How, and how much, do the makers of TV shows get paid?
January 28, 2007 3:32 PM Subscribe
How, and how much, do the makers of TV shows get paid?
In a much-linked-to interview with the South Park creators, they say they have no problem with people downloading the show.
My first thought was, "but doesn't that cut into their profits?", but then I realised I hadn't the faintest idea how the creators of TV shows get paid for their creations, or how much. Or if it's even "profit" we're talking about.
Selling movie tickets is a business anyone can understand. It's essentially no different from selling potatoes. If people buy more tickets, the film earns more money*. Same with DVD sales. Sell a billion tickets at five dollars each, and somewhere along the line, $5,000,000,000 is changing hands. But how does TV work?
Does a TV series get bought outright for a flat fee, as in, Matt and Trey get a million bucks for a season of South Park and that's it, no matter how well or how badly it rates? And if it rates through the roof and the TV network makes extra money by charging advertisers extra, Matt and Trey get no more? But they use that as a bargaining chip next time around and demand two million? Or do they somehow get a financial share of the show's ratings success?
And what's the difference between something like "South Park", which is relatively cheap to make, and the creators can presumably do most of it themselves and deliver it as a finished product, and something like "Heroes" where a huge cast and special effects and location shooting mean that it costs millions per episode and the studio is making a big investment in your project before it can even get started?
In a much-linked-to interview with the South Park creators, they say they have no problem with people downloading the show.
My first thought was, "but doesn't that cut into their profits?", but then I realised I hadn't the faintest idea how the creators of TV shows get paid for their creations, or how much. Or if it's even "profit" we're talking about.
Selling movie tickets is a business anyone can understand. It's essentially no different from selling potatoes. If people buy more tickets, the film earns more money*. Same with DVD sales. Sell a billion tickets at five dollars each, and somewhere along the line, $5,000,000,000 is changing hands. But how does TV work?
Does a TV series get bought outright for a flat fee, as in, Matt and Trey get a million bucks for a season of South Park and that's it, no matter how well or how badly it rates? And if it rates through the roof and the TV network makes extra money by charging advertisers extra, Matt and Trey get no more? But they use that as a bargaining chip next time around and demand two million? Or do they somehow get a financial share of the show's ratings success?
And what's the difference between something like "South Park", which is relatively cheap to make, and the creators can presumably do most of it themselves and deliver it as a finished product, and something like "Heroes" where a huge cast and special effects and location shooting mean that it costs millions per episode and the studio is making a big investment in your project before it can even get started?
* I'm aware by the way that Hollywood uses occult accounting methods so that no film ever makes a profit on paper and that just because you created a film that made a billion dollars, it doesn't mean you ever get a cent. That's not the point.
To my understanding, it's different for everyone. Everybody negotiaties their own deal. Some people will take a smaller salary up front for a larger piece of the back end. In cable, most like to be paid up front because there's no money on cable for residuals.
All that being said, once a show passes 100 shows, it's generally considered a cash cow, as it is plenty of episodes to be syndicated forever.
As the creators of SouthPark, I'm quite Trey and Matt see a piece of every pie. DVD sales, Advertising, Syndication, World Rights, Merchandising, Rentals etc.
When they say they have no problem with people downloading stuff off the internet, the last thing on their minds is that people downloading are bypassing traditional modes of commerce, thus taking money from them. I think Trey and Matt deeply understand that having people trading this stuff back and forth, even if it's for free, only strengthens their brand.
This is something I firmly believe that everyone in broadcasting and media will have to understand eventually.
I had started to write a whole rant about ubiquity being the key to success, and involving Microsoft in the debate, but it seemed like a hijacking.
posted by asavage at 4:54 PM on January 28, 2007 [2 favorites]
All that being said, once a show passes 100 shows, it's generally considered a cash cow, as it is plenty of episodes to be syndicated forever.
As the creators of SouthPark, I'm quite Trey and Matt see a piece of every pie. DVD sales, Advertising, Syndication, World Rights, Merchandising, Rentals etc.
When they say they have no problem with people downloading stuff off the internet, the last thing on their minds is that people downloading are bypassing traditional modes of commerce, thus taking money from them. I think Trey and Matt deeply understand that having people trading this stuff back and forth, even if it's for free, only strengthens their brand.
This is something I firmly believe that everyone in broadcasting and media will have to understand eventually.
I had started to write a whole rant about ubiquity being the key to success, and involving Microsoft in the debate, but it seemed like a hijacking.
posted by asavage at 4:54 PM on January 28, 2007 [2 favorites]
Correction: MOST of the time there's no money for residuals. Again, it likely changes deal to deal. As a creator of a desireable property, one has much more lattitude to get the deal they want than someone who plays a night watchman every other episode.
posted by asavage at 4:55 PM on January 28, 2007 [1 favorite]
posted by asavage at 4:55 PM on January 28, 2007 [1 favorite]
Viral marketing = more interest in show = more viewers of show = more profits from ads = bigger paycheck for stars.
posted by softlord at 5:04 PM on January 28, 2007
posted by softlord at 5:04 PM on January 28, 2007
The South Park guys are mega rich by most standards--of course they don't care if you download it. About a year or two after the show started, I read an article where their new contract gave them $18M from merchandising rights alone.
Also, you'd be hard-pressed, I think, to find any tv writer who cared if you downloaded their shows. Like most artists, they want their stuff enjoyed by as many people as possible. In addition, once the show's been created, they've been paid the bulk of their cash (at least for shows that won't see syndication). It's the networks that are pissed about downloading because they make much of their money off eyeballs--the more people who watch a given show, the more they can sell commercial slots for during its broadcast.
posted by dobbs at 5:12 PM on January 28, 2007
Also, you'd be hard-pressed, I think, to find any tv writer who cared if you downloaded their shows. Like most artists, they want their stuff enjoyed by as many people as possible. In addition, once the show's been created, they've been paid the bulk of their cash (at least for shows that won't see syndication). It's the networks that are pissed about downloading because they make much of their money off eyeballs--the more people who watch a given show, the more they can sell commercial slots for during its broadcast.
posted by dobbs at 5:12 PM on January 28, 2007
Response by poster: I think I've derailed my own question by starting off with that thing about Matt and Trey.
My question really is more "how do people in general get paid".
And the most informative answers have phrases in them I'm not sure about like "back end" and "residuals" and so on.
Can someone do a "like I'm a ten-year-old" version?
But this:
>once the show's been created, they've been paid the bulk of their cash (at least for shows that won't see syndication).
seems like the rough guess I was making.
If Matt and Trey have a movie in cinemas, they continue to earn money from ticket sales as long as that movie is being shown, and more tickets is more money.
But if Matt and Trey have a show on TV, it's already over as far as money's concerned. They've signed a contract to produce 22 eps, handed in the first few and have already been paid. Even if every single person in the whole country watches that show every single time it's on, they get no more money?
posted by AmbroseChapel at 5:30 PM on January 28, 2007
My question really is more "how do people in general get paid".
And the most informative answers have phrases in them I'm not sure about like "back end" and "residuals" and so on.
Can someone do a "like I'm a ten-year-old" version?
But this:
>once the show's been created, they've been paid the bulk of their cash (at least for shows that won't see syndication).
seems like the rough guess I was making.
If Matt and Trey have a movie in cinemas, they continue to earn money from ticket sales as long as that movie is being shown, and more tickets is more money.
But if Matt and Trey have a show on TV, it's already over as far as money's concerned. They've signed a contract to produce 22 eps, handed in the first few and have already been paid. Even if every single person in the whole country watches that show every single time it's on, they get no more money?
posted by AmbroseChapel at 5:30 PM on January 28, 2007
Response by poster: >Viral marketing = more interest in show = more viewers of show = more profits from ads = bigger paycheck for stars.
On the assumption that the people aren't downloading the show instead of watching it on TV, right?
We're assuming they're watching as well as, for that equation to be true?
But I guess if people were downloading instead of watching, the ratings would go down.
posted by AmbroseChapel at 5:38 PM on January 28, 2007
On the assumption that the people aren't downloading the show instead of watching it on TV, right?
We're assuming they're watching as well as, for that equation to be true?
But I guess if people were downloading instead of watching, the ratings would go down.
posted by AmbroseChapel at 5:38 PM on January 28, 2007
At least in some cases a network agrees to purchase a set number of episodes from the producers of the show for a set amount of $$. The details are negotiated. How the producers share the $$ is up to them to negotiate with the people they imploy to create the show (possibly within the bounds of union agreements).
The dollar amounts can vary dramatically depending on the popularity of the show.
posted by alms at 5:56 PM on January 28, 2007
The dollar amounts can vary dramatically depending on the popularity of the show.
posted by alms at 5:56 PM on January 28, 2007
Best answer: Writers and writer-producers are paid a cash fee per original episode by the production company. In union productions, the minimum writer fees are set by collective bargaining agreements, but most writers are paid in excess of that amount per individual contract.
For each repeat of the show by the network, and each redistribution of the show (syndication, DVD, foreign sales, authorized downloads, etc.) a residual fee is paid under a complex mix of individual and guild contract provisions -- as a general rule, the payments diminish over time.
Now, if you are a show creator and you had some leverage when you created the show, you might also have retained an ownership interest in the show. That's where the really big money is -- you get a great big slice, not just based on residuals, of all sales after the original network contract. Syndication, foreign sales, and (lately) DVDs are big drivers, but another very rich source is the renewal of the network contract after its original term runs out.
Whenever a creator is known or rumored to have made a 9-digit fortune from a television show (like Jerry Seinfeld and Larry David, or Matt Stone and Trey Parker) it was their moxie in keeping a heavy equity interest in the show at the very beginning that made it happen.
Illegal downloads will only ever disturb creators if they see them as costing them money. Thus far downloading seems well-correllated to increased legitimate (and remunerative) viewership of the show in question. Even when it starts to cut in (if it ever does), most creative types will see the illegal downloads as free promotion for new stuff they might do, and, thus, still accretive to their total income.
posted by MattD at 5:57 PM on January 28, 2007 [2 favorites]
For each repeat of the show by the network, and each redistribution of the show (syndication, DVD, foreign sales, authorized downloads, etc.) a residual fee is paid under a complex mix of individual and guild contract provisions -- as a general rule, the payments diminish over time.
Now, if you are a show creator and you had some leverage when you created the show, you might also have retained an ownership interest in the show. That's where the really big money is -- you get a great big slice, not just based on residuals, of all sales after the original network contract. Syndication, foreign sales, and (lately) DVDs are big drivers, but another very rich source is the renewal of the network contract after its original term runs out.
Whenever a creator is known or rumored to have made a 9-digit fortune from a television show (like Jerry Seinfeld and Larry David, or Matt Stone and Trey Parker) it was their moxie in keeping a heavy equity interest in the show at the very beginning that made it happen.
Illegal downloads will only ever disturb creators if they see them as costing them money. Thus far downloading seems well-correllated to increased legitimate (and remunerative) viewership of the show in question. Even when it starts to cut in (if it ever does), most creative types will see the illegal downloads as free promotion for new stuff they might do, and, thus, still accretive to their total income.
posted by MattD at 5:57 PM on January 28, 2007 [2 favorites]
In addition to what's been said already, some writers engineer development deals with production houses. These deals grant the production companies exclusive rights to the writer's future work for a period of time, and they can climb into the millions of dollars. Obviously, production companies have to sell these ideas to networks, which will bid on them only if there's money to be made. So, to the extent that ratings determine the amount of money to be made, they influence the viability of large development deals.
posted by smorange at 9:31 PM on January 28, 2007
posted by smorange at 9:31 PM on January 28, 2007
I work for a documentary show. The show buys works from documentarians. Specific in the contract are re-broadcast rights for a specific period of time and the right to allow the program to be downloaded from the Internet (it's a non-profit). Occasionally, the segment producers will opt out of the latter two for less money if they hope to show the film at festivals or something and don't want it to over exposed.
posted by Mayor Curley at 3:53 AM on January 29, 2007 [1 favorite]
posted by Mayor Curley at 3:53 AM on January 29, 2007 [1 favorite]
Response by poster: Interesting new development! I hope Adam can answer it.
posted by AmbroseChapel at 4:45 PM on January 31, 2007
posted by AmbroseChapel at 4:45 PM on January 31, 2007
This thread is closed to new comments.
posted by Brian James at 3:36 PM on January 28, 2007