It is important for both writers and producers to understand the main terms that go into an agreement between writers and producers.
Literary release letters
Writers often submit their scripts to production companies hoping that their work will be selected by these companies.
It is the norm for production companies to make writers sign a literary release letter prior to their submission. A literary release letter basically releases the producer from liability if similar material and ideas are subsequently used by the producer in producing a film that is not based on the writer’s script. From the producer’s perspective, a literary release letter is necessary considering the high volume of scripts reviewed by producers and the similarity that some of these stories might have with each other. Without these safeguards, producers would be subject to endless litigation.
If a producer intends to make an adaptation of a novel, the producer would need to acquire the literary rights to a novel. In determining what a fair estimate of the price of the work is, the producer must consider how closely the actual screenplay will resemble the original novel.
Next, at each stage of the writing process, the producer will enter into an agreement with the writer to write a draft of the script for a fixed fee. The writer gets paid whether or not the draft is acceptable to the producer, and the producer has the flexibility of getting more than one writer on board to write and rewrite the draft so that the final product is to the producer’s satisfaction.
In the agreement with writers, producers may also promise to pay writers a percentage, e.g. 5% of the net profits of the film.
Royalty on derivative works
Producers will usually grant writers the right of first negotiation to write derivative works such as sequels or television spin-offs. Even if writers do not write the derivative works, they will usually be entitled to royalty on all derivative works.
Ownership of screenplay
If a production company previously acquired literary rights to a script but does not proceed to produce a film by a certain date, the ownership of the script will revert back to the writer.
Subsequently, if another production company decides to produce a film based on this same script, the production company would have to pay the previous company all the costs it incurred in acquiring and developing the script.
Writers usually want their names to appear in the credit but the “written by” credit may go to someone else if the writer’s work is rewritten by other writers. Top writers may want to negotiate on this by limiting the number of other writers that the production company uses to make changes to the script.