Today’s breaking news covers something that comes up over and over in film budgeting and casting: back-end points, rev-share, and benchmarks/bonuses. Indie filmmakers are often jumping over huge budgeting issues regarding above-the-line talent and collaborators with the gambler’s favorite negotiating tactic of breaking off a bigger piece of the back-end that may or may not ever even exist at the indie level. It’s deferring the issue of money up-front and incentivizing collaborators to take ownership of the picture, some deals are so good that it’s impossible to pass up! But it is always a gamble.
Scarlett Johansson Sues Disney for Breach of Contract Over ‘Black Widow’ Release, by Brent Lang & Rebecca Rubin: “Disney’s decision to release “Black Widow” on Disney Plus at the same time it hit theaters has sparked a legal battle with Scarlett Johansson, the actress tasked with playing the Marvel superhero. In a lawsuit filed Thursday in Los Angeles Superior Court, attorneys for Johansson allege that the star’s contract was breached when the studio opted not to debut the film exclusively in theaters, a move they claim depressed ticket sales for the Avengers spinoff. Much of Johansson’s compensation was tied to the box office performance of “Black Widow” — if it hit certain benchmarks, bonuses would kick in. “Disney intentionally induced Marvel’s breach of the agreement, without justification, in order to prevent Ms. Johansson from realizing the full benefit of her bargain with Marvel,” the suit reads.”
If you’re looking for more information on back-end points, I highly recommend my article HERE that goes through the meaning and how to structure them for independent filmmakers. I highly recommend reading up if you’re not sure. I wrote it, you can ask me questions on IG or Twitter if you still need some clarity: @JennicaRenee
One of the things I stress as a Producer is that your distribution decisions NEED to be in place before production begins. At least have an idea of where you want to go. If you’re a first time filmmaker, you don’t belong to any filmmaking resource groups, and you don’t feel confident in your google literacy – then call a film distributor, you’re totally allowed to call them. Their numbers and emails are on IMDb Pro or directly on their websites. Call and ask their opinion, it doesn’t hurt to try and call a few. Get an idea of what your package/budget/star power/genre/ … is going to get you in distribution attention. Or call a sales agent, they want to reel you in early to help influence a project to be at its best selling viability, so call a sales agent to get their opinion on what is the current distribution trend for similar films to yours. Whatever you do, KNOW what your plan is and garner a “Letter Of Interest” if available (“LOI” gives future collaborators and talent and even investors the plan and thus creates a bit of legitimacy).
Things change. Pandemics happen. Life is unpredictable. So, don’t take back-end points if they aren’t spelled out in the addendum of your deal memo alongside a distribution plan. Never. Under any circumstances. And then, make sure those addendum and notes are explicitly restated in your contract. AND THEN, explicitly request a third-party-obligation statement be included in your contract with stipulations (pay-outs) determined if those third-party-obligations are not respected come distribution/licensing deals.
I am not Marvel. I am not Disney. I am an actress (https://linktr.ee/JennicaSchwartzman), producer (PurposePicturesProductions.com), screenwriter (IMDb), author (Movie Baking)… and distributor (LittleSisterEnt.com). This is just my opinion, but as you can see, my opinion comes from a decade of experience negotiating deals and teaching these concepts at the University level across the country. I have some thoughts and they are worth putting into practice.
We like finding ways to adapt our budgeting to explore keeping up-front costs low, but we should adjust a little more now that we see how it plays out in the real world. So, here is a list to consider for indie collaborators:
- No back-end points to replace total income unless you are a copyright owner or part-owner. If you want to include back-end points, make sure your base income/childcare/mortgage/health insurance/anything you need to COMFORTABLY do your job is not parceled out to the back-end, take care of present you before future you is in consideration. Unless you’re independently wealthy, then gamble away that silver spoon!
- No back-end point deals to defer income, unless you are offered multiple credits. If you are acting for a base rate and then offered to ‘produce’ but no offer of an additional base rate, it’s up to you. Your time is paid for with your first job, you can choose to gamble your second title. If someone asks you to take less than your required income AND less then your union standard up-front rate for one job/credit, then they are asking you to do less than your current best and the film will suffer because of added stress. Even then, consider that back-end may never get paid on a low-budget indie, so make peace with copy/credit only on that second title.
- Only accept back-end points that are already detailed explicitly in an addendum to the deal memo alongside any other ‘favored-nations’ or billing order considerations for back-end point distribution. That means the ENTIRE back-end structure should be stipulated in writing to accompany a deal memo where back-end points are in consideration – this is the wild west and there is no back-end point industry standard expected, you will be given an uneven and unfair deal if you don’t see it upfront. Also, producers parcel out back-end points ALL THE TIME even when they have no idea how it will be structured. I see it happen before my very eyes CONSTANTLY. This is fraud, btw. Treat it as such.
- Only accept an offer that accompanies a distribution plan (at least know if this is going straight to YouTube for no paywall VS a full digital release on iTunes/Amazon/VUDU/GooglePlay VS a limited theatrical, because a producer should know this very early on if they know what they are doing). A producer may want to stay ‘flexible’ in order to go to festivals and sell a film in some imaginary big pay-out dream, but until that happens, contracts should have a base level plan to accompany offers in order to give you an idea of whether or not your film will ever have a transactional paywall (meaning back-end points will never come to fruition if a producer hasn’t committed to distribute).
- Opt for bonuses / milestone / benchmark payouts as much as possible (random examples, check with a casting director or agent for industry best-practices: $5K bump if sold to Lifetime, $20K bump if acquired by NETFLIX, $50K buy out if acquired by HBO, $100K milestone payout for every $10 Million in Box Office worldwide…). Only top collaborators or top talent will be able to negotiate these types of deals. Realistically examine if YOUR name will have any bearing on these benchmarks, thus Scarlett Johansson recognizing that Disney+ would garner a HUGE internal streaming payday with her face on it, recognizing that Disney could take a lawsuit hit if they rake in more money internally than through worldwide box office. Scarlett Johansson‘s deal with Marvel wasn’t honored purposefully (allegedly), she’s a big enough star for all of this to happen. Recognize YOUR power behind a film. Buuuuut don’t overestimate, as I have personally almost let go of a team member for over inflating their personal contribution to the selling power of a film.
- Require a third-party-obligation statement in your contract, stipulate payments or buyouts if those third-party-obligations are not honored throughout the life of distribution. This applies to many aspects of your contract. Become familiar with this as soon as possible.
- Don’t bet on the financial success of a movie with a production budget of less than $750K with a marketing budget of less than $30K. I know that is a terribly harsh and negative idea, but consider that you may miss out on the back-end of a one-in-a-million hugely successful low-budget film, but be really happy with your contribution on all the films in which you collaborate at that level. If you are paid a decent yet likely low wage and felt good about your performance, you’ll have a happier life in this industry knowing that you are taking care of your family up-front. But once you start to tip to the other side of that production budget, then begin to add in the milestones/benchmarks and back-end points that may make your symbolic and literal ownership of the project create a momentum that’ll become passive income over time.
None of this is new, we are not ‘adopting’ new policies, we are adapting to a changing world. This list may give you the impression that I am somewhat against employee co-opts and co-ownership or rev-sharing. I am a HUGE supporter of all of these things from $0 budgets to Marvel budgets. However, actors and team members across the industry pick my brain on back-end all the time and I always say: If there is enough to pay you for your base rate up-front, you cannot negotiate that away AND be the best team member for that film. You do your best when you can focus on work. If the pay is $0, I will never judge you. But be sure to become familiar enough with rev-share agreements and co-ownership so that you aren’t left empty handed alongside a peer who has bamboozled you out of your fair share. It’s up to you to make sure you know what you’re in for. You likely won’t have Scarlett Johansson‘s legal team on your side if/when this happens.