3 ms·
Less 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/Holly
by mmaunder 15y ago
Less 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.
- jongraehl 15y agoYou must mean that Technicolor pays the studio first, then overcharges later.