Web Series: Development, Revenues and Contracts

QUESTION FOR FILMTVLAW.COM:
About how much money can a web series make? I need a contract with my production partner, something simple to split up the show 50/50, but I’m not sure how money gets paid for a web series. Can you help us sort this out?

ANSWER BY BRANDON BLAKE, ENTERTAINMENT LAWYER:
Thank you for posting a great question about web series. Independent television production is like the independent film business in the 1990s, it is growing fast and everyone wants to be a part of it. In addition to this article, you can also look up our Q&A blog at http://filmtvlaw.com/entertainment-lawyer-qa/, which is a huge resource of original articles and insight on the entertainment business.

Netflix, Amazon and Hulu, soon to be joined by Disney Plus, are the current big-name entertainment platforms in a quickly growing list, and all have collectively chosen to favor series over feature length programs. In a basically unlimited bandwidth environment, the only thing that matters is hooking viewers for longer periods of time, so a 12 hour miniseries does that better than a 90 minute feature.

Defining a Web Series

In some sense many high budget series could now be considered “web series.” SVOD, TVOD and AVOD platforms like Netflix, Amazon and Hulu are all streaming content, just like YouTube. Netflix alone has 150 million subscribers worldwide, which is more subscribers than the top five cable-TV companies combined. And as streaming platforms have grown, so has the percentage of original content.

So, what defines a project as a web series? “Web series” today are typically defined as series produced for Youtube.com or other non-subscription platforms, with episodes shorter than 30 minute. If you intend on showcasing directing or writing talent, then web series are an option. In some ways web series are like film festivals are for independent film. They should be approached as a means to demonstrate your abilities and get public recognition.

Revenue From Web Series

Revenue is a problem for web series on non-subscription platforms like YouTube. Since YouTube has reduced the CPM rates (Cost Per Mille), which is the amount of money paid per 1000 ad impressions, the real average CPM is now around $3. So that means $3 per 1000 ads viewed. But ads do not play on every video view, and if the viewer skips the ad or blocks the ad, then no revenue is generated at all from that view. Realistically you could be looking at $1 per 1000 views or less, equating to about $1000 for 1 million views on YouTube. Producers will need a lot of episodes with an astonishing number of views before making back costs for even a modest web series.

REALISTICALLY YOU COULD BE LOOKING AT $1 PER 1000 VIEWS OR LESS, EQUATING TO ABOUT $1000 FOR 1 MILLION VIEWS ON YOUTUBE.

If you are viewing YouTube as a showcase for your series, then the second problem involves whether a network or platform will pick up an existing web series after it has been on YouTube. This point is two-fold. First, if a producer wants to approach a network about an existing web series, that web series must have over 100,000 views and preferably over 1M views per episode before the networks will even start to take notice. If a producer puts the series or pilot onto a public video service like YouTube and it only acquires a few thousand views, then the producer is actually making a case for the project having no market.

Second, the networks themselves are trying to survive as independent entities and hoping to not end up being just another channel on YouTube. That means finding fresh, unique content that is not available anywhere else. So, network executives will run the other direction when producers bring web content to them, unless of course the series has several million views per episode.

Although there are creative ways to generate revenue from web series, mostly involving sponsors and targeted content, in the end most web series end up being showcases for the directors and writers, and not much more. In order to generate revenue from a series, most experienced television producers will choose to do so with a network, platform or major production company to pick up the bills and guarantee marketing and distribution of the project.

Television Producer Agreements

So my first caution about the venture you are embarking on is whether you want to target this series as a web series at all, or whether you should consider developing the series independently for a network or major platform that can provide production financing and marketing money for the series.

If you choose to develop the project as a web series, then a 50/50 split of copyrights has some serious complications.

Sharing Copyrights

Sharing copyrights, if you do not have a well drafted agreement between the parties, generally means that neither party will be able to sell or distribute the series without the other’s approval. This is a classic situation to create deadlocks between the parties. Moreover, it is not the case that dividing the copyrights in some proportion other than 50/50 makes the situation any better. In fact, even sharing a 1% share or less of a copyright can cause the series to not be distributable without the approval of 100% of owners.

Circumvention

Television development has the additional problem that splitting the copyright is no guarantee that your producing partner will not circumvent your agreement and work out a much better deal for himself or herself directly with a future network or platform.

So, you could end up in the situation where your producing partner both has the ability to block your distribution of the series (on YouTube or elsewhere), and if you do get a network or major platform deal, your partner could still negotiate a separate deal without your participation.

Ultimately it is better to spend the time and money to negotiate a proper development agreement before deciding on distribution strategies. Please contact our office to discuss your project and contract needs.

As with any entertainment matter, please do not make a decision about complex matters without consulting an experienced entertainment lawyer first. At BLAKE & WANG P.A. I have been representing feature film projects, television series, and recording artists for more than 18 years. Please feel free to contact my office at www.filmtvlaw.com about a quote.

- By Brandon Blake, Entertainment Lawyer