Prelude to Axanar/Axanar Productions

Fact Check

Peters Wades Into Salary, Profit Debate

Responds to Growing Criticism in Axanar’s Kickstarter Forum

Alec Peters

By Carlos Pedraza

Starting the week of October 3, 2016, producer Alec Peters moved to deal with increasing criticism from Axanar’s Kickstarter backers concerned about the lack of progress on the promised film and Peters having paid himself a full-time salary using donors’ money.

Peters Paid Himself Salary

One backer, David Lein, challenged Peters’ salary:

Just wow. No one was making a profit yet you paid yourself a salary of $38,000, plus other expenses.1)

True or False?

TRUE Peters’ Salary Lein is correct. Axanar’s own Annual Report documents Peters paid himself a $38,166.57 salary through July 2015 (no financial information since then has been released by Axanar), plus another $3,099 for his actors’ union dues.2)

Additionally, in CBS and Paramount’s court filing regarding the defense Motion to Compel Discovery, the studios point to Axanar’s own audit of its finances to allege Axanar “have spent tens of thousands of dollars, raised from Star Trek fans, on personal expenses and [producers’] salaries,” including travel, tires, car insurance, and gas.”3)

Paying it Back

Peters justified paying himself more than $41,000 in salary and union fees this way:

FACT CHECK is an AxaMonitor series examining claims made with regard to the Axanar case, chiefly Alec Peters’ blog posts, interviews and public announcements. Read the series »

Hey David, I paid back 100% of that salary and have put almost $150,000 of my own money in this project. What else you got? And besides David, I have worked full time on this production for 2 1/2 years. I love that in your world people miraculously donate all their time for no pay working full time.4)

Lein did not appear to be convinced by Peters’ justification for his two and a half years of full-time work:

Two and a half years is a drop in the bucket compared to some projects I have seen. As for working for free, that’s the nature of fan films, be it Star Trek, Doctor Who or Star Wars. Nobody makes money off it and everybody … shares the load. They do it for free because it is their passion. It doesn’t matter that you paid your salary back. What matters is you paid yourself a salary in the first place. In my mind it changed this project from an ambitious fan film, to for-profit fan film and I feel that crossed the line.5)

True or False?

UNKNOWN Paid Back Salary. Peters’ claim he paid back the salary he paid himself was completely unsubstantiated. Without his release of Axanar's audit turned over to the plaintiffs in the lawsuit, there was no way to confirm whether such a payment occurred, how much it totaled nor whether it included money he paid himself since July 2015.

Working Full Time

Peters justified paying himself because he worked full time on his project. “Charities,” he wrote, “pay salaries to their full-time employees.”6)

True or False?

MISLEADING Full-Time Work. Peters justified his salary because he worked full time on his project. However, fan films aren’t supposed to be a fan’s actual job; working full-time is not an expectation of fan productions, which by their nature are not supposed to be someone’s profession, otherwise obviating a project’s status as fan-made. Peters’ choice to devote himself full time to Axanar doesn’t automatically entitle him to draw a salary, particularly since no other known fan production uses its crowdfunding this way.

Axanar's 'Non Profit' Status

Lein questioned the premise of Peters’ claim: “Last time I checked Axanar was a fan film not a charity.”7)

ACCOUNTING FOR Axanar’s finances. An audit of the production’s finances became part of the copyright infringement case against Alec Peters.

That led to three successive posts by Peters:

David, the point is you claimed salaries were profit. They are not by any IRS definition.

My point was non-profits pay salaries. And David, just because a project took 7 years does not mean the person worked full time. When a person works full time, it is unreasonable to expect that they work for free. And since Star Trek New Voyages, Star Trek Continues and Star Trek Renegades all paid people, please don’t tell me that a fan film means you don’t pay people.

And Fan Films are generally, by definition, “not-for profit” whether or not they are actual 501(c)3 entities. There is no “profit” from Axanar.8)

True or False?

FALSE It’s About Profit Peters has used the “IRS definition” of profit as justification for why Axanar’s revenue-generating activities should not count as “making money” from its use of Star Trek’s intellectual property. AxaMonitor has already debunked this notion by:

  • Documenting Axanar Productions’ status as a for-profit corporation in the state of California.
  • Demonstrating Peters’ definition of the term ‘profit’ isn’t relevant to the direct financial benefit he is alleged to have gained from copyright infringement.

This was further supported by federal Judge R. Gary Klausner in dismissing Axanar’s motion to have the lawsuit dismissed. He ruled the idea of profit irrelevant to the analysis of copyright infringement in which Peters gained direct financial benefit from Axanar:

Although it is unclear whether Defendants stand to earn a profit from the Axanar Works, realizing a profit is irrelevant to this analysis. The Court can easily infer that by raising $1 million to produce the Axanar Works and disseminating the Axanar Works on Youtube.com, the allegedly infringing material “acts as a ‘draw’ for customers” to watch Defendants’ films.9)

PARTLY TRUE/MISLEADING Other Fan Films Paid People While it is true that other fan productions have paid some actors and tradespeople, by and large such films are volunteer affairs. Moreover, no fan production has documented salaries for the producers — the people who run the production — other than Axanar.

FAN WORKS AND MONEY Learn more about the varying schools of thoughts within fandom over fans’ rights to create work based on others’ copyrighted material, and the role money plays in calculating fair use, in the Wikipedia article, Fan_labor.

MISLEADING Non-Profit Fan Films Peters’ assertion that fan films by definition are not for profit is not based on any clear definition of what a fan film is; in fact, fans have divided into conflicting schools of thoughts regarding revenue from fan works.10)

In Axanar’s case, the idea that a fan production must necessarily be a non-profit is contradicted by its alleged activities designed to create income, some of which involve the manufacture and sale of products based on copyrighted works. In other words, fan films are not for profit until, as asserted by plaintiffs in the Axanar case, they are:

Defendant Peters and his colleagues expressly stated that they were not creating a “fan film.” This case is about a commercial enterprise designed to take money from Star Trek fans, which funds were used to pay Defendant Peters along with his friends and colleagues, to create, as Defendants describe it, “an independent Star Trek film.”11)

Keywords

2)
Axanar Annual Report 2015, Revised, p. 10.
3) , 11)
“Discovery Motion, Joint Stipulation Regarding Defendants’ Motion to Compel Discovery from Plaintiffs,” p. 4, 9/29/16.
9)
Civil Minutes, Judge R. Gary Klausner’s Order to Deny Motion to Dismiss, p. 5 §B(2), “Vicarious Infringement: Direct Financial Benefit Allegations Made on ‘Information and Belief,'” 5/9/16.