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The Almighty Buck

Stan Lee Sues Marvel Comics 680

Posted by michael
from the profit-always-an-ephemeral-concept dept.
night_flyer writes "In a story that demonstrates the way the entertainment industry manipulates its artists, Marvel is claiming that the 400 Million dollar blockbuster movie Spiderman produced no profits, and they are trying to weasel out of their contract that gives Stan Lee 10% of the profits from his creations. Nuff Said!"
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Stan Lee Sues Marvel Comics

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  • by ONOIML8 (23262) on Wednesday November 13, 2002 @08:13AM (#4658047) Homepage
    That's a load of crap. You pay a man an honest wage for an honest days work.

    Seems like these things have been going on in the comic book industry from the beginning tho.
    • by Metrol (147060) on Wednesday November 13, 2002 @09:40AM (#4658509) Homepage
      That's a load of crap. You pay a man an honest wage for an honest days work.

      You also generally get a lawyer, accountant, and agent to look over any multi-million dollar contracts before signing. Especially for an established artist who must certainly have those resources at his disposal.

      More than likely, folks like the actors, director, producers and the like took their cash off the gross revenue. Profits coming in get translated back to further marketing, associated products, and all kinds of other expenses to increase the gross. The higher the gross revenue, the more cash for the folks collecting on it. There is zero incentive for the studio, Marvel, or any of these folks to focus on a column labeled "profit" for the sake of Stan.

      I really do feel for the guy, but it has limits. The focus on gross has been around for decades, and won't be going away any time soon. Stan himself should have known better! He's been in this game for a while now.
      • by JabberWokky (19442) <slashdot.com@timewarp.org> on Wednesday November 13, 2002 @11:15AM (#4659292) Homepage Journal
        I really do feel for the guy, but it has limits. The focus on gross has been around for decades, and won't be going away any time soon.

        Well, it's lawsuits like this that inject a little reality into over legislated situations. Put a situation like this in front of a judge and jury ("We only made $400 million dollars so we couldn't pay him anything for the characters he created"), and common sense has a chance of asserting itself.

        Stan himself should have known better! He's been in this game for a while now.

        Agreed. In this case, he's been involved with movies and even personally producing and paying for distribution for over two decades that I know of... and he certainly has attorneys on payroll at Marvel that deal specifically with character licensing and renumeration for said licensing.

        Still, tricky-contracts can be (and have been) slapped down in court. Common sense (aka a jury of your peers) can trump crafty contracts.

        --
        Evan

  • No Profits (Score:5, Insightful)

    by Mr_Dyqik (156524) on Wednesday November 13, 2002 @08:13AM (#4658050)
    Surely the studio should cut its losses, and not make the proposed sequel then.

    Shareholders should be complaining to the board as you read this.
    • Re:No Profits (Score:3, Insightful)

      by tanveer1979 (530624)
      Music industry follows a grand screw-up plan.
      The profits reported are after these cuts :
      Producers Pay
      Actors/Director/etc pay
      Cut for the guy who put in money
      ++++++
      Some inflated expences. There is no way Stan is going to win. Marvel can easily show that the movie made a loss, well it did only after the producer took his 200 Million $ fee
      • Re:No Profits (Score:3, Insightful)

        by Mr_Dyqik (156524)
        The parent was sarcastic.

        If no movies make profit, then how do studios make profit? Surely they must, or you'd hear about it on financial news etc. Or are they using the Enron method of financial reporting?

        In other words, isn't claiming that a movie makes no profit a deliberate mistatement of financial earnings (ok, so it's not an official statement of earnings, but it is a statement), possibly punishable by the SEC. If they claim to have made no profit in court (and I'm sure a decent lawyer would ask about all the other movies they made as well), and then report an overall profit to the SEC, then they would be guilty of something. This should be part of Stan Lee's case, at least to the press, if not to the court.
        • Re:No Profits (Score:5, Informative)

          by Amazing Quantum Man (458715) on Wednesday November 13, 2002 @01:19PM (#4660765) Homepage
          Do a Google search on "Buchwald" "Coming to America" "Paramount"

          for more on how movies don't make money.
        • Re:No Profits (Score:5, Interesting)

          by jgalun (8930) on Wednesday November 13, 2002 @01:44PM (#4661052) Homepage
          If no movies make profit, then how do studios make profit? Surely they must, or you'd hear about it on financial news etc.

          Well, I totally agree that Spiderman obviously must have made a profit, or they wouldn't be making a sequel (and an X-Men sequel, and a Hulk movie, and a new Superman movie). However, in answer to your larger question - movie studios are actually not very profitable. I read an article about this a couple years back, and basically buying a movie studio is a horrible investment. The dynamics of the industry (movies costing so much to make, basically) mean that the studios themselves are not a good ROI. Yet people invest in them for one of two reasons:

          1) The glamour. People aren't always rational economic actors, or at the very least, you have to take into account that people may seek more tha money. Yes, perhaps I could make 6% profit investing in bonds, but maybe I'd rather have 3% profit but hang out with movie stars/sleep with actresses all the time.

          2) Media conglomerates believe that somehow, "synergy" will eventually make the movie studios pay off. Yes, this movie studio isn't a good investment as a standalone, but maybe if I tie my magazines, TV channels, pay per view channels, and retail stores together I can make it profitable.
    • Re:No Profits (Score:5, Interesting)

      by coupland (160334) <`dchase' `at' `hotmail.com'> on Wednesday November 13, 2002 @08:52AM (#4658201) Journal
      This is similar to the little pie chart you see on gas pumps claiming only 5% profit on gas sales. The problem is that profit is purely subjective since all expenses are subtracted from profit. Send the entire company on a 1-week vacation in Hawaii? It gets deducted from profits. Hire a hundred people to act as a permanent "think-tank"? Deducted. Free beer in the cafeteria? Deducted. You can burn hundred-dollar bills for warmth but still claim no profits. When a company cries poor due to low profits you need to take a closer look. Operating losses, declining sales, or decreased revenue are better indicators of corporate health. Pharmaceutical companies, oil companies, and now Marvel comics all cry poor in profits but are throwing buckets of money into a woodchipper 'cause they've run out of places to stack it...
      • Re:No Profits (Score:3, Interesting)

        by jafuser (112236)
        Doesn't this help with taxes too? As in, if there's no "profit" then they pay less or no taxes?

        The incentive for companies then is to use up all income immediately as "marketing" (or other) expenses... new luxury cars to drive around the execs, flights to europe for a week to "promote" the movie, including the marketing VP's family so they won't miss him/her, etc...

        Better to have something left over for the "company" than to give a piece to the government... I swear if there wasn't so much corporate welfare, exploitation, and "good buddy" politics, I wouldn't have to give 40% of my paycheck to taxes...

        • Re:No Profits (Score:4, Insightful)

          by Dyolf Knip (165446) on Wednesday November 13, 2002 @02:44PM (#4661655) Homepage
          That's why an income tax is a nice idea in theory (tax the wealthy a higher percentage than the poor), but becomes utterly impossible to implement in real life. You have to know everything about everyone to keep it legit. I wouldn't mind higher sales taxes or even interstate commerce taxes as an IRS replacement. The uber-wealthy and big corps may be able to hide what they earn and lie about what they spend it on, but it would still get taxed anyway. Of course, then they'd just start doing under-the-table sales... sighhh...
      • Re:No Profits (Score:5, Insightful)

        by GoRK (10018) <johnl @ b lurbco.com> on Wednesday November 13, 2002 @11:39AM (#4659592) Homepage Journal
        Well, you may be right about quarterly reports from big companies and whatnot, but you're wrong about gasoline.

        Generally, the establishment is lucky to make 5% net on the sale of gasoline, and that's before counting expenses for operating the pumps. Did you know that you play a flat tax of a *minimum* of 0.37 on each gallon no matter what the price is? It doesn't get any cheaper as prices go down, even though it should based on what the taxes are designed to pay for! Aside from that, it's illegal to inflate gasoline prices. I do not agree with the current taxation of gasoline, but I do agree with the price. Here's why:

        Relative to the value of a dollar, gasoline is cheaper in the USA now than it has been anywhere in the world, *ever*. Granted, a couple years ago we got to see 76 cent gasoline in some places, but that was abnormilly low. Where is any company in the line from the investors on the drilling rig to the store selling you the gasoline supposed to take a $35 barrel of 50 gallons of oil and turn it into something they can make money with selling it for 38 cents/gallon (not including tax). Gasoline is already being practically given away as it is. People should stop complaining so much about it and rethink their decision to buy a new $45,000 car that gets less than half the gas mileage of the land yachts of the 70's.
        • by Malcontent (40834) on Wednesday November 13, 2002 @12:15PM (#4660043)
          "Relative to the value of a dollar, gasoline is cheaper in the USA now than it has been anywhere in the world, *ever*."

          Well somehow I doubt the gasoline in the US is cheaper then in Quatar or Abu Dhabi.

          Also remember that all the oil in the world actually belongs to us. We may let other countries sit on top of our oil reserves but we reserve the right to kill them anytime we want if they mess with our oil supply.
    • Re:No Profits (Score:3, Interesting)

      by gvonk (107719)
      See, the thing is, Billy, Marvel Entertainment didn't make a Spider-Man movie.

      It's a little more complex than that. It's the same reason you wouldn't reasonably claim that a band made $15 million in profits because their $20 cd sold a million copies and cost $5 million to make. Columbia/Tristar or whoever the fuck made the movie bought the movie rights from Marvel Entertainment for $12 million or so.
      So, even if that were mostly profit, they would owe Mr. Lee a cool million, or exactly what they've paid him every year since he signed his contract.
      • by Komrade S. (604620) on Wednesday November 13, 2002 @10:19AM (#4658820) Homepage

        Marvel has learnt from its past mistakes and no longer simply takes a step back from their film properties. They have a subdivision "Marvel Films", or something to that effect, which involves this guy [imdb.com] being on the set to every single Marvel film property. From what has been released, Marvel gets a profit slice, not just a flat licensing fee.

        Oh and by the way, Sony Pictures made the movie and it cost about 100 million to make. It took in 800 million [imdb.com] at the box office worldwide thusfar and is the 7th highest grossing film of all time. It earnt an estimated 245 million [hollywoodreporter.com] in it's first week on video release. So out of this billion dollars, yeah, I'm sure Marvel only got "$12 million or so".

      • by damien_kane (519267) <damien@st r a t . net> on Wednesday November 13, 2002 @10:37AM (#4658951) Homepage
        Qouth Kevin Smith:

        "Oh I disagree...
        We had a contract, for likeness rights; remember?
        As we are not only the character basis but obviously the artistic basis for your intellectual property, when said property was optioned to Miramax you were legally obligated to secure our permission to transfer the comic book to another medium.

        Since you failed to do that, Banky, you find yourself in a very actionable position..."

        In this case, all Stan is saying is: "Where's my mothefsckin' movie check?"
  • by youngerpants (255314) on Wednesday November 13, 2002 @08:14AM (#4658051)
    Pop stars are getting ripped off, developers are getting ripped off, fishermen are getting ripped off, the fire department are getting ripped off, etc, etc, etc

    Dont mean to sound despotic, but Stan, join the queue
  • by JSC (9187) <john@coTEAxen.com minus caffeine> on Wednesday November 13, 2002 @08:15AM (#4658055)
    After all, he didn't do anything important re: Spiderman. All he did was develop the idea in print, nurse it along for years, pour his sweat and blood into it, bring respectability to a substandard art, etc.

    The studio did the hard part. They hired the lawyer to screw Stan! If that isn't worth the 10% I don't know what is.
    • by jonr (1130) on Wednesday November 13, 2002 @08:25AM (#4658094) Homepage Journal
      Yeah, he only drawed the thing. I mean, I could do that! Corporations have rights, too you know. Anybody can dabble wit pencils and paper, but it takes real work to create all those special effects...
      J:
      • by rovingeyes (575063) on Wednesday November 13, 2002 @08:46AM (#4658182)
        but it takes real work to create all those special effects...

        The irony is that even those are done by artists.

        • I think 'special effects' was meant like all those fun items listed in the books that list expenses which end up spelling 'no profits'...

          In all fairness, Marvel had a hand in making the movie, but I don't think they were the company behind the wheel. Marvel only gets a percentage based on some (probably complex) formula and it souns like Stan Lee gets paid ten percent of what profit Marvel makes off of it. So it IS possible, however unlikely, that Marvel's expenditures to get the movie made are roughly equal to what they get out of it. But... IANAA (I am not an accountant... thank god. ;)
  • by Sycraft-fu (314770) on Wednesday November 13, 2002 @08:17AM (#4658065)
    If you liscence something for a peice of the action always, ALWAYS try and do it based on revenues. Yes, you'll have to settle for a lesser percentage BUT you it is much harder for them to screw you. Basically, you get paid based on a percentage of sales, not profits.

    The problem is, it's easy for acountants to find creative ways of including more "expenses" to make it look as though there were no profits. If that happens, then you have to fight it out in court. Revenues are much mroe straight forward, and harder to fudge, so it's much harder to screw you on them.
    • No surprizes here.

      Kinda reminds me of a certain energy company that disappeared not too long ago.

      =Smidge=
    • I completly agree (Score:5, Interesting)

      by Gekko (45112) on Wednesday November 13, 2002 @08:56AM (#4658211)
      This is usually how rookie unproven writers get screwed, especially authors who have had succesful novels. This is unfortuantly very common in the movie industry. Established names usually never have a problem getting Gross Points instead of Net Points, they are real tight with Gross Points because there are only so many of them to go around (Gross Points also count as an expense driving down the pool available to Net Points). I don't get why Stan didn't have a better entertainment lawyer.
      • Re:I completly agree (Score:3, Interesting)

        by nojayuk (567177)
        Actors also get screwed over with the gross/net point deal. Sir Alec Guinness got something like 1.5% of the gross from the first Star Wars movie, as he had worked in Hollywood before and had been screwed over previously by the studio system's attack accountants. They needed hydraulic jacks to get the smile off his face when the millions started rolling in.

        It may be Urban Legend but I have heard it said that the Star Wars films haave yet to show a profit -- on paper, at least.

  • Hah! (Score:4, Insightful)

    by BJH (11355) on Wednesday November 13, 2002 @08:18AM (#4658069)
    The part that really gets me is this: ...the company is "in full compliance with, and current on all payments due under, terms of Mr. Lee's employment agreement."

    As if Stan Lee were just some burger flipper, instead of the person who created the character that they made $400 millions dollars from.

    I've had it up to here with people that seem to think that a corporate lunch every now and then with their buddies makes them "creative".
    • Re:Hah! (Score:3, Informative)

      by sql*kitten (1359)
      As if Stan Lee were just some burger flipper, instead of the person who created the character that they made $400 millions dollars from.


      Maybe the studio/distributor made $400M (and that's revenue not profit), but Marvel only made $12M - that's what they sold the rights for. 10% of $12M is $1.2M. The article doesn't say that Stan Lee had a contract with New Line (or whoever).
  • by GnomeKing (564248) on Wednesday November 13, 2002 @08:19AM (#4658071)
    After reading the article, it seems that this is another case of a large company screwing the people who work for them out of their money...

    Marvel has reported millions of dollars in earnings from the film but has told Lee the company has seen no "profits" as defined by their contract.

    I guess they got to define "profits" in the same was as microsoft got to define "remedy" (its a joke!)
  • Not that unusual (Score:4, Interesting)

    by Pike65 (454932) on Wednesday November 13, 2002 @08:19AM (#4658072) Homepage
    According to my Accounting lecturer (don't look at me like that - it's compulsive for my ComSci Masters course) this isn't that uncommon. He pointed us to this from the Guardian . . .

    "Robert Carlyle, star of the internationally popular film The Full Monty, was puzzled because he had not received any of his share of the profits from the film. 'Surely a film that cost £5 million and has taken hundreds of millions must be showing some in profits?' he asked the film's distributers. 'No', they replied 'in Hollywood no film ever makes a profit. It's all in the overheads.'"

    Remember kids, "tidal waves couldn't save the world from Californication . . ."
    • Re:Not that unusual (Score:4, Interesting)

      by Temporal (96070) on Wednesday November 13, 2002 @09:02AM (#4658234) Journal
      And according to my economics textbook, in perfect competition, no company ever makes a profit. After all, if one company was selling their goods at a price that brought them a profit, than some other company should be able to sell for less, and naturally everyone would buy from the cheaper company.

      Well, of course that's all theory and it's hard to apply to practice, especially in the case of intellectual property (which, IMO, really needs a completely different economic system to support it, although I don't pretend to know the solution)... but that's the theory. And if you think about it long enough, it makes sense that no good company would ever actually have "profits", although I'm having trouble coming up with a good way to explain why...

      I think the real question here is, first of all, how evil was it for them to even offer a percentage of profits to this guy when they knew full well that "profits" don't really exist, and second, how dumb was this guy to accept a deal based on profits rather than revenue?

      Lesson to everyone: When negotiating with big companies, never accept a percentage of profits in return for anything. Always ask for revenue, or a set dollar amount.
      • Re:Not that unusual (Score:3, Informative)

        by sql*kitten (1359)
        And according to my economics textbook, in perfect competition, no company ever makes a profit. After all, if one company was selling their goods at a price that brought them a profit, than some other company should be able to sell for less, and naturally everyone would buy from the cheaper company.

        This is like those high-school physics textbooks with statements like "assume a spherical elephant". The "perfect economy" you refer to is completely abstract and bears as much relation to the real world as a perfectly spherical elephant does to real aerodynamics. Example: Say a haircut costs a corporation $0.99. It doesn't matter if Corporation X is selling haircuts for $1 in Delaware, if Corporation Y is selling them for $2 in Anchorage, then you pay $2 because it would cost you more than $1 to get to a Corporation X branch.

        You can only have a "perfect economy" if the cost of price data, knowledge of all competing products (including storing and processing the data) and shipping between any two points, and storage at either end is zero, and information and product distribution is instantaneous.

        it makes sense that no good company would ever actually have "profits", although I'm having trouble coming up with a good way to explain why...

        The reason a corporation would avoid profit is to avoid tax on that profit. But remember that corporations do pay a lot of tax whether or not they make a profit (payroll taxes like NI in the UK, for example), VAT, etc.

        Even without this distortion, the reason a company wouldn't have profits carried over from year to year is because any money left over at the end of the year would be paid to shareholders as dividends.

      • by thomas.galvin (551471) <slashdot&thomas-galvin,com> on Wednesday November 13, 2002 @11:06AM (#4659210) Homepage
        And according to my economics textbook, in perfect competition, no company ever makes a profit. After all, if one company was selling their goods at a price that brought them a profit, than some other company should be able to sell for less, and naturally everyone would buy from the cheaper company.

        You economics textbook is wrong. Theoretically, one company could always undercut the other, eventually selling everything at, or even below, cost, but this never happens unless a large company is dumping the market.

        Basically, it goes like this: if you can sell a widget for $5.00, companies will be willing to produce 100 of them. If you can sell a widget for $10.00, companies will be willing to produce 1,000 of them. If you can sell a widget for $15.00, companies will be willing to produce 1,000,000. (Just example numbers). Now, if a widget sells for $5.00, comsumers will be willing to purchase 1,000,000 of them. If a widget sells for $10.00, comsumers will be willing to purchase 1,000 of them. If widgets sell for $15.00, consumers will be willing to buy 100 of them.

        Because supply meets demand at $10.00, that is what the average market price for a widget will be. If you try to sell them for more, you are going to have left-over stock, and if you try to buy them for less, companies are not going to bother producing them.

        In perfect competition, therefore, every company makes a profit, but not a profit so great that it hurts the consumer. Unfortunatly, perfect competition is, for the most part,a pipe dream. Fortunatly, the good people running state governments are trying to tax internet sales again [com.com], which, as we all know, will make the market much better for everyone.
      • According to an economics textbook, in perfect competition, a company makes zero economic profit.
        Economic profit is different than accounting profit.
        Economic profit is accounting profit minus the opportunity cost of the next best thing the person/copmany could be doing. Companies do not report economic profit on their balance sheets. They report accounting profit. Accounting profit is what's at issue here.
        If your textbook doesn't explain this, it's probably not a very good textbook.

        The concept of economic profit is pretty interesting though. In this case, the movie studio is claiming to have made no accouting profit. This would make their economic profit negative, meaning that the company would have been better off doing something else with it's resources. This is obviously not the case, given the huge success of the movie.

        What I imagine they'll do is just reinvest all their profit in the company. Since all the studio people people own stock in the company, they'll still make (theoretical) money because their stock value will rise.
        There may still be a legal case here. At a whole company accouting scale they may be able to just reinvest the profit back in to the comapany, but if one looks at just a single picture, then you make be able to prove they made a profit. If they can't prove that all their "expenses" are tied to the picture, then they may not be able to figure them in when they calulated how much money the picture made.
    • by Myco (473173) on Wednesday November 13, 2002 @09:13AM (#4658302) Homepage
      Call me crazy, but this could potentially become a watershed event in entertainment contract law. Whether or not Stan Lee wins, this situation could be massaged into a public outcry for artists' rights. Think about it:
      • There's a huge amount of visibility -- everyone saw the movie and knows it made shitloads of money.
      • Lee is a revered and sympathetic personality -- nobody wants to see him get screwed over.
      • In spite of this, due to the way the contract is worded Marvel is probably correct in their claim that they don't owe him a dime, in the strict legal sense.
      End result, Lee loses his money but the public outcry is sufficient to push changes in contract law which provide new protections for artists.

      Okay, it might not happen this time around -- media conglomerates are hugely powerful and genuine public outcry is hard to come by and expensive to properly focus into action. But the sort of scenario I'm describing is one of the most plausible ways for change like this to be brought about -- goad the public into outrage with an example of a mediagenic victim being screwed by the bad guys. Look at history -- many important pieces of legislation are tied to individual events which raised an outcry out of proportion to their individual significance.

      Yes, it's lame when someone gets screwed like this. But it happens all the time, so when it happens in a highly public way that's better for all of us because it contributes to potential reform.

    • by Mark Garrett (607692) on Wednesday November 13, 2002 @09:16AM (#4658325)
      Forrest Gump also never made any money, at least as far as the contract with the writer of the original story was concerned. The problem is that overhead can be allocated however a company wants to.

      Say you have a fleet of limos sitting around to drive executives/actors around. Ah, let's put that all on Spiderman... don't want to lose corporate profit by giving out higher royalties than you absolutely need to. Etc...

      The incredibly stupid thing here is that Stan Lee has control over a rather large field of 'intellectual property' that said movie studios may want to draw on in the future, not to mention the sequel(s) of current films.

      Imagine... Stan Lee's contract terms for Spiderman III: "5% of gross ticket sales and, oh yeah, %5 of gross ticket sales of Spiderman 1&2 you f%&#$!!!"

  • That's the thing the story's missing: it doesn't say what the terms are. It just says "10% of profits as defined." That's not very good: maybe "profits" was defined as "stuff left over after we paid everything out," which would always be $0, since they probably don't manage a reservoir of cash to pay 10% from...
  • Steve Ditko (Score:5, Informative)

    by alexc (37361) <alexc@nOspaM.sporks.org> on Wednesday November 13, 2002 @08:20AM (#4658076)
    the artist steve ditko should receive some credit and money too. Unfortunately, none of the press seems to care that he is a co creator.

  • by krazyninja (447747) on Wednesday November 13, 2002 @08:20AM (#4658077)
    This is somewhat similar to the way Simon was trying to reclaim Captain America way back, as in this link [teako170.com]. To avoid issues like this, all data relating to money accruals for all films should be public. If the MPAA can support RIAA for taking action against copyright violators, why cant it do this??

    • Because nobody with money wants it to happen. Duh.

      What, did you think you lived in a democracy?

      Captain America indeed.

    • by NewbieV (568310) <victor...abraham ... ot@@@gmail...com> on Wednesday November 13, 2002 @08:48AM (#4658187)
      Some public information from Marvel's 10-Q SEC filing in this PDF: [marvel.com]

      "7. SPIDER-MAN: THE MOVIE
      During 1999, the Company entered into a license agreement with Sony Pictures Entertainment, Inc., ("Sony") providing for the licensing of the Spider-Man characters in exchange for a gross participation in the marketing of the Spider-Man: The Movie (which was commercially released on May 3, 2002) and related releases on DVD/VHS and likely other revenue sources (e.g., syndication sales, etc.), and established an equally owned joint venture for the merchandise licensing of the Spider-Man: The Movie characters.
      Earnings associated with the Company's participation in the gross proceeds of the movie have been recognized as non-refundable advance royalty payments as received, which amounted to $10 million in 1999, and $2.5 million in the second quarter of 2002. During the quarter ended September 30, 2002, Sony reported Marvel's participation through such date at approximately $2.0 million in excess of advances previously received - which amount was subsequently collected from Sony. Prospectively, additional movie royalties will be recognized as revenue - as reported by Sony. Earnings associated with our merchandising joint venture (accounted for under the equity method of accounting) amounted to approximately $1.8 million during the three month period ended September 30, 2002, and $7.1 million during the nine months ended September 30, 2002, and represent the Company's share of merchandising royalties, net of expenses. The Company's share of the joint venture's earlier losses were $0.3 million in each of the years 2000 and 2001."

      Millions in revenue, but no profits?
  • by shani (1674) <shane@time-travellers.org> on Wednesday November 13, 2002 @08:21AM (#4658080) Homepage
    My understanding is that this is SOP for scriptwriters, for instance. No matter what the sales are, the net profit magically ends up being zero, so they never get any royalties.
  • Boycott? (Score:2, Interesting)

    by aagha (130742)
    Why Not? There's enought comic buyers in the US, not to mention the world, that $40M might actually be worth paying to avoid a boycott.
  • ME LOSE MONEY??
    that makes me angry, You wouldn't like me when I'm angry.
  • by LittleGuy (267282) on Wednesday November 13, 2002 @08:26AM (#4658100)
    Huge Economic Success due to Spiderman, but Peter Parker can't benefit because:

    * Check written in Spiderman's Name
    * False agency
    * Peter's sense of morality (and flashbacks of Uncle Ben) prevents him from accepting check.
    * Etc etc.

  • by Jeppe Salvesen (101622) on Wednesday November 13, 2002 @08:32AM (#4658121)
    Maybe we should remove all copyrights on fictional written works for a while? The industry is creating a false sense for would-be-artists that they can make a good living doing what they excel at, but most of them don't get anywhere due to mismanagment and greed. So - copyrights have largely ceased to benefit those who create the works of art.

    Why then should we feed the corporations with gullible, naive people out to change the world?

    I also get increasinly mad at people who continuously get money because their granddad was a good writer. That somehow is very wrong - as in, all people should have equal opportunity and equal responsibility.

    Copyrights on factual works is a bit of a different story. We have not understood the world sufficiently well to do something that drastical to the science community. However, patent reform is direly needed if our industry is going to start growing again - with real growth, not just growth based upon more effective court-room tactics.
  • by Rinikusu (28164) on Wednesday November 13, 2002 @08:33AM (#4658122)
    This sounds a lot like DC's dispute with Alan Moore over Watchmen. (Doesn't DC own Marvel now?). Basically, Alan Moore (one of comics writing gems) created a wonderful story that made DC millions. Posters, T-shirts, coffee mugs sold like hotcakes, and Alan Moore got zilch (even though he was entitled to royalties and such). DC said the Posters, et al were "advertising" and thus were not subject to the royalty clause, thus legally screwing Alan Moore. It was that event that caused Alan Moore (a UK citizen) to quit writing for US based comics altogether for a good long while (until the advent of some of the more independent labels who actually treat their artists right). I may have some details a bit fuzzy, but I believe that's the gist of the story. (There were apparently other factors that also led to his "retirement" from US comics, as well).

    A google search didn't come up with anything substantial, but I seem to recall an interview with him in Comic Shop News or the other big weekly comic paper, maybe I'm just smoking crack regarding this. Might be best to disregard this. :P

    • DC is owned by Warner Brothers, and Marvel meanders on its own, failing (until recently) to really capitilize on all its licenses. Marvel's financial woes- bankruptcy and the like, were generated by over expansion and the 90s comic bubble.

      As for Alan Moore, great stuff coming out now, but he came back for a spawn issue first, which meant he had to deal with McFarlane (we all know what he did to gaiman), and I'm ever so glad he didn't decide to quit with companies on our side of the continent all together.
  • by Anna Merikin (529843) on Wednesday November 13, 2002 @08:35AM (#4658127) Journal
    The Supreme Court of the US ruled more than ten years ago that the tradition of the US movie industry is well-known to cheat its stockholders and others by accounting tricks that reduce `profit' to zero -- at least on the books.

    It's a little like Enron in reverse -- cooking the books to remove all traces of return.

    It's quite legal and easy for them to do, and it has been the tradition in Hollywood since it began. And that's how the SC ruled in a case brought by a(n other) writer of one of the Predator series of Movies IIRC. In that case, like this one, Stan seems to have gotten percentage `points' (in Hollywood jargon) instead of real dollars.

    The studios find it easy to do this, as they can charge whatever they like for stock footage (stuff they've already shot and used in other movies) since they are the true producers, whatever the credits might say. And all movies use stock footage somewhere. F'rexample, the fire scenes in Gone with the Wind have been used (and charged for at inflated prices) in hundreds of movies.

    This and `distribution costs' allow them the room to reduce the booked profits on any and all projects to zero.

    The Predator movie the Court ruled on was, at the time, the largest grossing (worldwide) movie in history. And it never made a profit.

    Neither did Goodwill Hunting or Titanic.
  • Source of the Claim (Score:5, Informative)

    by theduck (101668) <(theduck) (at) (newsguy.com)> on Wednesday November 13, 2002 @08:37AM (#4658139)

    OK, there's a little more info here [comics2film.com].

    Namely, that the source of the claim is not from any copyright or other rights as creator of the characters, but from a 1998 contract giving him royalties for the licensing of his creations, but not the actual comic book sales.

    Looks like it's going to be a legal wrangle over whether movie profits can be considered to be royalties.

    • The Contract (Score:5, Informative)

      by theduck (101668) <(theduck) (at) (newsguy.com)> on Wednesday November 13, 2002 @08:43AM (#4658169)

      Sorry, should've held the parent post until I found the contract [sec.gov].

      The pertinent clause is:

      (ii) You also continue to have the benefit of a single full-time assistant. (f) In addition, you shall be paid participation equal to 10% of the profits derived during your life by Marvel (including subsidiaries and affiliates) from the profits of any live action or animation television or movie (including ancillary rights) productions utilizing Marvel characters. This participation is not to be derived from the fee charged by Marvel for the licensing of the product or of the characters for merchandise or otherwise. Marvel will compute, account and pay to you your participation due, if any, on account of said profits, for the annual period ending each March 31 during your life, on an annual basis within a reasonable time after the end of each such period.

      Note that profits are explicitly mentioned.

  • by CptLogic (207776) on Wednesday November 13, 2002 @08:42AM (#4658163) Homepage
    My mate Al is going to kill me for slashdotting his site but:

    This is one of the best articles I've read on this situation. It helps if you have some idea of the US Comics industry but Paul O'Brien is a good enough writer to make it all crystal clear. FWIW, Paul is a UK Lawyer.

    http://www.ninthart.com/display.php?article=428

  • by Steve B (42864) on Wednesday November 13, 2002 @08:44AM (#4658172)
    Marvel is claiming that the 400 Million dollar blockbuster movie Spiderman produced no profits

    The "piracy" problem must be even worse than they're admitting....

  • by f00zbll (526151) on Wednesday November 13, 2002 @08:44AM (#4658175)
    People should stop buying this line of BS about how publicly traded corporations are here to build value for it's share holders.

    That might have been the original idea, but get real people. If one were to look at the behavior of the top 100 corporations, does that rule hold true? As corporations weild more political power, they are becoming the equivalent of the ruling class. The only difference now is the rich get to hide behind some corporate name and not subject themself to public scrutiney. The more things change, the more they stay the same people.

  • by The Mutant (167716) on Wednesday November 13, 2002 @08:49AM (#4658189) Homepage
    I've been pretty amused in the past reading all of the comments (some on /. as well) that talked about how the film business "got it" (usually argued from the position of all the extra features and additional content DVDs come with), and how the RIAA, music biz, etal were "out of touch".

    This just proves business is business, and the entertainment industry is - what a surprise - very adept at sugar coating their activties until, of course, the lawsuits start flying.

    Business is business, and anyone sticking their head in the jaw of the corporate machine has gotta watch out for themselves. I'm sure Stan had attorneys looking after his interests so I don't know what happened there, but I do know that most companies will do anything they can to screw you should the need arise.

    And yep; I've got a Masters in Finance so I know of what I speak. A few of our case studies at Uni directly factored in litigation as a "cost of doing business".

    Good luck Stan! I've always enjoyed your work and genuinely wish you the best!
  • by buss_error (142273) on Wednesday November 13, 2002 @08:50AM (#4658192) Homepage Journal
    When are we going to stop giving money to RIAA and MPAA? I can tell you when I'm going to start boycotting them.... I've been at it for almost 2 years now. I haven't seen Spider Man, didn't buy the new CD from that band, didn't check out that Pay Per View move, or any thing like that. I buy my books from Baen, off of their webscription site, because the authors get double the money than from paperback sales.

    I trade a lot with friends. I buy a movie, when I do, second hand from a second hand store (Hollywood doesn't get their cut that way.) I've given to causes that are willing to fight RIAA and MPAA.

    So, what have YOU done? Obviously quite a few of you went to see Spider Man.

  • Business 101 (Score:5, Insightful)

    by saider (177166) on Wednesday November 13, 2002 @09:00AM (#4658230)
    That's why you NEVER agree to take a cut of the profits. You take a cut of the gross revenue. That way there can be no accounting games.
  • by Qender (318699) on Wednesday November 13, 2002 @09:00AM (#4658231) Homepage Journal
    This is the most common practice in the film industry. My family works in the film industry. The distribution companies never return "profits", as a few people have already noted, all of their costs for distribution are determines by themselves. They choose their own salaries, the cost of making the prints, the internal costs of advertising, etc... It's very common for filmmakers to get ripped off in this manner. It's happened to my father several times.

    Stan lee is very lucky he has an avenue of complaint, as this happens with most every feature film. Hopefully this will be some kind of a wake-up call to filmmakers.
  • by MoThugz (560556) on Wednesday November 13, 2002 @09:07AM (#4658254) Homepage
    Spiderman is one of the many movies that I actually went to a cinema to watch... why? because I respect Stan Lee, and I would rather let him have part of my ticket proceeds rather than pirate the movie off Kazaa or something.

    But when shit like this happens, I wonder whether it was worth it. It's amazing how 400mil is not enough to be considered profitable. Last I checked the movie didn't cost a billion bucks to make (I don't think it even costs 500mil).

    Thanks Sony... I'll repay you with my unlimited bandwidth.
  • by Anonymous Coward on Wednesday November 13, 2002 @09:13AM (#4658299)
    Anyone remember the shameful treatment given Jack Kirby when he tried to reclaim his original art from Marvel when Stan was at the top? I do hope that Stan wins this, but find the irony just a little bit delicious - Lee has not been known for giving creators their due.

    And where IS Ditko in all this? Is the mainstream press just too wimpy and gutless to brave one of his Ayn Rand-esque tirades and hair-splittingly precise reproach-a-thons?

    Clearly Ditko was a major part of the creation of Spider-man.. I'm not clear what kind of rights he has in the character, if in fact Lee ever let him have any. Any help?

  • Blurb is wrong (Score:4, Informative)

    by Galvatron (115029) on Wednesday November 13, 2002 @09:18AM (#4658336)
    As far as I read the article, Marvel may not be claiming the movie did not turn a profit. As I read it, the article states three facts:

    1. Stan Lee believes he has a contract with Marvel that entitles him to 10% of all profits from all tv shows and movies based on his creations.
    2. Stan Lee has not been paid for the Spider-Man movie.
    3. Stan Lee is suing Marvel.

    Nothing in the article explains why Marvel has not paid Stan Lee. Perhaps Stan Lee misunderstood or misremembers his contract. Or maybe Marvel has no explanation whatsoever, and was just hoping that Stan Lee was too old and senile to remember the contract. Who knows? Clearly, more information is needed.

  • Visions... (Score:5, Funny)

    by grub (11606) <slashdot@grub.net> on Wednesday November 13, 2002 @09:30AM (#4658419) Homepage Journal

    Peering into my crystal ball...

    StanLee: You owe me $40 million.
    Marvel:Well, we calculated that 30 million copies of Spiderman were downloaded via peer-to-peer programs...
    StanLee:..and..?
    Marvel: ..at $20 per DVD that would have been bought, we lost $600 million. So with the $400 million we earned on the movie release we have a net loss of $200 million. You owe us 10%, or $20 million.
  • Rule of Thumb (Score:3, Interesting)

    by cgreuter (82182) on Wednesday November 13, 2002 @09:41AM (#4658517)
    This sort of thing happens a lot in the movie industry. Typically, profits are juggled like this in order to reduce taxes. That's why, if you ever make a royalty deal with a movie studio, make sure you're getting a percentage of the gross, not the net profits.

  • $800m (Score:3, Informative)

    by Andy Smith (55346) on Wednesday November 13, 2002 @10:10AM (#4658734) Homepage
    the 400 Million dollar blockbuster movie Spiderman
    It actually took $800 million worldwide, plus any video and DVD sales and eventually the revenue from TV licensing rights. (And what about merchandise?) The $400m figure is just for the US box office takings.
  • by docbrown42 (535974) on Wednesday November 13, 2002 @11:08AM (#4659233) Homepage
    ...Guide to the Galaxy (original text game). I mean, how else can they claim to have "no-profit" and "profit" at the same time?

    Tune in next week, when Spidey battles the Ravenous Bug-Bladder Beast of Thrall!

  • by GlobalEcho (26240) on Wednesday November 13, 2002 @11:41AM (#4659611)
    To all you people babbling about films not making profits, and how Stan Lee should have negotiated for a percentage of the gross, let me make it simple:
    1. Stan Lee's contract is with Marvel, and
    2. Marvel licensed the intellectual property to the movie studio.
    3. Marvel's lawyers knew enough to negotiate for gross points, therefore
    4. Marvel made a profit, and
    5. Stan Lee is therefore entitled by contract to 10% of Marvel's profits.

    The contract dispute is not with the movie studios who, however evil, have done nothing particularly wrong by Lee. This is all about Marvel trying to redefine those profits.
  • by AAAWalrus (586930) on Wednesday November 13, 2002 @11:47AM (#4659678)
    Basically, the problem is that big movie accounting, much like big business accounting (a la Enron) has become the modern day "alchemy". With terms like gross points, net earnings, and loosely defined "profits", movie accounting provides millions of obfuscated legal terms to confuse the contractees such that no money gets paid.

    The idea that a blockbuster movie like Spiderman made no profit seems ludicrous, but on paper, accountants paint a different picture. It sounds like Stan Lee signed a contract that would get him a percentage of the "adjusted gross". "Adjusted gross" is a movie mumbo-jumbo term that basically means "what's left over after everyone gets paid", which almost always comes out to be absolutely nothing.

    Had Stan Lee been smart, and had the legal clout to pull it off, he should have tried for "gross points". "Gross points" are where the real money lives, and the types of contracts that grant gross points are usually reserved for the big name producers, big-wig movie execs, and A-list movie stars. Basically gross points are percentage points of the overall revenues that a movie brings in, before anything else happens to money - before expenses, before taxes, before the studios gets their checks.

    My guess is that Marvel had a deal that would grant them something like half a gross point (which is actually a lot), and Stan Lee's contract was with Marvel (not the movie studio) which would give him a percentage of that cut deemed "profitable". The problem is that Marvel's own number crunchers probably account for every penny of that revenue granted by the movie studio, leaving nothing left for Mr. Lee, because there are no operating "profits".

    It comes down to legal terminology in the actual contract, which is probably written to legally protect Marvel and the studios from the type of lawsuit that Stan Lee is seeking, and they will probably try to have the case dismissed based on legal precedent. (Hollywood sees this type of thing all the time) IANAL, but it seems like Mr. Lee's primary defense is that he was misled by the contract into thinking he would get a share of the actual *revenue*, not the *profits*.

    -AAAWalrus
  • I'm glad... (Score:5, Funny)

    by Eric Damron (553630) on Wednesday November 13, 2002 @02:11PM (#4661301)
    that the entertainment industry makes no profits from movies... If they did, they could afford to go to Washington and lobby for digital copy protection laws that would threaten our fair use rights...

    Whew... What a relief!

I don't want to achieve immortality through my work. I want to achieve immortality through not dying. -- Woody Allen

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