Editor’s Note: This is part 2 on my series discussing option agreements. You can find part 1 here.
If you are approached about having a work optioned, the first thing you need to understand is if you have the rights to grant the option. Who else may have an interest in the rights to your work and will need to be consulted? Do you have to involve any of your co-creators? If you did not do all of the work yourself, or you did not acquire all of the rights for yourself, then you will need to involve them. Do you have an agent? Do they have the right to negotiate media deals on your behalf? If they do, you’ll need to get them involved. Also, do you still have the right to negotiate or grant the option? You will have to review your publishing agreement. Some publishers leave media rights with the creators. Some publishers merely want a cut of any option money you receive. Some want to negotiate it on your behalf and have the contractual right to do so. Worse yet, some have acquired the rights to negotiate and dispose of it without your involvement. You’ll need to see who else you need to involve and what rights you currently have.
When optioning a work, it is important to specify what is being included in the option. It is important to clarify if it just includes the main comic book or a specific series, or if it also includes any future works developed relating to the main comic book. Ideally, as a creator, you want to limit it as much as possible, as it gives you more opportunities to exploit the work and profit from it. However, most studios will want the right to incorporate or develop direct sequels into media adaptations. It is important to make sure it is addressed, and if needed, the compensation adjusted to account for the inclusion of additional works.
The next key element of an option is what rights are being granted. For most production houses and studios, they want the right to almost everything. They will usually want film and TV rights, theatrical, radio, publishing, etc. Sometimes, however, a third party may only be interested in acquiring the rights for one thing, such as film or theatrical. Usually this is done because it is often cheaper to acquire limited rights, and the third party may not have the ability to exploit a full set of rights.
When granting rights in an option, anything you are able to reserve might be able to be licensed later on for additional money. These are called reserved rights. If possible, you should try and retain theatrical, radio/podcast, or games/video game rights. Another lucrative right is merchandising. Most studios will want the right to make and sell merchandise, and you will usually receive a separate royalty for these goods. Sometimes, you may be able to retain some limited merchandising rights to create goods based upon the original work (think goods based on a comic versus goods based on the movie). This is something creators should push for, as it gives you an extra revenue stream. Every situation and studio is different. With very few exceptions, creators should almost always retain publishing rights.
When dealing with the distribution and acquisition of rights, it is also common for studios to request that certain rights are frozen or subject to a right of first negotiation/refusal. If rights are frozen, then that means that one or both parties cannot exploit the rights, typically for a set amount of time, without the other party’s permission. If any reserved rights are subject to a right of first negotiation, rights of last refusal, or something similar, it means the party optioning the rights has the ability to negotiate for any rights it has not previously acquired.
Next time, I will discuss reversion and termination.