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…my name is…my name is Craig Mazin.

John: And this is Episode 315 of Scriptnotes, a podcast about screenwriting and things that are interesting to screenwriters.

Today on the program, we’ll be taking a look at how the movie business makes money on the big screen. And two plans to disrupt the status quo. We’re also going to be answering listener questions about creative rights and producer promises.

Craig: OK. [laughs]

John: But first, we have another event coming up here, which is not a Scriptnotes event, but is a Writers Guild Foundation event. It is a poker tournament, which Craig competed in last year. Craig, are you competing in the WGF poker tournament this year?

Craig: I’m not sure. I’m going to endeavor to do so, but it’s a little shaky one way or the other. But it’s a very good event. A lot of big fancy writers are there. A lot of regular, average, cool people are there. New writers are there. And I assume it’s for the benefit of the same program it was last year, which was the Veterans’ Writing Program.

John: Absolutely. So it’s to benefit the great work that the Writers Guild Foundation does. It is on October 20. It’s a Friday. It’s a $250 buy in. That gets you the chips and lets you compete against other screenwriters who may or may not be talented in poker, but are certainly talented at the craft of screenwriting. So if that is appealing to you, there’s a link in the show notes for that. So, another good WGF event to attend.

Now, Craig, last week we talked about Unforgiven. It was a popular episode. People seemed to really dig it.

Craig: Well, it makes sense because I’m not patting myself or you on the back here, it’s a great, great movie. And I generally have this theory that even though the massive majority of commentary on the Internet about films and television is negative, snarky, and mean. What people actually want when you get down to it is positivity. They don’t want bland, vapid positivity. Golly gee, I sure did like that movie. They want passion. It is so much more interesting, I think, for people to listen to anyone — not just you or me — anyone talk about something they love and talk about why.

So, maybe there’s a lesson in this for the purveyors of snarky slop.

John: I wonder if some of the fandom theory mongering that happens, basically like oh, this is how all these movies are really connected or this is the secrets you did not notice about this movie is an attempt to sort of create positivity. Like it’s an attempt to talk about movies that people genuinely love and because there’s this fear of like well why would I write that this movie is really good because everybody knows that movie is really good? So, sometimes I wonder if people are generating sort of controversies around movies just so they can have something to talk about and not feel pointless.

Craig: Well, that may be true. It may also be true that they simply have impoverished imaginations or a poor ability to understand why they actually like something. And so they don’t know how to express it. I mean, any idiot can yell at a movie. It requires no neural wattage, as far as I can understand. But the best people who write about films are the ones that write lovingly and in detail and insightfully. And it’s fun to read those things. It’s so much more rewarding to read those things than anything else because they bring you to a new movie, or they have you reconsider something that maybe you didn’t quite like before. So, I’m hopeful that maybe a few more people out there might start to do things like this.

John: It would be great. And so we will try to do another one of those deep dives on a movie before it’s another year. We always sort of promise we’re going to do one and we never do one. But let’s try to promise to do one in the next six months. How is that?

Craig: I hereby do vow. And you get to pick the next one.

John: I will pick it.

Craig: So again, people can either watch Tuff Turf now. They could read the script now. They could wait and watch Tuff Turf right before the episode if they want to get refreshed on Tuff Turf.

John: Yeah. I think it’s always a good choice to read Tuff Turf, but I will promise you that that will not be the movie that I pick.

Craig: God. I guess I’m going to read Tuff Turf for the 20,000th time.

John: You have to make those choices.

Craig: I was just talking about being positive and here I am, I’m pooping on Tuff Turf. I have never seen Tuff Turf. I just like the title.

John: I barely know what Tuff Turf is. I assume Tuff Turf is a football movie?

Craig: No. No.

John: I was wrong then.

Craig: The turf is like sort of gang turf, as far as I can tell. And obviously it’s tough. So, I don’t know actually what happens in Tuff Turf. And I don’t really know what it’s about to be honest with you. I think my turf thing is correct, but I’m not sure.

John: Well, if Pixar were to make Tuff Turf it would be about the brave glades of grass who have to fend off invaders. And it’s literally about the grass itself being tough. And like is the grass tough enough? And like one blade of grass would have to take a great journey in order to learn how to fight back against the lawnmower.

Craig: Yeah. And maybe the lesson in the end, true Pixar style, is being tough is a trap. It’s just a trap, you know?

John: I mean, the blade of grass has to learn how to be more emotionally connected to its fellow blades of grass, because they are all in this together.

Craig: They have to accept the best of what they are and understand that this is how it is. And that one day new sod will be there.

John: So whether it’s the Tuff Turf from the 1970s or the Tuff Turf of 2017, the common thread behind them is that at some point they’re going to be huge blockbusters on the big screen.

Craig: Segue Man! Tuff Turf, by the way, was I think the ’80s, not the ’70s. I don’t think the ’70s could have possibly produced Tuff Turf.

John: The Warriors was also the ’80s, was it not?

Craig: The Warriors I believe was late ’70s. Let me check. Because it seems like in my mind it was right on the edge of the decade turn.

John: This will be the episode that never actually starts.

Craig: Well, I’m good with that. I mean, listen, I think people don’t — 1979. Nailed it.

John: All right.

Craig: I don’t think people want us to actually start.

John: No. They want us to talk about Tuff Turf and like how little we know about it. So, I know it’s Warriors Come out and Play. That’s basically all I know. And that there’s baseball bats and they’re on a subway train.

Craig: Yeah. I remember Warriors was a movie that every single kid in my school was talking about. And I was not allowed to see it. So I was confused. I felt isolated. The problem for me is, so I was eight years old. We’re talking about third graders, I guess, at that point. And third graders are the worst at explaining movies. So, my understanding of the Warriors for the longest time was as it was conveyed through third graders, which is mostly just, “And then, and then, and then.”

John: Absolutely. Everything is episodic because that’s the way that kids describe these things. I was also really confused by Kiss at the time. And I bring up Kiss because I perceive that in Warriors there’s makeup and there’s disguises and faces and masks and things. And I didn’t understand whether Kiss was serious or a joke about rock. And I just didn’t understand Kiss at all in my youth.

Craig: I’m with you, actually. There were two bands when I was growing up in the ’70s that puzzled me. One was Kiss and one was The Grateful Dead. For the same reasons. Because I looked at Kiss and they seemed very serious to me, especially because of the blood. So Gene Simmons would bite a thing and then blood would come out of his mouth. And so I’m pretty sure they took it seriously. And my friends would collect Kiss cards. They had Kiss trading cards. And they were really serious about those. But then I heard the music and I’m like this is just pretty much bland pop rock. I know the Kiss army is now coming after me. But I want to rock and roll all night…that’s just sort of a boppy little rock tune.

John: Yeah. It feels good.

Craig: It’s just a pop song. And so I was so confused by that. And the other one was The Grateful Dead, because their name was The Grateful Dead and there were skeletons and skulls all over their stuff. And I finally listened to them and I’m like this is not the Swedish death metal that I was expecting at all.

John: Not whatsoever. I think the first Grateful Dead song I was really aware of was Touch of Grey, which is of course not indicative of their whole what they were sort of doing.

Craig: No.

John: But that’s the first song I heard. And like well that’s just almost a folk song.

Craig: Oh, no question. You were very late to the Dead. The first Grateful Dead song that I remember was Truckin’.

John: Oh yeah.

Craig: So I’m ready for The Dead. Like, OK, it’s The Grateful Dead. They are embracing their death and their skeletons and skull faces. And then Truckin’…like the Doodah Man. Truckin’. What? What is happening here?

John: Craig Mazin, what was the first live concert you saw of a big name act? Like an act you would hear on the radio?

Craig: The first concert I saw of such nature was Crosby, Still, and Nash. No Young.

John: Pre-Young. Pre-Young or post-Young?

Craig: It was post-Young. Post-Young. So I saw CSN. My first concert was Crosby, Stills, and Nash.

John: Mine was The Bangles opening for Cyndi Lauper. Or it could have been Cyndi Lauper opening for The Bangles. It’s a little unclear sort of where they were at in their respective trajectories. But it was at CU and it was kind of great. Like I still love both of them in their way. And it was my first show.

Craig: Let’s see, so you had The Bangles and you had Cyndi Lauper.

John: Yeah.

Craig: This was in 1980…?

John: When would that have been? Like 1986 I want to say.

Craig: God, I feel like The Bangles opened for Lauper.

John: Yeah, that’s got to be true because Cyndi Lauper would have already been a hit. She would have already had her True Colors and those moments.

Craig: Yeah. She wasn’t going to be opening for anybody. She’s Cyndi Goddamn Lauper.

John: Were you more Cyndi Lauper or more Madonna?

Craig: Oh, definitely more Cyndi Lauper. I did not like Madonna music — I have never liked it. I’ll be honest with you. I’ve never understood the Madonna thing at all. It has always confounded me because the songs are very pop generic, which is fine, but she herself just seemed so weirdly bland. I never got it at all. Whereas Cyndi Lauper just seemed like a genius. And so — I mean, there is no one like Cyndi Lauper. There’s never been anyone like her before her. There will not be one like her again. She’s Cyndi Lauper. And I was always — to me like Cyndi Lauper or the Eurythmics. You know, and I’m thinking about sort of synth pop ’80s bands, and I’m not even talking about like the arty ones. I’m just talking about sort of the mainstream ones. Like Annie Lennox fascinated me.

Madonna? Meh.

John: Yeah, but I think when it comes down to Madonna is you recognize the singular ambition. So, independent of talent, like you know, you take Cyndi Lauper or you take Annie Lennox, they are remarkable talents you feel like would find a way to be discovered no matter what. Madonna was good in her zone, but she was so ambitious that she was going to be successful no matter what. And I think that’s what I always sort of respected about Madonna was this desire to be at the top of everything. And that’s — it’s kind of — that’s kind of great. I love to see that.

Craig: I guess. On an individual basis, person by person, that can be very admirable. But I can’t help but feel like if that is true, a lot of people then grew up and said I’m going to be like Madonna and now we have Kim Kardashian, whose only talent is ambition apparently.

John: Yeah. That’s true. I’m not saying it was a good thing to be out there. I don’t like it in the Kim Kardashian’s. But I guess I can now understand why some people might like Kim Kardashian for being just empty ambition.

Craig: [laughs] Exactly. Well, I’m sticking with my Annie Lennox and my Cyndi Lauper.

John: That’s absolutely fine. And I will continue to enjoy my classic Madonna even as I don’t sort of celebrate the new Madonna stuff.

Craig: Yeah, OK, well you know what? I feel good about this.

John: I feel good about this. I think it was a good use of listeners’ time. Let’s get to a 101 on how the film industry works when it comes time for the big screen. So it’s a weird thing that I don’t think we’ve ever really talked about on the podcast. And it’s really strange the more you dig into it.

So, I first learned about film economics 101 back when I was in the Stark Program at USC. And it was great, but it was also kind of overwhelming. You recognized that the flow of money is really strange and different than I was sort of expecting.

So let’s talk about what exhibition is and how studios relate to it. And use that as a background to look at two new things that are happening in the industry and sort of why they are disruptive.

Let’s start with exhibitors. And so exhibitors are what we call the general term for what we call the theater chains, or actually even individual theaters. And so in the US the big chains you tend to recognize are AMC, Regal, Cinemark, Cineplex. But there’s also a lot of regional local chains. And so Pacific is really big here in Los Angeles, in Southern California. Every little city or community is going to have its own chains. And they’re important because within a region they tend to be not monopolies, but oligopolies. There’s not going to be that many theaters competing within a region because there’s just not that many people to see movies. Like you can’t have 15 different theaters within one little tiny pocket. There’s only a certain geographical range from which you can draw.

So, theaters are incredibly important for literally getting butts in seats. They own the seats that are going to be holding the butts that are watching the movies that come out on that first weekend.

Craig: That’s certainly true. Theaters are a strange business because they plop themselves down in the physical space and sell you something which is a movie plus all the popcorn and the so on, whatever you’re buying. But other than the concessions that they’re selling you, they don’t own the stuff they’re selling you. They’re kind of letting other people sell it to you through them. It’s almost like a trading post for movies really. So, it is true that you can’t plop these things down because they can’t really compete. They don’t have different products because they don’t make their own products.

They don’t sell unique products. It is, I guess, a little bit retail in that regard, but because of the way the pricing works, and we’ll get into that, you don’t have the kind of competition that you would have anywhere else. You don’t have where Target and Walmart are near each other and you say, well, I can buy this backpack at Target or I can buy it at Walmart. Let me sell, well, they’re selling slightly different backpacks and those are a little more expensive.

No, there’s one Justice League movie. Where is it going to be? That’s where I’m going. And it won’t be playing across the street from itself unless you’re in a city where you can get away with that sort of thing.

John: Yeah, in general within cities they tend to carve cities into zones. And so that a given movie will not be showing at one theater and the theater across the street. Occasionally on super huge movies they’ll break the zone, but in general a movie is playing at one place in Hollywood rather than two places in Hollywood. And that’s just how it has evolved. That’s how it has come to be.

And Craig makes a crucial point. They’re showing exactly the same movie. So, two theaters, they can only compete against each other on the intangibles or the niceties. Like ArcLight is a better experience than a crappy theater two blocks down, so I might choose to see the movie at the ArcLight. I might choose to pay a little bit more money to see the movie at the ArcLight. But that’s about it. They’re showing the same film. It’s only the stuff around the film that changes.

Craig: Yeah.

John: So let’s take a look at where they’re getting their movies. Well, from the studios. And so the big studios, we all know, it’s Disney, Warner, Fox, Universal, Sony, Paramount, and then there’s a couple other places that will bubble up from time to time. The Lions Gates. The other people who make big movies. And of course there’s independents. There’s the A24s. There’s going to be some other movies that come out there in the world. But it’s those big six studios that are controlling most of the product that is being shown in these theaters.

And so it seemed really natural that like, well, why don’t the studios just buy the theaters. Why don’t they just control the whole chain?

Craig: That’s a great idea. Why don’t they do that?

John: It would be so, so smart, and once upon a time they did.

Craig: Oh…

John: And so in 1948 there was a consent decree. It’s called the Paramount Decision. And basically it prohibited the studios from owning theaters. Up until that point, studios could control the theaters and it was ruled to be an antitrust violation. It was unfair restraint of trade because independent theaters couldn’t get access to these movies, so they broke them apart. And so you will still see some theaters called like a Paramount theater, but they are not owned by Paramount anymore.

Craig: Yeah. It was one of the early examples of what we talk about all the time now — Vertical integration. You control the entire chain of supply and in doing so you create a situation where you can manipulate prices and control the market and suppress competition unfairly.

If you had, let’s say think about your typical grocery store, if they were also making all of the food and packaging all of the food and selling you all of the food, and they controlled that entire chain of supply up and down, then they could start to undersell everybody. And it would be a problem for competition, right?

So, when the studios owned every single theater, you would as a consumer be forced to see whatever it was that they were showing. There was no chance to see something they weren’t showing. They could effectively create a system of censorship because if they all agreed they weren’t going to be showing certain kinds of movies in their own theaters, you couldn’t see them. Enter the Hays Code, I think it was called the Hays Code, right?

John: I think so.

Craig: And they also would force you to watch other stuff you might not want to watch, which is called bundling. So, Microsoft got into trouble with this one, especially in Europe. When they were selling Windows they would also sort of force you to now use Internet Explorer. This was a huge problem and it’s called bundling, where you lean on one monopoly to force people to start buying another product that isn’t necessarily required for the Monopoly to work. And now you’ve created a second Monopoly. And so Internet Explorer went from what the hell is this to the biggest browser in the world — if you can believe it, because remember that piece of crap?

John: Yep.

Craig: So, they would start bundling short films. They would start bundling their other movies together. If you want R movies, you have to — and you’re not — and we don’t own you. We still kind of own you. Because if you want any of our movies you got to buy them all now. It became a real problem. And they fought it. Man, did they fight it. They fought it all the way to the Supreme Court.

John: And they lost.

Craig: They lost.

John: So, the realities today is that the studios and the exhibitors are negotiating on a per-movie basis for which theaters are going to carry which films. And so if you look at the negotiation from both sides, the studios want the best screens. The exhibitors want the biggest movies. And so each of them is doing the calculation of like how much am I will to fight to get this movie or this screen and what is it worth to me to get that. And the terms they can be negotiating over are basically how much money are we going to split between us on this film.

Classically, the split has been on the first weekend or the first two weeks, the studio might get 90% of the money that comes back. Well, that’s not entirely true. They might split it 90/10, but with a certain fee guaranteed to the theater for that screen. That’s called the House Nut. And so that split would over the course of weeks generally equal out to be about 50/50 split between the studios and the theaters. But it’s all a negotiation. Even like the amount of that house nut would be a negotiation between the studio on that picture and the theater for that screen. So, it’s a complicated series of decisions and magnified by the fact that AMC has thousands of screens and Pacific has 30 screens. So there’s different levels of power between these two players as well.

Craig: That’s exactly right. The leverage is complicated on both sides. Obviously the larger the exhibitor, the more leverage they have. Of course, through economy of scale, their costs are lower than those of smaller theaters. So there is that to consider. And then there’s the question of the product itself.

The movie studios are still allowed to bundle, they’re just limited on how many movies they can do it with. So they can say, well look, if you want this you’re going to have to take this. So this is all part of the arrangement. I think most people don’t understand that when newspapers — ha-ha newspapers — when your online click-bait hell hole is reporting the box office for a movie, I think people assume the studio gets that. They don’t. They get, like you said, roughly half. For the amount of money that is collected in overseas arrangements, it’s even less than half. Because there are other distributors in between now that have to be paid. But when you think about it, it starts to make sense. A typical movie theater probably has, what, ten screens now? I mean, multiplexes used to be this crazy thing. Most movie theaters were one theater. One screen.

Then it became these multiplexes. Now everything is pretty much a multiplex, but your average, you know, OK, I’m going to the mall, I’m going to AMC, they’ve got — I don’t know — ten screens in there. It’s a lot of space. They’re paying rent. They have a lot of labor, still. They got to clean it. They got to maintain the equipment and the sound and all that stuff. So, there’s a certain sunk cost. And then, of course, they have to make a profit. And I think as many people suspect, the profit is probably largely from the concession stand.

John: Yeah. So whenever you see those stories saying that movie theaters make most of their money on concessions, you might think like, well, that has to be impossible. Because if a ticket costs $16, I’m not spending $16 on popcorn and a drink. But, maybe you’re spending more than $8, which is the half that the movie theater is taking from that ticket.

So, going back to Craig’s earlier point, I think that’s a really crucial thing to underline, and really for all of our listeners when they read stories about this movie cost $100 million and it made $100 million at the US box office, that does not mean it’s profitable. That the studio has taken in about $50 million if it’s made $100 million. So, it still has a good long way to go to make its money back.

The money that comes back to the studio from the movie theaters is called the Theatrical Rental, which is such a confusing word. And I really wish — I mean, I’m sure if we had a time machine we’d go back and we’d pick a different word for that because it’s confusing with rentals of video and everything else. But that money that comes back to the studio is called the rental on it. And that is an important figure for figuring out the profitability of a movie, for figuring out down the road whether a writer like me or Craig gets some percentage of profits on the film. The answer will be no. We don’t get any percentage of profits on the film.

Craig: [laughs]

John: But theoretically that’s how a movie becomes profitable is if the money coming back in to the studio is high enough. And that money coming back into the studio from the theater is called rentals.

Craig: A lot of it is done digitally now, but in the old days the studios would make a massive amount of prints and then the money was a rental fee. So, partly it was calculated by how many tickets you sold, but essentially what you’re renting is the reels of film that you’re projecting. And then you send them back.

John: So, my husband, Mike, used to run all of the movie theaters in Burbank, so he worked for AMC. And so he had 30 screens I want to say. And so I would hear all the stories of like how challenging it was to manage theaters. And you’re managing a largely teenage staff. He was still dealing with physical prints that had to be set up and spliced and sometimes you’d sync them between multiple theaters so you could actually show the same print in multiple theaters at the same time.

Craig: Oh my god.

John: It was just an incredibly exhausting job and, of course, all normal holidays are crucial times for the theater business. So those were the times you absolutely couldn’t take time off. Exhibition is a great, wonderful part of the business that we don’t talk enough about. Those people are wonderful. I think it’s good for screenwriters to understand the people who are showing our movies in the theaters, they’re not part of the studio machinery. They’re their own separate business.

Craig: By law. By law. Yeah.

John: So all the theater owners together are represented by the National Association of Theater Owners.

Craig: I love that. Because they’re NATO.

John: They’re NATO. They are NATO. We’ll put a link to the Wikipedia article for NATO in the show notes. But crucially you may have heard of CinemaCon, which used to be called ShoWest. That is the annual event where they — maybe it’s twice a year — where they trot out all the stars to go to Las Vegas to hype up the big movies that are coming out. And so it’s crucial to understand that theater owners themselves are a crucial audience for studios, because the studios want to make sure that the theater owners are excited about what they’re going to be bringing, so they promote stuff in the theater as much, so they’re more likely to strip that trailer in front of a given movie. So they’re going to be willing to put the giant cardboard standee in the lobby. That they’re willing to swap out their popcorn tins to promote that movie.

So that becomes a crucial very early marketing push for the studios to get the studio owners excited about it.

Craig: Yeah. Imagine that car dealerships weren’t exclusively connected to a certain automobile manufacturer. So they can sell any car. So my auto dealership, what I have here are ten different cars from ten different manufacturers because I think that these are the ones that are going to sell well. So, as a car manufacturer, you want to impress that guy. These ShoWest things are remarkable. They are this quiet thing that happens with an enormous amount of celebrity wattage.

These exhibitors, their representatives, see entire movies very, very early, or sometimes they see special 25-minute presentations of those movies. All designed to get them excited to display them in the theater. And it’s high stakes stuff. Some movies are, I think, probably made or broken right there and then at ShoWest.

John: I would say the only other industry that gets as much attention from studios at this early stage is toy manufacturers. Because I have friends who have worked for the big toy manufacturers and really quite early on they’ll be invited in to see rough cuts of films or the sort of sizzle reels to sort of hype up these things because toy manufacturers have such a long lead time to get those things done. They have to make decisions quite early on like are we going to try to do a tie-in with Guardians of the Galaxy for toys and they have to look at the movie and say like, OK, do we think this is a toy-worthy movie.

So for the case of —

Craig: Toyetic.

John: Is it toyetic?

Craig: That’s the word they use. Toyetic.

John: Does it want to be toyetic?

Craig: That’s ridiculous. That’s not a word. Toyetic.

John: And from the movie theaters’ perspective, I mean, they don’t have real control over what the film release calendar is, but they’re going to have some influence. I mean, all the studios know what weekends different movies are coming out and they have to figure out will I be able to get the screens I want for this movie if I come out on this weekend. And that’s a whole complicated dance.

Craig: It is. And similarly there are, the exhibitors are taking risks. For instance, we know that movie studios will traditionally counter-program against big movies that skew heavily towards one demographic or the other. Or perhaps sometimes against television events. So Super Bowl weekend, maybe there’s movies out that the studio might think appeal to demos that aren’t as interested in football.

So, now exhibitors have to say, OK, am I going to be counter-programming that weekend or am I going to be just going with the big boys that weekend. Look, I don’t know how they do this. I want to believe that there’s a science to it. I want to believe that their expertise matters. I think maybe it’s just luck. I mean, you know?

John: Well, I think it’s probably a combination of like good spreadsheets and some institutional knowledge that lets them predict overall things. But there’s always going to be those Black Swan moments where it’s like, oh, now it’s Titanic. And like now this movie is going to be playing endlessly for months.

Mike was telling me about when Titanic was in his theaters, I mean it made a tremendous of money for them but he hated it because they had to basically keep adding new shows to it. The movie was endlessly long, but they could add an 8AM show and people would come to an 8AM show of Titanic. It was just unstoppable. It was a juggernaut.

Craig: Yeah. It’s crazy. I mean, they have these things now that they never used to before where they’ll say, OK, if it’s a big movie we’re going to show it and it comes out on this date. It’s embargoed until this date. 12AM or 2AM screening. I mean, when Star Wars comes out, they do stuff like that. And that’s, ugh, but people show up.

John: People show up. It’s exhausting and hard for everybody. So, I wanted to do this 101 sort of talk through the theatrical film business so we could have some background on these two news stories that came up in the last few weeks. The first is about MoviePass. And so I was only vaguely aware of MoviePass. It is a system that you can buy this pass and basically go to unlimited movies over the course of a month. And the price of MoviePass was originally around $30, and then it dropped to like $19, and now they’re lowering it to $10 a month and you could essentially go to unlimited films over the course of the month. Which if you are a frequent filmgoer that’s a hell of a deal.

Craig: I mean, it’s frankly kind of a hell of a deal if you go to a movie once.

John: Yeah.

Craig: When I read about this, because I didn’t even know about this, I thought, well, OK, is this a way for exhibitors to kind of do this brilliant end run on the studios. If they make all their profits off of concessions, this is a way to essentially figure out how to get more people in at the expense of the studios, and then make a whole bunch of money off of concessions.

But in truth, that’s not really how it works. Because the exhibitors’ portion of ticket sales is what’s offsetting their costs so that the concessions can be profitable. If you lose that amount, then you’re losing money. And it seems like that’s in fact exactly what the exhibitors are saying now. That’s not sustainable. If one movie ticket costs an average of $8, you can’t let people see every movie they want in a month for $10. That’s nuts.

John: Yeah. It does seem just generally nuts. And so this kind of system exists in Europe. And it seems to work relatively well in Europe. But the prices are higher. So the prices, I’m going to link to an article that Jeremy Fuster wrote in The Wrap. But in Europe those prices are set between 16 and 20 Pounds a month, so that’s $21, $24, $25 per month, which is twice as much as what MoviePass is going for.

You know, classically when you reduce the price you hope to increase the frequency. And so I think the idea is like, well, from the movie theaters’ perspective you’re going to get more people through the door. They’re going to be buying stuff. It’s going to be great. But MoviePass is an independent company. So what’s weird to me is that it’s not like AMC has this program that they’re rolling out to try to do this. It’s this independent company that’s going to be reimbursing AMC. AMC was the impetus of this article. They’re the ones who are fighting back against it. And part of it is a perception issue.

They don’t want to perceive the price of movies to be going down. Because how much is a movie worth? Well, if it’s only worth nine bucks for unlimited movies, people are going to feel weird about paying $16 for that one movie.

Craig: Exactly. I mean, what they’re saying at AMC is, look, you can’t sustain this. This $10 price feels like a loss-leader kind of first sample of crack to get you hooked. But at some point then the price goes up and people are going to be annoyed because once people — you know, they hear, well, a song costs $0.99. It took Apple a long time to make a song cost $1.29. And it’ll take longer and longer still to kind of move up from there. But to move up dramatically would never work, right?

A song costs $0.99. Oh, now it actually costs $5. Wait, what? Well, that’s kind of what’s going to happen here. If you see three movies a month and you’re paying $10 for it, and then they come back they’re like actually now you’re going to pay $24 for it, well people are going to freak out.

I don’t understand this. And I don’t understand — I mean, in order for MoviePass to work, didn’t AMC have to make an agreement with them to honor it?

John: AMC must have originally had an agreement with MoviePass at that higher price point. They figured something out. And so it’s crucial to note that MoviePass’ money comes from some other place. So I don’t know if it’s VC money, or some other pool of money that’s paying for this. So, essentially they would be burning through this money in order to sort of grow up to a size. And then at some point magically flip a switch and become profitable.

We have examples of Netflix which had a subscription service. It went through conniptions as it sort of pivoted, but it has now become tremendously successful. So I can see from a Silicon Valley perspective like, oh, it’s disruptive so therefore it’s worth investing in. I just wonder if it’s disruptive in a way that is good or bad for people who love movies.

Craig: Well, the movie business has been a remarkably stable one. I don’t mean to say in terms of how much money it makes or loses from year to year, but rather structurally. The way the movie business works structurally has been remarkably stable for a very long time. Longer I think honestly than any other industry in our country.

John: Because if you want to look at the fundamental idea of what movie exhibition is, is that people are going to buy a ticket to come into a dark room, watch a movie projected, and then they’re going to leave. Like that’s the experience of going to see a movie. And that’s been the same experience for 100 years.

Craig: That’s right. And behind the scenes, the business structure behind it is Group A makes a movie, and Group B shows the movie. That’s the way it has been since 1948 when the United States vs. Paramount Pictures ended studio ownership of movie theaters. So, for all that time this is how it has worked. I understand the desire to disrupt it. The problem is I’m not sure you can. I don’t think this is particularly susceptible for disruption because it is kind of a great system. It works.

It works really well. It’s not like we can’t see the movies we want to see, you know? Remember when movies selling out was a huge thing. It was a problem. Movies don’t really sell out because they’re smart. They know how to just open another screen. They balance these things out. They’ve got good data. The system works. I don’t think MoviePass — I don’t understand it.

John: Absolutely. So we’re going to file this away to maybe come back to in a year and see what’s happened with MoviePass. I try to do some research before we talk about things on the air, but I still don’t fundamentally understand how MoviePass is supposed to be making money.

Craig: I’m with you.

John: Cool. A thing I did understand better was Steven Soderbergh’s business plan behind Logan Lucky. It is a new crime thriller that came out a week ago as we’re recording this. Basically he raised the money independently to make this film and then he hired a company to release it, to distribute it. So it was not really done through a traditional studio model.

And his plan was to sort of go into theaters, particularly concentrate his advertising in the final weeks. Concentrate on a southern strategy. The article I’ll link to by Brooks Barnes, sorry Craig, it’s a Brooks Barnes article.

Craig: It’s all right. We’ll make it through.

John: Quotes, “Mr. Soderbergh noted the box office for success is lower under this setup. With nearly everything prepaid and no hefty distributor fees coming off the top, even a modest $15 million opening would be a win.”

So, the movie did not hit that number. It hit $7.6 million on its opening, which was disappointing to I would imagine all the people involved, but I don’t think it necessarily negates the idea behind this business plan which is basically Soderbergh wanted more control, not just over his cut of the movie but how the movie was going to be marketed. He wanted to really be his own studio on it.

Craig: Yeah. I’ve been looking at this pretty carefully and trying to figure out exactly what’s going on here. And I think I understand it. There’s a larger question about whether this is advisable to do, in part because you are going to struggle replicating some of the things that studios actually do well.

So, but I understand, look, the impetus is this: it’s not about creative control per se, because there are a lot of directors that get creative control working in the studio system. So Christopher Nolan has final cut on his movies. And he, I’m sure, has an enormous input on what the marketing campaign will be and look like. And then the movie goes off into the world. It’s not just about creative control. It’s also about eliminating the studios as middleman.

As the article points out, it’s not exactly new for a filmmaker to be able to raise independent money to make a film. All right, in this case he wants to raise I think it’s $30 million. You can do that. And then the idea is you make the movie, it’s yours, you control it, and then a studio comes along and makes a distribution deal with you. They then work with the exhibitors to distribute the movie into theaters. They market the movie, etc. And you get whatever remains.

So, as the investors of the movie and the creator of the movie, what you get back is all the money that came in, minus what the theaters take, minus what the studio takes for distribution and marketing. Then you get what’s left.

So, he didn’t want to do that. But how do we get rid of that? So, his first idea was let’s just make the movie and go right to the theater owners. Brilliant. Except, as you and I have just pointed out the federal government looks very dimly on the owners of movies getting into these direct relationships with the owners of theaters. If a theater owner is now dealing directly with a movie director, and paying the movie director money so that they can — you start to worry is the theater owning the movie, is the movie owning the theater? They don’t like this so much.

So, here’s what I think happened basically. Soderbergh goes to this other company and they’re called Bleecker Street Media. And according to this article they have a total staff of 20 people. Bleecker Street would do the marketing campaign and they would receive a token fee of less than $1 million. If the film hit certain box office thresholds, they would then get a slice of ticket sales.

But, the point being they’re charging nowhere near what a traditional studio would charge to be the middle man. Essentially they’re kind of a fig leaf middleman to keep the whole thing legal and not running afoul of antitrust laws. And that’s kind of their purpose, as far as I can tell.

Did it work? This time, no. But the play here is to go after the probably exorbitant distribution fee that studios charge.

John: Yeah. So some of what you’re describing Craig is not that different than what happens on classic indie movies, the Sundance movies, because for each of those big six studios I talked about at the start of the podcast, there are a ton of little distributors who do that kind of negotiation directly with theaters to get those movies onscreen so people can see them. And so that is actually a pretty common thing.

What’s different here is that, you know, rather than them picking up the rights from this film, Soderbergh is basically going to them and saying, OK, I’m going to pay you to do this thing, but I’m holding on to everything myself. And that could work with the right film. Certainly when you look at how Lucas used 20th Century Fox to do the three Star Wars prequels, there’s a similarity there, too, where like Lucas really controlled everything but he was basically renting Fox to sort of put the stuff out there.

My hunch though is that Fox had some really meaningful percentage participation in there so that it was really in Fox’s interest to make sure that the Star Wars movies worked. Also the Star Wars movies were presold, so they were going to be a hit no matter what.

Logan Lucky is just another hopefully great Soderbergh film, but there’s no guarantee of success in that. And so that’s a challenge.

Craig: Yeah. I mean, look, from a studio point of view, even if somebody that has an incredibly desirable property like Star Wars comes to you and says I want to make a marketing distribution deal with you, from a studio point of view you don’t really have to run the numbers. You know what it’s going to cost. You tack on some percentage above that as profit. You win. That’s it. There’s no risk to you. You’re not paying for the movie’s production. Nor are you on the hook if it underperforms in theaters. You’re getting a fee.

So, I think studios generally like these things if they feel like it’s going to work out well for them and not damage their brand. I think they’re aware that everyone assumes that if they release a movie they made it, which is often not the case.

Here with this one, Soderbergh was aiming for something that kind of hadn’t been done before which was to release a film a la an independent, but to release it wide.

John: Yeah.

Craig: So, I don’t think this has ever happened before. They opened it over 2,500 locations I think was their goal here. So, that’s like a big movie release.

John: And he had big movie stars in it. I think if you’re going to try to do this with a non-franchise movie, this had the right combination of elements. You have Channing Tatum. You have big stars. You have a big director. But this one didn’t catch fire.

Craig: No. But that in and of itself is not really a comment on the business plan. It may be a comment just on the material itself and the attractiveness of the movie to people. I mean, because obviously big studio movies flop all the time.

Will this happen again? It certainly won’t happen as quickly as it would have if this one had worked.

John: Yeah. I agree with you. I think if this had sort of caught fire, you would see every A-list director going to their agency saying like I need to find the people who can do this for me, because I want to have all those controls. I want it to all be mine. Because this didn’t take off, I think there’s going to be a little more reluctance on that. And I think there’s going to be a bit more of appreciation for sort of what all those hundreds of people at the studios do to sort of make the machinery work to put out a big studio movie.

Craig: No question. I mean, for as much stick as we will give the studios for their sometimes questionable ability to creatively shepherd work, they are outstandingly good at being banks and being advertising agencies and being distribution agencies. They are fantastic at it.

And if you want to go it on your own, it’s not just a question of can you do it. There is an opportunity cost because you’re not doing it with the people that do it really, really well. So, OK, well this time it didn’t work. Let’s see what happens next time. I suspect there will be a next time. But who knows.

John: Who knows? All right, let’s get to two quick questions. First off, Tom writes in. “I’m a screenwriter who has just had his first movie produced. Is it worth making a stink if the studio violated your creative rights? I’m particularly asking about the right to view a cut before your movie is released? I called the WGA about this and they started talking arbitration. That scared me because it feels like it’s burning a bridge.”

Craig, what should he do?

Craig: I understand the fear of burning a bridge. You are not burning a bridge. We are trained to believe that we are constantly walking over gasoline-soaked bridges with little Zippo lighters in our pocket. And any time we dare question something or stick up for what we deserve, we’re just flicking that Zippo open. This isn’t just something that the bridge owners are telling us. This is something that agents and managers are constantly repeating to their clients. Everyone lives in fear of this burnt bridge.

Here’s what I have come to understand about this business after all this time. The bridges are not flammable, at least not on their own. Bridges become flammable when you do bad work. If you write something and it’s good and it makes money, you could be the one dumping the gasoline all over it. You could have yourself a good little torch party on that bridge. You can burn the whole damn thing down. They will build you a new one, because they want to make money.

So, with that said, if the studio is happy with your work and happy with you and they have violated your creative rights, I would not worry so much about the bridge burning. Also, it’s worth pointing out that the aggrieved party here is not you, Tom, it’s actually the Writers Guild, because these terms, these creative rights terms we have have been negotiated by the Writers Guild and they are in our collective bargaining agreement. The Writers Guild has a right to go ahead and pursue arbitration on your behalf with or without your consent, as far as I know. Because, well, their contract with the companies was violated.

I do believe it is important for us to stick up for these things. If we do not, then we don’t have them. We can keep going on strike and turning ourselves inside out every three years, and screaming about the companies and how unfair they are, because we want things. But if we do not actually demand what we already have and deserve on paper, then why are we bothering to ask for anything at all?

John: I agree with you, Craig. So, I have a movie going into production so just this week I got a letter from the WGA saying, hey, this movie is going into production. Here is a reminder of your creative rights. Also here is your reminder that many of these creative rights have a time-based quality. And so it is up to you to be proactive to try to make sure that you’re getting the opportunity to do these certain things along the way.

It was a great reminder. I will be sort of making sure that those creative rights are acknowledged as those milestones come up along the way. But if any of those creative rights were violated, I would let the WGA know because it is important to put that on record and to make sure that everyone knows when those things happen and when they don’t happen. You’re not narking on anybody. It’s a thing that was supposed to happen.

So, I would say to Tom, if anyone at the studio or producer contacts you about saying, hey, did you complain about not seeing a cut, the answer is the Guild contacted me to ask if I’d seen a cut. I said I had not. It’s the Guild’s responsibility to do that. And you know what? Let the Guild be the bad guy.

You know who is great at being the bad guy? The DGA. The DGA is so good at being the bad buy and I would love to see the WGA be the bad guy more often.

Craig: Halleluiah to that. And this is not something that writers have just started pointing out and asking about. As long as I’ve been in the Guild, writers have been saying why are we not more like the DGA when it comes to protecting the creative rights of our own members? Every director, big or small, gets a visit from a DGA representative on set to make sure that they are being treated properly and in accordance with the contract. And do you know who has no problem with that? The studios. In fact, they’re quite concerned. They want to make sure they don’t get into trouble with the DGA. The DGA is aggressive.

We are not. We’re just not.

John: Nope. So on the topic of aggression and following up on things, Leeann from Brooklyn wrote in with a question about how to navigate promises from a producer on a first time feature project. Let’s take a listen.

Leann: I recently finished my fourth feature script and passed it on to a producer contact of mine as a project I would also direct. She said she loved the script and with my permission passed it on to an exec at an independent studio which she reportedly has a solid relationship with. She said my script is exactly the kind of movie both she and the studio are looking to make right now, which is exciting for sure.

However, it’s now been three weeks since my last phone call with her, during which she said she would be getting a face-to-face meeting with this exec soon, whenever that is. But she also said if he didn’t work out, she would look for other funding options for the project this fall when her production schedule frees up.

So, I’m basically in a holding pattern. Or am I? My question is what should I be doing during this time? Should I take her at her word that she’s going to do whatever she can to get the film made? Or should I still be sending my script to more producers? I don’t want to sully what could be a great business relationship, but I also don’t want to miss out on any opportunities. Are all things fair game until something has been signed, or has essentially a verbal agreement been made between her and I and I should just stick with it and see where it leads?

While the phrase wait and see sounds passive and unproductive to me, could that just be my naïveté making me antsy? I would really love to hear what you both think about this situation and how you would recommend a writer-director looking to get her first feature made to act and react given these circumstances. Thank you both so much for all your work. You are mentors and wizards.

John: Actually, Craig is a barbarian in the current campaign we’re playing, but in general we very much appreciate the sentiment. I was nodding along a lot to Leeann’s question because I remember being in sort of exactly her situation, where I had come back from my internship every day to my apartment. And I would look at the answering machine, because it was still the answering machine time, waiting for this producer to give me word about this agent who was supposedly reading my script.

And about three weeks passed and it was incredibly infuriating and exhausting.

Craig: Yeah. Boy, this is a tough one. Well, good news, Leeann, you are a member of a large fraternity/sorority here. We have all been through this. Waiting is part of the deal. Unfortunately people take time to read things. People are busy. They have more to read than we can possibly imagine. If it makes you feel any better, I was talking to an actor last week — an actor who is on TV, he’s been on TV, he’s in movies — and he’s got a project that he’s working on and he’s been waiting for somebody to read it now for four months, and he’s the kind of person that you’d think, well geez, somebody would just read that in the next minute.

This goes on. The trickier part of your question I think is managing your own ambition and activeness. This is something I think we all struggle with. You have given the script to this producer. That she’s not a producer — it doesn’t sound like — she doesn’t have an exclusive relationship with this one studio that she’s talking to, because she said she can take it to somewhere else. She’s kind of now your producer. There is an implied relationship there.

You can certainly say, you know what, I think I want to give this to other producers, not you. But at that point what you’re saying is you’re not the producer. So, bye. And that will essentially sever that relationship.

You are more I think forgiven if time goes by — a reasonable amount of time goes by and nothing happens. But this is a tricky part. If you give the script to a producer and the producer is not particularly good and they kind of show it around to a bunch of places and those places say no, those places have said no. It’s not like you can get a new producer and they’ll suddenly say yes.

So, you have to ask yourself what your relationship with this person is. It sounds to me like you don’t have a manager or agent working on your side to kind of intercede on your behalf. You may want to talk to this producer and say, hey, are you aware of any managers or agents that you could hook me up with if you don’t. If you have representation, they should be inserting themselves into this process, obviously.

If you don’t, see if maybe this producer can segue you to someone, and then that person can start to give independent advice. It is a dangerous thing to suggest one clear course of action to you because we just don’t know enough and the potential for harm is significant.

John: I agree. I would underline what Craig said about trying to use this producer to try to get yourself to a manager or an agent is great. So, I think you definitely need to lob an email back into her saying like, hey, checking in. This is what I’m working on right now. I’d love to have a conversation with you about agents and managers because that’s definitely a next step I see being important for me.

But I don’t think your script is — I don’t think you should assume that your script has to be frozen and locked down and that no one else can put eyes on it. And so I would say whoever wants to read your script, let them read your script. And make it clear that there’s a producer attached to the script. There’s a producer onboard the script. But it’s going to have to get out there in the world a little bit wider so that people can read it. And maybe a different scenario will come up or somebody else will say like, oh, I know the perfect person who would want to make this kind of movie. And then you can direct your producer towards that person.

I just know so many people who have been in this situation where they have a producer sort of involved on a project and then like a year goes by and there’s no forward momentum. That’s what I’m worried about for Leeann.

Craig: I am, too. I mean, the one nice thing is that producers can accumulate, unlike writers. You’re the writer. You’re the director, Leeann. You have a producer now. But what happens sometimes is somebody — you give it to somebody else, they hand it to somebody else. That person says I’m a producer. I want to do this. And I can set it up. These people already want to buy it. And you say, OK, I can’t turn that down. That sounds great. I do have a producer involved. Well, they’re still involved.

And then it gets worked out. And the thing is you don’t have to work it out. The producers work it out. They figure it out. So that’s between them.

I will say to you that the one thing you definitely don’t want to do is just hit pause on your life and your creativity and your output because you’re in waiting mode. The waiting mode that you’re in never ends. Your life will be a waiting mode. It is such a trap to think I can’t do anything until I get the clarity of the call, because when the call comes all questions will be answered. It will be clear and definitive what’s happening. Trust me when I tell you it will not be. And it never actually gets that way. The only times things finally seem incredibly clear and definitive to me is when I’m at a premiere. That’s about it.

Other than that, it’s an endless series of negotiations and questionings and forwards and backwards. It’s just the way it is. So you have to get used to living in this constant state where you’re waiting on a thing while you push something else ahead.

So my strong advice to you is if you’ve had something else that you’ve been thinking about working on, if you’re thinking about working on this thing maybe hit pause on that for a moment because it’s out there. But if there’s something else you want to do, do it. You are not in waiting mode. You’re in Leeann living her life mode.

John: Absolutely true. I’d say the other moment which things become crystal clear is when they just completely fall apart. When that thing gets shut down and it’s done and it’s dead. And in a weird way that can be a relief, too. Because rather than this sort of floating ambiguity, I’m sometimes happier when something is just done. Like I can’t do that there. The ship has sailed. That can be kind of weirdly freeing. And I’ve found so often when I’ve been stuck in this waiting mode I get the “no” and that no is actually much better than the sort of Schrödinger’s cat of this half-dead/half-alive project out there.

Craig: Yeah. I’m thinking about the sheep movie. And the first time I read that novel and Lindsay Doran gave me the novel. And the seven year odyssey to get the rights to it. Seven years. And at no point did we ever succumb to any kind of fatalism. The amount of time involved was such that impatience was not even psychologically possible. You just had to accept it. You just had to accept. So, these things take remarkable amounts of time. When we read stories about things that have taken remarkable amounts of time, in our minds we just glide over it. Like oh yeah, that’s crazy. It took ten years to get to the screen. Wow.

Try living those ten years. That’s ten years. So, it’s just part of the deal. It’s just part of the deal.

John: Thinking back to Unforgiven, David Webb Peoples wrote that script and Clint Eastwood sat on it for all those years. And it turned out great. Everything was just wonderful and remarkable, but we did sort of skip over the fact that David Webb Peoples had no guarantee that movie would actually get made. It could have just not happened.

Craig: That’s right. I mean, he has written this script. I assume he understood on some level no matter how humble he may be that it was amazing. And there it was. In a drawer. Doing nothing. Yeah, very frustrating.

John: All right. Good luck Leeann.

It’s time for our One Cool Things. My One Cool Thing is a thing that was sitting in my drawer for a very long time. It’s a book called Party of One by Dave Holmes. And it was not literally in a drawer. It was on my Kindle, but so far back on my Kindle that I’d forgotten it was there.

So it’s a book from last year. It’s Dave Holmes, who sort of became famous as a VJ on MTV. I only kind of remember him from MTV because he rose up after I stopped watching it regularly, but the book talks about his sort of growing up in St. Louis. The chubby gay kid and sort of his so desperate to fit in and sort of the choices he made along the way. And also the wrong choices he made along the way. And how it worked itself out.

It’s one of the rare books where because he’s almost exactly my age, like every reference was just exactly right. I felt like I was just back in each of those years as he was describing them. So it’s a book that sat on my Kindle for far too long, but it’s just delightful. And really funny. And he’s a really talented writer, so I can’t wait to see what he writes next. So, Party of One by Dave Holmes.

Craig: Excellent. My One Cool Thing this week was a recommendation from Kumail Nanjiani and it is Hellblade, Senua’s Sacrifice. This is an independent videogame that is available for Microsoft Windows — yuck — or PlayStation 4.

Let’s see, it’s developed by a company called Ninja Theory. The director is Tameen Antoniades. And it was written by Tameen Antoniades and Elizabeth Ashman-Rowe. So, I’m not through with the game yet. I think I’m about a third of the way through. It’s incredibly simple on the one hand. You’re playing a woman who is some sort of ancient Viking type lady. And you are on a journey to rescue the soul of your lost love. And you’ve gone into the region of hell basically. But what sets the game apart is your character is psychotic. Not psychotic like blah, but actually has the mental illness of schizophrenia and psychosis, so there are constantly voices in your head that are the voices in her head.

And they worked with actual psychiatrists to make it accurate and to simulate the kind of voices and the incessant intrusion of those voices and the variety of those voices and the nature of the sort of things that those voices say when people have legitimate mental illness. And it is fascinating. And disturbing. And kind of remarkable.

I like it a lot. And for that reason alone — and you know, if you don’t like — it’s not actually heavy on combat. It’s a little bit more keyed towards puzzle-solving. And if you don’t love combat that much you can just set the combat to easy and, you know, not worry about it, because I don’t really care that much about combat. I’m more about the story and the puzzles.

So, very cool game. So thanks for that one, Kumail. I’m playing it right now.

John: Cool. That is our show for this week. Our show is produced by Carlton Mittagakus. It is edited by Matthew Chilelli. Our outro this week comes from Rajesh Naroth.

If you have an outro, you can send us a link to That’s also the place where you can send questions like the ones we answered today.

For shorter questions on Twitter, I’m @johnaugust. Craig is @clmazin.

We’ve had a lot of questions on Twitter this last week and they were good.

Craig: Yeah.

John: We’re on Facebook. Search for Scriptnotes Podcast. You can find us on Apple Podcasts at Scriptnotes. Just search for Scriptnotes. While you’re there, leave us a review. That’s always so helpful. Through iTunes you can download the Scriptnotes App for your phone, or the other app stores. You can find it there as well.

You can find the show notes for this episode and all episodes at That’s also where you’ll find the transcripts.

You can find the full back episode catalog at It is $1.99 to get to all of those back episodes. We also have some of the USB drives. And so if you’re looking for one handy item that holds all the back catalog, go to That’s where you’ll find the drive.

Craig, thanks for a fun show.

Craig: Thank you, John.

John: And so I will continue to debate whether Cyndi Lauper should have the higher place in my esteem than Madonna for her role in the ’80s.

Craig: No debate here.

John: No debate. She-Bop.

Craig: She-Bop. I’ll see you later. Bye.

John: Bye.


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