Imagine, you’ve written screenplay after screenplay; script after script. Now you’re finally having a conversation with a film producer or a studio or perhaps even an agent about your script. Someone likes what you’ve written. In fact they like it so much they want it. You have them right where you want them — or do you?
If you don’t know the difference between a screenplay option vs a screenplay purchase you might get screwed. Unfortunately some folks out there in Hollywood-land are counting on your ignorance when you sign on the dotted lined. Don’t make a mistake causing you to loose the best script you’ve ever written. Don’t go into a meeting unprepared.
Below are the primary differences between an “option” or “purchase.” If you speak to ten different people you’ll generally get ten different definitions with some overlap. However, the basic concepts are the same. To be safe you should always get the advice of an attorney when dealing with contracts.
Script or Screenplay PURCHASE
A purchase involves your sale of the script to another party. It’s really simple but there are certain nuances. These nuances are called rights. Typically when a producer buys your script he/she buys (or wants to buy) all rights to it. This means that the benefits of ownership of the screenplay transfer to the buyer from the seller. If a producer buys all rights to the screenplay they can do whatever they want with the story. It can be made into a movie, a book, a made-for-TV movie, a comic book, a web series — whatever.
If you sell all rights to your screenplay and it becomes a monster blockbuster hit with merchandising, toys, graphic novel etc, you get none of the money. Your money came from the sale of the screenplay.
However, rights can be negotiated separately as part of the overall screenplay sale. For example, you can sell all rights to the screenplay with a contract clause that a percentage of all licensing income be paid to you. If you’ve written a story like Toy Story and there are obvious merchandising opportunities, it’s to your benefit to add the clause or rider for merchandising — or you can basically increase your price. For example, instead of $300k plus 10% of all merchandising, you can sell the script for $600k. This way you take the money and run, instead of waiting to be paid quarterly.
Script or Screenplay OPTION
A script option is NOT a sale of the script or screenplay. A script option is the right to buy, produce or sell the screenplay. Here’s how it works:. You have a script that Producer A wants. Producer A options the screenplay and takes it to his financiers or a studio to pitch the script and get money to make it. The studio agrees to fund the movie. Producer A comes back to you an then buys the script at a previously agreed upon price.
Sounds easy? It isn’t. Options can be sold for…nothing. It happens all the time. If a producer likes your script but doesn’t have money he/she may option the film for $0 because he knows another producer who does have money, and he can sell the script to that producer for a finder’s fee. Sounds tricky, right?
Or, a producer will option your script for $0, in exchange he’ll offer the value of his ability to network with the Hollywood mainstream, something you cannot do. This producer will say that he has connections that can get your screenplay made, or sold, but he personally won’t buy the script. When the producer has an option on your screenplay he has the right to buy, sell, assign or produce your screenplay.
It gets trickier. Whereas a screenplay sale is final, an option lasts for a specific pre-determined period of time, usually one year. If you give an option to a producer for one year, he/she has the right to sell or produce the script within a year. After the year elapses the option is automatically voided. However, most options include a renewal clause where the producer can renew the option in writing for another year under certain circumstances.
Here’s where it gets trickier. If you option your script to Mr. A for one year, then after six months Mr. B comes along to buy the script you cannot sell it. During the option period, the option-holder is the only person who can sell the screenplay even though you are the owner of the script.
Many producers will suggest you allow them to option your script for no money. They will say it is the industry standard. Perhaps it is, but a standard is not a law or right. If a producer wants to option your script,it means he sees potential for a sale. If he sees potential for a sale and wants to benefit from that sale (or production of the film) he should should pay for it — and usually they can and will. Perhaps it won’t be a lot of money but it will be something.
Imagine this scenario: your friend wants to borrow your car to drive 250 miles roundtrip. When he gets to his destination there is a strong possibility that he’ll get a fleet of cars to bring home. Is it worth it for him to pay you $100-1000 to use your car? Sure it is. That’s how you should look at an option.