Rents, in the economic sense, are above-normal profits that are usually attributed to some unfair market structure, often made possible through regressive regulations.
In the case of copyright, there is perhaps no more infamous rent-seeker than Disney. The sprawling media empire has collected rents that are almost incomparably high relative to less rent-intensive industries.
Yesterday, Ramin Setoodeh made the observation that the five biggest movies of 2019 are all owned by Disney.
This has never happened. The five biggest movies of the year at the U.S. box office are all from one studio — Disney.
(1) #AvengersEndgame $856.4 million
(2) #CaptainMarvel $426.8 million
(3) #ToyStory4 $395.6 million
(4) #TheLionKing $350.8 million
(5) #Aladdin $345.9 million
— Ramin Setoodeh (@RaminSetoodeh) July 28, 2019
Some of these movies are still in theaters, and these figures do not include revenues from streaming or direct purchases of movies for years to come. Never mind the fact that an Avengers lunchbox, a Simba plush doll, or all of the toys featured in Toy Story 4, while also protected by Disney’s copyright, are not included in these figures.
To put these numbers in perspective, I performed some back-of-the-envelope calculations to compare the profits made by Disney on these five blockbusters to the returns made if they had invested the money they used to produce these movies in the S&P 500.
(See the methodological appendix below for more details on how I produced these figures.)
To be fair, even under a copyright regime with more reasonable terms, the fact that these statistics are based on movies that came out this year, some of which are still in theatres, (Lion King came out less than two weeks ago) shows just how easy it can be to recoup the cost of an investment from these movies.
Good for Disney! There’s nothing wrong with doing very well in an investment such as this. But if the copyright system is designed to guarantee a reasonable ROI for creators, producers, etc., and anything above that represents rents made possible by government grants of monopoly, then these films (and all derivative works) should be in the public domain by now.
Disclaimer: these numbers come from various sources, and precise figures are hard to come by. Even so, we did our best to produce numbers that are as accurate as possible.
To begin, I determined the inflation-adjusted returns from this S&P 500 calculator (assuming dividend reinvestment). I determined the start date of the investment from the moment the director of the movie was announced, as data on the beginning of production were hard to come by. I set the end date of the investment as the date of release. While these figures don’t reflect the nature of Disney’s investment (the production costs were not made as a lump-sum investment), for the sake of my analysis I wanted to give the most generous possible returns for the S&P comparison.
Next, I used data from varying sources, mostly the-numbers.com, a repository of various statistics on films. The box office statistics are based on the worldwide box office.
Here are the sources for the films examined.
- Avengers: Endgame, box office statistics, date director was announced.
- Captain Marvel, box office statistics, date director was announced.
- Toy Story 4, box office statistics, date director was announced.
- The Lion King, box office statistics, date director was announced.
- Aladdin, box office statistics, date director was announced.
The S&P returns were calculated by the value of this hypothetical portfolio at the release date (less the cost of the investment), while the returns for each film were calculated by subtracting the production costs from the box office totals to date.
Thank you to John Hunt for his excellent research assistance on this project.