Paying Points

Points PayoutPaying points is a typical offering to cast and crew on low budget projects. However, most independent production companies never payout points because they never have it contracted – Just offered by word of mouth. Those companies that actually contract the points may have little left over to pay it.

I’ve used points for several film projects and it works well as long as the film has multiple release venues including video and television distribution. The only unfortunate thing the producer has to deal with is a lot of paperwork for years. To reduce the tracking efforts, many times a date will be picked to offer the cast and crew an opportunity to sell their points back to the production company for a certain dollar amount or for product.

Sometimes the payment is made with excess DVDs based on a discounted value. This allows the cast member to sell the DVDs for cash or give them away to friends and family during the holidays or for birthday gifts. I was involved in a points based project that paid me 300 VHS tapes. I sold some, but you can guess what my kids gave at every birthday party they attended for an entire year. Had I sold all the tapes at 50% off retail, I would have made 3X my normal production rate.

Points vary greatly between projects and so does the amount of cash involved. One project paid 20% of a person’s rate in cash and the rest in points. Another project paid 10% in cash, 50% in points, and 40% in DVDs. The variations to financial packages are endless, but the key concept to understand up front is that eventually the production company will want the points off of the books and will either have a cut-off date or a buyout date for the points.

Here is a made up breakdown of dollars to clarify what is available for point payouts:

Film Revenue

$140,000,000   Actual Box Office Receipts

$100,000,000   Reported Box Office Receipts (after counting errors)

– $20,000,000   House Nut – Negotiated amount to cover concessions for film

$80,000,000   Theaters pay to distributors

– $20,000,000   Deduction to cover P&A (prints and advertising)

– $40,000,000   Distributor fees/margins

$20,000,000   Gross payment to producer

– $6,000,000   Production costs (cash returned to investors)

– $9,000,000   Investor payback agreement

– $1,000,000   LLC Operations

$4,000,000   Net Profits

– $3,000,000   Investor profits

$1,000,000   Point payout (all points total to 100%)

Please note that in the above scenario the people on the point system are the last ones paid. It should also be noted that the film scenario brings the point people to breakeven, which means their payout for DVD and television sales will be much higher as the investor payouts will be much smaller going forward. This is due largely to the producer scaling the payback structure to reward himself should he make a hit. On the above scenario the investors’ payout schedule declines after they reach 2.5X their original investment.

Every monetary exchange percentage is highly negotiable. The general rule of thumb for the producer is to get as much cash up front from the distributor as possible since creative accounting can reduce payback after the film’s release. The same rule applies for cast and crew. However, if the only way to be a part of a certain picture is to be on the point system, make sure it is in writing and the film has multiple venues. Also make sure alternative payouts or buyout programs are in writing.

There is one other concern about the point system and that is the 100% ceiling. Since it is against the law to promise more than 100% of profits for payout, the total number of points given out will always equal 100%. So if the production company offers you 10 points and they give out 20 points in total, you own 50% of the payouts. If however, you are promised 80 points and they give out 1,000,000 points, then your percentage isn’t worth talking about, as it isn’t even high enough to be considered a rounding error.

Even if you get the estimated number of points in writing, there is a consideration clause for going over budget. So lets say you sign an agreement for 120 points out of 10,000 points and the film goes over budget. There might be additional points paid out to bring a new stunt team in for the mass explosion scene. The new total number of points rises to 12,000 changing your 1.2% payout to 1%. According to the above scenario, your $12,000 payout just dropped to $10,000.

Also, the above scenario of an independent film bringing in $140MM at the box office is a great scenario to spell out how the points work, but consider that the average independent film only makes $6MM at the box office. This puts approximately $6,000 into the points kitty for the cast and crew. Now your 1% equates to a nice dinner or a dozen DVDs. However, the additional venues of release will increase your payout.

 

Copyright © 2013 by CJ Powers
Photo © mellefrenchy – Fotolia.com

 

WGA or Copyright Registration?

CopyrightI received a great question the other day and wanted to share it along with my response. “Should a screenwriter register her script with the WGA or with the Library of Congress?”

Now, I suppose that a disclaimer should be given at this point. What I’m about to share is based on the perspective of a writer, not a lawyer. Okay, I hope that helps you to understand there is no client lawyer relationship here – I do not practice law.

My answer is both. The copyright registration gives a certain level of legal entitlements for life and the WGA registration gives you a quick validation of the work’s existence.

The thing I like about the WGA is that I can instantly register my script online with a third party that, if needed, will send a representative to testify in court on my behalf. The WGA rep would testify to the facts about the particular script in question being registered at a specific date and time under my name.

When I was a kid, writers were know to mail themselves copies of their work in a post office sealed envelope. The seal would have a stamp placed across it and cancelled to prove the contents were in existence at the date of the cancelled stamp. This held up in court during numerous trials, but started falling apart when the seal was broken due to climate conditions or other reason.

Being able to show the Library of Congress certificate for copyright registration of the work in court is the ideal. Since the Library of Congress is a government entity, holding the copyright brings a quick end to any trial dealing with a possible infringement. However, it takes 2-6 months for the registration, which puts the work at risk for some time.

The best news about a copyright registration is that it entitles the writer who wins the court battle to receive an award of statutory damages and attorney’s fees. There are no awards based on the WGA, as there is no legal precedence that gives the WGA legal clout.

Some screenwriters take advantage of the copyright laws that allow you to own the copyright without registering the work. However, this becomes a little precarious without additional proofs of the creation date, which the WGA registration would help. However, it’s my practice to register all significant version changes with the WGA and the “first” work and or the “finished” work with the copyright office.

 

Copyright © 2013 by CJ Powers
Photo © mipan – Fotolia.com

 

7 Strategies for Producing a Quantity of Ideas

© James Thew - Fotolia.comDuring my senior year in college I had a professor tell us that we didn’t need to read the 880 page text book if we didn’t want to. It was a great relief to me, except the way he shared the comment caused me to question why he might say what he did. I dove into the book and consumed it within a few weeks.

I was all the more amazed to learn that 100% of the students in the class did the same thing. It drove me to ask the head of the communications department about how often books are actually read. He stated that there was only one book in one particular class that had 100% readership every semester.

There were two grades in the class, one for participation in discussions and another for a semester end report on the topic of our choice. The class was the most amazing one I had taken throughout all my years of study and I attribute it to one comment the professor shared just before he told us we didn’t have to read the book.

“This semester, I only have one goal for this class. I’m going to teach you how to think.”

My mind has been racing ever since.

This past weekend I shared with a friend that the proof copies of my latest book arrived. She could tell by the tone of my voice that I was happy with the accomplishment. In fact, there was a certain level of excitement, not wanting to wait a couple more weeks for the book’s official release.

That positive energy caused me to share how far along I was on my next book, which generated an interesting response, “Don’t you ever stop and rest?

The amount of writing I do on a regular basis could fill about six books a year. Between emails, business documents, blog posts, e-zines, screenplays, and books, I seem to have no lull in the ability to think up things to write about. I attribute this to God’s gifting in my life and what my professor taught us about thinking.

According to my professor… Thinking up new ideas is simply about coming up with something original by incorporating random elements into the creative process to deconstruct existing patterns in order to reorganize them in new ways. Simple…right?

Here are the 7 strategies that can be used to accomplish this above definition:

1. Continuous Thinking

People think every work needs to be of high quality, but over time those who produce a volume of work end up with the greatest of works. Thinking often is the key to productivity, invention, innovation and achievement.

Michael Jordan is known for his incredible shots and held the record as the highest scorer in basketball history, and, the record for the most misses. Bach wrote a cantata every week and Mozart generated 600+ musical scores. Thomas Edison created 1, 093 patents by assigning himself the duty of inventing something minor every 10 days and something major every six months. Einstein published 248 papers including one on relativity.

2. Combinatory Play

Taking time to randomly put various combinations of ideas together will develop some of great value. This process must be done in a playful form as it involves the conscious and subconscious thinking process.

The Scientific Genius, published in 1988, suggested that geniuses are considered genius only because they take more time creating unique or novel combinations of existing ideas than the normal person. This act of randomly combining or recombining images, ideas, thoughts, and so forth, into new combinations both consciously and subconsciously generates even more new ideas than most people take time to think through.

Einstein’s equation of E=mc2 was developed by just looking at energy, mass and speed of light in a new way. He didn’t invent the concepts, but instead just established a new perspective that changed our world. And, for Einstein it was all about having fun. He called his process “combinatory play”.

3. Change the Juxtaposition

Shifting the juxtaposition of an idea through time, space, category or other non-related venues or circumstances, will create something all together new.

Samuel Morse, who invented Morse code, was trying to figure out how to produce a signal strong enough that it would survive across the country. One day he watched horses being exchanged at a relay station and juxtaposed the idea of using relay stations with his cables. This led to the invention of relay boxes or repeaters to boost the signal numerous times to get it across the country. Morse would not have succeeded, had Leonardo da Vinci not first made the juxtaposition of water ripples with the sound of a bell ringing, thereby realizing that sound traveled in waves.

4. Combine the Incompatible

Everyone knows that you can’t combine incompatible things without some form of ramification, yet the new combination typically drives change and new ideas. While most people will say it wouldn’t make sense to combine the incompatible, geniuses do it to force a new breed of thinking when looking at a problem.

Niels Bohr tried hard to combine the idea that light is a particle and a wave. This thought pattern allowed him a new perspective that led to the principle of complementarity, a fundamental principle of quantum mechanics.

5. Transfer the Metaphor

Finding some form of resemblance between one area of life and another was considered by Aristotle to be a sign of genius. By finding those relationships from unlike sources, allows us to think in new ways and develop ideas never considered.

It only took Thomas Edison one day to invent the phonograph after he saw the resemblance between a toy funnel and the motion of a paper man and sound waves. Alexandra Graham Bell invented the telephone after comparing the inner workings of the ear with the membrane used to move steel.

6. Find it in Failure

The number of inventions that were accidentally created when someone was working on another invention is staggeringly high. Rather than conducting a review of a failed attempt on what was intended or expected, the question that can advance the creative process and innovation is “What have we done?”

Thomas Edison was struggling with how to create the filament for light bulbs and to calm his nerves he played with some putty stretching and twisting it – Leading to the idea of twisting the carbon like rope. B.F. Skinner invented more things than what he set out to do because he would shift to whatever he found interest in rather than operating according to his preconceived plan.

7. Collaboration of Elements

Collaborative outcomes seem to always be greater than the sum of the individually presented elements. This is accomplished by a team of people allowing all ideas to grow, without shooting down any of them. During this process no one has to tell anyone that their part of the idea won’t work or isn’t any good, as everyone will see what portions of the ideas build on the whole and raise the level of excellence with little effort.

The greatest lesson about thinking doesn’t come from what we are supposed to think about, but rather some of the ways to think. For instance, if you were told to count the number of O’s in the below diagram…

 

O   O   X   O   O   O

O   X   O   O   O   O

O   O   O   O   X   O

O   O   O   X   O   O

O   O   O   X   O   O

O   O   O   O   O   O

Would you count up all the O’s?

Or, would you count up the X’s and subtract it from six rows times six columns? By counting the O’s, you see things the way the system taught you to see it. By counting the X’s, you’re finding an alternative process that saves you time and gives you a unique perspective in life.

Like all creativity, there is no right or wrong answer, just a new or old perspective. By thinking according to the old perspective, we will come up with the same ideas that hundreds of others will have, but by thinking in a new way we can create and develop new ideas that have never been considered before.