by Steve Kaire
Since most screenplays get optioned rather than sold outright, writers need to know how options work. In general, options are a bad deal for writers.
Writers are basically renting their material out for a fixed period of time, usually from six months to two years. Option prices vary from no money up to a high of $25,000. And during the option period, writers cannot show or market their material to anyone else.
To illustrate how options work, we’ll use this example: an option price of $5,000 on the front end against $50,000 on the back end, for a period of one year. That means the writer is paid $5,000 up front at the time the option begins.
After one year, several possible situations arise. What happens most often is that the optioner passes on the script, having failed to generate interest from a studio or financiers. The writer keeps the $5,000 paid to him and all rights revert back to the writer, who is now free to shop his script around again.
A second possibility is the optioner asks to renew the option for another year, in which case the writer is paid another $5,000 (or whatever amount is agreed upon for renewal.) After that second year is up, the optioner can pass again on the script, or exercise the option, which is of course the best outcome of all. It means the option reverts to a sale, and the writer will be paid the back end money agreed to. In our example, the writer was paid $5,000 initially, followed by another $5,000 to renew, then will receive another $40,000 for a total of $50,000.
Doesn't sound terrible, right? The reason why options are generally a bad deal is because writers are usually offered nothing, or a couple of hundred dollars for a one or two-year period. (Technically, an option needs to be for at least $1, to show "good and valuable consideration" and make the contract legal.) During that time you have given up the rights to your material and you are prisoner to the person who holds the option. After that time is up, the optioner usually passes and the writer has nothing to show for it.
My advice is never accept a free option. If a company is seriously interested in your script, they should pay you five to ten thousand dollars as a show of good faith for the option. If they don't have that, but they do have something -- let's say $500 -- then the writer needs to weigh how much juice the optioner really has. Are they "real"? Have they produced successful movies similar in genre/tone to your project? $500 might sound great when you're broke, but who knows what you might be able to make happen on your own during that option period.
Editor's Note: Another strategy you can try is a "non-exclusive option" or a shopping agreement. Producers like to tie up material with cheap or free options so that they don't have the rug pulled out from under them or waste their time. A non-exclusive option gives them the right to shop the screenplay, and in return, you promise to notify them of any submissions you make so that you're not working at cross-purposes. This protects the writer because you give up none of your rights and can sell the script to someone else. Please consult an entertainment attorney before entering into any sort of arrangement!-- JC
Steve Kaire (HighConceptScreenwriting.com) is
a Screenwriter/Pitchman who’s sold 8 projects to the major studios
without representation. His top-rated CD, “High Concept--How to Create,
Pitch and Sell to Hollywood” is available on his website along with
original articles and national screenwriting contests.