We are aware of several feature films made by streamers under the terms of the Equity Cinema Films Agreement (CFA) being made available on streamers’ own subscription video on demand (SVOD) platforms.
Here, we take you through our current work on enforcing CFA Royalties for this type of use, how it works, and how you can get in touch if you think you are owed Royalty payments.
Film Productions
Equity is working to ensure that performers are being fairly remunerated for the use of feature films for which they were engaged by streamers under the terms of the Cinema Films Agreement where these films have been made available on the streamer’s own SVOD platform. Put simply and by way of example, where Netflix makes a film for Netflix or Amazon makes a film for Amazon. This is a live part of the negotiations with Pact.
For all productions made to date under the CFA, Equity must work within the set parameters of that Agreement. In this case, your contract is underpinned by its terms, including the methodology for calculation of Royalty payments. Equity cannot retrospectively apply different terms (for example, the use fee structure under our SVOD side letters); we can only ensure that the principles and mechanisms set out in the CFA are applied in a fair, equitable and transparent manner.
To that end, Equity is working to enforce Royalty payments due and payable by the streamers under the terms of the CFA.
Reasonable Value
The key feature of these discussions is to ensure that a reasonable value is allocated to the use on the streaming platform in the absence of tangible ‘Gross Receipts’ generated by a sale or license to a third party company. Traditionally, the starting point for the calculation of Equity Royalties is ‘Gross Receipts’ from sales/licenses to third parties in the hands of the producer/rights holder.
Our objective is to ensure that a fair mechanism is employed to impute non-existent ‘Gross Receipts’. This is known as an Imputed License Fee (“ILF”). There is not a ‘one size fits all’ approach to this; rather Equity intervenes with individual companies to ensure that (a) the use on their own SVOD platform is being reported in the first place and (b) that it is being done so transparently in accordance with principles recognised by Equity. Once an ILF is arrived at, the methodology then follows the usual structure of the CFA.
Under the terms of the CFA, feature films are entitled to recoup a certain percentage of the Production Budget before Royalties are triggered in the home entertainment markets. The 3% Equity Royalty is triggered after the applicable recoupment has been applied.
Any secondary uses outside of use on the streaming platform are excluded and will be reported separately, if applicable.
Equity is targeting all streamers who make films for their own platforms to ensure fair reporting mechanisms. We will do everything in our power to ensure that these productions are fairly accounted for and paid within the existing framework. We have already secured and paid out significant payments covering this sort of use.
A reminder
In parallel with these discussions, it is important to remember the following:
1. We are keeping a watchful eye on which collectively bargained agreement is appropriate for any current production and we will be alert to any indication that a producer is electing the wrong agreement, particularly if we feel that they are trying to evade SVOD use fees where this is in fact the primary use. We appreciate timely feedback if you feel that you are being offered an inappropriate contract. Any concerns about current or upcoming engagements should be directed to Productions@equity.org.uk.
2. Looking forward, the potential misuse of agreements is something that we are trying to address and eradicate within the ongoing renegotiation process with Pact. Our aim is to modernise the CFA by tightening up the definitions around theatrical release and trying to achieve greater parity in pay between the Agreements.
