INDIE Q&A FORUM 

FREQUENTLY ASKED QUESTIONS

Before proceeding to the Q&A Forum, check out the following frequently asked questions. It’s likely your question has been asked before. 

Answers posted on this website have been prepared by the Law Offices of Greg S. Bernstein, P.C. for general information purposes only and are not legal advice. Transmission of the information contained on these pages is not intended to create, and receipt does not form, an attorney-client relationship between the sender and receiver. Online readers should not act upon this information without seeking professional legal advice. 

By reviewing the following Frequently Asked Questions and/or proceeding to the Forum page, you acknowledge that you have read the above  caveats and agree not to rely on the following as legal advice.

The following are common questions asked by many (click on the link to find the answers):

 

Books, Plays, Songs and Other Materials

In general, you cannot use a book, play, song, another film, short story or other material written by someone else to base your movie on without getting the right (a license) to do so.  You can also not use parts of them in your movie without a license.  If you do either without permission, this is copyright infringement. The owner of the underlying work can stop your film from being made or distributed, in addition to getting damages from you.

The only exception is if the material is in the public domain. See discussion below on public domain.

Acquiring rights to a play, book, song, article or other rights to make into a film are similar.  You usually option the right to acquire the rights you need for an agreed price. Typically the option would run 12-18 months, for a fee typically in the range of $5,000 to $20,000.  The “purchase price” to acquire the cinematic rights typically is 2-3% of the budget, with a floor and ceiling. The floor and ceiling are, generally, determined by how popular the play/book/song/material is/was, how well known the writer is, how old the material is, and whether there is competition for the rights. Typically the floor is in the range of $75,000 -200,000 and the ceiling is usually twice the floor. Of course, these are only averages.  In addition, its not uncommon to give the author a share of the profits of the film, in the range of 2-3%.    


Clearance: Props, Art, Clips, Posters, Trademarks; Faces

In general, using any copyrights, trademarked or other proprietary material in your film requires a license.  There are some exceptions for “fair use,” and if the item is in the “public domain.”  

Characters from someone else’s film or comic book, or dialogue or lyrics from another film, book  or song, or a painting, poster, t-shirt,  car emblem, logo, or even a website (all the designs you see)  etc violates the copyright or trademark of the owner. Just because you can buy the poster, book, can of Coke, or other item does not mean you can just use it in your film.

There are even some landmarks that are trademarked, like the Hollywood sign, Beverly Hills sign and even the Empire State building.

Also, be careful about use of film clips. Besides getting permission from the owner of the clip, you might also need to get permission from the people who appear in the clip, the owners of the music in the clip, and maybe the owners of trademarks or other works that are in the clip.  Sometimes the owner of the clip has the ability to grant all these permissions, but most of the time they don’t have that right. (same thing for a person in a photograph or work of art).

Use of  a living person's name, likeness or voice  also requires a license.  Generally, the use of a deceased person may not require a license.

Websites are trademarked or tradenames. Moreover, how you use the URL can be an issue too.  So you cannot use anything (free or pay website does not matter) that shows the website name or URL without a license. In addition, most of the artwork (style, design, pictures, layout) is protected by copyright. So you need a license again. The only exception would be if nothing is readily identifiable (meaning you cannot tell which website or the photos, graphics etc.) Same thing re the operating system on a computer. The Windows logos is trademarked, as is Apple, Dell ,etc.

Most art, music, film clips, lyrics and the like will cost for a license to use it in your movie.

The good news is that most products will let you use their logos in a movie, for free, as long as the scene does not bad mouth their product or put it in a bad light. All the big brands have special offices that handle these licensing requests.

So why if they will give you a free license do you still need one?  If you don’t have permission, and they find out, they can sue to have you to remove it from the film, as well as for damages for unauthorized use. Of course, you can also digitally alter the scene to remove the logo and make it something else.

Finally, clearances are a complicated legal analysis. Hire an experienced lawyer or clearance specialist to review and advise.


DGA

While the DGA wont like what I have to say, I would avoid going DGA if you can.  Lots of young filmmakers think it’s a great way to go and be part of the DGA by making their film subject to DGA jurisdiction. After all, under their low budget agreement films under $2.5 million don’t have any minimum the director has to be paid.  So you can pick any number. The problem is, you still have to pay and hire other DGA members for your film (UPM, 1st AD etc) and pay them, albeit under the low budget agreement reduced rates from normal scale, still more than usually you would pay without being DGA, PLUS you have to pay pension, health and welfare on top of that, AND you will have residuals to pay (see below).  What also becomes a pain is the signatory process, plus they will take a lien on the film, demand a security deposit for the payroll, and another deposit for residuals, and a guarantee from a company involved in the production that is not just a single purpose company.

As for the DGA low budget agreement, if you go DGA, they are a good way to go, and unlike the WGA low budget agreement (see below), is truly a deal for low budget filmmakers.  The DGA has different rules and rates of pay that apply at about 10 different budget levels.  So if you are going DGA, understand each level and how spending an extra $100,000 on your film might push you to another level and that cost you a lot more than simply another $100,000.


Director Fees

If not subject to DGA, then you can pick any number you want. Even if subject to DGA, all the DGA requires is you pay at least DGA minimum.  If DGA minimum applies, there is a weekly rate, and minimum number of weeks of pay.   Its close to $200,000 if full DGA scale applies.   Many times DGA minimum is used as a reference, even if not a DGA film.

If DGA low budget applies, and your film is under $3.6 mil, DGA low budget minimum is $75,000 (scale is quite a bit higher but the rule is you can pay as little as $75,000). If its under about $2.5 mil there is no required minimum pay).

Putting aside DGA scale, the rule of thumb for a director is 5% of the budget, but with a ceiling based on what they have earned before, their track record, etc. With no track record, most directors will cap out on their first film between $50-100k.  The 5% rule also only applies up to a budget of about $5 million. After that, it depends on the prior success and track record of the director.

The director also usually gets 5% of the profits.
E & O Insurance

E&O, which is short for Errors and Omissions, protects the film from claims others may have against the film for things like you used music you thought was public domain but is not, you defamed someone, or the title of the film violates someone else’s rights, etc. Part of the application process is answering lots of questions.  Just like say life or medical insurance, you cannot ignore a problem.  The insurance will just not pay when the time comes if you lie on the application.   

Normal E&O policy that distributors want is $1mil/$3mil coverage, 3 years from delivery to the distributor, with a deductible of no more than $25,000. Some insist on smaller deductibles, and some are asking for greater coverage these days.

The only reason to get it before you have a distributor ,  is if you have a bank or financer that is insisting on it early, or there is concern about getting the coverage, or  if you are going to exhibit the film, or you are concerned about a possible claim (once someone makes a claim, its hard to get the insurance, or if you can, they may exclude that claim, and distributors generally wont take a film if the E&O has exclusions)

Fair Use

“Fair use” means the use of copyrighted material, a trademark or other proprietary material can be made without a license.  It’s an exception to copyright/trademark protection.  The idea is that certain uses should be permitted.  For example, doing a movie like “Super Size Me” that is critical of fast food, cannot really be effective without showing and discussing the brand name McDonald’s.  So use of the trademark in this documentary is permitted as “fair use.”  

In general, there is no such thing as fair use in a fictional film. A documentary MAY have parts of it that are “fair use” and a film about real life events may also have certain elements that would be “fair use.” 

But just because it’s a documentary does not mean that everything can be used without permission.   For example, if you walk into McDonald’s in your film “Super Size Me” and there is music playing in the background, that would likely be fair use, but add some music over the scenes for dramatic effect and that is not fair use. 

Whether something qualifies for fair use depends on legal analysis and review of the actual use in context. In general, if what you are showing is integral to the documentary (as opposed to entertainment value), then its ok.

One other area that is use of material in the background.  Say you are shooting a scene of the actor driving down the street and in the back of the shot there are all kinds of signs, billboards, and a Budweiser sign in a window.  The question here becomes how prominent the item is and whether it’s the focus of the shot or not.  Once again, only a lawyer can really make the determination of whether the use is “innocuous” or “fleeting” and truly “background.”    I have had some clients tell me something is just in the background and the item takes up half the screen or the actor is holding or talking about the item!

Finders and Finder Fees

Finders sometimes get a percentage of profit (1-5%) if they bring in all the money or most of it. As for the finder fee, the typical fee is 5% of the first million, 4% on the next etc, but usually the fee caps out at some level in the $250k range regardless of how high the budget goes. As for credits, the norm is an EP or co-EP. AP is a creative credit. So usually its not given for financing or finding financing.

Producers have to be real careful about finders. There are tons out there, of which few really can get the funds for your film.  Before you make a deal with them, try to confirm other films that they helped raise the financing on.  Second, make sure the deal you have is in writing and clearly says they have to bring you the cash, in the bank, by a date certain, or they get nothing. Be very very careful of deals that either are open ended, or give them a period of time beyond the end to still earn a commission on anyone they contacted.  What happens is that years later you find a financier, and through no help of them get your financing, then they come asking for their commission.  Because the contract did not say they had to bring the financing by a certain time, or because they sent the guy an email but nothing came of it, the contract may not be clear enough to avoid paying them to go away.

Finders should only be paid based on success; an success is cash in the bank, not simply an introduction, or even a signed contract. They are NEVER paid before receipt of funds from the investor (usually they are paid out of the investor funds current with disbursement to the production). A word of warning: to the extent you have a finder who is asking for an upfront payment, whether that be a cost advance or fee advance, run, don’t walk, away.

Finders usually earn 5% of the cash investment made for under $1 million invested. That said, many times it’s a negotiation and more often than not ends up being somewhat less than 5%. The rate drops as more money is raised. Typically a finder fee will cap out at $250,000 regardless of the amount raised.


Incentives

There is a lot of confusion about production incentives. Some producers think it will finance all the costs of their film, and others think the money will be there up front for them to spend.

First, production incentives are normally based on what you spend in the state (country). (Some states also have rebates for sales tax but lets put that aside for now). Different states handle their incentives differently.

Some provide for a “refundable credit”, which means you file a tax return for the production company showing what the credit comes out to, and the state sends you a tax refund, even though you did not pay any taxes. Think of it like a rebate. New York and Michigan are examples of this type of credit.

The other kind of credit is just that, a credit against your taxes. Most states like this let you sell your credit to another taxpayer.    Most production companies don’t have taxes they pay in the state they made the film. Heck, they only went to that state to make the film. So what the production company has to do is sell the credit to taxpayers who can use the credit. California and Louisiana are examples of this type of credit (actually, Louisiana offers to buy the credit if you don’t sell it to someone else). Usually with the tax credits that are sold, with broker fees and the taxpayer of course wanting to pay less than 100% so they actually get some tax savings, the going rates typically are 85-90% of the credit.

Keep in mind that most credits, whether refunded or sold, don’t turn in to cash for the producer until well after the film is done. Could be 6 months to a year, or even two years in some states. So, you have to find financiers who will fund against the credit. There are banks that do this, and most states that have incentives have local companies that finance against the credit (usually the same companies that act as brokers to later sell the credits). So between the financing and sales and this and that, usually you end up with about 75-80% of the credit. So if the state offers a 20% rebate, its really only about 15-16% to you, the producer. Also, keep in mind that not all expenses will count towards the credit. Different rules apply in different states. 


Investors; Finaniers; Scams; What to give the Finaniers

Banks and other lenders get loan fees and interest, and recoup costs like legal. Rarely do they get anything more.

The rest of this dicussion is on investors, called "equity".

If you have a high net worth individual wanting to invest, then the usual risks are whether they come through or not.

Be wary of so called financiers who are not in fact themselves investing but will go out and raise the money, or have a financing “plan. .  Most of the time they have little or no chance of succeeding, or it’s a scam.  There are also those who simply try to attach themselves to projects such that whether or not they have anything to do with raising any financing they get a fee and credit. You might not think that is the deal, but unless you have a good lawyer, it will be.

With regard to all financing that is not a known bank or known financer in the industry, be very very careful.   There are tons of scams out there.  Some are trying to scam you out of $5-25000 for a “retainer” or “expense advance” or  due diligence fee.  Many times they will tell you there is no up front charge, but its buried in the paperwork.  Or they tell you there is none, then a month or two later , once you have gotten to know them and trust them, then they ask.   If its not a scam for that fee, it could be to scam you or your other investors out of your funds. Many so called “matching fund” deals are like that.   You or your investor transfers funds to an escrow, except its not an escrow, and bye bye funds.  There are also tons of deals out there that sound possible but just wont succeed. Trust me , I have seen them all.

If you start to hear words lke “prime bank instrument” or ‘arbitrage” or letter of credit exchange, or “blind trust” or frankly any other sophisticated sounding terms, it’s a scam or a money laundering scheme or something else you don’t want to be a part of. 

The first thing to do when someone pitches you on a financing plan, find out what other films they have actually financed.  If they say they have not done films before, or its confidential, thank them and move on.  Both are excuses for not telling you something you can check.  If they tell you the names of films they helped finance, find an independent way to confirm with the producer of that film.  I have had so called financiers tell me they financed films … that I worked on and know who financed.  I even had one guy give my client the phone number for the producer of a film he financed…and it turned out to be the number for his assistant who pretended to be the producer! 

Any reputable financier will tell be happy to let you confirm their validity.

The typical deal for the investors are that 100% of net funds from the film (net after the distributors and sales agents take their fees and expenses, and you pay residuals and other off the top costs) goes to investors until they recoup, plus some interest or premium (typical is 20% flat so if they invest $100 they get $120). Then, profits are split 50% among all the investors (in ratio of their investment), and 50% to the producers, cast and crew. The investors have no cap or limit. They get 50% forever.

The 50/50 split is 50% to financier and 50% to the creative side. That means all the cast, crew and you share in the “creative” 50%.    So you bear the points to cast and crew out of your 50%. You get what is left. That said, it is negotiable and I have seen deals where the cast and crew points are off the top, but its not fair to the investor since the 50/50 split was predicated on those points coming out of the producer’s side.


Life Rights

How come you can see a movie about Facebook without Mark Zukerberg consenting or helping with the film?  Or how can there be three different TV movies about some notorious incident that was in the news?   Because, in general, you don’t need permission to tell the story about someone’s life (a living public figure or the events are public, or they are deceased). (If it’s a living person and the film is not about the person but you are using the person in the film for commercial purposes, there may be rights that have to be obtained.)

So why bother to get a life rights agreement?  The issue is not permission to use the story or name, but to make sure you don’t get sued for defaming the person by fictionalizing as most films fictionalize aspects of the story. The more the person is a public figure, the standards of what constitutes defamation get even harder to sue on. And dead people don’t have rights of defamation. In fact, in most states you can use the name, image and voice of a dead person in a film without permission (keep in mind that if you use a photo or film clip you need persmission from the owner of the photo/film).

The life story rights agreement is there to do several things. It gets their cooperation in developing the script and getting information from them that may not otherwise be known. It gets their exclusivity so they don’t work with competing projects. And it gets them to waive any claims that they were portrayed falsely or defamed. And that is the last point that is critical here. In general, if the event was public, and the involvement of the character was publicly known, and everything you portray about the character and their involvement is factually true (and can be proven as true), then there is no liability risk. That does not mean the person wont still try to sue. Keep in mind that just because something appeared in the newspaper does not mean it was true. There is a very high standard for newspapers in terms of what constitutes defamation. Not so for you the filmmaker.  So you have to do research to make sure you are not saying or doing something falsely.

Regarding deceased people, generally, you can make a film about someone who is deceased without concern (of course, others included in the story may still be alive, such as a spouse or children, and you have to be careful to not fictionalize in a negative way).  Note: generally the law of the state where the person died controls the rights to their name, likeness, voice etc. Many states do not recognize any special rights once a person dies, while others, like California, do recognize the value in a person’s name, likeness etc for commercial exploitation, but exempt the requirement to get permission to use the name, likenesses etc in films and works of art. Also, some major deceased celebrities have turned into trademarks, such as Elvis or Chaplin. So you always have to have a little legal research done if the person was a celebrity.)

     
Music in Movies

Music is an area that many producers make a lot of costly mistakes.

For some reason, people think that if you only use a few seconds of a song that is ok, that using music in their documentary is “fair use” or if your performers are playing the song or that if the song is old it can be used.

The first mistake producers make is not understanding that no matter how small the use of the song is, if its at all identifiable (2-3 notes) you need a license. And you need a license for any use, including festivals, and , technically, even as a temp track.

The second mistake is not realizing that for existing recordings, you need TWO licenses (sometimes more).   The underlying musical composition has rights, and so does the owner of the recording of that music.  The lyrics may also be owned by a different party.

The next mistake is assuming a song can be used without permission because its old, or you think its public domain, or the use is permitted as “fair use” (see discussion above re fair use).  Even if a song is very old, some parts of it may not be public domain, or the recording may not be. See the discussion above about public domain.  

Also, songs that people think might be public domain, are not.  Like the song happy birthday. 

Another mistake is shooting a scene with the actors singing or playing the song or in some fashion that you cannot change it, WITHOUT having gotten the license first. (the problem here is the licensor will get many times the normal price because they know how much it will cost you to change it. Even be careful with a festival license that does not have a set price to pay for full rights).

You need ALWAYS need a license from the owner of the composition. Whether you play an existing recording, have the music performed and recorded by your own musicans, have the actor whistle the tune, sing it,  or simply say the words, You will need a license.  The license  is called a sync license. Usually the owner of the lyrics is the same person, but not always. And sometimes the owner ship of the composition is divided among several people.
 
If you are using a pre-existing recording, you also need permission from the owner of the recording.  That is called a master use license.  Usually the owner of the recording and owner of the underlying composition are NOT the same.

Points

Points are short for percentage points of profits. So 1 point is 1%.  Typically, investors/financiers get 50% of the points (profits) and the creative side (cast, crew, producers, etc) get the other 50%. Typical points for cast and crew are 1-5% for the lead actors, 3% for the writer, 5-7% for the director, 5-10% for producers (producers who put the project together typically start out at 50%, and give away points to the actors, writer, director etc, usually ending up with 10-20 %).

Producer Fees

The rule of thumb for producers is 5% of the budget, but that rule only applies up to about a $5 million budget.  Generally, the fee is based on what the producer has earned in the past, and caps out in the $150,000 to $250,000 range for most producers of indie films.  Today, even the studios rarely pay a producer more than $2 million from the budget of a mega budget film (although such producers get a percentage of adjusted gross). 

Public Domain

Public domain means that the work (art, film, music, lyrics, etc) is no longer subject to protection and can be publicly used. Copyrights only last for so long (trademarks generally last forever as long as they are being used).

Sometimes however, only part of a work is public domain. For example, take a recording of Beethoven’s Fifth.   Obviously the composition is public domain as its way too old for copyright protection.  But the recording of that music you want to use may still be protected. Say it was recorded by the New York Philharmonic Orchestra in 1995.   The  Orchestra owns its recording.   Ever wonder why the film “it’s a Wonderful Life” was public domain and now is not? Well, the film (recording) is public domain but the underlying story is not.  So you cannot exploit the film if you don’t own the underlying rights.  There are even satiations where some music or films are public domain in some countries but not in others, because of differences in copyright laws or war time extensions etc.

There might also be different versions of something.  Say someone takes Beethoven’s fifth and changes some of the notes.  Or takes an old church hymn and changes some of the words. Those new versions are copyright protected as to the new/changed aspects.

I once had a film where the filmmaker tried to convince me that the Periodic Table he had on the wall on  the scene in the lecture hall was public domain. I pointed out to him that the design around the edges of this particular copy was copyrighted in 2000!

Once again, only a lawyer or clearance specialist can really make the determination of what is or is not public domain because they know the various nuances to look for.

Residuals

Residuals are additional pay to actors. What most producers do not understand is that it’s a percentage of gross receipts, not a share of profits. It has nothing to do with whether you recoup or not.

Originally, movies where shown in theaters, and what was called “non-theatrical” (ships, hotels, schools, military bases etc).  Residuals came about when movies started to be shown on TV.  The actor, writer and director unions said , “hey, we made these films for theaters but now you are getting  money from other areas, and we want a piece of it”.  Then when video came about, it expanded, and further for all other media. 

Because residuals are based on gross receipts, its important to try to get the distributor to agree to pay them.  That said, few distributors of independent films will do so.  Unfortunately, because most residuals are based on the distributor’s gross receipts, you can find yourself in a situation of owing residuals when you are not getting any distributions from the distributor.

SAG residuals are calculated differently based on whether a film was made under the theatrical agreement or the TV agreement, and what media is being exploited. For example, if a film was made under the theatrical agreement, there are no residuals due for theatrical exploitation, but if the film was made under the TV agreement there are residuals due for theatrical exploration. This discussion is about films made under the theatrical agreement.

The residuals rate varies by media, and by union.  If you have WGA, DGA, SAG and IATSE, you could find yourself paying more than 10% of gross receipts (other than from theatrical and non-theatrical) in residuals.

Generally, residuals are calculated based on the distributor’s gross receipts, except for video (DVD), whichare based on the producer’s gross receipts from video (the amount the distributor pays the producer), not the distributor’s gross from exploitation. There are other rules is the producer is also the distributor (like a studio for its own films). 

If the producer sells “all rights” and receives an up front payment, that payment has to be allocated to the different media to calculate the residuals. But it gets tricky, as TV would be on the distributor’s gross. So the amount allocated for TV is treated as an advance against the future residuals from TV.  But the producer could find themselves obligated to pay residuals on TV exploitation by the distributor without receiving any more money from the distributor. And remember, residuals have nothing to do with whether the film made a profit or not.

 If you fail to pay residuals, not only can they foreclose on the film (usually they have a lien), but they can put you on their strike list; meaning any film you try to make in the future the union won’t let their actors work for you.

One last point is what if your films is part union and part not (this has to do with SAG mainly.  Say you  have a foreign production where some actors are SAG and some are not or you do your film under the ultra low budget agreement where you can have SAG and non-SAG actors. There is a formula to allocate the residuals. Each actor is assigned a point for how many days they work and how much they get paid (there is a maximum number of days and rate of pay so a big star wont get allocated all the residuals).  The number an actor has relative to the total points is that actor’s share of residuals.  The residuals that would have gone to the non-SAG actors are just not paid. Say for example that the residuals rate is 4% and 60% of the points are SAG actors, so the effective residuals rate would be 60% of 4% which is 2.4%. So you would pay residuals at the 2.4% rate instead of 4% because not all your actors were SAG.

SAG

 One of the keys in making a film is to use actors who have name and face recognition.  Its key to selling a film.  Almost always, any actor who has done enough films have name or face recognition is going to be a member of SAG.  So there is going to be no way around not becoming a SAG signatory.

If you are a foreign producer, shooting your film outside of the US, and want to use one or more SAG actors in your film, you are going to have to do a partial registration (its actually a full registration but its called GR1 application and is not quite as intense). Essentially, you will have to pay all the SAG actors who are not local residents SAG minimum (although if you are hiring name actors you probably will pay more anyway), and treat them according to the SAG rules (work hours, accommodations, travel minimums, etc).  You will also have to pay pension, health and welfare contributions on the SAG salaries, and, later, residuals (see above). All payroll and PHW for SAG actors will have to be escrowed before they can travel.     The local cast can be hired and treated as you would if SAG was not involved. 

If you are a foreign producer who wants to shoot part or all of your film in the US, then you will have to do the full registration like any other US production must.

SAG registration takes at least 3 weeks, so start early.  There is a lot of paperwork and documents to sign.   SAG will review the chain of title and they must be satisfied, so they may ask you to have new documents prepared and many documents recorded with the copyright office.  They will take a lien on the film. They will also take a deposit on wages (40% of the estimated wages, with adjustment for salaries that have been escrowed).  They will also require collateral for residuals, in addition to the lien. This may be an additional deposit, a guarantee, a collection account or all of the foregoing or other forms of collateral.

If the film is shot entirely in the US, and is under $2.5 million in budget, there are various low budget agreements that apply with reduced rates and some reduced work rules (all of the deposits, security, residuals rates, etc still apply).   There is the Ultra Low (up to $200,000 budget), modified low (up to $625,000 although this limit can be increased to $937,500 with diversity in casting), and low budget (up to $2.5 million budget, but can be increased to $3.75 million with diversity in casting).  If you go over the applicable limit (you have to certify to SAG the final cost and they have audit rights), then you have to pay the actors retroactively at the higher pay level.  The modified low and low budget agreements also require that the film be theatrically released somewhere in the world before its released in any other media, otherwise all actors get retroactive pay to the full SAG rates.

One agreement to note for many first time filmmakers is the Ultra Low agreement. Under the Ultra Low budget agreement you can hire SAG and non-SAG actors. All SAG actors have to be paid the minimum of $100 per day. If you pay a non-sag actor more or less is irrelevant. PHW is only due on SAG actors.

One last point on SAG is what is called CORE.   SAG calls it financial core and makes it seem like its only for actors in financial trouble. That is not the case.   Core actually came from a court case not involving SAG and applies to every union.  A union member can decide to elect core at their choice.    Core allows an actor to work on union and non-union films, with no penalty by SAG.  You cannot be fined or suspended from the union for electing core or working on non-SAG films as a core actor. So what is the negative side?  You pay reduced union dues (what is called by the court the “core” dues, which are the dues less amounts allocated for lobbying activities and other such things, and cannot vote as a member of the union.   When you go core, you become a non-voting member of the union and pay lower union dues. You get all the benefits of being in the union, including health and welfare etc. You just cannot vote. You also can work on non-union films. SAG makes a big deal out of someone going core, and last I heard wont let you go back once you go core, but I don’t know if they can do that.


Sales Agents vs Producer Reps

A producer rep helps find you domestic distributors and also finds you a foreign sales agent and does not sell directly the foreign rights.  Typically a producer rep takes 10% for placing distribution. Some take more, sometimes 15% on smaller films that may be hard to place, but 10% is the norm. Some reps also ask for a fee advance, $5-10k typically.


Sales agents on the other hand are much more active in the sale of films.  They go to the various film markets, have a booth, set up screenings, and sell the film territory by territory, media by media. Most can also sell domestic rights too, just like a producer rep.  The commission rate for sales agents range based on how much they think they can sell. If they feel they can sell several hundred thousand dollars, the rate is typically in the 15-20% range.  If they feel they will sell less, then the rate goes up, and if they feel they can sell millions, the rate drops.  Sales agents also advance the costs they incur to make a trailer, artwork, do screenings, take out ads, and delivery the picture. They recoup these costs from revenues only.  Most will also charge an overhead fee to cover the costs of going to the markets. This can run from a few thousand dollars per market to tens of thousands, depending on the sales agent.

Do you need a sales agent? Absolutely.  There is just no way for you to compete and make sales.  Sales are made mostly because of relationships.  The relationship the sales agent has with the buyers. The sales agent also knows what prices are right, and can get paid too.  Distributors wont always pay on  a one off sale, and many times wont even buy, because they know the seller wont be around in the future.   

Do you need a producer rep?  Probably. Just like the sales agents know the buyers, the producer reps know the sales agents.  You wont know who is good or bad, who is honest or not, who is right for your film, etc.  Just like the sales agents with their buyers, producer reps know the sales agents and have relationships with them.

  
Scripts; Writers Fees

Typically a writer gets 2.5-3% of the budget, up to a budget of $5 mil. After that, it depends on how successful the writer has been before that to try to get more. That said, I have seen first time writers get less than $100k on films of $20 mil budgets and more. The point being that if you are a successful writer, you can demand more money. If not, you take what they offer since its your opportunity to get in the game. Of course if the film is WGA then there are certain minimums, but those are not based on budget. As for points, typically 1-3pts for the writer. (the points and fee are based on the writer being the sole writer of the script and no one brought in to rewrite etc.)

Options for a script usually are 10% of the likely purchase price for a 12-18 month option period. The purchase price might be WGA minimum, or it might be a percentage of budget with a floor and ceiling (as per above).
   

WGA


Nothing in the law requires that you become a WGA signatory to hire any writer or buy any script.  However, WGA writers will get into trouble with the union if they work for or sell scripts to non-WGA companies.  Thus the pressure to become a signatory comes not from the law, but from the writers.

The probem is, once you become a WGA signatory, you can only hire WGA writers and only by scripts from WGA writers and must pay WGA minimums for both.  So most producers have one company that is their WGA company and one that is not. 

WGA registration is similar to that of the other guilds, although a bit easier.   

WGA also has various low budget agreements, although the benefits are not quite as good as they sound.     The WGA low budget agreement only allows deferment of part of the fee, in certain cases. It applies to films under $1.2 million and PURCHASES and first rewrite only. It does not apply to normal writing services. Also, it does not change the rate of pay, it provides for limited deferment. For films under $500k, the amount deferred is whatever is agreed. For films between $500k and $1.2 mil, you must pay $10k on start of principal and the balance is deferred. That deferment is not what you think. The deferred portion is due at the moment you have revenue after recoupment OR , and this is the biggie, first distribution. So even if you have not recouped a dime on your film, the full deferment is due when you have any distribution on the film.