The original post for this episode can be found here.

John August: Hello and welcome. My name is John August.

Craig Mazin: My name is Craig Mazin.

John: And this is Scriptnotes, a podcast about screenwriting, and things that are interesting to screenwriters. How are you, Craig?

Craig: I’m doing okay. It’s February 29th today as we record this, which will probably be the only February 29th recording we do.

John: Yes. It’s Leap Day.

Craig: Yup. Leap Day. Boop.

John: Yeah. Do you do anything special on Leap Day?

Craig: No. I do exactly what I do every day.

John: Yeah. One of the things you don’t do every day is watch television. So if you did watch television you would know that many of the sitcoms this year have referenced Leap Day. And Leap Day as being a special day to do things you would never do in real life.

Craig: But that is a plot?

John: That’s a plot. You’ve got to look for a plot, especially if you are on your 5th or 6th season. You have to find something good to do.

Craig: Leap Day? Really? Alright.

John: Yeah.

Craig: I can’t say that this is pushing me towards television, but fine.

John: Oh, yeah, it’s fine. Hey, we have a bunch of followup questions, so I thought maybe we would hit those first.

Craig: Do it.

John: Craig, did I just lose you?

Craig: No, I’m here.

John: Oh, your silence indicated boredom or something. But let’s address this question. A reader named Daniel asks, “I assume that the author of a novel gets more if a movie is actually made, just as screenwriters do. What is the typical ratio of upfront payment to the option?”

Craig: I have no idea.

John: I have no idea either. Options, when you are optioning a book to make it into a movie, you end up paying generally a pretty small amount. So it could be $1. It could be $5,000. It could be $10,000. For a big book that is selling out of New York, that people think is going to be a really big thing, maybe you are optioning it for $100,000 against a $1 million. 10% could be a good break.

It really depends. A book that they are hoping to make into a major Hollywood studio feature, $250,000 sounds like a pretty low-to-reasonable figure for that. But it really does vary a lot. And I think that the thing to remember, if you are a novelist who sold a book to become a big Hollywood movie, you are also looking at the fact that you are going to sell a whole bunch more of those books once that book becomes a movie, especially if it is not a title that breaks out and becomes a huge hit independently.

Craig: Yeah. I think for sure that whatever the sort of heat is behind the novel is going to impact the kind of deal that the book agent, the publishing agent, can get for the author.

John: I remember when The Help sold. Octavia is a friend of mine, and she had written on Facebook that, like, “Hey, my friend Kathryn wrote this great book, it is called The Help. Everyone is loving it.” And I was like, “Oh, so a friend of Octavia’s, I will buy that book.” And so I bought it on Kindle. I didn’t read it right away. And then it became this huge bestseller. It became this huge deal thing.

And I think it was on its way to becoming a big deal thing when they took it out on the town and actually sold it. And they sold it with a screenplay already written. Tate Taylor had, I think, optioned the rights to the book himself, who is friends with everybody involved. So that was probably a unique situation. But that was a case where the book becoming a movie certainly helped the book, but that book was going to be a huge book regardless.

Craig: Yeah. I can’t really… — I have to say, I can’t really answer this guy’s question because I just don’t know. It seems like if there is a Booknotes podcast that those guys, the alt John and Craig would be able to better answer this.

John: Yeah. Second question here. “It seems the author of the novel always gets some sort of official ‘Based on’ WGA credit. Does this come with residuals?”

Craig: It is actually not a WGA credit, per se. The MBA, our collective bargaining agreement, specifies that there are certain source material credits that the companies can use. But the WGA doesn’t determine them. All it does is make sure that those credits don’t show up in some strange form like “Authored by” or something like that that might confuse people about who wrote what.

So “Based on the novel written by” is the standard source material credit. But that credit is assigned by the studio. It is something that they determine if they are going to assign. It is sort of pro forma, I think, for novelists that that credit is assigned if the rights are exercised.

There are no residuals. It is not a WGA credit. It confers nothing. Because the union is for employees, let’s remember that, not for contractors or independent contractors.

John: So, the novelist may get some backend on the success of the movie, but that would be a separately negotiated thing that is not part of WGA residuals.

Craig: Correct.

John: Third follow up question. “J.K. Rowling is listed as a producer on the final two Harry Potter films. Is this as rare as I think it is?” It’s pretty rare.

Craig: I would say, yeah.

John: Yeah. In the case of Harry Potter, I believe that Harry Potter was a pretty big deal, even when she first set that up. Because remember Spielberg was interested in directing Harry Potter originally, and he really wanted to combine the first two books. And she said, “No,” and it became this whole big thing. I’m surprised it is only the last two movies that she has the producer credit on, because she controls that franchise with remarkable strength and finesse.

Good job, J.K. Rowling.

Craig: Sure. It may have been that there was kind of an agreement that… — It is sort of like when sitcom actors renegotiate mid-contract because the show is doing really well, and they just want them to be happy, and know that they will stay beyond the term of it. So, it may have been one of those things where halfway in Warner Brothers said, “You know, we would love to keep you around. If you wrote another book…if you wrote a laundry ticket, or a shopping list, we would like that, too.”

So, it was probably just a nice little “Thank you.”

John: Yeah. And at that point they could have been negotiating for some other extension of the Harry Potter universe or world. There may have been a very good reason why they wanted to keep her especially happy at that point.

I will say that I feel like I have seen novelists’ names listed as a kind of producer on movies not too rarely; like Stephen King will always be a producer of some kind on an adaptation of one of his books.

Craig: It sort of speaks to how watered down the producing credit is. And for those rare people who really are producers in Hollywood, that is producer-producers, it is a bummer. I feel their pain. The producer credit has turned into a sop as it were.

John: Here is the fourth follow up question from Daniel. He asks, “What is Daniel Wallace’s role in the Big Fish musical? Does he have to okay it? Does he share in the proceeds?”

Craig: You know what? Let me take this one, John. [laughs]

John: Yeah. You know everything about this situation, so, go, Craig, go.

Craig: Daniel Wallace is a nightmare. I have been working with him for a long time on this Big Fish thing, which by the way is a terrible musical. I just don’t think it is going to work.

Anyway, he has hit me. He took a swing at me once. The guy is a nightmare. [laughs]

John: [laughs] So that was Craig Mazin. This is John August who actually is working with Daniel Wallace on this.

So, Big Fish is based on a book that Daniel Wallace wrote. A great little book that I took into Sony, we got the rights to it, we optioned the rights, Sony bought out the rights. We made it into a movie. Now we are making it into a musical. Daniel’s role is as source material. I mean, his book is still considered the source material of the musical. And he actually, for Broadway rights, has much more — I wouldn’t say control — but has much more upside in having it become a Broadway show.

Essentially, in order to make the Broadway version of it we had to go back and reacquire the rights to Daniel Wallace’s book, and to my screenplay which Columbia Pictures owns. As the screenwriter of the screenplay, I have no claim over the things I wrote for Sony because Sony is considered the author of that movie. So we had to go back and option both the book and my screenplay, bringing them together so we would have this source material to write the musical.

Daniel Wallace, I’m not sure the exact fractions of how this all works, but Daniel Wallace and Sony Pictures will both receive a royalty on every performance, every incarnation of the Big Fish musical. And so, every week, depending on how many tickets we sell, they will be getting a check, which is a very unique different thing than he would be getting from the movie version of Big Fish.

So, he has no approvals, per se. I think there are certainly situations where I think the person who wrote the source material might negotiate for approvals on things. In this case he doesn’t have those, at least as far as I know.

Daniel is awesome, so even if he does have those things, he is great. And so he has been seeing stuff along the way and we are keeping him in the loop. But he doesn’t have like a sign-off thing.

Craig: Well it sounds like he has been really nice to you.

John: Yes. Switching to Craig, I mean, he beats him up. He runs him down.

Craig: Savage. Savage. That was a good answer.

John: Thank you. I tried. What I will say in a general sense is that the rules for Broadway are arcane, and different, and sometimes more complicated, and sometimes a lot simpler. And a lot of stuff is a little bit more standard practice rather than “this is the Guild that is overseeing things,” because there is really not an equivalent Writers Guild.

There is a Dramatists Guild, but it is not a labor organization in the same way. So it is a guild that is sort of representing the best practices of things. And partly this is, again, because what Craig always says: the Writers Guild represents employees; the Dramatist Guild represents authors and people who own copyright on things. And on the Big Fish musical, I will own copyright which is a very different situation.

Craig: Correct. And there are obviously some wonderful things that go along with being the copyright owner. There is a reason that studios want to be the copyright owner. But one of the benefits that we have as screenwriters in not owning copyright is that we get to collectively bargain. So, you know, there are some plusses and minuses with these things.

John: Yeah. Our next question actually ties into that. Jonathan asks, “Regarding the discussion of dramatic rights, if a spec is involved, what is to stop the writer from converting it into a book form and self-publishing it before selling a spec? Then the writer could license the copyright of the book to the studio or the writer’s corporation in addition to doing the ‘work for hire’ on the script.”

Craig: Well. [laughs]

John: That does happen, kind of.

Craig: Yeah. Kind of. It’s actually not a great idea. Here’s the thing: first of all, if they want to buy your screenplay, and what you have done is, in some sneaky way, written a book first, and then you are going to license them the rights to the book, and then the screenplay, they are just going to pay you for the screenplay and $1 for the rights to the book. They don’t care about the book.

Frankly, given that circumstance, nobody cares about the book. That is why you are self-publishing it. It is not a very good book. Or it is not a notable book. So, there’s that.

The other problem that you have is, if John August writes a script and goes, “Before I sell this I am going to game the system and quickly do a novel version of this, self-publish the novel, and then go to them and give them the rights to the novel, and then I will sell them the script.” What you have actually done is screwed yourself out of separated rights. And you screwed yourself out of a really good credit because you are not going to get a “Written by” or “Story by.” You are going to get a “Screenplay by” and “Based on the novel by John,” which is kind of weird.

And so I don’t really see what the point is. What is the upside?

John: I can imagine some upsides. I mean, how about remakes? Or how about doing other incarnations? How about with doing the Broadway version of things?

Craig: But here is the problem: I see what you are saying on the Broadway version of things, but we will get to that in a second; in terms of remakes and all the rest of it, when they buy the rights to your novel, if you have the amount of leverage that normally goes along with a self-published novel, that is to say zero, they are going to get all rights in perpetuity for everything. They are not going to… — The last thing these corporations do is leave the door open for anything.

Any time they have ever let the door open they have been burned. So they are not going to do that. When it comes to the stage rights, I don’t think that that is going to work either because they are not going to be amenable to you doing anything that might trade on or violate their interest in the movie.

Remember, they can block you from using the title, I think.

John: Yeah. But you could block them from using… — If you owned the underlying source material of something, they could not do the Broadway version of…

Eh, I guess it is sort of the same case with the screenplay.

Craig: They are going to license everything. They will literally say, “You are going to give us the rights in perpetuity across the universe and all known galaxies. All rights in connection to this.” They won’t leave anything for you. And your little game will not work.

Now, obviously it is a total different situation if it is a legitimate novel and you have legitimate leverage, multiple buyers are interested, and all the rest of it. Makes total sense.

The only thing I have ever heard from people to recommend this kind of strategy is just to make the studio more interested in the screenplay, because sometimes studios like the notion that it is based on something. Because they can read that thing, but then again, if you have a spec, they can read the spec, too. I don’t know. It seems a little nuts to me.

John: Going back to your idea of, like, sometimes studios want to buy something that is based on something. That has been the argument for doing a graphic novel rather than doing a spec screenplay, or really honestly taking your spec screenplay, doing it as a comic book, and then selling the rights to the comic book, because for awhile people were eager to buy comic books.

And I think Derek Haas with Popcorn Fiction, that was some of the same instinct, is that this was the chance for screenwriters to write short stories and for development people to read short stories in genres that they are maybe not making as many movies. And say, like, “Hey, this is a great idea for a movie. Let’s have this guy come on and write. Let’s buy this story and turn it into a screenplay.”

Craig: That’s right. But it is important to note that Derek acts as a publisher. And so in a sense, whether this is rational or not, studios can say somebody, in this case Derek, read something and liked it enough to publish it.

Similarly, if you want, I know a couple of writers who had a really great idea for a screenplay, decided to go the graphic novel route for precisely the reason you are mentioning. Set up the rights to the graphic novel at a publishing company. And the second that happened, suddenly people came calling asking about the script because somebody somewhere had bought it.

John: There is a Good Housekeeping seal of approval.

Craig: That is right. Self-doing it ultimately is a transparent ploy. I just don’t see it panning out.

John: Let’s change gears and let’s have like a John & Craig’s Fantasy Exercise. And so this is what I want to talk about this week is what if you and I were each given control of a studio. So, Craig, you are in control of… — You can pick any studio. You don’t have to pick which one it is.

But you were given control of one of the major studios. And part of the — thinking about this is — I linked to the blog a week or two ago, and I will put another link in the show notes, Asymco, which is a website that does statistics on things, took a look at maybe 50 years of studio data. And they looked at all of the studios’ outputs, and you realize that the top five studios have been the top five studios basically for the last 50 years.

Craig: That’s right.

John: And they have traded one and two for top position, occasionally, but it has basically been the same people running — the same companies are running and making all of the major movies that we do.

Craig: Right.

John: So every once in a while there is a regime change, and you put somebody else new in charge of one of these studios. And let’s say that is you, Craig. So let’s talk through what decisions you and I would make if we were put in charge of one of these studios. Sounds good?

Craig: Sounds good.

John: So let me start with this. First question: Which overall deals would you want to keep at your studio?

Craig: I don’t want any overall deals with… — I don’t want many producer overall deals. I think there are a few producers that are absolutely worth it. And I would like to have them around. Although I think that in this economy you could probably get away with another kind of arrangement.

The most important overall deals that I would want to make would be with directors.

John: Okay. Which kind of directors? Who would you want to have an overall deal with?

Craig: I’m looking for directors that have a track record of delivering movies that people like within a reasonable budget. And particularly I would aim at directors who have shown a good track record of success in the $20 million to $60 million budget range.

John: Okay. So are you looking for Michael Bay Platinum Dunes, or are you looking for the ones that he is actually going to direct himself?

Craig: I’m not looking for… — Platinum Dunes, the idea of that is really about genre movies. To me it is less important about the kinds of movies. I am not necessarily…

If I am running my studio I don’t care so much about emphasizing genre or B-level or whatever, because I think there are really good movies, quality movies, that are made for $30 million. And there is genre that is made for $90 million. I am more interested in directors that I think are able to work with writers well and deliver good movies.

That combination, the director who delivers and writer who delivers, to me is the most important combination. If I can find teams like that and pair them up, that is how I want to develop my movies.

John: Yeah, I would say my criteria thinking through the overall deals at a studio that I am now in charge of, any producer deal that is costing me seven figures and they are not bringing their own money is highly suspect. If you are one of the people who makes those big, expensive movies, at this point you should probably be coming in with some of your own money. It feels really weird for me to be financing all of your overhead so you can have a really nice office on the other side of town, and maybe make a movie for us every once in a while.

Craig: I completely agree. I think there is a certain kind of dinosaur producer that has that kind of arrangement. And those are all disappearing. The only guys that really justify that are the ones that are delivering movies on a certain level in a big way, and there aren’t too many of those guys. And we know who they are.

But I wouldn’t make that… — Sort of prospectively moving forward that wouldn’t be my instinct. My instinct is all about the material and the director.

John: Yeah. Now, so rather than director overall deals, my focus would be TV showrunners who want to do features, and plucking some of them, plucking the very best of the TV showrunners and pulling them into the feature land.

So, the guys who are coming off of five years of an amazing show and can probably do amazing TV, I think they are undervalued in features. And I think they could probably do some amazing things. The danger, or course, is that they really are just going to go off and develop another TV show. You are not going to get anything out of them.

Craig: Yeah, as your competitor, I relish that this is your strategy, because to me, they are entirely different disciplines. And the things that work on TV right now, I think, interestingly are not working in theaters. There is material that requires people to go to a theater, and Mad Men isn’t it. But Mad Men is fantastic on TV. There are some showrunners that can make that jump. I mean, J.J. is sort of the most famous example.

John: You see, to me, I think you are spending not a lot of money to find who is the next J.J. Abrams, or Joss Whedon, or Ryan Murphy.

Craig: See, but I don’t need to make overall deals with them. They are going to find me because they want to do movies. If they want to do movies, they will come to me. And they will give me material. But more important, frankly, than the showrunner kind of guy to me is knowing… — J.J. is so valuable because he is a director. I just think that that is the most important part.

And the reason why I say that is the most important part, even as a screenwriter, which might seem crazy, is my new studio, or I guess I have taken over Paramount or whatever… — My studio can’t afford to make 30 movies a year because we can’t afford to market 30 movies a year. We have a small amount of these things.

When we have the material and we have the availability of actors, we need to get going. And that means we have to have a… — To me it means get a director on board from the start. Because what happens is if you develop material in the old school way, and then you bring the director in, you start going backwards and redeveloping.

John: That is absolutely true. You are making a very good point right there. And if you already have, in that director’s deal is already how much it is going to cost to direct the first movie you put him on, that is great and you can move faster.

Craig: Exactly.

John: I completely agree, because we do waste a tremendous amount of time. I’m on two movies right now where the studio wants to get everything just perfect, and then they will go after a director, and once the director is on board we are going to develop the whole thing again.

Craig: That is very 90’s to me. Because inevitably what happens, it is a very amusing thing from the perspective of a screenwriter — you will go through this very delicate, exhausting brokered negotiation over how the script should be, down to the letter. And then a director comes in and says, “What if they were all women instead of guys?” And the studio is like, “Great!”

Because ultimately they need a director to direct this thing and all of that fastidiousness falls away, and you start redeveloping. The other thing that it gets you is, as you mentioned, budget. If a director and a writer develop the screenplay together, they are developing it with that number in mind. You are not writing… — You don’t get caught in the “I just wrote a $100 million movie but they want to make it for $30 million.” That will kill the project.

So, in my mind, I don’t like the notion of screenwriters developing in vacuums. And, frankly, I don’t really need my studio executives developing the screenplays either because that is not really what they are spectacular at. Directors are much better — good directors — are much better at working with writers than studio executives, in my mind.

John: Let’s talk about studio executives. Which studio executives do you keep? What is your criteria?

Craig: I would love to find people that know how to match-make. I want studio executives with great relationships who can encourage teams to come together and develop the material. I want executives who can keep the director and the writer inside the box of what the studio generally is looking for in terms of tone and scope. And I want studio executives who aren’t afraid to let that team come back and say, “This is a better way.”

The most important thing a studio executive can do in my mind is help the writer and the director get to where they want to go within the chalk lines on the field that you have drawn for them.

John: I would say my criteria would be people who have actually made movies. And people, independent of their sort of studio executive function, have literally made movies. Because my frustration with a lot of the studio executives you end up working with: they don’t have a good sense of just literally how films are put together.

And I want the person who kind of feels like a producer but works for the studio.

Craig: Interesting. I mean, there is a movement, it seems, at studios to kind of fold the producing position into the studio executive position, kind of make it like a producer-executive kind of thing.

And I get where you are going. It is kind of a choice you have to make, I guess. You have to decide are you going to go for that kind of, the hybridized thing, or are you going to still have producers come in and handle that part of it.

Because it is hard, frankly, to find people who have made movies, who aren’t still making movies, or who want to do this and weren’t terrible at making movies, if that makes sense.

John: No, it does make sense. But I would say producers are having a hard time. Like the actual real film producers are having a hard time getting movies made. So I think you could probably cherry pick some of the very best of those people and bring them into the fold and let them be the people running the ship.

Craig: That is a good idea. There are a lot of producers out there who could be excellent studio executives in the absence of the old model which was flooding the lot with producers, all of whom had their offices, because there is enormous redundancy in it. A producer has three development people. And then the executive suite has development people. And everybody has development people.

And in the end, the funny part is once a director and a writer are sitting together in a room, none of those people really are developing anymore. They are just helping, as they should. And that is a good thing because sooner or later the writer has to write it, and the director has to direct it.

John: I would also want to find some way to reward these development executives with a percentage of the success of the feature so that… — I don’t have the right formula for it, but like the bonus for getting a movie made, the bonus for “this” amount of box office, the bonus for “this” kind of award. Just incentivize actually getting movies made because I don’t know that we do enough incentivizing. And so that is why calls go unreturned for six weeks.

Craig: It must be the case, I say that realizing I am setting myself up, but it must be the case that studio executives are rewarded for success. I mean, it may not be as direct as a piece of a movie or something quite that mathematical, but I can’t imagine that that doesn’t factor into their individual negotiations, how much they are paid, their position.

I mean, it seems like that would be the case.

John: Yeah. But if they are renegotiating every three years, then I don’t know. I just feel like there needs to be more of an immediate reward for it.

Craig: I guess. I mean, look, the problem is I am running my studio and I assign Jim to oversee a movie. And all I deal with for the next eight months is the fact that Jim is screwing up. And now the movie comes out and is a success because of the writer, the director, the cast, me for working hard to get it all done. And, wow, now I am paying Jim for a piece of it?

John: That’s true. I get that point, too.

Craig: Yeah. I mean, I’m cheap. I’m running a mean, lean machine here.

John: Now, you have just taken over this studio. There is a lot that is on its development slate, there’s a lot of things it owns, how do you figure out what are the stuff that is on the development slate you keep and what you get rid of? And do you put stuff in turnaround?

Craig: Well, sure. If you look at the material and you either don’t think that is going to connect creatively, or it is going to be impossible to sell, you need to turn it around. There is no sense in throwing good money after a project you don’t believe in; that is why they put you in charge. And that is just one of those… — That is part of the animal kingdom. When a lion takes over a pride…

Oh, it is kind of a gross analogy that involves infanticide. But, regardless, yeah, you have to put some things into turnaround, sure, of course.

John: I think I would bring in a committee of people I trust, and I trust screenwriters. I would bring in a committee, a group of six or eight screenwriters to literally read through everything that we have, and this might take a month. And so we will find writers who are awesome but were not working that month and bring them in. And literally sit down and go through everything we have and figure out what is promising and what needs to go away.

It is very much like we have just been going through and cleaning our bookshelves off. I think you need to do that. Because all of the cruft that sort of builds up on there is stealing focus from the things you should really be working on. And just going through and just saying, “Is this a movie that we want to make? Is there something here that is worth spending time on, and developing, and making into a movie?” If there is not, then it goes into turnaround.

And I would be much more aggressive than I think a lot of studios are about putting stuff into turnaround. Because there is always that fear that if you put something into turnaround, turnaround means that you are saying to the town, “Hey, does anyone want to buy this?” And another studio can say, “Yes, I want to buy that,” and they buy all the rights to it. And they can make that into a movie.

There has been a reluctance to put stuff into turnaround because of the fear of being embarrassed that someone else is going to take this property that you put into turnaround and is going to make a giant hit out of it, and then you look like a fool.

Well, yeah, but you weren’t making that movie either. So, put it into turnaround, let someone else deal with it. And focus on the things that you actually have that you like.

Craig: I agree with that, certainly the spirit of that. I am just far more autocratic than you are. I want to do what Steve Jobs did. I just feel like I am going to go through and I am going to ask myself, “Would people like this? And is it sellable?”

And even then, is it sellable? And could people like a version of this? And then ask myself the most important question, “What kind of writer should write this? What kind of director should direct this?” And hopefully if you are lucky find a script where you go, “We should be making this right now as it is.”

John: Yeah. Always about the situation.

Well let’s talk about what genres. What kinds of movies do you want to make if given everything you could make, what kind of movies are you going to focus on making?

Craig: Well, I’m a big believer in big movies. I am not one of these people that thinks that studios should just make little movies. I think big, huge bets are important, and they are good. You just have to pick the right ones. And obviously that is where the rubber meets the road. And you have to figure out if, okay, the Lone Ranger in and of itself doesn’t sound like a big movie, but Lone Ranger with Gore Verbinski and Johnny Depp does sound like a big movie.

So, I am going to make those big bets for sure, because to me that stuff in success spins out enormous benefit. You just have to be on the lookout for things that sound like they are big movies, but you are forcing it. And you have got to be careful about not saying, “Well, look, we have a couple of stars that are sort of on the edge of being big stars. And we have this material that feels like a big, huge spectacle. And we have a director that is kind of like in that zone, so we should just do it because who turns all that package down?”

Well, I would, if I didn’t think that it actually was going to be big. It is funny. It’s like we can smell it when they are forcing it on us. We just know. So I would make the big movies that feel like the wind would be at their back. And then I would really, really concentrate on the $20 million to $50 million comedies, the $20 million to $50 million genre pictures, and also then try and find some of those great $5 million to $10 million little bets that don’t cost much but sometimes just blow up and are amazing.

John: Yeah. Going back to the Lone Ranger and that kind of thing, so I am not really just picking on the Lone Ranger just by itself, but other sort of like really giant tent poles where you are spending a lot of money, and the Lone Ranger was an example where they stopped because they said, “Wow, this is going to cost way too much money.”

If you have big star, big concept, big director, I feel at some point you look at where you are actually spending your money. It is like, “Wow, do we actually have to spend that $50 million to do that special effect sequence that is not going to actually make the movie any better?”

Craig: Right.

John: And that is where you get into it. It is like, if you are getting big just to get big, well is it actually helping you sell your movie? And a lot of times I think it’s not.

Craig: Right. You are just forcing it. And I want to be clear that, because maybe it sounds like I am saying I want to make moves from a range of zero to $500 million. Well, who doesn’t?

But, to me, the danger zone of movies is when you go north of $60 million on original/first films, forget sequels and all the rest of it. If you are north of $60 million and you are south of $150 million, you are in a dangerous place. And the funny thing is I feel like that is where so many of the movies end up right now, because you are not big enough to be “oh my gosh — wow,” but you are definitely big enough to hurt if it fails.

John: Yeah. It’s bad.

Craig: It’s bad. You know, whereas I feel like if I have interesting people and a very sellable title and concept for a comedy, and it seems funny, for $30 million I will make that all day long, you know? The trick is to keep that budget for those kinds of movies… — I don’t know, I like that $20 million to $50 million, $20 million to $60 million zone. I just think that makes sense.

John: I’m going to pretend I took over Paramount, because I feel like there are Paramount movies that aren’t going to be made now, that they need to make more of, which are sort of the mid-budget, high concept dramas. So I am talking the Fatal Attractions, the Bodyguards. Look at the success of The Vow, and like The Vow is a movie that we kind of should have been making a lot more of.

It’s weird that we are not making kind of the Joe Eszterhas sexual thrillers anymore — that we are not making sort of the star-driven romantic dramas that people like. And you need to have a couple of those, and nobody is making them right now.

Craig: Yeah. That’s a good point. I guess it is all about the price point of these things. By the way, it must be, I mean, I can only imagine that some people who actually do make these decisions are listening to this and laughing their asses off at our naivety. [laughs]

John: I should have prefaced this whole thing by saying I recognize that these are tough jobs, and so people who come into these roles, not only do they have to meet with all of their own expectations, but they are not actually really in control of everything that we are pretending that we are in control of. Because they are reporting to other people, and there may be other reasons why they find themselves having to do those things. So this is why it is a fantasy exercise.

Like if we could come in and do anything we wanted to do, this is what we would do.

Craig: Yes. I have always found that when things seem sort of obviously fixable it just means you don’t understand them well enough.

John: That’s true.

Craig: Because if it were obviously fixable, they would have fixed it by now probably is my guess. It just feels like that is the way money works. You know, it always finds a way. So it is possible that this is the best of all worlds, but I just believe that, to me, the biggest mistakes studios make right now — the two biggest mistakes they make — is not teaming directors with screenwriters to develop material early on, and forcing big movies when they know they are forcing it.

Those are the two big ones.

John: Yeah. And sometimes that forcing big movies, like, yes, you had the big movie idea, and you had the big movie star and the perfect director, but you lost the big movie director and you lost the right star for it. So, are you going to make it with that sort of fourth choice guy? Ooh. That is tough.

And sometimes that gamble pays off, but it really often doesn’t.

Craig: Absolutely.

John: And so then you start to panic, like, “Oh, but we will cut $10 million out of the budget.” Well, that didn’t actually change the equation at all. You are still making a way expensive movie with the guy who can’t carry it.

Craig: That’s right. And the dangerous thing about these big budget movies is that once this train starts rolling, it will not be stopped. Because you can’t even get to the point where you start making the decisions you are talking about until you have spent $30 million or $40 million in R&D. And now, what are you going to do? You are going to write off $30 million or $40 million and not have a movie while stars and a director and people are available? Of course not.

You are jammed. And so the big choice to make is earlier on. And that is, again, another reason why writers and directors together, developing the material together, is so valuable because you are not going to have that kind of weird mismatch. And you are not going to have the parade of A-list screenwriters that are each getting $1 million to confuse things.

No. Get a voice together. That team is the key.

John: And we sort of talked about this before, but what would you do about home video? So you are now in charge of the studio, how are you going to handle home video?

Craig: I mean, it’s rearranging deck chairs. It’s so bad, and the fact is, talk about something out of their control; the marketplace is swinging around wildly when it comes to home video. The desire to own a physical piece, a physical object, that has a movie on it has disappeared. So, home video is going to continue to diminish.

The industry, all of the studios together — ideally — would come up with a joint venture that would iTunes it for them all, but they can’t get that together. So, I don’t know. I wouldn’t run that division. That’s the other guy. That’s not my problem. [laughs]

John: [laughs] Oh, that’s good. Yes. Bring in the Wall Street guy to do that for you. You are the creative.

Craig: I can’t. Honestly, I see no light at the end of that tunnel.

John: I’m going to pretend to shine a little light down there. I’m going to do my best. I have a weak flashlight, but I will shine my weak flashlight.

I think there is still some market for physical goods right now. And so I think while there is still some market for physical goods right now, you need to be able to sell those movies to people who want to buy movies. I would bundle Blu-ray with the DVD, so that people can buy one thing that has both kinds of discs in it so that they will be able to play it no matter what. So do that for while, and keep the higher price point which is helpful for right now.

I would, I don’t think UltraViolet is going to work. I mean, UltraViolet is what you were sort of describing where all the studios together were going to try to do this thing, but no one trusts that it is going to be around, so no one is going to do it.

Craig: Right.

John: People trust iTunes, so I would sell through iTunes. I would sell things you could buy at a store, that actually give you the download code through iTunes, people will understand. So, like, I am going to buy you The Vow on iTunes, and here is a physical thing that I can give you that is The Vow on iTunes.

And when I make licensing deals with places, I would make them long enough so that people feel safe that they are going to be able to find your movie. Because just this last week, Netflix lost its deal with Starz, that went down. And so suddenly several of my movies you can’t find anymore. And that is what frustrates consumers is that they can’t, they don’t know where to look for things.

And so, “Can I find your movie on this? Can I find your movie someplace else?” If you are going to make those deals, make them long enough that you really have a place to put your movies. Because otherwise people turn to piracy. And so the reason why people will download Charlie’s Angles off a torrent is because they can find it, and if they can’t find it a legal way, they are going to find it in an illegal way.

Craig: Yeah, it is true that people are still buying the physical objects. I mean, Hangover 2 sold millions of DVDs, many millions of DVDs. But when you look at the… — I was just doing a little research with a friend of mine. When you look at the amount of movies released in 2011 that sold more than 3 million DVDs, and you compare that to the amount of movies from 2007 that sold more than 3 million DVDs — in 2007 that number, I think, was 30. 30 movies. In 2011 it was 6.

And I have got to tell you, it’s not like the list of movies is that much more impressive from 2007. It is a dramatic falloff across the board. So, that is going away. And you are right to suggest that the problem is that the movie industry has failed to make an easy, obvious, new destination. And, by the way, the recording industry went through the same thing with even more turmoil because they were the first ones to be hit.

I don’t think that the problem is, at least in the immediate run, that people are going to turn to piracy, I think, because pirated copies still stink. I think the more immediate problem is that they are simply going to just turn to whatever is on cable, or just stop making movie watching a big deal. That is the problem.

If you untrain people to look at movies as a great way to spend an afternoon or an evening at home, they will find other stuff. And that is what is going on right now. The marketplace is retraining themselves in the absence of easy solutions to this.

So, if iTunes weren’t so wrapped up with Disney this would have been done awhile ago. But it is, and so we have got a problem.

John: Yeah. The last thing, which I think I suggested on a previous podcast, is if I am coming into a studio that has a big library, that big library is going to go on the equivalent of like the HBO Go. Because if you are Warner Brothers and you have crime thrillers dating back 50 years, put those together. Put those together as a thing that people can subscribe to.

And just the way that they at least have cable channels, I think there are internet channels where you could subscribe to something and be able to get any of those movies at any time is valuable. And try those new models.

Craig: That would be cool if you had access to decades, you know, just by subscription to Paramount — The 80’s. That would be cool.

I don’t know if our studio is going to work or not…

John: No. I think it could be doomed. But it is probably not more doomed than several other major studios currently.

Craig: Yeah. [laughs] I mean, it’s sort of like when they look at the performance of mutual funds and then just compare it to the index funds. It is sort of like time just generally churns out a certain average of hits, and a certain average of losers. And we pretend that we have more control over this than we do.

And, frankly, no one studio has seemed to corner the market on an ideal practice. And sometimes studios are rewarded for bad behavior. So, what do we know?

John: The only thing I would say, you could look back at 50 years and see, okay, who is actually the biggest of the studios has changed over the course of the 50 years, but like the top 5 are still the top 5. But you look at other industries that seem not completely dissimilar. You look at the computer industry and there are titans who are making most of the money, and everybody else is scraping for some scraps.

I think there is an opportunity for one or two studios to become much, much bigger if they were to be dominant. If one or two studios did a great job figuring out home video and had big hits to back it up, they could be very dominant.

Craig: Yeah. I mean, the thing that keeps these studios consistent in leadership is distribution. Because physical distribution of movies to theaters is an incredibly complicated thing. And it is very — requires a certain amount of monopoly power. I mean, I guess in this case it is a five-opoly. But that is what has kept them alive.

If that distribution advantage should disappear, I think honestly that the studios would disappear. They don’t have anything special there beyond that distribution ability. But it is a very powerful one. If one of them somehow mastered home video distribution in a way that the others couldn’t, I just don’t know how that would even happen. Why wouldn’t they all just copy it?

But if they could just get their acts together on this. They are repeating, it seems, many of the mistakes of the record industry in sort of squabbling while their companies burn. The home video thing is a disaster right now.

John: Yeah. And it is understandable why they are trying to defend the status quo because the status quo is their jobs. And so if everything changes, they may not have jobs, and that is a huge concern. But it is one of the reasons why the industry feels prone to disruption because an upstart who doesn’t have to have all of those other people doing those jobs could do a lot.

So I am wondering whether there is going to be a rise of sort of the pure financier who doesn’t actually deal with a lot of that backend stuff, and just makes the movies could possibly work.

Craig: Well, yeah, we have those. We have Legendary and Relativity.

John: And they come in as just giant banks.

Craig: Yeah.

John: But then eventually they start making their own movies and they start having their own distribution arms and doing other things. And we will see if that works out for them.

Craig: Well, you know, Legendary… — I don’t know if Legendary — it seems like Legendary is really happy doing what they do. And they have been so successful at it. You know? I mean, if I were running Legendary, if I were Thomas Tull I wouldn’t change a thing. I mean, it’s great. They bankroll, they make smart choices, they bankroll big hits.

John: For people who don’t know, Legendary Finances is the bank behind a lot of Warner Brothers’ big movies. And so I think 300 is theirs, the Batman movies are theirs.

Craig: The Hangover movies.

John: Oh, yeah, those little…

Craig: Those small things. They have done extraordinarily well. And, I think, they might have done Inception. Is that right?

John: Probably.

Craig: I think that it is a great relationship for Warner Brothers because what do these studios do best? What they do better than anybody is advertise movies and distribute movies. And when it comes to actually being a bank, there is no reason that they shouldn’t mitigate some of their risk on these real big bets.

It makes total sense. I think it is a great business for Warner Brothers and for Legendary. Smart.

John: And I also think there is a whole big chunk of money that is going to be looking for a place to spend their money in the next five years. And so, I think, a lot of the giant Silicon Valley money, and the Facebook money and stuff will eventually find its way here. And they will make movies, too.

Craig: Maybe so. Hey, only good for us.

John: Only good for us. Yeah, the more people that are willing to throw some money around, the more they are willing to spend some money on screenwriters to develop material. And that is a very happy thing.

Craig: Absolutely. Yes, I am so sorry that Amazon’s venture hasn’t churned out massive hits for them.

John: Apparently they did actually write a check for a winner. I don’t know if they wrote like a million dollar check, but they actually did pick a best screenplay.

Craig: Yeah. I’m sure they met the terms of their contest. [laughs]

John: I don’t know that they will be making a movie any time soon, but we will see how it all plays out. But my frustration, and this is dealing with stuff that happened before the podcast began, but I criticized the Amazon Studios deal as being a really bad idea for screenwriters in the sense of they were taking ownership of stuff that you really didn’t want them taking ownership of. And doing weird things that felt, not unscrupulous, but just kind of…

Craig: Exploitative.

John: Yes! Thank you. But, I like the idea of Amazon coming in and making movies because they have a tremendous amount of money, and they have a tremendous amount of advertising power and ability to reach people who are coming to their site every day. So, I supported the idea of Amazon making movies, I just didn’t like how they were doing it.

Craig: I support the idea of anybody making movies as long as they treat the professionals who make movies like professionals. Meaning that they pay them according to our contracts, and they give residuals, and healthcare, and pension, and credit protection, and all the things that we fought very hard for and have had for 70 years.

And Amazon sort of thinks that they are excepted out of that. And they can except out of that, but they also except out of being able to work with fine screenwriters like yourself.

John: Yeah. Exactly. Well, Craig, this was a fun fantasy exercise.

Craig: Yeah. I mean, it’s probably not the fun fantasy exercise that many of our podcast listeners were looking forward to.

John: I disagree. I disagree.

Craig: There’s quite a bit of slash-fiction. Podcast/fiction.

John: Someone recently was talking about the podcast. He was like, “Yeah, your podcast seems really weird because it feels like the only people who are the right target audience for it are people that are kind of successful screenwriters, but not really successful screenwriters.”

And I pushed back in saying I think most people who are interested in the film industry could relate to a lot of the things we are talking about. So, yes, the esoteric of credit arbitration, most people listening to this podcast will never go through it. But I think they can be interested and fascinated by it even if they are not affected by it.

Craig: I would have said to that person, it’s a fair point, that our audience is everybody that doesn’t already know everything about screenwriting, and is either screenwriting now or will be one day. And that is everybody minus A-list screenwriters. [laughs]

John: [laughs]

Craig: And then A-list screenwriters can listen to it just to make fun of us. So it is everybody.

John: It’s everybody. Great. Craig, thank you so much.

Craig: Thank you, John.

John: Have a great week.

Craig: Thanks. You too. Bye.

John: Bye.