How To Break The Hollywood Writer's Strike—The 1.5 Percent Solution

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strike1.jpgIt may be hard to sympathize with the TV and movie writers on strike. As the New York Times describes it, “instead of hard hats and work boots, the people on the pickets had arty glasses and fancy scarves.” But there are some serious issues at stake in this strike, particularly how the people who make TV shows will be compensated for the use of that material online. This actually is important because if Hollywood gets it right, it could set a precedent for all Web video.

Currently, the Writer’s Guild of America wants a flat 2.5 percent of all gross revenues (as defined by Hollywood accounting) for video shown on the Web, over mobile networks, or any future unspecified digital delivery networks. The producers want to keep the current rules, which give writers nothing for ad-supported video streams and 1.2 to 2.5 percent for videos that consumers actually pay for (whether downloads or streams). The producers are hiding behind the fact that the business model for Web video is still unknown in order to get out of paying the writers much of anything.

But if one thing is becoming clear it is that ad-supported video could be a bigger opportunity than paid downloads (Amazon, iTunes, and Netflix notwithstanding). There is nothing stopping the studios from negotiating to give the writers a percentage of future revenues, even if they are difficult to estimate. If no digital revenues are generated, then the studios won’t have to pay out anything. But if the Hollywood bosses figure out how to make a killing on the Web, then the writers (and actors, directors, and other contributors) should get a small cut.

Jay Adelson, the CEO of Digg and chairman of Web video production house Revsion3 (producer of Diggnation and the GigaOm Show) agrees:

I’m a big believer that those who make the content should be the primary
ones who benefit from it, particularly in this new, dis-intermediated
world the Internet has brought us.

Considering the cost of distribution has dropped for digital streams and
downloads, it should mean greater margins for the studios who control
the content. Therefore, I don’t think its unreasonable to expect some
greater recognition for the content creator.

How much recognition? The Writer’s Guild is asking for 2.5 percent. That is a starting point for negotiations. The studios should come back and offer 1 percent and they can meet somewhere in the middle—say, 1.5 percent. And they should treat streams no differently than paid downloads. It should be 1.5 percent of gross revenues, however they are made. Of course, those traditional writers will be competing with far nimbler teams of creative professionals in the Web video world. Ultimately, they need to be more worried about competing with the economics of five or ten people (writers, cast, crew, editors, and directors) putting out regular video fare, compared to 50 or 500 people. But they should hold their ground in these negotiations so that they can at least get a taste of those Web residuals down the line—maybe enough for them to jump over to the Web full-time and cut out the Hollywood studios altogether.

Okay, now that we’ve got that settled, can we get back to watching some TV?

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