Strike Resolved ... What It Means

A tentative deal between writers and producers was reached on Saturday; work in Hollywood could resume as soon as Wednesday. The big win for the Writer's Guild of America was securing a percentage of revenues when shows and movies are delivered online (rather than receiving a fixed fee.)

Cynthia Littleton of Variety has some thoughtful analysis of what the WGA strike meant to TV and screenwriters, in economic terms. She writes:

For the WGA, it was all about setting precedent and cementing the idea that scribes deserve to be paid for Internet exploitation of their work. More specifically, they wanted a deal that paid them a percentage of distributor's gross, on the principle that "when you get paid, we get paid."

But the cost of achieving that principle through a strike has been considerable -- particularly for the busiest and most successful WGA members with the most to lose. Meanwhile, the money to be made through the hard-fought new-media residuals is not exactly eye-popping.

A TV writer, for example, will earn about $1,400-$1,600 a year for each streamed episode on which he is the credited writer -- while some showrunners may have lost as much as six figures from unproduced episodes. Screenwriters will probably earn less from this new income source, as Web streaming of movies is not nearly as ubiquitous as streaming of TV programs.

The Wall Street Journal says:

Whether the advances the WGA made on winning new-media income will ever be worth anything remains to be seen. Some of the producers feel they have made a considerable concession in agreeing to pay the writers a percentage rather than a flat fee. But even the studios have little idea of what impact the Internet will have on the industry by the time the next negotiation comes around in 2011.

"There are important issues that remain unresolved and there are more discussions to be had over the next contract," said David Young, the WGA's West Coast executive director.

Reaching an accord with the Screen Actors Guild is next on the to-do list, according to the New York Times.

Three Great Reads: Andreessen, Hirshland, Goldstein

If you haven't yet read Marc Andreessen's post, 'Rebuilding Hollywood in Silicon Valley's Image, I recommend it. (Andreessen is the serial entrepreneur who helped start Netscape, Ning, and Opsware.) Try to filter out some of the Silicon Valley "we know the future best" rhetoric.

The one place where I think Andreessen is wrong, at least about today's world, is in the willingness of venture capitalists to invest in new content ventures. What we've seen so far are investments in sites that are trying to aggregate lots of content, or build communities, like FunnyOrDie.com, JibJab Media, and Heavy.com. Not really in people creating individual series, feature films, or docs. Many VCs are still scared at having to put money behind a creative group and hope for a hit.

Mike Hirshland, a VC with Polaris Venture Partners (an investor in JibJab and Heavy) has two really great posts on that topic, titled Investing in Digital Content: The Problem with the 'Hits' Model and Investing in Digital Content: When it Actually Does Make Sense. Hirshland suggests that things may be changing, in terms of VC funders and digital content:

While I certainly agree that most content plays are a bad fit for VC investment because they require investing alot of capital in the risky proposition of generating a hit, I think our panel’s preoccupation with the “hits” aspect of traditional content led it to miss an important point: the emergence of the digital [platform] is changing the rules and allowing some content business models to fit within the venture model."

Hirshland was referring to a panel at the recent NewTeeVee conference in San Francisco.

(Another worthy read: Patrick Goldstein on the need for screenwriters to be more entrepreneurial.)

`Why are striking writers so intent on getting a cut of Internet profits?'

That's the question LA Times writer Joseph Menn asks in today's paper. The answer is that digital media revenues are poised for explosive growth ... and the Internet-connected TV in the living room could mean that writers don't earn as much as they once did for TV and cable broadcasts...and consumers may not spend as much on DVD purchases and rentals.

From the story:

"The real winners from the writers holding out are the people in five or seven years," said analyst Laura Martin of Soleil/Media Metrics.

Exactly how entertainment will be delivered in the future is a matter of speculation. "In 10 years, there will be a monitor on the wall in the family room, and it will be connected to a box -- maybe an Xbox, maybe something else -- and I'm going to watch [content] on demand," said Richard Wolpert, an L.A. investor and former chief of strategy at RealNetworks Inc. "That's not going to be delivered over cable, it's going to come over Internet protocol."

Bypassing broadcast and cable delivery could wipe out a big chunk of residuals that writers now collect when their material is rerun. Wolpert said that explains why the writers are so intent on staking a claim to all new modes of transport into the home.

Will Writers Guild Strike Help Online Content Sites?

The Wall Street Journal says that sites like Funnyordie.com, MyDamnChannel.com, Break.com, and 60Frames.com may be able to work with Writers Guild members during the strike. Journo Sarah McBride wonders if this strike could help digital media in the same way the 1980s strike helped cable TV.

From the piece:

The companies may have trouble recruiting Writers Guild of America members, largely because of confusion over what writers may and may not do while on strike. Some writers believe strike rules preclude them from writing for anybody, even if it isn't studio content. But a spokesman for the guild said the rules don't prohibit members from writing for new media for companies that haven't signed agreements with the guild. "We encourage members, however, to consider trying to cover their new-media services by having the employer sign a made-for-new-media agreement," the spokesman said, "and we will continue signing such agreements even during [a strike]."

Online video companies are hungry for more professional material than what typically arrives in over-the-transom videos. Looking ahead a few years, the future of online video could lie more in series of clips, much like episodes of television shows, rather than one-off clips. "Advertisers like buying episodic things because it's predictable," says [CEO Keith] Richman of Break, which is aimed at men ages 18 to 35.

...A number of sites stress their association with Hollywood bigwigs. Funnyordie.com, created by actor Will Ferrell and writer-director Adam McKay, is already benefiting from the labor action, with several new skits spoofing the strike. Through their publicist, Messrs. Ferrell and McKay declined to comment on how the strike affects traffic or material on their site.