11/30/2007

More Clarification on the AMPTP's Numbers

A letter from WGA Board Members that was sent this afternoon to members, with even more detail on the corporations' proposal.

Fellow members:

There are a lot of rumors and questions floating around, and we’d like to address them.

HAVE NEGOTIATIONS BROKEN DOWN?
No.

DID OUR NEGOTIATING COMMITTEE ASK FOR A BREAK?
No.

THEN WHY THE FOUR DAY BREAK?
On Thursday, the studios and networks gave us some of their proposals, and said they needed more time to fashion the rest. Therefore talks were scheduled to resume on Tuesday.

THE COMPANIES SAY THEY ARE OFFERING US IS A $130 MILLION INCREASE. THE GUILD CALLS IT A ROLLBACK. WHY THE DISPARITY?
The companies have still not explained how they arrived at their $130 million figure, but we can certainly explain how this is a rollback.

OKAY. SO HOW IS THEIR MADE-FOR-INTERNET PROPOSAL A ROLLBACK?
Currently, the writer of a 30-minute prime-time TV show makes almost $21,000. The conglomerates are proposing that if that writer wrote the same show for the Internet, his or her initial compensation would be $2,600. That’s a rollback of 88%.

SO WHAT’S THEIR OFFER ON INTERNET RERUNS?
Currently, the writer of a half-hour television episode makes about $11,600 when his or her episode is first re-run on TV. The companies are proposing that if that same episode is rerun instead on the Internet, they will pay the whopping total of $139 for unlimited reruns for one year--and nothing at all if it only streams for six weeks. About a third of all TV series are now being rerun only on the Internet. This amounts to an immediate 98.8% rollback. And it gets worse. If they decide to call a show “promotional,” they don’t have to pay us anything. It’s a “freepeat.”

WOW. AND WHAT ABOUT FEATURES?
Are you sitting down? The companies want to be able to stream any and all feature films in their entirety, supported by advertising dollars, and pay the writers nothing. Zip. Nada. Bupkus. A 100% rollback.

GIVEN ALL THIS, HOW IN THE WORLD DID THE COMPANIES COME UP WITH THE 130 MILLION DOLLAR FIGURE?
Our question exactly. It’s definitely not a three-year number. As near as we can figure, their proposal might net us that total around the year 2107.

YOU HAVEN’T SAID ANYTHING NEW ABOUT DOWNLOADS.
Neither have they. We are hoping that they will address this essential issue by Tuesday. Stay tuned.

In solidarity,

Nick Kazan
Howard A. Rodman
Phil Robinson
Tom Schulman
(for the Board of Directors)

120 comments:

Anonymous said...

I call it UNION BUSTING!!!!

Anonymous said...

Thanks for the clarification. Those boys can write.

Anonymous said...

The writers keep calling the Internet "new media". I agree with that. But since it's "new" what's being offered cannot be a rollback because nothing was given before for Internet usage. It would only be a rollback if the pay went down for TV re-airings. It doesn't matter if most shows aren't rerun anymore on TV - they are being rerun on "new media" which is new and therefore no rollbacks are possible. For example, if I am being paid $6 to mow the neighbor's lawn and she also wants me to pick out the dead weeds in her garden for $3, it's not a rollback because I am doing a different job. If she was paying me $6 to mow the lawn and then decided to pay me $3 to mow the lawn, that would be a pay cut, or a rollback. I used simple numbers so the writers can understand.

20 year writer said...

Niiiiiikki, you got some 'splainin' to do!

Anonymous said...

It is only a rollback if the networks don't rerun the episodes on TV and just use the internet. Also how much do the networks get for the 2 minutes of ads at the most that are run on the internet. They can't pay more money out that they get in ad money. Tv will still be the major money maker for the time being. How are the internet viewings of a show being counted. Do you pay the writers per/view or a set time period. Do you monitor the stream and get paid according to how long it was watched per/min.
Does the Guild have any solid information on how much money the internet viewings of shows has been made. These are questions that I have and want to know about before I decide which side is being uncooperative.

Anonymous said...

anon at 7:50, it is a rollback if one distribution method is simply substituted for another that pays some ridiculous pittance. Get real.

If I pay you ten dollars to rake (or remove)leaves from my lawn and then slowly start paving over my yard (bit by bit) and change the deal so that you get a proportional part of that ten dollars for the existing lawn and a proportional part of 10 cents for the paving then I am in effect over time paying you much MUCH MUCH less.

Was that simple enough for you to understand?

This is not rocket science.

Anonymous said...

hey 8:10 Anon -

Your analogy is simply wrong. No one is taking away the original $10 you are getting for removing the leaves, just paying less for doing another, "newer" job.
A fifth grader can understand this, perhaps the writers are just not smarter than a fifth grader. Oh, and when and if this strike is ever settled, if I were a below-the-line worker on a show I would shun the writers, or "accidentally" hit them in the head with the boom mike.

BTL Guy said...

This is, without a doubt, a crappy offer.

I still hate that it's being calling it a rollback. At this point, though, I'll just agree to disagree on the semantics and move on...

I'm really hoping to hear three things next week:

1) What is the AMPTP's real offer -- where'd they come up with $130M, what's the issue on downloads

2) What's with the major-league discrepancy between the AMPTP release saying that WGA asked for the break and the WGA letter saying they did not? Someone is flat-out lying...

3) Most Important - What do the Writers NEED in order to get a deal done? What does WGA want in terms of streaming residuals? What do you want in terms of downloads?

In short -- make a counter offer. Don't wait if they drag their feet on presenting "the rest of their offer."

We've heard the complaints that they presented nothing new for three days, then they presented half of a crap offer. What has WGA done to move things forward?

Anonymous said...

Heh, well those who support "copyright" are generally greedy fucks who think its quite alright to get paid over and over for a job done once, so it's hardly surprising you've got your head so far up your posterior you don't understand that THE INTERNET is different. There is no way in hell the studios can make the same kind of filthy lucre they (and you) have been used to from tv. Only the destitute and kids will watch the material wrapped in Digital Restrictions Management junk in crappy resolutions and qualitys to thow up over.

IATSE JE said...

I am now fully solidified to lose everything if I have to (not much more than a few months for me). My family will get through it. These mother F****** can shove there arrogant offer up....

WGA, double it every time. They want a wide open internet future where they can get content anywhere for pennies on the dollar compared to the current tv structures. They will lose at that game. Come on showrunners, get with google and convince them that well produced ( and fully posted ) presentations are best and get this streaming future going without those bastards. WGA, start finding some jurisdiction with these internet distribution giants.

No question I am now 100% an idealogue with the WGA and the AMPTP can rot in hell.

Lee said...

"Thow" up?

My cattiness aside, your post pretty effectively exposes your ignorance of the issues at hand, especially in regard to the quality of internet streaming (if you ever watched ABC's shows online, the quality was almost as good as broadcast) and most especially in your stupid implication that all writers are "greedy fucks" who make so much money for their work and don't deserve anymore. I've seen better.

Anonymous said...

Looks like the WGA has the trolls going too. I wonder why everyone thinks that these shows can be produced on the Internet. Don't you know that the studios OWN these shows? You can't just make the office for Google because NBC owns it.

Lee said...

Anon 8:38 -

I'm pretty sure we're talking about producing ORIGINAL content, not new episodes of existing content.

Jeffool said...

I'm sure that in the future, on the net, media corps will make less on their original programming, and so will writers, actors, and everyone else... But that doesn't mean writers (and everyone else) shouldn't get paid at all for their work. It's just the tough change over, getting people used to watching online, that causes birthing pains. And it's a good time for the creators of art to get as much of the rewards as they can.

Anonymous said...

"
Currently, the writer of a half-hour television episode makes about $11,600 when his or her episode is first re-run on TV. The companies are proposing that if that same episode is rerun instead on the Internet, they will pay the whopping total of $139 for unlimited reruns for one year--and nothing at all if it only streams for six weeks. "

Well, the important question is, how is this $139 derived? If it's via some sort of formula which, when internet streaming is actually the norm, will actually mean a decent residual rate, then it's worth talking about. Is it based on a percentage of revenue? Licensing fee? Streaming traffic? I guess we just have to wait to find out.

Captain Obvious said...

Internet2.


Inform yourselves.

Anonymous said...

What is the writing fee for an hour episode of television?

Klaatu said...

Here's the math:

A $20k residual for writers per hour equals a total of about $200k in residuals per hour for all unions (WGA, DGA, SAG, IATSE, IBT, etc.).

TV commercials cost AT LEAST $50k each for network reruns (often more, but let's be conservative.)

There are 32 commercials per hour.

Therefore a rerun makes $1.6M in revenue and costs $200k in residuals. Or, residuals (for all unions) are 1/8th of the total revenue.

Now, nbc.com streamed 50 million ad-supported shows in October. (And that number will grow exponentially). But let's assume it doesn't. That's 600 million views per year.

Current ad rates for video on these site is conservatively $30 CPM (or 3 cents per viewer). Figure 4 commercials per show. (This will go up too.) That's 12 cents per stream. Or a total revenue of $72M per year (currently, with huge growth forecasted by the studios to shareholders). I also haven't included the additional income they receive from banner ads -- again, I'm being conservative.

So, if 1/8th goes to residuals, that would be $9M.

The writers' portion of that would be approximately $1M (same for directors, actors $3M, BTL $4M).

Now let's say that the total number of different episodes streamed is 400 in a year (twenty series with 20 episodes each or so).

That means the writer of each episode should get 1/400th of that million dollars. Or $2500 based on CURRENT revenues (remember, it's only going to go up).

The offer is $250 per hour ($125 per half hour, I assume).

So, that's a rollback of 90-95%, as Internet streaming replaces TV reruns -- which has already happened to shows like "Lost".

There's the math. They came in at five to ten cents on the dollar. And much less on future projected dollars.

Anonymous said...

Klaatu

How much does it cost to produce an hour of television?

Anonymous said...

Klaatu, thanks for the breakdown, v. interesting. Where are you getting that 50 million streams from nbc.com figure from? Do you know if they include partial shows? Because I know from annoying experience that 9 times out of 10 that I try to watch something on NBC.com it freezes up half way through, or keeps restarting from the beginning, and I give up. Also, is that info about ad rates (for both broadcast reruns and online CPM) available online somewhere?

Klaatu said...

It varies and I don't know exactly. Figure about a million bucks for a half hour sitcom. (A new one that doesn't have those 5th year hit show actor salary bumps.)

Let's take "The Office". (If anyone knows it's true budget, please correct me.) A 30-second commercial sells for $219,000 on that show (according to AdAge). At 16 commercials per half hour, that's revenue of $3,500,000 from the very first airing.

Even if the cost is double -- two million -- the show is in (very healthy) profits after it's first airing. Everything else, reruns, foreign, DVD, iTunes, streaming, etc. makes even more money for NBCU.

Klaatu said...

The 50 million streams in October for nbc.com comes from Jeff Zucker himself.

http://www.variety.com/article/VR1117974910.html?categoryid=1009&cs=1

Disney Channel reported 74.1 million complete episodes streaming their very first month doing it (June 2006). It's probably higher now.

Ad rate info is available in dribs and drabs online. AdAge publishes the 30-second rates for first run shows and there are a few articles on CPMs fo online.

Like all real numbers from the studios, they're hard to find, because they like to be able to lie about their profits.

Anonymous said...

Klaatu- how much of that $219,000 per spot goes to NBCU, and how much to the affiliate that's broadcasting it?

Klaatu said...

I don't know exactly. I think 2 out of the 16 commercials may be local. The stations make most of their money on local news to which audiences are driven by primetme programming.

Also, NBCU owned sations make up 27% coverage of the nation. They own the NBC "affiliate" in 7 of the top 10 markets.

Anonymous said...

wow, that makes me wonder how affiliates stay in business.

Also, The Office has the wealthiest demo in all of network television. What's the ad rate for a crappy show that nobody watches, like, I dunno, Life Is Wild on the CW? (No offense if anyone reading is on the staff.)

Kara said...

How much ad revenue is actually made on online viewing of a show vs.ad revenue generated by a television broadcast?

I doubt the numbers are even close. Does anyone have those numbers? I'd like to see them. The $20,000 per first rerun is based on ad revenue from the company, right? If not, what the heck is that number based on?

My point is that if companies aren't making comparable profit off of internet sales, then how can you expect the same amount of money to be paid to you?

iTunes is a different model. In a case like iTunes wouldn't the revenue model work like it does for DVDs?

And what about when I watch a movie on Showtime? Or on Showtime ON DEMAND? Do writers get residuals from that? If not, they should. ON DEMAND is the way of the future.

People are wrong if they think consumers will stop watching media on their televisions. Just look at the Apple TV. Soon these types of products will become household fixtures. These products will work in conjunction with online services. So the importance of internet residuals is undeniable.

If the model is changing and noone is sure exactly where it is going to go then why can't you negotiate a provision that allows you to revisit internet residuals on a yearly basis? That way you can make adjustments as changes occur.

Klaatu said...

kara read my post above to compare streaming revenue to TV rerun revenue.

Kara said...

Ahh, Klaatu. I see. So much math. It hurts my head.

So, if I understand this correctly, writers should NOT expect $20,000 for a rerun episode on the internet. They should expect $2,500? Each time?

Just trying to wrap my head around it.

Klaatu said...

Life is Wild is one of the lowest: 40k per spot (still $1.28 million per episode).

The CW's shows are definitely lower. A better comparison would be other NBC shows. They are all over $100k with many over $200 or more. Hereoes is about $300k.

And remember, we're only talking about the first domestic TV run which has become a smaller portion of the overall exploitation (fitting word, I know) of the product. According to NBCU, TV ad sales (including reruns) make up only 45% of their revenue from TV shows. The rest comes from other revenue streams. There's plenty of money to go around.

Klaatu said...

kara,

It is a lot of math. Writers are generally more verbal, and the studios like to take advantage of the fact that we don't like math.

According to my calculations, based on exisiting share of revenue figures, writers should get at least $2500 for each TV episode they wrote for one year of ad-supported streaming.

That is being very conservative with the numbers.

It also is based on today's revenues. There will be more and more online business. And more and more commercials per show (eventually as many as there are on TV). Probably sometime in the next few years, the $20k will be right for Internet. Right now, though, it's at least $2500.

They offered $250 for one-hour and $139 for half hour.

Dorkman said...

Of course, the most logical thing would be to offer writers a percentage of the revenue, instead of a flat fee. So if the studios make less than they usually do, the writers also proportionately make less as an automatic scaling measure.

Which is, for the cheap seats, what the WGA has been after all along.

Captain Obvious said...

There needs to be a percentage at play. It's what the writers originally suggested, and it makes the most sense. These flat amounts don't scale.

Captain Obvious said...

Dorkman beat me to it

Jeffool said...

I'm no writer; just a fan and supporter. But why should writers only get residuals for a year? Theoretically one could go back and watch shows years later. And you can bet the corps will still have commercials in them. Wouldn't it be more reasonable (on the parts of both artists and corps) to offer a standard, and on top of that a per-episode payment? Sure it'll be pennies, but if a show is watched tens of thousands of times...

Jeffool said...

Er, yeah, what the above three posts said... Wow I'm a slower typer than I thought.

slgalt said...

My TV comes in on the same tubes as teh internets!

Seriously, my cable company (which happens to be Time Warner, whom I hate) delivers content to my home on a cable, which I have to PAY a lot for just to watch TV. Hell, I want to strike just for that.

In a couple of years they will claim that my tv is the internet, and will defund the unions and all the health and pension funds.

Threat Level: Midnight said...

year 2107? wow....

Anonymous said...

Back in the day, when TV started, the main programmers were the same companies that made TVs and wanted to give people a reason to buy them. Then they discovers that you could make serious money selling ads, much more money than you could make selling TVs.

Similarly, Microsoft discovered that the real money in computers was in software, not hardware. Content is king.

Now we have the internet. It's like back in the day. It's the new frontier and the AMPTP doesn't have a lock on it. The first people to be able to put out serious, high quality ad and download supported programming will be able to carve out their own personal kingdoms, just like the networks did in TV.

So the question really is, who's got the deep pockets and the balls to start up a New Media "studio" and "network."

Here's what I would do. Hire top flight talent from the WGA, SAG, DGA, IATSE, IBT etc. Create four shows, maybe a couple dramas and a couple sitcoms. Let's say you pay current guild rates. It'll cost you about 200 mil to make 22 episodes of your four shows. Chump change if your company name rhymes with "bugle."

Now put that stuff up on teh internetz. Give people a choice. They can either watch if for free with ads (which you sell for big bucks cause you can give advertisers actual countable eyeballs unlike TV), or they can buy it, without commercials for, let's say $2.99 for a 60 minute drama, $1.99 for a 30 minute sitcom. You get a million buys per show, you're already breaking even. And that's not even counting ad revenue from the other million or so who watch for "free."

So voila, you've probably doubled your money. Now you're a studio head. Write yourself a check for 100 million dollars. Distribute 30million or so in residuals, dump the rest in you corporate coffers. Have a nice day.

I know this is a simplified model. I haven't talked about the fact that you'd have to advertise, maintain servers and such, but you get the idea. And I'm betting you'd get a lot more than 2 million eyeballs. Plus you can still sell it to overseas TV and put it out on DVDs for the Luddites. Hell, you could probably sell it to cable, too.

Sound good? Have your people call our people. Let's talk.

Anonymous said...

I seem to remember "new" media that came out in the 80's, when people were trading VCR tapes, and renting them out. Somehow this was able to be capitolized on, though not the writers, so that's why its so important to continue the strike. I'm just as worried as everyone else. I have a job that's supposed to start in January, and I don't want to be a scab. I support the strike, but at the same time it is the opportunity of a lifetime for me and I got the job before the strike even began. It sucks that this is what we have become.

Anonymous said...

Wow $20k in residuals.. that's a lot of money.
Some ppl get by fine on that amount of money per year.

Boycott 12/25/07 said...

I'm not a member of the WGA, but I hate unbridled corporate greed, and this last round of negotiations seems ridiculous. I like the Pencils 2 Moguls campaign, but I don't understand why there has not been a concerted, concise, easy-to-understand effort to kick the AMPTP in the bottom line.

A simple, clarion call for the public to boycott the movies 12/25/07? No rentals, no downloads, no going. Also, maybe churches would be comfortable getting behind it. 1 Day, 1 Voice to send a message.

If the idea gained enough momentum, it could add positive pressure to the negotiations. The media might pick up on it.

(Is it fear – that if it doesn't make a dent, a failed effort might be bad PR for the WGA?)

Thoughts? There's three weeks and some change...

Just Saying... said...

Don't Feed the Greed

BOYCOTT the movies

12/25/07

Movie Marquee Now Playing sign:
David vs. Goliath

Support the Writers Guild of America in their fight against ungodly corporate greed.

Please don't rent, download or go to the movies CHRISTMAS DAY 2007

1 Day to send a message with 1 Voice.

OR

Coming Soon to a theater near you:

BOYCOTT   12 • 25 • 07

All Audiences


Support the WGA, fight the power.

Gene Gauntier said...

Are you for real?

I fully support the strike.

But I have to wonder what planet you're on that you think it's a good idea to ask people not to go to movies on Christmas?

Don't you think that's stretching your/our battle a bit too far?

I support the strike but I also realize people -- outside of my realm of concerns -- have a life. Besides, it's not very holiday-spirit like.

I do think the studios are greedy corporate bas-tards.

BUT - I am not a socialist. I live in America. I am all for the fight but let's not let things get out of hand. Asking the rest of the country to boycott on Christmas/holidays is crazy, imho.

I guarantee you do this and the PR battle we're winning and public support we're garnering -- will be lost. The rest of the country are not loyal Buffy fans. It's a bit presumptuous.

makomk said...

klaatu:
You forgot to take into account bandwidth costs. I'm not sure what they'd come to right now, but bandwidth isn't cheap and online streaming video needs a lot of it.

lee:
Either you have really bad TV reception or ABC are a lot better than most streaming sites. (Unfortunately, being UK-based I can't check it out myself). Most viewers probably don't even have the bandwidth for TV-quality

makomk said...

Ah - apparently ABC does use a unusually high bitrate for the video on their site (though probably still not TV quality). A comment on this blog estimates this would have bandwidth costs of $23 CPM for your typical site, which may not be too bad, I suppose.

ABC can probably get better prices and decent ad rates, because they're a big player. Unless you're as big as they are, I think you can forget about making money on ad-supported streaming video.

Anonymous said...

When talking about the number of commercials during a time-slot, should the local ads not be excluded? That revenue is not seen by the networks correct?

The math presented by Klaatu is very interesting. That is the first time I've seen someone break it down.

m!les said...

This comment might seem like spam, but I looked and looked for a proper venue to say this, and I couldn't find one.

I have an Internet-based TV show called Newsbleep.com. As the creator/writer/director/editor/actor, I am both producer and writer. The show is in its second season, and I can't imagine going through all that hard work and then just handing it off to a producer who would monetize it and sell it without thought as to the effort and creativity I'd already put into it.

My latest episode, Newsbleep 103: TV Fan vs. Wild, was entirely unscripted, to show solidarity with the writers. Since I have no producer to strike against, and make no money off Newsbleep, I thought I could do that little thing to help spread the word. The episode itself is about two people trying to survive the writers' strike in a Man vs. Wild sort of way.

I'm not looking for a link or a blog post, I just wanted to let you guys know that Newsbleep supports the writers and UnitedHollywood.com.

Solidarity with the Scribes!

Anonymous said...

Klatuu,

I like the way you think and I wish that you were in the negotiating room, or are you?

Look, it's all about a number, and the numbers are out there to make a reasonable, conservative guess at what would be a fair number.

Bandwidth cost is not insignificant but it is far less expensive than the actual broadcasting and distribution of network TV (even over cable) which isn't free either. So you can call that a wash, I think, if the Internet replaces broadcast entirely, which any forward thinkg person is sure it will do. And of course like everything associated with computers, bandwidth costs will go down dramatically as the technology improves, which it inevitably will.

Klatuu, I like your number and I think it sounds...fair.

Obviously $250 sounds ridiculous, but to offer such a number is standard, old school, union negotiating. It isn't where we will end up.

But if the counter-offer from the WGA amounts to what they say it amounts to...50 million a year for all the companies combined, is so reasonable that it would be shocking if the AMPTP didn't accept it as soon as they can without looking like total idiots, and then we will all go back to work.

As an example, Viacom (that's just one company) spent 60 million dollars all by their lonely selves to get rid of one executive, Tom Freston.

Surely all of the content for the internet for ALL of the companies is worth at least as much as getting rid of one bad executive, isn't it?

I think the companies are stalling and being dramatic so they don't look like the ridiculously bad managers they are for ever having allowed this strike to happen in the first place.

Anonymous said...

I have one question in the number crunching: as I was listening to a SOUNDTRACK I thought to myself - HOW MUCH did the writer/singer/musician get for that song? AND how much did they get when the movie went to DVD??? How is that working? Somehow I bet Elton John or Sting are getting paid better for their songs than the writer of the Disney film. Any thoughts on this????

Klaatu said...

makomk, my comparison was based on revenue, not profit. I took the ratio of residuals to revenue from TV (which has worked for the studios for many years) and applied it to Internet streaming. There are costs associated with TV broadcasting and affiliates and cable/satellite providers, but the 1/8th of revenue formula has worked for the studios for many years. Internet has costs, but other costs are eiminated.

Here's another way to look at it:

Hulu, which NBCU and Fox have agreed to use to stream their shows, takes 15% and covers all broadband costs. Some of that wil lgo to hulu profits, but let's ignore that and assume that it costs 15% for bandwith.

NBCU has bragged about 20% profits for 2007. Okay, that's what they expect and would be thrilled with.

So, 15% for distribution, 20% for profit, let's give them 15% more for other costs (ad sales, etc.). That leaves 50% to pay residuals.

A $139 residual (their offer) to writers for a 30 minute show translates to about $1320 in total residuals to all unions. So, that means, if their offer is fair, they have calculated the value of a 30-minute episode to be $2640 over the course of a year.

I would gladly pay them that for my episodes to retain all Internet rights.

In June 2006, their first month streaming, Disney Channel streamed 74.1 million full episodes. Their first month! They currently have 21 different shows available. That's 3.5 million streams each. At 12 cents revenue, that's over $400k for each episode in a month!

Who do I make my $2640 check out to?

anonymous @ 11:00, thanks. I'm not on the negotiating committee. I just sat down and worked out what would be fair. If anything it's a lowball figure, since I was conservative with every number along the way.

Supporter from Local 695 said...

klaatu,

thanks for breaking down the numbers. couple of questions...

Are the broadcast ad rates the same for reruns as they are for original airing? my guess is that they're lower, and I don't know if you're using the lower rate or the average of all rates.

What is the appropriate time period? Would that $2500 be a good rate for the first three weeks, the first three months, year, forever?

does anyone know if this $2500 is a target that the guild is actually pursuing, or should it be viewed merely as an optimal goal?

Like several other comments, I really think calling this a rollback was an unfortunate choice of words, as the guild (and/or its dedicated bloggers!) is put in the position of defending its semantics instead of concentrating on the pure numbers, like you have done. thanks for helping to clarify everything!

Klaatu said...

Supporter from Local 695,

I used TV ad rates for primetime reruns -- and the very low end of that: $50k per 30-second spot. First run starts arounf $100k and can go over $300k.

Time period. I used the time period frm the studios' $139/$250 offer -- 1 year.

The $2500, was merely my independent (non-official) estimate of what would be the very bottom of fair. Remember it doesn't include any Internet growth, which we all know there will be lots of (and the studios themselves are forecasting). It also assumes they won't increase the number of commercials online to be similar to TV (which they will). It doesn't include revenue from banner ads. Etc.

You get the picture. I'm not saying $2500 is the right number. If they paid it, they'd still be getting an amazing deal. I just use it to illustrate how much of an ass-rape $139/$250 is, even based on today's "we don't know if there's money in it" scenario (i.e. lie).

Oh, and the reason it's a rollback, is because they are going from 1/8th of TV rerun revenue for residuals (for all unions, about 10% of that goes to WGA) down to less than 1/80th for Internet reruns. That's why it's a 90+% rollback -- especially since all reruns will eventually move to the Internet. Eventually, it will cut the salaries of writers, directors, and actors hugely. Itwill also eliminate the health and pension plans of all the below the line unions.

Anonymous said...

I want to thank all the WGA members for their efforts during this strike. It must not be easy being out of work, but you have all benefited me personally. I just sold my screenplay to a small studio and that couldn't have happened without this strike.

Captain Obvious said...

Yes the subject of independent production has come up before. Who has the cash? Who can pool it? I definitely have the balls, and was thinking about something along those lines anyway.

This script I finished recently is somewhat time-sensitive (it relates via a tangent to current events), and if anything, needs to be rushed into production.

AKA I love the idea of independent shows. I have a potentially independent feature that needs to be made ASAP. We should band crew together and work on totally independent projects. It'd be great for you BTLers, too, no? A solution to at least some of your worries?

Captain Obvious said...

...we need to build a fortress for Team Writers, if you will. Writers and everyone else have all been trodden upon for far too long. It is time we permanently rectify things rather than play this little game with the studios of gradually righting their wrongs every 20 or 50 years or so.

I don't want to wait a lifetime to see, as an earlier poster put it, Content be respected as King. Not just known to be important as the Wizard is known when he is behind his curtain.

Just wondering . . . said...

Anybody know if authors (of books) are making less "royalties" off of ebooks than traditional books? Especially since Amazon is in the game with Kindle, books are now simultaneously "pubbed" as traditional book and ebook. It's definitely not an exact parallel, not even an especially good one, I know, but I'm curious, most especially since Warner, Murdoch, et al own the big houses, too.

Klaatu said...

just wondering,

I don't know about book authors, but I don't believe songwriters had any issue getting their royalties for online audio sales -- in many cases from the same media corporations who are trying fuck us.

big d said...

hello i support the writers guild in their strike, good writing is more important than good acting! However, i was wondering if someone could explain something to me? all the shows that are stopping like heroes, lost, and prison break.... when not "if" the writers are successful in getting what they deserves will it be possible for these shows to resume? and is there a rough guide line from when the stike ends to when they will start to be shown? has the second series of heroes been filmed or only half?

Anonymous said...

Another way to go is to be as insanely talented as Trey Parker and Matt Stone. They are not members of the guild and, based on their success, have cut increasingly impressive deals. Their latest deal with Viacom involves millions in up-front cash and a 50-50 split of ad revenues across multiple platforms (according to the NYT).

I am NOT saying we should abolish the Guild. I'm just reminding folks that there are cases where the studios see writers as partners and not just employees.

Rach said...

Dear Corporate Sockpuppets,

It is a rollback because new media has conflicted with the old way of doing things . The old way was rerunning on tv The new way is rerunning on the internet. Now tv shows wont be rerun, we'll have summer reality tv instead, or something. That will increase networks money - more tv shows, new shows for people to watch - and to get new watchers they just throw the episodes online for anyone to watch. Usually, reruns during the summer were in order to create new viewers, but now there's a better way.

There's way less money because there will still be reruns, but done in the "new" way, and you'll take a huge rollback. Part of the reason people agree to contracts is because they know reruns will help.

Other news....

You writers can, if things go bad and you need, produce NEW SHOWS, with your talents, on the internet. Apple Itunes will sponsor you. Or, youtube, or revver. Or, google video which is still breaking out.
Sell podcasts, do whatever you need.

The internet makes production and distribution easier for many people.



And if you're saying that the distributors are making "way less" and the add revenue is "way less" online, the studios should be all to HAPPY to give them a share of the profits instead of a flat fee! If they got a share things would be MORE FAIR, at least.

Rich said...

So what everyone is saying steve carell doesn't make enough money? Or that all of the writer's aren't makeing enough money. God people think of your fans. When I come home everynight in the fall and winter I expect to get good television. I pay INCREDIBLE amounts of money every year to get cable or satelite. When it comes to this writer's strike I'm sure all of you are well off as far as the amount of money you make a year. Compared to my measly 35,000/yr. I just want to come home and watch my favorite shows. IT pisses me off that my hard earned money is getting wasted because someone else isn't making enough. You guys and your strike could live off the money you make for years. What the hell is the problem if someone plays your shows online. I have bought every season of the office and grey's anatomy I can't stand this selfishness of these people. Grow up and do your friggin job.

Anonymous said...

WGA: I think the deck chairs should be closer to the railing!

AMPTP: NO! They should be in the shade of the superstructure!

VIEWERS: ummmm.... isn't that, like an iceberg heading our way?

WGA & AMPTP: Shutup! The arrangement of these deck chairs should be the most important thing on the kinds of all aboard the RMS Titanic!
___________________________________
Both sides are going to lose in the long run, the WGA will likely just lose a bit sooner.

Stunts and vitriol will run out, and the public's interest/concern is already starting to dry up.

I'm sure this is all exciting right now. Making like lions of labor and all that. We'll soon tune out and you'll be walking picket lines no body cares about.

To mix metaphores a bit. Both sides of this dispute remind of two dinosaurs fighting over a bone while the meteor is screaming through the upper atmo!

Good luck! You're soon going to need it.

Anonymous said...

Klaatu:

Your calculations in your 9:12 PM post are based on an assumption which is false: that NBC actually gets much if any CPM-based revenue from its ad sales on nbc.com video streams. This isn't true, at least not yet.

That ad space is, at least 90% of the time, just bartered away as part of deals for broadcast ad space. Why? Because prime time viewership is falling so dramatically, that NBC needs to sweeten the deal to maintain its ad rates (maybe, just maybe, 'The Office' is a partial exception to this, since the demo is so attractive, but I can assure you as a media buyer that this is the case for most of the other shows)

So, maybe in the future, when networks really are getting CPM income in a meaningful way from streams, your model might be on target. But they aren''t now-- and paradoxically, the reason they aren't is because their broadcast viewership is being cannibalized by the internet, and whatever internet ad space they have they basically throw into packaged media buys.

Shorty said...

Here's a thought, WGA'ers:
Surely you all are aware how low the AMPTP can sink. But did you know that they've told their media relations assistants to go onto comment pages and boards (like nikki finke's) and post pretending to be angry writers and fans to mess with our minds and think we're fracturing??
So why don't we shill just like the AMPTP does? We've got some time on our hands and I know I've been itching to do some writing. Let's go to Cnn.com, MSNBC.com, yahoo, aol, etc and set these assclowns (and the public) straight! I mean, if the AMPTP's assistants and "media relations" can do it (and they barely can- have you SEEN their "writing"?) so can we.
Currently these sites are only telling the stories fed to them by their owners, the AMPTP. Well, it's time we invade with the truth. A novel idea. Let's use our freedom of speech. If AMPTP's goons want to play dirty, game on, bitches.

Anonymous said...

An addendum to my 3:03 post:

And yes, you can find interviews with Jeff Zucker and so forth where he will make claims about how much revenue online operations are bringing in, but he's, um, lying or at least exaggerating or fudging with the numbers-- not to screw writers but to impress stockholders and advertisers. I wish that weren't the case, but it is.

Captain Obvious said...

I'm confident that all areas of production will ultimately benefit from whatever action comes of this and it's really time for us to form an Alliance of our own...

Anonymous said...

Everyone (actors, producers, writers, directors )is an employee of the system and we all know what that means.

If the audience wants to see decent movies and tv programms produced in the near future, they must support the writers and boycott the crap the studios and networks put out.

Don't give them your money.

Don't support their greed.

Don't allow them to surpress creativity and originallity.

Make them realize who's in charge.

Make them come to terms with those writers who work endless hours so that they have a job and get paid.

Anonymous said...

"But did you know that they've told their media relations assistants to go onto comment pages and boards (like nikki finke's) and post pretending to be angry writers and fans to mess with our minds and think we're fracturing??"

Good Lord...I don't doubt that there is some of that going around...but I think it's a big mistake to assume that displaced workers aren't plenty upset and increasingly vocal about it.

I think it's more likely that the trolls are the posters who harshly criticize people when they voice concern over the loss of their jobs. If I were a corporation trying to cause a rift, I would pose as a writer and act like a jackass to the BTL.

English Dave said...

Anonymous said...
An addendum to my 3:03 post:

And yes, you can find interviews with Jeff Zucker and so forth where he will make claims about how much revenue online operations are bringing in, but he's, um, lying or at least exaggerating or fudging with the numbers-- not to screw writers but to impress stockholders and advertisers. I wish that weren't the case, but it is.''

Oh well that's different. Cave now WGA. The AMPTP would clearly rather commit a Federal offence than negotiate.

Anonymous said...

And who told you that they haven't already committed plenty of Federal Offences?

Wait a while and you'll hear the official statement from the D.A's office.

You just wait and see.

English Dave said...

Anonymous said...
And who told you that they haven't already committed plenty of Federal Offences?

Wait a while and you'll hear the official statement from the D.A's office.

You just wait and see.

I doubt if I'll ever hear that. But the WGA are hitting their bottom line. Good tactics. I hope everyone backs them up. Because despite the trolls here most people know the writers are the good guys.

Anonymous said...

Can they really force you to cross the picket line? I have a contract for 2008 I signed before the strike, and nasty people are saying I'll never work in this town again if I don't honor it. Can they do that? I like ethics, but I also like to eat.

English Dave said...

Anon 4.37

Or you could just fuck off?

Fvck you trolls. The WGA are pissed off. You made it so.

Spin it how you like. Writers care, the audience care. If it's good enough to care about.

Watch Family Guy. The returning series monoligue by Peter is a classic!

Klaatu said...

The Internet isn't canibilizing their viewership. They studios are moving their rerun viewership to the Internet. Lost and 24 never rerun. The stream online starting the day after they air.

And there are many reports of CPM's being even higher for online streaming. I was conservative. Some of these revenues and profits are reported by the studio heads themselves. You say they are lying to shareholders? Maybe, maybe not. They are responsible for those statements either way.

But, even if, as you say, 90% is barter, you'll notice the residual figure I came up with for the current situation is $2500. I'm not saying Internet revenues are as high as TV right now. That's why my figure is roughly 10% of TV residuals.

And we also both agree that Internet revenues will go up. At which point Internet residuals should too. I agree that the two audiences are (roughly) inversely proportional. TV residuals will keep decreasing and Internet ones must increase accordingly.

That's the point.

Anonymous said...

To Anon 12:33-- LoL or should I say SOL- which is what you will be when the Actors and Directors contracts are up in the spring of 2008. Movies can no easier be made without directors and actors than they can without writers. Hey, maybe they can film you sitting at your desk writing the play, imagining you are Angelina Jolie. Somehow, I doubt you look the part.

shanna said...

rich - If you feel so badly about wasting your "hard-earned" money on satellite and cable, why don't you cancel it? You aren't "required" to spend your hard-earned money on television just like the WGA isn't "required" to give away their hard work just to entertain you.

The networks have promised to keep you entertained and if they want to fulfill their promise, they should treat their workers (the writers) properly.

It's like if the McDonald's staff went on strike for a better wage and you told them to get back behind the counter so you can have your Big Macs. It's the company who's let you down not the people who slave over the burners.

Anonymous said...

Klaatu:

First of all: isn't '24' rerun on fX? I'm pretty sure they rebroadcast the first-run episode a few days after Fox does. At least they did last year- are they no longer planning this for the upcoming season? I know that the calbe residual rate is lower than the prime time rerun rate (I wonder if the WGA considers that a 'rollback'), but still, it's disingenuous to say that 24 'isn't rerun.'

I don't disagree with your larger point that there needs to be some sort of decent residual model, and that the AMPTP offer needs to come up- I just think the methodology you're using to ballpark the current offer, basing it on CPMs, is misguided.

If you can actually find a CEO bragging about actual CPM income from streams in the press, please post it. What I see is a lot of vague platitudes about how important and vital their online presence is for overall strategy and income-- which is true. Nbc.com streams are very important for NBCU, because being able to package the online streaming ads with the broadcast media buys (as discussed in my comment above) gives them strategic leverage to lure advertisers away from other networks with less robust streaming operations, and in an increasingly tightening broadcast ad market where the actual value of ads in terms of viewer reach is plummeting (check out http://upload.wikimedia.org/wikipedia/en/d/df/Primetimenetworkviewers0828.jpg)
this kind of leverage is vital if they don't want their overall ad revenue to tank as well.

WHich means that, yes, internet streaming is vital and important, and NBC likes to brag about how its stream traffic, putting a dollar value on it is hard. Its value at this point is that it prevents the whole thing from falling apart.

Oh, and a couple other points about your numbers: AdAge figures are for the high end of ad rates. Most space is sold under various deals, packages, so it's hard to generalize how much a particular spot costs, but in general, I would assume the average revenue per spot is about 85% of the AdAge table. And, someone asked about affiliates, they usually get, I think, six spots an hour, plus some sort of percentage cut of the primetime part. Even the ones that are owned or partially owned by their networks still have to operate and bring in revenue.

Re: foreign sales, you are right that that's an important revenue stream, and I don't know how much it brings in.

Anyway, again, I don't disagree with you larger point, I just think your actual numbers are way off, and since this is a public forum which lots of people read, I didn't want to leave them unrefuted.

Anonymous said...

Oops, here's the link I just tried to post in the comment above, it got cut off. Worth a look.

http://upload.wikimedia.org/wikipedia/en/d/df/Primetimenetworkviewers0828.jpg

Anonymous said...

Sorry, the link keeps getting cut off, here it is:

http://tiny.cc/Yw4Gn

Also, I just checked out the '24' reruns issue, and fX does indeed rerun every episode, in a marathon before the new season. Which of course produces as much residual as if it was re-run like a normal show (albeit at the lower cable rate).

Anonymous said...

"Which of course produces as much residual as if it was re-run like a normal show (albeit at the lower cable rate)."

Lol. It's exactly the same but less!

Anonymous said...

yeah, but the cable rate isn't an issue in these negotiations, is the point. It's misleading, I think, to say '24 isn't rerun' when every episode of 24 is rerun.

Klaatu said...

Yes, "24" reruns on cable. It also reruns on DVD and foreign channels and the Internet.

But it no longer reruns on prime time network television. The writers of that shows have already lost their most significant residual. Other shows are following the same pattern -- "Lost", etc.

Years ago, the studios gave the writers a bad deal for cable, saying it was new and there was no money in it. So, when "24" reruns on F/X which is owned by New Corp that owns the studio that producees it and the network that first broadcasts itm the writers get a reduced residual instead.

Then the studios gave a writers an even worse deal for home video, saying it's new and there's no money in it. So, "24' gets put out on DVD and the writers get about four cents per disc divided by all the writerson that disk -- say 8 episodes each -- so each writer gets 1/2 cent. The distributor gets most of the money -- 20th Century Fox home video, owned by News Corp.

The studios the gave the writers a terrible deal for foreign markets, saying those markets are new and there's no money in them. So, the writers get almost no money for airings of "24" in, for example, the UK, where it airs on Sky One... owned by, you guessed it, News Corp.

Now the studios are trying to give writers an even worse deal (by a lot!) for the Internet, where the shows will be streamed on fox.com and MySpace, both owned by News Corp.

This is the pattern. This is the history.

Residuals were started to benefit the studios. By moving a significant portion of writers' income to the back end, the studios lower their risk. Residuals are only paid on successes (i.e. things that rerun).

Residuals are not a bonus. The word "residual" means left over, not extra.

Since then, the studios have been systematically shifting reuse from the platforms where they agreed to pay reasonable amounts in residuals to the ones with lower and lower amounts.

So, yes "24" reruns on many other outlets owned by News Corp. Eventually the majority of views will be online. And they don't want to pay us for those.

This is serious erosion of real incomes for middle class people. If you don't want to call it a "rollback", call it that -- "erosion" or "reduction" or "ass-rape".

Anonymous said...

I think the writers are doing the right thing. If you currently sell pickles for $1 each, and tomorrow decide to sell them for $2 each, who is anyone to tell you that you are wrong? In truth, the writers are a major part of what the final shows become, their pay should better reflect that. How hard would it be to stand up and read jokes that were written by a good writer anyways?

CLH said...

I love you, Klaatu. Just a civilian here, but I know and everyone knows you guys are being screwed. Again. I repeat: Everyone knows it. And the fact that you're writers in Hollywood has got nothing to do with what's going on here and what's at stake. Working class folks in this country know exactly what this is about. Do not let the corporate PR f***s frame this. You guys keep control of script, please!

shanna said...

Thank you so much! (Klaatu and others who are approaching this logically and with some sense of what this amounts to) I don't care if I make $20k/year and a writer makes $200k, the networks and Big Business are making BILLONS (not millions, BILLIONS) and they are not paying a fair wage to those who work under them and PROVIDE THEM with the content that they profit from. And furthermore they are trying to squeeze more dollars out of people through dishonest means. That's wrong. End.Of.Story.

Following from the sidelines said...

Everyone keeps pointing to Lost and 24 as examples of how all shows are moving away from ever rerunning.

The fact that these shows don't rerun has nothing to do with the popularity of the internet (or, at least, very little to do with it).

These shows don't rerun because because they don't rerun well.

Lost and 24 are both serials. They have a very loyal fan base who watch the show every week, because the cliffhanger at the end of one episode leads directly into the beginning of the next.

You can't watch these shows out of order. You miss one, you either catch it on the net (and the Writer deserves a residual for it!) or hope that "previously on Lost" is good enough to catch you up.

Shows like The Office and ER, on the other hand, rerun very well because each episode is generally a stand-alone story.

The internet is very important and it is crucial that the WGA stake its claim now and get the residuals it's members are owed.

But the sky is not falling. It is disingenuous to suggest that all reruns will move to the internet, never to be seen on broadcast again.

Anonymous said...

Klaatu:

(I'm the media buyer who posted about your financial model and also about '24')

Again, I don't really disagree with your larger issue. I just think your analysis by which you determined that the AMPTP offer on streaming constitutes a 90% rollback on residuals, is way, way, off, both in terms of your assumptions about advertising income from streaming and your overall account of how much profit is floating the scripted television industry in general.

I do hope a fair residual rate is negotiated-- I just don't think the fair rate is, as you suggest, 10x or 20x times the current offer in terms of its relation to revenue, and its relation to the relation of primetime residuals to primetime revenues. (Sorry, lousy sentence but I think you know what I mean.)

(For that matter, if I understand the WGA current position, and I may be missing something, they're asking for about 3X the new AMPTP offer on streaming-- in other words, about $750 per episode rather than $250, still pretty small change, and I hope they get it, but if people are this upset about $250, I don't get why $750 will satisfy them. Even with a decent model, streaming residuals are gonna be chump change for a while. Again, that's all the more reason why the AMPTP should bargain up, I'm just saying they aren't off by a factor of ten as you argue.)

supporter from local 695 said...

Just to follow up on "watching from the sidelines" said, I've heard that Kiefer Sutherland negotiated into his contract that all episodes of 24 were to be aired consecutively, without repeat or interruption (ie, no "Love Boat Fantasy Island Family Feud 40th Anniversary Christmas Reunion Special" could preempt its time slot during sweeps).

I don't want to be a guy putting rumors out there, but I did hear this from a crew member on that show. If anyone can verify, that'd be great.

So, this is not to say that reruns are or are not diminishing, but in this one case, there seems to be an outside reason for it.

Fight on!

Anonymous said...

If I go to McDonalds, and the workers are striking because of poor wages, bad conditions and I can't get my Big Mac - it's not my problem - that's between the workers and management. Someone should be there to give me my food. Same as in this case - if I am paying for cable, someone should be creating those shows, whether it's the writers or new writers that are replaced. Someone else's working conditions are not my problem.

Klaatu said...

Thank you clh and shanna. I'm trying to be logical about it, despite my emotional response (anger and sadness).

I really am trying to approach this from what's fair, not what would be great (unlike the AMPTP).

Klaatu said...

Following from the sidelines,

Sorry, you are wrong. "24" and "Lost" rerun great. They wouldn't rerun great out of order, but they are extremely valuable when aired/sold/streamed in order.

"24" is a huge seller on DVD. "Lost" was the VERY FIRST SHOW to be sold on iTunes.

These are wildly popular shows. The writers should not be penalized for that! They aren't getting the most significant residual (network primetime rerun). They are getting a few dollars for cable or pennies fr DVD, because writers go bad deals for those markets, despite the huge profits both shows make in them.

The writers are now being offered an even worse deal for Internet, a place both shows have already proven to be very succesful at rerunning.

Perhaps the word "rerun" is confusing some people. Maybe "reuse" is better.

Rach said...

1. you can replay all the episodes of LOST in order over the summer. They chose not to do that.

2. you can replay all the episodes on cable, but that's syndication, not reruns. The networks could rerun them easily but they would rather fill the timeslots with something else.

3. no one said steve carell doesn't make enough money.

4. writing is not like a career where you gradually work your way up. There's not a lot of job security - or any. If you have a slam dunk sitcom you're employed for what? 10 years at the most. Then you're running around looking for another job and you're going to need an income coming in to help, and that's where dvd and internet sales should be.

5. They don't HAVE TO GIVE writer's the same amount for rerun tv shows as they do for the internet.

Just give a % of the profit from ads! Ads on the internet aren't a straight up fee. There's potential for nbc to make MORE off an episode with add money (if it's downloaded a lot) than a sitcom, and potential to make way less. You want to make it fair? Give writer's a PERCENT of the profits. Jeez louise, it's not rocket science.

Klaatu said...

Anonymous Media Buyer:

First of all, get a nickname, already! :)

Second of all, let's look at the Disney Channel. They reported 74.1 million streams during the first month they ofered them (June 2006). Likely this number has and will continue to rise.

Since June 2006, their TV ratings have not decreased. They've gone up! They have even acknowledged that online streaing has helpedTV ratings. When they stream an episode before airing it on TV, the TV ratings are higher when they do.

Also, they have no commercials on the Disney Channel, but they do have ads on their streaming site. So, those aren't bundled in with TV media buys. That's all new revenue. And a lot of it.

$139 residual for a year of streaming is not only a tiny fraction of their online revenues (by any measure), it's proportionately much smaller than writers receive for TV reuse.

Klaatu said...

rach,

That's what the WGA has been asking for all along -- a percentage of revenue. (You can't use profits, because they cook the books. According to News Corp. "The Simpsons" is a money loser.)

Anonymous said...

'Lost' doesn't "rerun great." Before they stopped rerunning it, it averaged about a 1.5 which is way low for such a popular (and expensive to produce) show.

Here's more:
http://tinyurl.com/2yc4p9
http://tinyurl.com/2fvj99

Anonymous said...

The bit about Fox claiming The Simpsons never made a profit is getting old and tiresome. More WGA propoganda people.

Klaatu said...

lol. Okay, how about this:

"Frasier ran for 11 seasons and made $1.5 billion in revenues, yet ended up $200 million in the red – according to Paramount’s accounts."

http://www.thebusiness.co.uk/trading-floor/265432/hollywood-accounting.thtml

mediabuyer said...

Klaatu: Re Disney Channel, I've never dealt with them, so I honestly don't know what their streaming income is. It wouldn't shock me if a lot of their streaming adspace ends up getting bundled with ABC Family or morning cartoons on ABC or something-- bundling often crosses networks like that-- but I can't say for sure.

Though obviously, yes, any way you cut it, streaming ads on shows that don't have ads when they're broadcast certainly increases the value of those shows. If I repped the show runner of 'Hannah Montana' I would certainly be taking notice.

But anyway, I'd think you'd agree that ads on streams of ad-free broadcasts is an unusual situation (unique to Disney Channel, I think) and not the normative one for whatever gets negotiated in this deal.

following from the sidelines said...

klaatu -

i wasn't talking about redistribution at all.

you are pointing to Lost and 24 as two shows that don't get rerun on their own networks.

you seem to be making the point that the internet is cannibalizing the network rerun.

i'm merely stating that even if the internet wasn't available for distributing these particular shows, they would not be great candidates for rerun on abc or fox because of the serial nature of the show.

In other words, writers for these shows wouldn't be get any residuals for a rerun on abc or fox anyway...

don't get me wrong, i think your math is solid and helps point us down the road of what the real residual ought to be -- and that's significantly higher than $250!

WGA Writer With Business Sense said...

To the person who asked the very good question about what is the royalty relationship on e-books in relation to physical books, I have some answers for you.

Standard author royalty per book is 15% of the saless price, from the first book sold. Because most authors recieve an "advance" on royalties to actually write the book, the advance must first be "earned out" and then the author gets royalty payments after enough books are sold beyond what the author was paid in the advance.

As to e-books, Random House, as an example, is actually paying a 25% royalty on e-books, because their reasoning is that since the books are transmitted digitally, it actually reduces their expenses enormously.

Isn't it interesting to note that there are businesses where the CEO's took a look at the efficiency of the Internet delivery model and actually decided to share that efficiency with the people who create the content that starts it all?

But the book business has an easier time admitting that without authors, there are no books.

And yet, the same is true for Hollywood. Except there are also actors, directors and crew people, all of whom recieve the benefit of residuals, and without whom there would be no movies or TV.

There has never, to my knowledge, been an "author's strike." That's because strikes are always the result of bad management. The media conglomerates own some of these book companies. They could learn a lot from how their book divisions deal with the talent that creates what they sell.

Klaatu said...

WGA Writer With Business Sense,

That is really good info about e-books. Thanks!

CLH said...

to WGA Writer With Business Sense:

Hey, thanks for the quick footwork on the e-book query! Still, Random House is owned by Bertelsmann. I'd be curious to know what HarperCollins and Time Warner are doing. But you're right, there's less to spin there about who's writing what for which purpose. And when a publishing house prints a book in a new format, say from hardcover to paperback, or from paperback to mass market, no one dares call it a "promotion" to avoid paying royalties.

Fight on! "Civilians" behind you.

Tom Corwine said...

I used to work for a CBS affiliate. During primetime programming (8pm-11pm Eastern), between 60 to 90 seconds of time per half hour was for local commercials. During half hour shows, stations typically get a break between acts 1 and 2. During hour long shows, after act 2 and after act 3.

Like I said above, the local breaks are 60-90 seconds each. On top of that, my station (small market) paid CBS to be an affiliate. We mainly made our money off local shows and sports events (both CBS and syndicated).

I just wanted to mention this, since there was discussion above about local affiliate's ad time.

shanna said...

anon 9:04 said:
"If I go to McDonalds, and the workers are striking because of poor wages, bad conditions and I can't get my Big Mac - it's not my problem - that's between the workers and management. Someone should be there to give me my food. Same as in this case - if I am paying for cable, someone should be creating those shows, whether it's the writers or new writers that are replaced. Someone else's working conditions are not my problem."

If you give your money to a company to give you a product and they aren't treating their workers right and service stops, it is your problem. YOU choose where to put your money and if you're morally bankrupt enough that you don't mind giving your money to people who are unfair then go ahead. But don't get upset when those workers decide to leave because they respect themselves enough NOT to be exploited.

Keep up the fight writers!

Anonymous said...

I am told that HarperCollins and Time Warner ebook contracts are in line with the Random House model. Actually, there were some early ebook contracts that were actually TOO generous to the writers, they offered a 50/50 split on cover price.

The early common wisdom was that ebooks were a lark, but now, with Amazon's Kindle coming out, publishers are seeing that there is a certain segment of the reading public that wants ebooks. So they have, with astonishing fairness, revised the contracts to allow writers to share in their benefit of reduced delivery costs with a 25% royalty instead of a 15% royalty for physical books, but which will still allow the publishers a healthy profit if ebooks become the preferred method of distribution, as some are saying they will.

This is what happens in a reasonable business.

Publishers would never throw their industry into chaos, potentially destroy their business models (as the AMPTP companies may do with network advertisers and the upfront way of selling ad time) all to avoid paying a measly 50 million a year.

Even if the fifty million becomes 150 million a year when the actors and directors recieve the same amount (split between the companies) it still is a drop in the bucket and not worth this strife, the bad PR, or the extra scrutiny the CEO's are exposing themselves to with the FCC.

Gavin Palone is wrong, Rupert Murdoch and Sumner Redstone don't want to dig in for a year because they don't want the glare of attention this strike has shone on their public promises of massive Internet profit, and they look like bizarre penny-pinching fools if they are willing to lose potential billions in network ad dollars all to avoid paying 50 million (or even 150 million between all the creative unions).

That's like, gas money for their company jets. That's nothing.

You don't "union bust" unions that have beloved movie stars as members. That may be elitist, but in the world of the moguls (who are elitist), they don't want movie stars mad at them, they want to be able to invite them to their parties so they can impress their friends.

If they didn't want that, as Nikki Finke points out, they'd be in the business of making toothpaste, not movies and television.

Hey Rupert, you OWN HarperCollins, why don't you take a tip from your own company and be done with this?

WGA Writer With Business Sense said...

NOTE: The above comment was from me, WGA Writer With Business Sense.

I don't know why my nickname didn't print.

The Internet is tricky, but I still think there's money to be made off of it.

Anonymous said...

WGA Writer With Business Sense:

Re the above: "
Even if the fifty million becomes 150 million a year when the actors and directors recieve the same amount (split between the companies)"


Wrong- via pattern bargaining, $50 million = just under $500 million, not $150 million. 1x DGA, 3x SAG, the rest IATSE and other assorted health funds. Whatever your take on the issue, you have to keep your numbers straight, especially if you purport in your nickname to have 'business sense'

WGA Writer With Business Sense said...

Hey Anonymous,

Thank you for the correction. However, your number isn't entirely correct either, because if these internet residuals replace network residuals (as we have seen they will surely do) and the Internet residuals, even in a very good deal for the unions are less than the network residuals currently (as we all agree they will be, we just can't agree by how much) the cost actually becomes:

A savings. To the companies when all content comes through the Internet, as no one is disputing that it will, as it already DOES in countries like Germany.

Even in the interim, as with shows like "Lost" which immediately do their repeats on the web, it represents a cost savings, even if they agree to exactly the amount the WGA is asking for (and what her sister unions will ask for).

So actually, it still makes no sense to have the guaranteed lost revenue of an extended strike (and no one is disputing there is lost revenue) which will never offset the gains that could be made by making a fair deal and ending it.

Even the unions best deal still means, in the end, the companies save money.

Unless the strike goes on and on.

But I appreciate your correction.

Anonymous said...

"Thank you for the correction. However, your number isn't entirely correct either, because if these internet residuals replace network residuals (as we have seen they will surely do) and the Internet residuals, even in a very good deal for the unions are less than the network residuals currently (as we all agree they will be, we just can't agree by how much) the cost actually becomes:

A savings."

Well, sure, if you assume that after this transition to streaming the networks retain 100% of the current $5 billion prime time ad market. But I think that's awfully unlikely-- if broadcast TV shuts down, a big chunk (most) of that ad revenue will go to the googles and facebooks of the world, not, say. abc.com. So calling a discounted residual rate a 'savings' in the context of completely ravaged revenues is kind of misleading, I think.

Anonymous said...

or, forget about the nightmare situation, of all reruns getting streamed instead of rerun-- take the example everyone's been using, 'Lost.' Well, the fact that 'Lost' only did 1.5 in broadcast reruns and got yanked in favor of streaming / iTunes isn't just bad news for the writers whose residuals are affected, it's bad news for the network that a popular show can derive enough rerun broadcast viewership to get a decent rerun ad revenue. It means an episode of 'Lost' has significantly less value than it would otherwise, even once you factor iTunes downloads and whatever incidental streaming revenue there is (see above in this thread about how there is is basically no CPM income for streaming, since that adspace is thrown into broadcast deals to prevent them from collapsing.) And it's bad news for the studio, too, because that impacts license fee negotiations. Basically, it's bad for everyone, not good for the studio/network and bad for the writer.

Anonymous said...

Correction: I mean 'it's bad news for the network that a popular show CANNOT derive enough rerun broadcast viewership to get a decent rerun ad revenue.' Not 'can.'

Anonymous said...

which also, by the way, why your eboo analogy isn't really relevant-- books aren't ad supported. If they were, and the ad revenues of traditional books were getting mauled by everyone buying ebooks instead, then you wouldn't see the royalty structure you describe.

WGA Writer With Business Sense said...

Anonymous,

Respectfully, I disagree. Google may start a network and compete with programing, and that would be something to worry about for the networks but hey, if they think they're good at what they do they'll survive that the way they survived cable.

No contract will mitigate the open marketplace of competition, nor should it. The companies have enjoyed the monopoly of distribution for a long time, but they will soon enjoy it no more. No deal they can get from the unions will prevent that from happening.

The companies will have more competition in an all Internet distribution model, to be sure, but they'll be doing it with a reduced residual structure, so that seems fair.

They may loose out to Google Studios (if and when such a company forms), but again, what they get from a protracted strike won't ensure them winning in that scenario.

I humbly suggest that they cut costs by getting rid of the ever thickening layers of so-called "creative executives" who have made network TV the worst it's ever been. I agree with Marshall Herskovitz on that one.

Whoever wins in the all-internet distribution model will be whomever has the best relationships with the best creatives and produces the best product. Just like now. It really is a meritocracy. If you think that there are an infinite number of people who do what we do, and do it well...well, then you haven't been watching youtube.

Advertisers want to be part of good content. Viewers want good content. Good content always wins.

Anonymous said...

WGA Writer With Business Sense:

But the issue about online advertising being harder to monopolize than network TV *isn't* contingent on Google starting up Google Studios. It's just contingent on Google being Google, and Facebook being Facebook, and so forth. A lot of product categories are already pulling out $ from television buys to buy more internet advertising. On the internet, networks are competing for ad dollars not just with each other but with massive juggernauts like Google, Yahoo, Drudge, etc., regardless of whether those companies decide to enter into the filmed entertainment business or not.

Re: television, maybe there are too many executives but that's not what drives up costs. Say Disney has 100 TV executives (which it doesn't) and they made an average of 200K a year (which they don't). Fire 50% of them, you save $10 million yearly. Big whoop. That's about the budget of three episodes of 'Pushing Daisies' or 'Lost' or 'Friday Night Lights' or 'Bionic Woman' or any number of failed shows. The costs problems are, unfortunately, in the product itself.

Anonymous said...

meanwhile, re that Herskovits article, before you take him too seriously, actually watch 'Quarterlife.' Since he and Zwick self-produced that for myspace, they were presumably free from the meddling influence of all these executives who are supposedly ruining shows. And yet, somehow, the show, um, kinda sticks. Just something else to think about...

WGA Writer With Business Sense said...

Anonymous,

I feel close to you now, and wish you had a better handle than "anonymous."

But at any rate, it has been interesting probing these issues with you. You are level-headed and seem willing to at least DISCUSS the difficulties of the new business models from the companies point of view without being ridiculous and pretending on the one hand there's no money to be made, and on the other hand going on MSNBC and bragging about the billions you'll be making.

I still feel like your arguments are generally focused around the idea of somehow defending the companies re: the internet, along the lines of somehow feeling sorry for them because their cushy monopoly of distribution is coming to an end.

To that I sort of have to say, um, well...boo hoo.

If they would stop dicking around with this strike, settle on a number (far less than the current numbers, at least on the network/TV side) and be able to preserve their relationships with artists, with agencies, with advertisers and with the very idea that, say, "Warner Brothers" means anything in the new media wild west, well, that's would would serve them best.

Because the reality is, Warner Brothers means nothing five years from now. It's just an olde timey logo you remember from when you were a kid.

Because the reality is, when they no longer have a monopoly on theatrical distribution, or personal ownership of films you watched theatrically, or series television (because it is all distributed through the internet) all "Warner Brothers" is...is a bank. With a cute olde timey logo.

And there are lots of banks. And the artists will prefer the banks that didn't have them walking circles in the driveway of:

Warner Brothers.

Anyway, it's been fun negotiating with you, Anonymous. It is my hope that discussions this substantive are happening in the negotiation room.

Anonymous said...

WGAer With Business Sense:

Hmm. Okay, go to a bank, or really, any venture capitalist, or Google, and tell them you want 100K to write a script for a tv pilot, that will have a one in five chance of bring produced. Explain to them that if it is produced, they'll be on the hook for another two million in production costs. And then tell them that once they've spent that two million, it has a one in four chance of making it on the air, in which case they are on the hook for about $40 million to produce a season of television.

And then tell them that their chances of the show lasting long enough for them not to lose almost half of that money (since the network licensing fee, is the 1 in 20 chance that it will syndicate.

Good luck getting that money. VCs and banks and new media conglomerates like Yahoo / Google won't put up with the economic inefficencies and risks that are part of the culture here and keep everyone employed.

So yes, I do feel sorry for the studios. And I feel sorry for everyone who works for them too, because internet distribution is a much bigger threat to all of us than an opportunity.

That doesn't mean the WGA should accept whatever the AMPTP feels like offering. It's just something to think about when you're trying to decide what a fair or acceptable deal is. A world where WB is just a brand is a nightmare world for writers, because there's no way that Yahoo or banks or whatever will maintain levels of employment anywhere near what we have today.

Angel said...

There are two specific comments here that my jaw dropped while reading. I won't even bother with the comment about $20k being enough to "get by fine". Spoken like someone who has never had to "get by" on $20k (before taxes and deductions) until the next bout of work comes their way.

The comments about it not being "their problem" if the products they use or they money they spend is not distributed fairly amongst those who produced the product. I'm taking liberties in summarizing.

"Someone else's working conditions are not my problem."

Yeah, I'll bet you believe they aren't. Just as sure as I'd bet that if they were your working conditions you'd care. Happy holidays, buddy. Happy holidays.

It obviously is your problem. You are here commenting on it. You are, as a consumer, being directly affected by what is happening. It may not be about the availability of a cheeseburger (as your example stated), but it is about your source of entertainment. You are right. You pay for it. It should be there.

But not at any cost. And you should be absolutely livid if you are told to accept anything less.

Tom Conrad said...

Some guy wrote I pay for cable and I don't care about writer's working conditions, I want my shows, hire new writers (cause writers grow on trees).

The writers' problem is not my problem!

And he also said that what goes on at Mc Donald's is not his problem. He just wants to eat his Big Macs.
Do you know the Big Mac you eat is propably road kill? Or that is full of cancer?

Unless you want to live in a society of your own, get together with this one, get off your ass and fight. Cause we don't fight only for ourselves, we fight for you too.

Do you really want to be ruled by conglomerates?

fupusscky said...

If I had a union, I'd probably strike as well. But, I'd remind the writers of this: while your cause is commendable initially, you have to be willing to compromise as well! Any new monies offered your way are not rollbacks: they're RAISES! I work for a bank and I bring in new money through loans and mortgages daily. Every payment the client makes on that home or financing (like every commercial aired for a tv show) contains interest- gross bank profit. How much do I see? JACK! The only difference: I can't strike. My only solution if I felt in a similar manner to the WGA would be to find a different job.

Given a union and an opportunity to receive residuals on the loans I set up, I'd certainly be willing to take a stand. But, the WGA should keep in mind that in most lines of work that isn't an option. Granted, they have the right to stand up and fight for what they feel is fair.

But they should also find a new job if they don't feel they are fairly compensated. Unions largely slow down production. This is proof.