Terminology Tuesday – Buyout

Since commercials seem to be among the few survivors of production during Covid, we felt talking about buyouts could be helpful. 

A buyout is a flat fee/lump sum that is paid to talent in lieu of receiving residuals (residuals are those fun checks you get in the mail every time your commercial or TV episode airs). Most of the time, buyouts are used for low budget or non-union commercials since there is more leeway. For most union commercial jobs (and for all TV episodic jobs) you will have continued payments on a residual scale. With a buyout, the client can air the commercial as many times as they want (within the contracted time) without having to renegotiate any contracts or pay you any more money and it’s pretty common. 

It’s important to know the difference between usage and buyout. 

Usage refers to how and where the client intends to air the commercial. In union projects, usage is broken down into various categories, like online, TV, cable, in theaters, etc. and actors are paid differently in each category. Every union project has a maximum period of use, after which your likeness can not be used without negotiating a new deal. The client then has to stop airing your spots, or else they owe you more money. Non-union projects, however,  can do whatever actors will agree to in their contract or initial offer. 

Luckily, if you’re a union actor working on a SAG-AFTRA commercial, you likely won’t have to worry about buyouts (you’ll be getting the gift that keeps on giving). However, with non-union commercials, you (or your agent) will have to your own due diligence. Here are some things to think over when negotiating or considering taking on a job: 

➡ What is the usage and is the buyout fee fair to the intended use?

➡ How long is the buyout and is the fee or the time negotiable?

➡ Will this non-union spot create a conflict toward a union spot—and does the pay make that worth it if so? 

➡ If the buyout is low, is the session fee (daily rate) negotiable? 

One of the biggest misconceptions about non-union buyouts is that it affects your conflicts (conflicts protect the client from you working for a competitor). While it does mean they own the material you shot and you can’t claim any more usage/royalties for it, it doesn’t mean you can’t be in other commercial work. That said, communication is always key. Ask questions ahead of time and be honest. Odds are it will end up working in your favor.

#themoreyouknow #TheCastingDirectorsCut #terminologytuesday

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