Foreign Levies, Or "Gee, I Guess France Isn't All That Bad"

Thanks, fur’ners!Lately, some of you who have worked on television shows or movies may have noticed a new kind of check coming from the WGA. It’s a foreign levies check.

What are foreign levies, why are we getting them now, how do we get them, and what’s the all-around deal here with this dough?

This is going to be a little long, but bear with me. It has a very happy ending.

Let’s start with (oh God, not again…) copyright law. As I discussed in past articles like this one, U.S. copyright law is somewhat unique. We feature the work-for-hire laws that say that employers who commission work can be the legal authors of that work, and we do not adhere to “droit moral”, or the moral rights of authors.

The rest of world doesn’t see eye-to-eye with the U.S. on copyright law, and this created an opportunity for us when foreign countries (particularly in Europe and South America) began placing levies (read: taxes) on the sales of blank videocassettes, blank DVDs and in some cases, even computer hard drives.

The foreign countries basically viewed blank media as a way for consumers to record their favorite televised shows and televised movies (including broadcasts AND cablecasts of theatrical movies). As such, they felt that the authors of those shows and movies ought to receive some kind of royalty for each such blank media sold. In order to get that royalty, they placed a levy on the sale of blank cassettes and DVDs and so forth.

That tax is intended to be distributed to the authors.

First problem: distributed how??? The foreign countries basically use their own formulas that are based on how frequently programs are run, and then assign the authors of those programs a share of the foreign levies based on that very factor. Therefore, the authors of “The Simpsons” will receive a much larger share of the videocassette tax than the authors of a show that airs once on Spanish TV.

Okay, so far so good.

Second problem: who is the author?

The AMPTP argued that under U.S. copyright law, the companies it represents are the legal authors of all American television shows and movies broadcast on foreign television.

And they’re right.

The foreign countries, however, said “non” or “nein”…or whatever they say in Greece. After all, they’ve never particularly respected the legal basis the AMPTP MPAA (Ed. note: Turns out it’s not the AMPTP, but the Motion Picture Association that handles this on behalf of the studios) was using to claim authorship, namely work-for-hire.

The WGAw and DGA each felt that writers and directors were the authors.

The MPAA and the writers and directors had leverage against each other. The unions felt the law would view their authorship claim favorably, but the MPAA certainly could take an obstructionist stance that would end up costing the unions more than they’d collect in foreign levies.

Hence, a compromise.

Initially, the MPAA collected the lion’s share of foreign levies (80%+), with the WGA and DGA splitting the rest.

In 2001, largely with the assistance of a WGAw and DGA consultant named Bob Hadl, the unions were able to grab a larger share…up to 25%, with the rest going to the MPAA.

So hey, we were getting lots of money, we had successfully stood up as co-authors with the directors (think about that…it really is a big deal), and we were increasing our share as well.

Things were good.

Too good.

The money starting flowing in to the WGAw. All of it went into a special escrow account. Here’s where the problems started. We’d get a big check on a regular basis, but with it came a huge printout with literaly 40,000 line items about how the foreign country intended the money to be apportioned.

Yeah. 40,000. (Ed. Note: This used to say 14,000, but apparently it’s waaaay worse than I knew!)

Even worse, the information was often incomplete or not useful. For instance, you might see that $124.29 was assigned to a television show name, but not for a particular episode. So which writer gets the money for “The Waltons”? Or it was assigned to an episode name…but they wouldn’t mention the show. So who gets the money for “Another Bad Day Pt. 2”? Then there was the case with soap operas. The episodes typically don’t even get names, and the foreign countries wouldn’t know the episode numbers. Even if they did, by the time they got them, they were often repackaged and cut together into frankenepisodes for which authorship was difficult to determine.

Ah, but the problems continued. Foreign levies are meant to be distributed to all writers of all shows and movies airing on foreign television.

That includes programs and movies not covered by the WGAw like animation. And non-fiction work. And porn.

Yeah, porn.

The WGAw wanted to distribute all of the money it was receiving, but it didn’t have records for many of the writers credited with those non-Guild shows (and porn). Remember, this was in the dark days before IMDB really caught on, and even then, IMDB isn’t exactly a legally reliable database.

Oh, and all the above? That was when it was working well. Often, the WGAw would receive a check with NO information.

Zippo.

Cut to 2001, when the WGAw staff and leadership decided to do something about all of this. The money that had been coming in was quickly mounting in the escrow account. In fact, it was crossing the eight-figure line. This was bad for two reasons: people weren’t getting their money, and California State law says that money kept in escrow for longer than seven years can escheat to the state.

No one wants escheating, right?

The answer was to build an entire staff around receiving, tracking, processing and distributing foreign levies checks to all authors, WGAw or not, who were due them. In the meantime, the monies that were about to enter into the escheat zone would be moved out of escrow and into the WGAw’s general fund in order to be protected, but would still be owed to the receipients. Essentially, we created a system of many IOU’s for many John Doe’s, with the idea that as soon as we figured out who they were and where they were and who was their rightful heir if they were dead, then we’d distribute the money.

The only remaining problem was one of cost. Putting such a system in place with the necessary computers, full-time staff, check printing machines and envelope stuffing machines and mailing machines was going to cost a lot of money. The answer was that the WGAw would charge a 5% administrative fee (this fee was announced in the 2003 financial report to the WGAw membership, so there was transparency). In other words, of all the money we distribute on behalf of writers, we take 5% to cover the considerable costs of doing this job right.

Note the key word “distribute”. The WGAw does not collect a fee on foreign levies it collects…only foreign levies it actually distributes. The fee is only applied in “success”. There is no incentive to sit on the money. In fact, there is a very strong disincentive to sit on the money (especially considering that the money is held in an extremely conservative account that earns very little in interest).

Happily, the system now seems to be working. The pile of undistributed foreign levies had risen to a massive $20,000,000+ level, but the WGAw finally started making a real dent. Last year, the WGAw distributed $8,000,000 in foreign levies (a huge leap forward), and for the first time, we’re now distributing more than we’re taking in.

If you’ve read this far, then you deserve the lovely ending to this all. The aforementioned Bob Hadl returned to Europe recently, and he’s helped negotiate a deal to increase the WGA/DGA share of foreign levies to 50%, double our existing rate. When that deal goes into effect, we will even more strongly assert our status as the authors of both record and fact for the purposes of foreign levies.

And so, to our readers in France and Germany and Argentina and throughout the world…thank you for buying blank DVDs and blank videotapes and hard drives. You and your governments are supporting the real authors of creative works, and the WGAw is doing its best to make sure those authors get their proper share.