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Typically, the first people to be paid from the Gross Box Office are the investors and distributors. After that, the remaining proceeds go to various pools where there is agreed-upon percent share. These pools include Producers, Directors, sometimes actors and sometimes writers.
The pools are made up of all the money left after the equity investors and distributors have been reimbursed for their costs. These players all have an agreed upon cut percentage of those monies.
The language in the contract may look something like:
The Production Company agrees that the Writer shall receive an amount equal to X% of the Production Company’s share of net profits received by the Production Company, but in no case less than $FIXED DOLLAR AMOUNT.
The writer and production company recognize that ‘share of net profits’ refers to the revenue accumulated in the ‘producers pool’. In essence, the writer will be paid in accordance with the same method and process used to compensate other members in the producer’s pool other than that the writer’s percentage is specifically X%.
Basically - it is a pool of money created and distributed before arriving at a Net Profit for the film. I believe it is a mistake for a writer to sign an agreement when they are merely getting a percent of NET PROFIT because due to a lot of accounting shenigans - that often is zero. The type of language (above) better ensures that the writer gets paid when the producer gets paid. It is a way of aligning your financial interests with the Producers.
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La Loteria - Optioned
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