The Theory of Chaos

Saturday, February 09, 2008

Am I going back to work?

Full post behind the jump

Contrary to what the papers keep reporting, the strike is NOT over, even though the media has grown bored with it like they grow bored with wars that aren't fun anymore. However, there is a tentative deal that our board is in favor of, and there will be doubtlessly-contentious meetings on both coasts tonight to go over the deal and air a few arguments on both sides.

For those with a perverse interest in this sort of thing, the summary of the major deal points is
here; and having looked it over, to the best of my limited knowledge, I'm going to agree with what many are saying: that this is a modest victory for our side, but a victory nonetheless.

First, the bad news:
I don't even see the letters "DVD" in there, which means that we gave up trying to stitch up that old wound. That's a heavy pill to swallow, especially for a feature writer like me, but we knew going in that the leadership was ready to trade this if it meant making a big move on the Internet. We had to be ready for this, and DVD revenue is declining while the Internet is growing - didn't anyone notice Steve Jobs' new ultra-thin iMAC doesn't even HAVE a DVD drive? You think he doesn't see the writing on the wall when it comes to downloading content wirelessly? There's a silver lining to this I'll discuss below.

More bad news: We just couldn't manage to kill that free streaming window. While we incrementally improved on what the directors got, and ensured ourselves a percentage share down the road (in the THIRD YEAR OF RE-USE; you know, when the real popularity of a TV show kicks in), those low flat rates for the first two years are still there, and studios will still get to keep every penny of advertising revenue from the first 17 days of a show's life on-line, when most of the viewing takes place. It's obvious that the studios are gambling on ad-supported streaming as THE future of television; because they fought like devils, and gave up a lot of other little morsels, to preserve those 17 days. I have a hunch that they've guessed wrong, but we'll get into that later.

Also: we sacrificed our efforts to unionize reality TV and animation. These are long-time sore spots for our union, and I can only imagine how much more leverage we would have had if we'd been able to shutdown The Apprentice and Project Runway. You thought the primetime schedule had been looking anemic; just try and picture that. But, knowing our leadership, we're not done working this angle, and will resume pressuring the shows on a one-by-one basis. We don't have to wait for three years to make noise on this one.

The final significant problem I see, and this has potential to be incredibly thorny: as in the DGA deal, there's a limbo bar the studios can wriggle under when it comes to original Internet programming. If the budget is under $1,500-per-minute, or $300,000 per program, and the writer(s) is/are not already a Guild member or by some other means a "professional writer", then the Guild has no jurisdiction. No minimums, no pension and health contributions, nada.

I know why the studios want this - in their minds, they're now in direct competition with every teenager who has a youTube page, so they want to be able to put micro-budgeted content out there without always being saddled with Guild minimums. As someone who has thought about making his own short films but wondered if he'd end up being hammered by having to pay SAG minimums out of his own pocket (my pockets ain't that deep), I actually sympathize with this, even though I think the numbers are way too high. Many episodes of basic cable programs are already under $300,000 per episode, and because "uncovered" Internet programming can then be "re-used" on traditional media without any visible guarantee of then having to conform to normal terms, this opens up a huge hole for non-union work on TV. In one sense I applaud it, as it will give a lot of young, non-union writers a way they can get their foot in the door with the studios. The trouble is - once they're in, will the studios try and KEEP them non-union?

What's the nightmare scenario? Let's say I'm a studio that wants to try out a pilot, but isn't sure that it's going to catch on, so I don't want to risk a lot of money. Let's call my Bland Young Adults Navel-Gazing. If I keep the budget under $300,000 and tell everyone in earshot - "I'm producing this for the INTERNETS, by Jimbo! The Highway of Tomorrow!", then I can hire a non-union writing staff, work them 80-hour weeks, pay diddledy-squat in benefits, and keep 100% of the ad revenue. And then, a few months later, I can tell everyone in earshot "Why, America LOVES this Bland Young Adults Navel-Gazing business! If only I had another platform, something like a major TV network, to show it on. Wait! I DO!" And then I can just port the show over to my Network, treat it like a new show for the non-Internet-savvy crowd, AND NEVER SHARE A RED CENT WITH ANYONE WHO WORKED ON IT.

I would love to have someone explain to me that it couldn't possibly work that way, but I'm not seeing it.

There are two small comforts here: 1) if the actual budget ever exceeds $300,000 sometime during production/post-production, the Guild's Agreement immediately applies retroactively. A lot of companies are going to squeeze right up to that line, and a lot are going to tumble over it early on. 2) By cutting themselves off from not just Guild talent, but any professional writer (including produced playwrights and published novelists), they will only be getting to play in the shallow end of the talent pool, and every time they find a promising artist there, we'll know about it and be working to put the Union stamp on them. And they'll want it, too, because they'll want the benefits and percentages they get working under our Agreement.

Still, things could be a little Wild West out here for awhile. But that's the effect the Web has.

Now, you're saying - God, this sounds WRETCHED, Nick! Why do you have anything like the cautious optimism you're projecting? First, a general note about strikes:

Strikes are negotiations that harness the emotional volume of a mass organism of pissed-off laborers. Remember that: even with all the signs and chants and invective, it is ALWAYS a negotiation. And in negotiation, no side ever gets everything they ask for, unless you're President Bush beating Congressional Democrats with a rolled-up copy of the Constitution (it's what he thinks it's for. That, and cleaning up BBQ-sauce stains.) So, if you're negotiating for labor, there's no way you can tell 10,000-plus people "This is what we think we can get, but they'll never just agree, so THIS is what we're going to demand, in the hopes that after it's chipped away, we'll be back at what we considered acceptable before. SHHHHHH! Don't tell anyone! It's a super best-friend pinky-swear secret!"

The goal of any negotiation is to trick the other side into revealing the minimum they'll accept, and then bleed them from THAT. So, you give your membership a list. Everything on it seems reasonable, everything on it is certainly deserved. And you say: "We're going in there to GET THIS LIST!" And we go "Huzzah!" and the strike begins.

Pissing off your membership by coming back with less than that initial list is not a bug in this process, it's a feature. Intellectually, I knew this. I also knew that my role in this strike was to say that everything on our list of demands is reasonable, and deserved, and we should get nothing less, and we stand with our leadership to make that happen.

So, that said, here's the good news, and there is quite a bit:

Distributors' gross, distributor's gross, distributor's gross. When I saw those words pop up in the DGA deal, I knew there was light at the end of the tunnel. Hollywood accounting is a finely-honed art of pretending nothing ever makes money around here, as a way of avoiding having to share profits. Don't believe me? Hollywood accountants claim Forrest Gump is still in the red* (*not a joke). Distributor's gross is our protection against that; it means that our share is calculated from all the money that flows in, before any of it gets diverted to other profit participants or cross-collateralized. We were never able to get this on home video or DVD. We've got it for the Internet, and the impact of that can't be undersold.

As for what concerns me most directly, on the feature side of things, Internet rentals and purchases of feature films have a formula that represents a HUGE improvement over home video/DVD. We're set for 1.2% for rentals and ad-supported streaming, and 0.36% for direct sales on the first 50,000, jumping to 0.65% for all sales afterwards. Now those numbers aren't sterling, and they are far short of the traditional 2.5% television re-use formula, but my rough math suggests that this represents a quadrupling of our share compared to home video/DVD. As a feature writer, this deal does a lot to cover my future.

Now remember how I said that all was not dire for TV writers, and that 17-day free window wasn't necessarily the ruin of everything? Here's my theory: at our Strike TV seminar, an expert in web marketing showed us a simple slide depicting the vast disparity in where advertising dollars are being spent compared to where consumer eyeballs are at these days. As I recall, it was something like only 8% of advertising dollars are presently devoted to the web, where Americans in the prime demographics are now spending as much of 34% of their leisure time there.

Advertisers look at that number and think - we should be putting lots more advertising on the web! I look at it and think - The reason people are flocking to the Internet is that they are sick of goddamn advertising.

We've got DVRs now to skip commercials. We wait for TV shows to come on DVD so we can watch them on our own schedule without interruption. We are becoming more active, empowered viewers, and TV has responded by giving us more ambitious serialized stories like in 24 and Heroes. If you have a choice to watch a show, streaming, in five minute chunks with commercials, or to pay a small fee and watch the full-episode at the touch of one button with no buffer lag and no ads, I think the studios are going to be very surprised how many people start choosing to pay rather than continue playing the Hostage Eyeballs game they've been running for decades. Remember how they kept predicting the doom of satellite radio, because no one would pay for commercial-free good music when we could get repetitive garbage with lots of commercials for free? There's signs of revolt brewing in the American consumer, we want to re-negotiate this deal where watching obnoxious ads is how we pay for our entertainment.

And the formulas for TV rental and purchase on-line? They're the same as the feature writers' shares. They actually get a better formula for sell-through after 100,000 purchases. I think that's going to be worth more than a lot of writers are imagining right now.

Maybe that's pie-eyed of me. There's a lot to grumble over in this deal, and I'm sure the grumbling will reach pretty high-volume tonight. To be honest, I'm not sure yet how I would vote on this deal, because I'm not educated enough to understand all the nuances and I want the more-educated people to weigh in.

But what no one can deny is - it's a substantial deal, and we would not have anything near this if we hadn't gone on strike.

I'll let myself smile about that for awhile.


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