Pull out any FSM CD of a classic M-G-M soundtrack—I mean the pre-1986 M-G-M film library (Logan’s Run, Mutiny on the Bounty, many more) that was sold to Ted Turner, then to Warner Bros. I do not mean the current MGM film company, who own post-1986 MGM films and the United Artists library plus most of the Orion, AIP, and other libraries—it’s a little confusing, I grant.
Or don’t pull a CD out, but take my word for it: they have copyright language with “©[YEAR] Turner Entertainment Co, A Warner Bros. Entertainment Company.” They also have: “Manufactured by Rhino Entertainment Company, 3400 W. Olive Ave, Burbank CA 91505.”
In the 1990s, Turner Entertainment (Ted Turner’s company) did a big licensing deal with Rhino Entertainment. This was what gave us the first expanded CDs of classic soundtracks like The Wizard of Oz, Gone With the Wind, Ben-Hur and others—it was a huge catalog (mostly musicals) released by Rhino.
This relationship started before Turner Entertainment was sold to Warner Bros.; I think it was before Rhino Entertainment, for that matter, was sold to Warner Bros. It was well before Warner Bros. then split off its record company from its film company. (There’s been a lot of gobbling up and spitting out of different libraries.)
In 2001, FSM started a relationship with Warner Bros.—who had by that time acquired Turner— to sublicense CDs from Rhino of titles (mostly scores, as opposed to musicals) that Rhino did not want to release. As I’ve explained elsewhere, this was pretty much the singlehanded doing of George Feltenstein, OUR HERO. We love George. Without George, there would not be the last 10 years or so of FSM releases—and I mean all FSM releases, as the Turner content anchored our catalog.
The Turner-Rhino licenses were what we call “finished goods manufacturing deals.” That is to say, the license and the manufacturing of the finished CDs are bundled together into one per-unit price. This is as opposed to a straight licensing deal.
A straight licensing deal would be: Warner Bros. licenses to FSM the rights to do a Logan’s Run CD and we promise to pay them a certain amount per unit sold (say, $3.60) on a certain schedule, and with a certain advance—we’ll pay for the first 1,500 units up front, or whatever $5,000 covers, something like that. After the license is executed, the actual production and the manufacturing (replication at the CD plant) of the CD is left to FSM to pay for and arrange.
Not so with a finished goods manufacturing deal. In a finished goods manufacturing deal, the licensing company (Rhino, Sony, Universal—the big record companies nowadays only license things this way, to keep the boutique sublicensing labels from lying about how many units they sell) comes up with one per-unit price (say, $4.50) to both license and manufacture the product. The printing of the booklets and tray cards are left to the label to supply, but the print goods are sent to the record company’s plant to be packaged with the finished CDs. So we never even learn how that price (say, $4.50) is broken down into the replication cost, master license fee, artist royalties, etc. It’s none of our business. WE are the bulk customer—a proxy for all of YOU, who then become OUR customers.
So if we have 500 copies of Logan’s Run in inventory (and we often do), we have already paid master royalties for those 500 units. Even though we haven’t sold them. Even if we never sell them. Because we bought them from Rhino! We, FSM, are just the resellers. (Other fees, like publishing and the musicians union, are our responsibility to pay as we go.)
This makes life easier in one respect: we don’t have to prepare quarterly royalty reports and checks to the studio.
But, it means that we are extending ourselves every time we press and repress the title. We are paying that master royalty BEFORE we sell the CDs to customers and collect the money, not after.
(The other way, the straight licensing way, after we have recouped the advance, we have to pay for the manufacturing out-of-pocket, but we don’t have to pay the master-license fee until after the units sell. It’s much easier for the cash flow.)
All right—back to Turner/Rhino. That deal, begun in the 1990s and extended at least once, expired on December 31, 2011. Warner Bros. now has a new in-house label, WaterTower Music, and wants WaterTower to manage the Turner library as well as the Warner Bros. film library. Perfectly logical and I’d do the same thing if I was them. That process is underway.
Because the Turner/Rhino deal is now over—we have lost our ability to repress titles like Logan’s Run, Mutiny on the Bounty, the Rozsa box set, etc.
They are ALL out of print!
Now, we do have a good relationship with Warner Bros. They know us, we know them, and unless I get a horrified phone call from them about my blabbing in this column, I don’t expect that to change.
I have discussed with them the possibility of re-licensing all of the FSM-Turner content and keeping the titles in print. We definitely want to this for the big sellers: Logan’s Run, Poltergeist, etc. But it’s easier said than done—someone has to draw up the paperwork, get it approved internally, make sure the royalty flow happens correctly, etc. It’s a drain on their internal resources for titles that are pretty well played out.
Complicating things somewhat, at least on our end—we just had EIGHT PALLETS of boxes of artwork (booklets and trays) delivered from Rhino’s plant to Screen Archives.
That’s me, the packrat: I asked Rhino to please send us all the extra booklets and tray cards because I didn’t want them thrown out. We didn’t get an inventory until we got the physical shipment. Some of the counts are what I expected them to be: we made 2,500 units of Green Fire, thus there are 530 booklets left, 617 tray cards—enough to do another 500 copies.
What we’ll ever do with 1952 Fastest Gun Alive booklets and 1868 tray cards, I don’t know. Sadly, probably chuck most of them at some point.
But this is the business decision that we face.
As much as I would like to keep these titles available forever, most of them have had their sales slow down to a trickle. I have to decide how important it is for us to try to negotiate new licenses at Warner Bros. to use up the existing print goods. For the Rózsa box set, that’s 15 discs worth of content to re-license—it’s asking a lot of them, because we would be asking them to waive the advance (this is technically an old title for us). Then we’d have to replicate 500 sets of discs, and have them packaged with the existing boxes and booklets. It’s a lot of work and money, with an uncertain prospect for recouping the costs.
Keep in mind that these were not flying out the door until recently, when people realized the stock was almost gone. We still have 225 copies (out of 2000 made) of the Bernstein box. If we made another 500 Rózsa boxes, how long would they take to sell out? How many would we have to sell to justify the cost? (I’d have to run the numbers.)
So at this point, I am not saying no. But I’d have to feel like there were 100-200 surefire orders to go through the trouble to make the final 500 Rózsa boxes.
(In case you are wondering: I had the option to make the final 500 boxes of the Rózsa set prior to December 31st. I did take the opportunity to manufacture certain hot titles—Kelly’s Heroes, The Man From U.N.C.L.E.—in quantity before the expiration. But for the Rózsa box I declined—because under the finished goods manufacturing deal terms, paying the master royalty up front for all 500 units, it would have been way too expensive...tens of thousands of dollars...I just couldn’t justify the cost.)
Feel free to ask questions in the comments to this post. I ask one thing: Please don’t be negative about Warner Bros. and/or Rhino. Not only will you get me personally in hot water...it's not warranted... seriously...they’ve been super cool, and very good to me—and you!
But I did want people to know that there are some legitimate business circumstances behind our decision to maybe press the last 500 Rózsa boxes, and then not press them, and now maybe press them again. (I knew for a while that the December 31st deadline was coming up, but nobody had decided exactly how to handle these titles afterwards. And as I am trying to explain, they still don't know.)
Sorry I'm not perfect. If you want to make an omelette, you have to break some eggs. On our way to 250 titles, we've broken some eggs. So has everybody, but most of them won't be honest about it. I will.