Tue Apr 18, 2006 12:26 pm

If I know the business well enough, there is a fundamental difference between record labels and movie studios and the way they do business. No recording artist receives $20M for a record deal. Meanwhile, Tom Cruise gets his 20 mil for every flick he shoots. The main difference is with their rights after the work is released. Musicians get their share of the pie, while actors, set designers, costume designers, cinematographers, lighting designers, wardrobe, props, gaffers, etc, etc, etc., get their money up front and sign away their subsequent rights to the studio. It would be really extremely complicated to work out the math for over 100 people entitled to the proceeds of a movie showing (in a theater or as a sale on DVD). That's why studios pay the creators big bucks and take ownership of all the royalties (and the risk, if the movie flops). On the other hand, musicians are usually very few, so the math is rather simple and easy. Also, record labels are a lot sleazier, in that they just don't want to take as much risk. They share it (generously) with the musicians, forking over only the studio recording expenses and the marketing up front. The band gets their money from the royalties, although a particularly generous label is sometimes nice enough to offer an advance on royalties.

As for TV, the deals are different from show to show. They can be with zero participation (fixed fee up front, with no royalties later), or lower fee and participation in proceeds. Now, here is where the whole iTMS residuals come into the picture. THe contracts are individual, therefore, unions have the right to negotiate away for every show. As with any other negotiation, it is between the parties negotiating. And it should not in any way affect the retail price of the product.

Tue Apr 18, 2006 2:25 pm

Under SAG, all actors get residuals. However, they only get residuals for what their collective contract with the studios allows for. That's why stuff like the iTMS sales wasn't previously included in royalty payments. I've never heard that fees vary from show to show. My understanding is that everyone in SAG operates under the terms of that collective agreement (with a minimum amount they can be paid, royalties per airing of each episode, etc.). Actors' agents can negotiate higher salaries, but the royalty arrangement is always the same. And the studios are not going to negotiate each iTMS show individually. They will simply craft an agreement that will apply to everyone equally.

And, BTW, an actor is considered an "above the line" person, whereas costume designers, gaffers, etc. aren't. People below the line on the budget get paid a set rate for their work and that's it. Anyone above the line -- actors, directors, producers, screenwriters, etc. -- gets their negotiated salary *plus* whatever their union's collective bargaining agreement allows, which includes royalties, etc. Some actors can get a piece of the gross box office revenue, for example, but that's an additional thing. Jack Nicholson and Michael Keaton got a piece of the gross for the 1989 Batman movie, for example, but, as you might recall, WB said that film never turned a profit, so those due money from the net profits were hosed. They sued, but I don't think it went anywhere.

	Quote:
	>How does a $0.02 residual translate into doubling the cost? The same way that the current $0.01 residual is fair compensation. Yes, there is a point of diminishing returns, but these people have the same mindset as Exxon-Mobile

Currently, there's no residual. Yeah, these people have the same mindset as Exxon-Mobil, but they also know that, unlike gasoline, people don't need to buy their products on a regular basis. They also know that higher prices can bring on more piracy, another consideration that has no comparison to gasoline sales. Therefore, they're more sensitive to prices.

And don't forget that they're playing a high-stakes game where they can sink literally tens of millions of dollars into a movie that can flop hard. Gas is gas, despite whatever sales and marketing the gas companies do to convince you to use their brand. I bet the Exxon-Mobil guys privately laugh at Hollywood for spending so much money essentially reinventing the wheel on a regular basis.