Exploiting Hollywood 1980

  Chapter 786 The interests are too great to renegotiate

   Ronald did not expect that the news that his director's "Top Gun" had been successfully pre-sold in the videotape market caused a huge noise that he never expected.

  The revenue of movies has been divided into two major parts in the past, one part is the revenue of the theater box office. Another part is the proceeds from the second broadcast on the cable station.

  The latter part of the income, unless separately agreed, is generally distributed to the main creative team and members of the three trade union groups according to a fixed small proportion.

   They are the Actors Guild, the Directors Guild, and the Screenwriters Guild.

  The so-called surplus means that after the TV station broadcasts more than ten times, or the revenue exceeds 10 million US dollars, a percentage of the profit must be allocated to the three union members.

   This part of the remaining dividends is led by the trade union, which is collected from the filmmakers uniformly, and then distributed to the trade union members who participated in the filming on a quarterly basis.

   And photographers, editors, makeup, costumes, props and other technical jobs have no right to participate in this residual value dividend.

  Because Hollywood generally believes that when a movie gets excess revenue, it is the outstanding contribution of the artists, not the skilled workers.

   After the rise of TV in the 1950s, many old directors, old actors, and old screenwriters relied on this for a large portion of their income. The old films they filmed were repeatedly broadcast on TV stations, and the remaining dividends were brought.

   After going through the struggles and negotiations between the three major trade unions and the Producers Guild, including when Ronald first entered the industry, he experienced a strike by the Screenwriters Guild and a strike by the Actors Guild. This ratio was gradually determined.

   As long as the number of replays of the old movie or the revenue, one of which meets the triggering conditions, the producer will distribute about 3% of the revenue of the TV station broadcast to the three unions. Then let them distribute to their respective members.

   It is easy to see that this distribution method is the least controversial for the director’s union with the smallest number of people. The Directors Guild stipulates that a film can only be signed by one director, so the 1.2% remaining dividends given to the Directors Guild belong to the director.

   While the Screenwriters Guild gets the least share, the Actors Guild gets the most money, and they want to increase the percentage of dividends the most.

   On the other hand, this dividend method is only valid for those popular movies. If the number of broadcasts on the TV station or the income does not meet the standard, then the creators will not receive any remaining dividends.

   Of course, the union will not watch those members who can’t make good works starve to death. After this part of the remaining dividends are transferred to the union, the union will draw a portion to supplement the union’s pension pool.

   and other ordinary members, after they can't work and retire, they still have a pension that they can hold to support their lives for a while.

   This distribution ratio is an equilibrium price obtained by trade unions, members, and producers after a long period of repeated games.

  However, the "Top Gun" video hits this fragile balance.

  Who knew that the market could grow tenfold as long as the price of videotape was reduced from $80 to around $30?

   The effect of this market size is that the production cost of video tapes has been greatly reduced, from a few dollars to a few dollars a box. The marketing and distribution costs that producers bear in order to distribute the videotape are also shared among more customers.

  Although the retail price has dropped a lot, the gross profit that the producer gets from it has not dropped much.

   At this moment, the three trade unions all saw fire in their eyes, and quickly mobilized their members and began to be interviewed in the media to criticize this phenomenon.

  The main creators did most of the work, why did the producers take the richest piece of the cake?

  …

   "I think Tom Cruise and their contract need to be renegotiated. In the past, in the videotape, the conventional division of content is not suitable for the development of the new situation."

  Paula Wagner has been pregnant for several months, wearing flat shoes, holding a document, and talking with her husband Nisita.

   "Although the reason for legal renegotiation is far-fetched, but it happens that the Screen Actors Guild is making a lot of noise. Can we take advantage of the situation and put some pressure on the two producers?"

"You have to pay attention that your client Tom, and the two producers signed a separate sharing agreement, not the remaining dividends stipulated by the union. Among the union members, there are a large number of people who are already dissatisfied with the stars' income. If you're going to follow the trend of video revenue explosions to get Tom's revenue, you have to be in case they separate you from the rest of the ordinary actors."

   "But why can Ronald get that 1.2% share?" Paula is no longer Ronald's manager. She can't share this part of Ronald's income, so she is a little dissatisfied with her husband's attitude. This, combined with the hormonal changes of pregnancy, made her a little **** off.

   "Ronald helped to shoot the Pepsi commercial at the beginning of the video. In fact, if it wasn't for the outstanding effect of the Super Bowl live commercial he helped Pepsi shoot, it is very likely that Pepsi would not have added a subsidy of $6 per box of video this time.

   This time, the pre-sale of Top Gun's video tape exceeded 1 million boxes for the first time. To what extent is due to Ronald's additional contribution, it is hard to say. I think the two producers may have picked up a big bargain. "

  Nisita helped his wife open the door with one hand, and helped her get into the car with one hand on her waist. Paula's age is already an advanced maternal age, and she needs to go to the doctor for an examination.

   But Paula is very precious in action, but she doesn't give in, "So, Paula. You'd better not let Tom compare himself with Ronald, it's not good for his future acting career."

   "I understand that Tom's better to appear in Ronald's movies in the future, this time Top Gun has raised Tom's status too much.

   I'm just a little pity, seeing the huge market potential of video tapes, the seven major studios will not be so easy to talk about in the future, Don Simpson and Jerry Bruckheimer, the two lucky ones, are really lucky. "

  …

   "This is a contract in black and white, why, you want to not abide by it?"

  Don Simpson cocked his mouth, holding a large cigar, and asked the manager of Pepsi Cola's marketing department with a smile.

   "When we signed the contract, we made a forecast based on the sales volume of 500,000. Now that the pre-sale has exceeded 1 million, it makes no sense for us to give a subsidy of six dollars per box of videotapes."

   Pepsi's marketing manager, answered politely over there.

Originally, PepsiCo had already paid $6 for each videotape. After seeing Ronald's Super Bowl commercial, which brought a lot of heat and discussion to Pepsi for a long time, people from Pepsi felt a little bit towards Ronald. superstitious.

   So they added another $6 subsidy to each cassette. That is, for every videotape sold for $26.95, Pepsi will subsidize Top Gun by $6.

   But the sales of the videotape were unexpectedly hot, and the pre-sale has exceeded one million boxes before it even went on sale.

   Pepsi's original marketing budget could not include this additional subsidy at all. So this time the marketing manager in charge of the project, along with the lawyers in the legal department, came to negotiate with the two producers.

   "Why do you think this way? Every box of our videotape sold is a marketing medium for an event.

  Every viewer who watches the videotape will watch the one-minute commercial in its entirety. This is an effect that you can't achieve on any TV program. "

   Bruckheimer didn't want to fall out with the big sponsor, and from their point of view, he thought of some reasons.

   "We have paid a flat subsidy of six dollars per box of videotapes, and this extra six dollars is estimated based on the estimated sales volume of 500,000 boxes.

   Therefore, this part of the direct subsidy to the producers of "Top Gun" must be stopped when the sales figures continue to rise. "

   "You mean to ignore the original intention of the contract in black and white, and then look for the business logic behind the terms. Do you expect the judge to decide this way? Is there any?"

  Don Simpson doesn't believe that there are judges who don't care about simple terms.

"Of course, whether you sue in Los Angeles or New York, we are sure to win this lawsuit. Also, if you don't agree to set a sales cap on the subsidy for videotapes, we will let the court issue a temporary injunction to temporarily ban the videotape's sales. On sale.

   This means that your sales channel can no longer continue to pre-sell videotapes. "

   Several senior lawyers from PepsiCo's legal department standing in the back row stepped forward uniformly, putting a lot of pressure on the two producers.

   "Who do you think you are? It's okay if you say yes? Prohibit if you say ban? Huh?"

  Don Simpson doesn't pay much attention to this tough statement. In Hollywood, which star does not need such tough coaxing and intimidation to be intimidated?

  I have long been familiar with this game that is bigger than the hole card.

   "Because we are Pepsi, we say yes, we can."

The leading lawyer,   , took another step forward and was already approaching Simpson's side.

   "Also, you are fighting between two people this time. We have contacted Paramount, and they are also very interested in the sales of the video tapes."

  Don Simpson's face changed, this son of a **** even went to Paramount to become an alliance. The top management of Paramount has long been very dissatisfied with the fact that the two of them received most of the proceeds from the videotape business.

In the future, video tapes will become an important source of income for the seven major studios. They all understand that this big sale is not because of anything special about "Top Gun", but because of the pricing this time. acceptable price range.

   Then, as long as you continue to price in the 30-40 price range, you can put new popular movies and classics in the film library on the market on a large scale.

After    "Top Gun", producers who cooperated with the Big Seven on film distribution could never get such good conditions as them.

   is the clause this time, and it is not that Paramount has not thought about going back on it. If they were to join forces with Pepsi, no matter how powerful the two producers were, they would still lose.

   In addition, the two sides can also make external moves to set up obstacles on the issue of video tape sales. In this way, if the momentum of the pre-sale is stopped, it will make a lot of money less.

   "We can talk to you about this subsidy clause again."

   Bruckheimer hurriedly pretended to be the good guy in the game of good guys and bad guys, and gave him an olive branch to make concessions.

  The two parties negotiated new terms. Within three days after signing the new supplementary terms, the pre-sale figures reached were still within the scope of PepsiCo’s subsidy.

After the pre-sale and the sales figures after the official launch, Pepsi will no longer subsidize their six-dollar subsidy per box.

   "It's much better than expected." The two producers settled the bill there.

  The first two weeks of pre-sale saw the strongest sales momentum, with more than one million boxes pre-ordered. After three days, the number will rise to nearly 1.2 million boxes.

  This part of the videotape, just directly subsidized by Pepsi, can make an income of 7 million.

   "What a good business! We are so lucky, hahaha!"

   There is nothing unacceptable to the two of them. Even if there is no subsidy for the subsequent sales, it is still a huge amount of income. Many Hollywood producers may not be able to earn so much money in their lifetime.

   "We continue to party, continue to have fun, and ask Ronald if he is free. The agent we found this time said that we can find beautiful women from New York's elite model agency."

  Don Simpson decided to forget the unpleasantness and continue to revel in the Orgy conference every day in the wine pool and meat forest.

  …

"Ronald, you are our director's lucky star. This time, I was able to renegotiate the terms of the remaining dividends with the Producers Guild, thanks to your 'Top Gun'." A white old man, well-dressed, with a little hair Sparse, but neatly combed, he sat behind his desk and said to Ronald.

The old white man sitting in front of Ronald is a famous Hollywood director. Franklin Schaffner, who once won the Oscar for best director for "General Patton", and who also shot a generation of sci-fi masterpiece "Planet of the Apes" .

   He has just been elected president of the American Directors Guild in the general election.

   When Ronald received his new Directors Guild ID card last month, he saw the signature of the new president, Schaffner.

   "It's a coincidence, I don't get much credit. No one knew before that a videotape sold for $30-40 to get the most bang for the buck."

   Ronald answered modestly.

   In fact, if it weren't for him, there would be other films. Other producers revealed this, and he was just lucky and just happened to step on this opportunity.

   "Modesty is a good quality, especially for a famous director." Schaffner was born in 1920 and is 67 years old. It is pleasing to the eyes of Ronald, the new director of his own children and nephews.

   "But don't be too modest, what you bring to the Directors Guild is not only more residual dividends, but also more bargaining power for us in front of the studio.

   Also, the number of new members joining the Directors Guild is decreasing. We have a whole bunch of old guys my age going for retirement.

  You have opened up the videotape market, and our Directors Guild can also receive a lot of dividends, which will be added to the pension pool. "

   Schaffner was jointly elected by many retired directors from the golden age of Hollywood to be the chairman.

   One of his important policy agendas is to develop more financial resources, so that these old brothers and old folks can have a more decent retirement life.

   "What? The number of new members is decreasing now?"

   Ronald asked the president when he heard what he was interested in.

"Yes, there are a lot more advertising directors, but their first-level members can't pay much membership fees. The number of film directors and TV drama directors who can pay large membership fees and bring dividends, and the number of newcomers who have joined the directors' union in recent years. are slowly declining."

   "Oh? That's because the new director didn't join the union? Or?" Ronald was a little strange.

   "For movies released in America, directors have to join the union, of course, except for Lucas, the freak. His own Lucasfilm, handling his own distribution business."

  Schaffner sighed, if Lucas could return to the Directors Guild, he would get a lot more dividends.

   "The current production cost is already very expensive. When you joined the club, there was still a miracle of one or two million to make a movie, and now the lowest low-cost movie also needs 6-8 million to make.

   And lack of training in low-budget films, film directors have no chance to enter the industry. I only feel now how many qualified members Roger Coleman's New World Pictures has delivered to Hollywood and the Directors Guild.

  Unfortunately, now drive-in theaters are also declining nationwide, and his exploitative films with hundreds of thousands of dollars are not doing well at the box office. "

   "Fortunately, I entered the industry early. If I only entered the industry now, I would have to wait another ten years? Will I have the opportunity to get a guide tube for the first time?" Ronald secretly called a fluke.

  The first movie "Rock High School" that I participated in was a small cost of several hundred thousand. The director's first "fast paced" was a small cost of three million.

  If it is now, and suddenly give 8 million to a new director, Ronald asks himself, he may not have such confidence to believe in himself who has never made a feature film.

   "I will convene senior members of the union to discuss with lawyers how to negotiate with the Producers Guild to add the videotape to the remaining dividends.

   We intend to imitate cable TV and set a bottom line for sales. Any film that sells video tapes above a certain amount needs to allocate a portion to our directors' union.

   I will also coordinate with the two actors’ unions (the film actors’ union and the TV show actors’ union) and the screenwriters union.

   In short, this time everyone accepts your love, and directors who make popular movies in the future can earn an extra income. "

   "Haha, I'm very happy to bring some benefits to everyone." Ronald, as a member of the director's union, also gave him a lot of support back then, and I feel very happy to be able to repay."

   "When it's time for the meeting, come and let the old guys meet you." The more Schaffner looked at Ronald, the more satisfied he became.

"If I have time, I will definitely come. You know, unlike you in the era of big studios, I have the opportunity to observe and learn from the big directors. I really hope to have the opportunity to communicate with other directors, preferably by their side, Look at their experience in making movies."

   "Ha, good. There are some old men in our director's union who can meet your requirements. Billy Wilder is my old friend, and he must also want to meet you."

  …

   Ronald, who returned home, received another call from Eddie, the general manager of Daydream.

   "Ronald, president of the Producers Union, Nick Conte called me and he invited us to join the American League of Film and Television Producers as Daydream Pictures."

   "Huh? That's the employer's alliance... No, I'm the employer now."

   Ronald reacted, he opened Daydream Pictures himself, and also got involved in the distribution business. Now he is a proper owner.

   "Yes, you are already an employer, my boss.

  Producers Alliance (AllianceofMotionPictureandTelevisionProducers, referred to as AMPTP) is a loose alliance that negotiates dividend contracts with major labor unions.

All seven studios are members of the league, as are a few mid-sized studios, such as Heimdell Films, which made The Terminator, Orion Films, the Oscar regular, and De Laurentiis Films, the Italian. industry, plus dozens of small studios like ours.

  This is different from the more official film association "MPAA". The Producers Alliance is mainly a loose organization, which is joked that it was established to sign a contract.

  Nick Conte, who taught at Stanford University Law Department and worked as a labor law attorney for many years, is now responsible for negotiating the entire alliance and major unions.

   So this time, it was he who invited us to join us and coordinated our position. "

   "Oh, this... I'm a member of the Directors Guild and the Writers Guild. If I join the Producers Alliance now, which side should I stand on when negotiating?"

   "Hehe, generally in your situation, you have to avoid all discussions and negotiations." Ed had already inquired about the details, and Spielberg had a similar identity to him, and he automatically avoided every negotiation.

   "Okay, ask a lawyer to look at the documents, we will join as soon as possible." Ronald reacted, and in the future movies produced by Daydream, the remaining dividends will also be allocated to the three major unions as soon as possible.

   There are some tricks in the operation, it is better to join the alliance early and learn it honestly.

   (end of this chapter)