The author's share of $100m • 21 March 2012 • The SnowBlog
The author's share of $100m
There's a little piece in the paper today about Susan Hill, author of The Woman in Black, and how rich she isn't. I admit I've been guilty of assuming Susan must be rolling in money given that the movie of her book has grossed over $100m (or has it? More on that in a moment). Obviously I should have known better. After all, I have read: The Hollywood Economist 2.0: The Hidden Financial Reality Behind the Movies. It's full of tales of high-grossing movies financially engineered so that they can make plenty of cash but no 'profit'.
Hollywood's trick is to take all the people they want to give money to and count their share of the cake as an expense. Then they offer to pay all the people they're not crazy about out of eventual 'profits' once the movie has hit its 'breakeven'. But that 'breakeven' doesn't happen until that first group of people have had their fill - and that can take decades, if it ever happens at all. Hollywood accountants also make sure that every other possible cost that could be associated with a movie is also paid off before the people with a share of the 'net profits' get a penny. And if there are some people they want to screw more than others they can vary their definitions of 'breakeven' depending on who they're negotiating with. NB: authors are almost never people Hollywood is eager to be generous with unless they're really 'connected' or on a winning streak at the box office.
Now let's have a quick think about that figure of $100m that the Woman in Black has supposedly 'grossed'. That would be total 'box office receipts', meaning the total amount charged for cinema tickets. Well, half of that money stays with the cinema. And then maybe 15% of what's left goes to the film distributor (who likes to overcharge for 'prints' of the movie). So straightaway the movie's coffers are only receiving $42.5m. The Woman in Black's budget is supposedly a very low-sounding $17m (source) but the average amount spent on advertising a nationwide movie in the U.S. is more than that (even back in 1997 the average was $19m). So if we guess an ad budget of $25m, the movie is now half a million dollars in the red. Of course, Hollywood studios make their money back with 'output deals' where they sell a package of their movies to TV and cable companies. And if all goes well, they also make a lot of 'back end' money on DVDs. And they work hard on merchandising and tie-ins. But it's quite possible that Susan doesn't get a share of any of that income because just as Hollywood accounting likes to lump every cost it can find in before it declares 'breakeven' it also likes to leave lots of revenue out.
Hollywood doesn't do all of this just to screw authors - it's also trying to avoid paying taxes. Preventing authors getting rich is just a happy side-effect (despite the fact that, as that article points out, 5 of the 9 films nominated for Oscars last year were adaptations of books).
So while the movie will carry on bringing in money for the studio on TV and DVD for years to come, Susan may only be entitled to a share of the 'profit' it makes in cinemas, where the revenue will peter out completely after a few months. And that's if Susan was lucky enough to get a sensible share of the 'net profits'. If she was offered, say, 2% of some 'net net net profit' figure, even a movie that did much better than expected could conceivably never pay out. Susan may only ever get whatever sum she signed over the movie rights for. Which had it been an unknown book could be as little as a thousand pounds. Hopefully Susan got much more than that, but it won't be pink-cadillacs-and-champagne-for-breakfast money.
If she'd insisted on writing the first treatment of the screenplay - which may or may not have been a) something she could have negotiated or b) something she wanted to attempt - she might have broken into six figures rather than the more normal five-figures for plain old 'movie rights' on a popular book.
My understanding is that the only way for Susan to really make money from the Woman in Black would be to have a rip-roaring sequel ready to go - and then hold it to ransom for a fat up-front payment and a 'share of the gross' including international markets and 'back end' licencing.
In other words: it's very difficult for an author to make serious money (i.e. more than a hundred thousand pounds) from even a blockbuster movie unless they sold the rights after their box-office track record was already established. And they had a lawyer who really knows Hollywood.