Tuesday, November 06, 2007

Is this the right answer?

Everyone in LA is all up in bunches about the writers strike. I have friends closely connected to the industry here--writers, sound techs, grips, talent managers--and I am extremely sympathetic to their plight. I am also concerned for how the effects will trickle down in ways that we can't even yet imagine.

I find that people here are very quick to be sympathetic to the writers. After all, studios are raking in cash hand over fist for all these movies and TV shows, and the writers are only asking for pennies to the dollar in residuals resulting from sales in "new media" (e.g. downloads on iTunes). I've Googled the crap out of this, and am having a hard time finding the exact terms to source, but I've heard it's around $.04 for every $15.

Why so stingy, you stinking studio bastards?

Rich, high-profile writers contend that they're fighting for the little guy, the one who doesn't get a lot of writing gigs, and needs his residual checks to get him through the dry patches. They garner sympathy with movie goers and couch potatoes everywhere, saying that the only reason we're being deprived of our late night talk shows and promising new shows like Journeyman is because of studio greed.

This is all probably true. I think that, ultimately, we the consumers will suffer in entirely different ways.

I'll explain (warning: math ahead!). Let's work with my un-confirmed, yet conservative estimates of $.04 for every $15 per writer. The size of a writing staff will vary between TV and movies considerably, but for the sake of easy math I'm going to discuss TV only, and make an assumption of five writers for an average TV show. Some quick multiplication and the studios are now paying out a total of $.20 per $15 made by that one show, and netting $14.80.

These still seems unreasonably stingy, right?

My question is, what happens when this strike lays groundwork for the directors guild, and then the actors guild? Right now, none of these hard-working artists are seeing dime one from new media, and that should change, right?

The truth is both the directors guild and the actors guild contracts are also coming up soon. Terms reached in this strike WILL lay groundwork for the directors and actors.

If (when) it does, let's see how that adds up. Let's suppose a TV show is working with about 5 different directors, has 10 writers, and has a cast that includes 20 actors. Let's suppose the terms are exactly the same. Now, for every $15 made on iTunes, writers get $.40, directors get $.20, and actors get $.80, yielding a grand total of $1.40 per $15. Now the studios get $13.60. Still, a lot.

These are conservative estimates, mind you, for small shows. Late night comedy teams can be up to 15-20 people strong. The Lost cast is ridonkulously huge. Payouts for these kinds of shows could start to look like $3 - $5 per $15, making the studio net around $12 - $10.

It still doesn't seem like much. My question is, when does it stop?

I ask this question based on my experience at Ticketmaster. Everyone hates Ticketmaster, because of their so-called ridiculous, expensive fees. The truth is that there was a time, when Ticketmaster was first starting, when they were the good guys. They usurped the big bad ticketing company, Ticketron, by making an event's entire inventory available to purchase everywhere at the same time, instead of different record stores having different inventory. For this service, they charged a service fee. It was bundled into the ticket price, and no one was the wiser.

Then Pearl Jam, and the fees were broken out, and everyone got furious. What they didn't know is that all of the people involved in an event-promoting chain, like buildings and promoters, saw that little fee as their own "new media," and they wanted a piece. Ticketmaster said, fine. BUT. For every cut divied up for someone else, they needed to make up that profit elsewhere. And these entitled parties said, Fine. Pass it on to the consumer. We don't care if everyone hates you.

And ever since Ticketmaster's fees started becoming a revenue stream for all these other parties, they've started asking for bigger and bigger cuts, passing along the increase to the consumer every time. There are even buildings and promoters who now think they can provide the same service as Ticketmaster, and collect the whole fee (note: this doesn't mean the fee goes away if Ticketmaster goes away).

Back to the topic at hand. Right now, you can download Ratatouille on iTunes for $12.99. You can get 6 episodes of Reaper Season 1 for $11.94.

Presumably, a cut of this sale goes to iTunes, and a cut goes to studios. Fair. No cut goes to writers, directors, or actors. NOT fair.

I guess my question is, what happens when studios start sharing their new media profits? They'll put the squeeze to iTunes, and renegotiate that contract. Ultimately, however, every party still wants (needs?) to get their share.

And prices go up. Maybe it's $13.99 for Ratatouille and $12.94 for Reaper. Maybe it's more. Most likely, it will be more. All this before anyone really knows for sure what the market will bear.

Look. Even as I'm exploring this, I feel I must state for the record, that I do agree that $0.00 is NOT the right answer. But is squeezing the consumer at the end of the day the right answer either? Ultimately, how much do you want to pay for a movie that takes up space on your hard drive, and plays on a small screen with crappy speakers? Sure, technology will advance to keep up with new media, and mediaphiles and early adopters will upgrade, and spend more money for the convenience. We'll grumble about it--we may even learn to hate iTunes the way we despise Ticketmaster--but we'll do it.

I don't know. I don't know the answer. I think it's generally a good idea to ask questions and look at every side of the issue, but I don't really have a powerful conclusion. I don't want anyone to lose their jobs, I'm not advocating one side or the other. I'm just wondering, will the outcome of this strike kick off a slippery slope of kick-backs, and, if so, where does it end?

And will anyone in this town give a shit when Joe Consumer ends up paying for it?


Tigerpants said...

Dinah, I totally believe that any resolution will be completely passed on to the consumer. The studios will refuse to absorb the costs, or won't be able to, so we'll get stuck. It'd be fantastic to earn what you're worth, and to be paid for the work that you do, but when you make as much as writers, it's tough to feel bad for them. I have stuff I did years ago that still airs every once in a while, and I don't see a dime. AND, I barely made anything when I did those projects in the first place.

Eh, it's a tough call.

Jeff said...

I'm reluctant to comment on this given my relative proximity to the issue and current IP address, but I totally want to. I'll have to wait until later to post my full thoughts except to say this: $15 is an arbitrary and experimental number chosen by Apple and the studios, and 0 divided by anything is 0. I think the real issues is that most people aren't buying their TV shows on iTunes, but rather are using Bittorrent to download shows that have the original advertising edited out. The studios are experimenting and grasping for new, solid revenue models for digital content and aren't finding them yet. Thus, they don't want to promise revenue to anyone when the actual value of a digital TV show may be near 0. It's a sticky issue.

(Full disclosure, we build the technology for the ABC full episode player in my department, and I'm proud of the fact that we're trying to retain an ad supported model for entertainment. More choice is better in my book, and the writers deserve a cut of that revenue, assuming that advertising on the shows can be sold to sponsors.)