Hollywood Accounting Back In Court: How Has Spinal Tap Only Earned $81 In Merchandise Sales For Its Creators? | Techdirt

We’ve discussed the amazing bullshit known as Hollywood Accounting many times here on Techdirt. This is the trick whereby big Hollywood studios basically get out of paying anyone royalties by claiming movies (including big, mega-famous ones) are not profitable. The most simple version of this trick is that the big studio sets up an independent corporation to represent “the film.” It then “sells” services to that corporation, which it owns, at exorbitant prices. So, for example, it will charge a “marketing and distribution fee,” which may actually be many multiples of the film’s actual budget. No cash changes hands here. It’s just a paper transaction, but because of those “fees” any money made from the film remains with the big Hollywood studio, and is not passed on to anyone who has “participation” in the net profits from the film.

Source: Hollywood Accounting Back In Court: How Has Spinal Tap Only Earned $81 In Merchandise Sales For Its Creators? | Techdirt

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