<story><title>LucasFilm Tells Darth Vader that Return of the Jedi Hasn’t Made a Profit</title><url>http://www.slashfilm.com/lucasfilm-tells-darth-vader-that-return-of-the-jedi-hasnt-made-a-profit/</url></story><parent_chain></parent_chain><comment><author>mmaunder</author><text>Less than 5% of movies actually show a net income (or net profit as the article calls it). It&apos;s called Hollywood Accounting:&lt;p&gt;&lt;a href=&quot;http://en.wikipedia.org/wiki/Hollywood_accounting&quot; rel=&quot;nofollow&quot;&gt;http://en.wikipedia.org/wiki/Hollywood_accounting&lt;/a&gt;&lt;p&gt;Summary:&lt;p&gt;-Studios create a subsidiary corporation for each movie and they almost never show a profit.&lt;p&gt;-The studios charge the subsidiary service fees for services performed like distribution, which lowers net income to zero or less.&lt;p&gt;-They do this to avoid taxation and paying royalties to actors.&lt;p&gt;Quote from wikipedia: &quot;Because of this, net points are sometimes referred to as &quot;monkey points,&quot; a term attributed to Eddie Murphy, who is said to have also stated that only a fool would accept net points in his or her contract.&quot;&lt;p&gt;There are many more cases like this involving high profile people including Peter Jackson:&lt;p&gt;&lt;a href=&quot;http://en.wikipedia.org/wiki/Hollywood_accounting#Examples&quot; rel=&quot;nofollow&quot;&gt;http://en.wikipedia.org/wiki/Hollywood_accounting#Examples&lt;/a&gt;</text></comment>
<story><title>LucasFilm Tells Darth Vader that Return of the Jedi Hasn’t Made a Profit</title><url>http://www.slashfilm.com/lucasfilm-tells-darth-vader-that-return-of-the-jedi-hasnt-made-a-profit/</url></story><parent_chain></parent_chain><comment><author>bfe</author><text>One of my intellectual property law professors, with fifty years experience in just about every kind of I.P. licensing scenario possible, all over the world, recommended it&apos;s almost always best in an I.P. license to ask for a flat fee first, and a small percentage of gross revenue with a short, hard reckoning date second.  The more bargaining power you have, the higher you should bump up your position for upfront flat fee first and percentage of gross revenue second.  Agreeing to a percentage of &quot;net profits&quot; is almost always a commitment to sue the other party down the road or get nothing.  Whatever I&apos;ve learned since then has left his recommendation intact.</text></comment>