For Hollywood’s creative community, the Internet has up until now served as little more than a worthless World Wide Web.
But times are changing.
In their continuing search for creative programming, entertainment dot-coms are opening up their venture capital-filled coffers to pay out some green.
“There is definitely money out there where there wasn’t any before,” says Garret Chau, head of UTA’s new media ventures group.
Yet how much money is being plunked down on the table for content deals is as varied as the ticket prices that airline passengers pay for the same flight. Similar deals easily vary from the thousands to the millions of dollars.
Specifics of cash deals are only beginning to make their way around the biz. And, while money is being ponied up, it’s Hollywood’s top tier — not the aspiring content creators trying to break into the biz — that are benefiting the most. The doors for Hollywood newbies are closing.
The way the dot-coms are dispensing money recalls in fact the way old Hollywood worked: The big names pocketed most of the dough while struggling writers and actors slaved away as an underclass. So much for equal opportunity on the Internet!
“Money is something that we don’t like to talk about,” says Mark Brooks, co-creator of “Lil’ Pimp,” a Web series on MediaTrip.com that’s being turned into an animated full-length feature for Joe Roth’s Revolution Studios.
“It completely fluctuates, and people try and hold us to that amount on future deals.” he adds. “This whole business changes so quickly. The going rate one month can be drastically different the next month, literally to the tune of thousands and thousands of dollars.”
Deal points for Web pacts are now one of the best-kept secrets in town, with few willing to disclose specifics — especially the dot-coms themselves — in fear of being forced to pay more for programming in the future.
And creators getting low figures don’t want to be publicly pigeonholed as low-rent talent.”We already had the experience where we did some things for a relatively small amount of money and other things for five times that amount of money,” say “Lil’ Pimp” co-creator Peter Gilstrap. “So we don’t give anything away because people try and hold you to that.”
The average three- to five-minute live-action short or Webisode costs $10,000 to produce — and that’s on the more inexpensive digital video. A Flash-animated series spanning the same time frame costs $20,000 per Webisode, or $4,000 to $6,000 per minute of animation.
Although all dot-coms — from AtomFilms to Z.com — are paying for content, they are spending thriftily, worrying about breaking the bank on content alone.
Take little-known Fiasco Films. The company was paid a paltry $1,000 by AtomFilms as well as stock options and a cut of advertising and offline syndication fees, for its 21-minute “The Making of the Blair Witch Project: The Blair Witch Project Project” spoof. Project cost $3,500 to shoot.
Smaller players have been offered $500 for 10-minute short films bowing at film festivals that cost $5,000 to make. The list goes on and on.
Big names get big bucks
It’s the big names getting the big bucks: “South Park” creators Matt Stone and Trey Parker and rapper Eminem were able to land hefty $2 million deals to produce Web series for Shockwave.com and Hookt.com.
Likewise, comic thesp Harland Williams is getting a $75,000 fee to produce 13 Webisodes for Shockwave.com. James L. Brooks, Tim Burton and David Lynch, among many others, also walked off with healthy deals for the same site.
On the writing front, scribes earn an average of $1,000 per Web script (usually three to five pages in length). Ghost writers receive $500 per script for a show they didn’t create.
Relatively unknown actors are issued checks of $300 per day, in keeping with Screen Actors Guild guidelines. Many thesps, however, offer their services for free in exchange for exposure.
“The day rate varies from $300 to $600 depending on the nature of the work and the budget of the particular project,” says Greg Krizman, a SAG spokesman. “We expect to be coming out with an Internet contract in the not-so-distant future.”
The Directors Guild of America, which keeps track of Web deals, declines to disclose how much a director helming for the Web receives. It also won’t disclose whether a DGA minimum rate exists for the Web.
“There’s no typical number,” says DGA spokesman Chuck Warn.
As for the Writers Guild of America, it created a contract for writers working on Internet programming three months ago, but has found no takers yet among producers. However, many candidates for the upcoming WGA broad elections have said the guild needs to spell out what jurisdiction it has over Internet work in next year’s contract negotiations.
Helping raise the money bar is a more aggressive stance by tenpercenteries and management outfits when it comes to their clients working on the Web.
One example: Artists Management Group recently began repping Internet programmers Art Brown and Terry Gatens (Romp.com’s “Tardz,” “Sports Online” and “Crispy and Root”) and attempted to up their fees from $1,000 per Webisode to $5,000. Romp balked. Brown and Gatens walked.
Instead of cash, the creators of “Lil’ Pimp” are getting a larger percentage of the backend, especially of the upcoming pic.
“If our film does well, we’ll make money,” Brooks says. “If it doesn’t, we’ll still be all right. You could make a bunch of ‘Lil’ Pimp’ movies for the price they paid for ‘South Park.’ We’ll make a lot of money in the backend, not so much up front.”
One thing not helping attract top talent to the Web is confusion.
Consider this scenario from Netcaster Eveo.com: In the first round of a deal, filmmakers are offered a non-exclusive agreement that says the work will be online for six months. Eveo will digitize and encode the work if it’s sent to them on videotape and everything is streamed on the site provided it’s not porn or homevideos.
Each person who submits a film gets a nickel per view and an immediate $100 advance on that amount. So far they have 1,300 videos online, with the top clips earning over $1,000.
In the second round, select filmmakers receive a lump sum of money that starts at $500. Eveo then gets worldwide exclusivity in all media for five years, including DVD, inflight on airlines and TV. If a work gets signed to something beyond the Internet, a 55/45 split is made with the filmmaker. Of the 1,300 videos they have, Eveo has claimed the exclusive rights to 150 clips.
Confused? Imagine the content creators who must sift through contracts like this from several Web sites.
“When we began the company, we looked around at the exhibitor agreements that other dot-com sites had, and we decided to construct what everyone would consider to be a filmmaker-friendly arrangement,” says Alan Sternfield, chief content officer at Eveo.com.
While uncertainty over prices is the holdout keeping traditional film and television content creators from making the leap to the Web, those feelings may change next year if SAG and WGA go out on strike: If that happens, the only place to turn to for work will be the Web.
Let the schmoozing begin
Dot-coms may want to start schmoozing venture capitalists now. Talent, and their agents, will be hungry for money. And it’s not like they’re not starting to make it.
Online projects are beginning to move offline.
In the sale of Icebox.com’s animated “Starship Regulars” to cabler Showtime, Icebox co-founder Rob LaZebnik receives full participation as a creator and exec producer and a split of Icebox’s earnings, including rights payments, producing fees and backend revs.
Writer-producer John Ridley (“Three Kings,” “Third Watch”) received a major cut of the $1 million against $1 million sale of his Web series “Undercover Brother” that runs on UrbanEntertainment.com.
Yet stock deals are still in play.
That’s one way animation site Icebox, headed by Hollywood industryites, continues to attract established TV show creators and scribes (from “The Simpsons,” “King of the Hill” and “Seinfeld,” among others) to create animated content for its Web site.
Creators receive stock for the initial series of episodes. Additional stock and cash, as well as a cut of offline revenues, is exchanged for the next season of episodes, if ordered.
“We have a very simple deal structure that is basically ‘favored nations’ here,” says Icebox.com prexy Gary Levine. “We’re going after a certain level of writer, and once we get them, they should feel comfortable that they have the same deal as their other friends and colleagues.
“We have a strict favored-nations policy that gives everyone a real peace of mind when they come in with some real potential upside on their series. Nobody is ever at a cocktail party and overhears about someone else who really took Icebox to the cleaners.”
However, the demand for cash over stock is likely to continue as Netcasters are canceling or putting on indefinite hold splashy IPOs on Wall Street, nixing any potential windfalls for content creators holding hundreds of options. Creators understand the value of nothing.
Only Shockwave.com still plans to move forward with its own stock strategy. In June, the company hired former Pixar Animation Studios chief financial officer Lawrence Levy as CEO, partly to oversee the public offering.
There may be hope for stockholders, however, in that several of the major entertainment Netcasters — including Icebox.com and Z.com — are affiliated with Internet incubators and may benefit once those parents become publicly traded.
“When you’re dealing with stock in a company that’s not public, there’s a great variable there,” Icebox’s Levine says. “But certainly in terms of present value of stock and cash, it’s far below what they (content creators) would command in television and film.
“And to some extent it basically dictates that we are the ‘project on the side.’ We’re fine with that. … We’ve become the passion project on the side for almost all of our writers. So they know this isn’t their day job. But they really can’t wait to get back to the Icebox series.”
(Ann Donahue and Tim Swanson contributed to this report.)