Bye Bye Back End, Hello Streaming

May 1, 2019Article
Los Angeles Lawyer

The meteoric rise of Netflix has completely reshaped content production, distribution, and consumption in Hollywood.

For better or for worse, these changes are altering talent compensation structures and, as a result, affecting the practices of entertainment lawyers. Because Netflix utilizes a subscription-based business model, it cannot monetarily calculate the performance of any individual title. Unable to precisely determine a title’s performance, Netflix is unwilling and arguably unable to offer its talent an interest in the hypothetical profits that an individual title would realize, a marked departure from the standard practice in the entertainment industry.

To the extent talent would like a return to the pre-Netflix contingent compensation model, the onus will be on entertainment lawyers to craft back-end-like compensation structures for the streaming era.