But, I like Not Paying 10% Commission

Agency Agreement 2019

But, I like Not Paying 10% Commission

One argument your agent and agency might be making to you about why you should oppose the Guild’s initiative is that it will cost you money. In some cases, this is true. We will all return to a world in which we pay 10% commission on our earnings.

That means, in any given year, some percentage of us would lose the so-called “savings” of packaging – that is those of us who, in that given year, happen to be employed on a show packaged by our own agency. Why give up a world in which the studios pay our 10% commission for us (at least periodically)?

Turns out, there are a number of reasons:

First, if you are a writer who has decided to hire a manager and/or attorney in order to generate a life-sustaining career – a decision caused in almost every case by the painful realization that our agents are not doing the job we hired them to do – then you have already given back that 10% to 15% and more. (It’s more, by the way, because you pay that money to your manager and attorney, year in and year out, regardless of whether you are saving the agents’ commission or not.) A generation ago, writers did not have to make that choice. Writers did not, by-and-large, have managers or attorneys on retainer. Their agents did the job they were hired to do. It is a somewhat cruel truth that these agencies that now make hundreds of millions of dollars from packaging our shows routinely tell their clients that they need to hire a manager if they want to be properly taken care of.

This is not an argument against the value of managers. Many of them do a wonderful job nurturing our careers, giving us good advice and helping us find opportunities. The agencies’ neglect of their clients has created a permanent niche for managers to serve writers. However, employing a manager should be a matter of choice, not necessity.

Here’s the second reason why the 10% savings isn’t such a good deal: If you’re ever lucky enough to have a show on the air that generates profits, you have likely given back the 10% and more, because your agency takes its 10% off the top, which means that your profits are earned on 90% of what they would have been.

The third reason why the 10% savings isn’t as good a deal as it seems to be is the most important. While we were led to believe that we were making out like bandits by saving on commissions – while the agencies and the companies that employ us have grown increasingly rich – writers’ above-scale income has been in steady and steep decline. Between 2013 and 2016 it declined 23%. In the last two years it has risen slightly, probably in part to the progress the Guild made in protecting employment span. Even so, income gains in the last two years have not kept up with inflation. And quotes in television have stagnated so much that the average co-executive producer episodic fee is the same now as it was twenty years ago.

Why is that? One direct and indisputable factor is that our agents have failed to defend our quotes. Even as they have guaranteed that their own income soars, they have allowed ours to decline. The question is why. Is it because agency wealth is no longer based on how much we make, but rather on how much our shows cost and how much profit they throw off?

But when the tide of the entertainment business rises – and when agency and studio boats, now joined together by strong ropes of mutual self-interest, rise as well – and when writers’ boats just happen to buck the rising tide and slowly sink – you have to ask yourself if it’s all just coincidence. Perhaps here we have an explanation for the seemingly incongruous studio generosity of paying our commission for us, in the form of packaging fees.

Studios increase their profits by applying downward pressure on labor costs, including writer salaries. Our agents are supposed to push back, defending and increasing our quotes. But agencies with packaging deals have no incentive to do so. Instead, they benefit from windfall profits by the increasingly-profitable studios. Studios complain about packaging, and yet it persists. You have to wonder whether there is not some unholy bargain going on – some soft collusion that has left writers on the outside looking in.

Now this savings of 10%, ballyhooed by our agents, looks less like a free lunch. It’s hush money.

Ignore the quieter truth that your paycheck is staying the same, year after year – or maybe declining. Buy into your agent’s argument that in this world you’re lucky to be working and that your salary is – well – take-it-or-leave-it. Stay silent about the fact that not just your employers, but also the fiduciaries, required by law to put your interests first, are all getting wealthy around you. And, in return, you’ll save 10% of your salary when your agency packages your show.

But yielding to that unreality concedes that our value is in our agents and not in ourselves. Which is not true. Which has never been true. The very idea is a fear instilled in us by those around us, who benefit from our fear. It is no more true than the lie that the entertainment business is doing poorly – that our employers are living by the skin of their teeth – that our shows’ budgets are set in stone, and even though they can withstand all kinds of increases in other departments – they cannot bend to pay a writer a dollar more.

Still – here’s the thing – as true as our arguments are, as morally reprehensible as packaging is, there is some financial risk to us in ending it.

The first thing that happens if we do away with packaging is that we go back to paying our full commission. The rebound in writers’ income will come later. And there is no absolute guarantee that every dollar saved by the studios will end up back in writers’ pockets. But economics suggests that when all agents’ interests are again properly aligned with ours – when they earn a dime every time we earn a dollar – that they should, together as a group, representing all writers – be capable, as they had been for decades before, of winning for us a fairer share of the pie.

Certainly the studios, once they stop lining the pockets of our representatives, will find their own pockets bulging by more than the 10% we will now pay our agents. How do we know that? Because the agencies are fighting too hard to preserve packaging and avoid commissioning us.

(Pay attention to how the agencies contradict themselves on this. They say, on the one hand, don’t be so upset about packaging. It isn’t such a great deal for us. We have to take a chance on any given show going into profit before we earn a penny on the back end. And on some shows we forgo more in commission than we make on our 3%. At the same time, they’re telling us – we can’t afford to stay in the business and represent all of you if we’re forced to do it all for 10%. It’s a wonder CAA and WME and the others can make ends meet.)

And if all of that isn’t enough to make you think that a periodic 10% savings on commission isn’t a bum deal, imagine this: Imagine the next twenty-five years and a world where our agents both package and produce. Imagine what happens to our above-scale income when those who negotiate our salaries also employ us.

Bottom line: Agents who earn their money from the profitability of our shows – in other words, from lower costs and higher revenues – make a mockery of the concept of a fiduciary. They are not our advocates; they are, effectively, management.

Want to bet on that world, in exchange for a periodic 10% back on your salary?


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