Annie Leibovitz and Debt

[jecxz]

Terrible situation!

http://www.nytimes.com/2009/02/24/arts/des...=2&ref=arts

I hope she gets her rights back.

[feppe]

Terrible situation!

http://www.nytimes.com/2009/02/24/arts/des...=2&ref=arts

I hope she gets her rights back.

Thanks for the link, very interesting!

Ms Leibovitz hasn't lost her rights, she has merely used them as collateral.

But if NYT gets it right, it's a very far-reaching contract: if she defaults on her loan, she would lose the rights to all her past and future images. That sounds like a law suit waiting to happen. Not to mention the 18-24% interest rates which are against usury laws in many jurisdictions.

Nevertheless, a very creative way to generate wealth out of art, and potentially a great way for prudent artists and collectors to leverage their works.

[Rob C]

Thanks for the link, very interesting!

Ms Leibovitz hasn't lost her rights, she has merely used them as collateral.

But if NYT gets it right, it's a very far-reaching contract: if she defaults on her loan, she would lose the rights to all her past and future images. That sounds like a law suit waiting to happen. Not to mention the 18-24% interest rates which are against usury laws in many jurisdictions.

Nevertheless, a very creative way to generate wealth out of art, and potentially a great way for prudent artists and collectors to leverage their works.

I wish her well, as I would anybody caught up in financial problems.

But, at the risk of sounding really old-fashioned, what happened to the good old idea of saving up to buy what you want? I know about the fact that you can make all manner of claims against taxation etc. and when I was still working I did indeed employ a firm of accountants to prepare and present my books to the Inland Revenue each year. But, I feel that some advice that I got from such professional sources can be flawed and not always the best for the individual though perhaps accurate enough in a general business sense.

Take cars: I used to buy cash, new, when I had the bread available and something looked interesting enough and within my means. Then, on advice, for two changes of model I bought via hire-purchase and I do not think I would recommend it for anyone running a one-man band in photography. The flaw is that income is simply too unreliable; there are good months and ones where you can contemplate suicide. Yes, at the end of the year or perhaps over a longer period you might be doing well, but is the unrelenting demand to meet a payment such a good thing to have to carry along with all the other baggage of running a business?

That is a situation that strikes me as almost unavoidable for people in the business today. Buying that Nikon F and Hasselblad 500C seemed a bit steep at the time, but it did happen relatively painlessly; how would that pan out with the prices for today´s top-of-the-range equipment, I wonder, how much stress would getting those mega-pìxel backs and the bodies for them generate, not to mention the top Nikons of now? And I do wonder if, in today´s terms, the earnings are as good as they used to be through the mid-60s to the late 80s.

Interesting, though, that the world´s most celebrated photo-celebrity herself needs to borrow...

Rob C

[jecxz]

Rob C,

I'm getting very worried.

I'm finding that I agree with you more and more.

I agreed with all that you said in the Focus Magazine thread, and with what you have said here in this thread too.

Like I said, I'm very worried  

Kind regards,
Derek

[beamon]

I suspect that as this depression grows (yes, I used the "D" word), we will see many more highly leveraged notables coming into the news.  

Though it's nice to be debt free, I still fear what will become of the savings that we are counting on to see us through to our demise. The big difference between 1929 and now is that those few that had cash in 1929-1940 could buy the world with it. Currency, today, through debt and the magic of printing presses, will soon begin the inexorable rapid decline to a level that no one can predict.

[russell a]

Risky business!  I would think that valuing art (especially future art) as collateral would be nearly as tricky as valuing the current toxic batch of derivatives.

[Petrjay]

Let's see if I've got this right: she walks into a high-end pawn shop and borrows !5.5 million dollars to "pay off mortgages and deal with other financial stresses?" Sure sounds like a well thought out solution to me. I guess she can stop worrying now.

Peter J

[alainbriot]

The question is how can she ever repay the loans since the terms are that she gives up her copyright income, which, for a photographer in her situation, are the primary source of income I would estimate?  What other sources of income are left to her?  Contracts for future photographs without copyright income?

[dalethorn]

Or she could adopt the attitude "What's past is past, and the only thing that counts is now (and the future becomes now every second)"

It's more likely her "heirs" that are worried about not having a pile of money to luxuriate in.

If it were me, my highest priorities would be the new camera, printer, and whatever it takes to make the next exhibition.

No matter who "owns" the rights to the material, I'm sure history will clearly regard it as hers.

[Justan]

There are a number of issues brought up by the article. The key issue seems to be about a path some use to leverage large sums of money. Okay. Loan terms are loan terms. If Ms Leibowitz wishes to collateralize her future works, that is a prerogative for the very successful. But the value of future works has to be next to nothing. She’s no kid, and could have a stroke or die today. I think the appeal of this contract is mostly for show but of little substance.

As far as credit goes, it is a tool. As long as it is used responsibly the borrower and the bank know the risks. We all face catastrophe. If we build a life based on the worst expectations, that is about what we get. If we build it based on reasonable expectations and accept the risks, that is normal.

A key difference between 1929 and now is that in 1929 a huge majority of the US population derived their earnings from agriculture and raw materials manufacturing. A minority, but a big one, got their earnings by having a traditional job. A huge reason for the slow recovery after 1929 is that people by the million turned completely away from using machinery or any signs of what we call contemporary culture. As example, people would dig ditches with shovels and picks, even though there were backhoes and front loaders nearby to do it. In short, culture tried to regress. It didn’t work then. Now we have no option. Very few now earn their income from farming.

The key problem we face is the result of irresponsible lending on a huge scale. This has largely caused loans to stop being issued for all but the most credit worthy. This process will not revert to more traditional lending patterns until the mess has been cleaned up.

A lot of people will do anything they can to hang on to what they think they own because selling right now means a substantial loss. Ms Leibowitz is just an example of that. Because she’s successful, and despite the fact that she’s clearly over her head in debt, she’s taking advantage of the tools available.

[feppe]

The question is how can she ever repay the loans since the terms are that she gives up her copyright income, which, for a photographer in her situation, are the primary source of income I would estimate?  What other sources of income are left to her?  Contracts for future photographs without copyright income?

She still retains her copyright. She "merely" used it as collateral. So just like on a normal student loan where parents use the house as collateral, the house can be used for living. Only if she defaults on the loan, does she lose her copyright.

But yeah, if the article is accurate in saying that in case of default she would lose all her copyright on her future works as well, it sounds like Annie Leibovitz didn't read the terms thoroughly, or fully comprehend the implications. Or she was really desperate.

[Rob C]

Rob C,

I'm getting very worried.

I'm finding that I agree with you more and more.

I agreed with all that you said in the Focus Magazine thread, and with what you have said here in this thread too.

Like I said, I'm very worried  

Kind regards,
Derek

Derek, don´t worry; just be pleased that you are right!

Rob C

[Rob C]

Whatever the reason for her doing what she has done, it is still sad that she is in that situation. Come to think of it, she might not have done anything; it might be that she has other, pressing responsibilities of which the public knows nothing, and neither it should.

As I said before, I wish her well.

Rob C

[Rob C]

I suspect that as this depression grows (yes, I used the "D" word), we will see many more highly leveraged notables coming into the news.  

Though it's nice to be debt free, I still fear what will become of the savings that we are counting on to see us through to our demise. The big difference between 1929 and now is that those few that had cash in 1929-1940 could buy the world with it. Currency, today, through debt and the magic of printing presses, will soon begin the inexorable rapid decline to a level that no one can predict.

I have no debts at this time, other than the common, ongoing ones like electricty, telephone and the like, but it is of little comfort, living in Euro-land, when I look at the exchange rate of the pound sterling against the Euro. Just get your head around this set of figures:

26th February 2008...... I Euro = 0.7536 pounds
29th December 2008.... 1 Euro = 0.9785 pounds

I live off what comes to me in pounds. In reality, that means no new set of wheels, no new wonder-Nikon, ever-dearer meals and running costs.

So, yes, you are right, and all through the greed of a select little band of brothers... and people still have the time to worry about political correctness! Amazing.

Rob C

[Chris_T]

I wish her well, as I would anybody caught up in financial problems.

Without any factual info about how she got herself into this situation, I can't say I feel sorry for her.  But if a photog with her kind of success can end up like this, I wonder how many other mere mortal photogs are in dire financial situations. Of course, they won't get any press.

But, at the risk of sounding really old-fashioned, what happened to the good old idea of saving up to buy what you want?

Now, now, according to the US government, the current solution is to spend, not save.  

[Chris_T]

Just get your head around this set of figures:

26th February 2008...... I Euro = 0.7536 pounds
29th December 2008.... 1 Euro = 0.9785 pounds

You are calling the cup half empty. Not too long ago, when the US$ and Euro behaved the same way, many US merchants were thrilled to have the Europeans flocking across the Pond for bargains!

This is how I understand "global economy": at any given time, some parts of the world will profit at the expense of the other parts, and the fat cats everywhere will get even fatter at the expense of the less fortunate.  

I live off what comes to me in pounds. In reality, that means no new set of wheels, no new wonder-Nikon, ever-dearer meals and running costs.

On a serious note, I congratulate you for having your priorities right and your feet firmly on the ground.