We start today — and since I'm tight on time, we may close today — with this one from this one from Peter W. Randall…
The folks at my office say it's silly for the Writers to strike over a piece of revenue from the Internet since there is no revenue on the Internet. No one's making money on the Internet, they say. What do you say to that?
I say that by allowing this strike to happen, the Producers have already probably cost themselves a minimum of $500 million and it could easily spill over into the billions within a week or three. They've thrown almost every phase of their businesses into uncertainty and chaos. They're laying off loyal employees and discussing how much of the audience they'll lose during the strike which might never come back to their product.
It would be Braindead Stupid of them to let all that occur if they could have headed it off by giving us a tiny percentage of an area where there isn't or won't be any money. You can do the math on this yourself. What's 5% of Zero? Oh, hell. Let's be generous. Make it 10%.
There's an e-mail circulating from some guy who's arguing the point your friends are arguing. In it, he says in effect, "I can tell you that from my experience that there's almost no money to be made on the Internet and I oughta know. I have a whole bunch of websites and I've barely made a dime off them." The reply to that, of course, is: "That's because you, unlike NBC, aren't offering full episodes of My Name Is Earl on your website."
But it's actually more than that because the WGA stance is not about getting X% out of what's currently coming in. It's about not allowing the Producers to build an entire infrastructure on the 'net with all sorts of precedents and definitions established that will long exclude the unions from sharing in new revenue streams. For instance, they want to say that just about anything they put on a website for streaming or download, regardless of how they can "monetize" it (hate that verb) is "promotional" and therefore should be exempt from residuals. We need to nip that one, as Deputy Fife used to say, in the bud.
There are a lot of predictions about where the delivery and sale of content is going with regard to the web but every single one involves a closer relationship with the old methods and a blurring of the distinctions. To make this point, let me tell you about My TiVo.
My TiVo is a wonderful thing. Actually, it's so wonderful that I have three of them but let's just talk about one. I can set My TiVo to record The Office and then I can watch The Office at my convenience. That alone would make it a good thing but My TiVo can do so much more than that because my TiVo is connected to this amazing thing called the Internet. Because it is, My TiVo can download movies from outfits like Amazon and Netflix. I can buy a movie and watch it in my home without the studios even having to spend the three cents or whatever it costs to make a DVD these days. I can use My TiVo to listen to XM Satellite Radio. If I had My TiVo hooked up to cable TV, depending on where I lived, I might be able to have My TiVo download that episode of The Office for a fee if I didn't record it when it first aired. I've downloaded TV shows and movies from the Internet via my computer and transferred them to My TiVo for viewing purposes. Any day now, I'll probably be able to download anything I could ever want to watch via the Internet and watch it on My TiVo.
And I do all this on the same machine, punching the same buttons on the same remote control. I watch on the same TV and since Time Warner owns my cable company and Fox owns much of my satellite provider…well, the experience of watching television via the old-fashioned means is almost seamlessly morphing into the experience of watching it via the Internet.
The old business models are all changing. The old financial structure of broadcast television from a Writer's viewpoint, was that you write the show for X dollars, predicated on the understanding that if it reruns, you'll receive Y dollars. Everyone agreed to that…perhaps grudgingly in some cases, but they agreed. A Writer's compensation for writing a show is not X dollars. It's X plus whatever Y yields. But in the new model, the Producers are paying X and then if the Y part goes anywhere near the Internet, they argue it's "promotional" and claim that no back-end money is due. Or at best, they insist they'll pay on the DVD formula, which isn't nothing but it's close.
That's dangerous for the Writers in a couple of ways. Not only do we lose a vital part of our incomes but as more and more of the studios' and networks' profits come via Internet delivery, they're going to be arguing that the old first-run, conventional network parts of their operations are less profitable. They'll use that as an argument for cutting X. So if we don't establish our stake in all these new technologies now, we'll lose on both ends. We'll have no share of the expanding field and a smaller share of the shrinking one.
Or look at it from the standpoint of a guy who writes movies. I, as a consumer, can purchase and watch your film more ways than ever before, all by sitting in this very chair, watching the same TV screen and using the same remote control device. I can watch it on broadcast television. I can watch it on HBO. I can watch it on pay-per-view. I can rent the DVD from Netflix and watch it here. I can buy the DVD from Amazon and watch it here. I can have Amazon or Netflix do a digital delivery to My TiVo. And once it's on My TiVo, there's not a lot anyone can do to stop me from burning a DVD of it or putting it on my iPod or my iPhone or my iChing or whatever iHave.
From the POV of a consumer, it's pretty much the same to me: Same TV, same remote control, same chair, even the same movie. But the back-end dollars to you, the Writer, can vary wildly from decent to non-existent…and any day now, it'll be worse. Because Time-Warner is now streaming (for a fee) episodes of vintage and recent TV shows and is close to marketing vintage, recent and maybe even current movies the same way.
When the Producers say, "There's no money in the Internet," they're not to be believed. They never say there's any money when it means sharing with anyone. They brag to stockholders how much they're making and their executives receive the kind of salaries you pay someone who's making zillions for you…but when any union staggers up like Oliver Twist and says, "Please, sir, may I have some more?", they cry poverty and wail about unrecoupable losses and gasp, "More? You have to get less!"
I mean, these are the people who told James Garner they'd never made a profit on The Rockford Files and who were arguing until just recently that the original Star Trek was still in deficits. And we're supposed to believe them that they haven't quite figured out the Internet yet? That they need another three or six years to study how to make money on it so they'll know how to cut us in on it? (Yeah, I'm sure our cut will be their number one concern.) Three or six years from now, they'll only have figured out how to totally exclude writers, actors, directors and other contributors from the table. Because these companies are really good at devising ways of making money…and even better at devising excuses to not share it. Why on Earth would we want to give them any more of a head start than they've already had?