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Damon Lindelof, the co-creator and head writer of Lost has this Op-Ed -- "Mourning TV" -- in The New York Times today. Here is the pith: "I am willing to hold firm for considerably longer than three months because this is a fight for the livelihoods of a future generation of writers, whose work will never “air,” but instead be streamed, beamed or zapped onto a tiny chip.
"Things have gotten ugly and the lines of communication have broken down completely between the guild and the studios. Perhaps it’s not too late, though, for both sides to rally around the one thing we still have in common: our mourning for the way things used to be. Instead of fighting each other, maybe we should be throwing a wake for our beloved TV.
"Because the third stage of grief is bargaining."
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Lindelof is a hero. It is a good op/ed, entertaining and informative from a great point of view.
Wow, go Damon! that there was some pretty writing, and way more to my liking than the Criminal Minds guy. No wonder I prefer Lost to CM. Thanks for posting this Nikki. Don’t worry we who love TV support you and share both your grief and your resolve. We’ll be there when you get back to us and return to the sweet sarcastic TWOP goodness that is talking about TV.
I think it’s a little too late to ‘hold out’. It would be instructive for the present generation of writers (and everyone else) to read the article on Page One of the Opinion Section in today’s LA TIMES. Perhaps then there will be an understanding of why we (the WGA) are always going to get the shaft. In the Beginning, the top earning writers sold out on owning our own creations for big bucks — unlike the Dramatists Guild in 1919. (Hard to argue that the paradigm is different. Producers still have to invest in a play as well as a movie; directors still need a script). But we’ve rendered ourselves in all probability perpetually powerless, because back then (and now) we looked upon ourselves as competitors rather than comrades…(and I use that word with a small ‘c’). A few exceptions like James Cain and Dudley Nichols knew better, but were ignored. So 3000 or 4000 pickets a day (how many will still be out there in 9 months?) are not going to change history. It’s just a matter of how many crumbs they choose to throw us…and it’s our own fault.
Okay, here’s what I don’t get about the WGA position on new media. These conglomerates they’re bargaining with tend to have a profit-to-revenue flow of around 9% to 12%. For instance, Disney just reported a quarterly profit of $877 million on revenue of $8.93 billion. That means that 9.8% of its revenue is profit.
The WGA residual proposal for new media is that writers would get 2.5% of the net new media revenue flow from the content they write. When you factor in the pattern bargaining from other guilds (1x for DGA, and 3x for the SAG residual pool), that totals to 12.5% of new media revenue flow going to reisudals.
In other words, the WGA is suggesting a deal by which the new media revenue-to-talent-residuals flow *exceeds* the revenue-to-profits flow of the entire corporation, in most cases.
Doesn’t that suggest that 2.5% is way too high? Even beyond the ‘fairness’ issue, there’s a growth issue. If the emerging new media operations of these conglomerates have that level of added relative costs– exceeding the profit margins of the entire corporations– won’t that motivate the companies *not* to invest in new media (which is pretty much the only hope for saving scripted television) and instead put their resources behind amusement parks or video games or what have you? Which I would think the WGA would want to discourage, since it will mean fewer jobs for its members.
…says the pussy that’s continuing to edit.
Oops, the post above should read “The WGA residual proposal for new media is that writers would get 2.5% of the GROSS new media revenue flow from the content they write.” Not ‘net.’
JustWondering: consider the source of the figures you are quoting. You can’t trust the companies’ profit figures. It’s Hollywood accounting.
Bottom line: an industry that provides a $60 million golden parachute to an incompetent like Tom Freston can afford to pay writers a decent (though still miniscule) percentage of their revenue.
… I hope he’s putting as much thought into wrapping up Lost sometime in the next decade in a coherent manner. It would actually be cool if the series finale where to be streamed and not air.
Only people truly suffering are the ancillary and support peeps who’s paycheck to paycheck subsistence depends on the writers having minimums.
BTW, there are fat cat showrunners who are already making coin off the internet postings of their work. But the vast majority doesnt have the juice to get that in their deals… yet.
Writers, please think of everyone else and not yourselves.
Producers, don’t look now but there are a bunch of strategy guys who who are making it real easy for the Googles, Nabiscos, and Nikes to make their own “Content.”
Not Content
Not Ovitz
…hope Damon is as eloquent when he finally wraps up Lost.
He better be.
btw, wouldn it be poetic if the last ep of Lost were streamed?
Not Ovitz
In his NYT Op-ED piece he says they are not paid for itunes downloads…not true,,,that is paid at the despised DVD rate……He should check his facts —DGA member
Hey, it’s not easy being Tom Freston. You have no idea how hard it was to take the ‘M’ out of Mtv.
justwondering:
Why do you say 3X for SAG?
Also, we are PROPOSING 2.5%. They have yet to bargain against that number. This is exactly why this is going nowhere. We offer proposals and they won’t propose back.
JustWondering,
That’s exactly what the fight is about.
Most people don’t understand that when a corporation takes in a dollar, 90% of it is consumed by costs of goods, overhead, taxes, etc. Most companies are doing well to end up with a profit of 10% of total revenues. That’s true of most companies in most industries, not just in the entertainment business.
No CEO on the planet is going to make a deal where he gives away 125% of the gross profit on a product. If he does that, then increasing sales volume results in increasing losses. Coporate executives don’t think in terms of revenues, they think in terms of net profits (more specifically, “Earnings Per Share”) because that’s what drives stock prices. A CEOs job is to continually increase Earnings Per Share, thereby increasing share value (given a stable risk profile).
The most equitable kind of deal would be one where the writers get a slice of the profits. Unfortunately, the studios have never been honest in their accounting with regards to their profit participants. The studios have no one to blame but themselves when the WGA refuses to take a profit sharing arrangement.
So, now you have a situation where the studio CEOs must make a “net profit” deal to satisfy the demands of their shareholders; and the WGA cannot take a net profit deal and must demand a gross revenue deal or they’ll get screwed by the studios.
When you put all these complex elements together, I forecast an 80% probability that the strike lasts at least six months, and a 50% probability that the strike lasts a year.
Cheers,
thenumbersguy
I have nearly posted this comment five times on other sites; basically each time I hear about “the way things used to be.” I’m curious of exactly what is meant by “the way things used to be”: No matter the distro method, Hollywood has never escaped the factory it became prior to the Paramount antitrust case. What better days are we talking about?
Then studios owned the theaters and had talent under contract, now their parent companies are vertically integrated and six companies own more than 90% of media in the US and advertisers have talent under contract. “The way things used to be” is a mythology, mostly set up to sell the audience on Hollywood magic. The unfortunate part is that we as artists buy into and perpetuate the myth as well.
Furthermore, the studio divisions of those parent companies bring in a small percentage of their total profit. This business not only is the worst business to get involved in financially, but it also makes very little logical sense in terms of the execution. Artists everywhere should be thinking about “the way things could be” over “the way it used to be” or “how do we get involved in this same machine but with a slightly higher percentage of profits.” It could be anything we want if we can imagine a better, non-zero-sum model. We’re all in it now for a right reason, so why not strike for the root and resist hacking away at the branches of the problem?
Come up with a better model. Maybe that involves Google, that’s a brainstorming start, but I hardly think that’s the best idea for everyone to win the most. Perhaps instead it is a part of the larger distro puzzle, which we all know is the most challenging part of making motion pictures for any screen: Getting distribution. New distribution platforms/digital distro are also the billion dollar questions on the table. You want to win? Then tell them what the new business model is, by doing it without them. With so many brilliant minds out of work, why shouldn’t we be able to set up new ideas? At least one major studio is paying a group of new media types to figure out where digital distro is going. They’ve set them up with offices on the lot. It’s time to think beyond the obvious choice that is Google, and focus on how new and traditional media can be bridged to diversify distribution options and monopolies on knowledge.
to justwondering –
taking a percentage of one revenue stream is what we’re asking for. You have to understand that they are making money on multiple streams.
I don’t think you can fairly compare how gross revenues for a product should be divided against reported profits for a company. We’re not asking for 2.5% of Disney’s gross revenue. We’re asking for a percentage of the money they receive for the REUSE of a product we’ve created for them, one that they will sell in multiple markets, the cost of which has already been accounted for in the budget for its first use market.
They recoup and make their money for a tv show when it airs on tv. It costs them very little to create DVD and practically nothing at all to make it available for downloads of streaming. That’s all gravy. We are entitled to our share of it because we, along with the actors and directors, contributed to the creation of that product.
The only really serious solution is for every show runner creator to walk away from their shows permanently. They need to have the courage to walk away from their million dollar development deals and their million dollar current salaries.
If you had 150 of the top show creators chartering a jet to Silicon Valley to meet with the Google and Microsoft and Facebook groups plus some deep-pocketed venture capitalists a brand new internet network would be created very quickly. Content would rule.
Look at funnyordie.com as an example of what a brand new Internet Network could become. Actual half-hour and one-hour programming all streamed to home computers on Damon’s DSL dream hook-up. It’s only a couple years away. This is the ideal moment in the history of TV to make the leap. And it won’t be a leap of faith either.
It will be a leap based on the combined track records of the 150 show creators. They just need to have the guts to do this. If Damon is right and Television is soon to become obsolete he should be leading the charge on this and not just writing about it for the New York Times.
If this were to happen the networks would very quickly promote the next in line co-executive producers to show runner status just to keep their current programming alive. But the new web-based creative network with billions of dollars backing it would proceed as I’ve described it. Let’s see some real guts. Otherwise the eventual agreement will disappoint everyone and three or four years from now we will be right back here with everyone complaining.
Dave L wrote:
But that’s just the thing– the higher the profit-to-revenue level, the better for the company’s stock– and boosting stock price is what publicly-held corporations do. So if studios are lying about these figures, which they may well be, that means that the profit-to-revenue stream at Disney last quarter might even be *less* than the 9.8% it’s claiming, not more. Which makes me come back to my original question of wheteher an aggregate 12.5% residual rate on gross new media revenue is too high.
Mike wrote:
Writer who Earned 60K in 07 wrote:
Except isn’t the argument being made by the WGA– and in the Op-Ed piece that this post is about– that pretty soon the internet *will* be the first-use market? Which means that whatever’s negotiated now needs to serve as a model for the product’s primary use, not just re-use.
And also, re: “cost of which has already been accounted for in the budget for its first use market”, my understanding is that in the current system, even fairly successful shows run huge production deficits ($1-2 mililon, about half the budget per episode) in their first-use market (prime-time broadcast). So unless producing television becomes suddenly half as expensive as it is now, I don’t understand how a 12.5% gross residual pool will be sustainable– since soon new media won’t be one of many revenue streams, as you claim, but the *only* one.
Again, pretty much all TV shows do *not* recoup when it airs on TV, until/unless it syndicates.
Thanks JustWondering, I have been speculating about the exact same thing. The numbers just do not add up. And the only counter-argument seems to be “those aren’t the real numbers, the studios are lying liars” … but unless that claim can be substantiated, which I haven’t seen, then people are just blowing smoke.
It seems like the elephant in the room is the accounting practices of studios, and it’s what needs addressing. Because shares of gross just do not make business sense.