Hollywood Accounting
 

Studying Budgeting and Accounting for film this month and just got an interesting link from my instructor that I figured a few people here might be interested in.

http://www.techdirt.com/articles/201...ofitable.shtml

The actor James Garner sued over this years ago. I think it was The Rockford Files that still hadn't shown a profit despite years on the air and in reruns.

the most creative people in hollywood are the Accountants.

I'm trying to find some more info, but I had heard of them doing this on one of the original Star Wars movies and people are still owed backend and the studio still claims to have not made any profit. And we're talking about Star Wars, everyone knows how much they've made over the years.

Rocket fuel for 60 X-wing fighters not cheap.

Demand 5% of domestic and worldwide box office revenue as well as 5% of physical and digital format revenue. Probably forgetting some stuff but that should give you plenty.

The exact example that comes to my mind when Hollywood Accounting is mentioned. A percent of profits can be very arbitrary. A smaller percent of gross isn't.

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The music industry is the same way in many regards. They pay artists a royalty on albums sold, but make the artists pay back every dollar the label spends recording or promoting the record. There are big acts that sell a lot of albums and never see much, if anything, in the way of royalties because of the accounting measures the labels go to in order to hide profits.

I know a few big bands that got .15 cents royalty per album after paying back all recording/promotion costs.

Yep, it is why you see the real big acts sign deals that give them big advances. If they can get a few million in advance money they know they will never sell enough records to pay it and all the promo expenses back so they take what they can get up front then cash in on tour.

The Music Industry is well known for contracts that make money for everyone but the Artists, especially first contracts for new performers. There are no Guilds (screenwriters, actors, etc) to protect or set standards for performers contracts.

Tom Petty filed for bankruptcy back in the 70s to get out of onerous contracts.

That is why TLC filed for bankruptcy. A lot of people couldn't believe they were each living off $50k/yr when they first found success but they got screwed in their first contract because they didn't know better.

Yep that is pretty common.

There are a lot of acts out there that had 2-3 big hit songs and made millions for the record labels then saw their popularity die off and they ended up leaving the industry and had little or nothing to show for it.

Some of that can be the artists fault. There are plenty of bands who made millions touring and blew through it all partying and living the rock star lifestyle as they assumed it would never end, but many also thought they would get royalties for life from their hit songs only to later find out those royalty checks would be pennies.

Springsteen is another one that sued to get out of his contract. Just as he was getting big he realized how bad his contract was and that he didn't own any of his material so he sued. For 2 years he was unable to do anything because of the lawsuit. Had he lost he could have lost his career, but it worked out for him.