The Movie Business

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

Kelly Crabb

• Editorial: Simon & Schuster
• Año: 2005
• ISBN:
  9780743284622
• Categoría: Mezzi di comunicazione e arti performative
• Categoría: Arti performative

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.

Book Six

Making
Money with
the Movie

You are in the theater. The lights are dim. Your loyal friends and family, who have believed in you and stuck with you through your travails, are there. Members of the cast and crew are there. Your dream has become a reality. After many months of hard work and careful planning your great idea has been transformed into moving images on the silver screen. I know you are exuberant, but why aren’t you feeling relaxed? I think I know what’s on your mind. You are thinking about what’s coming up next. You are thinking about the mountain of money (somebody else’s money) that was spent on your making your dream. And, most important, you are thinking about getting that money back. Well, here is where we talk about how that happens. Every movie has a life cycle that ideally begins with the exhibition of the movie in theaters. For certain types of movies, merchandise licensing and the sale of sound-track albums is possible. The next stops on the journey are home video and pay-per-view. The movie then makes a stop on free television. There might be print publication and even stage play opportunities. Interactive games and the Internet have opened up new vistas and have lengthened the life cycle of motion pictures.

Theatrical
Distribution

Theatrical Distribution Basics

We now reach one of the culmination points of your dream: the distribution of your movie in theaters—the crown jewel of movie exploitation. This marks the point when your great idea reaches the silver screen with millions of adoring fans standing in line to see and enjoy it, and laying down their hard-earned money for the privilege. This is where the marketing machine goes into full gear, spending all that P&A money to get the word out. The critics will write—good things, I hope—about your movie. The “hype” will start to build.

The importance of theatrical distribution.

Why is theatrical distribution so important? It is a long-standing tradition that theatrical distribution starts the distribution cycle. This is where the movie critics start writing about the movie and where the main cast and director start to make appearances on behalf of the movie. This is a convenient spot to start spending advertising dollars. The theatrical release says, more or less, that this picture is worthy to be counted among the other pictures that played in the local theaters (avoiding the stigma of straight to video and other less-than-worthy projects). Theatrical distribution in the United States, moreover, is the foundation of international acceptability. Foreign distributors will tell you that theatrical distribution in the United States will enhance the value of the film’s foreign appeal. I have no statistics or other data to back up these notions—but I can confidently tell you that most people in the industry think this way. Therefore, get a domestic distribution deal.

Timing of the theatrical distribution deal.

Even though we waited to talk about distribution until we arrived at the point in the process where it occurs, there are several places in the making of a film where you can set the deal: after the treatment is written, after the screenplay is finished, and after the movie is produced.

After the treatment is written. As we have discussed, in today’s world of making movies, it is highly unlikely (try virtually impossible) that a distributor will agree to take the movie on the basis of a treatment only. Well, if your treatment is written by Michael Crichton or John Grisham—maybe.

After the screenplay is finished. Once the screenplay is finished, it is possible to put together an attractive package and set it up with a distributor for financing, production, and distribution. As we have noted above, given the realities of today, this is the ideal time from the production financier’s point of view at least in which to get this commitment in place.

After the movie is produced. The other possibility is when the movie is finished. This is the most risky point in time for the investor. As you know by now, assuming you believe what you’ve read above, many things can happen along the way to affect the final product. You might run out of money and not be able to do those killer special effects you have imagined. Your actors might not capture their roles. Your director might turn your masterpiece into something less. In sum, at the end of the rainbow, there may not be a distributor willing to take the picture. If that is the case, your investors have just bought themselves a very expensive, one-of-a-kind, home video.

On the other hand—and it does happen—the stars might line up and everything could go as planned or better and you could have a real gem on your hands. If this happens, you can take your movie to one of the many film markets, submit it to a film festival or shop it around town. If you get more than one bid (the beginning of a bidding war), you may be in the driver’s seat to get a great deal from a substantial distributor. You’ll be a hero. The odds are not with you, but it could happen.

The distribution world.

As we discussed in the context of raising money, distribution can be divided into two parts: domestic distribution and foreign distribution. Within each of these areas, there are major and minor players, each with their own set of strengths and weaknesses.

Domestic distribution. Domestic distribution, at least from my current viewpoint, means North America (the United States and Canada and their respective territories). One used to be able to say that this territory represented the majority of a movie’s expected worldwide revenues. It is now thought that North America represents 30 to 50 percent of the worldwide box office of any given movie. It is true, however, that North America remains the most important single territory. Because North America is the center of the film world (in other words, no other single area represents a larger source of revenues and because the world’s most important distribution companies are located in North America), the distribution worthiness of the film outside North America is often determined by the existence and quality of a North American distribution deal.

Foreign distribution. Technically, the territories outside North America constitute the foreign market. However, within the foreign market, there are some important established territories and some that are merely emerging. The major markets outside of North America are Japan, Germany, the United Kingdom, France, Italy, Benelux (Belgium, The Netherlands, and Luxembourg), Scandinavia (Denmark, Norway, Sweden, and Iceland), Spain and New Zealand/Australia. It is generally thought that these areas represent 40 to 60 percent of the world market. This is not to say that there are no other important areas. Latin America is growing in size and importance. Taiwan, Hong Kong, Korea, and, of course, China represent huge potential sources of revenues. (China, for example, is said to have at least 150 million people with incomes that rival the middle classes in Japan and the United States). Eastern Europe and Russia also represent opportunities. Indonesia, Malaysia, Singapore, and India are also potentially large markets. In a real way, the lack of importance of some territories is due mainly to factors that are political in nature. At the current time, China imposes a quota system on movies being imported from outside its borders. India, which produces more movies than any other country in the world, is protective of its local industry.

The independent film world can be more or less defined by surveying the attendees at a series of markets throughout the world. The Cannes Film Festival (in Cannes, France), the American Film Market (in Santa Monica, California), the Sundance Film Festival (in Park City, Utah), the Toronto Film Festival (in Toronto, Canada), the Berlin Film Festival (in Berlin, Germany), and so forth, are magnets for the world’s major film distribution companies and producers from this industry.

The majors. Depending on the winds of fortune, there are five or six major distribution companies. All of them are located in the Los Angeles area¹ (fondly referred to throughout the world as Hollywood—even though, technically, only one, Paramount Pictures, is actually located in Hollywood proper). Each major studio has an interesting history, reaching back to the early 1900s, and each can claim numerous classic films, larger-than-life stars, auteur directors, and visionary producers that provided the foundation of what the movie industry is today.

The major studios have gone (and are going through) many changes. In the Golden Age, the studios were more-or-less self-contained fiefdoms that financed, developed, produced, and distributed their own movies. Each studio hired its own contract writers, actors, directors, and producers. They built their own lots. They owned their own equipment. The independent filmmaking community existed, even back then, but the studio system reigned supreme.

Even in the midst of the studio system’s glory, there were significant movements opposing the power of the studios, including the experiment of United Artists—a studio formed by three of the most powerful actors of the time (Douglas Fairbanks, Mary Pickford, and Charlie Chaplain) and director D. W. Griffith, but the studio system survived primarily intact until the early 1950s. Even United Artists, originally a distribution company dedicated to the release of independent films, eventually took on the trappings of the studio system. Reasonable minds can differ on what really brought about the dramatic shift in power from the studios controlling everything in the Golden Age to the balance of power that exists today, but the fact is that certain talent (and the agencies that represent them) share the power with the studios who have decided that distributing films (which includes controlling the theatrical, television, video, and other exploitation rights) is the best business to be in.

In addition to a shift in the system, there has been a dramatic shift over time in the fortunes of the actual corporate entities that dominate the business. MGM, for example, was the undisputed king of movieland during the height of the studio system. Today, according to many, it may be a stretch to list MGM as one of the major distributors (which is nevertheless, for historical means, what I have done below, even though it appears at this writing that it will be acquired by Sony Pictures).

It is also worth noting that, although all of the major studios are located in California in the United States, half of them are now owned by large multinational firms from a variety of countries. Sony Pictures (formerly Columbia Pictures) is currently owned by the Japanese electronics giant Sony Corporation. Twentieth Century Fox is owned by News Corporation, the corporate vehicle of Australian mogul Rupert Murdoch. Universal Pictures, at least partially back in U.S. hands (General Electric, which also owns one of the three major U.S. television networks, NBC), was owned in rapid succession by a Japanese company (Matsushita Electric), a Canadian company (Seagram), and a French company (Vivendi), which still owns a stake in the company.

A highly relevant point for all producers to take note of is the affiliations that the major studios have. As a matter of course, studios acquire formerly independent production companies with successful track records (for example, Disney acquired Miramax Films and Warner Bros. acquired New Line Cinema). Alternatively, studios may offer high-level producers housekeeping deals—which may take the form of granting the producer an office on or near the studio lot and/or some discretionary development funding. The studio will ask for a first look at the producer’s product, and the producer benefits from the housekeeping arrangement—which means the producer must offer the film to the studio first. Some producers may even have an output deal, where the studio promises to distribute all or a certain number of the movies made by such producers. These affiliations, however structured, are how the studio guarantees a predictable source of movies to feed th...