Fair pay in Hollywood: how does it translate to Europe?
Performers' fee negotiations with content providers are taking a new turn with the advent of streaming
Currently, releasing the latest movies via both streaming and theatrical release is a strategy that several film studios, notably Disney, have adopted in order to overcome the prolonged closure of cinemas and to maximise profits following the heavy losses due to the Covid-19 pandemic. But it is likely to have an impact on performers' fee negotiations.
Impact on box office share
In July 2021, Scarlett Johansson, who recently played the title role in the Marvel movie "Black Widow", filed a lawsuit in the Los Angeles Superior Court alleging that Disney breached her contract by releasing the movie on Disney+ on the same day it was released in cinemas.
Johansson claimed that her agreement with Disney guaranteed an exclusive theatrical release with her salary largely tied to box office performance, and that having released the movie simultaneously in cinemas and on streaming platforms prevented her from receiving the agreed salary. Johansson claimed that Disney sacrificed the film’s box office potential in order to grow its fledgling Disney+ streaming service to her detriment.
Johansson argued that the simultaneous release of Black Widow on the platform and in cinemas caused a reduction in the expected revenues from traditional box offices of approximately $50 million with the parallel increase of Disney revenues in terms of subscribers to Disney+, notably of the VIP membership, that was necessary in order to access the film.
In a robust initial response to the lawsuit, Disney alleged there was "no merit whatsoever" to Johansson's breach of contract claims.
The lawsuit has now been settled and the terms of the deal were not disclosed. Of wider significance to the industry is how to calculate compensation of performers in a world where the traditional consumption of movies is progressively shifting from cinema seats to living-room sofas.
Calculating fee from subscriber model
Major companies are prioritising their streaming services in order to drive growth. This strategy has considerable financial implications for actors and producers who want to ensure that the growth of streaming does not damage their interests.
It is likely that platforms creating content will need to consider new requests from performers regarding the criteria for their remuneration which, in certain instances, might not be related only to the streaming of the relevant movie.
For instance, if access to the movie is restricted to premium account subscribers, the possible increase in the numbers of new premium accounts (both new and existing subscribers) might be requested as an element to take into account for the calculation. If that is the case, for how long should the revenues from these subscribers be considered as a part of the basis of the calculation of the performer's compensation? And to what extent can one assess that the new premium accounts are tied to the content involving the celebrity? A new subscriber can obviously access the relevant movie, but also all the rest of the platform catalogue, which has nothing to do with the celebrity's performance. What might be a reasonable percentage for celebrities?
Furthermore, if new criteria for their remuneration are requested by other celebrities, the platforms will need to consider carefully whether this could lead to an unsustainable business situation. And this would also have an impact on other video-on-demand platforms.
The situation has clearly changed and platforms will need to address forms of remuneration more appropriate to the new landscape in the framework of current and future contracts with performers and celebrities.
Fair remuneration in EU
In this regard, at least in the European Union, an answer seems to be given by EU Directive 2019/790 on copyright and related rights in the Digital Single Market. The Copyright Directive should have been transposed by Member States into national law by 7 June 2021 but not all Member States have completed the implementation.
Article 18 provides for the principle of making sure that "copyright contracts" provide authors and performers with a fair remuneration, which, to the maximum extent possible, reflects the effective commercial success of their works.
Remedies for performers with reduced potential earnings due to the various forms of exploitation of their works not addressed or foreseen in the agreement may therefore reside in the fair remuneration principle as implemented in the different Member States.
Connect with one of our experts
Gianluigi Marino, Lead author Partner, Italy gianluigi.marino@osborneclarke.com +39 02 5413 1769
Dr. Martin Soppe Partner, Germany martin.soppe@osborneclarke.com +49 40 55436 4050
Julia Darcel Senior Associate, France julia.darcel@osborneclarke.com +33 1 84 82 45 42
Robert Guthrie Partner, UK robert.guthrie@osborneclarke.com +44 20 7105 7662
Alessandra Corigliano Senior Lawyer, Italy alessandra.corigliano@osborneclarke.com +39 02 5413 1733