Movie studios get a percentage of ticket sales. How do they know that cinemas, especially small independent ones, are reporting their ticket sales correctly? Couldn’t a cinema just claim that a screening had 20 paying viewers when in reality they sold 300 and keep the entire extra revenue for themselves? Or do cinemas have to pay per screening regardless of how many people are in the cinema?
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Ticket sales are also part of business earnings. If they underreport earnings, that is tax fraud. It’s not just royalties they’re misreporting there. Huge discrepancies between profits and royalties would be obvious.
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