John August

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Money 101 for screenwriters

Film Industry, How-To, WGA

Most of the questions I answer on this site are from readers who hope to become professional screenwriters. A small percentage of these readers will succeed, and suddenly face a new category of questions about What Happens Next. Having watched former assistants and other young writers cross the line into professional work, I’ve noticed that one of the biggest mysteries is money.

I want to offer a brief financial education for the newly-employed screenwriter. For most of you, this won’t apply — yet, if ever. But for others, this may be worth a bookmark, because there are some specific, unusual things you need to know. Screenwriting is a strange profession, and handling the money it generates is more complicated than you’d think.

1. Don’t quit your day job — until you have to.
—–

Before writing this post, I asked a dozen working writers for their recommendations, and this was by far the most-often made point.

The natural instinct is to immediately quit your crappy day job once you’re hired to write something (or sell a spec). After all, isn’t that the dream? Isn’t this why you came to Hollywood? Every waiter and barrista in Los Angeles considers himself a screenwriter, so quitting your day job is an important way to distinguish yourself as a True Screenwriter, the kind who gets paid actual money to push words around in 12-pt Courier.

But don’t. Don’t quit your job right away.

Even if you sell a spec for $200K, it will be months before you see a cent. The studio will sit on your contract as lawyers exchange pencil notes about things you can’t believe aren’t boilerplate. When I was hired for my first job, ((I adapted the kids book How to Eat Fried Worms for Imagine.)) it took almost four months before I got a paycheck. I was living off of money from a novelization, but when that ran out, I had to ask my mom for help paying rent.

Nearly every screenwriter I speak with has a similar story — you’re never as broke as when you first start making money.

Beyond the initial delay in getting paid, keep in mind that there’s no guarantee you’ll have a second writing job. I haven’t seen numbers, but my hunch is that a substantial portion of new WGA members aren’t getting paid as screenwriters two years later. A career is not one sale. As one writer friend says, “I always think of myself as six months away from teaching community college.”

If all goes well, the needs of your career will eventually force you to give up your day job. You’ll have meetings at 11 a.m. on a Wednesday, and no more excuses to offer your boss. Or you’ll be hired on a TV show, which is at least two full-time jobs. So don’t panic when it comes time to quit. Just try to leave on good terms, with back-of-mind awareness that at some point you may need to get a normal job again.

Here’s how the transition happened for my former assistants:

* Rawson finally quit working for me because the movie he was directing (Dodgeball) was in preproduction. He went from being an assistant to having an assistant in less than a week.

* Dana had a movie greenlit and another script under a tight deadline.

* Chad met with Aaron Sorkin on a Tuesday morning — and got hired in the room. He had to start working on Studio 60 that afternoon.

Each of them left, but only after the needs of their writing career made it impossible not to. In the meantime, they had regular hours and health insurance. That last part is especially worthy of attention, because it may take months to get WGA health insurance started after making a sale.

2. It’s less money than you think.
—–

We’re used to getting paychecks that have all of the taxes and expenses taken out. Maybe you’re bringing home $850 per week. The math is relatively straightforward: you know how much you need for rent, food, utilities and whatnot. And next week, you’ll get another check.

Screenwriting is nothing like that. You get paid in chunks, from which you have to pay taxes and percentages to all the people working for you. The money shrinks at an alarming rate. Worse, you have limited ability to predict when you’ll get paid again.

As an example, let’s say you and your writing partner sell a spec script to a studio for $100,000. That seems like pretty good money. But how much of it do you get to keep? Let’s run the numbers.

100k grid

Out of all that money, you have less than $37K, and that’s before you’ve paid a penny of taxes. So don’t buy your fractional [Net Jet](http://www.netjets.com/) just yet.

Some points while we’re here:

* Not every writer has a manager. I never did. Many beginning writers find managers helpful in making contacts and working on pitches. Your mileage may vary.

* While most managers get 10%, that’s not fixed by law the way it is with agents.

* You can also pay attorneys by the hour — but they’re well worth the 5%.

* You generally don’t write a check for your agent and attorney — that money is deducted by the agency when they collect from the studio for you.

* The WGA sends you a form every quarter on which you list what you’ve been paid by signatory companies. It’s your responsibility to pay dues.

Flipping through Variety, you might think that all screenwriters are rich. For instance, you might read that Sally Romcom sold a pitch for “low six figures.” That’s slanguage for $100 to $250K — still a lot of money. But if you actually looked at her deal, you’d see that the money is structured in a way that she’s unlikely to get it all at once, or even in the same year.

deal steps

Sally is getting paid in three steps: first draft, rewrite and polish. For each step, she is being paid half at commencement, and half when she delivers. Each step has a time frame, ranging from 12 weeks for the first draft to four weeks for the polish. There is generally a four-week guaranteed reading period between each step, which means that the fastest she could expect to be paid for these three steps is 32 weeks (12 + 4 + 8 + 4 + 4).

She’ll get $125K for these three steps. The $75K sole credit bonus only happens if (a) the movie gets made, and (b) she’s the only credited writer on it. ((The shorthand for Sally’s deal would be “125 against 200.” The first number is what she’s guaranteed to make, while the second represents what she’ll get if the movie is made.))

In order to pay her bills, Sally needs to be able to predict when she’s going to be getting more money. For years, I kept a spreadsheet tracking projects and expenses across upcoming months, to make sure I’d have enough cash to pay rent six months down the road.

3. WGA membership happens automatically
—-

One day, you’re an aspiring screenwriter who hopes to join the Writers Guild. The next, you’re a working screenwriter who must join the guild by law.

The first time you sell a script to (or are hired to write by) a signatory company, ((There are a few indie companies which are not under the WGA deal, but every major studio is.)) you need to join the Guild. Odds are, the guild will contact you as soon as paperwork crosses the right desk, but you can also jumpstart the process by calling the Los Angeles office.

You’ll have to pay a fee of $2,500 to join. ((WGA East costs $1,500 to join. No, I don’t know why it’s cheaper.)) Ask nicely, and they’ll let you spread out the payments.

The most immediate benefit to joining the guild is the health insurance. The plans and benefits are confusing but extensive, with trade-offs for Preferred Providers versus HMOs. It’s worth spending a few hours getting it set up correctly. Once you’re in the plan, you’ll need to keep working in order to maintain eligibility.

4. Splurge on one thing
—-

Once you start making money, there’s a natural instinct to upgrade every aspect of your lifestyle, which has probably stalled out in a post-college, heavy-Ikea phase. Don’t. You’ll burn through your money and wonder what you spent it on. Instead, buy one thing you really want and can afford. Make that your reward.

For me, it was getting a dog. I’d wanted one since I was 10, and I was determined to move to an apartment that allowed dogs. I found a duplex off Melrose and got my pug. Twelve years later, he’s still sleeping at my feet. He’s a good dog and a good reminder of how my career started.

Your dog equivalent may be a car, a painting, or a 30-inch monitor. Buy it and enjoy it.

But don’t feel any pressure to act rich. I drive a six-year old Toyota. We buy store brands and clip coupons. We fly coach. ((Though we’re pretty canny with upgrades. Get a credit card that pays you either frequent flier miles or hotel points, and use that for everything.))

Over time, you will probably start spending more on housing, clothing, travel and food as your standards rise. That’s okay. But spend your mad money on those few things that actually make you happy.

5. Don’t rush to pay off your student loans
—-

Everyone wants to be debt-free, but classic federal student loans are some of the cheapest money you’re ever going to find. Until you feel confident that you’ll have enough money to last you a solid year, keep paying your normal amount.

Instead, pay off your credit cards and private student loans, which tend to have much higher interest rates.

6. Sock it away
—-

Whether you’ve made a bunch of money at once in a spec sale, or carefully grown a nest egg through steady assignments, you’ll want to put your money in two virtual boxes. In the first, stash enough to live on for six months (including taxes). In the second box, put all the rest of the money you make — and pretend it doesn’t exist.

I’m not qualified to talk about investments, pensions or retirement, but I feel absolutely certain giving you this financial advice: save your money. Get financial advice about about smart places to put it, and then leave it alone. Except for rare occasions — buying a house, for example — you should never need to touch it. Your living expenses should be more than covered by new money coming in the door.

7. At some point, you’ll incorporate
—-

When a studio hires me, they actually hire my loan-out corporation, which provides both tax advantages and liability benefits. I didn’t become a corporation until after Go, at which point my agent and attorney told me it was time. ((I’ve often heard $200K/year as being the threshold at which point incorporation makes sense, but it may be higher or lower depending on circumstances.)) It’s a lot of paperwork to set up — your attorney will do most of it — and a fair amount of responsibility, with quarterly taxes and other filings.

Like heart surgery, it’s smart to ask a lot of questions, but you ultimately want it handled by professionals who do it every day.

Before becoming a corporation, I was managing my money easily with Quicken and Excel. The added complexity of the corporation led me to hire a business manager and accountant. The best resource for finding a good business manager is other writers. You want someone responsible, reachable and thorough. Keep in mind that a business manager is not an investment guy. A business manager is writing checks to keep the lights on. The only financial advice you’ll be getting from your business manager is to spend less money, which is always worth hearing.

How to cut pages

Big Fish, Charlie's Angels, Dead Projects, Formatting, Go, How-To, Words on the page

One page of screenplay translates to one minute of movie. Since most movies are a little under two hours long, most screenplays should be a little less than 120 pages.

That’s an absurd oversimplification, of course.

One page of a battle sequence might run four minutes of screen time, while a page of dialogue banter might zip by in 30 seconds. No matter. The rule of thumb might as well be the rule of law: any script over 120 pages is automatically suspect. If you hand someone a 121-page script, the first note they will give you is, “It’s a little long.” In fact, some studios will refuse to take delivery of a script over 120 pages (and thus refuse to pay).

So you need to be under 120. ((But! But! you say. In the Library)), both Big Fish and Go are more than 120 pages. I’m not claiming that longer scripts aren’t shot. I’m saying that if you go over the 120 page line, you have to be doubly sure there’s no moment that feels padded, because the reader is going in with the subconscious goal of cutting something. ((Go is 126 pages, but it’s packed solid. Big Fish meanders, but those detours end up paying off in the conclusion.))

Which usually means you need to cut.

Before we look at how to do that, let’s address a few things you should __never__ do when trying to cut pages, no matter how tempting.

* **Don’t adjust line spacing.** Final Draft lets you tighten the line spacing, squeezing an extra line or two per page. Don’t. Not only is it obvious, but it makes your script that much harder to read.

* **Don’t tweak margins.** With the exception of Widow Control (see below), you should never touch the default margins: an inch top, bottom and right, an inch-and-a-half on the left. ((Page numbers, scene numbers, “more” and “continued” are exceptions.))

* **Don’t mess with the font.** Screenplays are 12-pt Courier. If you try a different size, or a different face, your reader will notice and become suspicious.

All of these don’ts could be summarized thusly: Don’t cheat. Because we really will notice, and we’ll begin reading your script with a bias against it.

There are two kinds of trims we’ll be making: actual cuts and perceived cuts. Actual cuts mean you’re taking stuff out, be it a few lines, scenes or sequences. Perceived cuts are craftier. You’re editing with specific intention of making the pages break differently, thus pulling the end of the script up. Perceived cuts don’t *really* make the script shorter. They just make it seem shorter, like a fat man wearing stripes.

Fair warning: Many of these suggestions will seem borderline-OCD. But if you’ve spent months writing a script, why not spend one hour making it look and read better?

Cutting a page or two
—-
At this length, perceived cuts will probably get you where you need to be. (That said, always look for bigger, actual cuts. Remember, 117 pages is even better than 120.)

**Practice Widow Control.** Widows are those little fragments, generally a word or two, which hog a line to themselves. You find them both in action and dialogue.

HOFFMAN

Oh, I agree. He’s quite the catch, for a fisherman. Caught myself trolling more than once.

If you pull the right-hand margin of that dialogue block very, very slightly to the right, you can often make that last word jump up to the previous line. Done right, it’s invisible, and reads better.

I generally don’t try to kill widows in action lines unless I have to. The ragged whitespace helps break up the page. But it’s always worth checking whether two very short paragraphs could be joined together. ((I try to keep paragraphs of action and scene description between two and six lines.))

**Watch out for invisible orphans.** Orphans are short lines that dangle by themselves at the top of page. You rarely see them these days, because by default, most screenwriting programs will force an extra line or two across the page break to avoid them. ((While I rag on the program, Final Draft is smart enough to break lines at the period, so sentences always stay intact. It’s a small thing, but it really helps the read. Other programs may do it now, too.))

Here’s the downside: every time the program does this, your script just got a line or two longer. So anytime you see a short bit of action at the top of the page, see if there’s an alternate way to write it that can make it jump back to the previous page.

**Nix the CUT TO:’s.** Screenwriters have different philosophies when it comes to CUT TO. Some use it at the end of every scene. Some never use it at all. I split the difference, using it when I need to signal to the reader that we’re either moving to something completely new story-wise, or jumping ahead in time.

But when I’m looking to trim a page or two, I often find I can sacrifice a few CUT TO’s and TRANSITION TO’s. So weigh each one.

Cutting five to ten pages
—-
At this level, you’re beyond the reach of perceived cuts. You’re going to have to take things out. Here are the places to look.

**Remove unnecessary set-ups.** When writing a first act, your instinct is to make sure that everything is really well set up. You have a scene to introduce your hero, another to introduce his mom, a third to establish that he’s nice to kittens. Start cutting. We need to know much less about your characters than you think. The faster we can get to story, the better.

**Get out of scenes earlier.** Look at every scene, and ask what the earliest point is you could cut to the next scene. You’ll likely find a lot of tails to trim.

**Don’t let characters recap.** Characters should never need to explain something that we as the audience already know. It’s a complete waste of time and space. So if it’s really important that Bob know what Sarah saw in the old mill — a scene we just watched — try to make that explanation happen off-screen.

For example, if a scene starts…

BOB

Are you sure it was blood?

…we can safely surmise he’s gotten the necessary details.

**Trim third-act bloat.** As we cross page 100 in our scripts, that finish line become so appealing that we often race to be done. The writing suffers. Because it’s easier to explain something in three exchanges of dialogue than one, we don’t try to be efficient. So you need to look at that last section with the same critical eyes that read those first 20 pages 100 times, and bring it up to the same level. The end result will almost always be tighter, and shorter.

Cutting ten or more pages
—-
Entire sequences are going to need to go away. This happens more than you’d think. For the first Charlie’s Angels, we had a meeting at 5 p.m. on a Friday afternoon in which the president of the studio yanked ten pages out of the middle of the script. There was nothing wrong with those scenes, but we couldn’t afford to shoot them. So I was given until Monday morning to make the movie work without them.

Be your own studio boss. Be savage. Always err on taking out too much, because you’ll likely have to write new material to address some of what’s been removed.

The most brutal example I can think of from my own experience was my never-sold ([but often retitled](http://johnaugust.com/archives/2005/a-movie-by-any-other-name)) zombie western. I cut 75 pages out of the first draft — basically, everything that didn’t support the two key ideas of Zombie Western. By clear-cutting, I could make room for new set pieces that fit much better with the movie I was trying to make.

Once you start thinking big-picture, you realize it’s often easier to cut fifteen pages than five. You ask questions like, “What if there was no Incan pyramid, and we went straight to Morocco?” or “What if instead of seeing the argument, reconciliation and breakup, it was just a time cut?”

Smart restructuring of events can often do the work for you. A project I’m just finishing has several occasions in which the action needs to slide forward several weeks, with characters’ relationships significantly changed. That’s hard to do with straight cutting — you expect to see all the pieces in the middle. But by focussing on something else for a scene or two — a different character in a different situation — I’m able to come back with time jumped and characters altered.

Look: It’s hard to cut a big chunk of your script, something that may have taken weeks to write. So don’t just hit “delete.” Cut and paste it into a new document, save it, and allow yourself the fiction of believing that in some future script, you’ll be able to use some of it. You won’t, but it will make it less painful.

The six-hour scene

Writing Process

I spent the end of last week in Des Moines, where I had a trustees meeting for [Drake University](http://www.drake.edu/). It was also a good excuse for barricading myself in order to get some more pages written on my current project. (The thing I [went to Maine](http://johnaugust.com/archives/2008/northeaster) to research.)

In [How To Write a Scene](http://johnaugust.com/archives/2007/write-scene), I explained my basic process for getting a scene on paper, which consists of looping it in my head, doing a “scribble version,” and then writing up the final thing. But like all workflows, there’s something a little best-case-scenario about the way I described it. So in the interest of myth-busting, I want to explain how some scenes are a lot more work.

(Note that I’m only promising to explain “how,” not explain “why.” After a decade doing this, I’m still sure not why some scenes are exponentially more difficult to write than others. Many times, you don’t see the monsters coming.)

In this case, it took six hours to get one scene written. And it wasn’t, on the surface, a particularly challenging scene: Two characters in a room, talking. A very clear in and out point, with the bookending scenes already written. But it was a beast to get on paper.

In general, when I reach a scene that seems unyielding, I’ll happily skip ahead to write another scene. ((Actors and directors generally have to shoot the scene listed on the schedule, whether it suits their mood or not. The writer, working independently, can check his inner barometer and determine which scene would be most fun to write. “Fun” being relative. At some point, all the easy scenes are finished, and it’s only the sight of the finish line that gets those last scenes written.)) But in this case, I knew I needed to crack this scene before writing any others, because it introduced a major character’s primary goal, his cri de coeur that would set the tone for much of the movie. That’s something you don’t get in an outline — the emotional drive. I needed to feel it in order to write any of the major scenes later in the script.

So I needed to write it.

The scene looped in my head pretty well. I could see the basic action, and had a sense of what the characters were saying. But when I tried to do a scribble version, it refused to come together. I had a notepad full of dialogue, mostly just single lines, with arrows trying to arrange them into a meaningful sequence. I spent two hours on the flight to Des Moines trying to make the pieces fit before finally putting it aside.

After writing three comparatively easy scenes, I took another stab at it. I asked some obvious-but-necessary questions:

* Was I starting at the right place?
* Was I ending at the right place?
* Could another character drive the scene?
* Would changing the location help?
* Did it need to be two scenes, rather than one?
* Did the scene even need to exist?

The answers confirmed my frustration: it was the right scene. It was just a bitch to write.

I went back to looping it in my head, and tried to forget about the half-written dialogue. If you’ve ever watched a movie with the sound turned off, that’s basically the effect: you don’t know what they’re saying, but you know they’re saying something. And you can tell what the tone is.

Tone ended up being the variable that needed tweaking. By cranking one character up to a near-manic state, his leaps of thought made a lot more sense. I did a new scribble version on a clean sheet, this time with half the arrows.

On the flight back to Los Angeles, I finally wrote the scene itself. It was still tricky, but it hit all the points in an agreeable way. It felt like a scene you could see used as a clip on a TV review show, in that it embodied the tone and ambition of the story.

So now it’s done, and I can continue on the remaining 60-odd scenes left.

Why screenwriters have it so good
—–

Here’s the thing: You don’t always have six hours to write a single scene. In television, that level of output would get you fired. Even on features, there is real time pressure. Spending six hours on two-and-a-half pages is a luxury problem.

So what do you do if you have to write the scene, and you only have an hour?

You muscle it. A good writer with enough experience can get a version of the scene on paper that will range from unobjectionable to pretty damn good. Particularly on production rewrites, I’ve had to muscle scenes that in a perfect world would have been handled more artfully. But [the results](http://www.imdb.com/title/tt0163025/) aren’t terrible. Given the needs of the director, cast, production and studio, you do the best you can with resources you have. Time is finite. So is mental energy.

But when it’s your own script, you owe yourself the time and effort to let each scene be the best it can be. The first 10 pages of Big Fish took three solid weeks of work. I’m convinced that almost any lesser version would have significantly hurt the movie.

The six-hour scene is now typed up, and I’m happy with it. In the cold light of Courier, I know it still needs tweaking, but I’m pretty confident it will remain in the movie in largely the shape I wrote it. If I’d brute-forced it, I’d always wonder if it was the right scene.

Why writers get residuals

Film Industry, Strike

My [Pencils Down](http://johnaugust.com/archives/2007/pencils-down) article got a lot of links, which led many first-time readers to the site. Most had little experience with screenwriting or the entertainment industry, so it’s no surprise that the concept of residuals was, frankly, odd.

My friend Jeff often jokes (half-jokes, I think) that he wishes he got residuals on spreadsheets he made in 2003. He’s articulating a familiar frustration: Why should screenwriters get paid extra money years after they finish their work? After all, plumbers don’t get residuals. Neither do teachers, secretaries or auto workers.

So I want to explain why writers in film and television get residuals, and why they’re at the heart of the ongoing WGA strike.

The standard analogies
—-

Let’s say you’re a Nashville songwriter. You write a song that Carrie Underwood records and takes to number one. You get paid royalties for writing that song: albums sold, radio plays, the generic Christmas Muzak version. A hit song is worth a lot of money. A moderately successful song is worth a moderate amount of money.

Or let’s assume you’re a novelist. You’re John Grisham, and you write a legal thriller that half the folks on a given flight are reading. You get paid a royalty for every book sold. Like a hit song, a best-seller is worth a lot of money. A book that doesn’t sell as well earns the author less.

In both examples, the way an artist makes money is not necessarily upfront (writing the book or song) but over the course of years. These creative works are annuities that keep generating money, for both the writer and the publisher. Every year, copies are sold. Every year, writer and publisher make money. ((Note that this is quite different from a Jasper Johns painting, or any other artwork which increases its value because of its singularity.))

I’ll stop here to say that if you don’t think songwriters or novelists deserve royalties, I’ve lost you. Everything else I’m about to say is predicated on the belief that a creator (i.e. songwriter, novelist) is entitled to profit from the success of his or her work. If you disagree — if you think that once the publisher writes a check, all bets are off — thanks for reading this far. We’re done.

If you’re still with me, let’s play hypotheticals. What would happen if songwriters and novelists didn’t receive royalties?

It would be a lot harder to make a career in either field.

Most songs don’t become hits. Most novels don’t become best-sellers. Songwriters and novelists may only create new, money-generating work every few years. Royalties are what pay the bills in the meantime. Without royalties, very few people could afford to write songs or books for a living. These pursuits would become hobbies for the rich, or patrons of the rich. (And in fact, Western literature was largely written by the people who could afford to write.)

→ Royalties allow for a middle class.

Publishers aren’t interested in financing the American dream, however. They simply want books and songs to sell to the world. They have a straightforward and related interest in keeping royalties flowing:

→ Royalties allow for a larger pool of talent.

Without royalties, there would be fewer people who could maintain a career as a songwriter or novelist. There would be fewer songs and books to publish. It’s in the industries’ best interest to keep writers writing, generating new work to make the publishers money.

Residuals are royalties with special sauce
—-

Writing a screenplay is a lot like writing a song or a novel. The writer goes off and struggles to compose something that is a perfect combination of fresh and familiar, which will hopefully appeal to a large enough proportion of the intended audience. Just like songs and books, most screenplays never make a cent for their creators. Books sit unpublished; songs go unrecorded; screenplays remain unproduced — locked forever in 12 pt. Courier.

But a few make it. A few become movies.

And in the process of converting written words to filmed entertainment, a bit of legal sleight-of-hand takes place. I’m going to oversimplify it to make it comprehensible, but the longer, more accurate version matches the shape of what I’m about to explain.

Whether you write a song, a book or a screenplay, you’re protected by copyright. More than that, you’re acknowledged as the Author of the work, which has important (but eye-glazingly complicated) implications under international law, including certain inalienable creative rights. When movie studios read your screenplay and decide they’d like to make it into a film, they hit a few snags. Two examples:

1. As the Author and copyright-holder, you the writer control the ability to make derivative works, such as a movie. Or a sequel. Or a videogame.
2. Some of your inalienable ((As in, “you can’t give them up, even for money.”)) creative rights as Author (e.g. “no one can mutilate or distort the work in such as way as to be prejudicial to the honor or reputation of the author”) are potential nightmares for a company about to spend $100 million on a movie distributed worldwide.

So a compromise was made.

Screenwriters would sell the “authorship” of their screenplays to the studios, ((If you’ve ever stayed through to the end of movie credits, that’s the reason behind that block of text reading, “For the purposes of international law, Big Movie Studio is the author of this film (motion picture).”)) and allow themselves to be classified as employees. Original works would thus become works-made-for-hire.

In exchange, screenwriters would get a host of benefits and protections covered by the Writers Guild of America (the WGA), which as a labor union can *only* represent employees.

The WGA would also collect royalties on behalf of screenwriters. Royalties were renamed “residuals,” since only “authors” collect royalties. ((There’s another history behind the term “residuals,” referring to the practice of keeping performers on hand as backup for electronic recordings. That’s a partial answer to the question, “But wait, why do actors get residuals?”))

If this strikes you as a kludge, you’re not alone. It’s graceless and awkward and weird. It’s completely unlike what happens in playwriting, even though playwriting and screenwriting are close cousins. ((Playwrights retain copyright. If screenwriters were to hold on to copyright and “license” the movie rights to the studios, the whole thing would become incredibly problematic for reasons Craig Mazin has explained artfully.))

I’ve described the process in terms of a screenwriter working on an original script by herself, but the same basic machinery applies to adaptations or television shows. Staff writers sign contracts which perform similar legal judo, making their words the company’s words.

In exchange for higher guaranteed payments (“minimums”), residuals don’t start accruing in a work’s initial window (theatrical release for a movie, first broadcast for a TV show), but rather down the line, especially when it comes out on home video.

That’s what the current WGA strike is a largely about: the residual rate for home video, and especially work distributed through the internet. ((The current DVD residual rate is 0.3%. The studios’ proposed residual rate for the internet is…zero. Because work on the internet is defined as “promotional.” That’s ballsy, frankly.))

You’ll note that the studios aren’t talking about eliminating residuals altogether. Even in one of their earlier proposals for “profit-based residuals,” they were acknowledging that writers are entitled to them. Without some form of residuals, the charade of authorship-transference ceases to be mutually beneficial.

What’s more, I suspect that the wiser members of the entertainment industry recognize what publishers have long understood: you want to keep a lot of writers on hand. You never know which one is going to create the next [Desperate Housewives](http://www.imdb.com/title/tt0410975/).

Residuals are like the research and development fund for the industry.

Why you don’t get residuals for old spreadsheets
—–

Coming back to my friend Jeff, let’s look at why that spreadsheet he made in 2003 doesn’t earn him residuals.

When he created it for his boss, he was an employee of the company. Copyright-wise, everything he did for them was a work-for-hire. They owned it outright.

When a screenwriter writes a script, she’s transferring this bundle of authorship rights to a corporation. In exchange for these legal and creative rights, she gets paid an upfront fee and royalties (called residuals).

Readers from the technology and medical fields might recognize an analogous situation with patents and intellectual property. It’s not uncommon for an inventor to get paid per unit for the right to use some proprietary innovation. So it may help to think of screenplays as “literary inventions,” subject to a strange but industry-standardized procedure to protect both creators and corporations. It’s not pretty, but it gets the job done.

Why gaffers don’t get residuals
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While the process of making a movie begins with the screenwriter, it ultimately involves dozens — sometimes hundreds — of professionals, from grips to gaffers to art directors to truck drivers. Most of the people working on a movie receive no residuals. ((Although depending on which guild or union they belong to, residual-like payments might form part of their pension and health fund.)) Is that fair? After all, these people work long hours, sometimes in very difficult conditions, and make a huge contribution to the finished film. Why don’t they get residuals?

Because residuals are royalties paid to an author. They’re not a bonus. They’re a guaranteed payment to the writer in exchange for giving up copyright and authorship claims.

In the heated rhetoric surrounding the strike, both sides have made misleading claims about the economic status of writers in Hollywood. The studios like to portray writers as greedy millionaires, while the WGA holds them up as middle-class victims of corporate fat-catting. Neither is accurate. Most writers aren’t millionaires — yet the Hollywood middle-class would be the envy of most of America.

The reductionism to “the rich fighting the super-rich” misses the real issue: the [internet will replace television](http://www.nytimes.com/2007/11/11/opinion/11lindelof.html), and the industry needs to come to terms with what that entails. The WGA strike will end with compromises over the residual rates. The eventual IATSE strike will be about the definition of what a “program made for the internet” means, how much their members must be paid, and when overtime kicks in.

How to explain this to your buddy Brooks
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The take-home lesson, in case you need to explain to a friend who blames “greedy writers” for why The Daily Show is in repeats:

* Writers get royalties: for books, for songs, for literary works.
* For legal reasons, studios want to be considered the “author” of a movie. So screenwriters transfer “authorship” to the studios, in exchange for a bunch of rights, and residuals.
* The studios and the WGA disagree about what rate is fair for work distributed over the internet.
* Since internet distribution will eventually replace DVDs, a bad rate would result in a pay cut for writers.
* That’s why there’s a strike.

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