Business Musings: A Cautionary Tale (Hollywood Part 1)

I’m starting a tiny new series because of everything that’s been in the news of late. But first, let me give you a caveat. For decades, Dean and I have said “Hollywood” when we really mean the film and/or TV industry. That word wasn’t accurate 30 years ago; it’s less accurate now.

The industry has mushroomed. It’s not even one industry anymore. You can do deals with a streaming service, or network television or network television in, say, France or make a movie in India or China or make a movie that you can upload yourself on YouTube.

The possibilities are endless. Really, truly endless.

But for the sake of this particular little series, assume this: When I say “Hollywood,” I mean the movie/TV industry, and I am most likely talking about the biggest one still, the one based in the U.S.

Okay? Then here we go.

Let’s Start With Copyright—Again

Once upon a time in a land faraway, an insurance salesman finished writing a novel. He had graduated from a private college with a degree in English, tried to enlist in wartime and was unable to, because he was too nearsighted—although he did manage to spend his college years in the R.O.T.C. He was a military junkie who read technical manuals for fun.

The novel he had finished was an overly long, much too technical, somewhat dull “thriller” with an everyman hero. “What’s wrong with a hero who’s married, loves his wife and plays with his kids?” the author asked on the cusp of fame. “That’s what most people are.” (Put a pin in that. We’ll come back to it later.)

He couldn’t sell the novel to any of the big players in fiction, or even to any of the small players. At that point in his life, he was a failed novelist, and he did what most failed novelists do: He gave up.

But he gave up aggressively. (He was an aggressive asshole, who only got worse later in life.) Instead of putting his overly long, much too technical, somewhat dull “thriller” into a box under his bed, he mailed it to a tiny nonfiction press. The editor there saw something in it, convinced her boss to buy the novel, if the author cut 100 pages out of it.

The author did. But he still didn’t believe in the book. Or maybe, he was just too damn dumb to know better. I think he was, as most authors are, that horrid mix of ego and insecurity and the insecurity won here. (Ego would win later on.) He sold all rights to the book to the technical press for a pittance.

Then he went back to writing, hoping he would have better luck.

Well, he did have better luck. The press he sold the book to was a government-owned nonprofit, and they routinely sent their books to the White House. The president, a conservative back in the days when conservative politicians actually read, found the book and, when a reporter asked him what he was reading, held the book up and said that the book was his “kind of yarn.”

That was all it took. The book sold millions of copies. It sold to the movies immediately thereafter and actually got made into a good movie with big stars.

But we’re getting ahead of ourselves. Our damn dumb protagonist (we can’t call this author a hero. Trust me) wrote and sold more books related to the first book. The same character, actions that take place both before and after the first book—a sequel in most meanings of the word, according to the non-profit publisher. The non-profit publisher, who had already profited on their investment when they sold paperback rights to a Big New York publisher, contacted said Big New York Publisher about this sequel thing. Because, you see, the damn dumb writer had sold his next few books to that Big New York Publisher, not realizing, apparently that he had written sequels. (Sigh.)

Suddenly, everyone was in a suit with everyone else about who owned the material and who had the right to license the books and produce them and who had the right to license any part of these works to Hollywood.

Yep, big money jumped into the picture, and suddenly everyone was protecting their piece of the pie.

Well, except the damn dumb author who had sold all of his interest forever and ever in the book, and that included his “every man” character.

(It’s very complicated to have a copyright or a trademark in a character. The character has to be so unique that it can’t be anyone else. It can’t be “every man.” It just can’t. And, because I’m not an IP lawyer or even play one on TV, I am not going to explain this to you further. I am, however, going to do what I always do. I’m going to recommend this book from Nolo Press: The Copyright Handbook. A new version has just come out. Buy it. Read it over breakfast or in small bites, and search for the answers to any questions you might have. Believe me, they are in that book.)

This is the turning point moment. That moment in all good stories where the protagonist (dumb or not) comes to an all-important fork in the road. You’d think this author would have learned that he needed to understand copyright and deal making and all of that stuff. Instead, he blames his error on the fact that he had no agent or lawyer to guide him.

The problem with agents is that they are often as clueless as our damn dumb protagonist. The problem with some lawyers is that they make more money in a case that drags out in court than one that can be settled quickly.

Back then, before the first movie came out, before it became clear just how much money this particular project with the Presidential Gold Seal of Approval could make over decades, there was an opportunity to settle everything.

The technical press had been cooperating. After all, they owned all rights. They wanted “a little bit of compensation.” Compensation they were entitled to, by the way. They could have been draconian about all of this. If they had been a Big New York Publisher, they would have been draconian and the author would have been screwed.

But the non-profit publisher and the writer had a deal to settle this amicably. Most likely, the non-profit would get a percentage, and our damn dumb protagonist would retain the opportunity to write and sell the sequels to the Presidential Gold Seal of Approval book. Some money—maybe a lot of money—would have gone to the non-profit press, but, honestly, in this kind of publishing and licensing movie and TV rights, there’s more than enough money to go around.

The author’s lawyer balked. The deal went into arbitration and (spoiler alert) got settled weirdly and without any clarity. The author, a well known jerk, did not make any friends (even pictures of him with the movie stars show him smiling and the stars as far from him as possible) and he got more and more egotistical over time.

The author incorporated, and did some business things to mitigate his tax burden, things that involved his then-wife. Yep, then-wife. Whoops. Because there was a divorce, and more problems and another wife, and five children, and movies, TV, more books, and lots and lots of business weirdness.

Then our damn dumb author dies. And the second wife wants everything, so she sues. Because those deals, made in the murky beginning before the first movie came out, left a lot of questions unanswered. She wanted answers—and she wanted those answers to come with money. As in, all of the money. (Or 80% of it, with the remaining 20% going to the kids.)

Here’s my favorite part. Her suit and the vehemence with which everything gets argued encourages the judge to put all of the money the properties earn into escrow, until the dispute is settled.

In other words, no one gets any money at all.

Four years later…

The case is so murky, so muddled, so damn confusing that the judge can’t do what a judge would like to do in a situation like this. A judge usually reads all of the documentation and then makes a summary judgement.

In this case, the judge concluded the mess is too tangled to figure out. So the case will go to trial. And, honestly, lay people will guess at whatever is happening here…unless both sides (all sides?) in this dispute settle.

Eagle eyes now know who I’m discussing. This is the case of Tom Clancy. I’ve oversimplified much of it, because this case also involves the 35-year rule (look it up), the statute of limitations, arcane business law, arbitration, and oh, so much more.

But it all stems from complete and utter ignorance. In the beginning, the ignorance was the ignorance of a typical writer. Writers don’t need to know business (they think) or copyright (they think) or marketing or anything else. They’ll have people to take care of that.

Clancy had no people at first. Then he hired people known to have sticky fingers. Or, at least, people known to make deals that benefited themselves as much or more than the client.

(I know some behind-the-scenes stories that I can’t verify through a quick Google search and am not going to put here in an excess of caution.)

When there was a fork in the road, Clancy always took the road that led to disaster, not the road that would clarify. His ego, never small, got in the way once Ronald Reagan gave him the Presidential Gold Seal of Approval. Every thing in this legal mess can be brought directly on Clancy’s ignorance and his unwillingness to bend.

But let’s not ignore the Naval Institute Press, which initially bought the book. They too seemed to be ignorant of a few things.

I do not know the details of the very first movie deal, The Hunt For Red October (although it strikes me as I write this, I can probably find the contract, since there’s a lawsuit). But I do know this: whenever Hollywood makes a contract, especially when the publishers and authors involved were ignorant of the ways of movie powerbrokers, Hollywood takes everything. They want movie rights—sure—but literary rights too, and usually merchandising rights (thanks, George Lucas [insert sarcasm emoji]) and anything else their sharks…um, lawyers…can think of.

You think that the publisher, the writer, and the book agent involved in the early years of this clusterfuck were aware of this? Yep, me neither. Deals got struck, deals got made, people ignored the deals, other problems ensued, and no one opted for sense or clarity—not that either was easy with Clancy involved.

Let’s rewind the tape though.

All of this—decades of legal wrangling, an estate tied up in litigation for eight years now—could have been avoided if Clancy had understood copyright in the first place.

Sure, he could have sold the book to the Naval Institute Press back in the day—and negotiated—the contract. He could actually have asked for things outside of their standard contract. Which, if you look at the 1988 Washington Post article I linked to, is the one he signed. The publisher explicitly says, “the contract gave the Press the right to any sequel to ‘Red October.’ It’s a standard contract we’ve been using for years.”

Clancy was so happy to sell the book he no longer believed in that he didn’t even negotiate a boilerplate contract.

Head-desk-head-desk-head-desk-head-desk.

Back then, $5000 was on the line. Now, multi-millions, if not billions. Don’t expect this thing to get settled any time soon.

The Reason I’m Bringing This Up

I have done so many posts on copyright and the importance of learning copyright that I have lost track. If you do nothing else, look up this post. It’s critical for all writers. For every story of a writer doing things well, there are thousands of writers who haven’t. Most writers who haven’t don’t sell at the level that Clancy did.

Frankly, Clancy wouldn’t have sold at that level either, if he hadn’t gone to the Naval Institute Press, who routinely passed their books to the White House, and Ronald Reagan hadn’t picked up the book and actually read it. I don’t buy what the publisher of the Naval Institute Press was selling about the influence of their curation (although he might have a bit of a point about that “trim 100 pages” thing). But their habitual marketing sprinkled some luck on the entire project, and that changed everything.

If they hadn’t had luck, Clancy would have been another writer who produced an eye-crossingly dense first novel that sold 10,000 copies and got relegated to the dustbin of history. His mistakes would never have been noticed, and no one would have cared.

But that luck, that sudden reversal of fortune, can happen to any writer at any point, and as I’ve often said, what hurts writers the most is success, not failure. Failure is something you can move on from.

Success can destroy a writer, a career, and an entire family. (You think Clancy’s family is one big happy huggy group? Yep, me neither.) When you negotiate a contract, you should negotiate for success, not for failure. (Although you should keep an eye on that failure side of thing.)

There’s so much money in successful publishing that leeches moved into this business a hundred years ago. Leeches can siphon funds away from bestselling writers and the writers don’t even notice. Clancy made millions on his books. I’ll wager, without looking at any numbers, that at least one of his agents (a Jabba The Hut character whom I’d met and run from) made more.

I know that Clancy’s New York publishers made a boatload more money than Clancy ever did. That’s due to traditional publishing contracts. The traditional publisher makes 80-90% on the book; the writer makes 10-20%. The movie studios made a boatload more than the publishers did. And other studios are poised to make even more money.

Here’s the thing, writers. If you’re indie published, you make 70% of each book sold. You might even make some good money in a movie-TV deal. If you know how to negotiate or you know how to hire a good attorney who will then negotiate for you (and will know when to walk away), you’ll make even more money…on the books, not on the movie-TV deal. We’ll talk about that next week, when I discuss in depth what’s going on in Hollywood right now.

Right now, there’s a feeding frenzy on literary properties. This has little to do with the pandemic, although it sounds good. Yes, agents, managers, directors, and studio heads are at home, and yes, a few of them even cracked a few books—enough that they can say they read “a lot” during the pandemic.

But there’s a whole other reason studios are licensing literary properties right now—and yes, book agents are involved. It’s an ugly reason, and I’ll deal with it next week.

Keep this in mind, though. Most movie and TV deals never result in a property showing up on some screen (big or small). The deals happen. Some money changes hands. Often rights get gobbled up and swept into some studio’s valuation. Writers are happy, thinking they’ll end up with a movie or TV show from their property, which (as we all know) will be the next Game of Thrones. But if the writers are as dumb as Clancy, well, they might lose the right to even write in their fictional world again. Doesn’t happen, right?

Think again.

Your Homework This Week

Yep, I’m giving you homework. Read the article on the Clancy copyright case. If you’re really interested in learning about copyright, pull out your copy of The Copyright Handbook and read through the summary judgement the judge issued on February 10. Look up every copyright thing you don’t understand.

You won’t understand all of this case. Hell, I don’t understand all of it.

But you will get a clear picture of what ego and ignorance can create. Then you add the greed, which is always a factor in estates of the famous, and you get this.

Oh, and remember: We all will have estates, and our heirs (whoever they are) will inherit. Even if we’re not as successful as Clancy, ignorant heirs will believe that there are millions at stake. (Oh, gee. There’s that word again.) Think something like this won’t happen to you or to someone you love enough to leave your precious writing estate to?

Think again.

*****

It is so nice to have the luxury of reading business news again. 2020 was fraught—COVID, election, post-election—that I could barely find time to write, let alone read business news. But there’s time now. Which means there will be more posts like this one in 2021.

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“Business Musings: A Cautionary Tale (Hollywood Part One),” copyright © 2021 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / andrewgenn.