Capítulo 249: Chapter 249: The True Face of Hollywood’s Talent Agency Industry
In North America, where laws and regulations seem comprehensive and governmental, judicial departments, and industry associations work by the book, society is ultimately made up of people. Like how Bill Roscis and Kara Fes could privately reach agreements that actually breach the rules, every industry has its gray areas.
As Robert Downey Jr. said, even in North America, many regulations are static, but the people operating within them are dynamic.
"The reason Michael Ovitz approached you is simple. You've shown enough potential. If you join his management company, he will definitely find ways to win you over."
It seemed Downey Jr. knew quite a bit about this. Wiping his mouth with a napkin, he said, "Once you develop a favorable view of Artist Management Group and become dependent on them, they will surely encourage you to break away from CAA and stop using an agent."
"Stop using an agent?" Murphy asked in confusion, "You mean they, as managers, can handle agent-related business?"
"The law and industry regulations don't allow it," Downey Jr. answered affirmatively, "but in practice, it's possible."
Murphy waited for a more detailed explanation.
As known, managers, unlike agents, don't need a license to operate. However, regulations state that managers should not engage in activities to secure work for their clients and must avoid conflicts of interest with agents.
Also, managers aren't bound by strict contractual terms and commission caps like agents.
"Managers have a larger scope of authority compared to agents,"
Seeing a rare chance to show off his knowledge to Murphy, Downey Jr. took his time to explain, "Managers can partially or fully benefit from their client's work outcomes, even becoming producers. Traditionally, it's believed that since a manager's role isn't to secure work for clients but to plan their careers, it doesn't conflict with the agent's role."
Murphy crossed his arms, waiting for Downey Jr. to continue.
The best way to handle someone eager to share knowledge is to let them speak. A chatterbox can't help but spill everything they know.
Seeing Murphy not asking further, Downey Jr. pinched his nose and took a sip of water.
"Do you know, Murphy? The current Hollywood talent agency industry is facing a huge challenge!"
As expected, Downey Jr. couldn't hold back and started sharing, "Nowadays, agents mainly represent established, box-office attracting stars, or at least clients like you…"
He pointed at himself, "Or me, who have shown enough potential."
This was a harsh reality, but it was true. Would Bill Roscis have signed Murphy if not for his significant improvement during and after the filming of "Hard Candy"? Would CAA have renewed their contract with Murphy if "Saw" hadn't been a big hit?
Murphy understood Downey Jr.'s point and continued the conversation, "So, the aspiring talents with less potential or those needing development can't catch an agent's eye, making managers a necessity in this market segment?"
"Exactly." Downey Jr. nodded vigorously. Murphy, however, shook his head and asked, "Without an agent, do managers secure work for these clients?"
Earlier, Downey Jr. had mentioned that managers typically handle "problematic" clients, either newcomers or those without market appeal, requiring substantial time and resources to nurture and develop, increasing their marketability to employers.
Therefore, managers usually need extendable contract periods and higher commission rates to motivate the long-term, continuous, and risky development of these "problematic" clients.
This was also why Murphy wasn't enthusiastic about Michael Ovitz's invitation. No one wants their earnings to be further exploited.
"Yes, managers!" Downey Jr. explained, "This is the fundamental conflict between managers and agents. If managers get licensed, they face restrictions of contract duration and commission caps, posing huge risks in developing clients. If they're unlicensed but secure work for clients, they risk having contracts revoked and incomes confiscated by the Labor Commissioner for violating regulations."
He shook his head, "But reality is far from this. As long as clients don't report, these issues are generally ignored. Even if someone reports, it's not a problem nowadays. Before I was arrested, a case in California's Labor Court involving a complaint against a manager ended up not only clearing the defendant but also expanded the boundaries of 'securing work' for managers."
"Oh?" Murphy was intrigued, "What was the ruling?"
"In that case, the Labor Court set an exception for managers 'illegally' securing work," Downey Jr. answered promptly, "As long as a manager plays an active role in a production project, they can bypass licensing restrictions and directly hire their client. This means they can legally secure work for their clients!"
Murphy was somewhat surprised, "That's possible?"
This exception nearly confirmed the legality of managers securing work.
It was a simple solution, even for an outsider like Murphy. The law prohibits agents from directly participating in film production, but managers can. A manager can initially position themselves as a producer or one of many producers in a crew, meeting the requirement of "playing an active role in a production project," making it legal and reasonable to secure work for their clients afterward.
Laws can indeed have drastically different effects when maneuvered skillfully.
Downey Jr. added, "Some managers invest in and own shares in production companies, significantly influencing film projects, even gaining dominant power. This means some managers and producers have enough influence to develop production projects that provide work for their clients, free from interference by other producers..."
"Of course, this affects agents' interests, further intensifying the conflict."
He shrugged, "In the past, agents and managers complemented each other, but now it's a competitive relationship. Basically, managers can do anything agents can — even more. More and more managers are adopting the substance of agents."
Murphy suddenly recalled, "Bill mentioned that management companies approached him too."
"That's normal," Downey Jr. wasn't surprised at all, "The current trend has led to a large outflow of agents from agencies to management companies, further blurring the once-clear division between agents and managers. Many managers and management companies now provide services that effectively 'secure work' for clients."
"Still, agency companies have their own advantages," Murphy noted, frowning, "Management companies can't represent superstars."
"For now, yes, but it won't always be so," Downey Jr., well-informed due to his family's traditional show business background, knew more than Murphy, "While you and Gal Gadot were hiding at home, Michael Ovitz's Artist Management Group already secured Robin Williams. He fired his agency and will rely solely on his manager for all deals. And now, they're targeting Leonardo DiCaprio next!"
This was a super A-list client for CAA.
Times are changing, environments are changing, and industries are undergoing various transformations.
From what Downey Jr. described, with the blurring boundaries of managers, many entertainment agencies like CAA and William Morris would inevitably face massive challenges, even losing their dominant industry positions.
But Murphy remembered clearly that even ten years later, CAA's market share in Hollywood didn't shrink but continued to grow, albeit at a slower pace.
Though not as knowledgeable as Downey Jr., a seasoned player from a traditional showbiz family, Murphy wasn't a fool. After a bit of thought, he figured it out.
CAA's strength lay in its one-stop package services and cross-management services!
Although the law explicitly prohibits agents from participating in film production, if viewed differently, agents' package deals are essentially like a producer's role.
The traditional agent model is increasingly passive, with income limitations due to commission caps. One-stop package services, however, break these constraints. Package deals are akin to production; although agents are prohibited by unions from being producers, they are not barred from packaging clients together for deals.
Murphy shared his thoughts, but Downey Jr. wasn't surprised and naturally said, "This is another conflict point between agents and managers. These package deals effectively make agents into producers, affecting managers' production models, and naturally, conflicts of interest arise."
Downey Jr. explained, and Murphy fully understood. The reason agency companies champion one-stop package services is not only to attract clients and earn more profits but also to maintain their industry position amidst competition from managers.
Moreover, CAA's cross-management services for clients, covering work, life, and special opportunities, are essentially managerial tasks cloaked as agent services.
Attracting clients, controlling upstream resources, and earning higher profits with package and integrated services — forcing managers clad in the guise of agents to perform tasks of agents while disguised as managers — that's the current reality of Hollywood's talent agency industry.
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