The Funny Thing About Circular Arguments

November 3rd, 2006 · No Comments
by Kassia Krozser

We figure we’ll be sitting on the sidelines while the battle of new media compensation is waged in Hollywood — been there, done that, as the kids say — but that doesn’t mean we can’t make great sport of the fight while it’s brewing. Let us begin with the “for purely promotional purposes” argument. And yes, this matters to people who write books. We wouldn’t lie to you.

If you’ve been following the news about digital media (and we have no reason to believe that you don’t), you know that this YouTube phenomenon is causing entertainment executive to break out in hives. Cease-and-desist letters are the new black. “Do not post our copyrighted material online. Remove it. Immediately.”

Yet, the studios (and their kin), argue, these “clips” are purely for promotional purposes. Granted, we slept through more than one marketing class, so maybe we don’t understand how the whole thing works. But it seems that in order for video to serve a promotional function, it must be viewable. Locked in a virtual filing cabinet is not exactly fulfilling that mandate.

Of course, a thinking person will reason that the reason behind most demands for removing videos from YouTube (and kin) is because the studios want to monetize this stuff. That’s where we get into a situation where someone is chasing his or her own tail. If the studios don’t receive compensation for these videos, then they don’t have to pay participations and residuals. If they receive compensation, then you can bet your sweet bippy that talent and investors are going to demand their fair share (which is the subject of another post, unless we get off on a tangent. You just never know around here.). It should go without saying that paying third parties for these clips is not the intent of the motion picture studios.

Oh, yes, you could argue that there is a mechanism by which studios have received compensation for promotional materials — it’s been going on for years. In the case of residuals, talent doesn’t get hit with marketing costs, so “reimbursements” are generally not reportable, either. In the case of third party participants, there are lots of “it depends” moments, but, in many cases, these expenses are offset by reimbursements.

The guilds and talent are going to argue, quite rightly, that online and digital media are entirely new distribution channels. Sure they look and feel like the old school distribution channels, but the cost of production and distribution and methods of broadcasting/selling/licensing have changed. Thus the methods for calculating contingent compensation should change. It is going to be rough enough for the studios to toe the line on the 20% video royalty, much less argue that these are promotional items. Especially if dollars are flowing into the bank.

If you’re a writer, you should be very much interested in this. Why, you ask. Because the kin of studios includes publishers. You know, the publishers who are trying to give you the lowest possible royalty rate they can on electronic books? Some argue it’s sort of on the part of ancillary income, some argue it’s more like a “club” sale, some argue that you are deserving of a miniscule rate because “costs have increased”.

This is why you should closely follow the upcoming battle between the guilds and the motion picture studios. We are admittedly cynical, but when major corporations talk about protecting artists, we tend to translate that to “protecting our own interests.” Understandable, sure, but do you want to have that kind of protection?

[tags]publishing, motion pictures, movies, residuals, writers, writing[/tags]

File Under: The Business of Publishing