p2pnet news view Advertising | P2P:-Most of us watch the news on TV and use the advertising segments as convenient toilet or coffee breaks.

But those of us that think advertising is an inconvenient distraction from observing our chosen content stream don’t quite Grok how Mass Media operates.

If one counts the number of minutes of advertising per 60 minutes of TV, one quickly realizes the programming including movies, series, news, documentaries and other entertainment are there to capture audiences for the advertisers.

Think of it as the invisible taxation of your leisure time.

There is no such thing as free entertainment.

But all that programming is licensed and the media owners and the movie and CD distributors all have to pay licensing fees, or royalties, to the original owner of the content, which means that the vast majority of the purchase price of the ticket, CD and the taxation of your leisure time through ads goes to the USA.

In 1958, the amount of licensing fees being moved out of Australian hands and into American bank accounts was so high for movies alone that the Australian Government redesigned the CPI around those very license fees.

They gave films their own unique special category. That year films actually cost  Australian taxpayers 2.6% of the national Balance of Payments. (Page 373 Aus Yearbook 1958).

To place this into perspective Australia’s foreign debt represented only 1.6 % of the GDP in comparison. Films were the only product imported or exported from Australia that deserved their very own special category by name.

These days the entire industry does it slightly differently. Last year Foxtel Licensing fees were $645 million dollars and the proceeds of virtually every movie ticket sold and every digital copy of music sold went straight into overseas bank accounts outside of Australia’s economy and ironically also invisible to the USA economy.

From The Department of Commerce – THE BALANCE OF PAYMENTS OF THE UNITED STATES Concepts, Data Sources, and Estimating Procedures, May 1990  Table I-3.—BEA Balance of Payments Surveys—Continued (Page 13)

Survey title and number
(Annual Survey of Royalties, License Fees, and Other Receipts and Payments for Intangible Rights Between U.S. and Unaffiliated Foreign Persons (BE-93).
Types of information
Sale and purchase of rights relating to industrial processes and products; books, records, audio tapes; trademarks; motion picture and TV tapes; broadcast and recording of live performances and events; business format franchising; and other intangibles.

In 2005, the BEA decided to cancel this survey http://edocket.access.gpo.gov/2005/05-8976.htm

Because:

The Department is proposing to remove the reporting requirements for these five annual surveys because the information collected is now being collected on four separate quarterly surveys. Specifically, the BE-25, Quarterly Survey of Transactions Between U.S. and Unaffiliated Foreign Persons in Selected Services and in Intangible Assets, replaces the BE-47 and BE-93 surveys; .BEA began collecting data on these quarterly surveys in 2004.

Because —-

Paperwork Reduction Act
The surveys that would be discontinued by this rule have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act under the following OMB control numbers: 0608-0013 (BE-36 survey), 0608-0015 (BE-47 survey), 0608-0016 (BE-48 survey), 0608-0017 (BE-93 survey), and 0608-0063 (BE-82 survey). OMB approved the quarterly surveys under the following OMB control numbers: 0608-0068 (BE-9 survey); 0608-0067 (BE-25 survey); 0608-0066 (BE-45 survey); and 0608-0065 (BE-85 survey).
List of Subjects in 15 CFR Part 801
International transactions, Economic statistics, Foreign trade, Penalties, Reporting and recordkeeping requirements.

Dated: March 30, 2005.
Rosemary D. Marcuss,
Acting Director, Bureau of Economic Analysis.

I’d have thought requiring companies to file quarterly reports would increase the paperwork, not decrease it.

An example of a licensing organisation, existing solely to accept foreign movie licence fees.

(Without the Stichting entities displayed).

Source: http://fraser.stlouisfed.org/publications/scb/page/10642/2008/download/10642.pdf

And from the official BE-25 FAQ (http://www.bea.gov/international/pdf/be25faq.pdf)

15) We purchased services from a German company, but we sent the payments to a Swiss bank. How should we report this transaction?

Since your transaction was with a German entity, you should report this as a transaction with Germany. Where the money actually goes is irrelevant, even if you were to send your payments to a bank in the U.S. as a matter of convenience.

16) We provide services to a U.S. affiliate of a German company. Is this transaction applicable to the BE-25?

No. Your transaction is with a U.S. affiliate of that German company. This would be considered a domestic transaction and therefore not applicable to the BE-25.

27) My company purchased accounting, auditing, and bookkeeping services from three countries: $2 million from Norway, $1 million from the United Kingdom, and $800 thousand from Venezuela (totaling $3.8 million). How should I report the data?

You have a few options. You could report this data on Schedule B under transaction code 1, accounting, auditing, and bookkeeping, and list the country detail. Because the total purchases of this particular type of service totaled less than $4 million, you have a second option of reporting this data on Schedule B under transaction code 1, accounting, auditing, and bookkeeping services, without the country detail and reporting the total purchases of accounting, auditing, and bookkeeping services on line

32. Finally, you have the option of not reporting these transactions.

In other words if a service affiliate company has lots of collection overheads e.g.: royalty payments then the small amounts under 4 million do not need to be reported. An interesting option if the service company has 200 shareholders due 3.9% royalty on every 100 million license fees.

Interesting is all we can say.

And of course, not one penny of which was payable in taxation by American (or American Affiliate Corporations (Stichting)) corporations to the Australian government.

Government used to be about governing for the benefit of the taxpayers, the constituents, the voters.

The Australian government used to balance the books by the simple mechanism of the purchase or sale of gold.

Australia is a gold rich country and in times of shortage we were still capable of balancing our international accounts by funding additional mining exploration and extraction of the precious mineral.

But then the government was hoodwinked in the seventies into accepting an alternative to the gold standard. And the balance of payments has been getting worse ever since.

Now, on the back of the greenback, our future is no longer ours to determine. Every point the greenback nosedives increases the cost of our standard of living.

The United States is bankrupt. Everyone in the world knows it, except our prime minister, Mr Kevin Rudd. Consequently, to keep up, the government has no choice but to tax every part of our lifestyle.

Interestingly enough, there doesn’t yet appear to be a way of taxing P2P, and that means every time a file is downloaded, no money leaves Australia, making our economy stronger.

Yes, I know you, my disbelieving reader, will immediately retort, Hah! What about GST on DSL connections and my response will be,  You’re quite correct: DSL which is taxed, does enable one form of P2P.

But at least that GST is payable to the Australian Government and not an offshore entity that routes the payment through Stichtings in Austria and the Netherlands designed to ensure that licensing revenue isn’t taxed by Uncle Sam.

http://www.sec.gov/divisions/corpfin/cf-noaction/stichting050704.htm

Be a Patriotic Australian, do your bit for the economy, download a file today and tomorrow spend the money saved on buying an Australian product.

Tom Koltai – p2pnet
[Koltai is an economist in Sydney Australia. He's says he's been online for 26 years, has run several ISPs and, "lobbied governments in four countries to prevent Internet restrictive usage legislation from being enacted". He says he's a strong believer in P2P, "as being a technological requirement to fully exploit the convergence of telephony with computers and remove the last barriers to human communication and interaction".]

April, 2009

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This entry was posted on Saturday, April 4th, 2009 at 9:53 am and is filed under Advertising, P2P. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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