Archives for 2011

The original post for this episode can be found [here](http://johnaugust.com/2011/follies-kindles-and-second-act-malaise).

**John August:** Hello. My name is John August.

**Craig Mazin:** My name is Craig Mazin.

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

**Craig:** A little tired. A little overworked right now.

**John:** I’m sorry to hear that.

**Craig:** Well, worse than underworked.

— I’m sorry, I said it’s worse than underworked. It’s better than underworked.

**John:** Yes. You wouldn’t want to be unemployed.

**Craig:** No, no. No.

**John:** No, no. At the worst of our jobs we’re not digging ditches.

**Craig:** Right, precisely.

**John:** We’re indoors most of the day. We have comfortable chairs. — If we’re smart we have comfortable chairs.

**Craig:** Yes. I’ve got the Aeron.

**John:** I’ve got the thing that’s not the Aeron. I’m going to stand up and look at the back of my chair so I can tell you what it is. Hold on one sec.

**Craig:** Exciting.

**John:** Exciting. I will post a link to whatever it is in the show notes. It’s the one that’s not the Aeron but it’s like the Aeron. It’s supposed to be they can rip it apart and recycle it better. It’s the next thing. Do you remember what that was called?

**Craig:** I think my wife has one of those. I’m one of the many beneficiaries of the dot com bust. Hundreds of start-ups bought thousands of Aeron chairs in a display of remarkable optimism and they all went belly up, so they sell these things on eBay or whatever.

**John:** A good chair is very crucial. I found that Aeron didn’t give me quite enough support and that’s why I was happy to switch to this one which has worked better for me.

**Craig:** I have a little guy here who pushes up on the bottom of the chair for me.

**John:** That’s crucial, having that small person in your employment who can provide lumbar support like that.

**Craig:** He’s actually not small. He’s six foot two but he takes pride in his work.

**John:** Pride in your work is really the crucial thing.

**Craig:** It’s key.

**John:** Hey, Craig, I have a question for you. As you’re working with a director — let’s just say you’re working with Todd Philips — and Todd Phillips says, “€œHey, you really need to see this one Orson Wells movie that you hadn’t seen before.”€ As you know, Orson Wells is a master of comedy and you really can’t make Hangover 3 without Orson Wells€ knowledge.

Todd said, “€œHey, you need to check out this Orson Wells movie.”€ What would you do?

**Craig:** I would watch the movie.

**John:** How would you watch the movie?

**Craig:** I guess I would try and iTunes it or Netflix it. Barring that, I guess I would go to a brick and mortar and rent it.

**John:** Isn’t it remarkable that you can find pretty much any Orson Wells movie that has probably ever been made? You can be able to find that movie.

**Craig:** Pretty much.

**John:** I bring this up because, as I’ve talked about before on the show, I’m working on €œBig Fish€ the Broadway Musical, so I’ve needed to see a ton of Broadway musicals so I’m up to speed and so I can talk somewhat intelligently about other Broadway musicals, and I’m finding it’s a very different situation.

If I want to see any movie that’s ever been made, I can go and find it either on Netflix or digitally or somehow I can find that movie. With a Broadway show, it’s much more difficult. You can find a cast album for a lot of things. You can sometimes find a recording. Lincoln Center has recordings of some Broadway shows that were staged in the last 10 years or before that.

Sometimes there’s a movie version of it so sometimes you can see — like — the movie version of West Side Story,€ which is great, but a lot of shows you can’t actually see because they’re not staged that often.

**Craig:** So you have to actually go and see shows?

**John:** Yeah. It’s like being a filmmaker or screenwriter in the 1970s, for example, where you actually had to see a print of the show, and if there wasn’t a print handy you couldn’t see it, but even more difficult because you actually have to physically be in a space where people have come together to put on a show.

I guess my point is it’s harder to get caught up with all of the history in musical theater than it is to get caught up to cinema.

**Craig:** Yeah. I’m a musical theater fan but almost all of my fandom is based on the music. I listen to music and I listen to albums. I’ve seen almost no shows, so that’s something I guess I’ll have to rectify somewhere down the line.

**John:** In some ways you’re familiar with these musicals the same way if someone had only seen the action sequences in €œRaiders of the Lost Ark.€ You’re only getting the big highlights, but you’re not seeing how it all fits together in the bigger structure.

**Craig:** That’s right. On the other hand, though, I don’t have to sit through those really boring, bad songs.

**John:** Well, as the book writer who has to write all that really boring stuff I’ve needed to see a lot of those things. Luckily in a big city like LA we have Reprise!, which puts on a lot of the lesser staged Broadway shows. I think it’s Jason Alexander who is one of the big people behind Reprise!.

Several times a year over at UCLA they’ll put on a show that isn’t staged very often. I got to see €œHow to Succeed in Business Without Really Trying a couple years ago before this most recent incarnation, and I could see, “Oh, that’s what that show is really about and that song that I recognized needs to be in that show and that’s a good thing.”

This is all a very lengthy introduction to the point of I finally saw Follies for the first time two weeks ago in New York. It was really strange to see Follies. I’m guessing you’ve not seen €œFollies?

**Craig:** I haven’t seen Follies. I’ve heard quite a bit of the music of it, in consistent with my report from a few seconds ago, but €œFollies,€ by all accounts, was viewed as a very strange show from the start so you’re not alone in thinking that.

**John:** One of my frustrations, I should also add, when you’re trying to catch up on the history of musical theater is people inevitably say, “You should have seen the original.” That’s helpful because the original was in 1971 so unless you provide a time machine for me I really can’t go back and see the original staging of €œFollies.

The best I can do is a see a current staging of €œFollies, which is playing right now at the Marquee Theater in Broadway with Bernadette Peters and a lot of other talented people. Follies is this weird one, because I knew going into it that it has this weird place in the pantheon of Broadway musicals because it’s like a shibboleth.

You can’t say anything bad about €œFollies in a way because then you’re a godless heathen, but if you talk about it without acknowledging it’s generally perceived flaws you’re an idiot. It’s one of those things in describing it here and knowing that whatever I’m saying is going to be recorded for future people to listen to I have to be careful about talking about Follies.

**Craig:** But you’ve already blown it by saying that you have to be careful about talking about it. [laughs]

**John:** It’s like €œFight Club.€ You have to be careful about Fight Club. It’s such a strange, strange show. Do you know what it’s about? You’ve listened to the cast album.

**Craig:** It’s about these women who used to be burlesque-y stars and they all gather together for a reunion? Is that right?

**John:** That’s correct mostly. It’s not just women, it’s women and men. More women than men. It’s based on the €œZigfield Follies. This generation of it was between the two big wars so it’s the late ‘€œ40s, early ’50s I’m guessing. The show is staged with these older performers coming back to this theater that’s about to be destroyed for one last reunion.

A reunion setup is a very natural way of starting a story. What’s unusual about Follies is not only do you have all the older versions of these people, you have their younger versions as well, so the cast is huge because basically you have a younger version for each older person in the show so the cast gets giant.

The younger versions don’t interact directly with the older versions, but a lot of times they’re echoing what they’re doing or you’re seeing an earlier moment that they’re talking about in the present back in the past.

Also troubling, not troubling but problematic, is that the present day of it is the 1970s so you’re watching this in 2011 watching a show set in the 1970s and in the 1940s and your frames of references are off.

The younger incarnations of these people I take it in the original staging were much more explicitly handled in ghosts. In this most recent one I wouldn’t really necessarily call them ghosts. They’re more like a CBS show, like a Cold Case. It’s like they’re half flashing back to earlier times.

The show, the soundtrack album that you’ve listened to, the only reason that people still talk about it as much as they do is there’s amazing songs in that show. €œI’m Still Here,€ €œBroadway Baby.

**Craig:** Broadway Baby is a classic. Elaine Stritch has an awesome version of Broadway Baby.€ It’s funny because I don’t know quite where. It’s a live version. It must have been a tribute concert. The thing about Sondheim is every — I would say — 14 hours there’s a tribute concert to Steven Sondheim where everybody gets together and sings his songs.

There’s a great Elaine Stritch that is really funny and then there’s this heartbreaking version of I’m Still Here€ by Dorothy Loudon that is my particular favorite.

**John:** Those two songs are classics. Too Many Mornings Could I Leave You. Losing My Mind which is a great, great song. They’re all written by Steven Sondheim, who’s, again, considered a deity. The book was written by James Goldman, who is a screenwriter who did a lot of different things, is the brother of William Goldman. There’s a tradition of screenwriters working in the theater.

The other song that I’d heard from it that I didn’t know was from the show was œWaiting for the Girls Upstairs.

**Craig:** Yes, that is from that show.

**John:** That is from that show. That is very literally the suitors waiting for the girl performers that are getting changed upstairs and taking too long to change upstairs. I’d heard that song many different times but I really had no context for it. I always assumed it was like the girls upstairs were in an apartment upstairs.

I kept envisioning the cast of €œFriends€ for that song and it’s not even remotely that way.

**Craig:** That’s my struggle with all these songs. I don’t know what €œI’m Still Here is about other than a woman who used to be a popular singer or performer of some kind now well on in her years and she struggled through tough times and lost of fame. I don’t know what the context is beyond that.

**John:** Hearing that song wouldn’t you assume that it’s one of the main characters who sings that song?

**Craig:** I would, although I happen to know it’s not.

**John:** No, it’s a really side character. The same with that and Broadway Baby. Naturally as screenwriters you can’t turn off that screenwriter brain of, “Okay, this isn’t really all working right and so how do you fix this?” The only reason the fix it instinct kicks in is that you recognize that the parts are working much better than the whole.

The parts being these really, really great numbers, these great songs, but the framework around them isn’t maybe all you would hope it could be. Those two songs, they’re not your lead characters singing them. They do help set up this whole sense of this generation has passed and some of the people are still performers and most of the people have gone on to other kinds of lives so it works on that level.

The real meat of the show are these two married couples and essentially the one girl really wanted the other guy and both of them are in unhappy marriages because of choices made decades ago. €œCould I Leave You is could the one wife leave the husband, and it’s a really good, funny song, but it plays strangely in what’s meant to be a deserted theater.

It feels like you want to see her in her house singing this song rather than in some theater. Losing My Mind,€ which is a great song, but you hear that song and it feels like a more recent love. It feels more like I’ve been in love with you for a year and you told me once that you loved me and were you just being kind?

It feels more like a recent romantic obsession rather than something that dates back 30 years.

**Craig:** Yeah. Well, maybe I’m kind of the beneficiary, then, of sort of hearing these songs out of context. For instance, Broadway Baby€ is hysterical when Elaine Stritch sings it. It’s a very funny performance. Maybe it’s really tragic and sad in the musical but I sort of enjoy it on its own.

Actually, it’s funny, with Sondheim. Maybe because I’m just not quite… I am not a musical theatre nut. I’m just a casual fan.

**John:** Yeah.

**Craig:** So I’ve never seen, for instance, €œSunday in the Park. I’ve never seen it. But I do love It’s Hot in Here and I do love €œPutting it Together. I feel like that’s okay. I enjoy those songs for what they are. I can figure out that It’s Hot in Here is… or It’s Hot up Here?

**John:** Yeah.

**Craig:** I can’t remember which one. But it’s the people in his famous painting that are singing about being stuck there. And that’s all I need to know. I’m good.

**John:** Yeah. Yeah.

**Craig:** By the way, a little trivia question. Who’s the actress who originated the role that sings I’m Still Here€ in The Follies?

**John:** I don’t know.

**Craig:** Yvonne De Carlo who was famous for playing…

**John:** Ah-hah. Batwoman.

**Craig:** No.

**John:** Catgirl.

**Craig:** No. Was she Catgirl?

**John:** Wasn’t she?

**Craig:** No. Well, maybe she was but I know her, most famously, as Lilly Munster.

**John:** Aaah.

**Craig:** Lilly Munster.

**John:** I’m looking at Yvonne De Carlo right now.

**Craig:** Yvonne De Carlo.

**John:** Just because that’s a crucial thing.

**Craig:** Yeah, it’s crucial.

**John:** Yeah, I’m not seeing it here but she was in €œThe Girl from U.N.C.L.E.€ So that’s important.

**Craig:** Yes.

**John:** Yeah.

**Craig:** All right. Trivia time… Done.

**John:** So, my other screenwriter brain. And this is, again, dangerous to criticize a show that is beloved by many people. But this is also useful for people, screenwriters, who are listening to this podcast.

In the clever idea of like, “Oh, you have the old version and the young version,”€ you end up dividing the audiences loyalties because it’s like, “€œWait. Am I supposed to be caring more about the older version or the younger version?”

**Craig:** Yeah.

**John:** Which is, certainly, a challenge we had in the movie version of Big Fish, too. It’s that you’re splitting the roles between the young Edward Bloom and the older Edward Bloom. So, which one is the real Edward Bloom?

**Craig:** That’s a great way of putting it because in every movie where an individual is split, through time travel or just the framing of the movie, you never really believe they’re the same person. In your mind you can’t track it that way.

**John:** Yeah.

**Craig:** So, you’re always… I mean, you try.

**John:** Yeah.

**Craig:** As writers, we try and do the best we can. But, inevitably, the brain won’t allow it.

**John:** Yeah. The other issue I found… and it’s not unique to this musical but when you have people in unhappy marriages, the idea that their marriage is going to fall apart on this one night… or, actually, more specifically, that their marriage would have lasted up until this one night… can be a real challenge. It’s like, if you hate each other so much then how did you possibly get in the car to come here tonight?

**Craig:** [laughs] Right.

**John:** That’s a challenge.

**Craig:** It’s like the dilemma of drama. When marriages break up they usually break up slowly and miserably. It’s like dying. No-one ever dies by grabbing someone’s hand and whispering those last great words and then eyes roll back. It’s like two months in the hospital, bedpans, and machines that go “ping.”

**John:** Ping. Oh, I’m going to steal a line from Andrew Lippa, who is the composer on €œBig Fish.€ His father gave him an amazing deathbed line. His father was coherent enough so Andrew said, “€œDad, are you comfortable?”€ and his father opened his eyes and said, “€œI make a living.”

**Craig:** [laughs] Was he consciously joking, right there at the end? Or was he just confused?

**John:** Oh, he was consciously joking.

**Craig:** That guy is awesome.

**John:** That’s pretty amazing. Isn’t it?

**Craig:** That’s pretty awesome to be Vaudeville at the very end.

**John:** Yeah, Vaudeville to the end.

**Craig:** Yeah.

**John:** So, by bigger framing around this whole Follies end, having to physically see musicals and see them staged, and having to really track down like… There are many musicals that I would rush out to see. Even a version that I know isn’t supposed to be the best possible version because otherwise I just couldn’t see it.

Another big difference with movies is movies have a fixed, finished form. €œRaiders of the Lost Arc€ is basically always going to be the same €œRaiders of the Lost Arc.

**Craig:** Yes.

**John:** Which is why, when there are new releases where they change things, I think people get so pissed off. There’s this assumption with movies that once you’re done, you’re done. And you’re not going to change the movie anymore.

**Craig:** Right. In fact, this goes to the heart of a question that every screenwriter asks sooner or later. Typically, when they’re starting out and they’re dealing with a lot of the humiliations, the everyday humiliations of being a professional screenwriter.

They say, “Why? Why are playwrights treated so much differently? Why does everybody respect the playwright and never change a word? Not the directors. Not the actors. But, screenwriters are treated completely differently.”

The answer is very simple. Playwrights write a play and that’s done and then the play is performed. Performances are not intellectual property. They’re performances. They are not even works of art, in the legal sense. They’re performances of a work of art whereas screenplays are not.

Screenplays are intended to be transformed into a movie which is fixed, as you put it, and done and is, in fact, a work of art and intellectual property that is never changed.

The fact that the playwright writes something that is performed over and over and over in a million different ways requires consistency in the words. It must have it. Otherwise, what play are you seeing? Are you seeing Fiddler on the Roof or somebody else’s €œFiddler on the Roof?

That is why we are in a jam, as screenwriters.

**John:** Yeah.

**Craig:** Our work isn’t performed.

**John:** Our work is transformed into something else that is the finished thing.

**Craig:** Correct.

**John:** It’s a little sorbet, before we get to our next big topic. Are you reading a lot these days? Are you getting a chance to read for fun?

**Craig:** Not for fun. No.

**John:** No.

**Craig:** I mean, I got the Jobs autobiography. I have not even cracked it open. Mostly, I’ve just been reading stuff for jobs. I mean, for writing.

**John:** I’m sorry.

**Craig:** Yeah, I know. Bummer. What are you reading?

**John:** I’ve read two things this last week. So, first off, I got the new Kindle. Not the Kindle Fire but the really cheap $79 Kindle, which is great, by the way.

I got the one with ads and the ads are a little bit annoying. They don’t interrupt your reading experience but if it’s just sitting there then suddenly it will turn into a hair care product ad. It’s like I don’t really want to see that.

**Craig:** Totally inapplicable to you.

**John:** Yeah. Not useful for me.

**Craig:** No.

**John:** But it’s great and it’s small and it fits perfectly in my coat pocket, for when I’m in New York. I can be on the subway, I can pull out my Kindle and read for a bit on the subway and it’s great. So I find myself reading a lot more.

Or, and hopefully, if I’m in a restaurant and it’s too dark for me to use my real Kindle then I can just pull out my phone and read the same book on my phone.

**Craig:** Right.

**John:** So, a useful advantage of living in 2011.

**Craig:** Yes.

**John:** So, I’m reading two things. I read Mindy Kaling’s book.

**Craig:** Oh yeah. I heard that was great.

**John:** Yeah. Mindy Kaling is the producer and actress and director on The Office. It’s good. People want to compare it directly to the Tina Fey book and the Tina Fey book is meteor. There’s just more to it.

But what I found really interesting in Mindy Kaling’s book was her back story, in terms of how she got started. I’d know she’d written this play called Matt and Ben which is about Ben Affleck and Matt Damon.

But her whole back story about how that got set up and started was really fascinating and very much proves the thing that we say here a lot, “You don’t know what is going to be the one thing that is going to push you over the edge and get you noticed and get you started.”

This was just something that she found funny and fascinating and she pursued with full vigor. And people liked it. That’s the thing that sort of got her put in a spotlight and she used that spotlight very well.

**Craig:** Yeah. Mary notes how funny talent plus unique perspective tends to stand out.

**John:** Yes.

**Craig:** Yeah.

**John:** Yeah. So, she’s great. I’m reading Thinking, Fast and Slow. I forget the author’s name, but I will put it in the show notes. It is a really good brain book. I have to read a good brain book, every year or two, about the mental processes. His basic argument is that you have two systems that process thought for you.

You have system one which does things automatically and subconsciously and can do most of the functions of making the simple decisions about things and noticing when something is wrong and that you have to pay attention to it. And system two which does your more difficult… What we really think of as thinking.

It does your complicated math and stuff like that. A lot of our decisions that we assume we’re consciously aware of are really being made in system one before we’re thinking about it.

**Craig:** Yeah, absolutely. There’s a really interesting book I recommend. Actually, I took a class with this guy when I was in college. His name is Julian Jaynes.

**John:** Oh, I know Julian Jaynes.

**Craig:** Yes.

**John:** Bicameral or the breakdown of the…

**Craig:** Yes, €œThe Origin of Consciousness and the Breakdown of the Bicameral Mind.€ I said that really fast but you’ll put up a note, I’m sure. It’s a really interesting book. He essentially argues that the root of consciousness is language and it’s why we are conscious, in the way we understand it to be, and animals are not. At least that’s his theory.

One of the things he talks about first is what consciousness isn’t. A knee-jerk response to the question, “€œWhat is consciousness?” is awareness. But he points out… We’ve all had that experience of driving in a car and then suddenly realizing, “I haven’t really actually been paying attention. How did I even get this far? I’ve been thinking about something else while I’m driving.”

But while you were thinking about something else you were staying in your lane, slowing down when cars in front of you slowed down, making right turns and left turns, and taking exits.

It’s remarkable how much your brain can do without you actually paying attention.

**John:** Yeah. It raises the question of what is the you. It’s like, without you paying attention… well, part of you is paying attention. It’s just not that part that we think about as being consciousness.

**Craig:** Right.

**John:** It’s not that part that sort of self reports and carries your awareness of your inner monologue. So, Jaynes’s book is fascinating. I’ve seen it a lot. I read it ten years ago, maybe. I’ve seen a lot of criticism about it since then.

**Craig:** Yeah.

**John:** But I think it’s fascinating in terms of its ideas.

**Craig:** It’s essentially groundless but, as a groundless theory, it’s fun to read. His essential argument is that once we developed a capacity for language and came up with the word “I” and with metaphors, to be able to describe ourselves through language, that’s how we essentially began to become conscious.

There was one thing that I remember after I read the book. I went to bed and I had a dream. It was a normal dream…. I remember in the dream someone said something that surprised me. That happens all the time in dreams. People say things and you go, “€œOh, okay,” and then you respond. Just like a regular conversation.

When I woke up, it occurred to me those aren’t other people. They’re just me. I mean, obviously, my brain is writing and playing all the roles in a dream. But you don’t know what they’re going to say. So, somehow your brain is capable of splitting off and creating multiple consciousnesses that can interact with each other in a dream.

Well, that happens most efficiently when we’re dreaming. Certainly, that’s a big part of what we do when we’re screenwriting. We do it with awareness, but part of the tool of the screenwriter is to somehow become schizophrenic and have people inside of your head think differently than you and surprise you.

**John:** I don’t remember if this is Jaynes’s book specifically, but I recall one of these books was talking about when we read the really classic Greek literature and there’s all the talk about the gods talking to people, that may have actually been the experience of what it was like to be alive at that time.

Well, our assumption that, “Oh, people back then were exactly the way that people are now,” that may not be entirely true and that people may have actually heard voices the way we consider a schizophrenic hears voices much more commonly because of just the way the brain was organized and the way that language had shaped how we’re thinking about things.

So people in the classic times or the pre-classic times may have literally been hearing voices a lot, and so their experience of who they were and who the outside world was could have been very different.

**Craig:** Yeah, that was Jaynes. He was arguing that the two hemispheres of the brain are connected by this big huge bundle of fibers called the corpus callosum, which is much larger in women by the way than men. Men are more split brain on the average than women, which by the way accounts for some of these very persistent cognitive differences so they think that we see over and over in men and women.

But his suggestion was that in the old days there was even less of a connection between the two hemispheres, and what we tend to think of as our own mind talking to us, people then either literally heard as an auditory hallucination or just interpreted it as somebody else speaking to us. It accounts in some small part for why people back then were so much more religious.

People are religious now, but not in the way they were then. I mean people then truly did hear gods telling them what to do, and it was quite commonplace. Interestingly, no one ever said, “€œOh, that guy who says God is talking to him, he’s crazy.”€ Quite the opposite. Those people were prophets. Now, of course, if you say that God is talking to you, it’s time for some chlorpromazine.

**John:** Yeah, I don’t want gods talking to me. I’m happy to have a sense of the universe being sane and rational and ordered and me being a player within it.

**Craig:** I beg to differ. I want to be in charge. Yeah. I prefer the solipsistic vision where you’re all here for my benefit. It’s just a big play, and…

[laughter]

**Craig:** …When I close my eyes you all die. When I open my eyes, you wake up again. [laughs]

**John:** Having made The Nines,€ which was essentially that whole premise, it’s not really quite how I view the universe. But it is fascinating and telling.

**Craig:** Tempting, isn’t it?

**John:** Tempting, yes.

**Craig:** [laughs]

**John:** One other thing I want to talk about is what I described in our setup email is second act malaise. I should say second act, not in the sense of theatre second act because theatre has two acts. It has a first act and then an intermission and a second act. Second act malaise in terms of screenwriting, which is you have your first act which sets everything up. You have your last act which wraps everything up.

The second act is this vast stretch in the middle of writing, which can both be challenging narratively but also challenging really hard just in work because I find that when I’m deep in the second act like I am on this one project, you’re excited about all the stuff you’ve written. You’re excited about the stuff that’s coming up, but where you’re at right there in the middle can just be a slog.

**Craig:** It can. In fact, I am right there right now on a script, right in the middle, and because I knew we were going to be talking about this, I started thinking about why. Because look, the first act is actually the hardest thing to write I think. You have to invent all the voices, the characters, the appearances, the situations, the premises, and so forth.

The third act is a little easier because theoretically it is what must occur. The second act shouldn’t be so much harder than the first. So I started asking myself is this psychological? Is it just, “Okay, the excitement of the new is gone?” The excitement of “I’m almost finished” is gone?€ So is that the cause of the fatigue? But I came upon a possible different solution, so I’m curious to see what you think.

I think that when we write, we naturally identify with our protagonist. Even if they’re very different than us, their experience is something that we have to feel emotionally or we don’t write them very well.

In the middle of the movie our characters tend to be lost. [laughs] They tend to be unmoored from their comforting surroundings. They’re in the middle of their journey. It is the hard part of their journey.

There is no resolution around the corner. In fact, sometimes they don’t even know what they’re supposed to do next. I actually feel like when we’re writing, it’s not surprising that we get tired and a little overwhelmed and fatigued in the middle because that’s how our characters are.

**John:** Yeah, that’s a nice way of thinking about it. I like that.

**Craig:** Thank you.

**John:** I would push back and say I find the first act to be the easiest part to write.

**Craig:** Interesting.

**John:** I find starting a script to be very difficult. Much like our friend, who describes her of having to climb into the water very gently and splash water on her toes, I have a hard time literally starting the work.

But the first act is fascinating and exciting for me because I am setting up the rules of the world. So anything is possible in the first act because what could happen in this movie? Well, whatever I want to have happen in this movie. I’m setting up the rules and the boundaries of what this movie is.

The second act for me partly is challenging because I already have established those boundaries, so I know that I can only go this far to this far, this far, this far. You’re on a path, and you have to stay on that path. You’ve decided we’re going to drive to Wichita, so you have to find a way to make that drive to Wichita as interesting as possible.

You’re not allowed to introduce a lot of new characters. You’re not supposed to be introducing brand new ideas in terms of what characters should want.

Sometimes you are revisiting things from earlier on in the story, so they’re not new. One of the projects I’m working on right now, the director has an interesting mandate, which has been challenging to carry out but also fascinating to carry out is that she doesn’t want to see the same set twice, which is…

**Craig:** Really?

**John:** Really. Which is really a great goal. I don’t know necessarily that it was achievable. But her point worth discussing is anytime you come back to a set, you have a sense that the story is not moving forward because you’ve literally returned to someplace that you’ve been to before.

So even if some other things have changed or the characters in a different place now, you are going back someplace and you want to always go forward.

**Craig:** Well, there goes €œCasablanca€ and quite a few other movies. [laughs]

**John:** Absolutely.

**Craig:** Go on.

**John:** But some of my favorite movies, that is actually I think really true. €œRaiders of the Lost Ark€ is never going back to the same set twice.

**Craig:** That’s a really good question. Does it ever go back to the same set twice?

**John:** And Star Wars might but only in things like the Millennium Falcon or in the vehicles that are physically going someplace new.

**Craig:** Yeah. Well, he goes back home and sees the skeletons of his aunt and uncle.

**John:** Aha! So that’s why I would add an addendum. It’s like you can go back to a place but only if it is destroyed…

**Craig:** Right.

**John:** Or significantly transformed.

**Craig:** I think that that’s true actually. In thinking about the script I’m writing right now, I don’t think there are any returns. It’s a weird thing. I never thought of it that way, but yeah. It’s a good point.

**John:** Maybe part of the reason why I also am fascinated about second act malaise or maybe because I experience second act malaise so deeply and it frustrates me so much, a lot of my movies don’t have second acts in a classic sense. Like €œGo€ just restarts itself twice. The Nines restarts itself twice, and so The Nines is essentially three first acts. There’s something really exciting about that that you’re burning everything behind you.

**Craig:** Well, I’m a fan of a good, well-crafted traditional second act, but a lot of what I think about when I’m in the middle of it is making sure that…

I always like to think of these things in terms of the relationship between the character or the protagonist and the theme of the story, and making sure that as we go through the second act that they are encountering glimpses of this new way of living and this new truth and resisting it and fighting it.

So I feel like I never fear second acts. I don’t know — maybe all it really boils down to is the second act is that also the part of the process where you realize, “I’ve been doing this for a while.” And when you do anything for a while, it gets a little boring. It’s exciting to finish — god, it’s exciting to finish — and it’s exciting to start. But what’s exciting about page 40 through 80?

**John:** No, not that much.

**Craig:** Not that much.

**John:** This last weekend in New York I was lucky to be able to see my friend Quinn run the New York Marathon, and writing a script is very much a marathon. I suspect it’s a similar experience to a marathon runner. Those first four miles, that’s going to feel great. “Hey, you’re running a marathon!”€ Those last couple miles, like, “€œGreat, I’m almost done with my marathon!”

If I were running the marathon I would suspect miles 8 through 20 would get annoying because there’s nothing new about them. It’s just more fatigue and keeping it interesting for yourself.

**John:** Well, that’s what sets marathon runners apart from we mortals, and I would suggest that that’s what sets we professional screenwriters apart from the people who start 12 scripts and never finish them. If you can’t find the joy in that middle slog, some sick perverted joy, maybe this isn’t for you.

Bummer!

**Craig:** Bummer.

**John:** Gunshot.

[laughter]

**John:** That feels like the perfect note to end our podcast here.

One thing I should say and I meant to bring this up earlier is we talk about the show notes or the links. If you’re listening to this podcast or through iTunes or through wherever else, the links for every show are always on johnaugust.com. So just johnaugust.com, Scriptnotes, and all the shows are there.

Links that we’re talking about for anything that we bring up in the show will always be there.

Anything more, Craig?

**Craig:** No, I’m tapped.

**John:** Yeah, I’m tapped, too.

**Craig:** I’m exhausted.

**John:** But thank you, sir.

**Craig:** Thank you. That was good. That was fun. I really enjoyed the Musical Theatre Monday. That was fun.

[laughter]

**John:** Very good. All right. We’ll talk soon

**Craig:** Thanks.

**John:** Bye.

**Craig:** Bye.

The original post for this episode can be found [here](http://johnaugust.com/2011/how-movie-money-works).

**John August:** Hello. 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 today, Craig?

**Craig:** — Caught me mid-sip again. I’m doing fine today. Doing fine. How about yourself?

**John:** I’m doing really well.

Now Craig, whenever I bring up a television show, your standard response is that you have not seen it because you don’t watch any television shows. So I thought today I would ask what was the last movie you saw in the theater?

**Craig:** The Help.

**John:** The Help. Did you enjoy The Help?

**Craig:** I did enjoy The Help, I have to say. I thought that it was very well directed. Viola Davis, who I mention frequently, is a spectacularly good actor, and I like watching her in pretty much everything. I wasn’t familiar with her until I saw Doubt, and she’s only in Doubt for two scenes really.

But she has this one scene with Meryl Streep that is just unreal, I mean just spectacular, and a great example of a scene where the director just got completely out of the way and just covered it over a two-shot and just let the actors do what they do.

**John:** Yeah. The director’s name is Tate Taylor and actually a person I’ve known for a very long time. He’s part of the same crew with Melissa McCarthy and Octavia Spencer, so it’s been great to see him have such a success.

**Craig:** Yes. Tate Taylor did not direct Doubt. He directed The Help.

**John:** No, no, no. The Help. So The Help was also a tremendous success. That was one of the breakout movies that did not cost a lot of money, made a tremendous amount of money at the box office, and should therefore be completely profitable. Isn’t that correct?

**Craig:** Yeah. Well, [laughs] yes and no. It depends. Define “profit,” John.

**John:** Well, I think that’s exactly what we’re going to try to do today. I thought of this actually this weekend. I went to go see Puss in Boots, the animated Puss in Boots, which was actually really good. But I hadn’t seen the Shrek movies for a long time, so this was the first time getting back into that world. It was really nicely done.

But as I was buying my ticket, I started to think about like, “Wow. How much of this ticket is actually going to go back to the movie versus the everything else of it all?” So this is going to be an upper-level discussion I think because it’s not talking just about the words on the page but just how the film industry works and how money in the film industry works. So let’s put on our big brains and talk through the whole thing.

**Craig:** Yeah, that’s worse than big-boy pants today. Well, it’s a good thing we’re talking about it because it actually is very relevant for what we do. Screenwriters are in a constant state of employment-seeking. We write movies. Movies are expensive to make, still, no matter what anybody tells you, and even more expensive to market.

So we are relying on people to pay us and to support the films that we want to write. If we’re going to do that, if we’re going to dance that dance, it’s probably a good idea for us to understand how the business works from their end, because it directly impacts us.

**John:** Yeah. Well, one of the most fundamental things I think we have to understand about how film economics works is that every movie is considered its own company. It’s considered its own venture. So The Hangover 2, it was set up as its own company to produce a movie called The Hangover 2. All the accounting for The Hangover 2 exists within this bubble for this one movie.

So they will charge any possible expense against this movie for The Hangover 2, and the money that comes in will eventually get a portion to it. The same for The Help. The same for every different movie. On independent films, like The Nines, there’s a little bit more transparency because you’re seeing exactly what money is spent and what money is coming in.

On bigger movies it becomes more complicated, because there’s just so much money coming in and going out. But ultimately they’re set up the same way, which is that each film is its own venture and has its own accounting for profit and loss. Almost no movie is going to show a profit because of the things we’re going to talk about today.

**Craig:** Yeah, they’re certainly not going to show a net profit as defined by the studios. Look. It’s all tautological, and a net profit is what they define net profit as. There are certain facts that don’t change, and the facts are some things cost money and some things make money. Obviously, movies tend to make money. That’s why these businesses continue.

These studios, regardless of the fact that the ownership has changed hands over the years, most of them have been around for decades and decades. They are among the older businesses in the country. So obviously, movies make money. How they define making money, the rest of it, that’s the accounting stuff. So there are two ways we can approach this, which is, “How do movies actually make money?” And then, “Why do they keep saying they don’t?”

**John:** Yeah. So let’s break it into two different categories. There’s the money that you spend and the money that comes in. So first let’s talk through all the stuff that’s about the money that you’re spending in order to make a movie and market a movie. After we’ve made the movie, then we’ll start talking about the money coming back in from people buying tickets and buying DVDs.

So let’s first just talk about the money that we’re spending. The first thing if you’re going to approach making a movie is you have to buy the rights to something.

**Craig:** Oop! You’re already too late in the timeline. There’s something before that. The very first thing that will eventually be considered an expense of your movie are the salaries of the people at the studio.

**John:** The overhead.

**Craig:** Yup, overhead. Just business. Cost of business.

**John:** Generally, a 10 percent overhead is charged against a movie, although it can change based on the terms in people’s contracts.

**Craig:** Right.

**John:** So yes, there are preexisting costs called “overhead,” which are going to be a percentage of the total budget of the movie. As you start to approach making this one individual movie, the first thing you’re going to do is get the rights to something, or you’re going to buy a script that will become the underlying source for something.

So if you are making The Help, for example, you are going to buy the rights to Kathryn Stockett’s book I think. I hope I get her name right. So you have to buy the rights to her book. You need to hire a writer to adapt the book, which in this case is Tate Taylor.

Those are your first line out of expenses that you’re talking about for your movie. So however many, if it’s $100,000 you bought her book for, if it’s $100,000 you paid for the script, those are your first expenses that you’re running down.

Shortly after that, you have a director who you’re hiring on to direct this movie. You have the producers who are going to be producing this movie. A whole other podcast can be about producers and what good producers do and what terrible producers do, and why people get producer credits who probably shouldn’t get producer credits. But there will be producers, and those people are accounted for at this point, too.

You have actors. You have talented actors like Viola Davis and Octavia Spencer and everyone else who’s in that movie. Those are additional salaries that you’re paying for in this initial part of the process. Everyone whose salaries I’ve mentioned so far, those are considered above the line. So studio budgets for movies have what’s called “above the line” and “below the line.”

Above the line is the rights to the material, the writer, the director, producers, the actors. Is there anything else that usually gets counted above the line?

**Craig:** No, that is the above the line. The phrase comes from the fact that there’s an actual line, because the notion is “above the line” is the material and the “talent.” Then “below the line” is the crew and the physical expense of making a movie.

**John:** Yeah, and so really talented people are below the line. So you’ve got costume designers below the line. Your cinematographers are below the line. Your editors are below the line. But they’re not considered that above the line talent. Where it could become helpful to discuss the difference between above the line and below the line is certain kinds of movies will be very expensive above the line and very inexpensive below the line.

For example, when they were making those really high-concept Jim Carrey comedies, those were a classic example of “You’re paying Jim Carrey $20 million, but your whole budget in the movie is maybe $40 million.”

**Craig:** That’s exactly right.

**John:** It’s a huge chunk of the budget. Increasingly, I would say that I don’t see that split quite as much because it tends to be like you’re paying somebody a ton of money and then you’re also making an incredibly expensive movie beyond that.

**Craig:** Yeah, or in the case of a movie where it’s a smaller film but you want a big star, they get creative with paying the star out of the real profits of the movie as opposed to guaranteeing them a massive payment up front.

**John:** Exactly, but above the line is all those billboard names plus all the actors, the writer, director, producers. Below the line, everybody who’s physically responsible for making the movie, so their salaries plus the actual expenses of shooting the movie, taking the movie through post, color correction. Everything that leads up to “Here is the finished movie that we can deliver and show to the world.”

So when you add together the above the line and the below the line, you have what’s called the “negative cost,” which is confusing because it sounds like it’s a minus number. It’s not. Negative cost literally refers to the cost to get you to the film negative that you are going from there be able to generate all the prints that you’re sending out to the world and releasing theatrically.

So when you see in a Variety story, like “this movie had an estimated negative cost of $80 million,” they’re referring to that’s how much they spent to get the movie finished.

One weird thing that didn’t occur to me until I started really getting profit statements on movies that I’ve worked on is you think the negative cost is just done at a certain point. Like “Okay, we delivered the movie. So the negative cost won’t go any higher than that.” But it still does, because they still find new things to charge against the movie years down the road.

**Craig:** That’s right; that’s right. Yeah, the accounting becomes amazing. Truly amazing.

**John:** So after buying the rights to material, hiring writers, hiring a director, hiring actors, hiring a crew, you went and shot the movie. You took the movie through post. You’ve delivered the movie to a studio. Now is the time to spend the money to market the movie and to create the actual physical prints that will go out to the world. So that’s called P & A, or prints and advertising.

Back when I was in the Stark Program, they would have us budget $2,000 per print for releasing theatrically. So literally it’s a 35-millimeter print that you are having Technicolor or Deluxe make and then ship to the theater and stick in the projector and show to the world. I don’t really know what the correct accounting is for a print now, especially if it’s digital, but there still can be a fee charged for every print to every theater.

**Craig:** There’s a cost. Yeah, there’s a cost involved in just making the prints, and they still make a ton of physical prints for movies. I think probably most movies are still physically projected. That part of the process also includes, I believe, dubbing and subtitling for foreign territories.

**John:** Yeah, and it seems like a weird thing, “Oh, well, $2,000.” Like $2,000 isn’t really that much compared to the budgets of these movies. But if you’re releasing on 3,000 screens simultaneously, that’s $6 million you just spent to make the physical prints.

**Craig:** Yeah. No, it’s definitely real money for sure.

**John:** It’s real money.

**Craig:** The “A” in P & A is the killer though. [laughs]

**John:** Yeah, so “A” is all the advertising. When you think about advertising, your first instinct is naturally going to TV, which I’m sure is still the bulk of what people are spending for…

**Craig:** For sure, yeah.

**John:** …marketing. So it’s every 30-second spot, every Super Bowl spot you’re buying for $1 million for that one launch thing. So that’s the easy money to think about for P & A. For independent films, you may never have a TV commercial, but you’re still spending on advertising because it gets down to the little banner ads you buy on websites.

You’re paying co-op money to the theater owners for the little listing in the newspaper that says, “Now playing at this…” and “Here are the show times.” You have to pay for every one of those little things. You’d assume that, “Oh, well, that expense would just go to the theater owners.” It doesn’t. You actually are paying for those newspaper ads in the free weekly newspaper.

**Craig:** Yeah. Theater owners don’t spend anything to advertise any particular movie. That is entirely on the studio. So every television ad, every bus side, every billboard, every radio spot, every promotional contest, stuff online, events, the premier. [laughs]

Everything, even the cost of sending the stars to New York to be on Letterman or wherever they go, all of that stuff ultimately comes under publicity and advertising. It’s all folded in as part of this massive expense. Increasingly, that number is starting to rival the budgets of some movies and in some cases actually more than budget.

**John:** Oh, yes. In some cases it’s far exceeding the actual budget of the movie.

**Craig:** Yeah, and that’s the thing that changed the most. I started in marketing in the early nineties, and that’s the biggest change to me in this business if I can look at one thing. It’s not so much that they’re making fewer movies. I actually think they’re making fewer movies because of this thing. This thing is that it costs so much more now to attract people to a movie because our attention is so divided now.

It’s not that we don’t like going to movies. It’s that we have less time in the day to notice what movies are coming out, so they have to bombard us and blanket and publicize movies in a way that they did not have to do before. That is enormously expensive.

Because of that expense, they then have to ask in a way they used to ask, but now it’s become almost an essential question, “Should we even make this movie?” If the movie costs $40 million, but it costs $60 million to sell it, what is the more important question? “Is this movie good?” Or, “Can we sell it?” Obviously the answer is, by $20 million to them, “Can we sell it?”

**John:** Yeah. So, it’s important to understand that there is a budget for the advertising and for what all the marketing is going to be for the movie. That is not part of the same budget for the movie itself.

So the line producer isn’t looking at the marketing budget for the movie. The line producer is looking at how much money he has to get this movie physically shot and delivered. The marketing budget is handled by completely different people. A good producer has his or her hands on both the production budget and the marketing budget and has a strong say in both of those. But it is beyond even the director’s control how much money is there and how it’s going to be spent.

**Craig:** Yeah, and the marketing budget is also elastic to a point. The budget for a movie is negotiated between the filmmakers, the producer, and the studio, based on the script and based on the cast and based on the expectations of what this movie could eventually bring back in income.

But the marketing budget expands and contracts based on the end result. They can look at a movie and say, “This is a dog. We’re dumping it. We’re not going to spend that much.” Or they can say, “This is great. We are tripling your marketing budget.”

I know that on the first Hangover, I think they saw the initial cut of the movie and went, “Alright, let’s spend way more than we spent on the movie to sell this, because it’s a hit.”

**John:** Yeah, that’s going to be the case. Another good example would be the Saw movies or any of the low-budget horror movies. They look at one of those and it’s like, “Oh, there actually is great potential here.” So they’re going to spend ten times their shooting budget on advertising because they feel like they can make their money back out of it.

**Craig:** For sure.

**John:** Other things that get included in the overall cost of making the movie: We have the negative cost. Negative cost would also fold in interest. So basically, in order to have the money to make something, you are taking out a loan. Now usually, you’re actually taking out a loan from the studio itself, but they are charging you interest. So, in a way, it is the studio paying itself, is how it goes.

**Craig:** And insurance.

**John:** And insurance, overhead. Insurance is both the policy for in case a stuntman dies, but it’s also insurance to make sure that the film can get completed if there are other catastrophes. Because the last thing you want to have happen is you get 80% done with the movie, and then you can’t actually finish the movie. A movie that can’t be finished or can’t be delivered is… It’s a horrible situation, because you have burned all this money and you have no way of getting the money back out.

So you buy insurance and a bond, a completion bond, to make sure that you will be able to finish shooting the movie. In some cases it does kick in. A star dies. When River Phoenix died during that Dark Water or whatever that movie was —

**Craig:** Right.

**John:** — That became an insurance claim because you have to figure out what you’re going to do with that movie.

**Craig:** Every movie, at some point or another, has an insurance claim. I went down Monday when I was directing, because I had bronchitis. The doctor literally pulled the plug on me and sent me home. That is an insurance day. Every day costs money. People showed up. They cooked food. They built props. They were waiting around. That’s money.

**John:** Yeah. On Go, we had an insurance claim for a camera malfunction – basically had negative flashing and we had to go back and reshoot. So that was two days of reshooting, where we had to really press our case for, “We have to reshoot these things. There is no technical solution for this. We actually have to go back and reshoot.” That does happen on a lot of shows.

While it is not an expense that you have while you are shooting the movie, what is ultimately charged against the overall cost of making the movie will be things you’re paying out to first dollar gross players and residuals. Those are going to be costs that will be charged against the movie ultimately.

There are other things that are siphoning money off from the film, which, for screenwriters, is good, because residuals are a very good thing. Residuals will kick in even though the movie will never, itself, become profitable.

**Craig:** Right. Residuals are based on gross receipts. The other major expense that every movie incurs, and this is the fun one, is the distribution fee. A studio does not distribute. The studio that makes a movie does not distribute the movie. They own a company that distributes the movie.

So every Disney film is not distributed by Disney. It is distributed by the Buena Vista Pictures Distribution Company. What is a distribution company? It’s a bunch of people in the same building, employed by the same people, who work with the theaters to place movies.

Distribution is an incredibly important thing because big studios tend to be able to get any movie into a theater, into lots of screens if they so desire, because they trade on the movies that the theater owners know are going to be big hits.

So, “I have Pirates of the Caribbean coming down the line for Christmas. You need to take this movie now and put it in your theater or I’m not going to give you Pirates of the Caribbean.” “Okay, I’ll take it.” So there is a real value to the distribution company. They obviously do a lot of work.

But, in the end, here is the deal: This is one of the areas where the studios pull a fast one on us. They basically say, “It costs $30 million. Our distribution company charged us $30 million to distribute this film.” Well, what that means is that they moved $30 million from their left pocket into their right pocket. It’s the same company. They’re charging themselves money and then telling you that it is an expense.

**John:** Yeah, there are exceptions to that. When George Lucas hires 20th Century Fox to release the new Star Wars movies, it really is a separate company kind of releasing it. But in most cases it is exactly the same people who made the movie that are the people who release the movie.

**Craig:** That’s right.

**John:** It would be useful to step back and take a look at the three big players of how movies are made and released. You have the production company, the people who basically make movies. You have the distribution company, who take movies that have been shot and distribute them to the people who can show them. You have the exhibitors, who are the people who actually are physically showing them, who are the theater owners.

**Craig:** Right.

**John:** Once upon a time, those were all the same people. That was vertical integration. So, 20th Century Fox would make a movie, distribute a movie and show it in its own theaters. I forget the name of the classic lawsuit that broke up that model.

**Craig:** I can’t remember it either.

**John:** It’s like Taft-Hartley. But it’s not Taft-Hartley.

**Craig:** Yeah.

**John:** We’ll put that in the show notes, but the studios are not allowed to own movie theaters anymore. So Pacific Theaters or AMC Theaters have to be their own separate companies. The distributors, which are really the studios, negotiate with the different theater owners to figure out who is going to play what movie and how that is all going to work.

**Craig:** Right. The theater owners basically – the way the studios make money off of movies is the theater owners pay them a rental charge, because they are renting the print from the studio. Obviously, they don’t own it. So they pay them a flat rental fee. Then, of course, they give them a percentage of the box office receipts.

**John:** Yeah. Let’s — I’m going to just put a boldface header here. This is the second section of what we’re talking about. So we’ve talked about all the money that goes out. Now, we’re starting to talk about the money that comes back in.

**Craig:** Right.

**John:** This is how people make money on making movies. It’s by showing them in theaters and showing them on TV and everything else. So with theaters, we are negotiating with AMC or Loews or one of these places. We are agreeing to basically split the box office with the theater owners.

**Craig:** Well, to some extent.

**John:** Yeah, to some extent. Generally, in negotiating with theater owners about which theater we are going to show them in and which screens we are going to have, it’s an ongoing conversation. But you are trying to get into the right houses at the right size.

You say, “Okay, opening weekend we will make a 90/10 split and we’ll pay you a certain amount per theater.” There’s like a – each theater has a house nut. So, “This is how much we are going to pay you for the right to show our movie in your theater.” Does that make sense?

**Craig:** Yeah.

**John:** I’m putting that kind of poorly.

**Craig:** Basically, here is the deal. It’s all a negotiation. If I’ve got a movie — let’s use Harry Potter. Everybody wants Harry Potter. It’s a guaranteed hit. There’s no chance it bombs.

So Warner Brothers says to a theater, and typically a theater chain, a very large chain, “We will give you Harry Potter at this level, but that’s a favor from us to you, because we could give it to your competitor across the street. We’re giving it to you in return for the first weekend,” which is where the big bulk of money is made.

Often times, a third of the entire box office run is made that first weekend. “We’ll make sure that you don’t lose money showing it, and maybe we will give you a little piece of the box office, but the bulk of it comes to us.”

As weekends progress, that split trends more towards a 50/50 kind of thing. And it’s because every movie is different, it’s hard to say ultimately, “What do theaters keep from box office?” because everybody says – they look at box office reports and they say, “Wow, Harry Potter made $400 million in the U.S. That means Warner Brothers made $400 million.” No. The theaters keep a lot of that. Someone once told me it’s sort of like a 60/40 thing.

**John:** Yeah. If you average out all the weekends and how it all flows.

**Craig:** Yeah, 60 is to the studios, and 40 is to the theaters.

**John:** But another truism you will see cited is that the theaters make more money off of concession sales than they do off of ticket sales, which doesn’t seem to make sense at all. Because if you buy a ticket for $11, not everyone is spending $11 on candy and popcorn.

Whether that statistic is true or not, the thinking behind that is that the theater owners keep all the concession money for themselves. They are not splitting any of that money back with the studios who are making the movies.

**Craig:** Exactly. Yeah. The theater owners are constantly… there is a war going on. I don’t know if people understand this. There is an endless struggle between exhibitors and studios. Obviously, they need each other, but they have cross purposes.

Theaters, obviously, want to make as much as they can. The studios want to make as much as they can. So the studios tend to win the whole box office battle. The theaters, in order to make their money back and to be profitable, obviously, they want to constantly raise ticket prices, which the studios constantly fight against them doing, because studios want more people showing up.

The theater owners obviously keep increasing prices on concessions. The big one that the studios hate is the theater owners run advertising, which pisses audience members off. Then, in return, what the theater owners hate is that the studios, in order to generate more money for themselves, want to shrink the time between the time that the movie is in the theater and the time that you can buy it on DVD.

As piracy spreads, studios are panicked that no one is going to go to the theater or, if they go, they won’t buy the DVD because they can get it that night on Bit Torrent or something. The theater owners hate that, because it means that the theater experience is being cheapened and isn’t as special. It’s this endless war.

Then, one last thing: Another big war is technology. Studios want theaters to have excellent projection. They want them to have 3D. They want them to have better sound, digital delivery. The theater owners are saying, “Great, but that’s entirely our burden. That’s a capital expense on our end and it costs you nothing, so help us.”

**John:** And, to some degree, studios are hamstrung to directly invest in the theaters, because they’re not supposed to be owning theaters.

**Craig:** Right.

**John:** Yeah. So it would behoove everyone if everyone had better projectors. It would be best for people who are going to see movies. It would be best for distributors, because that way they don’t have to make as many prints and they can digitally deliver prints and they love that.

It’s better for the theater owners ultimately, because there is less physical stuff for them to have to handle and they can get by with fewer projectionists. There are reasons why it is good for everybody. It’s just that switching over to a new projection system is really expensive.

**Craig:** Right.

**John:** So that’s why when they build new theaters, they tend to have nicer projectors and everything is more digital. In the older theaters, it’s hard to justify converting them.

**Craig:** Yeah.

**John:** But it comes down to even things that seem really cheap. There was a fight recently over 3D glasses and who should be responsible for providing 3D glasses. Should it be the theater owners or should it be the people who are producing the movie? It can be a very low margin business, so the cost of those $0.50 glasses can add up.

**Craig:** Yeah, for sure. No, it’s an interesting study in forced partnership. I mean, it’s economic. I’m sure they teach it in some sort of class.

**John:** The only statistics that you are likely to be able to find out about how a movie is doing is by box office. So we talk about domestic box office or worldwide box office, and so it’s important to remember that box office is really a function of how many tickets were sold and at what prices.

That’s the public figure that’s actually ever disclosed for a given movie. Privately, that’s not what really matters to studios. Studios are looking at what is called film rentals, which is, “How much of the money from the theaters is coming back to their pockets?”

**Craig:** Right.

**John:** That’s what is letting them know which movies are successful for them or not successful for them. Those film rentals that are coming back to 20th Century Fox or to Warner Brothers. That’s where they take off their distribution fee. I think 35 percent is the standard distribution fee now?

**Craig:** Yeah. Yeah.

**John:** So 35 percent of whatever is coming back to Fox, they are saying, “35 percent of that is going to the 20th Century Fox distribution arm,” and is not counted towards the actual, individual movie.

**Craig:** Which is, sort of, on its face, kind of dumb. The fact that it’s even a percentage is counter-logical.

**John:** Exactly. If it really was a cost, then add up the cost and charge that cost to the whole movie, rather than making it a percentage.

**Craig:** Yeah. No, it’s a scam. [laughs] It’s a total scam.

**John:** Yeah. So, agreed there are issues that you can take with studio accounting, its complexity, its…

**Craig:** Its scamminess.

**John:** Its scamminess.

**Craig:** Yeah.

**John:** The distribution fee is certainly one of the biggest ones. I would say distribution fee, interest and overhead are all easy targets for it and that when you really dig in, if you have to go through an audit on a given movie, you find that there are a ton of expenses that are thrown against a movie that may not really be legitimate expenses.

**Craig:** Correct. Correct.

**John:** Yeah. For example, if you are lucky enough to have a movie that is considered for an Academy Award campaign, every possible expense that they could think about to throw – in terms of trying to win you an Oscar — will get thrown against the movie. So every party, every screening, every possible thing will get charged to your movie. That’s going to be a tremendous amount of money.

**Craig:** By the way, those are actual expenses. I don’t mind those. [laughs] It’s the ghost expenses that make me nuts, but what are you going to do?

**John:** Yeah, but when you say, “Where do the expenses stop?” Should you be charging the studio executive’s hairstylist against the Oscar campaign?

**Craig:** Well, it depends on the hair.

**John:** Yeah, if it’s great hair.

**Craig:** Right.

**John:** If it wins the Oscar, then it’s worth every penny.

**Craig:** Right. Exactly.

**John:** Right now we have been talking about the theatrical experience, which is clearly the first step for most of these movies. But, a lot of movies are going to be making more of their money on home videos. That used to be videotapes. Then it was DVDs. Now, it’s iTunes and all of the other places that people can get movies legitimately and see them on their flat screens of some kind. Pay cable. Free cable. Broadcast television.

And an important thing to understand about when you start making television deals for things is that a lot of times ABC is not buying your movie. They’re actually buying a package of movies. They’re buying five different movies from Sony for $40 million and they’re buying the rights to show those movies several times.

Where that becomes troubling is, if Charlie’s Angels is one of those movies — there are five movies let’s say — so Charlie’s Angels is one of those movies and the other four movies are four movies you’ve never heard of, and you would never, ever want to see, they will try to account for those equally. They will just divide the $40 million among those movies and Charlie’s Angels will not show the profit that you think it should show.

**Craig:** Shenanigans. More shenanigans.

**John:** Yeah, just shenanigans. So when you start to have audit fights or have issues, that’s the kind of thing that comes up often, how they are apportioning things.

**Craig:** That’s what they do. Also, airlines are a big source of revenue for the companies. Hotel rooms — Lodge Net and all that stuff. There is a ton of money in that ancillary market, the afterlife. What is interesting about the aftermarket is, unlike the expense of releasing a movie theatrically, where you are making those expensive prints and delivering them and pouring a ton of marketing in, the ancillary stuff is really profit magic for the companies, or has traditionally been.

The movie is done. It’s got awareness. Hopefully, it was a hit. If so, you are literally just, in the case of iTunes, pressing a button and getting paid and doing nothing else. Someone who ran the studio one said to me that the best way to make money in the movie business is to own a library of movies and to not make movies.

Libraries kick off money every year, every title, without fail, with very little expense, very little cost associated with that. So as the VHS and DVD market boomed, you could see the movie business expanding to just chuck as many movies out there, because there was just this pot of gold at the end of almost every rainbow.

Even if the movie was a disaster, theatrically, somehow it always seemed to make money overseas and here through DVD and home video. Less and less the case now. That is another reason why the movie business has contracted a bit.

**John:** When you see studios freaking out about piracy, this is why they are freaking out about piracy. A tremendous amount of their income was coming from those things down the road. So that guy who was videotaping the movie in the theater is costing them, in their perception, sales of DVDs or iTunes sales or legitimate sales down the road, and they can’t ever possibly make those back.

It’s also crucial for screenwriters who are hoping to make more movies. We only get residuals on those things down the road. We don’t get any residuals on the first theatrical run of a film. Residuals are things that get paid to us from all of those other little bits, the airplane runs and the DVDs.

**Craig:** Not airplanes, actually.

**John:** Airplanes is first, isn’t it?

**Craig:** They count airplane as part of the theatrical release. I don’t know why. But you’re right, everything else in the release of it is where our residual base comes. Frankly, that’s where the profit in the movie business is. If you were to say today, that by fiat, the movie business could only make money by showing movies in theaters, I think, honestly, that every studio would just shut down.

**John:** Pack up and go home.

**Craig:** Yeah, because they cannot make the economics work. Making movies has become extraordinarily expensive. It’s a little counter-intuitive, because you think, “These cameras are getting cheaper and it’s so much easier to deliver content.”

But the other truism is that we have come to expect a certain level of spectacle with movies that is enormously expensive to achieve. Even when you find interesting filmmakers out there doing it on the cheap, it’s still, overall the rule of thumb is that, if you’re going to deliver a big, huge action movie, you need to spend money or it’s just not going to look like a big, huge action movie.

At least, that’s the studio calculation. So they need DVDs and video. They also need DVDs and video tapes to pay for the bombs because there are bombs. When you make a movie for $40 million and it loses $20 million, that is a big hit.

**John:** Yeah, they want to create a portfolio of movies, so that the hits will even out with the misses. Obviously, whenever somebody new comes to Hollywood, whenever new money comes to Hollywood, they, very smartly, say, “We’re only going to make the successful movies and we’re not going to make the bombs.”

The truth is that you don’t know which movies are going to be successes and bombs. So you try to plan carefully for what those will be. The challenge, I think, in our current situation is that the movies that are successful tend to be the incredibly, incredibly expensive movies. So we’re only making those incredibly expensive movies and we’re not making more of these mid-range things. We’re not making very many of The Help, and The Help is a godsend if that is your movie.

**Craig:** It’s very profitable. Then you look at movies, comedies in particular, I think, are extraordinarily profitable. Obviously, The Hangover, Bridesmaids, Horrible Bosses are movies that don’t cost a ton. That’s why comedy, I think, will always be a staple.

It’s not because people like them. Obviously, they do, but they like lots of movies. Horror movies and comedies tend to not require a ton of cash to make, but they can be just as successful or popular as action films are.

**John:** Yeah, because they don’t have to be home runs. You can hit doubles and triples and make a tremendous amount of money. I should back up and say, when I say, “Oh, they’re tremendously profitable,” again, we’re not talking that on the accounting of each individual film that they’re profitable, because they won’t be.

**Craig:** None of them are.

**John:** None of the movies, I think, that we have talked about today are going to show a profit on their actual, individual statements. But they are profitable for the people who made them, because they got to charge that 35 percent distribution fee. They charged their overhead against them. They charged everything they possibly could against them and they have a nice chunk of change because of that.

**Craig:** Yeah. Look, they run these models. That’s a word you hear all the time now. They model the budget based on what they think the movie will do theatrically and what that, then, implies the movie will do on video and OnDemand and iTunes.

They know before they roll a foot of film what they think the movie is going to make. Usually, they are right. They usually have a pretty good sense of it. But — I lost my train of thought.

**John:** It’s okay, because a bus just showed up.

**Craig:** Oh, a bus showed up.

**John:** People who are listening on good headphones may notice that Craig works at a bus stop.

**Craig:** Yeah.

**John:** You have to have more than one line of work if you are a screenwriter these days. You have to have many irons in the fire.

**Craig:** Got to stay in touch with the people. Do you know what I mean, John?

**John:** Yeah. So, he gets his best stories working as a shoe shiner. I think it’s good that you are keeping your working-class roots going there.

**Craig:** Yeah. Really, you can smell the urine in the air. I love this bus stop.

**John:** [laughs] Craig, thank you so much for a good and lengthy discussion on how the film economics work. I hope we all learned something today.

**Craig:** God, I hope we have. I sure do.

**John:** One of the things that I actually thought about this as the intro to how we were going to talk about this today, is, as I mentioned before, I am working on Big Fish, the musical. Broadway has a whole different economic model behind it in how it all works.

I am just now starting to learn it and it’s just bizarre. So we are at the stage now where we invite really, really rich people in to listen to the show and they write big checks to invest in the show, hoping that it is a huge success.

But, I honestly can’t say I understand exactly how they would get paid out in success, or God willing success, or why it’s a good idea for them to do that. Obviously, hopefully they want to support great art. But there is actually a profit and a business model and I can’t say I fully understand it yet.

**Craig:** This is one of the ways that I am a creative person. I don’t mind money. I like money, but I don’t understand it, to be honest with you. I don’t understand the ins and outs of it. Frankly, it doesn’t inspire me to talk about finance. I don’t really get it.

So, the people who do get it, I think, they do just much better than we do, because they really understand how it works. To me, it’s just a check. I don’t know.

**John:** One last thing we should slip in here is merchandising. There’s not going to be a perfect answer for this. But if you are making a movie that has toys — let’s say you made a little movie called Star Wars — toys are going to be an incredibly important part of how you are making a tremendous amount of money.

Some of the money from merchandising will be counted towards your movie and some of it won’t — which is a way of saying that those little, small things in your contract that seem like you’ll figure that out whenever they kick in, can become very, very important. So the degree to which all the ancillary toys and such become part of the accounting of your movie is really dependent on how good your lawyers were.

**Craig:** Yeah. You know guys, the deal is if a movie fails it doesn’t really matter what was in your contract. But in success, you and the people that owe you money will go hand-to-hand combat for a while. You see it in TV. When TV shows get syndicated and 20th Century Television sells the show to FX and it’s all the same, it gets so complicated. An industry of lawyers and people deal with it.

For those of us who write, I think the most important thing is to just be cognizant of how these guys make their decisions. So when it comes time to write your script, just know if you write a period piece that is a very adult drama, the studio is going to look at it and go, “Well, I see a whole bunch of budget costs that wouldn’t be in a horror movie.” Just be aware that it’s a little bit of an uphill battle. Just know how they think.

**John:** Yeah. So Craig, they’ve already come back to you. Hangover 3 is going to be PG-13 and there are going to be a lot of toys. Is that correct?

**Craig:** Hangover 3 will be rated R. [laughs] But there may be toys.

**John:** Toys are great. We love toys.

**Craig:** Love toys.

**John:** And we love talking about movies. So, thank you again, Craig, for another great podcast.

**Craig:** Thank you, John.

**John:** We’ll talk soon.

**Craig:** Bye.

The followup post to this episode can be found [here](http://johnaugust.com/2011/more-on-movie-money)