This article is a little rambling and is only loosely related to anti-piracy
(1) There are all sorts of subsidies internationally for movie related industries/services. (2) US studios are "exporting jobs" by taking advantage of these subsidies to to various editing tasks overseas. (3) This is unfair because of various WTO rules and principles of free trade. (4) US states are responding by doing the same (5) Anti piracy is a higher priority for the US industry.
I don't really see the last point as related to the first 4. The other points are part of a bigger picture in the ongoing globalization process. Countries are "competing" with each other in all sorts of ways. They compete for jobs, FDI & tax revenue in ways they didn't previously, at least not as much. This gets translated into tax breaks, subsidize and lots of other things.
IMO the most interesting part of all this is that a movie cannot be said to be a US, French or South African production anymore. Shooting takes place all over the place. Editing and post production now happen place all over the place too. "Quality" in the form of the best actors or best special effects people is important. Money always flowed more freely than goods, services or labour so that comes from everywhere too as it always has.
IMO the industry is in a unique position. Much of the work is easy to parcel. The 'firm' comes into existence to make a film and then goes away so personal relationships, buildings, equipment and other things that keep firms monolithic (reduced transaction costs is usually considered the biggest advantage large firms have over individual actors transacting in spot markets, Ronald Coase's theoroms) are not much of a factor.
More than "a little" rambling. All it seems to say really is that MPAA efforts to combat "piracy" might also be construed as justification for more action on free-trade violations.
What a horrible article. I've stopped half-way through because it would just refuse to report the 4 lines that make up this news, instead making it look like a clip-show in a cartoon, going off on a side road after every 2 words of content.
If the states compete with subsidies, I cannot see how small countries with small populations and economies (such as new zealand) cannot also offer tax breaks. They would be laughed out of court. Not to mention all the farming and energy subsidies paid by the federal government at the detriment of other countries.
It's actually a case for free trade. CVDs are meant to balance out the advantages of foreign subsidies (protectionism) and provide a level playing field for domestic (US) industries. As far as I'm aware there aren't any such laws about free trade between states, so when Louisiana passes subsidies and takes work from California, I don't think there's anything you can do about it. But once it goes international, various treaties come into effect. Of course they were designed around things like cotton and steel but there's no reason they can't be applied to high tech industries.
What digital goods are in this case is imported services, something that is increasing rapidly and not covered in trade policies as clearly as physical goods.
If you employ an overseas statistician or buy software from an overseas supplier, you are basically importing statistics or software. The fact that these are a digital good/service makes little difference from an economic perspective.
How do you place value on an import? Let's say you import an Airbus, and you have to declare its value. Do you just add up the kgs of aluminium and plexiglass and carbon fibre and steel? Or do you itemise it and say you paid this much for the engines and this much for the fuselage? How do you account for the labour? Or the R&D? Nevermind the computer system(s) that flies the thing.
In the world of physical things we know the value of something based on how much someone is willing to pay for it. That should include all the materials and labour and R&D etc. So we can know how much someone paid for the Airbus and that's it's market value.
In the past, if you filmed something overseas or maybe just did the VFX work, you would send back reels of film. I imagine that most of the time when getting them through customs just the physical value was declared - ie $10k for some Kodak film. Nevermind the fact that you may have paid someone overseas $100 million for the completed movie. From a customs point of view it's impossible to tell the difference between someone's student film and a Hollywood blockbuster, the medium is the same.
Now deliver the film digitally and all trace of it goes away. So Hollywood can send a check for $100 million to the UK and get back a digital copy of a film which doesn't show up as being imported at all.
The complicating issue here is that someplace like the UK might offer a 25% subsidy to make the movie there, so you spend $100 million, get a digital copy of the film and a check for $25 million from the UK (or just pay $75 million depending on how it's arranged). Which causes jobs to be lost in the US, but it's harder to see than when someone changes the price of steel because the actual product is invisible to the normal import process. Why is a movie different than an Airbus? (This could be used as an argument against tariffs and import duties in the first place (even on Airbuses), ie free trade, which is why they're pursuing CVDs which came into effect through various free trade agreements.)
So how does this affect other people? Let's say I do work for a European company, but I live and work in the US as a freelancer. Are the services I provide and the files I transmit now considered exports? Do I have to deal with yet more complexity come tax time? Sounds like it could be a huge pain in the ass.
Say, if someone posts some text on a website like Pastebin, and another person copies and pastes it in another country, would it be considered as an import?
(Additional irony if text is a Python computer language program)
1) They argued that moving digital good around should be subject to import tax/duties just like physical goods (steel/ lumber). The case they were making was for finished digital products.
2) The same argument can be used for the unfinished digital goods of the movies - the special effects. Currently large studios outsource the post production work to cheap labor markets.
Using the same justification as the MPAA uses for finished movies, labor activists in the domestic FX industry can have the government slap an import tariff on the special effects digital content as it comes into the country, wiping out the cost savings from outsourcing it in the first place.
If it's true, I don't understand why it took one guy hiring a lawyer on his own who did the detective work necessary to help out the rest of the industry.
You know, instead of like the concerted efforts of the industry itself. Does the VFX arm of the industry just not care to get involved in lobbying/lawyers?
*understanding I read the part of the article that mentioned it's "difficult" because they have no union. If you don't have jobs, you don't have union busting employers - it's literally the best time to make a union.
The industry only has 6 customers (the studios) who often negotiate as a single entity (the MPAA) and who are big fans of subsidies, so for a a VFX studio to pursue something by themselves would essentially blacklist them and put them out of business. The brilliance of this plan is that it's being organised by the workers whose lives are being affected.
This is also just a push to a fat deal on some other minor case. i'd guess.
The document they cite is not even ruled over yet. And it will probably be full of references to "end-user consumption" or such, making it null on this VFX issue.
This is interesting. Essentially, if offshore development work is done somewhere that a significant subsidy is involved, it may be illegal according to WTO and US trade rules, if the digital product itself is defined under the same regulations as "manufactured goods." It seems that the MPAA has actually weighed in on a separate anti-piracy measure regarding 3d printers, where they argue that digital works should be regarded as manufactured goods with the same protections.
Anyone got a source for this comment referenced in the article?
"In 2006, Princeton economist Alan Blinder famously warned that the critical economic divide in the future will 'be between those types of work that are easily deliverable through a wire or via wireless connections with little or no diminution in quality, and those that are not.'”
It looks like countries have been doing subsidies for a long time, so protectionism is an old thing. Slapping a tariff on those imports is one way to neutralize that kind of protectionism.
[+] [-] netcan|12 years ago|reply
(1) There are all sorts of subsidies internationally for movie related industries/services. (2) US studios are "exporting jobs" by taking advantage of these subsidies to to various editing tasks overseas. (3) This is unfair because of various WTO rules and principles of free trade. (4) US states are responding by doing the same (5) Anti piracy is a higher priority for the US industry.
I don't really see the last point as related to the first 4. The other points are part of a bigger picture in the ongoing globalization process. Countries are "competing" with each other in all sorts of ways. They compete for jobs, FDI & tax revenue in ways they didn't previously, at least not as much. This gets translated into tax breaks, subsidize and lots of other things.
IMO the most interesting part of all this is that a movie cannot be said to be a US, French or South African production anymore. Shooting takes place all over the place. Editing and post production now happen place all over the place too. "Quality" in the form of the best actors or best special effects people is important. Money always flowed more freely than goods, services or labour so that comes from everywhere too as it always has.
IMO the industry is in a unique position. Much of the work is easy to parcel. The 'firm' comes into existence to make a film and then goes away so personal relationships, buildings, equipment and other things that keep firms monolithic (reduced transaction costs is usually considered the biggest advantage large firms have over individual actors transacting in spot markets, Ronald Coase's theoroms) are not much of a factor.
[+] [-] cratermoon|12 years ago|reply
[+] [-] NKCSS|12 years ago|reply
[+] [-] nodata|12 years ago|reply
And then go after the amount lost in tax revenue.
[+] [-] beagle3|12 years ago|reply
It's just the reporting of anything other than gross (and contracts based on that reporting) is misleading.
[+] [-] steve19|12 years ago|reply
This is just a flimsy case for protectionism.
[+] [-] mprovost|12 years ago|reply
[+] [-] zaroth|12 years ago|reply
[+] [-] netcan|12 years ago|reply
If you employ an overseas statistician or buy software from an overseas supplier, you are basically importing statistics or software. The fact that these are a digital good/service makes little difference from an economic perspective.
[+] [-] mprovost|12 years ago|reply
In the world of physical things we know the value of something based on how much someone is willing to pay for it. That should include all the materials and labour and R&D etc. So we can know how much someone paid for the Airbus and that's it's market value.
In the past, if you filmed something overseas or maybe just did the VFX work, you would send back reels of film. I imagine that most of the time when getting them through customs just the physical value was declared - ie $10k for some Kodak film. Nevermind the fact that you may have paid someone overseas $100 million for the completed movie. From a customs point of view it's impossible to tell the difference between someone's student film and a Hollywood blockbuster, the medium is the same.
Now deliver the film digitally and all trace of it goes away. So Hollywood can send a check for $100 million to the UK and get back a digital copy of a film which doesn't show up as being imported at all.
The complicating issue here is that someplace like the UK might offer a 25% subsidy to make the movie there, so you spend $100 million, get a digital copy of the film and a check for $25 million from the UK (or just pay $75 million depending on how it's arranged). Which causes jobs to be lost in the US, but it's harder to see than when someone changes the price of steel because the actual product is invisible to the normal import process. Why is a movie different than an Airbus? (This could be used as an argument against tariffs and import duties in the first place (even on Airbuses), ie free trade, which is why they're pursuing CVDs which came into effect through various free trade agreements.)
[+] [-] twiceaday|12 years ago|reply
[+] [-] zacinbusiness|12 years ago|reply
[+] [-] cinskiy|12 years ago|reply
(Additional irony if text is a Python computer language program)
[+] [-] raldi|12 years ago|reply
(1) What the MPAA's move was
(2) How it screwed the studios
[+] [-] antoko|12 years ago|reply
2) The same argument can be used for the unfinished digital goods of the movies - the special effects. Currently large studios outsource the post production work to cheap labor markets.
Using the same justification as the MPAA uses for finished movies, labor activists in the domestic FX industry can have the government slap an import tariff on the special effects digital content as it comes into the country, wiping out the cost savings from outsourcing it in the first place.
[+] [-] MWil|12 years ago|reply
You know, instead of like the concerted efforts of the industry itself. Does the VFX arm of the industry just not care to get involved in lobbying/lawyers?
*understanding I read the part of the article that mentioned it's "difficult" because they have no union. If you don't have jobs, you don't have union busting employers - it's literally the best time to make a union.
[+] [-] mprovost|12 years ago|reply
[+] [-] gcb0|12 years ago|reply
The document they cite is not even ruled over yet. And it will probably be full of references to "end-user consumption" or such, making it null on this VFX issue.
[+] [-] waynemr|12 years ago|reply
[+] [-] l33tbro|12 years ago|reply
"In 2006, Princeton economist Alan Blinder famously warned that the critical economic divide in the future will 'be between those types of work that are easily deliverable through a wire or via wireless connections with little or no diminution in quality, and those that are not.'”
[+] [-] MWil|12 years ago|reply
I did a grad school paper on automation/relocation/innovation regarding union busting and this stuff has been predicted since the microchip.
[+] [-] mprovost|12 years ago|reply
[+] [-] himangshuj|12 years ago|reply
[+] [-] mschuster91|12 years ago|reply
[+] [-] Kiro|12 years ago|reply
[+] [-] hayesdaniel|12 years ago|reply
[+] [-] nl|12 years ago|reply
[+] [-] darkarmani|12 years ago|reply
It looks like countries have been doing subsidies for a long time, so protectionism is an old thing. Slapping a tariff on those imports is one way to neutralize that kind of protectionism.