7 ms·
LucasFilm Tells Darth Vader that Return of the Jedi Hasn’t Made a Profit
- malbs 15y agoWouldn't it be nice if Lodsys got out of the patent troll game, and into using it's lawyers to fight for net-profit-residuals for people who worked on films that earned huge profits over time? Wouldn't it be nice.
- zalew 15y agoit's a link from an article which was here yesterday http://news.ycombinator.com/item?id=2981442 http://news.ycombinator.com/item?id=2981442 http://www.filmschoolrejects.com/features/6-things-the-film-industry-doesnt-want-you-to-know-about.php/all/1 http://www.filmschoolrejects.com/features/6-things-the-film-...
- bfe 15y agoOne of my intellectual property law professors, with fifty years experience in just about every kind of I.P. licensing scenario possible, all over the world, recommended it's almost always best in an I.P. license to ask for a flat fee first, and a small percentage of gross revenue with a short, hard reckoning date second. The more bargaining power you have, the higher you should bump up your position for upfront flat fee first and percentage of gross revenue second. Agreeing to a percentage of "net profits" is almost always a commitment to sue the other party down the road or get nothing. Whatever I've learned since then has left his recommendation intact.
- bfe 15y agoJust to add, there are a million different possible situations, and "almost always" is a big exaggeration here, and I don't know anything about the particular case in the post. But the point remains; there is often virtue in simplicity.
- Maven911 15y agoIts an interesting perspective that seems to suggest the opposite view from the 'other' article on the front page about contracts: Just Sue Me
- bwillard 15y agoI disagree that it is the opposite. In fact I think it is more like LucasFilm is saying Just Sue Me. From the article Seth (I am assuming he is a reliable source as I know nothing about the film industry) seems to think that if LucasFilms was sued that they would lose (or settle), but luckily people, specifically Darth, are either to lazy or the amount they would win wouldn't cover the legal expenses of suing. So in effect LucasFilms is pretending like the risk of litigation isn't there and it is working out OK for them so far. Just like the experiences of PUD.
- rdl 15y agoI never cease to be amazed at how honest and forthright everyone in the (top tier) of the startup industry is, vs. the entertainment, government contracting, small business, etc. space. To say nothing of finance or politics. That silicon valley and tech is taking over the world might be a result of this, but in any case, it's better for humanity.
- jarek 15y agohttp://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus-faceboo/ http://techcrunch.com/2009/11/06/zynga-scamville-mark-pinkus...
- GeneTraylor 15y agoI disagree, look at the options given to Skype employees [1], being in the valley doesn't magically mean that your safe from the dark side of the force. [1] http://techcrunch.com/2011/06/26/skypes-worthless-employee-stock-option-plan-heres-why-they-did-it/ http://techcrunch.com/2011/06/26/skypes-worthless-employee-s...
- rdl 15y agoSkype was Private Equity, not normal VC/founder/team terms. very rarely do founders fuck their employees over, relative to how employees are treated in most places. Founders vs. VCs or Founders vs. PE is more common, but founders at a late-stage company should be a lot more educated and resourced. It's mainly at the idea to startup to series A stage where people are fairly universally honorable, at least among the top people.
- patio11 15y agoWhy isn't there an enterprising law firm going through the credits of all the Star Wars (and similar-vintage films with ongoing commercial potential), contacting every person on the list, and telling all the retired ones "There is a pot o' money with your name on it if you sign these papers which let us sue them for residuals on your behalf."? I have to imagine that the legal strategy required there is a for loop with half-dozen templated documents: "Settle with $CLIENT regarding the residuals from the production of $FILM or in discovery we will subpoena all of $FILM's books and hand them to the forensic accounting department of $BIG_FIVE who will describe in vivid detail how they are an utter fiction, resulting in $DISTRICT_JUDGE issuing a judgement in excess of $GUESS against $YOUR_COMPANY."
- anamax 15y ago> Why isn't there an enterprising law firm going through the credits of all the Star Wars (and similar-vintage films with ongoing commercial potential), contacting every person on the list, and telling all the retired ones "There is a pot o' money with your name on it if you sign these papers which let us sue them for residuals on your behalf."? Because they'd lose.
- ZachPruckowski 15y agoLook at how hard it is to get traction on investigations into the current foreclosure/securitization boondoggle - it's taken 3 years for judges to actually start looking, the federal regulators are completely uninterested, and maybe 4 state AGs out of 50 have even started looking. And these are obvious and clearcut violations of pretty straightforward laws. Their reputations and legal teams have been a buffer against all sorts of suits and investigations. A Hollywood investigation would be worse politics, since you've have every TV station screaming about the government intrusion in investigating their parent companies. Look at things like the just failed Attorney General settlement with the banks - the worst case here is the company makes a one-time payment of a few pennies on every dollar of profit to some fund nominally targeted towards the victims. Then you throw in all the indemnification offered by corporate structuring and the fact that there probably aren't technical violations of the law here and good luck selling some accounting irregularities as a prosecution. Maybe in a few years that stuff will change, but right now the environment is such that nobody really buys the idea of government actually smacking someone with TR's Big Stick.
- ChrisArchitect 15y agoolllld article from 2009 rehashing longtime complaints of bitter Vader suit wearing actor. He didn't get a cut of the only-named-in-merchandise Ewoks toys. Boohoo.
- veyron 15y agoI remember reading something similar in the music industry, written by courtney love. Anyone have a link?
- patio11 15y agoGoogle [Courney Love RIAA], first result: http://www.salon.com/technology/feature/2000/06/14/love/print.html http://www.salon.com/technology/feature/2000/06/14/love/prin...
- veyron 15y agoI should have guessed that it would be RIAA that would point me to the article :P
- deleted 15y ago[deleted]
- clobber 15y agoGive this a read too: http://gizmodo.com/5417318/my-6247-royalty-statement-how-major-labels-cook-the-books-with-digital-downloads http://gizmodo.com/5417318/my-6247-royalty-statement-how-maj...
- jackvalentine 15y agoNot the link you're after, someone has already provided that but I found "Why I started Magnatune" really interesting. http://magnatune.com/info/why http://magnatune.com/info/why
- wyclif 15y agoThe Problem With Music by Steve Albini (the original article Courtney Love was inspired by in her attack on the RIAA): http://www.negativland.com/albini.html http://www.negativland.com/albini.html
- Bud 15y agoGeez, Lucas. Have you no sense of decency, sir, at long last? Have you left no sense of decency? I mean, really. I can see being a greedy fuck for a couple decades, while you're still unsure if you are, in fact, going to become and remain wealthy beyond the dreams of avarice. But once you have the fuck-you money put away for you, your entire family and everyone you've ever met who was halfway interesting, can't you toss Lord Vader some coin for his trouble? Shameful.
- phxrsng 15y agoYes because he clearly knew they would be such a success at the time he was negotiating contracts. He made the standard contracts, which is what you have to do, because you can't just change the terms later based on how successful something is or isn't. This isn't a case of Lucas being exceptionally greedy. Maybe its a case proving how 1-sided Hollywood contracts are, though.
- kanamekun 15y agoWhile I agree with you, the article is about Return of the Jedi which was released in 1983 - six years after the first Star Wars movie came out. So by the time these contracts were being negotiated with David Prowse, the producers of the project knew that the movie was likely to be highly successful.
- Joakal 15y ago"... I accuse the corporations, who oppose the moral rights of the artist, of being dishonest and insensitive to American cultural heritage and of being interested only in their quarterly bottom line, and not in the long-term interest of the Nation. ..." There's more, including calling any such distortion of [his movie?] art as barbaric. http://savestarwars.com/lucasspeechagainstspecialedition.html http://savestarwars.com/lucasspeechagainstspecialedition.htm...
- socratic 15y agoI hate citing Reddit, but this un-sourced imgur link makes it seem like he's not such a bad guy, no? http://i.imgur.com/lTvOg.jpg http://i.imgur.com/lTvOg.jpg
- mmaunder 15y agoLess than 5% of movies actually show a net income (or net profit as the article calls it). It's called Hollywood Accounting: http://en.wikipedia.org/wiki/Hollywood_accounting http://en.wikipedia.org/wiki/Hollywood_accounting Summary: -Studios create a subsidiary corporation for each movie and they almost never show a profit. -The studios charge the subsidiary service fees for services performed like distribution, which lowers net income to zero or less. -They do this to avoid taxation and paying royalties to actors. Quote from wikipedia: "Because of this, net points are sometimes referred to as "monkey points," a term attributed to Eddie Murphy, who is said to have also stated that only a fool would accept net points in his or her contract." There are many more cases like this involving high profile people including Peter Jackson: http://en.wikipedia.org/wiki/Hollywood_accounting#Examples http://en.wikipedia.org/wiki/Hollywood_accounting#Examples
- mattm 15y agoThe link from the Wikipedia page to a leaked receipt from Harry Potter shows an example of this. http://www.techdirt.com/articles/20100708/02510310122.shtml http://www.techdirt.com/articles/20100708/02510310122.shtml Geez, a $57 million dollar loss in interest. How is that even possible?
- scotu 15y agoThe effects of this accounting practice looks a lot like the claimed effect of piracy...
- jordan0day 15y agoThis is a very good insight. I wonder how often the figures that get flashed around about how much money Hollywood is losing due to piracy are drawn directly from these fictionalizations created for an entirely separate purpose.
- fialk 15y agoAnother example of how criminal it is: A major studio will pay Technicolor $25 million annually for an exclusivity fee. Then Technicolor will charge inflated rates to the studios, so the films will appear to lose money.
- kprobst 15y agoI seem to remember Alec Guinness hit the jackpot on the SW franchise by demanding a % of the profit (gross?), so I assume this guy had a different contract. I suppose Guinness had a lot more pull and negotiating leverage than a dude whose primary contribution to the films was to be tall.
- philwelch 15y agoAlec Guinness was a Serious Actor with plenty of impressive film appearances under his belt. Of course he had more pull.
- ErikCorry 15y agoMaybe the fact that people would have noticed if they had replaced him in the sequels also strengthened his bargaining position.
- officemonkey 15y agoI don't think Sir Alec ever thought there would be sequels. Especially since he dies in the first movie. I think it's just a matter of good bargaining. At the time, Guinness had been in the movies for three-plus decades. Prowse's career hovered just above the "extra" category. Prowse probably signed whatever contract they gave him; Guinness probably dictated terms.
- JonnieCache 15y ago>Prowse's career hovered just above the "extra" category. At the time, Prowse was most famous as the Green Cross Code Man, from the UK's pedestrian safety public service films of the time. http://www.youtube.com/watch?v=CRUBMBi_lp4 http://www.youtube.com/watch?v=CRUBMBi_lp4
- noonespecial 15y agoI'm always fascinated by the way institutionalized dishonesty creeps into entire industries. From used car salesmen to film moguls, once a certain practice has ossified over the years into "everyone in the biz does it", practices that would result in jail time in other industries are simply accepted as business as usual. Even more curious, everyone to the man knows its wrong, but no one moves to change it. The emperor has no clothes and we just like him better naked.
- JoeAltmaier 15y agoYou can't be the 1st to change; you'd get run over.
- rbanffy 15y agoOnly if you were unable to actually turn a net profit. What would happen instead is that more actors and writers would be willing to work with you because they knew they'd get a fair share of the whole deal.
- roc 15y agoThe problem there, is that the talent that would truly help you succeed can already demand gross participation from any studio. And the rest, while they would undoubtedly prefer to work for an honest studio, would climb over one another to land almost any work regardless of accounting policy.
- el_chapitan 15y agoThat is the attitude of all the people who later look at a either a working process, or a working product and say, "damn, why didn't I think of that?"
- usedtolurk 15y agoMany would say the same thing about the software industry.
- 15y ago
- spullara 15y agoI wonder if you add in the marketing and distribution cost for bit torrent & associated search sites you can find that the movie companies should be paying them?
- Tichy 15y agoEven shares on "gross profit" can fail: it can be beneficial for the publisher to give away the product for free. I've had this happen to a J2ME app, which the publisher gave away for free in exchange for advertising (they were building presence and reputation by this). Another trick seems to be bundling - "buy this collection of things and you get thing x for free". So profits for selling thing x would be zero. I am sure there are many more tricks like this...
- chopsueyar 15y agoIf there was an exchange, there was consideration, and this seems more like a barter, not a free give-away. I bet a good lawyer could have made a case for you. I believe the IRS would consider the advertising to have some monetary value, which is what your gross profit fee would be based on. The fair market value of goods and services received in exchange for goods or services you provide must be included in income in the year received. http://www.irs.gov/taxtopics/tc420.html http://www.irs.gov/taxtopics/tc420.html
- larrik 15y agoI don't know why this is such a surprise to everyone. Outside of the startup scene, showing net profit is a Bad Thing. It increases liability to taxes and to employees[1], etc. Maybe public companies are different (though since, movie studios are just about all subsidiaries of public companies, maybe not), but in my dealings with many multi-million dollar companies (especially those with union contracts to deal with), they find any way possible to show a loss on the balance sheet. Between accounting tricks and taking money off the table through reinvesting (real or imagined) and executive salaries, profit is basically a made up number based on whatever management wants it to be. Taking any percentage of net profit, in plenty of industries, is basically the same as taking nothing. On a side note: the article and the one from the other day that mentioned this story as well only seemed to consider box office gross as the movie's revenue. I mean how many of us just on HN have more bought or gotten than one copy of the Star Wars movies over the years? I know I have at least 3 hanging around, to say nothing of TV airings and the like. [1]Liability to employees: Through profit-sharing programs, raise discussions, union contract talks, etc., publicly showing a "profit" can cost the company money.
- taylorbuley 15y agoPossible this is due to the kind of "creative accounting" detailed here: http://www.deadline.com/2010/07/studio-shame-even-harry-potter-pic-loses-money-because-of-warner-bros-phony-baloney-accounting/ http://www.deadline.com/2010/07/studio-shame-even-harry-pott...
- chopsueyar 15y agoBest quote from article: "Can you imagine the hedlines if Darth Vader sued George Lucas?"
- zandorg 15y agoI was expecting a video: 'nooooo!'
- microtherion 15y agoTL;DR: He finds their lack of profit disturbing