Q: I am a young filmmaker in Australia. I have been chasing the film rights to a book written by an American author. I have gone through the various publishers and have finally been given the name of the agent who represents the author in the States. I am interested in knowing if the film rights to the authors book are available, and if they are, I want to know the correct pathway to go down to purchase them.
A: To find out if the film rights are available, all you need to do is ask the agent (but you also need to do a lot of other things described at the end of this blog). Assuming the rights are available and owned by the author, the next step is to negotiate the deal with the agent on behalf of the author to option the film rights. (If the agent is a tough negotiator, you can try to cut him out of the equation and deal directly with the author; that’s a risky strategy that can backfire. But don’t worry, there are other books available.) And if you make the deal, the final step is to document the deal in an option agreement. You could actually purchase the rights, as you suggest in your question, but it’s unusual to do so — the typical way to go about this is to option the rights.
Law Law Land has amassed a rich library of beautifully written blogs, many of which discuss option agreements in general and book options specifically. But an option deal for a run of the mill book has the following standard key parts:
- Option Period: The length on the initial option period and possible extensions. For example, the initial period could be 18 month, with two 12 month extensions.
- Option Payments: The amount you’ll pay for the option and each extension. This varies wildly from zero for a self-published book of bad (or good) Czech poetry to $100,000+ for a high concept best selling “masterpiece” of the week.
- Purchase Price: The amount it will cost you to exercise your option and actually purchase the rights. The purchase price also varies wildly. It could be a set amount, but it’s often expressed as a percentage of the film budget with a certain minimum floor and a maximum ceiling. The percentage could hover around 2.5% to 5%.
- Backend: Contingent participation for the author, which is generally a modest percentage of the picture’s “net proceeds.”
- Subsequent Productions: In most cases, there should be royalties payable to the author for sequels, prequels, TV series, etc., based on the book or the first picture. For most books, these are relatively standard, e.g., for sequels, a royalty of 50% of the original purchase price.
- Reserved Rights: Generally, the author reserves certain rights in the book, such as publication rights, the right to write and publish sequels and prequels to the book, and a few other rights.
By the way, you would want to make clear whether the dollar amounts are US or AUD. Alternatively, if you don’t place a huge premium on clarity in your business life, you can keep it ambiguous; the agent will assume it’s US, and you’ll assume it’s AUD. This is a clever negotiation trick that doesn’t work, makes agents very angry, and will kill the deal.
Once the deal is made (you may no longer be “a young filmmaker” then), the next step is to actually document the deal in an option agreement. The option agreement must be in writing and signed by the author. In addition to the key deal points above, there are many other important bells and whistles involved. We’ll mention some bells and leave the whistles out. For example, the author should warrant in the option agreement that the characters in the book you’re buying are not used in other books or writings by this author, and depending on how prolific the author is, you should probably read some of the relevant books to make sure yourself. It’s not uncommon for authors with limited imagination to use the same characters in multiple books. It’s possible a character from the book you are buying also appears in another book by the same author, and the author had already sold the exclusive movie rights to that book (and that character) to someone else. And there are many other important “bells” and one or two “whistles” to address in the option agreement.
While the deal component of this negation could be relatively simple if the book is an obscure piece that nobody showed any interest in except the author’s immediate family and if the author is eager to hand you the rights, in many cases the deals get complex and nuanced. After all, few authors consider their book a “run of the mill,” despite our witty characterization above. And certainly for the actual option agreement part of all this, you would want to work with a lawyer who’s done this many times; or you can work with a lawyer who’s never done this —that way he’ll learn something, too.
By the way, while agents are some of the most trustworthy and detail oriented people you’ll ever have the pleasure to run across, you can’t rely on what they say and you absolutely must review the chain of title to confirm that the film rights to this book are actually available. This includes reviewing the author’s agreement with a publisher and ordering a copyright search report. You should always order a full copyright report, but you can get a quick preliminary idea by doing a cursory check yourself on theU.S. Copyright Office website.
This blog was originally published as part of Legal Ease, Film Independent’s weekly column on legal matters pertaining to the entertainment industry. To see other LEGAL EASE columns please click here.