Studios Execute Strategy, Take Upper Hand In Strike Talks

The studios’ deal with the Director’s Guild of America came so quickly one has to wonder if this wasn’t part of their strategy all along. One thing is clear: the writers aren’t going to be thrilled with this deal, but they will be under enormous pressure from high-level members of their own ranks to accept its basic premises. There are 1,500 writer/directors who are members of both guilds; if they vote for the deal, it will be a huge vote of no-confidence in the WGA.

Said “Law & Order” producer Dick Wolf to the LA Times: “If the WGA rejects the basic concepts of a DGA deal, there’s going to be a great deal of dissatisfaction with the membership. The bottom line here is: This town should be back to work in three weeks.”

If the writers accept the general terms, they give up the dream of unionizing reality shows and animated productions, but get jurisdiction over web productions costing over $500,000. As we predicted, the DGA didn’t drive a hard bargain on web residuals. Movies sold online, for example, pay the current DVD royalty of 0.36% on the first 50k downloads and 0.65% thereafter. The directors did a little better on TV streamed on the Internet, negotiating a $1,260 fixed payment for a year’s use (the studios had offered $250). But the studios still have a 24-day “promotional” window to use streaming video without paying residuals.

As we’ve noted before, the digital percentages in question are close to meaningless over the 3-year term of the proposed deal. The key is the directors took control of online video, and agreed to revisit the rates in three years, when it may be clearer what entertainment business models work on the web.

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