2008 Woodie Awards
Writers Guild Strike Hurts Everyone Involved
Alex Schaefer
Issue date: 1/31/08 Section: Commentary
The Hollywood writers strike has filled the news lately, with the main buzzword being residuals. When a member of the Writer's Guild of America (WGA) sells a script, both parties agree that it is worth a considerable sum, but to facilitate the inception of the project they agree on an initial payment that is much less than the actual valuation of the script. To make up the difference, the studio pays the writer a residual, or a percentage of the gross sales, whenever that movie is played or a TV show is aired. It's pretty simple. It's the equivalent of an author getting paid each time a copy of his novel is sold.
The main issue of contention is that the writers are not contractually compensated for any sales or profits earned by the studios through electronic business. There are two ways that studios earn money in this manner. The first is electronic "sell-through," the term given to services such as iTunes, or Amazon.com where users pay to download a show or movie and then save it onto their computer's hard drive. The other method is called streaming. This is when a video is played on a Web site or media player, but is not saved to the computer. Companies earn their cut here through ad revenue. It would seem reasonable that the writers, who helped create these products, would be compensated, just like they would be if a video was rented or sold in a store.
This seems fair enough, but the AMPTP (Alliance of Motion Picture and Television Producers) has stated that they do not turn much of a profit from their internet sales. They say it is used as more of an advertising platform to get people to watch their shows on television and go out and see their movies. The writers disagree, but moreover, they don't want to see history repeat itself.
The origins of the current strike stem from the agreement reached at the conclusion of the previous writer's strike, in 1988. That one lasted a little over 21 weeks and the main point of contention was the burgeoning home video market. It was a relatively new medium in terms of mass distribution of films and at the time the major studios were skeptical, at least publicly, about its true revenue potential. They ultimately negotiated a deal that paid the writers 0.3 percent of the first million reportable gross sales with that number increasing to 0.36 percent as sales grew. At the time, VHS tapes were expensive to produce and companies only realized 20 percent of the gross sales as profit. As the industry transitioned to DVDs, the studios began living out a real life version of the scene from the movie "Blow" where Johnny Depp sits in a room completely surrounded by cash attempting to tally the stacks. Because DVDs typically only cost about 60 cents to make, they are sold for massive profits and have become the main stream of cash flow for the industry.
The main issue of contention is that the writers are not contractually compensated for any sales or profits earned by the studios through electronic business. There are two ways that studios earn money in this manner. The first is electronic "sell-through," the term given to services such as iTunes, or Amazon.com where users pay to download a show or movie and then save it onto their computer's hard drive. The other method is called streaming. This is when a video is played on a Web site or media player, but is not saved to the computer. Companies earn their cut here through ad revenue. It would seem reasonable that the writers, who helped create these products, would be compensated, just like they would be if a video was rented or sold in a store.
This seems fair enough, but the AMPTP (Alliance of Motion Picture and Television Producers) has stated that they do not turn much of a profit from their internet sales. They say it is used as more of an advertising platform to get people to watch their shows on television and go out and see their movies. The writers disagree, but moreover, they don't want to see history repeat itself.
The origins of the current strike stem from the agreement reached at the conclusion of the previous writer's strike, in 1988. That one lasted a little over 21 weeks and the main point of contention was the burgeoning home video market. It was a relatively new medium in terms of mass distribution of films and at the time the major studios were skeptical, at least publicly, about its true revenue potential. They ultimately negotiated a deal that paid the writers 0.3 percent of the first million reportable gross sales with that number increasing to 0.36 percent as sales grew. At the time, VHS tapes were expensive to produce and companies only realized 20 percent of the gross sales as profit. As the industry transitioned to DVDs, the studios began living out a real life version of the scene from the movie "Blow" where Johnny Depp sits in a room completely surrounded by cash attempting to tally the stacks. Because DVDs typically only cost about 60 cents to make, they are sold for massive profits and have become the main stream of cash flow for the industry.
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