early consultation with a lawyer regarding these issues can help avoid costly patchwork -- or worse, disaster -- later on. It is critical to have some basic understanding of the key legal issues yourself. But your own knowledge should not be substituted for access to a lawyer who has an in-depth knowledge of and experience in the legal aspects of the movie industry -- especially "intellectual property" (as it relates to the creation, ownership, and exploitation of stories, music, trademarks, and other so-called nontangible assets) and other issues related to film industry customs.

Lawyer types. In the industry, there are lawyers and there are lawyers. Some lawyers are specialists even within the entertainment industry -- they cater to certain types of clients. The type of practice an entertainment lawyer has may also affect his fee arrangement -- some lawyers may be willing to take you on a percentage-of-what-you-earn basis and some lawyers may not. Generally speaking, lawyers representing producers prefer hourly billing, with certain tasks related to the actual production process performed on a "flat fee" or "capped fee" basis. Lawyers representing "talent" (directors and actors, for the most part) will often work for a percentage of the talent's revenues. Most lawyers will insist that, regardless of the fee structure, you will have to pay your own disbursements (copying and telephone charges, for example).

Lawyer services. In a way, it is jumping the gun to try to summarize what film lawyers do for producers, as this is the subject matter of this book. But perhaps a quick overview will help put everything in perspective as we venture forth into the land of detail. As noted earlier, to reach the quest -- get your movie out there -- you will move through three stages: development, production, and distribution (or exploitation). Here's what lawyers will generally do in each stage:

A lawyer's services during development. A lawyer will help you establish a strong (hopefully unassailable) "chain of title" (a pedigree so to speak) related to the most important asset in this process -- the story and all the permutations of the story: the treatment, the screenplay, and the movie itself. He or she will help you with contracts that clarify your position regarding the rights (optioning the film rights to a book, for example). Lawyers will help you hire a writer and, at the same time, help you maintain control and ownership of the writer's work product. If you are able to get a director or actor interested in your project, a lawyer will help you get that director or actor committed. Unless you are already well established (and if you are, I am flattered that you would consider reading this book), and even then, most lawyers will want to charge you an hourly fee for this type of work, as it is virtually impossible to predict how difficult/complicated or easy/simple it will be to accomplish.

A lawyer's services during production. You will need a lawyer's help in connection with the financing of your project, as any investor will likely insist on a contract clarifying the benefits of his or her bargain. You will need locations, costumes, designers, makeup artists, camera people, electricians, music composers, sound technicians, gaffers, grips, best boys, and, yes, of course, actors and actresses. You will need contracts, and hence lawyers, for each of these purposes and persons. Lawyers perform services related to the financing of a motion picture on an hourly basis. These transactions are generally complicated and involve a lot of paperwork. The other contracts related to the actual production of the movie are sometimes performed on a "flat fee" basis or "capped fee" basis. In this event, the lawyer and you will decide what services are included in the flat or capped fee and what services are not. For example, litigation or resolving disputes that may arise will normally not be covered under flat fee or fee cap.

A lawyer's services during distribution. In order to make money, the movie must be exploited -- play at theaters, be sold in the form of DVDs and/or videocassettes, and later broadcast on television. Merchandise and soundtrack albums, related to or based on the movie, might also be sold or licensed. These transactions too require contracts and lawyers to do them.

In sum, you will need lawyers to help you on your adventure. You will need lawyers who are competent in basic intellectual property law, film financing and entertainment transactions, licensing, and other related areas, such as trademarks.

Professional writers and others who may own your idea.

It is virtually impossible today in the United States to get a movie made without a screenplay. For now, you will have to trust me on this. You have two choices: You can write it yourself or, if you don't have the experience or the skill, you can hire (or, if you have no money, persuade) someone else to write it for you. Most producers hire writers to get the screenplay finished.

If you write the screenplay exclusively by yourself, on your own time (meaning that you are not writing it within the scope of your day job -- if you have any question about this, you had better see a lawyer), without taking money from others and without signing a piece of paper to the contrary, then you will probably be the owner (unless of course you copied or based your script on someone else's work).

If someone else writes the script, even if it is your brother, best friend, or spouse, that person may own it as a matter of law. Or, if you write it together with someone else, you may own it together as a matter of law. And please note that this "writing something together" thing can sneak up on you. Suppose you borrow your aunt Lucy's formulation of dialogue or insert an anecdote told you by your cousin Lenny in the screenplay, the use of someone else's contribution, however small, can raise questions related to copyright law. For the most part, unless you get that other person to sign a piece of paper with certain magic language and perhaps do other things consistent with that piece of paper, these problems will persist and -- like the problems facing the imprudent motorist who failed to use the Fram oil filter -- will loom larger than life later on.

Agents, managers, and their constituents.

Unless you intend to use your local high school drama program students to do the acting, you are destined to interface with the world of professional "talent" -- a term which often refers to actors or actresses, but can also mean directors and other "artists" whose skills are relied on to enhance the quality of the movie. The professional talent world, like any system, has its own structure, culture, and traditions. An established actor, for example, will have a "manager," an "agent," a "publicist," and a lawyer, each with a specific role to play.

Managers. The manager is generally responsible for running the "business" that is embodied in the artist's career. The manager may help the artist invest the income, file taxes, and make important business decisions whether related to the artist's entertainment career or not. Some managers are professional accountants (or CPAs) and a few come from the legal profession, but there is no general rule. Unlike agents, managers do not have to "register," but technically they are restricted from doing what agents do -- find work for their clients.4 Managers can work with one or many clients and there are solo managers as well as large talent management companies. The manager will likely be in proximity to the artist and so he or she may be a great way to make the "pitch."

Agents. In essence, an "agent" is responsible for bringing work to the artist he or she represents. Depending on the current stature of the talent, the agent is the artist's sword or shield. For example, an agent who represents a promising, but not-yet-established performer will spend a good deal of time calling producers, or more particularly "casting agents," who represent producers, on a particular movie project, pitching the artist's promising future and trying to secure work. But if the performer is well established, the agent may spend some or all of each day screening the many offers that come in the door without solicitation; the rest of the day may be spent calling well-established producers who have a "hot" property that is attractive to the client.

Some agents may read screenplays (or read the "coverage" by professional readers) and play an active role in helping the client decide whether or not to accept the project; other agents may simply pass the opportunity on to the artist (or the artist's manager). The corollary wisdom bears noting -- some performers read screenplays and make their own decision and others (at their own peril, I believe) rely on advice. Agents, usually well versed in the art of the transaction, may also play a highly active role in the basic negotiations of a deal. Agents work on a commission basis (usually 10 percent of the client's compensation) and can, therefore, be relied on to aggressively pursue the highest compensation possible. They will also demand creature comforts (first-class hotels and travel and private dressing rooms, for example) for artists as well -- agents know that an unhappy client is not good for business.

The talent agent world is dominated by large agencies with formidable staying power: William Morris Agency (the granddaddy of talent agencies whose history reaches back to the early 1900s), Creative Artists Agency or CAA (started by former William Morris agents in 1975), and International Creative Management or ICM are traditionally known as the "big three," but upstarts such as United Talent Agency or UTA and Endeavor are also forces to be reckoned with. There are many smaller agencies as well, some with specialities (such as the Gorfaine/Schwartz Agency, which represents songwriters, composers, and music supervisors).

Talent agencies are regulated in the state of California and a person must qualify to become an agent there under the Talent Agency Act5 which also limits the scope of the agent's business. Agents who represent professional actors must also qualify under the rules of the Screen Actors Guild (SAG) and must sign an agreement that prohibits them from being producers of projects featuring their own client's services, as this is seen by SAG as a "conflict of interest" -- a situation where the agent is tempted to put his or her own interests ahead of the client's. Agents well understand the clout that actors have in getting projects made and attracting people to the theaters. If the agents were the producers, they might lose their objectivity and "sell" their clients on an inferior project just to line their own pockets (or so goes the reasoning behind SAG's position). Agents on the other hand wonder why managers, who are not restricted by the Talent Agency Act or any agreement with SAG, escape the conflict-of-interest trap. This requirement on the part of agents to comply with the Talent Agency Act is a major source of friction between agents, who are bound by the act and must register, and managers, who are not bound by legal restrictions of the act or the requirement to register.

Other professionals in your future.

A producer also needs access to a good film accountant, in the event that he or she actually finds someone to back the project financially. A producer should make lists of qualified unit production managers (or UPMs), who can help locate a crew and handle the technicalities of an ever-increasing technology-laden business. You will need help preparing an accurate and industry-acceptable budget. Accountants and "line producers" can help with this process. Eventually, you will need a director (who is the captain of your ship), a casting agent, a cinematographer, costume designers, set designers, location managers, and builders, electricians, grips, best boys, editors, sound engineers, drivers, caterers, and so on. If you are lucky (or unlucky, as the case may be), you will meet them all. Some, but not all of these people are represented by agents.

Copyright © 2005 by Crabbapple Music Corporation

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Table of Contents


Foreword

Preface

Book One

I Have a Great Idea for a Movie

Your Quest and Help Along the Way

About This Book and How to Make the Most of It

Passwords and Tokens (Learning the Lingo)

A Linear View of the Map: Development, Production, and Distribution

There'll Be Help Along the Way

From Idea to Treatment

Some Fundamentals of Copyright Law

Registration

Implied Contract

Who Is the Author of the Treatment?

Using Someone Else's Story

The Option Agreement and the Acquisition

Rights Granted

Reserved Rights

Representations, Warranties, and Indemnities

Respecting "Chain of Title"

Publicity Rights -- Name and Likeness

Miscellaneous Provisions

Using Someone Else's Life -- Publicity Rights

Book Two

The Screenplay:

Nothing Happens Until It's Finished

Hiring a Writer

The Screenplay as a Blueprint

Papering the Writer's Deal

Obtaining an Existing Screenplay

Pros and Cons of Using a "Spec Script"

Doing the Acquisition or Option Deal

Making the Dream Come True

Obtaining Development Money

Sources of Development Financing

Structuring Development Deals

Book Three

Packaging the Elements

Identifying the Elements

What Do You Want to Be?

Packaging Basics

Papering the Package

The Deal Memorandum -- an Overview

The Structure of the Deal Memorandum

Book Four

Getting the Money to Make It Happen

Production MoneyRules

Some Words of Warning

The Basic Independent Movie Investment Deal

The Details Behind the Standard Investment Deal

Bringing the Money Home

The Split-Rights deal

The Film Festival Route

Financing the "Gap"

The Coproduction Deal

The "Negative Pickup"

Knowing and Appreciating Your Investor(s) Risks

The Studio as Financier

The Studio Deal

Your Deal with the Studio

Book Five

Producing the Movie

Some Legal Preliminary Matters

Preproduction -- Getting Ready to Roll

Corporate Organization

The Guilds

Assembling the Main Players

Long-Form Talent Agreements

Net Profits and Variations

Advanced Guild Issues: Joining SAG and DGA

Procuring Everything Else

Crew Agreements

Location Agreements and Permits

Product Placements

Filming the Movie

The Point of No Return?

Guild Rules Applied

Things that Happen During Principal Photography

Finishing All Production Details

Dubbing

Effects

Music

Final Credits

The Legal Details

What's in a Name? MPAA Title Registration

Title Clearance/Title Reports

Copyright Report

Script Review and Clearance

MPAA Rating System

Music Clearance

Insurance

Book Six

Making Money with the Movie

Theatrical Distribution

Theatrical Distribution Basics

Distribution Agreement

Use and Return of Print Materials

Merchandise Licensing

Merchandising Rights

Merchandising Rights Deal

The Merchandise Licensing Deal

Sound-Track Albums

The Sound-Track Album

Sound-Track Album Deal

Home Video

Home Video

The Home Video Deal

Television

Television

The Basic Television Deal

Print Publishing

Novelization

Screenplay

Stage

From the Screen to the Stage

The Definition of Live Performance

Live Performance Exploitation

Separated Dramatic Rights under the WGA Agreement

Interactive Works

From Passive to Interactive

Definition of "Interactive Multimedia"

Interactive Multimedia Exploitation

Internet

The Net

Web Sites

Territory

Rights

Deliverables

Company Obligations

Consideration

Other Terms

Epilogue

Notes

Index

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First Chapter

Book One

I Have a Great Idea for a Movie

With the invention of motion photography in the early part of the twentieth century and the rise of the motion picture industry in Hollywood came a new vision of art, glamour, and wealth in America. The drama on the screen often gives way to drama off the screen as each new generation of young treasure seekers try to follow that dream of "lights, action, camera." And every day in America, someone says silently or to others, "I have a great idea for a movie."

Your Quest and Help Along the Way

About This Book and How to Make the Most of It

Since there are always persons (and you may be one of them) for whom the word "hobby" holds no meaning, I decided to write this book. It is for the would-be movie producer (the person who gets the vision, develops the blueprint, assembles the players and crew to make the dream a reality, and then -- if all goes well -- finds the treasure at the end of the rainbow), as told from my perspective -- an entertainment industry lawyer.

What this book is.

This book will take you through the basic transactional steps of movie production -- development, production, and distribution -- and answer many of your questions. It will also introduce you to some fundamental principles of intellectual property law. These are things that you will need to know to get your project off the ground, avoid some potential problems down the road, and give you a shot at realizing your dream.

What this book is not.

It might be helpful to say what this book is not: This book is not about how to come up with a commercial idea, script, ormovie. If I could tell you that, I would be living on a ranch near Jackson, Wyoming, writing movie scripts and collecting big gaudy writing fees and royalty checks.

Likewise, this book is not a technical manual about how to physically create a motion picture. It is not about camera angles, setups, or cinematography. Reading this book won't prepare you for being a "best boy," "grip," or "gaffer."

A word of caution about the contract illustrations.

From time to time in this book I will use more or less authentic contract language to illustrate how certain deal terms and legal principles might appear and are applied in real life. It would be a mistake, however, to assume that the contract language is complete, the best possible wording, or applicable for any and all circumstances. A given term may or may not be applicable to a certain situation, but you will need an experienced attorney to help you, one who fully understands the circumstances. Moreover, I have purposefully avoided talking about the so-called contract "boilerplate" (language that clarifies the choice of law and a number of other things that first-year law students learn in their contracts courses). The contracts are not complete and should not be used or relied on as forms or exemplars.

Passwords and Tokens (Learning the Lingo)

Pay attention to the terminology. You will learn, if you haven't already, that Kingdom Hollywood is like a mystical land with signs and tokens. "Will the studio put up P&A?" a producer might ask. "I'm going to use a negative-pickup deal to finance my movie," another might say.

Like many professions, Hollywood insiders seem to have a language of their own. You will need to learn this language. To help you bridge this gap, I have put certain standard terms and phrases in quotes and have listed them in the index in the back.

A Linear View of the Map: Development, Production, and Distribution

The basic steps of moviemaking are called development, production, and distribution.

Development.

The goal of this step is a "packaged script." The road to a packaged script is often referred to as "development hell," for reasons that are readily apparent to those who have experienced it. Nevertheless, all moviemaking starts with this unavoidable step. The best solution is to do it well and pray for good luck.

Idea. Since you have a "great idea for a movie," you already have accomplished the first development step. Most (note that we will seldom use the word "all" in this book) good movies start with a great idea. How to tell whether your idea is commercially viable is beyond the scope of this (or any) book. I will take it on faith that your idea is "great" (and it better be -- if it is to propel you through the adventure that lies ahead).

Treatment. Once you have your idea, you will need to develop it into a story (usually reduced to writing in the form of a "treatment" or "synopsis"). Treatments can be as short as one paragraph or as long as a novel, with everything in between. You will need a treatment for several important reasons. First, a well-developed treatment or synopsis can be an important tool for introducing your idea to others, such as the writer who will develop a screenplay based on your idea, possible development financiers, and others who might help you get your project off the ground. Second, a treatment is often the first step in obtaining copyright protection for your project. An accurate legal adage of copyright law is "you can't copyright an idea -- only the tangible expression of an idea." Unless your project is based on an earlier copyrighted work, like a novel, comic book, or prior movie, the treatment is the most simple and earliest tangible expression of your idea.

Why all this sudden talk about protection? As you will see, the question "Who owns this story?" is one that should occupy an important place on your ever-increasing list of concerns.

Screenplay. From the treatment, you will develop the "script" or "screenplay" -- a standardized art form. You should learn this form yourself (by taking classes, reading one of the several helpful books on the subject of writing screenplays, or by carefully following the form of an acceptable sample -- successful screenplays are often published; there are also computer software screenwriting programs that guide the writer through the correct format). The screenplay, like the treatment, incorporates the story and is a copyrightable tangible form of expression. The screenplay, unlike the treatment (which is usually a narrative description of the story), is characterized by a series of scenes that form the structure of the story. The screenplay contains the dialogue and describes in order the actions of the characters.

Packaging. Once the script is finished, the ideal next step is to get a well-known actor and/or director "attached." An actor who has credibility at the "box office" or a director who has made successful movies in the past can, in theory, attract the attention of studios or independent financiers. Attaching "elements" (actors, directors, attractive locations, sponsors, etc.) is called "packaging." For reasons explained later, packaging -- especially by an independent producer -- is challenging and becoming more so.

Setup. The happy ending of the development stage is a "green light" for your screenplay (which is necessarily accompanied by lots of other green things -- dollars). If your screenplay (packaged or not) is as great as your idea, someone may either buy it from you -- in which case this book will end for you shortly -- or back you by literally putting his or her money on the line to let you produce the movie. When the money is in place, your project is "set up."

Production.

Production is the process of putting on film (or some digital format that may emerge in the future) the idea expressed in the script. It takes a lot of work and if you are thinking that this is the "fun" part, think again (that's what directors are for -- to have the fun you thought you were going to have). There are usually three phases within the production stage: preproduction, production, and postproduction.

Preproduction. By now, you have set your project up for production by obtaining a commitment for the production money and are ready to start. It's time to get serious about pulling your cast together; hiring a director (if you don't already have one attached) and a crew; finding and securing locations; designing sets; designing costumes; and in other ways getting ready for the hundreds of decisions and problems that are coming your way. You will also want to come up with a budget that will actually work, because along the way you will write a lot of checks. Did I mention the guilds (unions)? Many actors, directors, crew, and even musicians belong to collective bargaining units or unions and if you use guild members you will have to deal with these guilds. You'll need insurance. You'll need an accountant. And, yes, you'll need a lawyer. This is the job you are signing up for. The producer oversees all of this.

Production or principal photography. Then comes that magic day -- the day that "principal photography" (or the "shooting") begins. The script is finished. The locations and sets are ready. The cast is there. The costumes are hanging on the rack. The hairdressers and makeup artists are at the ready. The cameras and crews are poised. The accountants have their checkbooks. The lawyers give a discreet nod. Everything is ready to go. Right?! If you did your job correctly during development and preproduction, you may make it through this.

Postproduction. The film is "in the can" (in other words all of the scenes have been filmed) and the crew and cast have gone their way. Now it's time to finish the job. The film has to be edited and the soundtrack finished. And all the relevant items have to be readied for delivery to the distributor -- and that's when you get to find out if you have been keeping track of the process. Did you remember the legal things? If you start thinking about such things during postproduction, it is too late.

Distribution.

Ultimately, it will depend on the distributor to get this newly created masterpiece to the public and vindicate the hours of abuse you have taken from all those naysayers who said you couldn't do it. Theaters have to be persuaded to show it and the people have to be enticed to come. "Prints" of the now completed movie will be made and the "advertising" process will begin. All of this comes with a cost.

Theatrical distribution. The primary initial goal is to get the finished movie into the local movie theater. The big screen is still considered the best first step for getting the movie out there. The system is geared for this: The critics write their reviews, the ads come out (newspapers, television, posters, etc.), the word of mouth starts to spread, and the box office results are reported. All this publicity helps the launch of the movie along its destined path. A theatrical release can take different forms: A "general release" is designed to cover a wide, national audience; a "platform release" is targeted to a smaller demographic or geographic area at first in order to build toward a wider base. A movie can even be "four-walled" (played in a single theater). If the movie is a certain type, it may also find its way into a specialized distribution network -- the "art" film is the prime example of this.

Video. With the advent of the video recorder (and the legal cases which allowed its use at home2), movies on videocassette and now DVD (and who can predict what the future holds) have become a common feature of our lives -- and an important secondary source of revenue. You can rent or buy them.

Television. Eventually, the movie will find its way to the small screen. Television is also an important and long-term source of revenue.

Ancillary markets. Movies yield a surprising variety of moneymaking possibilities. Sound-track albums featuring the musical score and songs from the movie are one popular source of revenue. Certain movies spawn toys and other merchandise.

There'll Be Help Along the Way

And you will need help. Even a casual observation should teach you that the process of making a movie is one part art, one part science, and all business. Illusion on film is a product of technology, skill, and even daring. The legal and business challenges are no less complicated than in any walk of life. You won't be able to do it alone. Following is a sample of the people who will enter your life:

Lawyers.

Oh, I know, "let's kill all the lawyers." But wait a minute. Years ago, there were a series of television commercials for Fram oil filters. A workaday mechanic appears in the ad making reference to a blown engine. "Too bad," says the mechanic about the unfortunate owner of the car, "if he would have come to me earlier I could have installed one of these" -- he holds up (you guessed it) a Fram oil filter -- "for six bucks, but now it's going to cost him big." Then our mechanic delivers the catch line: "You can pay me now or pay me later."

Unfortunately for you, and lucky for lawyers (like me), there are certain legal issues in the film business that are like the latent motor engine problems that the Fram oil filter was designed to prevent. Early consultation with a lawyer regarding these issues can help avoid costly patchwork -- or worse, disaster -- later on. It is critical to have some basic understanding of the key legal issues yourself. But your own knowledge should not be substituted for access to a lawyer who has an in-depth knowledge of and experience in the legal aspects of the movie industry -- especially "intellectual property" (as it relates to the creation, ownership, and exploitation of stories, music, trademarks, and other so-called nontangible assets) and other issues related to film industry customs.

Lawyer types. In the industry, there are lawyers and there are lawyers. Some lawyers are specialists even within the entertainment industry -- they cater to certain types of clients. The type of practice an entertainment lawyer has may also affect his fee arrangement -- some lawyers may be willing to take you on a percentage-of-what-you-earn basis and some lawyers may not. Generally speaking, lawyers representing producers prefer hourly billing, with certain tasks related to the actual production process performed on a "flat fee" or "capped fee" basis. Lawyers representing "talent" (directors and actors, for the most part) will often work for a percentage of the talent's revenues. Most lawyers will insist that, regardless of the fee structure, you will have to pay your own disbursements (copying and telephone charges, for example).

Lawyer services. In a way, it is jumping the gun to try to summarize what film lawyers do for producers, as this is the subject matter of this book. But perhaps a quick overview will help put everything in perspective as we venture forth into the land of detail. As noted earlier, to reach the quest -- get your movie out there -- you will move through three stages: development, production, and distribution (or exploitation). Here's what lawyers will generally do in each stage:

A lawyer's services during development. A lawyer will help you establish a strong (hopefully unassailable) "chain of title" (a pedigree so to speak) related to the most important asset in this process -- the story and all the permutations of the story: the treatment, the screenplay, and the movie itself. He or she will help you with contracts that clarify your position regarding the rights (optioning the film rights to a book, for example). Lawyers will help you hire a writer and, at the same time, help you maintain control and ownership of the writer's work product. If you are able to get a director or actor interested in your project, a lawyer will help you get that director or actor committed. Unless you are already well established (and if you are, I am flattered that you would consider reading this book), and even then, most lawyers will want to charge you an hourly fee for this type of work, as it is virtually impossible to predict how difficult/complicated or easy/simple it will be to accomplish.

A lawyer's services during production. You will need a lawyer's help in connection with the financing of your project, as any investor will likely insist on a contract clarifying the benefits of his or her bargain. You will need locations, costumes, designers, makeup artists, camera people, electricians, music composers, sound technicians, gaffers, grips, best boys, and, yes, of course, actors and actresses. You will need contracts, and hence lawyers, for each of these purposes and persons. Lawyers perform services related to the financing of a motion picture on an hourly basis. These transactions are generally complicated and involve a lot of paperwork. The other contracts related to the actual production of the movie are sometimes performed on a "flat fee" basis or "capped fee" basis. In this event, the lawyer and you will decide what services are included in the flat or capped fee and what services are not. For example, litigation or resolving disputes that may arise will normally not be covered under flat fee or fee cap.

A lawyer's services during distribution. In order to make money, the movie must be exploited -- play at theaters, be sold in the form of DVDs and/or videocassettes, and later broadcast on television. Merchandise and soundtrack albums, related to or based on the movie, might also be sold or licensed. These transactions too require contracts and lawyers to do them.

In sum, you will need lawyers to help you on your adventure. You will need lawyers who are competent in basic intellectual property law, film financing and entertainment transactions, licensing, and other related areas, such as trademarks.

Professional writers and others who may own your idea.

It is virtually impossible today in the United States to get a movie made without a screenplay. For now, you will have to trust me on this. You have two choices: You can write it yourself or, if you don't have the experience or the skill, you can hire (or, if you have no money, persuade) someone else to write it for you. Most producers hire writers to get the screenplay finished.

If you write the screenplay exclusively by yourself, on your own time (meaning that you are not writing it within the scope of your day job -- if you have any question about this, you had better see a lawyer), without taking money from others and without signing a piece of paper to the contrary, then you will probably be the owner (unless of course you copied or based your script on someone else's work).

If someone else writes the script, even if it is your brother, best friend, or spouse, that person may own it as a matter of law. Or, if you write it together with someone else, you may own it together as a matter of law. And please note that this "writing something together" thing can sneak up on you. Suppose you borrow your aunt Lucy's formulation of dialogue or insert an anecdote told you by your cousin Lenny in the screenplay, the use of someone else's contribution, however small, can raise questions related to copyright law. For the most part, unless you get that other person to sign a piece of paper with certain magic language and perhaps do other things consistent with that piece of paper, these problems will persist and -- like the problems facing the imprudent motorist who failed to use the Fram oil filter -- will loom larger than life later on.

Agents, managers, and their constituents.

Unless you intend to use your local high school drama program students to do the acting, you are destined to interface with the world of professional "talent" -- a term which often refers to actors or actresses, but can also mean directors and other "artists" whose skills are relied on to enhance the quality of the movie. The professional talent world, like any system, has its own structure, culture, and traditions. An established actor, for example, will have a "manager," an "agent," a "publicist," and a lawyer, each with a specific role to play.

Managers. The manager is generally responsible for running the "business" that is embodied in the artist's career. The manager may help the artist invest the income, file taxes, and make important business decisions whether related to the artist's entertainment career or not. Some managers are professional accountants (or CPAs) and a few come from the legal profession, but there is no general rule. Unlike agents, managers do not have to "register," but technically they are restricted from doing what agents do -- find work for their clients.4 Managers can work with one or many clients and there are solo managers as well as large talent management companies. The manager will likely be in proximity to the artist and so he or she may be a great way to make the "pitch."

Agents. In essence, an "agent" is responsible for bringing work to the artist he or she represents. Depending on the current stature of the talent, the agent is the artist's sword or shield. For example, an agent who represents a promising, but not-yet-established performer will spend a good deal of time calling producers, or more particularly "casting agents," who represent producers, on a particular movie project, pitching the artist's promising future and trying to secure work. But if the performer is well established, the agent may spend some or all of each day screening the many offers that come in the door without solicitation; the rest of the day may be spent calling well-established producers who have a "hot" property that is attractive to the client.

Some agents may read screenplays (or read the "coverage" by professional readers) and play an active role in helping the client decide whether or not to accept the project; other agents may simply pass the opportunity on to the artist (or the artist's manager). The corollary wisdom bears noting -- some performers read screenplays and make their own decision and others (at their own peril, I believe) rely on advice. Agents, usually well versed in the art of the transaction, may also play a highly active role in the basic negotiations of a deal. Agents work on a commission basis (usually 10 percent of the client's compensation) and can, therefore, be relied on to aggressively pursue the highest compensation possible. They will also demand creature comforts (first-class hotels and travel and private dressing rooms, for example) for artists as well -- agents know that an unhappy client is not good for business.

The talent agent world is dominated by large agencies with formidable staying power: William Morris Agency (the granddaddy of talent agencies whose history reaches back to the early 1900s), Creative Artists Agency or CAA (started by former William Morris agents in 1975), and International Creative Management or ICM are traditionally known as the "big three," but upstarts such as United Talent Agency or UTA and Endeavor are also forces to be reckoned with. There are many smaller agencies as well, some with specialities (such as the Gorfaine/Schwartz Agency, which represents songwriters, composers, and music supervisors).

Talent agencies are regulated in the state of California and a person must qualify to become an agent there under the Talent Agency Act5 which also limits the scope of the agent's business. Agents who represent professional actors must also qualify under the rules of the Screen Actors Guild (SAG) and must sign an agreement that prohibits them from being producers of projects featuring their own client's services, as this is seen by SAG as a "conflict of interest" -- a situation where the agent is tempted to put his or her own interests ahead of the client's. Agents well understand the clout that actors have in getting projects made and attracting people to the theaters. If the agents were the producers, they might lose their objectivity and "sell" their clients on an inferior project just to line their own pockets (or so goes the reasoning behind SAG's position). Agents on the other hand wonder why managers, who are not restricted by the Talent Agency Act or any agreement with SAG, escape the conflict-of-interest trap. This requirement on the part of agents to comply with the Talent Agency Act is a major source of friction between agents, who are bound by the act and must register, and managers, who are not bound by legal restrictions of the act or the requirement to register.

Other professionals in your future.

A producer also needs access to a good film accountant, in the event that he or she actually finds someone to back the project financially. A producer should make lists of qualified unit production managers (or UPMs), who can help locate a crew and handle the technicalities of an ever-increasing technology-laden business. You will need help preparing an accurate and industry-acceptable budget. Accountants and "line producers" can help with this process. Eventually, you will need a director (who is the captain of your ship), a casting agent, a cinematographer, costume designers, set designers, location managers, and builders, electricians, grips, best boys, editors, sound engineers, drivers, caterers, and so on. If you are lucky (or unlucky, as the case may be), you will meet them all. Some, but not all of these people are represented by agents.

Copyright © 2005 by Crabbapple Music Corporation

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