Raising Money = Building Someone Else’s Business

The film and TV industry can be brutal, especially for newer artists and filmmakers. Since making a movie is so expensive, most new filmmakers look to the studios for funding. Unfortunately, in this context raising money = building someone else’s business. Let’s find out why.

When you’re raising money from a studio, (in it’s simplest form) you are selling off ALL your creative work. They get all your rights to exploit your work in any way that they can while giving you as little as they can when compared to what they could possibly make. You’re feeding their business with ideas, ideas that get turned into minutes of content, and they earn money for years to come when the hard work was all yours to begin with – RIGHT?

So, what can you do as an artist? You’re going to need the production funds from somewhere. Since you’re putting so much work into your project, and the product itself is your brainchild, it’s only fair that you get most of the profits from your baby – be it monetary, fame, or recognition. Hitting up the studios for money might initially seem like the most obvious way since most filmmakers start this way. But there is a way around this, if you are willing to make the trade off that comes with working outside of the studio system.

The Problem With Funding From Distributors

Whether you’re a director, a scriptwriter, an actor, an assistant, or if you’re working behind a camera, when you sign your agreement or crew deal memo, you are signing away all your rights to the copyright that you might be perfecting in the process of doing your job.  That means everything – story, plot, characters, names, circumstances – EVERYTHING.  And the day you get out of line or stop playing by the rules that they defined when creating your agreement is the day you are asked off the project.  AND THEY HAVE THE RIGHT TO DO THAT.

You lose everything that you created.  The only thing you maintain is any downstream income that might come from that project – if any.  Or any reserved rights that might come form your agreement or the WGA agreement (assuming the producer is signatory to the WGA Basic Agreement). Filmmakers, just to get their work on the big screen or in front of an audience, are selling off their intellectual property to a distributor or a studio. What the studios are doing is giving you money for what initially seems like a good deal, but let me shed some light on why it’s not always the case.

Loss Of IP

When you’re starting, you’re low on experience and a track record. That is a point the financiers will drive home so they can drive down the cost of hiring you or buying your project.  They will say (out loud or implied), “we have no idea who’s going to watch you work ? ” “The studio is the one taking the production and marketing risk, right?” “You get to make the film, we get to sell it. Everyone wins!”

But if you just think about it a little, you will understand how unfair this is. What you are essentially doing is selling off all the rights in your ideas to a studio. You’re losing control over everything in the screenplay. They can exploit it however they wish. What might seem like a good investment to you is, in most cases, a very bad decision.

The studios have been in this business for a while. They have an idea of  the potential your project holds, even if you don’t. And if they are willing to fund your idea, chances are they have a very good idea of the profit that they can make a. A Profit that should have rightfully been yours.

Loss Of Control

As soon as you sign that piece of paper, you are actually giving away all control to the screenplay that you just sold.  To be clear, that is probably a fair trade.  You get paid for an idea and they get to see if they can make a ton of money. They get to decide what they want to keep, what they want to cut, what they want to spin off and they even get to decide whether you stay on the project or not.

Yes, they can even fire you from YOUR project. It means you have to abide by their rules and give up some of your creative freedom. Since they’re giving you their money and delivering your project to an audience, you have to listen to them. You have to abide by their deadlines, their budget, their ideas. There’s no other choice.

If you fail to do this, they will usually bringing in another person saying “We want to bring somebody in on this project to shepherd it to the next level.” They are initially going to be nice about it. In my experience, a good executive will keep the creators in a project and engaged so that their ideas can flourish, but at the end of the day, you (the creative) can be asked out at any time if they don’t like the direction of your idea and you should understand that.

So, whether you’re a writer, actor or a director, when you’re selling any kind of creative work, you’re giving up all control and in exchange for that you are gaining access to the studio’s production funding and the marketing machine behind it.

Lower Returns, Forever

There’s a “net” revenue definition.  Net revenue is defined by gross minus expenses and the definition of expenses can vary, but it mostly means whatever the studio decides to lay off on your title. You should consider Net Revenue as a opportunity to receive no additional revenue from your idea.

There is also the clause where you are signing away your ownership in the work to be used on all platforms “known now or devised in the future.” What doe this this mean?

This means that any rights that you own are now transferred to the studio for the rest of time and on all platforms that exist now and any platform that will be invented in the future. There was a time when filmmakers were selling their idea to a studio, when they used to generate the vast majority of their revenue from movie theatres, they didn’t pay much attention to all the ancillary ways they could monetize a movie. Then, of course, things changed, and we got cable TV, pay-per view, and eventually streaming services like Netflix, Hulu, Disney Plus, etc.

In the old days, a filmmakers contract would have only covered cinema exploitation, and if your film was to be streamed or sold to home video (when those platforms were invented), you still maintained those home video rights because the agreements were not clear about transferring ALL your rights. But now that the studio have learned their lesson from the old agreements that lacked the creativity of owing everything, they are now buying ALL your rights from you, forever.

Not only do they have the right to exploit your work in whatever way they can , but they can also do it in new ways that get invented in the future. Suppose you made a film, sold your rights to a distributor, and years later, the film gains a cult following and eventually ends up being a classic.  In that case, you have no ownership of the work anymore, even though it was your brainchild, all your hard work. But the distributors are now exploiting this film and making spinoff shows and businesses. It’s all over every streaming service, cable TV, airline seat backs, and even restaurants, like “Bubba Gump Shrimp Co.”

Whenever you sell your creative work to a distributor or a studio, you are selling them something that will build their business. It will keep providing them revenue for years to come. The money just keeps coming in. Money that should have been coming to you. A great example is Warner Brothers acquiring DC Comics.  The DC catalogue was at Time Inc, then went to Warner Bros in the late 80’s when they acquired Time Inc, and now is a HUGE franchise for the studio.

But there’s nothing you can do about it. Because you sold your rights for what might seem like a small amount of money, in comparison to the kind of profits the studio is making from your work and will could be making for a long time. You might feel like you’re not getting enough value for your work, the value that you deserve, but remember that you got paid up front and for that they got your idea.

Understand, that my analysis above is very one sided and lacks that nuance of access, funding, marketing, publicity that a studio can provide, but you need to be clear about what you are doing when you get into that system.  You lose control, but you get paid and maybe you will get a decent back-end definition that will produce some downstream revenue if you become powerful enough, but don’t count on it.  Get as much as you can up front!

So What Do You, As An Artist, Do Then?

It seems that the system is rigged against the creatives, right? So what do you do? Your best bet would be to take the distribution and marketing into your own company and deliver your work to an audience yourself. Not only do you have full creative freedom over your body of work, but you also get to reap the profits and control the audience side of things as well.

I think the problem is that most people as filmmakers look at this thing as a creative endeavor. While the creative process is of course a huge part of it, it is also a business. And it is how you handle this business that determines how much success you’re going to get out of your film or show.

If you’re a content creator of any sort, you need to look at your work as your business. You need to treat it like a business and sell it directly to your consumers. You could be selling tickets to shows or subscriptions, or maybe even have a Patreon account (which I’m not a fan of – seems like begging to me). Whatever it is, you can be distributing your content yourself. Not through third parties, who will own you.

Work on building a brand, making your name in the industry. Your content should be unique and specific to you. No matter what genre or the form of media that you use, it should stand out and become a brand in itself. A brand that will be synonymous with you.

You can start small. Make something with 10 grand. Then you sell those to your customers, and since there aren’t any third parties involved, you get to use most of the revenue on your next project.

Once you’ve saved up a bit, double your budget. Make a film with twenty grand. Maybe you start to see even higher returns, so you can spend more on the next few projects. This is how you slowly build and grow your audience. You have full control of your intellectual property, the returns, and also the audience. You get to decide what to deliver to them, directly.

Learn to cater to your audience, and sustain that relationship. Eventually, you’ll have built your very own library. Once you age out of the entertainment industry or you feel like you’ve given everything you can, you can sell your library to a distributor who will then get to exploit it on a larger scale.

But now, it doesn’t matter what they do with your work. Because you’ve already profited and you’ll get significantly more for your library than you would have if you just sold the rights to your ideas in exchange for funding. So you have to think smart to get ahead in this business.  This has benefits, but also has its own drawbacks.

Conclusion

In the entertainment industry, raising funds=building someone else’s business. To get what’s rightfully yours, you should maintain control of your intellectual property and look at you work as a business or you can work inside the studio system, know that there is little to no up-side and get paid as much as you can up front.