As the deadline for the writers' strike bears down, Hollywood waits with anticipation and fear. The effect of a strike, if not averted or delayed, would be programs off the air, movies delayed, and people out of work throughout the industry and the local economy. It doesn't have to be that way. There's room for a deal on all the major issues:
DVD Residuals. DVD residuals are the writer's cut when a movie or TV show gets released on DVD. The current formula - which the WGA calls "the hated DVD formula" - is crazy. It dates to 1985, and is adapted from an old record industry royalty formula. What's more, it's based on the assumption that "videograms" - videotapes, at the time - are expensive to manufacture. That's no longer true; DVD's in quantity are $0.25 - $0.35, shrink-wrapped with inserts and ready to sell.
Of course, there are other expenses - shipping, recoupment of production and advertising costs, etc. - but still, the studio profit is large. Meanwhile, the writer gets under $0.05 (five cents) per unit sold. That's ridiculous. The writer's want $0.10 per unit. Not a huge increase, but the actors and directors will get parallel increases too. The parties should compromise on $0.075 (seven and one-half-cents) or $0.0625 (six and one-quarter cents) and call it a day.
Residuals for Internet Downloads. The studios want to apply the DVD formula (pdf) to downloads as well. This, too, is ridiculous. The DVD formula makes no sense any more for home video, let alone for downloads, where the manufacturing cost is zero. The studios' position amounts to paying the writers 0.3% of the studio's gross on downloads, whereas the writers want 2.5%. They should compromise on 1.2%, which is the figure used for videogames and pay TV (HBO and Showtime).
Residuals for Internet and Cell Phone Streaming. The studios' position is unclear. They say they want to apply the DVD formula, but they also reserve the right (pdf) to deem any streaming (and even download) usages as "promotional" - even if the studio receives revenue - which means no residuals would be payable at all. Piggy, piggy, piggy. Give the writers the 1.2% unless the studio receives no revenue on the usage.
Jurisdiction Over New Media. When writers create content directly for new media (webisodes and mobisodes), the WGA wants the guild agreement to apply. That's a bit much. The agreement is 625 pages and is so incomprehensible that the day I started working at the Guild (I'm a former WGA Associate Counsel), my boss told me not to bother reading it because none of it meant what it said anyway. Plus, setting minimum compensation levels for writers, when business models are unknown, is not feasible.
However, there is a voluntary Internet Sideletter (p. 561 of the agreement) that a few studios have signed on a project by project basis. All it requires is that the studios pay pension and health insurance benefits (P&H). The compromise: make the Sideletter letter apply to all new media (such as cell phones), add a provision requiring credit parity (require that the writer get credit on-screen if the director or actors do), and make the Sideletter mandatory. Done.
There are some other issues as well:
Animation. The writers want jurisdiction over animation writing, which they've received on a case-by-case basis. Trouble is, a rival union, IATSE (the "IA"), also claims jurisdiction in this area. Ironically, the president of the WGA is an animation writer. Still, this one's probably a lost cause.
Reality. The writers say they want jurisdiction over this issue, but their strike rules don't even bar such work (in contrast to movies, scripted TV, and animation - the writers can't do any such work during a strike). They're signaling that they'll pass on this issue at the end of the day.
The CW. The writers want to treat the CW like a full-fledged network for compensation and residual purposes. It isn't; treat it like Fox in the 90's and set the levels in between network levels and the current lower rates.
MyNetwork TV. The writers want higher residuals here. Please. MyNetwork TV? This channel is more like no-one's network TV.
So, a deal is possible. The parties should make one and let the town get back to work.
Read more thoughts about the strike on Huffington Post's writers' strike opinion page.