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Commentary: State of the Union
The Hollywood writers' union strike reveals just how much TV and movie studios are counting on online video for future revenues. As usual, though, writers are having to fight for their fair share.
Fri., Nov. 30, by Eric Schumacher-Rasmussen

When the 12,000-plus members of the Writers Guild of America went on strike earlier this month—a union labor action that’s still going on, though both parties returned to the negotiating table this week—it did more than simply send most TV shows into reruns and create a world where the words "Ellen DeGeneres" and "scab" are used in the same sentence.

It showed just how much studios and networks are banking on internet video as a linchpin of their future revenues. In fact, their silence on that front was deafening.

After months—years, even—of crowing about how much money there is to be made from online video, the studios and the Alliance of Motion Picture and Television Producers, which negotiates on its behalf, suddenly wanted us to believe that the revenues from online and mobile video, whether original content or repurposed form TV, were so unpredictable that the studios couldn’t afford to promise the writers too big a piece of it.

A week after the strike began, someone calling him or herself "strikingwriter2007" posted a video on YouTube called "Voices of Uncertainty," which shows interviews of studio execs including Walt Disney’s Bob Iger, News Corporation’s Rupert Murdoch, and Viacom’s Sumner Redstone boasting about how much money there is to be made in digital distribution, interspersed wtih biting comments in support of the WGA. "We all have PDAs, we all have cell phones with screens, we’ve all experienced the screen in the back of the taxicab or the screen in the elevator," said NBC Entertainment chairman Ben Silverman, "and we are one of the best companies in the world at feeding those screens." After which followed strikingwriter2007’s response: "Screens will be fed. Writers, not so much."

The video’s closing comment is most telling, however: "How come the only time the internet seems to confuse the studios is when it’s time to pay their writers for it?" That’s probably overstating the case a bit. There is still disagreement and uncertainty among entertainment companies as to the best way to monetize content online. Just look at NBC’s schizophrenic approach. You can watch their shows on NBC.com, which is logical enough, or you can watch them on Hulu.com, NBC Universal’s joint venture with News Corporation that has yet to establish an identity, much less an audience. If you want to download NBC programs, though, you have to do that at Amazon.com. Clearly, there’s still an element of "throw everything against the wall and see what sticks" in the studios’ strategies, even though the consensus is that ultimately, advertising is where the greatest monetization potential lies.

But even if the studios are hedging their bets, the writers’ grievances are legitimate. After all, they don’t want to make the same disastrous concessions they made in 1985, when they gave away a large portion of their residuals on videocassettes because the profitability of the burgeoning home video market was uncertain. We all know how that’s turned out. And though it’s easy to joke about pampered Hollywood writers getting dropped off by their limos at the picket lines, the fact that so many writers—particularly the young ones, with the most to lose—are supporting the strike goes to show just how seriously they’re taking the potential of digital distribution.

Studios have invested too much in their online initiatives to abandon them completely, and the web is increasingly being viewed as just another screen by the entertainment press. Entertainment Weekly’s annual list of the top 25 entertainers of the year included Will Ferrell, not for his role in the big-screen Blades of Glory but for being one of the principals behind the online startup FunnyOrDie. And for the first time, the mag gave online video a list of its own, compiling the ten most memorable viral videos of 2007, with FunnyOrDie’s riotous "The Landlord" at the top.

More importantly, consumers en masse are beginning to accept the web as both a place to catch shows that they missed on TV and a place to find original content they can’t get anywhere else. The audience for online video is growing exponentially, and that means so is the potential for profit, profit that should be shared with the creators of the work, not just the entertainment companies that own it.

But the studios have never handed over anything without a fight, and so the writers’ strike shouldn’t have come as a surprise. Producers made a new offer yesterday, but according to the Writers’ Guild it doesn’t cover downloads and allows the studios to avoid payment on reuse of anything for "promotional" purposes, even if that includes streaming a full episode of a TV show. And so, for now, the strike goes on.