Buyouts

  • User Deleted

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    Hey Guys,

    I have been acting for just under a year now, and wanted to know if anyone could give me a brief overview of how Buyouts work, etc.

    I know there are different types etc, but just an idiots guide to buyouts in general would be great.

    The problem is that I am getting cast in commercials I am finding myself, but my new agent is saying that either because the usage fees are no good, or the buyout period is too long etc. Obviously I trust my agent, so I wouldn't want to go against them, but would like to know more about it as I don't want to be missing out on money as well.

    But from what I have researched is that a Buyout is simply the company buying you out, but doesn't stop you working on other potential commercials.

    Any advise here would be really appreciated.

    • 6th Oct 2012
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  • Lee Ravitz

    Actor

    Yes, the basic buyout principle (which is becoming increasingly common across the board for commercials) is that you are paid a one off fee for usage across stated media in accordance with the contract. It is framed in distinction to a residuals deal (very uncommon in today's market, whereby you are entitled to a small percentage payment anytime your piece of work is shown) and renegotiable deals (whereby the agreement is that you will gain additional payment if the usage of the work runs beyond a stated period of time, or is used across more platforms than are covered by the terms of the original agreement - generally, this will only happen in the event that the ad is considered to be a runaway marketing success).

    There are no absolutes set for rates, so if your agent is of the opinion that the buyout being offered is too low to be worth their while that is their prerogative. Similarly, they can have justifiable reservations about extensive usage agreements (e.g. three years worth of usage across media) if the initial buyout being offered is poor, and there is no option to negotiate further or bigger payments later.

    There *is* such a thing as pricing yourself out of the market, and I can understand your frustration if your agent appears to be preventing you going for job offers simply because they feel their cut of a profit will be too low...but you can't necessarily fault an agent for thinking that the offer of poor rates of pay doesn't reward them for negotiating deals on your behalf. Individual agents have different sticking points in this regard.

    If you want some comparative impressions of what a 'good' buyout is, I will defer to others on the forum - but they can range hugely, from £1000 or thereabouts to £25,000 from some of the richest companies. You probably shouldn't be asking an agent to negotiate any buyout deal that offers less than £1000 minimum, and some agents would hold that below £5000 is not worth the time and energy incurred to secure the deal in question. With that said, the average amounts offered for buyout seem to drop regularly each year (not, I hasten to note, a good thing!), so possibly it is your agent who has slightly unrealistic expectations about how much advertisers will be prepared to pay out for your services. It may be an idea to talk to your agent about this concern directly for that reason.

    • 4th Oct 2012
    • 1
  • User Deleted

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    Hey Lee,

    Thanks for your really in-depth explanation. Really appreciate you taking your time out to explain it to me.

    Lets say for example,if the commercial you do does have a buyout, can it also mean that you cannot for example do any other commercials as they have bought you out? Or does it simply mean they are buying you out of usage fees?

    Still a bit confused on this...

    My agent is a lot more experienced then me, so I have full trust in them. Tt's just good to educate myself on this a bit more.

    Thanks again

    • 4th Oct 2012
    • 2
  • Lee Ravitz

    Actor

    The buyout is just a term for how the money owing to you works, Cyrus. So, yes, it just means that a single fee is being negotiated for your pay. As I said, an agent may question this if they think the fee is low for the amount of time the company are asking that the commercial be aired. Production companies will make considerable money from a successful advertising campaign, but being bought out (it's your services being 'bought outright', if you like) means that neither you nor the agent see any money beyond the amount of the initially agreed fee, no matter how successful the campaign may become.

    In the good old days, you might have stood to sign contracts that ensured you all a small fee every time your work was used, but that's increasingly a thing of the past: however, an agent can still hold out for deals where additional fees can be renegotiated if the campaign gains momentum, or only agree to advertising campaigns that pay a certain minimum buyout in the first instance.

    It has nothing to do with your being able to advertise for a similar company. However, that's not to say that a company can't ask you to sign an 'exclusivity' clause if they want to - which may place you in the position of having to forgo other work. In effect, you agree to do an advert as the face of Jones's Shoes on condition that you don't, two months later, agree to do another advert as the face of Smith's Shoes, because it would make everyone who actually cast you look ridiculous. Generally, most commercials casters will ask you to fill in a recent commercials employment history at every commercials audition, and they will often ask if you have done any work that might 'conflict' with the current campaign - but, by and large, if you have just been shooting an advert for a Japanese computer console and you are now being asked to audition for an advert for a German electricity provider, there is not considered to be any conflict of interest. You are, after all, an actor, and you follow the work. If the only thing you are ever seen for is commercials for electricity providers then once you have done one, it is true that others may get more reluctant to use you to advertise the same basic product. Even this, however, remains a subjective casting choice: it is only if you sign an exclusivity agreement that you *have* to avoid actively pursuing other work in the same vein for a given number of years. If your agent thinks that exclusivity is being asked for, in return for your being paid off at a paltry rate, then it's likely they may want to turn down the audition offer, for fear that you will lose more lucrative work later down the line because of it. However, it's still true that none of these issues should be confused with buyout agreements.

    • 4th Oct 2012
    • 3
  • User Deleted

    This profile has been archived

    Thank You so much for such a clear and concise explanation. That really makes sense now, and I know the difference between a Buyout and an exclusivity contract.

    Thanks again pal, really appreciate you taking your time out here!

    • 4th Oct 2012
    • 4
  • Lee Ravitz

    Actor

    Glad it was helpful. Just to sum the whole thing up with two useful descriptions I found on line, and make it crystal clear:

    A Buyout Contract is when an employer makes a single prepayment, 'buying out' the contract, so as to hold no further ongoing obligation to employ or pay the person concerned

    An Exclusivity Agreement is when an agreement is made by one party contractually to avoid engaging in particular business activities with other parties for a specified period of time.

    I'd stress that the latter kind of agreement is unusual, but not unknown, in the world of advertising: I was literally at an audition a couple of weeks ago in which an exclusivity clause was inserted into the contract for the actors' services, and I made careful note of that fact for later discussion with my agent. It may arise in acting terms should there be a need to particularly associate your identity with a specific product or company, or to defend the integrity of the product by preventing you advertising for the opposition.

    • 4th Oct 2012
    • 5
  • Cia Allan

    Actor

    I just wanted to comment on something regarding advertising for a similar company, which has given me a new view of buyouts.

    If you had a a one-year buyout and an exclusivity contract on, say, a toothpaste commercial you were in, this protects the company whose toothpaste ad you appeared in, and exists to prevent you from filming for another toothpaste manufacturer. That's simple enough. But what if there is no exclusivity contract?

    Let's look at things from a second toothpaste manufacturer's point of view. They love your audition but they don't want your previous toothpaste commercial to undermine theirs. And they look back 3 years!

    It is absolutely normal and commonplace for a casting director either to get you to fill in a detailed form listing commercials you've been in over the past 3 years, or to ask you during the casting process what you have done in the past 3 years to see if there are any what they call 'conflicts'. So Smith Shoes won't want to hire you if you can already be found promoting Jones Shoes 2 years ago.

    This has actually made me put a new meaning on the term 'buyout'. It's only how I interpret it, but it helps me decide what jobs to go for and what to ignore. So my new definition of buyout is this. "We are buying your performance outright with no residuals for X number of months, AND because of filming with us, you won't be able to accept another job with a similar company for 3 years". They don't say that, but that's how it works

    Some years ago I did a TV commercial where the all-in fee was just £800 including the buyout. I have to say I was delighted to earn some money so I grabbed it! However, within some months of filming the job, a company marketing a very similar service contacted my agent asking me to audition for their upcoming commercial and were offering two days of session fees plus a £5000 buyout. They said I looked perfect for the job. BUT I couldn't do it because of the 'conflict'.

    In my understanding, despite there not being an exclusivity contract in place, I realised that the first company had effectively 'bought' me for 3 years, and to my loss. The second company just wouldn't see me for the casting.

    So just because there isn't an exclusivity contract in place, doesn't mean you can go ahead and promote a similar product. The block will come from the second company, not the first.

    IMPORTANT: It's particularly important to confess what you have done in the past 3 years and not try to hide it. Two different casting directors have told me of actors who have been sued for the production costs of a commercial because they failed to disclose their involvement in a similar product's publicity, so when it was discovered, there had to be a re-casting and new production schedule - thousands of £££s. So it's not worth it to try and keep quiet or to lie. If you're not sure if a product conflict would exist, get your agent to check with the casting director before sending you to the casting. An example of this might be a commercial you've done for Manufacturer A promoting a herbal slimming product and a casting for Manufacturer B's herbal tea drink. Is it a conflict or isn't it? Probably not, but always ask first. As I know to my cost, there's nothing more annoying than taking time out to go for an audition and incurring travel costs, only to find out during the first few minutes of the casting, that they consider there to be a conflict with what you've previously done.

    • 5th Oct 2012
    • 6
  • User Deleted

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    Thanks for your explanation Cia. I really appreciate you taking your time to reply. Makes Sense

    • 6th Oct 2012
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