The Option and what you need to know
For this new article John, the head editor of this website has asked me to produce a short piece on options. I asked him what sort of option, and I realized there is a lot to talk about.
What is The Option?
Let’s start by having a look at :
“In the film industry, an option is a contractual agreement between a potential film producer (such as a movie studio, a production company, or an individual) and a writer or third party holding ownership of a screenplay.”
The keyword here is “potential”.
As a filmmaker, if your work is optioned by a producer, that means that you are contractually bound to him. To what extent depends solely on the content of the option.
Let’s say you wrote a treatment about a Wall Street employee who realizes that his company gets rich by impoverishing millions of people. Your treatment is of interest to a movie studio. It wishes to option it. You will sign a contract with the studio by which you guarantee that you will not develop your treatment for any other company during a set period of time.
This is called the period of exclusivity.
What happens if The Option is exercised
During or at the term of this period, the movie studio may or may not exercise the option. It will depend on many parameters: how the screenplay turned out, if the studio managed to receive the agreement of potential actors and a director, and most importantly, if it found money to make it happen.
If the studio does exercise the option, you are in business so to speak. If it does not, tough luck. You are back on the market with your treatment and free to get optioned by any other company of your choice.
An option is not more than a promise with a big ‘if’. The potential producer promises you to produce your movie if the gods of filmmaking are auspicious, at this point he becomes your producer. If the gods are angry, your treatment falls into development hell: the exclusivity period is extended, you get a few bucks but not much happens for you. However, your work remains out of the market.
What types of things can one option?
Many materials can be optioned: a screenplay, a book, a short story, etc.
As a filmmaker, you may want to option somebody’s work. Here is some advice for getting started:
Chain of title
The first thing you want to do is determine who owns the right to the particular material you want to option. Sometimes it is fairly straight forward, (in the case of a self-published book for example) sometimes it is – well, very complicated.
To the extent of my knowledge there is not a database that shows you exactly who owns which rights on which materials. You will therefore have to reconstruct the chain of title: hunt down who owned what right at what moment, and work your way up to the current owner(s) of the specific rights you are looking for.
The more complicated the chain of title is the more thorough you need to be. Some unscrupulous third party will try to sell you or lend you option rights they do not own. It has been done in the past, and will be done again.
For this reason, if you are an indie filmmaker (which you ought to be since you are reading IndiefilmNYC), I would not recommend going into the reconstruction of a complicated chain of title on your own, you are likely to waste a great amount of time for questionable results. However, if you are already in business with a production company, let them deal with it, their legal department will happily delve into it for you.
The material indie filmmakers want to option are mainly books. If this is your case, your best bet will be to contact the publishing company or the author(s). Big publishing companies have a specific department called “subsidiary rights”. This is the one you want to reach: they will have all the information you need and a contract template ready – provided somebody else hasn’t optioned the book already. Of course, this will cost you money. This is where your negotiation skills will come in handy.
How to acquire The Option
When you decide to option somebody’s work, you will need to be convincing. You want him/her to feel that you have a sound project and that you are on top of it – that it will happen.
If you are thinking to approach an author without a plan for the future, read the first part of this article again. Money is one of the incentives you can use: you promise the author to pay him/her $100.000 (known as “the Purchase Price”) if you exercise the option. In the meantime, you will pay him a percentage of that sum upfront (say 10%) to compensate for that time his/her work is out of the market.
Remember: what you are asking the author to do is to trust you and only you with his/her work for a set period of time. He/she will be contractually obliged to turned down any other offers made during this period.
The cost of The Option
If the work is available and the author agrees, you will have to negotiate the terms of the options.
As in any contract you need to set the who, the where, the when and the what. Not necessarily in that order. Most importantly you will need an indemnity (‘hold harmless’) clause.
Writing a contract is basic storytelling. You need a beginning, a middle and an end.
The beginning is how much you will pay upfront and for what exactly (what are you adapting and to what format). You will pay this amount of money the day you sign this deal with the author of the optioned work. If you want to be taken seriously you need to pay this amount – ask yourself how much you love working for free.
The middle is what happens during the exclusivity period. You will be bound to do your best to make the movie (or whatever it is you optioned the author’s work for). You can set some milestones, such as the final draft of the screenplay, the inking of a deal with a studio or the funding of the whole project, etc.
The end is set when the exclusivity period expires. What are the cases in which the option will be renewed and for how long? What happens if you drop the option or if you exercise it?
Shall you choose to exercise the option; this is the moment when you have to keep your promises. If you promised $100.000 in the event you exercise the option, you are legally bound by the agreement to do so.
Contractually speaking the option is merely saying to the competition “I’m first, back off”. In the hypothesis you chose to exercise the option, you will then need to sign an extensive transfer of copyright. Therefore, I strongly recommend to attach or incorporate said contract to the option – this will save you major headaches while you are entering into production.
As usual, the bottom lines are:
Try to foresee every possible outcome and lay them down clearly in the agreement
Do not promise more than what you can afford.
Note: this article is not legally binding and merely expresses the point of view of the editor. It is your responsibility as a filmmaker to make sure you comply with the law and sign the proper documents.
More great resources about optioning your film:
How To Option The Film Rights For A Book
Optioning A Screenplay: What A Screenwriter Should Probably Know by Tamika Lamison
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