Scary Article about SAG Ultra-Low Budget Agreement

I guess we'll all have to cross this bridge when we come to it. There seems to be many SAG indie films on this board. I wonder if others can chime in with their plans/suggestions/experiences...

I certainly want and will make provisions for my SAG actors to receive a piece of the pie. They did me a huge favor and I plan to return it
 
We're basing this situation on a $50,000 sale of your film, so of course it sounds dismal. What you sold your film for $250,000? or $500,000?

Suddenly a $35,000 SAG fee is not so bad.

Point is....Ya gotta think big!
 
Just to be clear - you're not saying that this *actually happened* with "Paranormal Effect" are you?

Barry_Green said:
So yes, by the way the contract is written, let's take an extreme example:

You make a $15,000 movie called "Paranormal Effect" and you want good SAG actors, so you sign the ultra-low-budget agreement and pay them $100/day. Then you take it to festivals and you do well, and someone decides to buy it off you and they give you $50,000 cash. Hey, you tripled your money, cool, right? So you pay the actors 4.5%, so basically you split a couple grand with them. The distributor says no way will he sign your distributor's assumption agreement, so the offer is $50,000 with no signature, or nothing and you lose, so you take the money.

He then goes on to start a viral marketing campaign and makes $200,000,000 with it, off of theatrical and DVD release. You think that'll fly under SAG's radar? I don't think it will. So SAG looks up the current signatory, which is still you, and says "we need our 4.5%, so here's a bill for $9 million." Made out to you. Not to the distributor. You.

So you take it to the distributor and say "hey, pay up!" Do you think the distributor, who has no legal obligation to, will give you a dime? I don't think so either.

This was the situation, as of the time that that article was written.
Click to expand...
 
No, I have no idea what may or may not have happened with Paranormal Activity, I just used a fictional film called "Paranormal Effect" to show what could happen in an extreme case.

With the actual Paranormal Activity, I sincerely doubt it was SAG at all, and even if it was they'd be covered because the distributor (Paramount) is a SAG signatory, which means they would automatically have assumed the distributor's assumption agreement.
 
Barry_Green said:
And it also says that SAG can take a lien out on the picture, preventing you from selling the rights outright.
Click to expand...

This is why I don't use SAG. I don't to much controversial stuff. All it takes is the wrong person to find out and suddenly no one can see my film.

-Nate
 
Barry_Green said:
No, I have no idea what may or may not have happened with Paranormal Activity, I just used a fictional film called "Paranormal Effect" to show what could happen in an extreme case.

With the actual Paranormal Activity, I sincerely doubt it was SAG at all, and even if it was they'd be covered because the distributor (Paramount) is a SAG signatory, which means they would automatically have assumed the distributor's assumption agreement.
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Right...effect, not activity...duh
 
I think just the fact that between all of us, we still have no single cohesive answer to this question, including from some people who have actually SIGNED the SAG agreement, is a real indictment on SAG's efforts to make the process easy for independent filmmakers.

I'm still waiting to hear back from SAGIndie, will update when I do. If anyone has access to the latest Basic Agreement (the 800 page deal), is there a way you can send/upload it? I'd like to page through it myself, but it's not readily available for download on the SAG website.
 
Signing with a major relieves the filmmaker of this fee, correct? And only signing with a distributor who agrees to this "distributor's assumption agreement" will also relieve the filmmaker from this fee, correct?

What is the issue? The filmmaker has options. We wanted to work with certain actors who's names might draw the attention of higher profile festivals and distributors...So we did. This is not a deal with the devil. SAG offers this deal for the independent filmmaker with little to no budget so he/she can hire some name actors and give the film a better shot at some recognition. Its a good offer.

Outside of a few cases, a complete no name film has a huge uphill battle ahead of it. And the battle is already hard enough.

What am I missing?
 
I think the issue here is that the unreasonable SAG residual clauses (if we are interpreting them right) create an ostensibly "lost" budget range for indie filmmakers. Anyone who desires to make a film between $100k and $500k really needs SAG actors in order to command a large-enough advance to cover your initial investment, but at that budget range, there is little chance of signing with a "major" distributor (aka one who is a SAG signatory and will sign the DAA).

Therefore, the independent filmmaker ends up with an entire budget range ($100k to $500k, in my rough estimation) that will end up being a surefire losing proposition financially. What's more, this budget range is a CRUCIAL middle step for filmmakers who have already made a $20,000 feature (like myself).

With the current SAG residuals (again, if we are interpreting them right), a filmmaker can really only:

A) Make a $20k film using non-union actors and recoup a big enough advance to cover their budget from a small/mid-range distributor (as I did with "Plasterhead").
B) Make a $1 million + film with SAG actors and get a distro deal with a major distributor who is a SAG signatory.

What we are losing out on, as I said earlier, is that all-important middle range stepping stone, and that is why the contract clauses in question are so important and why I'm hoping something conclusive eventually comes out of this thread.
 
Kevin wrote: A) Make a $20k film using non-union actors and recoup a big enough advance to cover their budget from a small/mid-range distributor (as I did with "Plasterhead").
B) Make a $1 million + film with SAG actors and get a distro deal with a major distributor who is a SAG signatory.

What we are losing out on, as I said earlier, is that all-important middle range stepping stone,
Click to expand...

There is no safe middle range stepping stone.
Between no-budget (what you can afford to lose) and SAG-signatory whatever-budget, a producer's chance of recovering their money (never mind making a profit) is .0000000001% IMHO.

This is the reality of the market place. What's the first question a distributor asks you? Who's in it?

What's the second question? What's the budget.

If the answer is no names and no-budget, no distributor will take the film or even take a look.

Here is the acid test: will you pay anyone $20,000 for the right to represent their film even if you think it's the most brilliant movie you've ever seen?

Would you pay out $1,000,000. to the producer of Blair Witch if you had the money and you were a distributor? I know Arista did, but would you?
 
It seems to me people here make it seem a lot bleaker than it is, to be frank. Everyone on DVX User says you cannot make money on feature films on the indie range, it's impossible, none of them ever make money, you might as well not even try, you're just wasting your life and throwing away money.

Then in reality, everyone I know in the industry who has worked on indie projects has recovered all or most of their money. So there's a pretty big difference here between those two. I know my actor friend was in a guy's film where they spent $100K, and they sold international rights first, then I guess got a DVD deal here, and have made back most of the money. I don't think they broke even, it is definitely a weirder kind of niche film, but pretty well done and it was his first movie. So very small losses, which is not bad really. Then I also know of a number of other films my DP friend has worked on, some with a producer friend I worked with once as well, and most all of them returned a profit, they were $100K to $500K films.

I'm sure the reality lies somewhere in between, but the point is I don't put much stock in whatever people say here about how impossible it is. I think the problem is everyone who is doing well isn't on here posting about it, and everyone who tried and failed or has never tried at all is here saying it's impossible. It's just, to me, kind of silly. I'm sure everyone means well but the reality is you can't succeed without taking risks, and those risks can be calculated and you can be smart about it.

Then again most indie films in that budget range pretty much suck, so it's no wonder so many of them don't make any money. I don't really know the people who are making lousy $100K films, I know the people who are actually talented and know filmmaking who are making those films, with real actors, all industry pros, etc., and doing well with them.
 
thanks everyone
this thread has clarified many issues dealing with indie and union filmmaking
the two paths really don't cross
nothing has changed; it's who you know
multi-millionaires have made movies and got eaten alive in distribution
total amateurs have made movies and ended up making billions
the adage is true: nobody knows anything
 
filmman said:
thanks everyone
this thread has clarified many issues dealing with indie and union filmmaking
the two paths really don't cross
nothing has changed; it's who you know
multi-millionaires have made movies and got eaten alive in distribution
total amateurs have made movies and ended up making billions
the adage is true: nobody knows anything
Click to expand...


True that.

And people, let's find some direction here, if the ridunkulously successful Blair Witch and Paranormal Activity have taught us anything it's that MARKETING and CONTENT matter most, period. Nothing matters more than marketing and content. Presidential elections are won on marketing. Stars, SAG, all of it doesn't mean anything compared to an entertaining flick with specifically aimed niche marketing behind it.

Screw a distributor! With things like Netflix and Createspace it's a new age.

When I finally do my first film (still a couple years off, right now I'm just having fun learning doing web stuff), the one and only thing I will ever be concerned about will be making a name for myself in my city (Chicago). If you make a name for yourself in your city, (assuming it's LA, Philly, Boston, DC, etc) and you garner a following there, the rest is cake. The "rest", honestly don't matter.

Start building your fan base now on facebook (MySpace and YouTube are dead) so that two years from now you have 5-10,000 fans in place, maybe 20% of which will be in line to pre-order your next DVD. Then pound your city with posters and post cards and T-shirts from Vista Prints.

Get a facebook following for your projects and get your city behind you and YOU become the star.

Marketing a movie shouldn't be viewed any different as marketing anything else (be it a piece of real estate, a new bar, or a new brand of orange juice). The key components of good marketing are to make your product available and then to inform people as to how they can get the product and why they should want it.

I look at marketing like a grand game of Risk. You focus your attention on a specific area first. Here in Chicago we have neighborhoods (Old Town, Rogers Park, West Loop, South Loop, Uptown, Wicker Park, Wrigleyville, Boy's Town). So first you flood ONE neighborhood with your product. Talk to the local business owners, see if you can get your postcards (or, better yet, posters) in their businesses. Heck, see if they'll even let you sell your DVD there for a split on the profits. Tell them you're local, talk about the neighborhood, worst case scenario you've got that store owner as a new interest in what you're selling. Leave business cards with your movie's name and website on car windows the way carpet cleaners do. Hand out fliers or even 3 dollar DVD prints to the locals to get the word out. Hand out free T-shirts to people jogging or at health clubs and ask them to wear the T-shirt next time they workout.

Then, once you feel secure that you've pounded a specific neighborhood enough, you move onto the ajoining neighborhood and start the process all over again, bringing friends, fans, crew members -- whoever to help you out. If a neighborhood is especially bad, then just leave postcards at the bus terminals -- heck you might even be able to buy advertising for really cheap on some of the bus routes there!

You keep progressing outward until you have the entire city blanketed in your inexpensive promotional material. In conjunction with this you can go to your city's surrounding smaller suburbs and talk to the newspapers there to see if they'd be willing to give you a write-up. That way you're getting stuff for your DVD slip, getting some additional coverage -- while keeping it all still local.

Like Risk, you go conquering territory by territory. Obviously if you have a few grand to spare from your budget (though I personally think 60% of a budget should be marketing), hire a marketing company (and maybe a friend or two) to go out and do this for you.

I'm in sales, and while I do spend time on the phone generating my own business, I pay other people (telemarketing and direct mailer services) to generate business for me as well. I got into sales so that I could work from home and thus have time to write. Along the way I found out I liked doing film stuff so I've started to learn that as well. But whether you're selling novels, comics, DVDs -- whatever, it's all about content and marketing.

That's the path I'm following anyway. I guess I'll know if it worked in 5 years or so. I'm sure I'll still be lurking around these boards to let you know.

:D
 
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But the *CONTENT* (which you did discuss, but far less than the marketing) *is the core thing here*. Many, many a marketing dollar has been wasted on films that leave audiences indifferent or worse. Think "Gigli" (with my apologies for asking you to). "Paranormal Activity" started out tiny - in 12 theaters, with presumably pretty modest expectations, at least compared to the aforementioned Bennifer turkey (there I go making you think of it again - argh). But it grossed a very impressive $78K in the first weekend. Sure, that was helped a lot by some smart promotion, but people (and critics) walked out of the theatre and...told all their friends to go see it. Why? Because *they loved the movie*. Only then did it gradually open wider and wider, until it hit its present level of 2558 theaters (and $100M gross and counting). AFAIK, marketing kicked into overdrive only after the film grew a major set of legs. The Movie Whose Name I Shall Not Mention Again In This Post had the opposite effect: people (probably including many who walked out on it) told their friends to avoid the stupid thing like the plague...

So, two recipes:

"G%$&i" (name disguised to protect the sanity of the reader): *crap movie* (which I did try to watch, but stopped, fearing my dinner might make a return trip if I continued), but star-driven and budgeted and promoted to the hilt = commercial neutron bomb of epic proportions.

"Paranormal Activity": *great movie* (evidently - haven't seen it yet myself, but I'll give it the benefit of the doubt here), with no stars and a sub-micro budget, coupled with a smart but initially cautious marketing budget, then once it took off an aggressive one = commercial success of epic proportions (all things considered).

What's the key difference?

Just read everything between the asterisks above...

Chamber005 said:
True that.

And people, let's find some direction here, if the ridunkulously successful Blair Witch and Paranormal Activity have taught us anything it's that MARKETING and CONTENT matter most, period. Nothing matters more than marketing and content. Presidential elections are won on marketing. Stars, SAG, all of it doesn't mean anything compared to an entertaining flick with specifically aimed niche marketing behind it.

Screw a distributor! With things like Netflix and Createspace it's a new age.

When I finally do my first film (still a couple years off, right now I'm just having fun learning doing web stuff), the one and only thing I will ever be concerned about will be making a name for myself in my city (Chicago). If you make a name for yourself in your city, (assuming it's LA, Philly, Boston, DC, etc) and you garner a following there, the rest is cake. The "rest", honestly don't matter.

Start building your fan base now on facebook (MySpace and YouTube are dead) so that two years from now you have 5-10,000 fans in place, maybe 20% of which will be in line to pre-order your next DVD. Then pound your city with posters and post cards and T-shirts from Vista Prints.

Get a facebook following for your projects and get your city behind you and YOU become the star.

Marketing a movie shouldn't be viewed any different as marketing anything else (be it a piece of real estate, a new bar, or a new brand of orange juice). The key components of good marketing are to make your product available and then to inform people as to how they can get the product and why they should want it.

I look at marketing like a grand game of Risk. You focus your attention on a specific area first. Here in Chicago we have neighborhoods (Old Town, Rogers Park, West Loop, South Loop, Uptown, Wicker Park, Wrigleyville, Boy's Town). So first you flood ONE neighborhood with your product. Talk to the local business owners, see if you can get your postcards (or, better yet, posters) in their businesses. Heck, see if they'll even let you sell your DVD there for a split on the profits. Tell them you're local, talk about the neighborhood, worst case scenario you've got that store owner as a new interest in what you're selling. Leave business cards with your movie's name and website on car windows the way carpet cleaners do. Hand out fliers or even 3 dollar DVD prints to the locals to get the word out. Hand out free T-shirts to people jogging or at health clubs and ask them to wear the T-shirt next time they workout.

Then, once you feel secure that you've pounded a specific neighborhood enough, you move onto the ajoining neighborhood and start the process all over again, bringing friends, fans, crew members -- whoever to help you out. If a neighborhood is especially bad, then just leave postcards at the bus terminals -- heck you might even be able to buy advertising for really cheap on some of the bus routes there!

You keep progressing outward until you have the entire city blanketed in your inexpensive promotional material. In conjunction with this you can go to your city's surrounding smaller suburbs and talk to the newspapers there to see if they'd be willing to give you a write-up. That way you're getting stuff for your DVD slip, getting some additional coverage -- while keeping it all still local.

Like Risk, you go conquering territory by territory. Obviously if you have a few grand to spare from your budget (though I personally think 60% of a budget should be marketing), hire a marketing company (and maybe a friend or two) to go out and do this for you.

I'm in sales, and while I do spend time on the phone generating my own business, I pay other people (telemarketing and direct mailer services) to generate business for me as well. I got into sales so that I could work from home and thus have time to write. Along the way I found out I liked doing film stuff so I've started to learn that as well. But whether you're selling novels, comics, DVDs -- whatever, it's all about content and marketing.

That's the path I'm following anyway. I guess I'll know if it worked in 5 years or so. I'm sure I'll still be lurking around these boards to let you know.

:D
Click to expand...
 
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Paramount spent $10M in P&A for Paranormal Activity once they picked it up. Still a small amount compared to other P&A costs. They picked the film up for $300K domestic rights (foreign was already sold off). Don't know about points. So it is back to the marketing - someone paid for all those television ads in primetime...

Michael
 
MichaelP said:
Paramount spent $10M in P&A for Paranormal Activity once they picked it up. Still a small amount compared to other P&A costs. They picked the film up for $300K domestic rights (foreign was already sold off). Don't know about points. So it is back to the marketing - someone paid for all those television ads in primetime...

Michael
Click to expand...

At what point did Paramount pick it up? Before or after its initial 12-theatre US theatrical release? Before or after early critical and audience raves? At what point in its history did they start investing the big marketing bucks?
 
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OK...a bit of googling turns up the following from canada.com's movie guide, verifiably accurate or otherwise:

"Paranormal" went into wider release by Paramount after playing to sellout crowds at midnight-only screenings over the past few weekends in a handful of markets determined by online balloting.

Taking a page from the playbook of 1999's underground smash "The Blair Witch Project," the Viacom Inc unit is letting the fans do the marketing through such social-networking sites as Twitter. Its own marketing costs have been minimal.

Paramount bought the $15,000 movie last year at the Slamdance Film Festival, an indie rival of the concurrent Sundance festival in Utah."
 
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And from the Vancouver Sun on 10/12 (btw - is "P.A." a Canadian film?):

"A low-budget horror flick driven almost exclusively by fan-driven word-of-mouth — Paramount Pictures’ Paranormal Activity — earned $7.1 million this weekend in just 160 theaters. The top three films, by contrast, were each in about 3,000 theaters."

and:

"Most people found out about this through the recommendation of a friend,' said Rob Moore, [Viacom’s] vice chairman."
 
If the above is true, then Paramount sunk its marketing millions into a film that had already proven it had a major set of legs. Proven by nothing other than large numbers of wildly enthusiastic filmgoers and critics...

This then is *not* a story about a big marketing-dollar driven success. It's about an audience enthusiasm-driven success that got some big marketing money thrown at it on once it was.

Very, very smart money if you ask me...
 
Hmm. I'm going to go out on a limb and say that content is certainly less important than marketing when you're talking about a 20-50K film (like what we're discussing here). That is from a STRICTLY money point of view. I'm personally disgusted when I see a movie made by someone who obviously made it to make some sort of headway in "the business" or to "make a name" for themselves. I come from the writer's perspective, so, to me, content is the only reason you should be doing anything creative whatsoever. If you're in it for the money in any way shape or form, don't mind my snickering as you live a life of frustration and poverty.

I live the "lifestyle" of an accomplished writer or successful filmmaker in that I don't have anyone telling me where to be or when to be there. I do what I want when I want and am compensated pretty nicely. You can create the devil-may-care, man-of-leisure lifestyle and earn a pretty solid living simply by learning about investing and marketing. If you're doing this kind of stuff, creative stuff, for any reasons regarding monetary gain, it's a silly notion, and again, don't mind my snickering.

So, content is key for the ARTIST and the AUDIENCE, but it only HELPS the saleability, it only makes the job of marketing EASIER (not unlike referrals in business), but in terms of dollar for dollar, I believe more money should be spent on marketing than on any other aspect of the film. Because if I make a crappy movie for 9K and spend 11K on marketing, I garauntee you (10,000 to 1 at least) that movie will make more money than a decent movie that I spend 18K on and spend 2K on marketing.

Mind you this goes against everything I believe in as an artist, but as a business man I know it to be true. I know guys who do the same thing as I do and who are much better at it than I am who aren't as successful because they save and horde instead of market and promote. So, in that, their "content" is better than mine, they probably even get more referrals than I do, but in the end I will come out ahead because of marketing and promotion. In business I am literally sustained by hard work, self-promotion and marketing, not because I spend my hours learning and growing and deciphering new economic trends.

But content, christ man, if content is not your NUMBER ONE reason for doing what you do, then you shouldn't be doing any of this, right? To me, content is a GIVEN in the arts. I wouldn't care to give advice to anyone who wasn't making content their number one priority.

I think the meshing of content and marketing is too complex, though. Content regards the creative stages, marketing regards the monetary return. Content is the reason you create, marketing is how you make the money off of your creation. If you create content to make money, you're doomed artistically, plain and simple.
 
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