The Hobbit Took $120M From Kiwi Taxpayers - Maybe They Should Own The Rights
from the we-wants-it-back dept
Yesterday, we wrote about how US taxpayers were handing over approximately $1.5 billion to Hollywood to get them to film movies in certain locations -- and how little of that money actually generated jobs (though, lots of it flowed into the pockets of Hollywood studio execs). Even worse, the story highlighted how there's a nasty "race to the bottom," where Hollywood demands increasing subsidies from different locations, with promises to only film movies in the locations with those subsidies. That means more and more taxpayer money going to Hollywood, for the sake of a temporary production, which often brings in workers from LA, and has only a brief, marginal impact on the local economy -- usually much, much less than the subsidy in question.While the NY Times article explored how this was happening in the US, a new article at Bloomberg highlights how this is happening around the globe, using key examples from the subsidies around The Hobbit and Harry Potter -- both of which involved massive subsidies in response to Hollywood threats to film elsewhere.
How much taxpayer money can Warner Bros. demand from the government of New Zealand to keep production there (rather than, say, in Australia or the Czech Republic)? That answer turns out to be about $120 million, plus the revision of New Zealand's labor laws to forbid collective bargaining among film-production contractors, plus the passage of three-strikes Internet-disconnection laws for online copyright infringement, plus enthusiastic and, it turns out, illegal cooperation in the shutdown of the pirate-friendly digital storage site Megaupload and the arrest of its owner, Kim Dotcom.Again, if this actually created the economic activity that Hollywood claims it does, perhaps it would be worth it. But both articles highlight how this isn't true at all. It just shifts money from local taxpayers to Hollywood execs.
[...] The U.K. government found this out in 2005, when Warner Bros. threatened to move "Harry Potter" productions to the Czech Republic. The government of Gordon Brown caved in to studio demands and passed new subsidies. In 2009, New Zealand also gave in and now faces demands for more.
The worst part is that, for most of the wannabe Hollywoods, it's bad economic policy on every level. The productions bring in mostly low-end, temporary jobs, while the high-end jobs remain in Hollywood or New York. Call it the Curse of Harry Potter.That article, authored by Joe Karaganis, who has been studying this issue for quite some time, suggests that if the public is financing these movies, then perhaps the movies should belong to the public if the studios can't pay back the loans. The suggestion is a really creative one. If the movie actually makes money, then the studios can pay back the loans. If it's a flop, then let the movie go to the public via a Creative Commons license, and let the public do something with it.
One way to break the curse is to route public money through what we might call an Expecto Patronum license -- named after the powerful defensive charm in the Potter series. Under the license, public money takes the form of a conditional loan rather than a grant or tax break. After five years, producers have a choice: Pay back the loan or re-release the film under a Creative Commons attribution license, which would allow it to be shown freely.It's such a reasonable idea that you know that Hollywood would freak out at any legitimate push to use it. In true "entitlement mentality," they believe such taxpayer-funded subsidies are their right, and that localities that won't pay up are missing out. Yet, as the data clearly shows, most locations would be much better off saying "no," as the benefit is minimal. Or, at the very least, they should make the terms similar to what the article suggests. If you want the public to finance the movie, then make it conditional. In the end, you pay back the loan or the public gets the movie.
If a film is among the few that have longer-term commercial value, its producers can choose the first path. If it isn't, they lose nothing by taking the second route. The license thus underwrites creative risk-taking without squandering public money on blockbusters. It also ensures that public investment generates public culture -- not works controlled by the studios for the next 95 years.
Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.
Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.
While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.
–The Techdirt Team
Filed Under: copyright, hobbit, jobs, new zealand, subsidies
Reader Comments
Subscribe: RSS
View by: Time | Thread
Open leter to the people of New Zealand
We're all in this together, keep your stick on the ice.
[ link to this | view in chronology ]
Re: Open leter to the people of New Zealand
[ link to this | view in chronology ]
Re: Open leter to the people of New Zealand
You want to stop MAFIAA and get rid of these greedbag bloodsuckers somehow those who have that special IT knowledge must Wikileak their stuff.
Show it all to the Mainstream and Educate them so they will know the truth.
[ link to this | view in chronology ]
Maybe you should actually read the laws governing production tax rebates. Then you'd learn how closely the incentives are tied to the hiring of local residents and dollars spent at local suppliers. I know that doesn't fit your anti-Hollywood narrative, but your claims are blatantly, laughably false..... again.
[ link to this | view in chronology ]
Re:
When it comes to making movies, Hollywood ships in people from LA, they don't use any local people.
[ link to this | view in chronology ]
Re: Re:
http://www.entertainmentpartners.com/production_incentives_results/?jid=218&GEORGIA
It's 20% for everything spent locally. They also report that there are 5,440 Georgia crew members.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re:
1) Claim to hire locally to get tax break
2) Bring in outside workers
3) Finish movie
4) Shell company claims bankruptcy and owes nothing
If you don't get your money up-front, you won't get it.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
Unfortunately it really means, "Justice for those who have the money to buy it."
[ link to this | view in chronology ]
Too bad he didn't hit his head on the way down.
Expect the MPAA blog to counter this "false and misleading" information.
[ link to this | view in chronology ]
The other part of the equation
[ link to this | view in chronology ]
[ link to this | view in chronology ]
So wait, is the issue tax rebates or loans?
[ link to this | view in chronology ]
Re:
He's saying structure it as a loan. Many of the subsidies are structured as loans and *called* "tax rebates" (or "credits") anyway to make them sound better.
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
True. All the government has to do is take a loss instead.
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
http://urban.csuohio.edu/publications/center/center_for_economic_development/Film_Commi ssion_Full_Report_Final_Revised.pdf
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
Are these temporary offsite or remote filming locations like what's going on in New Zealand, or are these permanent or semi-permanent operating facilities, ala Hollywood studios?
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
by which you mean, they don't work. At all.
http://www.cbpp.org/cms/index.cfm?fa=view&id=3326
Study which shows they're almost a universal disaster.
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re: Re:
My link actually discusses the E&Y study (funded by the film office....) and explains all it's many faults. And it points to the study that looks at the REAL results, which show they're a disaster.
[ link to this | view in chronology ]
Re: Re: Re: Re: Re: Re:
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
In my town, the government gave lucrative tax breaks and other perks (footing the bill to create new infrastructure, etc.) in exchange for a major company to set up business. All the usual promises were made (economic benefits, jobs, etc.) and, as usual, they didn't materialize (all but a handful of jobs were filled be existing company people, using nonlocal suppliers, etc.). The business did well for a few years, then left just as the major time-limited perks expired. The community suffered a net loss.
I can see this happening once. But this happened three times, the third time with everyone full well knowing what was going to happen. But big business can buy its way into anything.
[ link to this | view in chronology ]
Re: Re:
However, when you see what's going on in NZ, I think it's becoming a problem where the connections to the MPAA are stronger.
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
You simply don't understand corporations, Mike.
ARE we all in this together? Or is 1% Ivy League Mike actually a corporate shill putting out silly notions in order to discredit them and to bring out the obvious arguments against? -- But doesn't have to be a fool or knave question: he can be both!
Is anyone here really certain that Mike "Streisand Effect" Masnick...
http://en.wikipedia.org/wiki/Streisand_effect
Doesn't get a little thrill every time I post this link?
[ link to this | view in chronology ]
Re: You simply don't understand corporations, Mike.
...right?
[ link to this | view in chronology ]
Re: You simply don't understand corporations, Mike.
[ link to this | view in chronology ]
Re: Re: You simply don't understand corporations, Mike.
How do we know that TAM != OOTB?
Going Biblical, I think Darryl begot TAM, which begot OOTB. Although it may be more like Darryl begot OOTB and TAM begot AJ. Hard to tell when you don't have access to the server logs.
[ link to this | view in chronology ]
Re: You simply don't understand corporations, Mike. MIKE IS A 1%'er??!!??
Mike is a 1%'er now?
Bwaahahahahahahahahahahahaahhahahahahahaha
(takes deep breath)
ahahahahaahahhahahahahahahahahahahahhahahaha!!
Wow, you just took the cake and completely invalidated any opinion you might ever put forth.
Mike is a 1%'er....wow. Do you ever even think before you type, or do you just not care how foolish you look? Do you ever think before you type how you are undermining any point you are trying to make by making such ridiculous and way, WAY outside the box attacks like this?
It's auto-report for your comments from here on out, as you obviously have nothing relevant to add to any topic here, you just have a massive hard-on for attacking Mike in any manner possible.
[ link to this | view in chronology ]
Re: You simply don't understand corporations, Mike.
[ link to this | view in chronology ]
Yet today bribing businesses like this is effective how you do business, even though you're screwing over the tax payers in the process.
[ link to this | view in chronology ]
Value for money
[ link to this | view in chronology ]
Tourism
http://www.skynews.com.au/showbiz/article.aspx?id=823026&vId=3681012
"After the Lord Of The Rings films came out a Tourism New Zealand survey showed 6% of visitors came mainly as a result of having seen the movies. They added around 250m annually to the country's income. "
Spend $120m, get some of it back in tax/etc, and then get 250m (NZD?) annually for a couple of years? That's not a particularly bad investment.
There's more than just the jobs created here. For the US it might be difference, since lots of US cities are not appealing even after a film has been made there, but for somewhere like NZ, it can be quite different.
[ link to this | view in chronology ]
Re: Tourism
People are paying a lot of money to see movies, now that the cat is out of the bag and we suddenly see that Hollywood is not even funding them well I feel sharing is even more relevant and acceptable than previously, especially in places that has funded movies, many movies.
[ link to this | view in chronology ]
Re: Re: Tourism
(Yes, it's Wikipedia, but look, references!).
Before you say "rubbish", do a scant bit of research rather than using preconceptions.
[ link to this | view in chronology ]
Re: Re: Tourism
[ link to this | view in chronology ]
Re: Re: Re: Tourism
[ link to this | view in chronology ]
Re: Re: Re: Re: Tourism
[ link to this | view in chronology ]
Re: Tourism
Not every country, region or town is able to do so. I've seen all the Harry Potter movies, Star Wars, etc. Not one of them did I ever think "I should go visit where they shot this!" I've thought that about New Zealand.
I'll say it again: Lord of the Rings/The Hobbit is a special case where NZ is able and willing to BE Middle Earth. Not every movie/location can say the same.
[ link to this | view in chronology ]
Re: Re: Tourism
Which is why I said that in my post in the first place, just not with the words "special case".
For NZ it isn't a bad idea, which is why this article comparing it to US tax breaks is stupid, because it's not exactly like with like.
[ link to this | view in chronology ]
Investigations
This is just another reason that Hollywood should be giving there movies away free to the public. And this is not in any way acceptable in any country. Demand an investigation NZ, demand they pay there debts or give up the copyright to the people who have paid for the movie to be made.
[ link to this | view in chronology ]
Hollywood Just Can't Catch a Break
Mike, what you're missing is that the filthy pirates are now managing to leach all the value out of a film before it's even done being filmed!
Sheesh.
[ link to this | view in chronology ]
Re: Hollywood Just Can't Catch a Break
You know it's funny how you mention that without expecting a bit of truth from your sarcasm :-) I honestly think you shortened the entire explanation of the article. It's not the film they are devaluing, it's NZ itself so they can try to gain a "stronger foothold" on a country.
Honestly this makes me think about many possible connections between what the MPAA is doing here and their attempt to completely derail MegaUpload.
[ link to this | view in chronology ]
Just Like Last Time
See William M. Adler, _Mollie's Job_
http://www.amazon.com/Mollies-Job-Story-Global-Assembly/dp/0743200306
This is a book about how a job making small electric components traveled, from New Jersey, to Mississippi and Arkansas, to Mexico, and eventually overseas. It deals with such side issues as Wall Street financiers, corrupt labor unions (the Teamsters), and the New Jersey Mafia, complete with cement overcoats. Suffice it to say that the financiers eventually betrayed everyone they ever dealt with, without any exceptions.
[ link to this | view in chronology ]
ask Rhode Island...
http://www.slate.com/articles/business/moneybox/2012/06/_38_studios_and_kingdoms_of_amal ur_how_curt_schilling_s_video_game_company_duped_rhode_island_out_of_75_million_.html
[ link to this | view in chronology ]
We'll subsidise your creative risk-taking by giving you an intellectual monopoly for fourteen years. In exchange, when that time is up, your output becomes public domain.
Of course, the length of that subsidy has already become so long that it's not much of a bargaining chip for Hollywood to get it extended in exchange for the film location, so now they've just resorted to directly demanding money.
[ link to this | view in chronology ]
Re:
"In the case of copyrights, the most rational solution is Great Britain’s Copyright Act of 1911, which established the copyright of books, paintings, movies, etc. for the lifetime of the author and fifty years thereafter..."
Thanks miss, but no thanks. The justification for the "and 50 years" lacks any rationalisation or evidence. Even the lifetime bit is questionable in terms of comparative advantages. So much for objectivism...
[ link to this | view in chronology ]
[ link to this | view in chronology ]
Re:
[ link to this | view in chronology ]
Re: Re:
[ link to this | view in chronology ]
Re: Re: Re:
[ link to this | view in chronology ]
Re: Re: Re: Re:
[ link to this | view in chronology ]
Paying the loan back?
This goes back to the issue of how can this happen in the first place- how can a movie be #1 at the box office, take in millions of dollars and the studio claims it lost money? If all these movies actually lost money, how is the studio still in business?
[ link to this | view in chronology ]
An idea for taxpayer-funded movies
[ link to this | view in chronology ]
Let's do the math...
[ link to this | view in chronology ]
Your (state's) mileage may vary.
I think some jurisdictions already have experimented with the idea of the public partially owning the film. I think British Columbia's has an optional clause like that.
And anyone who has the idea that all film crews come from Hollywood, Los Angeles is truly talking out their ass. I've made a living in this business for 15 years and you know how many days I've worked in L.A.? One. I live and work in a mid size city. Stop lumping us in with L.A., you undermine your credibility when you do that (and I need you to stay credible). Every once in a while, when we are filming on location, some dumbass will drive by, flip us the bird and yell "Go back to L.A." or equivalent, not realizing that 85% of the crew working there permanently live, work and support families in this city.
I'm generally against corporate welfare. But when the incentive program is up for renewal in my state I'll support it. It's the difference between having production in your state or not. For the studios it's just a business decision. They don't care about the scenery or anything else. It's all about the money. Corporations have no soul. I've always said that if you want to get rid of these incentives, you have to get all the states (and the Canadian provinces) to do it at once. Put everyone on a level playing field. (The L.A. union locals would love that!)
New Zealand. $120mil for one production. Wow. True it's a multi year production that could drop close to a billion, but still. Lot of dough.
I tell you what those of us who make a living at this really got to worry about: China. Production companies don't like to go to China for a variety of reasons but the winds are changing. They're becoming more responsive to outside business interests and with their artificially devalued currency they could offer the mother of all incentive programs. Slave labor available too.
[ link to this | view in chronology ]
You know...
If Hollywood came here to film a movie, they'd die of boredom in 2 minutes.
[ link to this | view in chronology ]
Open Letter to the People of Muppet Land down under
The idea that people watch a movie and then suddenly spring out of their chair ready to tour the film backdrop is kind of stupid, even moronic and frankly all of the so called statistics are supervised by the political party that bought the snake oil. I would like to inform you all that in terms of tourism this place is deserted. In terms of financila returns they all long dissappeared with the planeloads of British actors after they had wlaked the red carpets and polished off the champagne.
The truth is we will never know the truth about these shady deals. The financials produced would be as mythical as Mordor.
The Kiwis are just the sad muppets who made the sandwiches and served the beer and paid out the hard earned tax subsidies. We got nothing! And no hard feelings with the U.S. whatsoever we love tourists from up there and want to see more. The blame lies solidly with our Prime Minister (who incidently owns a retirement home in Hawaii) and the dwarf like muppets who accept this crap as truthful.
Kia Ora!
[ link to this | view in chronology ]
The Prime Minister of NZ wants a green card.
After all the kickbacks his business cronies have received, he'll be on the boards of many large companies, being paid a huge salary to sit in a deck chair and phone in appearances at meetings once or twice a year.
Doing the bidding of the MPAA and RIAA ensures his well-funded retirement plans go off without a hitch.
[ link to this | view in chronology ]