WGA Strike Primer: MovieStudio.com

Wandering the Consumer Electronics Show, it's impossible not to see it in perspective with current negotiations. I've covered CES for 14 years, and once-unimaginable technology is already commonplace. DVDs, digital cameras, Tivo, recently just ideas, and now as normal as Spaghetti-O's. New technology comes very fast.

And, yes, that odd Internet thing. Years ago, giants GE and Sears owned GEnie and Prodigy, services that accessed this "Worldwide Web." Some goofy, little start-up, America OnLine, was all in text. David crushed Goliath. Then bought Time-Warner. Time Magazine named Amazon.com's Jeff Bezos its Man of the Year for changing how the world does business. Nine years ago.

That Internet thing. It's the future, you know. Honest.

Whatever many billions of dollars the Internet already holds, however, (and swimming the ocean of CES, it's profoundly massive) it's nothing compared to how it will soon truly explode. And thanks to the AMPTP corporations leaving the table and accelerating the issue, it will happen sooner than the AMPTP thinks. And it will happen with or without them. Indeed, as the AMPTP cavalierly now finishes negotiating with a guild not on strike, it may well happen without them even being aware.

And then there's the elephant in the room to seal the deal. More on that in a moment.

An early proponent of all this is Patrick Goldstein, whose L.A. Times column, "The Big Picture," has repeatedly addressed the Internet's entrepreneurial opportunities for WGA writers. Goldstein, a longtime friend, though I won't hold that against him, has been a yammerer about technology since he regularly took record companies to task for not embracing media changes. That hasn't worked out all too well for them.

There's nothing new-fangled about the Internets. People stream TV series online, complete with ads. They pay to download movies. They watch commercial webisodes. So, the question isn't "if." It's "when and how?" Microsoft's new Mediaroom blends TV-Internet-PVR-downloading seamlessly. Samsung's Info Link and Sharp's Aquos Net build integration directly into their TV sets for sale this coming year. And just two weeks ago, Netflix announced a deal to allow its Internet-based "Watch Instantly" movies to be viewed directly on LG televisions. Apple announced its own similar program with iTunes last week.

Make no mistake, it's happening. The Guild is already talking to huge Internet companies. (And "huge" as in huge.) Two weeks ago, the ball already started rolling as the WGA announced a deal with the online studio MRC - a company backed by heavyweights including AT&T and Goldman, Sachs. Others are right on their heels. All these companies understand the Internet - it's their field. They ache to provide new content. How could they not?

Just consider the Internet companies for whom the marriage of Internet and movie/TV content would be a match from heaven. Microsoft, Google, Apple, Amazon, Netflix, Yahoo, Audible, eBay, YouTube. Why not Samsung, too? Why not Sharp, Panasonic, JVC? Companies used to sponsor shows regularly - why not again, but on their websites to bring traffic and promotion?

How far do you have to stretch to consider this? Last week, a member of Guild leadership mentioned that he expected an announcement soon of a deal with Yahoo. If so, that's massive. Because it's hard to imagine its equally-massive competitors wanting to be left far behind.

And the business plan for such companies doesn't seem terribly difficult to figure.

A modest $8 million movie has few additional costs, with no prints and inexpensive Internet advertising. Charging a mere $5 means that if only 1.6 million people around the entire world access your movie, you've broken even. No risky "opening weekend." It's online. Forever. A slate of five movies - that's a paltry $40 million investment. That's chump change for Microsft-Google-Amazon-JVC. And you can still release a DVD. (Note: It's a safe bet that writers will get more than 4 cents.)

And the same business model holds for "TV." Original web series are already playing. They're small now, but once you have working plans between the WGA and these New Media corporations, real money is at play - and that gets major talent which attracts viewers.

I'm not saying it's this easy. I'm saying - it's going to happen.

(And is already. Witness the recent L.A. Times front page story, "Striking Writers in Talks to Launch Web Start-ups." Filmmaker Doug Limon - "The Bourne Identity" - just signed a WGA deal for his substantial Jackson Bites company to develop programming content for New Media.)

One other bonus: Hollywood ageism, sexism, racism...say goodbye. These are businessmen, they want gravitas, credentials. Serious business partnerships that make money. A real New Economic Partnership.

And then the biggest bonus of all. The elephant in the room.

Copyright.

The greatest bane to writers is that they don't control copyright of their work. The corporations are legally the "author." Playwrights own their copyright. Novelists own their copyright. Not screenwriters, not TV writers. But with the Internet, the business and legal dynamic changes.

The important point of New Media for striking writers - since every project starts with that blank page - is that it will be writers who take the project lead in this new dynamic. Gross participation, a fantasy dream in Hollywood for writers, is already an actuality in New Media. With the Internet, it goes even further: writers will be able to own their copyright, protect their work, control their future.

If you don't think this will drive writers to the Internet, you have your brain switched to the "Off" position. And it will dynamite the Internet wide open.

And because the AMPTP corporations twice walked away from the table, they may find themselves left behind. It's a critical risk for them. If the new "networks" and "studios" are Microsoft, Google, Amazon, Apple, Netflix and virtually anyone, then you don't need Old Hollywood. You don't need to own a studio lot, you don't need a distribution network, you don't need an FCC frequency. You need money and a website.

You don't even need a website. Release your movie or even original series direct-to-DVD. The tech landscape is wide open. Gimp.TV is a sponsored "network" already.

"Last year everyone talked about 'someday,' as in, 'Someday, when everyone watches video on the Internet . . . ,' " media analyst James McQuivey of Forrester Research told the Los Angeles Times. "That 'someday' language has gone...Change is here. It's upon us."

How little do the AMPTP corporations not get it? Their communications director Jesse Hiestand recently wrote to the L.A. Times, responding to a column by Mr. Goldstein:

The writers might want to start "digging for themselves," as Goldstein suggests, but if either side tries digging completely on its own, they'll find not the gold of which Goldstein writes but rather a grave of their own making.

That's the same sound vaudeville theater owners made when their talent left to be in those silly "talking picture shows."

Digging for gold?? No one has to dig. Microsoft just paid Viacom alone $500 million for a single deal. NBC announced it expects to make $1 billion in digital revenue this year. Sharp is spending $4 billion to build just one factory to make those new integrated-LCDs. And the metadata income these media companies earn from selling collected data on their New Media users (it's built into Blu-Ray) trumps this all. Dig??!! Guy, it's raining.

It doesn't enter into AMPTP heads (seemingly buried in the sand) that writers joining forces with Microsoft-Google-Amazon-Netflix is as far from the concept of going "on its own" as could be. With friends like that, solitude is over-crowded. Indeed, we have reached the point now that whatever the AMPTP does - whatever the DGA membership does - whatever even the Writers Guild itself does...the landscape has already changed.

After the Writers Guild signs agreements with those really huge Internet companies, movies and web series will start appearing online. The studios and networks can join in the future - or buy a ticket. Credit cards accepted. Don't forget your password.

Read more about the strike on the Huffington Post's writers' strike page.

Comments

[thetvdecider]

robert, you're right. it will happen. but as of right now, and the next couple years, the nets aren't making squat from streaming shows. if the nets or studios are printing money 3 years from now, lead your people out on the streets again and claim your proper share. but right now you're looking for money that simply doesn't exist. the dga knew it and took a moderate position. they stuck their toes in the digital water and will be in a position to revisit the situation when their new deal is up.

it's also clearly not as easy at you make it out to be for the internet companies to distribute original content. remember yahoo and lloyd braun a couple years ago brazenly laying out their strategy to take on hollywood with their deep pocketbooks financing original web content? how'd that work out? lloyd is gone and yahoo is laying off thousands.

granted, times have changed, technology has moved forward, and the new media companies have even more clout. but if popping out hit movies and tv shows is as easy as everyone seems to think it is, wouldn't everyone -- including the googles, amazons and netflixes of the world -- be doing it by now?

much as it might hurt to say, the evil companies that produce and distribute tv shows and movies must have some kind of idea what they're doing. you still need them.

[thetvdecider]

robert, you're right. it will happen. but as of right now, and the next couple years, the nets aren't making squat from streaming shows. if the nets or studios are printing money 3 years from now, lead your people out on the streets again and claim your proper share. but right now you're looking for money that simply doesn't exist. the dga knew it and took a moderate position. they stuck their toes in the digital water and will be in a position to revisit the situation when their new deal is up.

it's also clearly not as easy at you make it out to be for the internet companies to distribute original content. remember yahoo and lloyd braun a couple years ago brazenly laying out their strategy to take on hollywood with their deep pocketbooks financing original web content? how'd that work out? lloyd is gone and yahoo is laying off thousands.

granted, times have changed, technology has moved forward, and the new media companies have even more clout. but if popping out hit movies and tv shows is as easy as everyone seems to think it is, wouldn't everyone -- including the googles, amazons and netflixes of the world -- be doing it by now?

much as it might hurt to say, the evil companies that produce and distribute tv shows and movies must have some kind of idea what they're doing. you still need them.

[petegrif]

And what is all this sturm and drang about technology anyway? Why should internet companies have a strategic edge vs traditional media companies?

It's all about the price of an eyeball. Any eyeball.

Media companies display content (doesn't matter what medium, newsprint, radio, tv...) and that content attracts eyeballs. They then rent access to those eyeballs.

So the questions are: how many eyeballs? and which eyeballs?

Because that determines how much you can charge! Some eyeballs are worth more than others. Much more. And it turns out that virtually any eyeballs are valuable to someone who wants to put exactly their product in front of exactly that person's eyes.

So the issue is - how do you know how many eyeballs there are and whose eyeballs they are?

And this is where the internet has a HUGE advantage. In exactly the same way that Amazon is able to construct a personalized page for you by observing your behavior on the site (browsing and buying) when internet TV/rich media become ubiquitous it will be possible to profile virtually everyone in our society.

That means that any marketeer will be able to target ads to his market segment with hithertoo unthinkable accuracy. The per eyeball cost will be significantly higher, but the campaign will overall likely be cheaper and it will be significantly more effective in terms of actions/view.

This internet based, ad optimization is what the internet/new media is all about.

The traditional companies have the content (except for elements like youtube that have been bought by guess who - google) and the tech companies have the optimization. A full on war is inevitable and all artists are caught in the middle of it.

[scottellington]

I have two questions that probably belong in your FAQ.
First, "What can I, an 'ordinary' American, do to end the strike?"
I've stopped doing business as usual with all of the transnational corporations that hired the AMPTP, because I mean to send a message to them in the only language (negative wealth) I'm sure they and their shareholders understand.
The flaw in my chosen mode of communication is the scale of my protest, which leads to Question 2:

Is there a law that prohibits the WGA from calling on consumers to boycott studio product?

[petegrif]

Another point that is worth mentioning is that there is a HUGE difference culturally between N Cal tech companies and S Cal media companies. The N Cal culture is much more supportive of and respectful of the talent. And to be honest the management is much more sophisticated. They have to be because they have had to deal with rapid technological change for a long time. In such an environment you had better be strategically sophisticated and you had better respect the talent.

[dbaileyire]

there is only one teensy problem with your arguement. don't get me wrong I love writers. I think they are generally treated like crap and deserve a hell of a lot more than they get plus all the respect in the world for doing what they do. but novelists create an end product. the novel. screen writers write screenplays they don't make movies. and most screenwriters don't know all that much about creating movies nor should they have to worry about it.

if the writer was a director and producer and sound guy , costume designer , etc etc then maybe that would hold more sway but they arent. writers create the essential piece of the puzzle. the corner stone. but thats not the same thing as making a movie. that requires multiple talents and a lot of money. the corps you listed don't know much about making movies either. they have the money.

[HarleyPeyton]

Wow, I can't win. Richard Goldstein is a cranky Village Voice writer. Okay, he used to be. Patrick Goldstein is the author of the awful LA Times article today. So it's Partrick I'm complaining about. And Patrick who was duly trashed by Nikki Finke just moments ago.

[HarleyPeyton]

Ahh, crud. Post in haste...

I was of course referring to Goldstein's column today. Which read as if it had been dictated by Chris Lehane.

[HarleyPeyton]

Robert,

Thanks for another great column. Oh, and the next time you see your pal Richard Goldstein, tell him the Patric Veronne is Yassir Arafat Joke was a real kneeslapper. Not as funny as the many cranky emailing anti-strike writers he cites (anecdote apparently IS data!). Or the various quotes posted that extoll the virtues of the DGA deal without a shred of actual examination. Of the actual deal.

But still pretty funny.

[InofTouch]

And then the Bubble burst!

[BillSeward]

From United Hollywood. Says it all:

"As an attorney with a lot of experience in publishing law as well as entertainment law (and stints as a law clerk at both the WGA and the DGA), I think it is foolish to settle for a flat residual rate without using the publishing paradigm of it being an advance against future royalties. Better to settle for for a lower advance with Download One applied to the back-end than to let the studios garner to themselves all the money that will flow over the first few days.

I'm reminded of the old joke about putting a marble in a jar for every time you make love during the first year of marriage and taking out a marble every time after that. I've heard you never take out all the marbles and I'm afraid that talent will never get anything close to what the studios hoard during that window they've reserved for themselves. The only way to make up for the loss of residuals from television reruns is to stick to a percentage of revenue from Download One and the fact that the studios are trying to divert that should indicate how much money they expect to make. It will be video tape and DVDs all over again."

[MrsWakely]

It's really important to have someone who covers technology lay this out there in such detail. "Hollywood," with all it's arcane practices, and rules and regulations, and high school hierarchy and various other levels of bullshit, could find itself being bitch-slapped into the new normal. It has a monopoly over NOTHING anymore. When it says to the guilds "jump!" instead of "how high?" it may start hearing "go fuck yourself." And by the way, every single member of the WGA, SAG and the DGA reading this, aren't you DYING to tell them that, so we can all stop pretending we like being held hostage to these assholes?

The equation Mr. Elisberg lays out is simple: Internet need content. Internet pay for content. Hollywood have little control over internet. Hollywood fall down into tar pit on La Brea.

Hollywood can be fair or be dead. Aint that a bitch Jeff Zucker?

[Spikethedog]

BE: "Just consider the Internet companies for whom the marriage of Internet and movie/TV content would be a match from heaven. Microsoft, Google, Apple, Amazon, Netflix, Yahoo, Audible, eBay, YouTube."

I'm sure I'm not reading you right and that you are aware that Google already acquired YouTube for $1.65 Billion in Stock.
This bolsters your argument, by the way, but it sounded like you didn't know it was a fait accomplie. But I'm sure you knew.