tailieunhanh - PROFIT-SHARING CONTRACTS IN HOLLYWOOD: EVOLUTION AND ANALYSIS

Hollywood remains the principal source of funding and distribution, even when only a relatively small proportion of production is conducted entirely in-house. Technically independent productions include Hollywood blockbusters such as Terminator 2: Judgment Day (1991) and Basic Instinct (1992), produced by the independent Carolco in an alliance with TriStar Pictures. As with the likes of Selznick, arrangements with independents such as Carolco, Castle Rock and Morgan’s Creek in the 1990s gave the studios extra flexibility, to work in partnerships that reduced their risks, especially at the higher-budget end of the spectrum. It is clear that formal independence. | PROFIT-SHARING CONTRACTS IN HOLLYWOOD EVOLUTION AND ANALYSIS MARK WEINSTEIN Abstract This article examines the development of profit- or revenue-sharing contracts in the motion picture industry. Contrary to much popular belief such contracts have been in use since the start of the studio era. However early contracts differed from those seen today. The evolution of the current contract is traced and evidence regarding the increased use of sharing contracts after 1948 is examined. I examine competing theories of the economic function served by these contracts. I suggest that it is unlikely that these contracts are the result of a standard principal-agent problem. I. Introduction One of my colleagues has suggested that the second-easiest way to start a fight at a pool party on the west side of Los Angeles is to argue in favor of the two propositions presented in this article 1 net-profits contracts as used in Hollywood have been in use for more than 60 years and 2 these contracts are reasonable responses to contracting problems that arise in the motion picture industry. Litigation about employment contracts in Mark Weinstein is an associate professor at both the Marshall School of Business and the Law School University of Southern California. I am indebted to many individuals at the University of Southern California and elsewhere who helped me sort through my thinking on this subject and guided my research. I am specially indebted to Aton Arbisser Darlene Chisholm Harry DeAngelo Linda DeAngelo Victor Goldberg Kevin Green Richard Jewell Ben Klein Michael Knoll Ananth Madhavan Kevin Murphy Pierce O Donnel Mel Sattler Bobby Schwartz Matthew Spitzer Eric Talley Jeremy Williams Mark Zupan and the staff of the Cinema and Law Libraries at the University of Southern California. I would like to implicate all of them but I cannot. I have received many useful comments from presentations at the University of Southern California Law and Business Northwestern University Business .

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