Script Enabler

Writers believe that very soon, reruns will give way completely to internet streaming.

Whenever a prime time television show is rerun, either on the broadcast network, local stations in syndication or on cable, the writer collects a residual. When it is streamed to the internet (e.g. InnerTube on CBS or off the HBO website), the writer does not collect a residual (and for that matter, neither do the actors).

The reason is that because the talent isn’t paid for this reuse. Therefore, the cost is minimal for the studios to make these shows available to stream on the internet. The studios are also able to charge advertisers for commercials that the viewer cannot skip over. As reported in The Hollywood Reporter, this ad-supported internet streaming market for television shows could potentially grow from $250 million this year to $1.7 billion by 2010.

How important is this? A writer used to be able to count on at least two residual checks for their episode airing. One for when it originally airs and one for when it repeats in the summer. Right now, shows like “Heroes” and “Lost” don’t have a second broadcast airing. When did this change?

In 2000, “Survivor” proved that you could attract a large audience during the summer so the networks started programming inexpensive reality shows. “Dancing with the Stars” and “American Idol” both started as summer series. To make room for these summertime reality series, prime time repeats were repurposed to ad-supported internet streaming for which writers receive nothing.

This ad-supported internet streaming is a completely separate issue from what the AMPTP calls “electronic sell-through” and the WGA calls the “hated DVD formula.”

When they say “electronic sell through” what they’re talking about is internet downloads: buying movies and television shows on iTunes and Amazon Unbox and downloading it to your computer. This is not the same as internet streaming which disappears when you close your browser or shut off your computer.

The issue is that the AMPTP believes internet downloads are the same as home video (DVD/videotapes) and therefore subject to the same residual rate. After negotiations ended October 31, the AMPTP released a statement saying, “In referring to DVDs, we include not only traditional DVDs, but also electronic sell-through — i.e., permanent downloads. As you know, we believe that electronic sell-through is synonymous with DVD.”

The WGA doesn’t believe that a DVD, a tangible disk that has manufacturing, shipping and storage costs is synonymous with digital downloads which have no manufacturing costs and minimal distribution and storage costs. Therefore the WGA doesn’t believe digital downloads should be compensated at the “hated DVD formula.”

Back in 1985, the home video residual rate for writers was negotiated to 0.3%. The WGA agreed to this lower rate to subsidize the untested home video market because the hard manufacturing costs of a VHS cassette were prohibitively high.

Today, home video is far from an untested market. According to The New York Times, U.S. consumers will buy nearly $16 billion in DVDs this year. The studios make roughly $17.26 per DVD. In comparison, writers make four cents. During these negotiations, the writers asked for eight cents. Just to give you some perspective, had the WGA not subsidized the fledgling home video market and kept the pre-1985 rate, writers would take home 21 cents per DVD today.

The AMPTP wants to use the home video rate of .3% to compensate writers for internet downloads. The WGA wants a rate of 2.5%. According to the same Hollywood Reporter article, the internet download market could potentially grow from $315 million this year to $1.16 billion by 2011.

Why am I willing to walk the picket line over this?

Under the current contract, writers residuals will gradually dwindle to nothing as more television shows and movies are repurposed for the internet. It’s no big secret that writers tend to be unemployed most of the time and residuals help get them through the lean years. The Los Angeles Times had an article about the positive effects of residuals for writers.

Residuals are deferred compensation for the full value of the writer’s work product. This value can only be determined over time. The current contract doesn’t fairly factor in the internet as part of the total value of the writers’ work product.  The new contract must address this otherwise writers may see, very quickly, studios benefit monetarily from a writers work with no compensation at all for the writer.

If a writer’s work product is available on the internet (streaming or download) and it’s generating revenue for the studio, then it’s fair to say that the writer’s work product has not yet maximized its full value and the writer should receive compensation.

For a complete list of WGA contract proposals click here.

For a complete list of AMPTP contract proposals click here.