ABSTRACT
Filmmakers can receive two different kinds of profit participation in their contracts: so-called “gross proceeds” participation or“net proceeds” participation, and each have its own accounting formulas and definitions. “Gross proceeds” formulas are much more favorable for filmmakers than “net proceeds” formulas. When gross proceeds formulas are used in a filmmaker’s contract, a film has to earn far less money before the filmmaker begins to see some of it flow his or her way. Most filmmakers must settle for net proceeds participation. Net proceeds are determined by deducting a series of fees and expenses from all Defined Gross revenues. The exclusion from Defined Gross of a significant chunk of merchandising revenue – often 50 percent of merchandising revenue – also can keep a lot of money out of the revenue pot, as do exclusions of large chunks of soundtrack and music publishing revenues.
