The ironic reality of the writers' strike is its irrelevancy. Why? Read on.
Fifty three percent of 300 media, advertising and entertainment executives believe writers should continue to "hold out for everything they want," with 47 percent voting for them to "pick up their pencils and get back to work." According to the poll conducted at www.jackmyers.com, a slight majority of a group that should be expected to be more sympathetic to the networks and studios express support for the Writers Guild of America.
This surprising result suggests underlying acknowledgement that digital assets represent an important and growing revenue stream for the industry and, although it is impossible to assess the long-term incremental value represented by digital, writers indeed deserve a slice of the pie. The challenge for networks and studios remains their inability to accurately determine the economic impact of digital distribution opportunities in the face of continuing network audience erosion and disruption of traditional revenue models. Writers remain adamant that billions are already being generated without significant loss of traditional revenues, and the self-incriminating words over the past few years of network CEOs support their claims.
Assumptions of digital profitability notwithstanding, negotiators representing the production community are hardening their stance as networks and studios complete their internal economic scenarios and conclude a long-lasting strike will not materially affect 2008 profitability, as reduced production costs offset revenue losses. In a November 7 conference call with analysts, News Corp. president Peter Chernin suggested "during fiscal 2008, a strike is probably a positive for us." In the longer term, an apocalyptic disruption of the Upfront selling season and fall 2008 programming schedule would have long-lasting impact.
Realistically, though, any long-lasting negative impact could be offset if a hard-core stance against the union results in greater profitability from digital business models. Ultimately, writers, directors and actors will receive a slice of the digital pie. The question is how much, what assets will be included, and how much risk will networks and studios be inclined to take on digital content development costs if potential profitability is diminished for those few programs that achieve success.
What is at stake is the historic willingness of studios and networks to invest massively in development costs for projects that never see the light of day. Currently. thousands of concepts go through an expensive and drawn out development season, only to be winnowed down to a few dozen pilots and then further reduced to a few produced series, and then even further narrowed to those that make the second and third season cut based on audience ratings.
In the post-strike digital world, thousands of concepts will be cheaply produced and scattered across the digital landscape, much of it by members of the unionized Hollywood community who are being disenfranchised by the established economic models. Broadband and mobile video websites will eagerly offer distribution for this content and ad sales networks such as Broadband Enterprises and Tremor Media will help fund it through advertiser support. A few will find their way to cable and broadcast series that compile the best of the web, and ultimately networks and studios will acquire development rights to the best, in a reversal of current windows. Studios and networks will increase their production of online content and significantly reduce their investment in script and pilot development. At the end of the strike, whenever that is, writers will need to become more entrepreneurial if they hope to benefit from digital income. I can't envision any scenario where writers get to simply sit and write and expect to benefit financially whether or not their scripts are ever developed. So perhaps they must fight the good fight now to protect what little future upside they have in any distribution model.
The ironic reality of the writers' strike is its irrelevancy. Digital media is disrupting the economic models of an industry whose models have been broken for years. Today, fewer than one network television series in twelve breaks through to profitability. This one program in twelve has to support the enormous operating overhead of those who risk capital to develop and produce the programs. It is a business of failure, not success. The Writers Guild of America wants a piece of that American Dream – the ability to fail time and time and time again, and ultimately have a profitable business. Networks and studios prefer to hold onto their right to fail upward for as long as they can. Writers are rewarded now for their failures; they want a bigger slice of the action in those rare instances they succeed. Whether the strike ends soon or continues into the new year, there's a new business model in town and whatever deal is brokered, writers will no longer be the beneficiaries of a model that pays for failure.
The bet now is that the two sides will find common ground in the next six weeks, maybe even during post-Thanksgiving negotiations, and reach an interim settlement. If talks fail, and the strike continues into mid-2008, write the epitaph for the current development model that funds the writing of hundreds of scripts each season. And for both sides of the strike issue, that's not such a terrible thing.
To register your vote for or against the strike, visit www.jackmyers.com.