April 24, 2014

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Show Us the Numbers

Today brings yet another story about how Hollywood’s finances are better than ever. Ross Johnson’s story (“Video Sales Abroad Are Good News in Hollywood. Shhh.“) in today’s New York Times tells us that the studios are keeping their overseas DVD sales secret, so as not to interfere with the industry’s tradition of lowballing its revenue.

“For a long time, the film business was a single-digit business on investment return,” said Charles Roven, the producer of “Batman Begins” from Warner Brothers, a division of Time Warner. “Now, because of home video, it’s a low double-digit business, and the studios want to make sure it doesn’t go back into the single-digit business.”

In the past, lowballing has enabled the industry to limit its payouts to stars whose contracts call for a share of the profits. As the story reports, that battle goes on.

These days, of course, surging profits would be inconvenient in another way. They would undercut the industry’s rent-seeking in Washington, which relies on a narrative in which technology destroys the industry’s revenue stream. If the technology problem is really as bad as the industry says, then it ought to show up in the sales numbers.

The music industry has opened its books, reporting sales and revenue numbers that fell for several years before rebounding slightly in 2004. By all reports, the movie industry is still more profitable than ever.

It may turn out that the net effect of technology on the industry is neutral, or even positive. If so, then no expansion of copyright law is needed, and a mild contraction may even be in order. Remember, the goal of copyright is not to maximize the profits of any one industry, but to foster creativity by regulating just enough to ensure an adequate incentive to create. If the industry wants to argue that incentives are inadequate now, or will be in the future, then it will have to show us the numbers.

The stars fight lowballing by demanding a detailed audit of industry revenue reports. We should demand no less.

Comments

  1. Copyfight says:

    Enough Already with the Crocodile Tears

    Ed Felten asks Hollywood to quit shedding crocodile tears over profits “lost” to Internet-enabled piracy — at least while it continues to make more money than ever, while denying movie stars (the “artist”) a more sizable cut: If the technology…

  2. Don Marti says:

    DRM proponents argue that Hollywood won’t release movies to new formats without strict DRM. But hasn’t the time from theatrical release to DVD release actually gottten shorter since DVD burners and CSS-descrambling software became readily available?

  3. Peter O says:

    If so, then no expansion of copyright law is needed, and a mild contraction may even be in order. Remember, the goal of copyright is not to maximize the profits of any one industry, but to foster creativity by regulating just enough to ensure an adequate incentive to create. If the industry wants to argue that incentives are inadequate now, or will be in the future, then it will have to show us the numbers.

    The argument against this is going to be that: Hey, this is a capitalist society! Just because we’re in the black a little bit doesn’t mean we’re making everything that we are owed.

  4. Alexander Wehr says:

    DRM violates the due process clause by allowing movie studios to be indirect judges, juries, and executioners of copyright law.

    The constitution is clear. If we are suspected of copyright infringement we should go before a judge, not be restricted of our right to fair use without probable cause, a warrant, or an indictment and trial for legal infraction.