Writers' Strike: Is Political Posturing About to Trump Good Economics?

I'm about to get myself in a lot of trouble. So be it... Listening to both sides in the looming writers' strike, it's clear to me that politics is about to trump sound economics. Neither the Writers Guild nor the Alliance of Motion Picture and Television Producers is looking at the issue properly.

If you look at the amount of money that was at issue during the last writers' strike in 1988, I bet it was less than the amount the strike ended up costing all concerned. And I believe that will be the case this time around, too.

Expecting movie studios and television networks to change with the times is not asking too much. New technologies have dramatically altered Hollywood's economic landscape, but the AMPTP is still clinging to a revenue model that was created back in the days of Lew Wasserman and Abe Lastfogel - and was, as I understand it, adopted from the record business (you remember records, don't you?). The movie business took the formula used for calculating record royalties and basically transferred it to the sale of videotapes (you remember videotapes, don't you?). What's more, the current royalty formula for DVDs factors in the cost of manufacturing (today's electronic DVDs and web downloads, of course, cost absolutely nothing to "manufacture"). Clearly, the media world has gone through a major evolution since Lew and Abe, and it's time for its business practices to follow suit.

On the other hand, what the representatives of the Writers Guild have to remember is that all union contract negotiations are to set minimums, and that the effect of the change in residuals from DVDs and New Media they are seeking will not rise to the level of revenue they are asking for - or what the strike is going to cost the Guild's active members. Once again, the eventual cost of a strike will exceed the financial gain being sought.

Going on strike to lose more than you gain is not smart negotiating.

Both sides should also keep in mind that TV ratings have fallen significantly over the last few years, and the movie box office hasn't been all that great either.

But, who knows, maybe clearer heads will prevail - and sound economics will supersede political posturing. Let's hope so, not only for the sake of the writers, the studios, and the networks but for the millions of people in the community who will be hurt by a strike, including below-the-line workers and all those who aren't in show business but whose livelihood is dependent on a Hollywood that is up and running.

Read more thoughts about the strike on Huffington Post's writers' strike opinion page