Tuesday, February 28, 2023

The Basics of Option Agreements - Part 4


Editor’s Note: This is part 4 on my series discussing option agreements. You can find parts 1, 2, and 3 at the links.

            In order to wrap up my series on option agreements, I want to discuss compensation other than the initial option fee and purchase price, and I want to briefly discuss shopping agreements.

When negotiating an option agreement, the initial focus will be on the option fee and the purchase price. These are important, but additional forms of compensation should be offered by the studios, and if not, then should be requested. If you are lucky enough to have a work that is optioned before it has been released, then you should request bonuses if the book is on any best seller lists or wins any awards. For a TV series, creators typically receive a royalty for each episode. It is also common to receive a bonus if the series is sold or runs for a set number of episodes. Creators also receive a small percentage of the overall minimum adjusted gross revenue of the work and a percentage of merchandise sales as well. These are just a few of the other forms of compensation creators can receive when a property is optioned and produced, and creators should make sure they are included.

Another form of compensation is consultant or producer roles. This tends to be a stickier point for studios than other forms of compensation, but creators should seek them out. As I mentioned in a previous post on executive producer credits, they can be prestigious, and they can be a nice source of additional income. Depending on your role, you can receive additional payments and bonuses based  on the success of the adaptation and contributions you provide.    

Finally, I want to briefly talk about shopping agreements. Shopping agreements are most often used when a third-party has interest in adapting your property and wants to see if they can drum up interest in it. If they are successful, then they will have the ability to either adapt the work or participate in the adaptation. Often, these will include a small fee, or no fee, paid to you. These are also typically shorter than option agreements. I tend to be wary of these types of agreements, particularly if there is no fee paid to the creator, but they can be useful in developing a project that might not have gone anywhere otherwise.

The ins-and-outs of option agreements and, to a lesser extent, shopping agreements, can be overwhelming. However, having a basic idea of what to expect, and knowing what you might want out of the deal, will go a long way toward making the process easier for you, and it will hopefully allow you find a deal that will satisfy you.