1/31/2008

Michael Russnow: Let's Have a Formula That Is Meaningful

Former WGAw board member Michael Russnow has been covering the strike on his personal site and recently began blogging "The Writers Strike for Dummies" on the Huffington Post. In his most recent entry, Russnow discusses the importance of setting precedents for compensation on the Web.
We believed the AMPTP when they cajoled us to accept the cable deal in 1981 with the understanding that when they stopped rerunning old black and white shows and started making serious money they would take care of us.

We believed the AMPTP when they cajoled us in 1985 to accept the definition of gross to be one fifth of the monies they received, because the VHS industry was new and those cassettes were expensive to make. When it became really profitable they would take care of us.

Well, they did become profitable, even more so when they switched to DVD and its much cheaper manufacturing costs. And of course, the cable industry grew and grew as it became more and more the norm for shows to rerun directly from their original traditional network home to cable networks like USA, Lifetime and Arts & Entertainment, and the ad rates for those new rerun shows soared through the roof.

And guess what, they didn't change the payment formula. [...] And now there's the Internet and all its possibilities, some of which are already here.
So while history certainly provides ample reason to be circumspect about the AMPTP's predictions and promises about new technologies, Russnow points out that it's incorrect to make a one-to-one comparison between prime-time reruns and online streaming:
[N]o one's suggested that either $20,000 or the $12,000 prime-time network residual fee that half-hour shows receive should be paid for reruns transmitted on the Internet. When the Internet replaces broadcast and cable as the main source of original programs and reruns the fees should more accurately approach the amounts writers, directors and actors receive in syndication, which are significantly lower than the prime-time rerun rates. These monies are in the low to mid-thousands for subsequent runs and descend in value as rerun usage increases until the payments are in the hundreds of dollars.

I'm also not saying we must absolutely have the syndicated rate, and perhaps it's time to recognize the vast dissemination of viewing possibilities. Just as there are many, many more cable networks than there are over-the-air channels, the Internet possibilities are infinite, yet it's clear that in the future a relatively manageable number of dot.com networks and film companies will dominate.

Let's have a formula that is meaningful and reflects the true worth of AMPTP afterlife profits, rather than the pitiful amounts they propose... .
Hopefully, both sides in the current informal talks can acknowledge that new technologies need new thinking and new payment structures. Check out Russnow's full piece for his thoughts on why the composition of the DGA and WGA memberships lend themselves to different deals and, to my knowledge, the first strike metaphor based on Charles Schulz's "Peanuts." (Who's the Red Baron in all this?)

6 comments:

Jen said...

I'm wondering if the brave new year-round programming plan NBC has means a very quick end to prime-time repeats. NBC could pay for more programming, shift reruns to the web at huge residual savings, and still come out ahead. Or am I being to much of a conspiracy theorist?

Michael said...

Jen, I think you're being a conspiracy theorist. There's no way the streaming revenue from, say, Law & Order or ER would surpass first- (or second-) run reruns at this point in time, so it would make no sense to not broadcast reruns of the shows that are currently rerun, year-round schedule or no.

stuiec said...

The poster steven hale on another thread here opened my eyes to something: the Internet substitutes the opportunity to interrupt an hour-long show six times for a total of 12 or more minutes of ads with the opportunity to immerse the viewer in a non-interruptive bath of advertising opportunities for the entire 48 minutes of running time. The form of the ads changes, the number and placement changes, the cost of each ad changes... but if it's done right, the revenue opportunity for the network is much greater.

No, it isn't happening right now. But yes, it will happen over time. So it does make sense to drive a stake in the ground for the principle of a percentage residual. If you can win that this time, so much the better -- but if not, you'll have to gird up to win it in a future contract negotiation.

makomk said...

"The poster steven hale on another thread here opened my eyes to something: the Internet substitutes the opportunity to interrupt an hour-long show six times for a total of 12 or more minutes of ads with the opportunity to immerse the viewer in a non-interruptive bath of advertising opportunities for the entire 48 minutes of running time. The form of the ads changes, the number and placement changes, the cost of each ad changes... but if it's done right, the revenue opportunity for the network is much greater."

The trouble with that is the non-interruptive bit - for ads to matter, people have to actually notice them. Sure, you can show ads for the entire 48 minutes running time, but people will be watching the show, not the ads. (It'll also be nearly impossible to tell how many people actually saw any one ad - they know how many people it's been shown to, but that's a very different figure.)

I'm sure advertisers will figure out some way of getting the viewer's attention, but this comes at the price of annoying them. Eventually, if it gets too bad, people will start finding ways to block or avoid seeing the ads. (This has already happened for normal Internet ads, which is part of the reason Adsense was so successful.)

stuiec said...

makomk: you're right, the formats have to be clever. But you can imagine a couple of easy-to-provide scenarios -- for instance, using one button to "bookmark" an ad so that you can browse to the advertiser's website when the program ends, and another button to "pause and jump": pause the program stream and jump instantly to the advertiser's website. After the jump (immediate or post-program), the advertiser can present whatever format works best for his product or service. Maybe the landing page is a pizza order form; maybe it displays a video window with a :15, :30 or :60commercial.

And maybe the advertising revenue model shifts from CPM (cost per thousand impressions) to CPC (cost per clickthrough), or some hybrid of the two.

Viewers tolerate the network logo in the corner of the screen, and in-program promo pop-ups at the bottom of the screen. The new technology makes those pop-ups clickable. Also, a generation raised on first-person shooter video games and sports programs with heads-up displays of game information can easily adapt to a viewing format that presents ancillary advertising at the margins of the screen.

Not An said...

stuiec -

Actually I find the network logo and the pop-ups to be so annoying that I often turn away from the show plus I find them disrespectful of both the viewer and the artists who created the product.