Sometimes when a no-budget filmmaker can't afford to pay a cast and crew what they are worth, then "profit participation" > "deferred compensation"
So many filmmakers struggle with the challenge of making their film because it is such a complex artform with a gaggle of logistical and artistic elements to it. One minute you are figuring out locations the next you have to decide on wardrobe then your DP is asking you about lenses and lighting (hell you might have to be the DP too) and your lead actor wants you to help him understand the crux of the scene. That's not even taking into account the budget and the legal and the food and the... you get the picture.
Filmmaking is hard work to do all by yourself which is why most don't. Filmmakers raise money to cover the costs of their cast and crew and those who can't raise sufficient money promise deferred compensation to their cast and crew. But even those who can't afford to pay cast and crew (and offer merely credit and deferred compensation) still find ways to pay for equipment, food, transportation and select cast and crew members. That's all and well but most people in the industry know that "deferred compensation" is code for free. Especially if the contract refers to them receiving deferred compensation out of net proceeds after the investors have been paid off.
That's why I'm surprised I don't come across more filmmakers offering everyone in their cast and crew "profit participation" instead of "deferred compensation." The profit participation can be structured as an equal split between everyone involved who has a substantial role to play or it can be structured as an amount that pays the cast or crew member the amount they would have made had they been paid their actual rate. Also, the amount can be capped so that the profit participant receives his or her pay (and maybe a little more) or it can continue to flow into their pockets for the life of the film's distribution.
Granted it's always better to simply raise enough money to pay your cast and crew (even if it's at a discounted rate) since everyone agrees that "real" money now is better than "maybe" money later. Also, profit participation is not always easy to define and structure and works better for a small cast and crew (since traditionally it's only a few select producers, investors, castmembers and the director who would be deemed profit participants, anyway). Finally, the investors should have a guaranteed first line to any monies made since they are the ones taking the biggest financial risk. But if no-budget filmmakers really want to show their appreciation for cast and crew that they can not afford but need, then offering profit participation could be better than deferred compensation. It gives everybody skin in the game to make the film a success and reflects a commitment by the producers and director to actually pay the cast and crew by sharing in any future money it makes.
Danny Jiminian is a producer and attorney who specializes in Entertainment Law, Intellectual Property, Business Law and Nonprofits and practices out of New York. For a free consultation, email him.
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