The original post for this episode can be found here.

John August: Hello and welcome. This is John August.

Craig Mazin: My name is Craig Mazin.

John: And you are listening to Scriptnotes, a podcast about screenwriting and things that are interesting to screenwriters.

How are you, Craig?

Craig: I’m doing great. I know that that is a rhetorical question, but actually lately I have been having…

You know those days where you can’t seem to get on top of your own schedule? You are running behind on everything, and even the strange little quirks of circumstance seem to conspire against you and make you later, and later, and later? And for the last week everything has just been falling into place. Like today I knew that I had to be here to do this podcast with you and I was at Universal and this meeting was running long and then there was a lunch, and it just worked out almost to the minute that I was here on time.

Because… — I don’t know. The clouds parted. The sun shone through. Just things have been going my way.

John: Well that’s great. Congratulations.

Craig: No, no, no. That’s not great. That means that very soon…

John: Oh, I’m sorry, yes. I feel bad for you because it clearly means that your run is about to end and you will be sad soon.

Craig: The regression to the mean will occur.

John: The regression to the mean will inevitably occur.

Craig: Inevitably.

John: I had a… — I was in New York for almost two weeks to do casting for Big Fish. And I had to speak… — I was invited to speak to the film school out in the Bronx. It’s this public school that has this amazing film program there and so they invited me to speak. And it was… — Of course I’m going to go out and speak to them.

And I was so convinced that I was going to make it there in plenty of time. I was taking the 6 and I was going to get up there, and the trains conspired against me.

Craig: Mmm.

John: So, it was one of those days where I had the opposite of the Craig Mazin luck, and I watched as my speaking time passed while I was still on the train that was stopped on the tracks for about 15 minutes.

Craig: No way!

John: Yeah.

Craig: It was stopped?

John: It was stopped.

Craig: Oh, eh, it was probably a suicide.

John: Oh, yeah. That’s a good way to think about it.

Craig: Yeah.

John: So my minor inconvenience versus some family who lost a loved one.

Craig: Well you always want there to be some kind of death at the other end of any kind of commuting stoppage. I feel like if I am going to stop, there should be a price in blood.

John: Yeah.

Craig: Yeah.

John: But I did finally make it to speak to this film school in the Bronx, which is this amazing film program which I was so incredibly envious of these students because they are in high school but they are studying making movies. And they have to do all of the normal stuff you have to do in high school, and all the basic requirements, but they get to shoot movies and talk to filmmakers. And I am just incredibly envious of people who get to come of age in this time of wonder.

Craig: Yeah. What school is this in the Bronx?

John: It is called — and I will put a link to it in the show notes — but it was called the Cinema School. It is a New York Public School, but it is especially funded for the arts. And so I think it is an equivalent of the Fame school if you were a dancer, but if you were a director or a screenwriter you might get to go to this school.

Craig: Right. Like there is the Bronx High School of Science which is the science version of that; it’s public. And it is selective I presume?

John: It is selective. Yes. You have to sort of apply to it and get in to it. But it is not a charter school in the normal sense.

Craig: Right.

John: It somehow magically works and they got money to do it. And God bless them.

Craig: Yeah, no, it’s like Hunter High School and Stuyvesant High School, Midwood — I think it is called — yeah, it’s like a pre-med.

New York actually has a really cool system like that; it’s smart that they have a movie one.

Yeah, you are envious of those kids in a positive way, and I hate them for having advantages I didn’t have. So…

John: That pretty much explains the difference between you and me.

Craig: Yup. White and dark. Here we go. Yin and yang. Let’s do this. [laughs]

John: I was talking to Dana Fox this week, who is busy casting her TV show. She has a… — Dana Fox, who is my former assistant and a very good friend, she sold a show to Fox, the studio, and Fox the network about her brother, Ben Fox.

So there are so many Foxes involved that it is kind of crazy.

Craig: Yes. I mean, I could say that is pretty Foxed up, but, well, I’m not going to say that.

John: Yeah, that would be kind of a hackneyed joke.

Craig: I did not just say that. It didn’t happen.

John: No. But I’m not going to let Stuart cut that out. That’s going to stay.

Craig: No. He shouldn’t cut it out. It is evidence that I didn’t do it.

John: Ah, okay. Yeah. But talking to her about casting, because she is in the middle of casting right now, and I just came out of a casting thing, made me really think about the difference between feature casting, and TV casting, and Broadway casting.

When you are casting a feature, you have actors come in and they are reading the sides; they are reading the scenes from the actual script of your movie. Or, sometimes you will write special scenes that are better for figuring out who these people are. But your only question is: Can they perform the scenes that are in your film?

When you are casting a TV show it is really a different experience because you are wondering, “Well, will they be good in the pilot, but will they also be able to do stuff like three years down the road when our show is a giant hit?” It is all of this sort of… — You are banking on what that person is going to become. It is a very different process.

Craig: Mmm. Yes. I could see that. Casting for movies is very limited and narrow and, yes, you are going to…

And also, you only have to perform it once for a movie. But you have to find somebody with some kind of stamina, social stability, the availability to just commit to this for a really long time. Totally different animal.

John: It is. If you are casting a feature, sometimes you are willing to put up with an incredibly difficult person because it is just a feature, and they are going to shoot however many weeks and then they are done and they are gone. You never have to see them again.

Craig: Right.

John: If you are casting a TV show, you are saying, “Do I want to show up to work every day to deal with this person?” And a lot of times the answer is no.

Craig: Yeah. Yeah. So, how is that going for her?

John: Good I think. I think it is going to have an amazing cast. It’s a good, funny script. She’s awesome.

Craig: She is definitely one of the… — I would say she is probably the sunniest writer I have ever met.

John: Yeah. Sunny is a nice word. I like sunny.

Craig: Yeah. Very sunny.

John: Right now, she is a consulting producer on, or some sort of producer, on the New Girl, and the new show has a similar vibe and, I think, a similar opportunity for future success as that show.

Craig: Cool.

John: Speaking of success, I thought today we would focus on, well, what I would call “Six Figure Advice.” Because we did a previous podcast, I called it “Five Figure Advice,” which is when you are just starting to work, and you are starting to make five figures. So, $50,000, $60,000, you are getting paid to write and that is a great thing. So we talked about what life was like at that level.

Craig: Right.

John: Now I want to talk about the six figure advice. So, you are making more than $100,000, probably a fair chunk more than $100,000, and a lot of your decisions about things might be a little different. Your life looks a little different. And, based on my experience with screenwriter friends, the people who have problems with money and finances, a lot of times it really happens at about this level.

Because when you are just starting to make money you kind of know what that is like. You sort of know what it is like to live paycheck to paycheck. You know how to sort of pay for things and sort of how much, you know, to pay off your credit cards and that kind of stuff. When you hit the six figures, you are not sure if you are rich or not. You are not sure how much money is really coming in. You are not sure what your life is supposed to look like. And people make the wrong assumptions about what their life should look like. And then they end up having to take jobs out of desperation because they burned through their money quicker than they thought they would.

Craig: Yeah. Well that is a really good way of putting it, that people sit around and think to themselves, “What should my life look like now that I am a writer of a ‘this’ kind of movie or now that I have made this much money in a year?” And that is exactly where people go wrong because if you decide what your life should look like, what you are really basing it is on other people’s lives.

And what I have come to discover is, you have no idea truly what is going on in other people’s bank accounts. There are people who make so much more than I do, and you would never know. There are people who make so much less than I do, and you would think they make way more.

John: Yeah.

Craig: People spend and borrow at rates that are widely disparate. So, put out of your mind what you think your life should look like, and instead just take a look at what is real for you; so that is sort of a basic starting place.

John: Yeah. The underlying advice behind all of this is: really pick a life that is comfortable for you, that you can easily maintain, at even less money than you are making right now. And pretend that you never make more money than that, and then you won’t go bankrupt. Then you won’t run out of money most likely.

Craig: Yeah. I mean, I guess, first of all, don’t be the kind of person that defines your life by the stuff that you buy, which is hard for some people I think.

But I like, sort of the first advice is, because I feel when you start making a certain amount of money and you are looking at ways to maximize what you earn, the number one way to maximize what you earn is to pay less in taxes. [laughs] That is… — Because that is something that you actually have some control over, whereas an agent will take 10%

So we talk about incorporating, and we talk about saving money for retirement. So I guess we should probably start with incorporating.

John: We should talk about incorporation. So, maybe a little bit of prefacing: By the time you are making six figures, you likely have some sort of a team who is working for you. So you would have an agent, certainly, at this point. You would have a lawyer who is making your deals. Those are kind of givens; it is unlikely that you are paying a lawyer per contract or something. You have a lawyer who is taking a percentage, taking 5%.

Craig: Right.

John: You might have a business manager — sorry — a literary manager, someone who is your manager, who is legally not soliciting work on your behalf but is working for you. So that might be another percentage of some money going out.

You are also probably incorporating at some point in this stage. It always used to be, the rule of thumb I always heard is, when you are making more than $200,000 a year consistently…

Craig: Right.

John: …then you incorporate. I don’t know if that is still the advice, but…

Craig: Yeah. I have heard the…

John: Your lawyer would tell you that.

Craig: $250,000. I mean because the deal is that there are benefits that come with incorporating but there are also some costs that go along with incorporating. And so the math is to do the cost benefit and the break point where it seems like it evens out is somewhere in that $200,000 to $300,000 a year range. So, you are right. The first thing you have to ask yourself is, “Is this real? Am I actually going to be making this on a year-to-year basis?”

So you have to actually get good at sort of figuring out what your deal is, and whether you have just had one big success that you may not be able to replicate. And the key is year after year. If you sell a script for $1 million in 2013, and then you don’t sell anything in 2014, you would get hurt by the corporate stuff in a weird way, I think.

You need to kind of be able, I think, you need to be able to replicate your success, in some way, year after year after year. And to that end, and it is a little difficult to do sometimes, talk to your agent and say, “Let’s just have a, forget about coddling me, don’t worry about my feelings, let’s just be super realistic so I can plan for my family — for me and for my family. What do we expect?”

John: And really, you can only be planning it based on, I think, writing assignments. Because you can’t plan, “I’m going to sell a spec every year.” That is just not going to happen.

Craig: You are so right.

John: Yeah. You are only going to be making $200,000 to $300,000 a year if you are pretty consistently being hired to write things for people. And, so if you have nested jobs where you are doing a rewrite on something and you are starting a first draft on something else, and that is pretty consistently your life; if there are always two things that are vying for your attention, likely you are going to start to make the kind of money where incorporation makes sense.

But if it is just a situation where you sold one script, then it is not time to incorporate yet. I didn’t incorporate until after Go. So, I had already sold three things — been hired to write three things — but I wasn’t making enough money that it made sense for me to incorporate.

So when I get my residual statements it is really interesting, sort of like a little history lesson.

Craig: [laughs] Right.

John: The residuals for Go go to John August. The residuals for everything after that point go to my loan-out corporation, because by the time I made the contracts for those other movies I was a loan-out.

Glossary entry here. A loan-out is another word for a corporation. So a loan-out is basically the company; rather than hiring you specifically, they are hiring your corporation. And your corporation is hiring you and loaning you to the company to do the work.

Craig: That’s right. Usually people are an S Corp. There are two kinds of California corporations, S Corp… — Actually, it is a federal designation, S Corp and C Corp, I think. And the idea is not to shield you from any legal stuff; it doesn’t. All it really does is give you the benefits of some tax work so that you minimize the amount of tax you pay. That is pretty much what it comes down to. Taxes.

John: It does. And when you are saying shield you from taxes, what it lets you do is expenses that you are accruing in business, you are able to take them, to pay for them as the business rather than having to pay for them as an individual.

So, rent on an office, an assistant if you have an assistant, agent fees, other things like that can be taken out on a corporate level before you are writing the check for yourself as an individual.

Craig: Yeah.

John: So, essentially, the corporation is paying you on an annual basis, or more often than annually. But in return for that, you have to do quarterly taxes and a lot of other special filings that are a hassle.

Craig: Yeah. I mean, first of all there is an expense involved in just incorporating itself. But, there is another thing, one of the more hated aspects of the tax code is called the Alternative Minimum Tax where basically if you are an individual and you make a lot of money you can write-off a whole bunch of stuff if you want, but then they basically at some point say, “You have still made too much money. We are just going to now add more tax on.” You can’t write-off all that stuff because you are not a business. You are an individual. You couldn’t possibly be doing that much as an individual that is a business expense.

But corporations don’t have alternate minimum taxation. If you run a business and you bring in $1 million, and you spent $1 million to get that $1 million, you have a net taxable income of zippo.

So, while screenwriters don’t have the kind of expenses that go along with a shop, we do have our internet, and our cable, and if we go to see movies for research, and buying books, and traveling, and leasing a car, and all this other stuff. Oh, like I have an office, you know, so my rent here. And all of that gets taken off of the amount.

So, right off the bat, you have to talk to your accountant if it is time for you to incorporate and you incorporate. And I would say every single professional screenwriter we know that has been working for more than a couple of years is incorporated.

John: Yeah. Now I want to back up, because my understanding when I first formed a loan-out was that there was some legal shielding, that there were good reasons for, like, not losing your house for going through a loan-out rather than going directly, making a contract directly. But that is not your understanding?

Craig: Eh, they call it “piercing the veil,” where if you have a corporation that is really just you, and your corporation incurs some kind of legal liability, they will go after you. They can go after the officers of the company if their feeling is that people are individually doing wrong, but then hiding behind a corporation as if the corporation did wrong. There are fewer protections than you would think.

Now, that said, I should point out we don’t have that problem as screenwriters, because the only real liability we can incur is when a studio…

For instance, when The Hangover, when Warner Brothers, and Hangover Part II, and Todd Phillips, and I, and Scott Armstrong were all sued by this kooky guy who claimed that we stole his life, I got served papers until he withdrew the suit. But in our deals with the studios, they always indemnify us. They always say, basically, “You say that you didn’t steal it and we promise to cover your legal fees and all the rest of it if you are sued.”

So, given that, because I don’t really know what other legal liability we could incur.

John: But couldn’t it be sexual harassment or some other kind of discrimination?

Craig: Hmm.

John: I just could envision some other things which they might go after you differently as a corporation.

Craig: That’s true. I guess, like, for instance if you are on a set and you do something to sexually harass somebody. The point is, no, your corporation is not going to protect you from that because your corporation didn’t sexually harass somebody, you did. [laugh] And they are too smart for it.

I mean you can’t… — Maybe I suppose in some narrow place it might be advantageous legally, but really what it comes down to is taxes.

John: Yeah. Now on the subject of taxes, at this stage you would likely have an accountant who is figuring out your taxes, because your taxes would be more complicated than what you are likely to be able to do with just simple Quicken and the tax software.

Craig: Oh yeah.

John: It gets more complicated. A lot of people will have a business manager. I had a business manager right about the time that I formed the loan-out corporation. But I think you don’t. Is that still the case?

Craig: I do not. Yeah. I do have a tax guy who handles my taxes. And I have obviously an investment guy who handles investments. But when it comes to… — Business managers tend to do things like pay your bills, calculate the taxes that you might expect to owe and make the installations, handle your payroll. Because one of the quirks of being a loan-out company is that you tend to have to employ a payroll service to make it seem like a real company. So you actually pay yourself from one account to another, which is a bit odd. And then they handle things like your dues and, I don’t know, stuff like that.

I do all of that on Quicken. It is not that hard, you know. So I take 45 minutes every third day, pay my bills, do it all through Quicken. Bing, bang boom and I am done.

John: Yeah. So I have a business manager so I don’t do that. And partly it is because I will be gone on a set and I won’t be able to think about that stuff. I will just submarine into a project, and I won’t come out for a long time, and stuff wouldn’t get done otherwise, which is just the reality of sort of my life and my situation.

The danger of having a business manager, I would say, is it can insulate you from the realities of your money.

Craig: Yeah.

John: And the people who run into problems, they really have no sense of how much money they have or what they could be doing or should be doing, and that can be very dangerous. So I think it is less likely that your business manager is going to rip you off. It is more likely that you are not going to be paying attention to how much money you actually have and will get into trouble because of that.

Craig: Yeah, look, there are two problems with business managers as far as I can tell. One is precisely what you said, that you become infantilized to some extent, and everybody is different, and I suspect that you are pretty grown up about it. But some people really do in an almost child-like way hire these people to be their mommy and daddy, almost like they are living on an allowance from these people. And so they don’t know what their liabilities are, and they are not really in control of their destiny. The other problem is that they cost 5% often, and that is a lot of money.

Any percentage of what a very successful screenwriter makes is an enormous amount of money for what oftentimes amounts to somebody who is basically doing what I am doing 45 minutes every few days on Quicken.

John: Yup. I’m paying a flat monthly fee…

Craig: Okay, that’s better.

John: …which is, I think, a little bit more reasonable.

Craig: Yes. And that is fine. And I would say that I am in the minority, probably, of screenwriters in that I don’t use a business manager, but I do stay on top of my money and I know where it is. I like to have control of these things.

John: Yeah. On sort of control, insurance is the kind of thing that you are going to start thinking about more as you get into six figures. So you will have health insurance through the WGA. If you are working consistently, you are going to have health insurance, which is great. But you may need disability insurance, which was a real surprise when it was first raised to me.

As presented to me, disability insurance is important if your earning potential is much greater than your actual assets are going to be. So, as it was explained to me, and you can correct me if you feel that I am misspeaking, if I got hit by a bus and was no longer able to write, at a certain stage in my career that would have been really catastrophic because everything I could have made I would not be able to make anymore, and that was going to be a real problem. Now that my assets are bigger than sort of the money that I can make over a couple of years, it is less of a factor.

But for a time, it was really important that we find somebody to give me disability insurance. It ended up being, like, Lloyd’s of London to protect me in that situation.

Craig: You are absolutely right in the way you described it. I never did it. And I didn’t do it because there were a couple of problems. One, when you get disability insurance as a screenwriter, it is a little punitive because they are going to presume that whatever money you made this year, or whatever money you made in the most, that is what they are going to have to pay out. So they jack your premiums up pretty high. And the truth is, what disability short of brain damage is going to incur in such a way as to keep me from writing. If you smash my fingers I can still write. If I get hit by a bus, and I am laid up for a few months, I can still write. It is not like we drive a bus or use our eyesight. I mean, we can be blinded. [laughs] I started running down the list of stuff where it was so extreme that, basically, it was far more likely that I would be dead than disabled to the point where I couldn’t write anymore. So…

John: Yes. A traumatic head injury; that’s always my favorite.

Craig: Pretty much traumatic head injury. Eh, I don’t know. It is a little bit like earthquake insurance. Like, for instance, here in California, the State of California requires insurers to offer the option of earthquake insurance or they are not allowed to basically sell any insurance in the state. The insurers, of course, turned back to California and said, “We can’t offer earthquake insurance. It is impossible, because when an earthquake happens we are going to be bankrupted.”

So they came up with this nonsense called the Fair Plan, where basically they charge you a very high amount of money and, in exchange for that amount of money, you are insured against earthquakes. But you are not really insured against earthquakes because there is a premium. So if there is earthquake damage, you have to pay 20%, I think, of the value of your house just right off the bat.

John: Yeah.

Craig: And then they cover the rest of the structure. But the point is there is never 20% damage to your house. It is like 5% or all of it. So if it is all of it, just walk away. If it is 5%, you are not going to get any insurance money anyway. So very few people take the earthquake insurance, and that is kind of the way I saw disability.

I’m sure people are going to write in angrily and say that I am insane and I should get it, but…

John: Yeah. And I am not sure it is going to be as important for you to get it at this stage in your career as it was a couple of years ago.

Craig: So I got away with something. [laughs]

John: You snuck away with it.

Craig: I love it.

John: Look at my friends Chad and Dara. They just recently got disability insurance because they are at exactly that stage in their career where their earning potential is much greater than their actual assets would be at this point.

Craig: Right. That makes sense.

John: And life insurance is a similar situation where life insurance is important for a family up to a certain point of income, up to a certain point of assets. But once the assets are actually significantly bigger than the yearly income it is not as big a deal.

Craig: It is not as big a deal. And obviously, the older you get it becomes less and less important.

John: Now simpler decisions, I think they are simpler decisions, for younger people who are facing this is your student loans. And I think I see people rush to pay off their student loans, which I think can be a mistake. Student loans are the cheapest loans you are going to find outside of a mortgage. If the money is burning a hole in your pocket, I guess better to pay off your student loans than buy a fancy car.

Craig: Right.

John: But it is not the best use of your money.

Craig: Well, yeah, let’s talk about loans in general, because as you make money you do… — Look, you don’t need to become obsessed with finances. I actually, I don’t really like the subject of money. And when I say I don’t like it, it is not that it turns me off, it is just not… — I don’t have any passion for it.

But it behooves us to at least know some basics. And one of the basics of finance is what is the cost of money, what is the interest rate, what do people charge you for loans. And right now they are at historically low rates.

Student loans have traditionally always been artificially low because they are supported by the government, to some extent. And you are right; if you can, there are some kinds of loans that are good to have. I have a mortgage. I could pay off my mortgage, but I don’t because the interest is deductible for my taxes. I might as well just hold on to that money, let it grow at a certain rate, take the tax benefit, and if it is such time that rates should move in such a way that it doesn’t make sense, then I will pay it.

So, there are certain kinds of loans where it is okay to have. Here are the loans that are not okay. So, yes, student loans, yes. Mortgages, yes. Smart mortgages. Credit cards. Never.

John: Yes. You should never. And if you are making this much money you should never be carrying a balance on your credit cards. That is ridiculous.

Craig: Ever. I mean, I don’t care what you make. If you’re…

John: But particularly at this level of the podcast you should not be paying less than everything.

Craig: That’s right. Because credit card interest rates are always much, much higher than what you can get in the bank, and oftentimes wildly higher to the point of usury. You see rates of 17%, 18%, 19%, 20% when the prime rate right now is almost zero. Money is almost free at this point.

So, get all of your money off your credit cards. If you have any on your credit cards it is insane. And then start, I would say the next best thing you could do is figure out retirement, which seems a little weird, because I started thinking about that when I was 21. But it is the best savings, the best investment you can make.

John: Yeah. So, to back up a little bit, if you have a loan-out corporation, one of the advantages of your loan-out corporation is you can set up a pension plan.

Craig: Yup.

John: And that is one way to sort of divert some of your money to that pension that is in your name. And you can’t sock away all that much money, but you can sock away some money, and that helps.

Writers Guild has a pension. It is not going to be a ton.

Craig: Well, it depends on what you earn and how many years you have earned. I mean, it could be nice.

John: Yeah. But most of what you are thinking about for retirement is really just the money you didn’t spend. That’s the money you earned that you stuck in an account and forgot about. And that is your retirement.

Craig: Well, there is, look, level one as you alluded to, there are what they call Qualified Plans. A Qualified Plan is any kind of investment plan where you put your money in, specifically for retirement. You can’t touch it until you are 65; if you do there are penalties. But if you can be good, and not touch it until you are 65, there is a tremendous tax savings on that money.

Traditionally, you don’t actually get taxed on that income. So if you can sock away, and when you have a corporation you are right, you can set up your own 401(k) plan. Maybe you put in $40,000. That is $40,000 untaxed dollars. And when you are a big shot screenwriter, your tax rate is nearly half. So, that’s a lot of money that you are saving right then and there.

So, job number one is maximize as much as you can into a Qualified Plan. It saves a huge amount of money.

Then, I think the next thing that you are talking about is saving. The lost art of saving.

John: Yeah. Keeping the money. Just don’t spend it. Don’t be Derek Haas and set up your line of credit at the Hard Rock Casino.

Craig: Well, you know, you can, because I have gambled with Derek, and he is like a leprechaun.

So, like, he has a line of credit and then amazingly… — I didn’t understand how that line of credit stuff works, and then I did it with him. We were at the Wynn. So, you open up a line of credit, let’s say for $10,000. And then you sit down at a table and you say, “I want a marker for $2,000.” So they give you $2,000. You don’t have to give them any cash. And then they have you sign a check, and the check is to them for $2,000. Right.

Then, let’s say you win, and now you have $4,000 in chips. You go to the cashier and you say, “I would like to buy back my marker.” And you give them $2,000 in chips and they come back and they give you that check and you rip it up. And ripping that thing up is the greatest feeling in the world. It is actually, really; it is like a huge dopamine reward. Super… — God, gambling is pernicious.

John: Yeah. It’s all the fun of destruction, plus there is money involved.

Craig: Yeah. Yeah. And just like how cool — you are like, “Look at me. I’m ripping up a check! Screw you. I win.”

John: On a less dopamine-inducing aspect of money, if we are talking about retirement, I think we have to be honest about the lifecycle of a screenwriter.

And so you are unlikely to be making this six figures for your whole career. And your whole career may be a lot shorter than you would like it to be. There are not many screenwriters in their 50s who are making that much money.

And that is the issue, is that your maximum earning as a screenwriter tends to come in maybe, it’s not your first year. It is probably years five through ten.

Craig: Yeah.

John: And after that point, some people will continue to make a ton of money, but most people won’t so much.

Craig: Yeah. I mean, look, what they don’t… — Everybody has their eye on what they call their big break, where you break into the business. And no one tells you that right after the break is a cliff where almost everyone that got their break falls off the cliff. And this is what is so, and frankly, it has gotten worse as far as I can tell. It is a harder business to stay alive in, because when you and I broke into the business Hollywood was making way more movies.

Now they make fewer, which means they develop fewer, which means they hire fewer of us, which means there are fewer of us.

When people ask, “How long can I expect to work in this business?” obviously the answer varies wildly according to your talent and your abilities to make your weight. But let’s just talk about averages. Not long. In truth, it is a bit like professional sports where a lot of people get their break, they play for a season or two seasons, and then they hurt themselves, or they just don’t quite click. And they are gone.

And there are guys who work five years and then are gone. There are people who work ten years and then are gone. To have a career that goes more than 20 years, you are in rarified air. You are in limited territory. There are not many of us. Look, I am on year 16 right now. You probably are similar to that I would imagine.

John: Yeah.

Craig: I would like to think I can get another four years. I would like to think I can hit that big 20 year mark. I think I will, but to be one of those guys that can put together… — Look, when I look at some of the names of people that say to me, “I’m having trouble finding work,” my heart sinks. It is a very difficult thing to make an actual, real career out of this.

And, please, for those of you who do have that wonderful day where you get that break, do not confuse that with a career. That is the beginning. In fact, the hardest work is yet to come. So, be prepared for that. If you are, you have got a shot.

John: Yeah. What I will say is you and I are approaching this from a pure screenwriting point of view, where we are writing screenplays that will become movies. Some A-list writers and sort of near A-list writers transition to TV and do other amazing things because TV is better in many ways. And sometimes people extend their career at the edges of what is a traditional screenwriting career.

Craig: Right.

John: So there are other things other than just falling back and teaching at a university, but it is important to be realistic about how much time a person ends up having a screenwriting career.

Craig: Yeah. And you know, there is also something very cruel about the way the business functions. There is this famous experiment that was done many years ago with rats where they would put them in a cage, and then they would flash a green light, and then shock the bottom of the cage. And they had another cage where they would just shock them occasionally, but there was no green light. And the rats in the green light cage lived twice as long because they were able to prepare for the pain.

But random jolts of pain are disturbing. Similarly, random jolts of success are disturbing. And, you know, Pavlov found out that if you didn’t always reward the dog when you rang the bell, but occasionally, it was even a stronger effect, because there was this anxiety of maybe this time. That’s why casinos function so well. And screenwriting can do that to people. I have seen people just go for years and years, and then there is this burst of activity, and like, finally, it is going to be okay.

And they ride that for another three or four very difficult, difficult years. And then it happens again, or it doesn’t, and I have to say at some point, you turn around and go, “Wait a second, did I just waste 15 years of my life in panic?” And it is just a very hard career.

I have to say, of all the arguments that the Writers Guild make to the studios about why we should be paid more, or how we should be paid, or two-step deals and all the rest of it, I do feel one of the strongest arguments we make is that the studios have effectively made this, it’s like it’s not a career anymore. They have ruined it.

I don’t know why anybody would get into this as a 21-year-old expecting to be able to support a family and make it to retirement as a screenwriter. It is just brutal.

John: Well that was a very depressing look at six figure advice, which really wasn’t meant to be so depressing. If you are making six figures, that’s good. It’s a good thing. It’s a good thing. Congratulations, you are making six figures.

Craig: Yeah.

John: And we realize that this is sort of esoteric advice because most people aren’t going to have a screenwriting career that gets them to that point and they won’t need to incorporate, but we always get those kinds of questions. And when we talk to real screenwriters who are working, some of the first questions they ask is, “Hey, do I need to incorporate? What should I do? Do I need insurance?” And so we thought we would talk about that.

On a future date, we will talk about seven figure advice, because then everything changes, because then you are looking at, well, like what kind of wood is best for the yacht that you are building.

Craig: Right. Exactly. And where can I legally kill and eat a panda.

John: Yes. And then there is eight figure advice, which is really esoteric because I don’t think there is any screenwriter who makes eight figures.

Craig: Not in one year. No.

John: No.

Craig: No. Not in one year.

John: I think a couple of the super producers make eight figures in a year, but there is no screenwriter. And precious few directors make eight figures a year.

Craig: Yeah. I know one who definitely had a pretty good year.

John: I don’t want to… — One who you are working with who had a very good, lucky year.

Craig: Yeah. I don’t know how lucky, but definitely it was… — He earned it, but man, that was a big year.

Yeah. I have to say, in summary, that if you are making six figures, I am thrilled for you and frankly any depression I have is related to the fact that it has become harder to become one of those people. And I want screenwriting to be a successful, viable career where people can actually work at it for the big bulk of their productive years. And right now, the squeeze is very difficult. And I do think that the studios are going to have to confront the fact that they are depleting their farm system in a dangerous way. And screenwriters need to be nurtured just like anything else.

John: Yup. We are the research and development for the film industry. And if they cut the R&D, then innovation will suffer, and things will get very, very bad.

Craig: Very, very bad.

John: I was just talking with a mutual friend of ours who is now segueing out of screenwriting and into digital development, so doing stuff for the iPhone and for other applications. And so she was meeting with VC people, and the VC people would say, “Oh, we like your idea but we only write like $10 million checks. We don’t really do the $3.5 million checks.”

And I was torn between my desire to congratulate her, I guess, and find those people and either throttle them or take their wallets.

Craig: Yeah.

John: Because I feel what we are mostly wrestling with here is just a lack of money. And if we could open up some purse strings here, I think there would be a happier time for a lot of us.

Craig: Yeah. I don’t see that happening any time in the near future.

John: Yeah. We need another Village Roadshow or some other outside entity, to come in with a lot of money, and start throwing money around. And they will make stupid choices, but their stupid choices benefit us greatly.

Craig: I think even more than that, what would be useful is a new market. You know, whatever, if they could figure out downloads in a way that was really awesome or, I don’t know. It is getting tough out there man.

John: Yeah. But you know what? It won’t be our generation that figures it out. It will be the next generation.

Craig: We will be old and doddering in our chairs watching the world burn around us, giggling into our glasses of panda blood.

John: Do you know who is going to benefit from it?

Craig: No, who?

John: The kids at the Cinema School in the Bronx.

Craig: Those kids.

John: Those kids will figure it all out.

Craig: Those kids are going to graduate and go, “Wait, what?! I get what?! I’m going to earn…oh God.”

John: Those fools.

Craig: “I should have gone to pre-med.”

John: Yeah.

Craig, thank you for another podcast.

Craig: Thank you, John. It was a good one.

John: I will talk to you soon.

Craig: Bye.

John: Bye.