Would You Rather Renegotiate Your Contracts... Or See Your Business Collapse?

from the which-is-more-stupid? dept

You see it all the time with companies in trouble, where they are able to renegotiate certain contracts for the sake of saving the overall business. So, I have a lot of trouble with Hollywood studios claiming that they simply can't figure out a way to offer movies online, because the contracts they signed won't let them. In the link above, Slate's Farhad Manjoo tries to figure out why the movie studios aren't offering up a decent, easy to use online movie service, and unfortunately falls for the studios' claims that they know they need to get online, but they just can't because of "a byzantine set of contractual relationships between many different kinds of companies studios, distributors, cable channels, telecom companies, and others." That sounds good, and it's no surprise to see Hollywood lawyers jump all over this as a defense -- but it's laughable. If the studios, distributors, cable channels, telecom companies and others actually realized how quickly the market is changing, they'd rush to change those contracts. No, it wouldn't be easy, but it is doable. Not doing so is a cop out from a group of folks who don't want to change and are hoping that things "just work out."


Reader Comments (rss)

(Flattened / Threaded)

  1.  
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    Anonymous Coward, Apr 21st, 2009 @ 8:20am

    If I am a big movie star do I care what happens in 10 or 20 years? Of course not. I was paid to do a movie under certain conditions. I had a contract. If you want to put it on the web, pay me more money. Now multiply that by everyone involved in the movie and that is what you have. Every actor, every musician that had a song in the show, every writer, everyone else.

    Of course, one would hope that new movies have those things included going forward.

     

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    Anonymous Coward, Apr 21st, 2009 @ 8:23am

    One of the biggest obstacles...

    ... at least when you talk about putting content online such that it will be available worldwide, is music licensing.

    Music licensing, particularly for TV shows, is largely geographically based. When you take a show to other geos, it can be too costly to license the music. Top Gear is an example of this and I suspect that most of the contractual problems with putting stuff online has to do with music...

     

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    TheStuipdOne, Apr 21st, 2009 @ 8:29am

    Can't Unilaterally Renegotiate

    The movie studios (Hereafter Party A) and the TV networks (Hereafter Party B) have contracts to distribute the movies. A would like to make as much money as possible and get recognition for films they produce. B pays large sums of money for the right to show the movie. The DVD distributers (Hereafter Party C) pay a large sum of money for permission to make, market, and distribute the hard copies of the movies.

    B makes their money primarily through commericals. Commercials only pay if people watch. C makes their money by selling plastic disks. That doesn't happen if people have no desite to buy them.

    A wants to maximize the money they get and see online distribtion as a way to do that directly. B believes that will result in fewer eyeballs which attackes their bottom line. C believes (correcly) that high quality online movies would attack their bottom line. B and C have contracts preventing A from distributing so A cannot sell movies online. B and C have no motivation to renegotiate as they will lose money. If A violates the contract they are out big bucks.

    It might not simply be a cop out. They might actually have this problem

     

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  4.  
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    bshock, Apr 21st, 2009 @ 8:49am

    honestly, why should we care?

    Hollywood movie studios produce mindless garbage. If they can't adapt to the changing market, forget about them. What's there to lose?

    Let the dinosaurs die. There are plenty of mammals waiting to step up.

     

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  5.  
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    Willton, Apr 21st, 2009 @ 8:59am

    Re: Can't Unilaterally Renegotiate

    As unfortunate as this sounds, I have to agree with TheStupidOne. Unless the studios have something to offer the distributors as an incentive to renegotiate, I don't see how a workout is possible. Distributors have no reason to renegotiate if doing so puts them in a worse-off position than before.

     

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  6.  
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    Anonymous Coward, Apr 21st, 2009 @ 9:17am

    Who needs them to distribute anything? I'm fine with the way it is now, I just take it for free.

     

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  7.  
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    Paul Brinker, Apr 21st, 2009 @ 9:19am

    One Bad apple

    When your movie has so many restrictions from the origional contracts (which could be 20+ years old) it takes one bad apple, sometimes, one person you just cant find but could jump out of the woodwork when the show hits DVD.

    You Cant Do that on Telavision (old nick show) is a good example, to get the show on DVD requires geting in contact with each cast member (who were childern at the time of production) in order to change the royalty system (each cast member got paid per show airing).

    in any case all it takes is one person to say no to shut down a huge cost of redoing the contracts. At the same time the stuff doesnt go out of copyright till 2100.

     

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    Justin, Apr 21st, 2009 @ 9:22am

    Somebody is going to do it

    Do they not realize that somebody is going to do this, if they do not they are going to miss out and be the last guy into a saturated market with nothing to differentiate themselves. It is about time that these people get into something early and not follow once everybody else has shown its a good idea. Netflix is already doing this, How can they do it and not the actual people who own the movie, this makes no sense to me. Are they really that dumb/greedy that they gave all the distributions rights away? if so maybe it is a good thing they will fail and we do not have to put up with their shit any more.

     

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    SAL-e, Apr 21st, 2009 @ 9:37am

    Excuses, excuses and more excuses!

    @TheStupidOne
    A (The studios) receives b% from B (TV networks).
    A receives c% from C (DVD).
    A, B, and C are run by the same people that are receiving a%+b%+c% from the same movie. (%a is the % of Theaters)
    So Hollywood executives are making excuses. They have put the system in the first place and they not going to give on it without fight. They (Hollywood) are trying to manipulate the market and because the market can not be manipulated for very long they have created the condition for piracy to occur. Now they are paying the price. Sorry, but Hollywood with their corrupted politicians and corrupted copyright (monopoly) system are the problem.

     

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    chris (profile), Apr 21st, 2009 @ 9:39am

    Re: Re: Can't Unilaterally Renegotiate

    Unless the studios have something to offer the distributors as an incentive to renegotiate, I don't see how a workout is possible. Distributors have no reason to renegotiate if doing so puts them in a worse-off position than before.

    once the studios go under there will be no contracts left and negotiations can begin anew.

    the studios have two choices: they can go under the hard way, by running out of money and going out of business for real, or they can go under the easy way and just go out of business on paper and re-incorporate in a new country under new legal entities.

    right now they have the power to choose, they may not have that power for much longer.

     

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    ChurchHatesTucker (profile), Apr 21st, 2009 @ 9:54am

    Re: Re: Re: Can't Unilaterally Renegotiate

    once the studios go under there will be no contracts left and negotiations can begin anew.

    In which case you're right back to square one. This is why copyright has to be shortened drastically, or removed altogether.

     

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  12.  
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    chris (profile), Apr 21st, 2009 @ 10:02am

    Re: Re: Re: Re: Can't Unilaterally Renegotiate

    In which case you're right back to square one.

    which is the case for things that have already been made, but not necessarily for the things that have yet to be made.

     

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  13.  
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    The infamous Joe, Apr 21st, 2009 @ 10:06am

    Re:

    Who needs them to distribute anything? I'm fine with the way it is now, I just take it for free.

    Allow me to clean this up a bit for you:

    Who needs then to distribute anything? There are thousands of seeders willing to do it for free-- and I promise that even more people will seed if the threat of financial doom were lifted.

     

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  14.  
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    Uncle Bud, Apr 21st, 2009 @ 10:08am

    Renegotiate

    In extenuating circumstances---10% Ten percent of something is more than 100% of nothing. You just have to know when.

     

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  15.  
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    Anonymous Coward, Apr 21st, 2009 @ 10:16am

    Re: Renegotiate

    10% of something is always more than 100% of nothing.

     

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  16.  
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    Per Bylund, Apr 21st, 2009 @ 11:10am

    They don't think they have to change

    Yes, we would think it would be a good idea for Hollywood to offer movies online and thereby broaden the market and potentially reap greater profits. Any company would like that, right? Well, in this case Hollywood is acting the way they have always acted (including music and media industry players): they call for legislation to "protect" them from technology rather than adapt to the market and make, find, and exploit profit opportunities.

    The entertainment industry has done this for as long as we can remember: when radio was introduced they wanted to get rid of it through legislation, when we got television they wanted it stopped, and it is the same with Internet. They don't think they need to adapt like everybody else - they think they have a right to use state coercion to protect their profits and prohibit sound technological advances because they find it too cumbersome to adapt.

    As far as I'm concerned, they might as well fail. The sooner the better, since they are set on pushing us into an Orwellian society rather than renegotiate contracts.

     

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  17.  
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    LostSailor, Apr 21st, 2009 @ 11:16am

    Still Not As Easy

    Gee, Mike, I would think that someone with a business background and whose primary profession is offering advice would come up with something a bit more reasoned than a facile "they can just renegotiate their contracts."

    Even if the studios realize that they need to adapt, there are hundreds of thousands of people who share in the revenue from the current system. Just witness the last year's Writer's Guild strike and the apparently narrowly averted Screen Actors Guild potential strike. It's not just the studios that need to be convinced, but all the other stakeholders.

    The current system of revenue sharing on the production side as well as the current distribution system (theaters, DVD, cable, Internet, broadcast TV) is a many tentacled thing. This is not an excuse, but a real obstacle to actually achieving the change in business model that you advocate. Do you have anything more helpful than just "renegotiate"?

     

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  18.  
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    ChurchHatesTucker (profile), Apr 21st, 2009 @ 11:17am

    Re: Re: Re: Re: Re: Can't Unilaterally Renegotiate

    which is the case for things that have already been made, but not necessarily for the things that have yet to be made.

    True, and some organizations, like SAG, have been very accommodating going forward (e.g., Dr. Horrible.) But the question is: how do you untangle the thicket of interested parties for past productions? It's insanely tough to do, in part because of the massive number of parties involved.

    Short/No copyright would solve that.

     

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  19.  
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    Mike (profile), Apr 21st, 2009 @ 11:35am

    Re: Still Not As Easy

    Gee, Mike, I would think that someone with a business background and whose primary profession is offering advice would come up with something a bit more reasoned than a facile "they can just renegotiate their contracts."

    Reading comprehension: "No, it wouldn't be easy"

    I said it's difficult, but at this point, anyone who can see where the market is heading has to realize it's the only way to avert a disastrous situation.

     

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  20.  
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    DS, Apr 21st, 2009 @ 12:17pm

    "Would You Rather Renegotiate Your Contracts... Or See Your Business Collapse?"

     

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  21.  
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    DS, Apr 21st, 2009 @ 12:17pm

    "Would You Rather Renegotiate Your Contracts... Or See Your Business Collapse?"

     

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  22.  
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    DS, Apr 21st, 2009 @ 12:17pm

    "Would You Rather Renegotiate Your Contracts... Or See Your Business Collapse?"

    Wow, I thought this was going to be a post on the UAW...

     

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  23.  
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    Anonymous Coward, Apr 21st, 2009 @ 12:41pm

    Re: "Would You Rather Renegotiate Your Contracts... Or See Your Business Collapse?"

    Ha, I clicked thinking the same thing.

     

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  24.  
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    Anonymous Coward, Apr 21st, 2009 @ 2:25pm

    Re: Can't Unilaterally Renegotiate

    "B makes their money primarily through commericals. Commercials only pay if people watch."

    Not true of TV networks. They get paid to run the ad, regardless how many people are watching.

     

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  25.  
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    Anonymous Coward, Apr 21st, 2009 @ 2:32pm

    Re: Re: Renegotiate

    Unless the something is debt, in which case it's a negative number.

     

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  26.  
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    Vincent Clement, Apr 21st, 2009 @ 5:31pm

    Re:

    But movies don't make any money ;)

     

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  27.  
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    Rob Friedman, Apr 21st, 2009 @ 9:40pm

    They are just too busy clutching their precious tightly to notice the soon to be collapsed ruins which surround them.

     

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  28.  
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    LostSailor, Apr 22nd, 2009 @ 8:13am

    Re: Re: Still Not As Easy

    "Gee, Mike, I would think that someone with a business background and whose primary profession is offering advice would come up with something a bit more reasoned than a facile 'they can just renegotiate their contracts.'"

    Reading comprehension: "No, it wouldn't be easy"


    So, in other words you got nothing else to offer.

    Saying that "it wouldn't be easy" is a gross understatement and, frankly, isn't really all that helpful. It's not as if there is one monolithic entity that can just "renegotiate" all existing contracts.

     

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  29.  
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    Anonymous Coward, Apr 22nd, 2009 @ 9:01am

    LostSailor, well, there actually is one monolithic entity that can just "renegotiate" all existing contracts. Our govt. seems to be doing just that right now. Hey, they did it with AIG, Banks, Wall Street, the Constitution, why not movie companies?

     

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  30.  
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    LostSailor, Apr 22nd, 2009 @ 10:05am

    Re:

    Hey, if you want the government to hand over billions of dollars to the movie studios, then they might have that option. But in fact, the government is not renegotiating any contracts with AIG, the auto companies, etc. Those companies might be doing it themselves, but I've not seen anywhere that the government is involved in any renegotiation.

    Or are you saying you want the government to take over the film industry?

     

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    ChurchHatesTucker (profile), Apr 22nd, 2009 @ 11:54am

    Re: Re: Re: Still Not As Easy

    Saying that "it wouldn't be easy" is a gross understatement and, frankly, isn't really all that helpful. It's not as if there is one monolithic entity that can just "renegotiate" all existing contracts.

    Your "monolithic entity" would be Congress, which is the entity responsible for the current rape of the public domain to begin with.

    And yeah, if they can 'renegotiate' the public's interest downwards, they can turn around and do the same thing to the industry.

    But as mentioned above, it's not going to be easy.

     

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