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It seems to me that it's not just a conflict of interest, but the interest of the agency is actually diametrically opposed to the interest of the talent. By keeping the pay of the talent they purportedly represent as low as possible, they make the overall 'package' easier to sell to a studio (which is how they actually make money).

Yes, Simon points this out explicitly: "Why bother to fight for 10 percent of a few dollars more for this story editor or that co-executive producer of some actor or director when to NOT do so means less freight on the operating budgets of the projects that you yourself hope to profit from? Why serve your clients as representatives with a fiduciary responsibility and get the last possible dollar for them, when you stand to profit by splitting the proceeds of a production not with labor, but with management — the studios who are cutting you in on the back end? Why put your client’s interest in direct opposition to your own?"

Hypothetically the more the package costs... wait, the "packager' isn't taking a cut of how much the package costs like they do as an agent (where they take a cut of how much their client gets paid, so a cut of what the studio is _spending_, so they want the studio to spend more, at least on their clients), they're taking a cut of project revenue??? (Or profits, or something in between, either way).

Oh yeah, that's evil. They're not representing their client at all anymore.

The obvious way to align these interests is that the "packager" should share a portion of their "packaging" cut with the people "packaged". But of course, the point of the whole "packaging" economy seems to be so they don't have to do this.

Real Estate agents are famous for not representing their customer's interest. In real estate, half the time (buy-side) your agent is being paid their entire income for the transaction by your adversary. In several states, "your agent" is legally required to disclose the fact that they are not your agent!

As usually, the disclosure is done as two crimpled pink pieces of paper with light gray print. The text on the paper tries to be legally correct and understandable by non-lawyers at the same time and fails to achieve either of these purposes.

Been through that. Still angry.

Your agent, no matter who is paying them, has a fiduciary duty to you. I’ve bought and sold a lot of property and can guarantee you that the fact that commissions are paid by sellers makes zero difference. Really, it’s coming out of the purchase price, which is netted to the seller but technically is being paid by you.

Your agent, no matter who is paying them, has a fiduciary duty to you.

This isn't universally true. In some US states, the frequent problem is that the agent who is showing you homes (and who you tend to think of as "your agent") is not actually your agent (with fiduciary duty to you), but a subagent of the seller (with fiduciary duty to them). Here's an excerpt from recent report on this:

---

For many years, a large majority of home buyers and sellers have worked with real estate agents. Most consumers believe that these agents always or almost always are required to represent the interests of the home buyer or seller with whom they are working. ... Yet, real estate agents often are not required by law to represent the interests of the buyer or seller with whom they are working, and many do not.

In reality, there are a number of different types of relationships allowed in most states between real estate agents and their clients.

  • Single agent: The agent works solely for the client
  and has fiduciary responsibility. A fiduciary agent
  is “obligated to procure the greatest advantage to
  his client.”
  • Designated agent: The agent is recruited by the
  listing agent to work with a buyer and has fiduciary
  responsibility to that buyer.
  • Subagent: The agent works with the buyer but has
  fiduciary responsibility to the seller.
  • Dual agent: The agent somehow is expected to represent the
  interests of both the seller and buyer in a home purchase.
  • Transactional agent: The agent works with both buyer and
  seller to facilitate a sale but has no fiduciary 
  responsibility to either party.

https://consumerfed.org/wp-content/uploads/2019/01/the-agenc...

---

So while it's possible that you live in a state where you are correct, where subagency and dual-agency are forbidden, in the absence of a signed contract for the services of a buyers agent, others should not follow your advice until they are certain the same is true for them.

So who does a Secret Agent have a fiduciary responsibility to?

Depends, are they a double agent?

> In many US states, the frequent problem is that the agent who is showing you homes (and who you tend to think of as "your agent") is not actually your agent (with fiduciary duty to you), but a subagent of the seller (with fiduciary duty to them).

Subagency was common up until the 90s but is exceedingly rare in today's market (and outright illegal in many states). In 2019, it is not at all a "frequent" problem.

You are right, and I probably overstated the frequency of that particular form of agency to point out a worst-case-scenario. I likely should have stuck with the main message that for a variety of reasons, an agent who is showing you a house does not necessarily have your best interests at heart. Do you happen to know how common it is for current buyers to be represented by an agent who does owe them sole fiduciary responsibility?

End of the day, an attorney represents your interests. A real estate agent may represent you but their actual duties are fairly minimal.

Real estate agents fiduciary responsibility is held to a reasonable care standard for matters relating to real estate. That means they need to be competent. Many of the things that buyers seek advice from agents are answered like "In my experience, blah blah blah". Those are usually legal questions, which agents are not able to answer. Often when people get in trouble, its because they don't understand what they are asking and mistake salesy fluff for an answer.

End of the day, 99% of what a "buyers" real estate agent does is bullshit that makes you feel better. "Sellers" real estate agents get listings, period. Buyers agents exist because people good at getting listings have a disincentive to talk to buyers. The buyers agent's primary task is getting ahold of keys quickly and pushing sellers to accept offers. Shitty agents who are incompetent or dishonest may slow-roll things to get you to accept offers quickly.

They may help you identify the type of home you want, but that isn't a fiduciary duty.

Even with fiduciary duty, most agents undersell property.

When the first offers are underpriced, a lot of agents will pressure you into selling, because their income is tighly coupled with the number of transactions per year.

There’s a couple of studies from the US that concluded that most sellers close the deals way too early, and that rationally they should have waited for more offers.

The sale price, and what offer to accept is not the decision of the agent, it is up the seller.

It is up to the seller, but when an experienced professional who tells you they have your best interests in mind tells you to underprice (because it's better for their bottom line)...

Actually, that's the poster child for a conflict of interest.

Real Estate agents are hopelessly conflicted. I don't use them so the seller's agents ends up working for me too. They tend to slip into a mediator role more than a fiduciary.

Lawyers would get disbarred it they operated similarly.

In our state, there is a well known realtor who has grown his practice using unethical methods. As one example, his agents routinely hang on to bids and don't present them to sellers within a reasonable time, using them to get buyers who have contracted with them to put in bids. ("You better put in a bid above asking - other people have put in bids"). This allows him to get the full commission instead of sharing it with other companies.

The incentives are also very messed up, because of the way commission is paid. Freakonomics [1] famously covered this:

Commission is typically 6%, which is split 4 ways to the buying agent, their agency, the selling agent and their agency. So your agent personally takes home 1.5% of the selling price -- on a $300,000 sale, they are making $4,500.

The difference between selling your house for $300,000 and $310,000 after commission is $9,400 in your pocket -- and a paltry $150 for the agent. Are they going to take the risk of leaving it on the market for an extra week (and spending more time showing it, etc) hoping to make an extra $150? Of course not. (Spoiler alert for the book: unless it's their own home, in which case they leave it on the market for an extra 10 days and sell for an extra 3% on average).

Another incentive problem exists on the buy-side: your agent gets paid more money the more you pay for the house. It's literally working against their interest to negotiate a lower price, other than when it's above your absolute maximum.

[1] http://freakonomics.com/books/#freakonomics

This is why, when selling, its better to use a la cart brokers. You pay a set fee to MLS your place, and set fees for other things. You still need to pay a commission to the buyer broker/agent, otherwise they won't show your place. So, 2.5% or 3%.

Traditionally, the commission paid was 5% (split 4 ways), but some markets that got as high as 7%. I once had an agent explain to me (who was bad at math) that this was due to inflation.

Yeah, I’ve had supposedly educated people try to tell me they tip 20%+ for standard waiter service instead of 15% due to inflation. Some work in finance. And sometimes on tip on the tax too. Crazy times we live in.

The real value of wages for waiters has decreased significantly because of inflation. Though that's not really inflation's fault as much as a lack of meaningful wage increases.

If your buddies work in finance, they should tip as much as they want (50%? Why not?). The poor restaurant workers need the money a whole lot more than they do.

The financial services industry has been skimming gajillions of dollars off the whole economy. Might as well pay at least some of it back to folks doing honest work.

It’s more like the general cost of living, especially housing, has risen faster than the price of a restaurant meal.

And as a buyer's agent, they make more money the _more_ you pay for the house you are buying, where of course you'd rather pay as little as you can get it for.

Even if the amount more they'll be making is trivial, it ends up being the same as the seller's agent problem in reverse. At best their incentives are to not care how much you pay, but want you to buy a house already without them showing you more. At worst, they actually want you to pay more.

That is so important, you lose they win. I never thought of it this way. So many poor incentives.

It's worse that that. First, all of the money comes from the buyer; that's why they're called the buyer. It goes to the seller who pays the closing costs. So the entire BPP = Buyer's Price of House is (Seller's Price of House + Closing Costs). The buyer will then pay sales tax on BPP. Yes, you are paying sales tax on the closing cost. It's worse still. You then pay property taxes on the BPP which means that you pay property taxes on the closing costs.

You can and I did negotiate the BPP and then tell the seller that you will be paying the closing costs yourself and deducting them from the BPP. Then you avoid paying sales tax on the closing cost service and paying property tax on the closing cost service.

Oh, and don't even get me started on the financial services industry scam of mortgage interest deductions.

please... tell me more. this is badly needed advice.

Interesting. It seems the only way to get a movie made that's not a studio-originating project, with people who _you_ want to work with, is 1) get your own financing (like DiCaprio schmoozing the 1MDB guy to fund Wolf of Wall Street), or 2) play tit-for-tat with something the studio really wants to make (like George Clooney giving them Ocean's 12 in exchange for them funding his Good Night, and Good Luck).

The Writer's Guild of America had a good video that also helps to summarize this and why writers are opposed to it.

https://www.youtube.com/watch?v=v5p6urW6c7I

Yes, basically this: the big agencies that run the vast majority of the entertainment business have transformed from talent representation into "deal makers"... essentially producers who represent everyone involved in deal. In theory this streamlines the whole process. In practice is royally fucks everyone involved who is not already in a power position.

Essentially now, if you are a writer or b-list celebrity, you almost need an agent to represent you when dealing with your agent.

Idk anything about movies, but the idea of packaging "talent" sounds potentially interesting for the startup space. 2-5 people "packages" that can already work well together and know what they can and can't do well.

I know I've been in circumstances where something like this would have worked really well.

> 2-5 people "packages" that can already work well together and know what they can and can't do well.

That's a consulting firm.

Wait, do consultants do actual work instead of just giving advice? (Serious question.) I always thought consulting is just looking at the existing/planned processes and products and saying “You should do X using best practice Y. Here are the details of my deep knowledge.”

In contrast, I thought anyone actually working on processes or products but not being an employee is a contractor. If anyone can enlighten me, I’d be glad. I always wondered what consultants do.

Yes, there are plenty of consulting firms that will make you an iOS app, web site/application, data processing pipelines(my company). IBM and Accenture are large companies that provide these services. Outside of tech, there are large firms like PwC that audit your books, and do other things you don't have the in-house skills for. Pharmaceutical firms ofter consult out their marketing to companies like ZS Associates.

The consulting you're talking about is "management consulting", but there's a huge world of stuff out there.

It's worth noting that companies like IBM and Accenture are also clients of those kinds of consulting firms that will make you an iOS app, web site/application/etc.

Yah, it's kind of a continuum. Plenty of consultants do execution, not just in tech. Accenture are "consultants" who will try and build you whatever you ask for, but they actually started as a subsidiary of Arthur Andersen.

> Wait, do consultants do actual work instead of just giving advice?

Sometimes either of those, but often they just have a pulse and keep a seat warm.

"Consulting firm" is often used as a generic term for any company you hire to do business work for you.

For example if you need a mobile app and hire a company that specializes in building mobile apps for their clients, there's a good chance the contract will say "consulting agreement" across the top.

But, in general conversation among technologists, those are more often called vendors, or contracting firms, or agencies.

When it's an individual person, the label usually depends on their role: consultant has some ownership of the result (in theory), contractor does skilled labor as assigned, temp does less skilled labor as assigned, intern, etc.

It's also an "acquihire." I was thinking along those lines, just without the company acquisition.

In practice, there can be a lot of difference between a consulting team and a regular one.

So why don't the packages set up as a production company like say Tiger Aspect in the UK - Or Back in the day as United Artists did in Hollywood

What you're proposing sounds doable (and has been tried a couple times). But the Hollywood packaging equivalent would be that first:

1. An "Agent" who was repping you doesn't disclose that they're also repping the Project Manager for the team (who is really well known) and you lose out.

2. Because of the incentives, there's little interest from the agent that is repping you to look for work for your solo projects or if it intersects with another agency.