How to Option a Book for Film Adaptation
We will assume that the chain-of-title is clear and that you are ready to negotiate the deal. First, some good news: Unlike screenplays and teleplays, books are not covered by the WGA Basic Agreement or any other collective bargaining agreement. There are no “minimum rates,” “residuals,” etc. This means that the deal can be anything that you and Larry the agent agree on.
1. Initial Option Period/Initial Option Payment: You will almost always be acquiring an exclusive “option” to purchase the motion picture and television rights to a book (see below) rather than buying them outright. This is simply because at this point you have no idea if you will be able to make the motion picture. You will need to hire a good writer to write a good screenplay, attach cast, search for financing, etc. Thus the option. The initial option period is generally between 12-18 months. Try for 18. One thing you can be sure of: It will take you much longer to find financing than you thought. There is no standard rate of payment for the initial option. The initial option payment can run anywhere from $0 with a promise to use best efforts to set up the project, in the case of unknown books, to seven figures, in the case of mega best-sellers. Based on Scribbler’s status and this book’s status and age, I estimate that $5,000 would be a fair price for the initial option payment. The basic rule (occasionally bent) is that the initial option payment is applicable against the purchase price for the rights, and the option extension payments are not. It is good to provide that during the option period(s), you will have the right to engage in all customary development activities including preparation of screenplays based on the book. A legal point here: You should prepare a “short-form option” and attach it as an exhibit to the option agreement. This is a one-page document identifying the parties and the rights being optioned. You can find the form for this in any entertainment contract form book. The author should sign this form at the same time he signs the option agreement. [Please note: Under U.S. Copyright law, no transfer of exclusive rights, including an option agreement and an assignment, is valid unless in writing and signed by the owner of the rights or his/her duly authorized agent. I always insist that the author sign.] You then record the short-form option with the U.S. Copyright Office to put the world on notice that you hold the option.
2. Option Extension Periods/Option Extension Payments: Because putting a motion picture together takes so long, I advise producers to always get at least two optional option extension periods. Get a third if Larry will allow it. The extension periods are each usually of the same length as the initial option period. Try to see if Larry will allow you to pay the same amount for these extensions as for the initial option period. After all, you are giving the author a chance for his five-year-old book to become a film, and no one else is breaking down his door. But Larry is a protective agent, and he may take the position that if you tie up his client’s book for a second and maybe third year, you should pay more for the privilege. This is not unfair, but I would keep the extension payments to no more than $7,500 each. You should also provide that the option period shall be automatically suspended and extended for the length of any force majeure event (labor strikes are the chief concern) or third-party claim that materially interferes with your ability to develop or produce your production. You may be asked to limit this suspension/extension to 6 months which is fair.
3. Rights Optioned/Rights Granted: If you exercise the option and pay the purchase price (see Paragraph 4 below), the author will grant you a package of rights. This is a very important deal point but has fairly standard parameters. Generally, upon payment of the purchase price, the author shall grant and assign exclusively to you in perpetuity and throughout the universe all motion picture, television (free, pay, cable, etc.), video/DVD, internet production, and allied and ancillary rights to the book including, but not limited to, remake, sequel, and television series rights, and merchandising and commercial tie-in rights (in respect to the productions that you produce). He must also grant you the right to exploit and distribute any productions that you produce based on the book in any and all media, now known or hereafter devised, throughout the universe in perpetuity. Most of these rights are self-explanatory. You need this broad range of rights because you may choose to produce a production other than your contemplated motion picture (hereafter “Picture”) in other media, either initially or as a remake, sequel, or series, and you (and your distributors) also need to be able to exploit your productions in any media now known or hereafter devised.
In respect to ancillary rights, sequel rights are especially important if the Picture has a cool character (like Jason Bourne or maybe Luigi) whom you will want to feature in subsequent original sequel productions based on your Picture. This will be especially important if your Picture is a hit! You don’t want to have to go back to the author to buy sequel rights at that point. Merchandising rights will likely not be a big problem or cash-cow with Looking for Luigi. But with science fiction/fantasy novels, where the author may already be doing some merchandising, they are a big issue and the author may resist granting them. Two common compromises, which are fair, are that you can only make merchandise based on either scenes from the Picture or the likenesses of the actors in your Picture. The author still gets to make his board games and key chains using made-up likenesses.