
Harry Shearer: Why My 'Spinal Tap' Lawsuit Affects All Creators - 6stringmerc
http://www.rollingstone.com/movies/news/harry-shearer-why-my-spinal-tap-lawsuit-affects-all-creators-w474441
======
probably_wrong
I knew this would be about Hollywood accounting.

For those that are not familiar with the practice, a leaked income statement
shows that "Harry Potter and the Order of the Phoenix" ended with a $167
million _loss_ [1], while "Return of the Jedi" has yet to make a profit[2].

[1]
[https://www.techdirt.com/articles/20100708/02510310122.shtml](https://www.techdirt.com/articles/20100708/02510310122.shtml)

[2] [http://www.slashfilm.com/lucasfilm-tells-darth-vader-that-
re...](http://www.slashfilm.com/lucasfilm-tells-darth-vader-that-return-of-
the-jedi-hasnt-made-a-profit/)

~~~
blowski
Taxpayers subsidise film production, pay a fortune to watch it, and then pay a
fortune to "protect" it from being pirated. The CEOs who have made enormous
wealth from this process then lecture us on the morality of "stealing". On
taxpayer-subsidised adverts of course.

~~~
adolph
Clearly they are using advanced financial and political engineering. I'd bet
that the tax burden is very low too.

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jfim
In case you were wondering after reading the original article how they can
generate losses on profitable movies, this article explains how Hollywood
accounting actually works:

[https://www.theatlantic.com/business/archive/2011/09/how-
hol...](https://www.theatlantic.com/business/archive/2011/09/how-hollywood-
accounting-can-make-a-450-million-movie-unprofitable/245134/)

~~~
adolph
See also double-Irish used in other industries to protect profits.

[https://en.m.wikipedia.org/wiki/Double_Irish_arrangement](https://en.m.wikipedia.org/wiki/Double_Irish_arrangement)

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toast0
I think this (and other examples) show that if you want to make money in
creative jobs, you need to be the distributor, or negotiate for a big advance.
A percentage of profits is basically not going to pay out -- actually this
seems like the same thing as startup pay: negotiate on salary, because you're
actually going to get that.

~~~
tarr11
Seems like gross receipts or some sort of revenue calculation is a stronger
position, but would be harder to get companies to agree to.

~~~
mannykannot
Art Buchwald won a ruling in 1990 that he should be paid on the gross profits
of a movie. This contemporary article says that the decision was "likely to
force sweeping changes in the way Hollywood negotiates its contracts and does
its bookkeeping", but I imagine they just closed the "loophole" through which
Buchwald won.

[http://www.nytimes.com/1990/12/22/movies/buchwald-gets-
damag...](http://www.nytimes.com/1990/12/22/movies/buchwald-gets-damages-in-
film-suit.html)

~~~
toast0
Apparently Art Buchwald and Paramount Pictures settled for $900M, including
vacating the judgment; and a future case Batfilm Productions v Warner Brothers
found that net profits terms were acceptable.

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sizzzzlerz
Go get 'em, Harry! Are you sure $125M is enough? You guys deserve far more, in
my opinion, for creating one of the funniest and most quotable movies ever.

~~~
giarc
Once the rest of the "band" signed onto the lawsuit, it was increased to $400
million.

~~~
camperman
Clearly, this lawsuit goes to 11.

------
mikestew
Yeah, don't pirate music/movies, kids, the artists need the money. Oops, turns
out the record/movie companies weren't paying them in the first place.

~~~
wnevets
That is why its almost always better to pay for their shows and buy a shirt

~~~
oh_sigh
In the article it says the 4 creators of Spinal Tap made $81 total in
merchandise sales.

~~~
67726e
I don't know how movies and merchandising typically operate, but it used to be
the case that musicians did their merchandising separate from their music
deals. This meant that buying a t-shirt and a ticket would contribute more
money to an artist than a record sale. I've seen articles and comments
floating around that "360 deals"[0] are becoming the norm, due to dwindling
record sales. These deals mean a cut of everything goes back to the record
company.

[0] -
[https://en.wikipedia.org/wiki/360_deal](https://en.wikipedia.org/wiki/360_deal)

~~~
joezydeco
But Shearer et al have an odd situation where they can't perform as Spinal Tap
without Vivendi's permission (and hand in the till). They can't even perform
the songs without paying a mechanical/performance royalty to the copyright
holders.

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panzagl
You'd think the IRS would get involved- creators robbed of income means
governments robbed of income tax.

~~~
e40
Someone's paying tax on it, just not the people that deserve it.

~~~
squozzer
Hypothetically. OTOH, someone who scams artists probably has ways of scamming
governments.

~~~
Declanomous
Well, given the fact that companies regularly do something similar by having
their companies generate their profits in areas with low tax rates by forcing
wholly-owned subsidiaries in locations with high tax rates to pay licensing
fees which basically cancel out their profits, I'd be inclined to agree.

Someone else linked this farther up the page, which is the example I'm most
familiar with:

[https://en.wikipedia.org/wiki/Double_Irish_arrangement](https://en.wikipedia.org/wiki/Double_Irish_arrangement)

------
wccrawford
I was just joking to a new gamedev group I joined about this when we started
discussing selling our game. Ugh. So ridiculous.

------
ChuckMcM
I do hope they are successful, although I realize that one possible outcome is
that in an effort to pay the creators the studios/distributors raise the price
of the content by 25% rather than shift balance of payments.

At some point, individual creativity is the the 'job' that will be automated
last, if at all. It will be useful to be able to make a living wage at it in
the future.

~~~
aanm1988
Aren't most contracts nowadays structured to avoid these types of shenanigans?
Profit sharing off gross income instead of net, for example.

~~~
jasode
If the talent is a big A-list star, he/she can ask for gross points and
sometimes get it.

On the other hand, if you're a desperate actor (or composer, or director, etc)
and have no leverage to negotiate a percentage of gross instead of net, you
end up taking whatever you can get. E.g. comment about the persistence of
Hollywood Accounting with an example of Jonah Hill:
[http://movies.stackexchange.com/questions/17022/why-does-
hol...](http://movies.stackexchange.com/questions/17022/why-does-hollywood-
accounting-still-work)

~~~
aanm1988
> Although not 'Hollywood Accounting', Jonah Hill

The comment is about Hill taking less (a lot less) to be in a Scorsese film.
That seems like an entirely reasonable tradeoff. He wound up with a second
oscar nomination out of it. It's also a move that no one would bat an eye over
if it was to do some artsy indie film.

~~~
jasode
Right. The Jonah Hill example was about "no leverage" inside of a larger
comment about Hollywood Accounting. Jonah himself didn't suffer from Hollywood
Accounting -- unless he _did sign_ one of those "net points" deals of which he
gets ongoing residuals of $0 that the public doesn't know about.

An unequal power dynamic between the talent and the studio means some actors
accept deals such as Hollywood Accounting, or SAG minimum wage, or possibly
both.

~~~
tunap
Or worse! The studios culled the talent on "reality tv" by calling them
contestants and bypassing SAG minimums altogether.

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ohthehugemanate
The takeaway is: if you want to make money, you have to go to ridiculous
lengths to dodge the tax man. Makes me think of the origin of the word
"privilege": private law. If you can afford a real financial manager, you have
a totally different set of rules.

Anyone know a good financial manager? I'm in the market....

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nraynaud
So they are siding with a politician from Luxembourg to try to get fairness in
accounting practices? That's an incredibly creative plot twist...

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giarc
I read an article many years ago about the music recording industry. According
to this article, compilation albums (think NOW! 37 and so on) are not
considered "final playlists or track listings", and therefore the distributor
does not need to pay the artists.

I did a bit of googling to find a source but it seems a lot of the recent talk
has been about online streaming and creating playlists.

