"So, you're saying that no current record contract includes royalties? I assume you have a cite for that claim, as that sounds rather ridiculous?"
I didn't say that. Royalties are paid "before profit" and not after. They are percentage of gross, or sometimes the percentage of a fixed net (ie, the costs towards the net don't change). Royalties are generally not paid on profit, they are paid on income.
"So do the studios. Universal Studios, part of a huge multinational corporation, has just taken in over $1 billion worldwide for a single movie (Furious 7),"
Yes, and Google took in 15 plus billion in the same quarter. Scale is important here. Universal may or may not make about 8% of the income of Google (we won't mention Facebook and other online billionaire companies in the discussion).
You can read here if you want to understand better (just read slowly do you don't miss anything):
" I don't give a crap what Google does individually when it's something that's standard for all corporations."
You need to understand that this is not standard for all corporations. It's something created quite recently all considered by tech companies who were looking to move money from high tax areas (where they do business) to low tax areas (where they do almost no business).
Nobody was claiming unique evilness - only scale. I would think a Tech blog would be more interested in the goings on at Tech companies, not old line movie companies.
Anyway, enough fun for this month, you can talk to yourself now, see you sometime in May or June.
Nice to see you are still around Paul. You still have reading issues, I gather, but that's a different issue for next month.
"So, by that logic, musicians who signed a contract for royalties, rather than a fixed fee upfront, had bad legal advice and only have themselves to blame if they can't feed their families from work they did 50 years ago?"
You don't know the difference? Royalties are a "before the net" thing and not an after the net thing. Record gets sold, band gets royalties. They aren't waiting for profit. Most bands also get a major up front that has to get paid off first, but that is a very different game. Bands generally are not on "net profit only" basis.
"That's a interesting view coming from you. I'll bear that in mind in other threads."
Only keep in mind that you didn't understand (again).
"Ah, so you admit that studios are using the same tactics as Google!"
I never said otherwise. My original point is only that the studios and such do it on what is a very small scale. Google does it with BILLIONS of income, not millions. Moreover, they aren't using offshore to move money around to avoid tax as much as to avoid paying certain people and to profit others. Google (and other big companies) do it to avoid paying tax, which harms all of us.
Go have a look how much search and ad business Google does in your country, and then try to figure out how much tax they paid in your country. If your country has higher corporate taxes (more than 5%) then you can almost be certain that most of the money went offshore long before tax time. This harms you directly, why worry about how a studio counts their beans when it doesn't really harm you?
I think you went a long way to make a point that is entirely irrelevant. You almost got back on track, but you lost your way.
If people sign deals for "percentage of net" without knowing what is involved in going from gross income to net profits, then they had pretty bad legal advice up front. Movies like Star Wars franchise films are rarely net profitable for many reasons. One thing is licensing (characters, screen play, and the like) which is an upfront and ongoing cost. A percentage or even a fixed amount per unit sale / rental / distribution is paid on all of the income from these movies. Done right, it means that the rights holders are generally the ones making most of the money long before the net is calculated.
It's pretty much the same deal that large corporate entities use to shift income off of their books, by creating expenses that need to be paid to offshore companies that hold rights, provide accounting and administrative services, and the like. Essentially, they "let" the offshore companies bill them for enough to syphon off much of the income long before the question of profits come into play.
What you call "hollywood accounting" is just "big business accounting", nothing more and nothing less. Producers, actors, and others sign contracts for percentage of net without having an idea what the gross to net calculations will be.
Hollywood does have one good trick however, which is where major players in a film get a percentage of gross over a certain level of sales or income. As an example, a movie might cost 50 million to make, and at 150 million of income, the leading actor(s) split a percentage of the income over that point. Producers and directors are often on this sort of deal, which not only pays them handsomely in the short term for a films success, but keeps on paying them in the future as long tail sales keep coming in. Since it's calculated BEFORE the net generally, it means less actual profits. If you have a handful of different players (investor, producers, directors, stars, writers, etc) on this sort of plan, when combined with licensing and such it can pretty much render any project as unprofitable on a net level.
Again, big corporations have different variations on this sort of idea, but the song remains the same - it's all accounting, and it's all about avoiding paying the little guy or "the people" their due. Uncle Sam has no choice, the tax laws generally address net profits and not gross income. Actors and producers do have a choice, and those who (foolishly) take net percentage deals get pretty much the same thing Uncle Sam gets... nada.
I agree with you completely. There is no intent for deflection, only to point out that the workings of a private contract between a studio and a producer is really just not important when compared to the massive amounts of tax that are avoided by corporations in the US and around the world.
I don't worry about jaywalking when someone is shooting at me. Priorities. Getting all uppity about the jay walking it to miss the scale of the offence under the circumstances. There are bigger fish to fry (including the studios and record labels that do the same sorts of tax avoidance tricks). Let's focus on what matters to the people, not the private dealings of the rich and stupid.
For a tech blog, you seem to be very much attached to the mundane - the literal small fry.
No great investigations into Google? We know that they have used every tax dodge and offshoring option possible to avoid paying their fair share of taxes. Many major tech companies have done similar things (did anyone look at Facebook's results yesterday?). They didn't rip off some overly entitled producer or artiste, but rather screwed the public directly.
From what I understand, the taxes avoided by these corporations in the US alone would be enough to pay for a college education for everyone currently in the education system.
Who cares about hollywood accounting? It's small potatoes in the real world.
"that remaining 10% would still be a huge amount of excellent new works."
The sentiment is nice, but an unproven concept at best. I am never a big fan of the strip mining mentality that seems to exist, hoping to find a gold nugget while ignoring the effects of the mining itself. The 90% crap figure you suggest is both painful and a whole lot of discouraging poor quality content to wade through.
"Make copyright duration based upon publication date"
Again, great sentiment, but the results would be the same: The copyright expiration would be extended to meet the requirements of the mouse and others, and thus the results would be the same as you have today.
Requiring registration to have copyright is wasteful, expensive, and creates an incredible amount of doubt in the public's mind as to what is and what is not copyright. Today's system is simple: Someone has copyright on it (even if it is a monkey). There is absolutely no doubt in anyone's mind right now that a work is copyright.
Perhaps better would be a "public domain registry" where creators could register their work(s) as in the public domain and free of copyright. Such an official move would certainly be a lot more clear than the near endless variations of creative commons licenses that always seem to have some sort of hold back or hidden restriction in them.
Philip K Dick. All the movies produced after his death. Careful curation and control by the rights holders his incredible trove of stories from being pillaged and plundered in a very short period of time, and instead we have been treated to a selection of exceptional movies. Had the work gone into the public domain upon his death, it's likely many schlock movies would have been made and killed the desire to make the stories into higher end movies.
Also, the "upon death of author" would lead to the inevitable BS legal defense of "I didn't publish without permission, I read on the internet that he was dead".
Umm,more like "citation needed" to show how this is getting in the way. I don't see very many, except for hackers upset that they can't break into something... the security types I can understand, but the rest? Not feeling it. So Citation needed for really good uses that merit such a widescale change to the 1201 protections.
Yes, and SCOTUS made that ruling without knowing the implication of a thing called "internet" and "perfect digital copies". It was a narrow victory for the VCR, but it is pretty clear that in the current circumstances, the decision would have swayed the other way. What saved the VCR was basically the degrading copies, that a copy of a copy wasn't the basis of widespread copyright violation. With perfect digital copies, the infringing uses of a VCR style device is much more widespread, and the courts decision could very likely have gone the other way.
There are very, very, very few instances where the restrictions in 1201 get in the way of meaningful work. Security experts are perhaps the exception, but that is still a fairly narrow concept that doesn't require throwing out the baby with the bathwater to fix.
I gather by the posting of multiple articles attacking 1201 in different ways this week that this is the new Techdirt Agenda play. How transparent.
The bill in question SOUNDS wonderful, but it opens up a can of worms. In particular,you hit the question of "non-infringing purposes". As an example, ripping a game or DVD or whatever that has DRM, and putting it on your own hard drive would appear to be okay. What if you upload it to a "backup" service? What if that "Backup" service allows others to access you files? At what point did it becoming infringing?
What happens if your "non-infringing" backup gets put on your network share drive, and your roommates or family members take a copy and share it with their friends. At what point was it for a non-infringing purpose?
Further, it would be clear that this change would make "ripper" tools entirely legal (ie, they would not be against 1201 because there would be "non-infringing uses"). Yet clearly, people would use these tools to rip stuff and put it on torrents or otherwise "infringe". What a change to 1201 would do would be to tip the balance that currently exists.
Wyden as always is really good at hopping on the bandwagon with things like this, introducing ANOTHER bill that clogs up the congress with unpassable legislation. There is little indication of wide bypartisan support for such a bill, if anything the US generally wants to protect IP and not make it many times easier for casual infringement to become the norm.
The point is that the money is the product of the alleged crime. When someone robs a bank, they criminal can't keep the money to pay for a lawyer. Why should it be different if the money was obtained by selling drugs, or selling illegal weapons?
Remember, by your logic, the bank robbery is only alleged until he is found guilty in a court of law. By that standard, he should be allowed to keep the gun he used, the money he obtained, and the car he stole to make the get away, as all of it hasn't been proven in a court of law. He should be allowed to drive that car to court, carry the weapon, and use the money to pay for his defense.
"It's an expansion of the Federal RICO Act, which was sold as the "only way to fight organized crime". Strip a mob boss of all his assets and he can't afford a lawyer to fight the charges was the idea. Which never made sense to me."
You have to think for a second. It is incredible unfair for someone to amass a huge fortune by illegal means, and then to be able to use those ill gotten gains to fight legal action. The idea isn't to make it impossible for them to fight the legal system, it makes it only that they have to fight the legal system without a bucket load of money they made by stealing or skimming from others.
Kim Dotcom is learning this lesson in a most massive way. He may even have to skip a couple of $1000 dinners to afford legal fees.
I agree. Why was the computer connected to the internet at all? Why was it not updated already? Had it not been used for a while? What would they have done if the laptop had not booted at all? Cancel the game?
Not sure why they needed to be net connected. Not sure why they haven't already done the updates. Not sure why auto updates would not be set to "manual" or "ask before installing".
Needless technopanic. These people sound technically not real competent, and in the end they are exactly the types that need auto updates to keep them from running software that is easily breached.
Mike, are you serious? The discussion has little or nothing to do with fair use, because the people who put the image out there WANTED it to be shared, wanted it to be viral, so they could sell more clothing.
Fair use isn't required nor is it part of the plan, the image was released with full intention of it being copied, modified and shared, more like a creative commons license. Permission was granted up front so nobody had to use the affirmative defense of fair use.
I know you are trying hard to push fair use, but try to use better examples. This one isn't very good and shows you to be desperate for examples and lacking in actual content to prove your case.
(oh yeah, fair use is an affirmative defense, because it only kicks in when you say "yes, I know it was copyright but..." that but is the start of an affirmative defense. No matter how many times you try to frame it the other way, you will always be wrong).
Posts like this are why it's hard to Techdirt seriously.
Verizon isn't saying that "spectrum crunch" never existed, they are saying that in those marketplaces, they have already obtained spectrum which may or may not be developed. The AWS-1 frequency group was not generally the group initially used in the US for 4th gen services, and was actually mostly used by T-Mobile and a few others. Many of the devices sold until recently in the US could not operate in this band.
That they have purchased spectrum rights in AWS-1 does not in any manner change the lack of space many carriers are seeing in the traditional bands used for wireless communication in the US.
Karl, I know you really, really, really hate all big wireless (and wired internet) providers. The disdain in each and every one of your posts is clear. If you are going to try to write hit pieces, at least try to be more honest.
(I'll be back again in a few months to laugh at something else. Generally I read Techdirt these days between the Daily Show's site and The Onion. It helps me better frame the posts here!)
I guess I get a year ender in too... I wonder how long before the "community" decides I have violated standards.
Mr Masnick is a very smart guy. It takes a certain skill and self confidence to be able to restate the world in your own terms and have other people believe you, even in the face of overwhelming proof to the contrary. Techdirt is very much about telling the truth, but it is also about telling it slant.
The real future?
We face the fact that governments worldwide are starting to come to terms with the internet, and are starting to demand that their sovereignty and laws are respected when dealing with their people. From European privacy laws, right to be forgotten rules, and even Kim Dotcom, it's becoming more and more clear that the wild west internet killing all business models is facing tough headwinds.
We are also starting to see the corner turned on piracy. from The Pirate Bay to changes in laws in Spain and attitude in Sweden, it's harder than ever to run a pirate site. Changes in laws in places like Canada in relation to VPNs and such show the way of the future, where the hidey holes aren't as secure. Caselaw will continue to mount to define corporate and personal responsibility online, and it's very likely that the truly anonymous internet may in fact be mostly a thing of the past. The universe of hackers, script kiddies, and government supported "cyberwar" operations make it even more pressing to get rid of as many of the ways of hiding as possible.
The funny part to me is that many people blame "da gubbermint", Obummer, or whatever other local nasty they can come up with. The true enemy of your privacy and your anonymity online is the very people who use those things to break the law, to hack, to steal, and to attack others. The overwhelming success of these groups means that your freedoms online will very likely be curtailed, limited, or tracked, to protect others.
From what was probably a zenith about 3 or 4 years ago, a careful eye can spot the trends, and see where things are going. There are fewer places to hide, and all the onion routing and dark webbing won't help you out. Reality is changing, and the net will be forced to change with it. The lawyers and the law makers and the lobbyists are here, the party is all but over for this existence. :)
Have a wonderful, safe, and prosperous new year. Support artists, support those who create, and make sure they can continue to create in the future.
I was waiting for this one to come up, because I knew what the spin would be.
The settlement is simple: 80 million is the big number, which would apply if another agreement was not reached. Now, in that reduced 4 million agreement, there may be other stipulations that must be met (such as not starting a similar service, or providing future user information and cooperating in court if called for related business, etc). If those were not met, it's very likely that the deal would revert back to the 80 million.
It also needs repeating that the MPAA and RIAA have said over and over again that they aren't suing people for the money, they are suing them for the deterrent factor against others. Part of that is keeping those very large judgements / agreements there to be used as a reminder of what may happen.
My personal guess: 4 million was about all Hotfile could manage, leaving the owners enough to live well and not have to restart their piracy based business.
I rarely comment here anymore (freedom of speech, just watch what you say). But this one is classic Techdirt bullshit that is hard to avoid.
You show increases in online sales. Yet, you don't show really what the effects are on the overall business. You point at vague "brand value", which is hard to measure at the best of times.
You point at online research. Well, news for you, I research plenty of high end cars, but generally don't buy them. Sometimes I am just looking at what my neighbor drivers, or perhaps the specs on that McLaren I saw the other day.
It's voodoo numbers, like the idiots who pointed at the high right of abandoned online shopping carts as if there was some magic reason people didn't buy - rather than it just being people looking for information and not to make a purchase. Pointing at vague brand values and searches made doesn't mean much.