remember this everytime you see that thing before movies saying pirating is not a victimless crime, its not ok for you to steal, just for them too....lol
And don’t forget, if they don’t make any profits, one would assume they wouldn’t be eligible to pay the IRS anything on it. Sounds like an excellent way to avoid your taxes.
This is why, say, a novelist will sell the rights to his book outright to a producer or studio. The movie may only barely resemble his novel, but he gets paid upfront and is done with it; doesn't have to worry about so-much-percent of nothing.
As a recovering CPA and iBanker, this creative accounting approach is common place in so many business models - mining, oil/gas, agriculture, hell even Solar panel mfg and NYC taxi medallions lol. There is always a “gotcha”... if you must be involved, at least ensure you are on the “right” side of the deal
@@eliyahfeld Maybe it's you who doesn't watch the news? For the past 4 years (PBS not withstanding) the news has largely served not to educate but to either fuel your delusional fantasies or inflame your irrational hatred, depending on where you stand.
This is mind boggling nuts! And the IRS lets them get away with this?? Unbelievable! It's a shame it's not more publicly known how blockbuster movies are considered not profitable by studios. ETA: I really like, and appreciate, you put sources in your video description!!
My husband works for the industry and union reps are constantly trying to get a piece of the streaming revenue. ATM union retirement plans and medical benefits are partially paid for by "Theatrical" money. Now that things are moving more and more to streaming none of the workers are getting their cut. Benefits are being slashed and fought over during contract negotiations.
Yet another way in which Hollywood is corrupt AF. So glad I decided to go back and watch all of Mike's videos from the start. This channel is incredible!
I had moved to Los Angeles at the age of 21. Lived there for 26 years. In that time, couldn't help but learn interesting little tidbits about "The Business" (the entertainment business, for the rest of the world, but simply "The Business" or even just "The Biz" to everyone in southern California), and had learned long ago about exactly this practice. Disgusting.
I've heard the term "Hollywood Accounting" and always wondered what it meant. However, I wldnt be in position to do quick search and it wld slip my mind by the time I cldv looked it up. Thank You so much for this video. It was precise. I'm always frustrated when a creator puts in a ton of useless info so they can get a video to a certain length. When a creator has done that twice then I'm out. I completely understand wanting s certain video length BUT GD, ppl... the occasional short video aint gonna kill ya. Also you cld do 2 unrelated topics in 1 video and just provide a quick explanation why you put these 2 topics together. Again THANK YOU! And Sorry, this comment is almost the same thing that I just complained about. Oh well, anyway.... Such is Life! Blessed Journey & Continued Success May you & yours and all y'all out there have happiness, good health, lots of wisdom and whole hell of a lotta fun. While having fun remember: the trouble wit trouble is it's starts out as fun!
My cousin went to film School and said that the reason why you see so many different studios that you've never heard of before and haven't heard of since at the beginning part of a movie, this is why. Those one-off studios are just shell companies that are established for a movie or two and then shut down once the Hollywood accounting has been complete. She also said that if you are a big enough actor, you can still get a percentage of the profits if you negotiate your contract to be paid out with gross profits from the movie instead of net. However, only the biggest actors like Keanu Reeves or Morgan Freeman could ever get that in their contract.
if you're involved in a movie, & your in a high enough position to warrant a percentage of a movie's take, negotiate for "gross points" (a percentage of movie's gross revenue), but don't be suckered into "net points" (a percentage of a movie's net income). "there are two parts in show biz: the show and the biz ...and you better make sure you're good at both."
Never accept a contract with net points. You will never collect anything. So take a higher up front fee. Only star actors and directors get gross points. Tom Hanks took gross points on Forrest Gump and got $40 million. Winston Groom the writer had 3% net points and got nothing. However, when it came to his second Gump book he said screw them and played hard ball and so he did get about 1 million USD for the rights to film his second book, which has still not been made into a movie 20 some years later.
Thanks for making this scheme public!!!!!!! I will never go to a movie again on the big screen!!!! I know TV counts as well but there is only so much boycotting you can do!!!! Pat
*Poor 6.7-foot Darth Vader!!! He was literally **_screwed_** out of potentially **_millions,_** if not many hundreds of thousands... all the while Mr My Shit-no-stinky - Georgey Porgy Lucas is walking around Hell-i-Weird with his chest all puffed out and his nose sticking in the air and with $7,200,000,000!!! Yep, that's a stupendous SEVEN POINT TWO BILLION DOLLARS IN THE FRICKIN' BANK!!!!!*
The real criminal part is that you can take the word Hollywood out, this is just how accounting works in general. Accounting is just like statistics in that there are rules and formulas, but you can ultimately make the numbers say whatever the hell you want them to say.
Thanks for this video Mike! Im working on a screenplay. If Im able to sell it, Im getting all the money up front. I’m betting actors and writers will do the same if more of this continues to happen.
If you’re a buisness owner you know how stupid this is. No sane individual will let people take from gross cause you’ll always lose money. Net revenue is just good intelligent buisness The problem here is the inflation of expenses…that’s scummy and the thing that should be illegal. But yea from a scummy Hollywood studio ask for gross since they will probably plan to scam you with this shite
That must not have happened with Star Wars because apparently Alec Guinness opted to receive his pay as a percentage of the profits and all the other actors chose wages and he made a lot of money from the movies success.
@@lula4148 did David Prowse opt for royalties rather than wages like Alec Guinness did? Ps: I was referring to the original movie not Empire Strikes Back. Perhaps after the success of the first movie (which was unexpected) the studio went back to it's standard rip off ways?
Dave Prowse isn’t a great example, allegedly he was a problem regards leaking the scripts so allegedly his stunt man played him for all of return of the Jedi. Still got paid, still complained.
"Average" working people have their taxes etc deducted before ever seeing a cent, if you're big enough, you can engineer ways to make yourself bigger, even at the expense of anyone helping you get there! I understand greed, but this is ridiculous.
So it's a well known exploitation technique that gets used all the time but it's still being allowed? Gotta love these greedy corporations and what they get away with
I dont know anything about film production but I've always known that in a get -paid -in- future deal in Any context you must NEVER agree to NET profit shares. Cos youre about to get scammed if you do... GROSS profit ( or gross profit with pre agreed fixed overheads subtracted) only kids!
This is so messed up, wrong in all aspects of you ask me!!! I think no matter what, if a movie was a book the author should get royalties no matter what the movie brings in from the theater n other ways of viewing, just like the music industry
Yeah....this isn't true. Legal entities are set up for individual productions for legal liability reasons and to obtain tax incentives from local governments. Talent contracts executed with the studio and not the production entity.
The image of accountants is that they are boring bean counters who have no creativity. In reality, there are different objectives for various financial reports, e.g., book income, tax income, government spending; and clever but ethical accountants use every lawful means to find loopholes to achieve the reporting objectives legally. That is how a company can show low profits for tax purposes but high profits for investors, and low profits for profit sharing. Even greater distortions are possible if an accountant is unethical and commits outright fraud, but such accountants risk criminal and civil liability.
Thank you for being you
you too :)
So, this must be why super famous actresses and actors STILL fall victim to the “casting couch”. Wow.
Same to you my Irish pal!!!
Heyyyy you. This is the first video I have seen with the porn moustache.
Thanks but I'm me not you
remember this everytime you see that thing before movies saying pirating is not a victimless crime, its not ok for you to steal, just for them too....lol
This is corruption pure and simple
nice, good work, made me feel much better now :)
And don’t forget, if they don’t make any profits, one would assume they wouldn’t be eligible to pay the IRS anything on it. Sounds like an excellent way to avoid your taxes.
This is literally money laundering.
The studio has to pay taxes still. Since the studio gets payed by the shell “company”. It does not have to pay royalties to actors, writers , etc.
This is why, say, a novelist will sell the rights to his book outright to a producer or studio. The movie may only barely resemble his novel, but he gets paid upfront and is done with it; doesn't have to worry about so-much-percent of nothing.
As a recovering CPA and iBanker, this creative accounting approach is common place in so many business models - mining, oil/gas, agriculture, hell even Solar panel mfg and NYC taxi medallions lol. There is always a “gotcha”... if you must be involved, at least ensure you are on the “right” side of the deal
Literally the most educational thing I encountered today. Well done, thank you.
Thanks for watching!
what do you mean, you don't watch the news?! 😅
@@eliyahfeld Maybe it's you who doesn't watch the news? For the past 4 years (PBS not withstanding) the news has largely served not to educate but to either fuel your delusional fantasies or inflame your irrational hatred, depending on where you stand.
@@ricosuave6898 dude, i was joking. U got my like, no worries
Although the past 4 years were not worse than usual, just same old news
This is mind boggling nuts! And the IRS lets them get away with this?? Unbelievable! It's a shame it's not more publicly known how blockbuster movies are considered not profitable by studios.
ETA: I really like, and appreciate, you put sources in your video description!!
Thank you!
IRS accounting is different than book accounting. IRS always gets its money.
the government has their greedy paws on anything that can be exploited...don't worry..they get their money.
IRS doesn't regulate accounting practices. The FTC does.
I was going to comment on that too
My husband works for the industry and union reps are constantly trying to get a piece of the streaming revenue. ATM union retirement plans and medical benefits are partially paid for by "Theatrical" money. Now that things are moving more and more to streaming none of the workers are getting their cut. Benefits are being slashed and fought over during contract negotiations.
Yet another way in which Hollywood is corrupt AF. So glad I decided to go back and watch all of Mike's videos from the start. This channel is incredible!
Subscriber here, just going back and watching all your videos from your very first video! Love your channel!
Wow how is Forrest Gump still not profitable..... that’s insane and should be illegal...
I had moved to Los Angeles at the age of 21. Lived there for 26 years. In that time, couldn't help but learn interesting little tidbits about "The Business" (the entertainment business, for the rest of the world, but simply "The Business" or even just "The Biz" to everyone in southern California), and had learned long ago about exactly this practice. Disgusting.
I've heard the term "Hollywood Accounting" and always wondered what it meant. However, I wldnt be in position to do quick search and it wld slip my mind by the time I cldv looked it up.
Thank You so much for this video. It was precise. I'm always frustrated when a creator puts in a ton of useless info so they can get a video to a certain length. When a creator has done that twice then I'm out.
I completely understand wanting s certain video length BUT GD, ppl... the occasional short video aint gonna kill ya. Also you cld do 2 unrelated topics in 1 video and just provide a quick explanation why you put these 2 topics together.
Again THANK YOU! And Sorry, this comment is almost the same thing that I just complained about. Oh well, anyway.... Such is Life!
Blessed Journey &
Continued Success
May you & yours and all y'all out there have happiness, good health, lots of wisdom and whole hell of a lotta fun. While having fun remember: the trouble wit trouble is it's starts out as fun!
My cousin went to film School and said that the reason why you see so many different studios that you've never heard of before and haven't heard of since at the beginning part of a movie, this is why. Those one-off studios are just shell companies that are established for a movie or two and then shut down once the Hollywood accounting has been complete.
She also said that if you are a big enough actor, you can still get a percentage of the profits if you negotiate your contract to be paid out with gross profits from the movie instead of net. However, only the biggest actors like Keanu Reeves or Morgan Freeman could ever get that in their contract.
Geez!! Is there anywhere in God's green earth honesty and integrity can be found!?
@Olli Rolli truth!
if you're involved in a movie, & your in a high enough position to warrant a percentage of a movie's take, negotiate for "gross points" (a percentage of movie's gross revenue), but don't be suckered into "net points" (a percentage of a movie's net income).
"there are two parts in show biz: the show and the biz ...and you better make sure you're good at both."
My wife and I are starting to watch your videos from the start. LoL Glad ya found your footing
This was fascinating! Didn't learn this in accounting class...
That's why i don't pay for any movie, i download them via torrent
Somebody should go on Lobbyists for good and start lobbying against this.
i am sure that was the primary reason 😂
oh my goodness, they are rolling in it; with no taxes to boot! Why isn't this a bigger deal?!?!
The Darth Vadar clip is actually that of actor Rick Moranis, portraying “Dark Helmet”, in Mel Brooks’s Star Wars parody film, Space Balls
J PR I love that movie.
same way they used to treat rock bands...
looking back at this video in 2021: "yeah, this is definitely still true crime. On-brand video."
They also fire the writers before the endings are written
“GOT
Sopranos, etc
Never accept a contract with net points. You will never collect anything. So take a higher up front fee. Only star actors and directors get gross points. Tom Hanks took gross points on Forrest Gump and got $40 million. Winston Groom the writer had 3% net points and got nothing. However, when it came to his second Gump book he said screw them and played hard ball and so he did get about 1 million USD for the rights to film his second book, which has still not been made into a movie 20 some years later.
Wow, a very early video in your channel Mike and I must say I forgot about that stache ya sporting there, I woulda shaved it off too, lol
I feel so ripped off.
This is why I'm a pirate. And always will be.
Bring it Hollywood.
Wow i always knew they were scumbags but this is low!
Thank you for this video! Super helpful for helping me understand this concept in my business accounting class!
Wow Mike, thank god the cleaners lost that mustache. 🤣
Thanks for making this scheme public!!!!!!! I will never go to a movie again on the big screen!!!! I know TV counts as well but there is only so much boycotting you can do!!!! Pat
Read books, they’re always better! 🙂
*Poor 6.7-foot Darth Vader!!! He was literally **_screwed_** out of potentially **_millions,_** if not many hundreds of thousands... all the while Mr My Shit-no-stinky - Georgey Porgy Lucas is walking around Hell-i-Weird with his chest all puffed out and his nose sticking in the air and with $7,200,000,000!!! Yep, that's a stupendous SEVEN POINT TWO BILLION DOLLARS IN THE FRICKIN' BANK!!!!!*
Insane. We also hear about the death of hollywood too
You are so good at explaining things!
You're right. He really is, no matter what the subject matter is. Must be the reason so many people subscribe and watch/enjoy his content ☮️🇨🇦
The real criminal part is that you can take the word Hollywood out, this is just how accounting works in general. Accounting is just like statistics in that there are rules and formulas, but you can ultimately make the numbers say whatever the hell you want them to say.
Freakazoid (yes, the cartoon) has a scene explaining this. As it goes: "Always get a share of the gross. The net is fiction"
Sounds like commercial real estate lol
Wow I didn't know that. Thanks for sharing. Mind-blowing
Thanks for this video Mike! Im working on a screenplay. If Im able to sell it, Im getting all the money up front. I’m betting actors and writers will do the same if more of this continues to happen.
Always ask for a piece of GROSS. The net is a sham!
If you’re a buisness owner you know how stupid this is. No sane individual will let people take from gross cause you’ll always lose money. Net revenue is just good intelligent buisness
The problem here is the inflation of expenses…that’s scummy and the thing that should be illegal.
But yea from a scummy Hollywood studio ask for gross since they will probably plan to scam you with this shite
Oh Mike... You're much easier on the eyes without the mustache!
This is interesting. I didn't realize that this is what goes on.
This was very informative ❤
That is so corrupt!
RIP Vader, another sad story from Mike.
This whole thing gave me a headache. Still great video Mike thanks for showing me just 1 more way people can wrong other people. Cheers!
Good show, thanks
Thanks for watching!
Now i don't feel guilty about my 10 terrabyte of pirated movies :)
This is genius. Thank you.
how come this has only 1K likes
Was this the premise of the musical The Producers?
That must not have happened with Star Wars because apparently Alec Guinness opted to receive his pay as a percentage of the profits and all the other actors chose wages and he made a lot of money from the movies success.
@@lula4148 did David Prowse opt for royalties rather than wages like Alec Guinness did?
Ps: I was referring to the original movie not Empire Strikes Back.
Perhaps after the success of the first movie (which was unexpected) the studio went back to it's standard rip off ways?
I was sure I read that years ago as well, that Guiness made a fortune on his percentage of the profits.
Dude, moustache? You never said! Kinda weird to keep that from us only getting back to the beginning now!
I like these types of videos better
watching this in 2023 and suddenly understanding why the actors are on strike hehe
It would be interesting if you did more bizarre cases of Hollywood.
Bring back mustache Mike 😍
Wow. Can hollywood be anymore sketchy?!
Yes. Yes, it can.
This also aplies to netflix/amazon streaming productions?
But, wouldn't the companies overcharging show a large profit? Thereby taxable?
PLEASE FOR THE LOVE OF GOD MAN PLEASE DO CHRISTOPHER MCNABB AND CORTNEY BELL
Dave Prowse isn’t a great example, allegedly he was a problem regards leaking the scripts so allegedly his stunt man played him for all of return of the Jedi. Still got paid, still complained.
I love movies but this makes me not want to watch anymore!
"Average" working people have their taxes etc deducted before ever seeing a cent, if you're big enough, you can engineer ways to make yourself bigger, even at the expense of anyone helping you get there! I understand greed, but this is ridiculous.
I didn't know that...
Great. I kinda don’t want to watch movies anymore.
So it's a well known exploitation technique that gets used all the time but it's still being allowed? Gotta love these greedy corporations and what they get away with
So when a movie is profitable does that mean an accountant fucked up?
I feel like I'm listening to Leo Getz.
Agree to royalties
Quite a shell game.
I wonder what the letters say now they’ll be from Disney? 😂🤭
I dont know anything about film production but I've always known that in a get -paid -in- future deal in Any context you must NEVER agree to NET profit shares. Cos youre about to get scammed if you do... GROSS profit ( or gross profit with pre agreed fixed overheads subtracted) only kids!
How can this be legal?
Bring back the stache
Only in America….or is it?
AHHHHHHHH MUSTACHE 🥰
I would guess artists NO LONGER fall for this BS offer, right?
This is the most vital information but has the least veiws/:
Wow "studio's love money". Please point me to a class that doesn't love money.
in other words, pirating movies is always the ethical thing to do
Mike. The moustache. Why?
This is so messed up, wrong in all aspects of you ask me!!! I think no matter what, if a movie was a book the author should get royalties no matter what the movie brings in from the theater n other ways of viewing, just like the music industry
How is this fraud legal, should be a change of flawed law.
Bring back the 'stache!!!
Mob accounting is what this really is.
Why are the rest of us bothering to save receipts for our nickel and dime operations? Because WE'LL go to jail if we try to pull this shite.
"springtime for hitler" (the producers)
The moustache...
the 'stache is real. Or is it...
Yeah....this isn't true. Legal entities are set up for individual productions for legal liability reasons and to obtain tax incentives from local governments. Talent contracts executed with the studio and not the production entity.
It's funny how the phoney bookkeeping becomes legal in court . Ya capitalism.
Is not capitalism , is corporatism, US hasnt being capitalist since 1913
@@danielgunz2364 semantics and your being myopic
It' s like The Producers, but very unfunny
It happens in every single aspect of buisness from Movies to cleaning toilets 👌
The image of accountants is that they are boring bean counters who have no creativity. In reality, there are different objectives for various financial reports, e.g., book income, tax income, government spending; and clever but ethical accountants use every lawful means to find loopholes to achieve the reporting objectives legally. That is how a company can show low profits for tax purposes but high profits for investors, and low profits for profit sharing. Even greater distortions are possible if an accountant is unethical and commits outright fraud, but such accountants risk criminal and civil liability.
They say you're the best they've ever seeeen. You shoulda. Nevervtrustedhollywood! SOAD.
Damn, wish you brought that sexy stach into the present day(2020) Mike...👌
How dare you taunt us with all of your "[Private Video]" listed in plain sight. Don't tease us that way!
Infinity train ?
Final Space
bring back the stache