by Deborah Hrbek

In the early hours of November 5, 2007, the 12,000+ members of the writers’ union, the Writers Guild of America (WGA), on both the east and west coasts, went on strike after the film and TV writers’ Minimum Basic Agreement (MBA) expired.

The strike is over three major issues:

1.      Writers’ residuals from DVD and home video sales.

2.      Writers’ residuals from “new media” revenue.

3.      Jurisdiction over made-for-new-media content.

These are interesting times in the entertainment industry, as the owners of the old media - network TV and Hollywood film studios -- grapple with the challenges of innovative media platforms, such as the Internet and mobile phones.  Can the old formulas for revenue-sharing fairly be applied in the digital age?

DVD/HOME VIDEO REVENUES:

First, let's put the debate into context.  Residuals are a critical component of a writer’s income stream.  The writers get paid a fee when they produce the written work, plus they get a percentage of the “back-end,” namely the revenues from TV reruns and other repeat uses of the program or film.  When the last agreement was negotiated, the writers under-estimated the potential revenue from DVD and home video residuals.  The agreement gives the writers approximately 5 cents on the dollar for every DVD/home video sold.  As the DVD/home video market has exploded, the writers have had to kick themselves for giving away so much of the DVD residual pie.  The Writers Guild was initially asking for the DVD/home video residuals to be doubled.  The writers withdrew this demand in a last ditch effort to avert a strike, asking instead only for increased residuals on new media income.  The studios held their ground and the strike action was called.  

NEW MEDIA RESIDUALS:

The studios are suggesting that the DVD/home video formula – 5 cents in the dollar per unit -- should also apply to residuals with respect to digital revenue streams.  The writers, who believe they were short-changed on the DVD/home video revenue, do not want to compound the error by permitting the DVD  residuals formula to become the precedent for revenue-sharing in all new media.  The studios are saying, it’s early days yet, we have no idea how large a piece of the pie the digital income streams are going to become.  The problem with that argument is, even though we now know the DVD revenue has become a substantial hunk of the pie, the studios do not want to share any more of it with the writers.  Therefore, the writers feel they have to lock into a good deal for digital media revenues now, or forever hold their peace.

BRINGING NEW MEDIA CONTENT UNDER WGA JURISDICTION:

Currently it seems that written work prepared for non-traditional media only is not covered by the writers’ union contract.  The Writers Guild wants to bring these platforms in under its umbrella, so that new media writers can have the same rights and protections afforded to writers in the more traditional media outlets. 

NEED TO SETTLE OR EVERYONE LOSES:

It remains to be seen whether the strike becomes an opportunity for independent new media platforms to flourish in the absence of big studio competition.   There are many other sources of entertainment now than there were during the last writers' strike almost 20 years ago.  If audiences significantly change their viewing habits, the strike could be a lose-lose situation for the major power houses on both sides of the negotiations.