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I’ve always believed a writer, even a newbie, should have some kind of answer to this question. The problem is that in the indie/alt-cinema sector, there are a few of different ways to calculate your script’s value and each of them are important. Each way of looking at your script’s value tells you something interesting about a writer’s relationship with producers, so it’s worth talking about.
The Traditional Method
The first way to calculate the value of your script is to use the traditional formula. In the past, when independent movies were still shot on film and required substantial budgets, this is how a deal for your script would have been structured. The formula was for a producer to offer the writer 3% of the production budget. A small part of that 3% being paid as a pre-production option fee, and the rest being paid on the first day of principle photography. An option is the deal you make with a producer, which gives them the exclusive rights to develop your script. Basically, you give the producer a fixed amount of time to get the film into production. Most option deals are signed for terms of three to five years. The amount paid for an option really depends on how much the producer wants this particular script. In the UK, on the very rare occasions you are offered an option fee, it’s likely to be incredibly small. Which could mean you are signing over the rights to your project for three years, for as little as £1,000 ($1.5K). The project becomes yours to put back into the market at the end of the three years, if the movie is not in production by then. The full fee for the script is only paid on the first day of principle photography. Traditionally, the moment cameras roll on production, the writer should receive their fee for the script.
Even though it’s highly unlikely that an independent producer will offer you this kind of deal, it’s still important to understand it, because a writer can use this old school deal as a benchmark to judge what they are being offered. It’s also important to understand the traditional deal structure, because it tells us about the relationship between producer and writer. The traditional relationship is that the writer is treated just like a member of the production crew, in that they are paid at the point of production. Another way of seeing this is that the writer is a freelance employee. Remember this, because later on, understanding this will help you to see why current producer/writer relationships have become so complicated.
Placing a Cash Value on Your Time
One of the problems with calculating the value of your script in the alt-cinema (indie) sector, is that the production budget may range between £0 and £500K ($750K), which would place your script’s value between zero and £15K. The problem is, the zero budget film may end up being more commercially successful than the £500K film. At which point, your 3% of zero is a very slim return for your contribution to making it a success. So, a writer needs another way to calculate an absolute value of their script. One way of doing that, is by working out its value based on the minimum wage. To do this you calculate the number of hours you have put into the script including: research, note-taking, planning, writing, taking more notes and then rewriting. I did the math on this, and in the end decided that every page of script took roughly two work hours/per draft to complete. This means the formula to calculate the absolute value of your script is:
minimum wage x (2 x number of pages)
Based on the UK minimum wage, this makes a ninety page script worth about £1.1K ($1.7K). This figure is an important one, because it gives the writer a way of understanding the amount of work they’ve committed to their script. Regardless of the script’s commercial value or even its merit, every screenwriter could have earned £1K if they’d chosen to flip burgers with their time, rather than writing. Personally, I think it’s a very conservative figure, because it doesn’t take into account the sum total of time you’ve spent learning how to write screenplays, but if you add that time in, nobody in the independent sector could afford any of your scripts!
The final way of understanding the value of your script is to calculate its market value. This is easy, because every script starts with a market value of zero. That’s because market value is determined by what someone is prepared to pay for it. Actually, it’s more complicated than that. As well as establishing what the market value is, these days there is a second question about when the script goes from having no value, to actually being worth something? For an established writer, one whose previous scripts have made money, it’s possible for the producer to take a guess at a new script’s market value. An experienced producer can estimate how much they believe the script will cost to make, the kind of talent they can attach based on the quality of the writing, the average return on movies in that genre, and how their past projects have performed. From those factors a producer can take an educated guess at what the project is worth to them, and based on that, what the script is worth to them.
If those were the only market forces involved, this ought to lead straight back to the traditional 3% of the production budget calculation, but it won’t. It won’t, simply because there is another factor in play -- other screenwriters. Basically, for every screenwriter with a good script, a script worth that 3%, there are several thousand screenwriters who will give their script away for nothing, if they believe this is their chance to break into the industry. This glut of free scripts has driven down the market value of all but the top-end scripts. In fact, it is this glut of screenwriters looking to get their first break into the industry and the downward spiral of production budgets, which has created the “collaboration era” we are in now. As it stands, right now, most producers have unilaterally put back the point at which a script goes from valueless to having a value. Depending on the producer, this point can move anywhere from first day of principle photography, to the point where the movie turns a profit. In real terms this means that very few writers are going to be offered money for an option by an independent (alt-cinema) producer. This isn’t always an unreasonable position for a producer to take, because when a producer is looking for a free option, what they are really saying is that your script has no market value until it has attached talent and secured production finance. For an unknown writer with no track record, that seems pretty fair, providing the producer isn’t a dingbat or a time-waster. Basically, as development finance is scarce, free options are becoming the norm.
However, what’s also becoming more common, is the proposition that the writer should take payment on the back-end. So, what the producer is really saying here, is that your script doesn’t accrue any value until the movie has made a profit. To me, this kind of offer should pretty much always be taken as a warning sign that either, the producer has no faith in their ability to get the project distributed, or that they really have no intention of paying the writer at all.
There is only one circumstance under which I’d consider a back-end (deferred or points) deal for a script from an established producer.
To make that deal the producer has to personally introduce me to the last writer he worked with, and that writer has to show me a photo of him holding a cheque from the producer, evidence that the cheque didn’t bounce, and a reference assuring me the producer isn’t a raving dingbat. If a producer can demonstrate a track record of paying their writers, and if they’ve got a good business plan, then I’m in. Which, as it happens, is exactly the same criteria an investor would be looking for. Which is one of main points I wanted to make in this article. If a producer is asking you to wait for payment until the film goes into profit, this changes the nature of the business arrangement.
Regardless of what the producer may tell you, when they ask you to wait for payment, they aren’t really asking you to be a freelancer whose payment is deferred, what they are asking you to do is to invest your fee into the project. It becomes an investment, because the producer is asking you to carry some of the risk, just like an investor. In this situation I believe you have to see your script as your investment in the film, and as such it’s fair to expect the pay-off at the end to be closer to an investor’s pay-off, as opposed to a freelancer’s.
So, if a producer asks me to take a payment on the back-end I expect two things: I want to clearly understand their business plan for the movie, to be sure it’s viable; and I want to see my fee to show a reasonable ROI (Return on Investment). Not only that, as the first investor in the project, I’d also expect to be at the very top of the payment schedule. Which means as the first investor, I expect a contractual obligation from the producer that I will get paid before anyone else. A lot of producers will find these conditions strange and possibly unacceptable. However, I would argue that a producer unwilling to factor the 3% writer’s fee into the production budget, is also making an unreasonable request. Which is why it’s called negotiating a deal. The negotiation for what’s fair in a collaborative deal is largely about balancing what the producer wants (not to pay for the script until they absolutely have to) against what you want. And, as what you want may or may not include being paid, there’s a lot to discuss.
Alternatives to a Traditional Back-end Deal
However there is another option, it’s called a co-production and these days it’s the alt-cinema option I favour.
In my opinion the idea of collaboration with a producer, where the writer is paid on the back-end, is a flawed one. It’s flawed simply because it’s based on the historical concept of the writer/producer working relationship. That relationship is the one where the producer is the employer and the writer the employee. As the point of payment get’s pushed back further and further into the project, I believe there is a definite point where collaboration doesn’t cover it, simply because the employer/employee relationship isn’t an accurate description. Once a producer is asking a writer to take their income from the back-end, I think it’s time to ditch the idea of collaboration and to talk seriously about co-production.
A co-production can be a much better deal for any writer serious about alt-cinema. A co-production is when the writer sets up their own company to produce the movie, but then comes to an agreement with another producer/production company to work with them. This is a step beyond becoming your own agent, because you’re not just pitching scripts to producers, instead you are taking the first step towards becoming your own producer.
A co-production is a good choice if your ambition is to take a lot more control over your films. And, in my experience, the trick to setting up your first co-production is to find an experienced producer to work with. A producer who has the experience and contacts you lack to bring the film to market. You want a producer with a solid track record of sales, who is looking for an easy, slam-dunk project for their distributor. Once you’ve found the right producer, you take them a project rather than just pitching a script. A script becomes a project when you start to attach the elements which make the project a slam-dunk for your co-producer’s favourite distributors. Those elements are: the right director; the right “bankable” cast; and, at least 50% of the production budget. This, obviously, involves a lot more work than just writing a script and pitching it. It’s not for every writer, but I think it’s worth considering.
The primary advantage of a co-production, over collaboration, is you are going to retain two things: a larger financial stake in the project, and, more control over the development of the project. The downside, is that taking on a producer’s role will take you away from writing, because the production of a movie, from concept to completion, can be a five/six/seven year commitment.
Fundamentally, writers looking at collaborations always have the choice to take a back-end deal, where they hand their script over to an indie producer, with the attitude that something either comes of it, or it doesn’t. This decision gives the writer the chance to move onto other scripts and the opportunity to open new doors with other producers.
I’m going to be honest, here. I really don’t know which option is the better career choice. Collaboration, where you decide to take a deal where you are unlikely to get paid, but where you don’t have any responsibilities. Then there is co-production, where you end up investing a lot more time and effort, and may still come away with nothing.
Personally, I tend of favour co-productions, simply because I like being involved in a film’s development, and the more involved I am, the more interesting people I meet, and the more options it gives me for future projects. However, making the leap from writer to producer is a fairly big one, and the learning curve is hellish.
In the meantime, be aware that there are always choices to be made when it comes to moving your career forwards. The kind of deals you’re prepared make don’t have to be controlled by what one producer is prepared to offer. There are other, alternative choices.
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