[A2k] Commentary: State of the Union

[Soenke Zehle]

Commentary: State of the Union
<http://www.streamingmedia.com/article.asp?id=3D9773>

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.

by Eric Schumacher-Rasmussen
November 30, 2007

When the 12,000-plus members of the Writers Guild of America went on
strike earlier this month=97a union labor action that=92s still going on,
though both parties returned to the negotiating table this week=97it did
more than simply send most TV shows into reruns and create a world where
the words =93Ellen DeGeneres=94 and =93scab=94 are used in the same sentenc=
e.

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=97years, even=97of 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=92t afford to promise the writers too big a piece
of it.

A week after the strike began, someone calling him or herself
=93strikingwriter2007=94 posted a video on YouTube called =93Voices of
Uncertainty,=94 which shows interviews of studio execs including Walt
Disney=92s Bob Iger, News Corporation=92s Rupert Murdoch, and Viacom=92s
Sumner Redstone boasting about how much money there is to be made in
digital distribution, interspersed wtih biting comments in support of
the WGA. =93We all have PDAs, we all have cell phones with screens, we=92ve
all experienced the screen in the back of the taxicab or the screen in
the elevator,=94 said NBC Entertainment chairman Ben Silverman, =93and we
are one of the best companies in the world at feeding those screens.=94
After which followed strikingwriter2007=92s response: =93Screens will be
fed. Writers, not so much.=94

The video=92s closing comment is most telling, however: =93How come the onl=
y
time the internet seems to confuse the studios is when it=92s time to pay
their writers for it?=94 That=92s probably overstating the case a bit. Ther=
e
is still disagreement and uncertainty among entertainment companies as
to the best way to monetize content online. Just look at NBC=92s
schizophrenic approach. You can watch their shows on NBC.com, which is
logical enough, or you can watch them on Hulu.com, NBC Universal=92s 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=92s still an element of
=93throw everything against the wall and see what sticks=94 in the studios=
=92
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=92 grievances
are legitimate. After all, they don=92t 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=92s
turned out. And though it=92s easy to joke about pampered Hollywood
writers getting dropped off by their limos at the picket lines, the fact
that so many writers=97particularly the young ones, with the most to
lose=97are supporting the strike goes to show just how seriously they=92re
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=92s 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=92s riotous =93The Landlord=
=94
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=92t 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=92 strike shouldn=92t have come as a surprise. Producers made a
new offer yesterday, but according to the Writers=92 Guild it doesn=92t
cover downloads and allows the studios to avoid payment on reuse of
anything for =93promotional=94 purposes, even if that includes streaming a
full episode of a TV show. And so, for now, the strike goes on.