The Association of Independent Commercial Producers (AICP) is advising production companies to re-think their role if asked to produce client-initiated commercials on spec. In a letter sent to its general members last month, the AICP expressed concern over "a new wave" of Anheuser-Busch boards that have been making the rounds in hopes of "enticing commercial producers" to do certain spots as a speculative proposition. In that correspondence, AICP president Matt Miller claimed that this type of working arrangement "holds many potential pitfalls for commercial producers agreeing to finance the project with no guarantee of sale or even promise of total reimbursement."
For regular spot jobs under the typical work-for-hire scenario, the advertiser-in exchange for financing the production-retains ownership of ideas and physical prop-
erty associated with the creation of the film. But Miller wrote that production houses are making a mistake if they adhere to this traditional work-for-hire relationship when bankrolling spec assignments. He claimed that applying the work-for-hire model to a client- or agency-solicited spec production is inequitable.
The AICP letter defined the Anheuser-Busch spec model as asking the production company to: "(1) Keep the limitations associated with a work-for-hire relationship; (2) assume all of the financial risk and liability; (3) waive any payment prior to or throughout the process; and (4) receive no guaranteed cost recovery or profit incentive. The only potential benefit is the abstract area of talent exposure."
And what if the advertiser decides not to use the finished spec work? Can the production house then use it in other places? "If the answer to the last question is ‘no,’ contended the AICP letter, "then the production company isn’t investing in a film for the director; it is investing in the agency’s idea for the advertiser. AICP is entirely opposed to this philosophy. Production companies are in business to make a profit just as are agencies and clients."
Miller wrote to AICP members that "a standard notion of business is that profit is directly associated with the amount of risk a party has assumed…You are, in fact, not in a work-for-hire situation, but are in the role of financing and creating property that you own. You are assuming risk and making an investment that should have a bona fide return. Your options in different business models would be: (1) Create the film and resell it with a profit attached that is proportional to the assumption of risk; or (2) Retain ownership of the film, and ‘lease’ the usage of the film and the characters contained within."
There is precedent for a production company financing and owning spots and then successfully leasing or licensing them. For example, in a scenario involving local and regional advertisers, director Chuck Jessen of Jessen Productions, Venice and San Francisco, has licensed award-winning commercials he’s created and bankrolled the production for dating back to ’96 (see separate story, p. 1). These Jessen-helmed spots have been syndicated in markets throughout the U.S.
Reaction
Miller said that production houses have thus far responded favorably to the AICP stance on the spec issue. He contended that the vast majority of AICP member houses support the position articulated in the letter. Miller said that to his knowledge, two Anheuser-Busch agencies-DDB Chicago and The Leap Partnership, Chicago-have been involved in the spec arrangement.
A SHOOT phone call to Fred Smith, founding partner/producer at Leap, had not been returned at press time. However, Grant Hill, executive VP/executive production director at DDB Chicago, did get back to SHOOT by writing a statement in response to the AICP letter.
"We are aware that some people at production companies and in management at the AICP do not consider ‘spec’ production to be good for the industry," wrote Hill. "We see potential benefits to many involved in this kind of work. Nonetheless, we have never urged anyone to do business under these circumstances. We are careful to discuss all the aspects and ‘worse case scenarios’ before we move towards production with any company on a spec basis. We respect anyone who decides that this way of working is not appropriate. In the production marketplace, there should be freedom for any company to make the decisions that are right for them. Choosing to work on the extremely limited amount of spec work out there does not compromise the production community. It presents an opportunity for those who want it."
And indeed there are at least some who see value in the practice. The debate within production house ranks over the issue of client- or agency-initiated and -solicited spec work has been chronicled in SHOOT over the past several months. In SHOOT’s Special Report on Production Companies, execs offered distinctly different opinions. For example, Michael Bodnarchek, co-founder/exec. producer of A Band Apart Commercials, bicoastal and Minneapolis, opined that "in the right circumstances, shooting a commercial on spec can be a great opportunity for a director" (SHOOT, 4/23, p. 51). He noted that A Band Apart has produced a few such projects, most notably Budweiser’s "Mind Control" directed by Charles Wittenmeier (who has since joined bicoastal/international Propaganda Films) for DDB Chicago. "Mind Control" went on to gain significant airtime and won several industry awards (i.e.-Grand and Gold at the New York Festival’s 41st annual Television Advertising Awards, a first place Mobius Award).
Meanwhile in that same Special Report, Michael Romersa, president of Stoney Road Productions, Santa Monica, expressed regret over having gotten involved in a client-initiated spec scenario. Originally, Romersa defended the practice, saying that it is not unusual for a production company to spend large sums of money to develop a director. But upon further reflection (SHOOT, 4/23, p. 56), he concluded that the spec arrangement sets a damaging precedent. "Every time we stray from the business practices that we know are a necessity to keeping our industry healthy, we set a precedent. Once that precedent is set, it seems impossible to go back. There seems to be less work and more competition these days and most of us will do practically anything for a quick fix. But that is just what it is, and it may lead to a precedent being set that will undermine the entire industry. My opinion is that production company cannibalism is forcing many to hunker down in a survival mode, not a great mode to pioneer innovative change in the industry … "
Divergent viewpoints also surfaced several months ago in a public forum, The Broadcast Producers Conference in Beverly Hills (SHOOT, 3/19, p. 7). At that time, Blair Stribley, president/senior executive producer/ co-founder of Backyard Productions, Venice, Calif., and Chicago, reported that his company had done some spec work for DDB Chicago and he reported that the experience provided "good creative and exposure nationally that helps our directors long-term." He noted that if houses are going to engage in spec work anyway to promote their directors, at least there’s a real opportunity with an agency like DDB Chicago to have production costs reimbursed and to possibly gain airtime.
During the same confab session, past AICP chairman Frank Scherma chimed in from the audience that giving away work for free can only prove damaging to the production house community. And ultimately the ad industry needs a healthy production community in place. "Six years ago," related Scherma, a proprietor of bicoastal/international @radical.media, "the discussion was about 35% markup." The rationale for companies occasionally reducing the markup back then was " ‘I’ve got to get the work. I’ll only do it on some projects,’" continued Scherma. The end result was a markup erosion that has hurt the viability of assorted production houses. He paralleled that history lesson to today’s spec scenario. If this spec practice continues, five or six years from now, he claimed, the far-reaching impact will be detrimental.
