Understanding the Business of Media Entertainment

The Legal and Business Essentials All Filmmakers Should Know

Gregory Bernstein

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429665172
• Edition: 2
• Topic: Media & Performing Arts
• Subtopic: Film & Video

This revised edition of Understanding the Business of Media Entertainment is an indispensable guide to the business aspects of the entertainment industry, providing the information you need to break in and to succeed.

Written in a clear and engaging tone, the second edition of this book covers the essential topics in a thorough but reader-friendly manner and includes plenty of real-world examples that bring business and legal concepts to life, such as the growing clout of digital companies and the rise of streaming providers like Netflix and Amazon, the transformation of independent film development and distribution, and changes to the media ownership landscape. Award-winning screenwriter and entertainment attorney Gregory Bernstein gives an insider's look at the filmmaking business, from copyright law and government media regulation to development, distribution, revenue, the role of agents, managers, and unions, entertainment contracts, and more. Other topics covered include:

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• Hollywood's growth and the current conglomerates that own most of the traditional media.
• How specific entertainment companies operate, including facts about particular studios and employee tasks.
• How studios develop projects and engage in marketing and distribution.
• The kinds of revenues studios earn and how they account for these revenues.

SECTION 1

Law and Entertainment

We begin by examining the two most important areas of law that govern the entertainment industry – copyright and First Amendment law. Without both there would be no entertainment business as we know it.

Copyright gives creators and entertainment businesses exclusive ownership rights in the screenplays, books, films, TV shows, songs, games, and other forms of entertainment they create. The First Amendment gives us all tremendous freedom to create just about anything we want, though not everything we want.

These two areas of law are the foundation on which the entertainment industry rests, and should be understood by all who work in this business.

CHAPTER 1

Copyright Law

Introduction

What is copyright? It’s a set of laws that give authors of certain kinds of creative works the right to exclusively own and control their work for a period of time. Copyright actually gives authors several rights, and we’ll discuss them later in this chapter, but for now what’s important to know is that copyright gives authors and other creators the sole right to exploit the copyrighted work.

Any person or company that spends time and money creating something valuable wants to legally own that thing, whether what’s created is a movie, video game, electric car, or disposable diaper. As we’ll see, copyright law grants ownership rights to only certain kinds of “things” – generally speaking, artistic and cultural works.

It’s impossible to overemphasize the importance of copyright when it comes to the entertainment business. The fact is, copyright is the lifeblood of the entertainment industry. Its grant of exclusive ownership rights allows individual creators to have professional careers as authors of creative works, and it also allows entertainment companies to make billions of dollars annually from movies, television shows, video games, songs, plays, and other forms of entertainment.

Without copyright, the entertainment business in all its forms would simply not exist, which means copyright law has had an incalculable impact on American society and culture.

In the Beginning

Back before the invention of the printing press, storytellers never had to worry about people stealing their work. For example, one of the world’s first great storytellers, Homer, who probably lived sometime between 800 BC and 700 BC, almost certainly told his stories orally, and since the tape recorder wouldn’t be invented for another 2,600 years, intellectual property theft was not high on his list of daily concerns. When the great Athenian playwright Sophocles (496–406 BC) actually did write the text of Oedipus Rex, he didn’t have to worry about unauthorized copying because only a handful of people could write, let alone read.

Fast-forward nearly 2,000 years and nothing at all had changed. Authors such as Dante Alighieri (1265–1321), who wrote The Divine Comedy, and Geoffrey Chaucer (1343–1400), who wrote The Canterbury Tales, never worried about intellectual property theft as there was no way for people to effectively copy and distribute their work.

Then, around AD 1450, Johannes Gutenberg invented the printing press and book publishing was born. For the first time, an author’s work could be copied with relative ease, and so for the first time writers and publishers had to worry about controlling the sale of what they created. Human nature being what it is, by the time Shakespeare’s plays were first formally published in 1623, his publishers were already decrying “stolen and surreptitious” copies of the plays that were “maimed and deformed by the frauds of injurious imposters.”¹ Along with Hamlet and King Lear, intellectual property theft had arrived on stage.

At first, a handful of book publishers in England tried to prevent unauthorized copying by forming what was, in effect, a monopoly. Called the Stationers’ Company, members of the group agreed not to copy a work published by a group member. England’s government recognized the monopoly power of the Stationers’ Company and officially sanctioned it to regulate the reproduction of books.² Much like the large entertainment conglomerates today, the Stationers’ Company did everything it could to firmly control the production and distribution of published works.

By the late 1600s, however, the printers’ imperious control had run its course; their ability to effectively censor what was published raised the hackles of the general public, and their greed and occasional abuse of authors’ economic interests alienated the very people who supplied them with books in the first place.

Thus, the pendulum of control swung away from publishers and towards the authors themselves. In 1710, England’s parliament passed what is known as the Statute of Anne, the first law that gave authors a governmentally recognized and enforceable copyright in their works. Under the law, authors owned the copyright to what they wrote for 14 years, during which time the author had the exclusive right to decide who could publish the work. The initial 14-year term could be renewed for an additional 14 years, after which time the work fell into the public domain,³ and could then be copied by anyone.

Now jump forward another 77 years, to 1787, when the United States’ Founding Fathers met in Philadelphia to draft the United States Constitution. A few years earlier England and its American colonies had engaged in a kerfuffle known as the American Revolution. The colonists had rid themselves of English control, but that didn’t mean the new American leaders turned their back on prevailing English law. Indeed, when the Founding Fathers met to write America’s most cherished set of laws, the United States Constitution, they looked to English statutes with which they were familiar.

One of the legal notions the Founding Fathers chose to incorporate into the Constitution was copyright. The Constitution says, “Congress shall have the power to … promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”⁴

This Constitutional language has had a profound effect on copyright law in America. For one thing, from the very beginning, America’s government has recognized that authors as well as other creative people should have a strong economic interest in the work they create. Giving authors and others the “exclusive” right to their work for a “limited time” means that they can control the exploitation of their work and thus reap whatever economic benefits the public chooses to bestow. The underlying public policy is clear: By providing this economic incentive the hope is that creative people will author new works, invent new products and make scientific discoveries, all of which benefit society as a whole.⁵ If this economic incentive didn’t exist, artistic people would have to find a different way to earn a living, which would severely restrict their ability to create, discover, and help advance society into the future.

The fact that the Founders gave Congress the power to secure copyright has also been vitally important. As you probably know, the United States has two distinct systems of law-making: The federal government can make federal laws under the powers granted it by the Constitution, and individual states can make laws, too. Thanks to the Constitution’s “Supremacy Clause,” federal law always takes precedence over state laws that are inconsistent with federal law.⁶ Thus, by giving Congress the power to secure copyright, the Founders eliminated states from having a significant role in this process.⁷ Therefore, people involved in entertainment need not generally concern themselves with 50 different state laws on the fundamental issues of copyright – they only have to understand the copyright laws passed by the United States Congress.

Congress has indeed exercised its Constitutional prerogative and passed various copyright laws from time to time. During the twentieth century, Congress passed two major overhauls of copyright law, in 1909 and then again in 1976. The 1976 Copyright Act,⁸ though later amended and augmented due to issues raised by the digital revolution, is still the fundamental copyright law governing creative works. Though the law was passed in 1976, by its terms it only applies to works created on or after January 1, 1978; works created before January 1, 1978 are covered primarily (though not entirely) by the 1909 Act.⁹

Since the 1976 Copyright Act is the current governing law, we’ll now turn to it and look at it carefully. Here are the principal questions we’ll examine:

• What works qualify for copyright protection?
• What can’t be copyrighted?
• When does copyright ownership begin, and what must an author do to officially obtain copyright?
• What specific rights do copyright owners receive?
• What happens when two or more people jointly create a copyrighted work?
• Who owns the copyright if someone pays you to create a work?
• How long does copyright last?
• What constitutes a violation of copyright, also known as copyright infringement?
• What defenses are there if someone claims you violated copyright?

What Works Qualify for Copyright Protection?

People can create a variety of different things, from scripts to medicine, from video games to light bulbs, from songs to atomic clocks and quantum computers. Copyright law only covers a certain portion of what people create.

Stated very generally, copyright covers artistic and cultural endeavors, while patent law, a wholly different and complicated subject, covers what can be broadly called inventions and the products derived from them.¹⁰

Since our focus is the entertainment industry, we’ll concentrate on copyright. Section 102 of the 1976 Copyright Act generally tells us what kinds of works qualify for copyright protection. Here is the text of Section 102, and I have italicized the key words and terms that merit further discussion:

1.Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Works of authorship include the following categories:

a.literary works;

b.musical works, including any accompanying words;

c.dramatic works, including any accompanying music;

d.pantomimes and choreographic works;

e.pictorial, graphic, and sculptural works;

f.motion pictures and other audiovisual works;

g.sound recordings; and

h.architectural works.

2.In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, reg...