Re: BUY-OUT FEE?

[Adam Acres] "I am doing a short commercial...what do I charge for buy-out?"

Typically, nothing.

Maybe things are different across the pond (although I've never heard of such), but here in the colonies when a commercial client hires you to produce a spot for them, they own it outright and may air it whenever and wherever at their pleasure... and for as long as they want. There are generally no residuals or additional payments to a commercial producer for the rights to air a commercial in perpetuity.

I suppose you could write a contract with a client that way... say, you do the initial work at a small fraction of your regular rate, with additional payments coming later based on how long or where a production airs. That setup though is generally a bit to clunky and complicated for something like a commercial, though. Additionally, unless you are also their advertising agency or directly handling their media placement and traffic yourself it's difficult to know when and where all the commercial is being used.

When a client hires you to produce a commercial, they generally own it. But... they should know that they own that finished production, and not necessarily its elements. Our contracts specifically state that while our commercial clients may air the spots whenever and wherever they wish, they don't own things like the original source footage, nor can they cut up the finished production and use pieces of it in other productions not created by us.

Also, remember that while the "You paid for it, you own it" theory applies to the commercial as a whole, it might not apply to some particular rights-managed parts of it. You may, for example, have a union actor's screen or voice performance in the spot that has only been licensed for a specific time, say 13 weeks. The same applies for music rights... which might be only for a specific time or market, or a specific media (i.e., the client would have to pay additional rights to use the same music track on a web-version of the otherwise broadcast commercial). But these are those residual payments required by the third parties, not by you. The commercial's production company doesn't usually get any additional fees based on the longevity or use of a spot.

T2

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Todd Terry
Creative Director
Fantastic Plastic Entertainment, Inc.
fantasticplastic.com

Hello Adam,

It sounds like they are asking YOU for a buyout rate which is more common in the print world then video.

I usually double my day rate for print buy out, but in the past have had agents triple it for print work.

A buyout in the United States means transferring the ownership of the work to the client to use anyway they want for any product in the future.

I try to negotiate "unlimited usage" instead of a buyout. With unlimited usage the client can use the image anyway they like and they don't have to pay you anything more in the future. But you maintain ownership of the image or footage.

If the footage is generic in nature you could use the footage in another one of your own projects, a self promotional piece, or possible sell as stock in the future.

The stock usage is somewhat a moot point if you're dealing with professional talent and their contract or release. But if you're dealing with non professional actors have them sign your release.

So if they are asking you for a buyout I would double your day rate, and if it's too much you could reduce the price and offer them unlimited usage.

Good Luck,

Jeff Cadge