Two Questions: Producers on Net Profits and Sharing Their Personal Lives
In this new series of articles, Filmmaker poses two questions to producers, directors and other filmmakers. One question is directed toward the nuts and bolts of filmmaking—questions having to do with terms, practices, legal issues, technology and so on. The second question deals with topics that are softer or more amorphous—questions that necessarily can’t have right or wrong answers and whose replies are based on the personalities and practices of the individual participants.
This issue, we directed our questions to producers, both fiction and doc, and asked them:
What are points, or backend, and how do they work? What’s your philosophy toward giving out points, and what’s your philosophy toward negotiating points for yourself? Would you rather take more of a fee or bet on the backend? Have you ever meaningfully received backend?
How much of my personal life do I, or should I, share with my collaborators?
Thank you to the producers below (who, switching hats, include myself) for their candid responses.—Scott Macaulay
Houston King (There There; Support the Girls): For this, I will first write an explanation of points. Points usually represent a percentage of net profits of an LLC (or other corporation) whose sole activity is production of a single film. Normally, these net profits are paid out after investors recoup their investment plus a return (15 to 20 percent) and other various costs (sales costs, delivery costs, etc.) are covered. Usually, one point represents one percent of 100 percent of net profits. But points’ definitions can be materially different from film to film, in the context of TV and for individual participants.
In independent films, 50 percent of net profits go to investors. My philosophy for the remaining 50 percent is to try to group together select members of a filmmaking team equally (as much as possible). For example, treating on a most-favored-nation basis the following four groups: the director, writer and main producers; the lead actors; the secondary actors; the department heads.
I prefer to balance my remuneration in the form of a risk-neutral balance of both fixed (producer salary) and contingent (net profits) compensation.
I have received meaningful backend.
P. Jennifer Dana (It Follows, Summering, The Assistant): My philosophy is that points should be given out to those that really help make the film, not just the actors and directors. Film is a collaborative medium, and without contribution of department heads, you can’t design a set, run a camera, edit and mix sound, so the team should be compensated on the backend, especially if they are working for a cut rate up front.
On fees versus backend, I think if you are in position to pay your bills then, yes, bet on the backend and the creative, especially if your budget is small. But so often it takes so long to get to the start of production that you need to be compensated up front for the years of work you will put into the project.
On smaller films, I have received meaningful backend and often multiple times over years.
Sarah Winshall (We’re All Going to the World’s Fair, Strawberry Mansion): I think of backend as a way to say “thank you” to team members who are going above and beyond and/or working at discounted rates. It’s particularly meaningful with crew who aren’t necessarily in a “glamorous” role: assistant directors, sound designers, colorists—those talented technicians who won’t get famous for doing the work but can be the difference between a successful film and a disaster. Working in the microbudget sphere, backend points are often the only capital I have to give out as a thank you, and hopefully that backend eventually pays off. That being said, I’ve only been on one film where I’ve seen anything come in from those points. It’s a long, slow road to recoup, and sadly, the points are more often just a token than anything financially meaningful.
Taylor Hess (The Surrogate, In Silico): I’m so curious how other (more seasoned) producers will answer this question because, for me, the majority of my income is not earned from producing indie films. I feel lucky that I’m able to make a living and also produce indies, but this context very much informs my current philosophy around fees and points. Negotiating points for myself feels more symbolic than anything else, likely because I’ve never meaningfully received backend. The points represent my investment in the film and the value I bring whether or not I’m ever financially compensated. I’d love an upfront fee, but budgets are too strained more often than not, and waiving a producer fee is the most obvious first way to ensure that crew rates and production value are protected. In terms of giving out points, it can be a nice gesture to acknowledge that while someone’s worth may not be reflected in the budget, they are valued nonetheless. But at the same time, I don’t think points should be offered as a substitute for sustainable rates.
Josh Penn (Beasts of the Southern Wild, 32 Sounds, Philly D.A.): My ideal philosophy, when possible, is to give out points to any crew who were truly a fundamental piece of making the film. This is especially true if they were not paid super well up front. Sharing with a bigger group means the participation may be pretty small, but it feels important to have key crew members get some share should the movie become profitable. I have had films where we shared the backend with about 50 people and crew members, like key grips and assistant editors, were part of the pool. The films ended up being profitable, and while sometimes the checks are for only around $100, those crew members are happy to receive them and to have their contribution recognized in this way.
In my ideal world, every movie’s backend would have a set-aside separate crew pool. For example, it could be five percent of the total pool and then split up at the end of post-production between all of the key crew members. The challenge is that actors end up taking so much of the backend, despite often being the people who got paid the best and sometimes spend the least amount of time on the film. What remains after that is often a very small amount for the producers and directors, making generosity to the crew harder to fit in. One thing to note is that these philosophies are much easier to implement on documentaries because there are generally no large actor backend pieces, and the crew sizes are more contained.
I wish that there was more standardization of how the backend is split up so that there was a little more protection for parties involved. Perhaps there should be an investor pool, writer and director pool, producer pool, cast pool and crew pool. These would not all be equal in size, but it would protect against and cap one party’s greed or leverage effecting the backend of other portions of the team that made the film.
I would also like to note that the Documentary Producers Alliance made guidelines for the documentary waterfall [the term for how and in what order payments are made to those participating in a film] that set some really good standards that I believe to be very fair and straightforward. For transparency, I was part of the core team writing these guidelines. I do wish there was something like this on the fiction end as well.
As for myself, I generally would lean toward taking more of a fee over backend as it is generally a safer bet for most films, but there are exceptions. Also, I see no reason why this is a choice between the two for independent producers where the fees are very rarely outsized, especially once broken down for all the time that was spent on the film.
I have meaningfully received backend, on most films. It’s a mirage, but I have had several films go into profits.
Katie White (Best Summer Ever): For context, the deals I’m negotiating are largely for indie films under $5 million and often first-time writer-directors. In today’s market, backend for films in this range feels null and void. You pray for a sale that pays back your investors at the bare minimum. Backend points should never replace anyone’s fee, especially the producer’s. Somewhere along the way, it became acceptable to not pay producers in exchange for backend, which may be lucrative for a blockbuster, but not in the indie space. That would render me unpaid and likely resentful of the project.
Regarding my past experience with backend, I have one feature narrative under my belt, and all proceeds from that film went to the nonprofit that EP’d it, making the conversation around backend nonexistent.
Ted Hope (The Tender Bar, Happiness, The Ice Storm): Currently, points are an antiquated concept for most films, at least those made under the auspices of a global streamer. In those rare instances when revenue can be both calculated and reported, though, points make sense for anyone who has the potential or likelihood of transforming the “success” of the project as well as those collaborators who are working either below their worth or market value. Although not always contracted, I believe we paid points to all participants on every film I produced that showed initial profits to the extent that deferments got paid out. That was five or six films.
On The Unbelievable Truth, The Brothers McMullen and The Wedding Banquet, contracts and deal memos did not have profit sharing of any kind in them. When we made more money than we anticipated, we divided it up in manners we thought fair. Simple Men and She’s The One were done under an IATSE low-budget agreement that allocated a portion of profits to the crew, so those who did not have it in their deal memo still got it. Stars and top heads of departments had it in their contracts.
Scott Macaulay (The Assistant, Gummo, What Happened Was…): I’ve produced, executive produced or co-produced 25 features, and I’ve received net profits on three. In one case, a microbudget film, the equity investor generously placed himself further down the waterfall, so that the producers, actors and crew could receive their net profits first. Significantly, the other two films were ones that largely did not receive theatrical releases. The minimum guarantee (MG) or license fees resulting from going straight to video, or straight to streaming, eclipsed the budget of the film, and no offsetting theatrical release costs had to be recouped first. Thus, profit participants got paid immediately (or, as is often the case these days, quarterly over successive years).
One other film would have received net profits, but, collectively, the director, my fellow producers and I made the decision to accept a lower MG rather than take a straight-to-cable offer. I remember the cable executive telling me that one day I’d regret that decision, and, to be honest, given that the film’s theatrical distributor wound up putting little muscle behind the release, he might have been right. This points to an issue seldom discussed in independent filmmaking, which is that there is often a moment after the film’s premiere when the pure financial interests of the investors can conflict with the often nonfinancial interests of the director. The investors, positioned ahead in the waterfall, in many cases simply want their money back, whereas directors are often looking for a distributor and release that will meaningfully build their career even if the upfront money isn’t as good. The best way to deal with this as a producer is to work hard to build and maintain relationships among the team and to make sure that everyone participating in a film is doing it for the best and clearest reasons.
One more note: Net profits are often defined as “of 100 percent,” meaning that one point is, as Houston King wrote above, truly one percent. But you’ll also see the phrase “producers’ share of net profits.” In the case of a film divided 50 percent for the filmmakers and 50 percent for the investors, that means that one percent of producers share of net profits is actually just half of one percent of overall net profits. My big advice here is to try hard to maintain one definition of net profits for all the profit participants; don’t let one actor, or level of participant, obtain a more favorable definition than anyone else, for both reasons of fairness and accounting sanity.
On sharing one’s personal life:
Hope: In forming bonds with my key collaborators, I use examples from my life. I aim to be generous, honest, vulnerable and transparent. I do so when I find such tales relevant to the problem we are trying to solve; I don’t share for sharing’s sake. One needs to be careful about “TMI” and those that prioritize such sharing over the project itself. My “bonding” is for the most part during the development and long prep process. Once we are shooting, there is far too much going on to talk so intimately. That said, setting boundaries and clarifying needs are both very important, so if you are, say, a single caregiver or have other important responsibilities that put restrictions on your participation, share that without hesitation and let it be known. Or if you need special consideration to do your best, let your partners know. Everything is workable and doable.
Dana: Christine Vachon once gave me this piece of advice a long time ago. I’m paraphrasing, but it’s to make sure your director has a relationship with some living thing—if not a life partner, then a dog, a cat, a fish but something. I thought that was a great way of saying to keep some boundaries and don’t make it personal all the time. So much of art and life gets blurred that having some space is helpful.
King: I prefer to have close personal relationships with my collaborators, especially directors and writers. It’s paramount to establish trust that we’re both looking to make the same film for the same reasons. That being said, I’d never let any personal challenges enter into a working relationship. As a producer, I want to enable writers and directors to do great work, never to weigh them down with exterior challenges of any sort.
White: This is a very tricky question. It’s remarkably difficult to embark on the journey of making a feature film and not share the details of your personal life and day-to-day experiences. Ironically, the intimate details either become the epoxy that binds you or are the reason the collaboration clicked in the first place. While I’ve seen this work out, I’ve also seen familiarity breed contempt. When it comes to negotiating financial deals, my tax returns and/or what my partners think or know I have in my savings should not affect what I make for my fee or backend.
Macaulay: This question is inspired by something filmmaker Margaret Brown (Descendant) said in her interview last issue with Robert Greene. She received traumatic news about a friend on her biggest shooting day and shared it with her subject. “I told him what was going on, and he had had something like that happen to him,” she said. “There was no way for me not to tell him, because it was so awful… I’d never had more crew than that, I’d never had that much money spent on a day of shooting, and it was still development money. And I was just scared I would mess up, you know? So, I felt like I had to tell him because we had to do it together, because I needed his support, and he was there for me.”
As a producer, this question is tricky to answer because often the producer is the recipient of so much sharing from others. Listening and being empathetic is part of the job. As a producer, I’ve had crew members, actors and directors share health issues, caregiving needs, divorce legal proceedings and much more because these things had to be accommodated for in some usually quiet and discreet way by the production. I think the fact that films are multiyear collaborations, with portions often out of town and involving long hours, makes these conversations more common than in traditional 9 to 5 jobs.
But as a producer, I tend to default to a need-to-know basis. My father was given a few months to live while I was in early prep on one film, and I told the director because, in addition to the obvious emotional impact, I would be physically absent for some period of time. When my late partner Robin O’Hara, with whom I produced most of those 25 films, became ill, I didn’t share much, as things were hopeful and she herself chose to be quite private. It was only when she was hospitalized that I informed more than a few people.
Like Hope, I will reference elements of my own life more often in the development process. Reading one script recently, which opened with a traumatic loss that affected the script’s remaining characters, I couldn’t help but share some thoughts around grieving that the director and writer thanked me for, telling me that it informed their thinking on the next draft. In turn, I was grateful to have been able to share my experience in a way that was practical and meaningful to them.