Today, I got a gift card for my upcoming birthday. Before opening it, I took a look at the fees on the packaging, and was pretty shocked:

So, for a $50 gift card, there’s a $5 fee just to purchase the card. Then, a $2 fee per month? If I didn’t use the card for a year, they’d count $29 profit on a $55 purchase. And if I forgot about the card for two years and a month, the entire $55 would be pure profit for the credit card company. Amazing.

Wow. This is sleazy.

Wikipedia: Hollywood Accounting

In accountancy, Hollywood accounting is the practice of distributing the money earned by a large project to corporate entities which, though legally distinct from the one responsible for the project itself, are actually owned by the same people. This substantially reduces the profit of the project proper, sometimes eliminating it altogether. The effect of this practice is to reduce the amount which the corporation must pay in royalties or other profit-sharing agreements.
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Due to Hollywood accounting, it has been estimated that only about 5% of movies officially show a net profit, and the “losers” include such blockbuster films as Rain Man, Forrest Gump, Who Framed Roger Rabbit, and Batman, which all took in huge amounts in box office and video sales.

Because of this, net points are sometimes referred to as “monkey points,” 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.
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Examples

Winston Groom’s price for the screenplay rights to his novel Forrest Gump included a share of the profits; however, due to Hollywood accounting, the film’s commercial success was converted into a net loss, and Groom received nothing. That being so, he has refused to sell the screenplay rights to the novel’s sequel, stating that he “cannot in good conscience allow money to be wasted on a failure”.

Stan Lee filed and won a lawsuit after the producers of the movie Spider-Man did not give him a portion of the gross revenue.

The estate of Jim Garrison sued Warner Bros. for their share of the profits from the movie JFK, which was based on Garrison’s book On the Trail of the Assassins.

Art Buchwald received a settlement after his lawsuit Buchwald v. Paramount over Paramount’s use of Hollywood accounting. The court found Paramount’s actions “unconscionable,” noting that it was impossible to believe that a movie (1988’s Eddie Murphy comedy Coming to America) which grossed US$350 million failed to make a profit, especially since the actual production costs were less than a tenth of that. Paramount settled for an undisclosed sum, rather than have its accounting methods closely scrutinized.

MINNEAPOLIS – A replay of the nation’s only file-sharing case to go to trial has ended with the same result — a Minnesota woman was found to have violated music copyrights and must pay huge damages to the recording industry.

A federal jury ruled Thursday that Jammie Thomas-Rasset willfully violated the copyrights on 24 songs, and awarded recording companies $1.92 million, or $80,000 per song.

[Source: Yahoo News]

I really don’t know why the RIAA hits people with these kinds of fines. I’m obviously no fan of pirates, but when I was a kid, I remember hearing that shoplifting carried a fine of 7x the value of goods you stole. But, $80,000 per song is a 80,000x fine. The RIAA and is also in another case against Brittany English aiming for 150,000:1 damages. Personally, I think piracy should carry a lesser penalty than shoplifting. I know that opens up problems for when trying to pursue court-cases, because small-fines aren’t really worth the time or effort, but oh well. (I’ve heard that some stores won’t even try to prosecute you if you shoplift small dollar-value items; it’s not worth their time. That’s the unfortunate side of small-penalties.)

The justice system exists not just to punish crime, but to punish it appropriately. This punishment is out of proportion to her crime (does anyone think she did $1.92 million worth of damage to the music industry?), which is an injustice in itself. I think everyone has a sense that say, shoplifting $24 worth of merchandise should carry a penalty, but it shouldn’t be an excessive penalty. We’d all be aghast if Walmart hit a shoplifter with a $1.92 million fine. This injustice just fuels dislike of the recording industry (and entire copyright-industry by association), and allows pirates to pretend that they’re the “good guys” here - as if the other side being “bad” somehow makes you “good”.

In general, I think people’s motivation for sharing digital media on the internet is to be nice to their fellow man. I think it feels completely different than, say, shoplifting. I’ve had pirates offer me pirated copies of this or that software because I happened to mention it, and it’s done with a “hey let me help you out” attitude. (And, no, I never take pirated media.) For that reason, I think uploading-pirates see themselves as helping out their fellow man - even if it hurts the big, evil, faceless corporation (assuming they think about the creator at all). I mean - how much more evil can you get than trying to stop people from “sharing”. It’s like the corporations are run by Gargamel. I’m kidding, of course. I don’t believe piracy can be reasonably compared to sharing, although, I think pirates probably view the world that way.

My guess is that the recording industry wants to cover their court costs, and paying lawyers to get a couple-hundred dollar ruling isn’t worth it. But, $1.92 million is still outside the range of reasonable lawyer costs. Or maybe their strategy is to scare the bejesus out of pirates - to send a message? Is that the purpose of these trials?

There are some hints that the recording industry won’t try to make her pay - and why would they, it’s not like she has the money. But, what does that mean? That a bad credit rating for the next seven years is her punishment?

Now, of course, she was uploading songs on Kazaa (rather than downloading them). Which means that she could potentially have shared with hundreds of people. But, I think any fine against her should be the minimum sufficient to stop her activity. Heck, she’d probably stop if she got a cease and desist letter in the mail. She also tried to get out of the accusations by claiming that someone else (her ex-husband or kids) did it, or that someone hacked into her wifi connection (even though she doesn’t have a wifi connection). I doubt that helped her case - the jury was probably insulted about being lied to. I’ve also read that her lawyer was trying to argue (in another case) that filesharing was “fair use” - which almost everyone (including anti-copyright activists) thought was a very bad argument. And the fact that she opted out of paying a settlement, and then keeps appealing the verdict (this is her second appeal and she plans for a third) probably isn’t helping at all.

There’s also something bizarre in the fact that she had a $1.92 million fine, but the PirateBay was hit with only a $3.6 Million fine (plus a year’s jail time). They’ve done far more damage to the creative industries than this woman.

The whole situation just leaves me feeling confused with a sense of injustice.

A couple of days ago, one of Belkin’s reps got caught trying to hire people to write good reviews of their products. Given the spate of fake reviews and other games (see my earlier post about Eidos manipulating journalists), it’s not only clear that companies have an incentive to mess with reviews and create fake “user” reviews, but it’s happening. Like everyone else, I don’t like these types of tactics. I’m a consumer just like everyone else, so I don’t like it from that perspective. It’s dishonest and manipulative. Secondly, I don’t like it as a game developer because it undermines trust in the whole game-review process. I usually check reviews before buying a game or product, and if I think some of the reviews are fake, I’ll have less trust in positive reviews. As a result, I’ll be less likely to accept positive reviews - which leads to the reaction that I’m less likely to buy. In other words, fake reviews have the ultimate effect of hurting sales of good products. And, if you’re a company who doesn’t create fake reviews, well, users don’t know it and your reviews end up being lower than numbers for comparable products (because they’re padding their numbers).

It sort of makes me wonder if companies would go out of their way to make fake reviews of their competitors’ products.

Some other examples of fake “reviews”:

I happened to see some videos on GameTrailers.com for a game called “Rat Race” a few months ago. I think many of those votes are fake. First, I think they’re fake because they are remarkably positive for some bad video clips (could anyone really believe user votes are in the 7.1-8.5 range)? And secondly, if you compare the number of votes and comments to the number of views, they are remarkably incongruent. Specifically, they have five videos up. Here’s the numbers:

Notice anything odd with those numbers? How about this: video #1 has almost four times as many views as video #4, but all the videos have almost the same number of votes and comments. Hmmm. Okay, I can’t expect the ratio of views-to-votes to be exactly the same, but it just seems suspicious.

A while back, Penny Arcade also had a comic about getting paid to write fake user reviews. I can’t find the exact post, but Gabe and Tycho said they discovered the existence of third-party companies who hire people to travel around the internet writing fake reviews for companies that hire them.

And, there was also that Amazon glitch a few years ago that accidentally showed the reviewer’s real names on the website. Authors were caught writing glowing reviews of their own books, but pretending to be someone else.

And, of course, there was a whole bunch of shadiness around Kane and Lynch. For example:

When viewing the official Kane & lynch website, a flash ad comes up with two 5-star reviews which… well… which don’t exist:

GameSpy did not say “It’s the best emulation of being in the midst of a Michael Mann movie we’ve ever seen” in their review of the game. They said that in their E3 2007 coverage. In other words, a preview. They also did not give the game five stars. They gave it three.

As for Game Informer, same deal. The highlighted quote does not appear in the review of the game. Nor do they give it five stars. Game Informer don’t even score in stars. They gave it a 7/10. (Source)

And I’ve heard that movies have a similar phenomena: there are certain people you can always count on to give a positive review. The movie companies know who they are, and then use them in their advertising, so they can say stuff like “a roller-coaster thrill ride! five stars!”. At least in that case, the “review” is part of the advertising, so we know not to trust it.

I discovered an interesting new blog-spamming tactic today. Notice a pattern here? All of these comments appeared on a single article. (The underlined words were links to another website.)

This is very smart and deceptively simple. It contains the key to unlocking business models in the ‘pirate’ world and ’ long tails’ :- ) I suspect VCs should have these bullet points as a mental checklist before funding a project
Posted by Dennis on February 2, 2008 at 2:25 PM

This is very smart and deceptively simple. It contains the key to unlocking business models in the ‘pirate’ world and ’ film izlelong tails’ :- ) I suspect VCs should have these bullet points as a mental checklist before funding a project
Posted by film izle on December 3, 2008 at 2:16 PM

This is very smart and deceptively simple. It contains the key to unlocking business models in the ‘pirate’ world and ’ long tails’ :- ) I film izle suspect VCs should have these bullet points as a mental checklist before funding a project film izle
Posted by thanks on December 18, 2008 at 3:35 AM

Answer: Spammers are duplicating existing comments but randomly inserting links to the spammer’s website. I even saw a few (spam) comments that mixed together two earlier comments. Darn spammers - always looking for a way around our filters.

I heard about this story through Penny Arcade’s podcast (minutes 14:00-40:00 of this podcast). I’ve heard about this kind of stuff in the past - where game companies try to delay bad reviews until after release. Obviously, the problem is that gamers want a reliable source to critique a game before they buy it. Game Companies want the best possible score so that more people will buy it. And so, the tug-of-war begins. Anyway, here’s an excerpt of (just the latest) game-score manipulation:

Eidos UK’s PR firm has confirmed that British sites planning on posting Tomb Raider: Underworld reviews with less than an 8.0 score are being asked to hold off posting them until Monday.
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“That’s right. We’re trying to manage the review scores at the request of Eidos.”

When asked why, the spokesperson said: “Just that we’re trying to get the Metacritic rating to be high, and the brand manager in the US that’s handling all of Tomb Raider has asked that we just manage the scores before the game is out, really, just to ensure that we don’t put people off buying the game, basically.”
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British site Eurogamer has already gone live with their 7 out of 10 review, which the representative said had caused “problems”.
Sources: Kotaku, Videogaming247

It’s kind of funny how Eidos just comes out and says that they’re attempting to “manage the scores” (read: make gamers think critic’s opinions are uniformly positive about the game). Didn’t Eidos learn anything from the whole “Kane and Lynch” thing? (In that situation, Jeff Gerstmann posted a 6/10 score for Kane and Lynch - also by Eidos - before it was released, and was fired because of it.) Link: “Gamespot’s Gerstmann Fired, Allegedly Over Kane and Lynch Review”, and Penny Arcade’s comic about it.