Writer's Guild Going on Strike

[Doug Jensen]

Thus, in my view, it only stands to reason that the people doing the actual work—writers, actors, directors, crew, etc.—are the ones who are most deserving of the profits. This goes for every industry.

99.9% of workers in the world do not rely on residuals. They do a job, get paid, and that is the end of it. As Tom says, if you want to participate in possible profits, then become an investor in the project, or buy some stock in the movie company, or fund your own production. Why do these union people beleive they are so special that they need to keep their hooks in a production for eternity? I suggest the negotiate for a fair rate to do the work and be done with it.

Does the worker who does the typesetting or cover design for a novel get extra pay if the novel becomes a best seller? No. He/she does their job, gets a check, and goes home. So much simpler for everyone. Of course, the laywers and accountants love things the way they are because it keeps them in business. The same reason we will never get meaningful tax reform or healthcare that makes sense. Too many poeple profit from a broken system.

 

[drboffa]

99.9% of workers in the world do not rely on residuals.

Yes, very true. I realize this is fanciful (at least at the moment), but my argument would be that everyone does deserve to share in the profits. Workers create the profits via non-renewable resources and are thus owed them, or at least a part of them. So ideally yes, a typesetter would be as entitled to some share of the profits as an author (or a janitor, or an investor, or whoever).

This is as unlikely to happen as healthcare or tax reform, as you note, so the next best thing would be ensuring that people are compensated fairly. There is clearly a big disagreement between the unions and AMPTP on what constitutes "fair compensation," but I'm more likely to side with the people who have to work for their money, rather than the people taking in tens of millions (or billions) a year.

 

[Paul F]

..... Thus, in my view, it only stands to reason that the people doing the actual work;writers, actors, directors, crew, etc.—are the ones who are most deserving of the profits. This goes for every industry.

Yes, that is one way to look at it. My guess is that the unions view it that way. Another view is that the people that financed and created the jobs are the most deserving of the profits. I'll bet the producers view it that way.

There's something for everyone.

 

[Tom Roper]

For the writers, actors, directors, crew etc., their wages are paid whether the venture is successful or not. Profits belong to the owners. They invest the money. They own the risks. They secure the debt. They put up the collateral. The wage earners are not stakeholders. If they were entitled to a share of the profits, should they not also be responsible for the same share of the loss? When they sign on, they don't have to worry about losing their collateral. They don't have to fear a loss. But a movie that bombs at the box office could easily cost more than the salary they were paid, because the owners have to pay all the employee wages, and all the expenses that were incurred A to Z including servicing the debt, notes payable, interest payments, rents, insurance, legal fees, licenses, sub contractors, taxes, benefits, pensions. The investors are the stakeholders, the risk takers who own the profits. Nobody gets them because they deserve them. You don't get your wages because you deserve them either, you get them because you are owed them.

 

[Doug Jensen]

Excellent post. Summed it up better than I ever could.

 

[drboffa]

They don't have to fear a loss.

I'm guessing you've never been an employee of a company that filed for bankruptcy...

 

[Doug Jensen]

I'm guessing you've never been an employee of a company that filed for bankruptcy...

I assume that hardly any of the actors and the vast majority of the writiers who are on strike are not employees. But even if they are, employees don't usua.lly have any skin in the game. If their employer goes bankrup they can just slide over to another employer and go right on doing whatever they were doing, while the owners and investors suffer the losses.

When Virgin Galactic went belly up a couple of months ago the value of my stock went to zero. But the employees got their final paychecks and went to work someplace else. When a TV show gets cancelled, the writers get their checks and go write for another show. But the owner of the show has lost their investment.

 

[drboffa]

I assume that hardly any of the actors and the vast majority of the writiers who are on strike are not employees.

I honestly don't know, Doug. My point was more about to idea that working people don't assume any risk in a company. If anything, they assume most of the risk, given their precarious position and reliance on wages. If a company goes bankrupt employees who are owed wages can get in line and hope to get paid, but often they're in line behind creditors and investors (if they're in line at all). That's a raw deal.

I also realize this is a broad difference of opinion between some of us (which is fine). The current thinking, in the US, is to prioritize owners and investors. One would even say to excessively valorize them. My view, and a minority but growing view (I hope), is to prioritize people who work for a living.

 

[Doug Jensen]

If a company goes bankrupt employees who are owed wages can get in line and hope to get paid, but often they're in line behind creditors and investors (if they're in line at all).

Owners and investors are NOT prioritized.
I'm pretty sure that the order of payment in a bankruptcy is: 1. Employee wages. 2. Vendors. 3. Investors. Plus in many cases, the employees have unemployment benefits for many weeks or months, so their income doesn't go to zero.

 

[Doug Jensen]

"Creditors who are owed wages, salaries, or commissions are given a high priority for repayment."

https://legalaidatwork.org/factsheet/employer-bankruptcy-sale-or-abandonment/

 

[Tom Roper]

I'm guessing you've never been an employee of a company that filed for bankruptcy...

An employee can lose his job for any reason, but he doesn't lose his assets. A company that is insolvent has secured and unsecured creditors. The assets that remain are divided according to the bankruptcy court. An employee can also lose his job when ownership changes hands. A company can be employee owned. They employess are shareholders with voting rights and thus participate in profits, but also losses. If it fails, the stock he owns becomes worthless. The risk is owned. But the notion of a union demanding a percentage of profits but not losses is very naive. It would be the metaphor for, "I want what's in your pocket but not what's in your mailbox."

 

[drboffa]

"Creditors who are owed wages, salaries, or commissions are given a high priority for repayment."

https://legalaidatwork.org/factsheet/employer-bankruptcy-sale-or-abandonment/

Read a little further:

"However, “secured creditors” are first in line, and therefore ahead of employees, for repayment. (Secured creditors are banks or other commercial lenders who are entitled to repossess or seize property if payments are missed.) Because secured creditors are generally owed the most money (usually for property and equipment loans), there often is not much money left over to give to the creditors, such as employees, who are in line after them. Sometimes, creditors in line behind secured creditors may only receive a penny for every dollar they are actually owed."

 

[Tom Roper]

I was shooting weddings for Petit Four Films. They would pay 50% in advance and stiff you for the back half. You can cry about it or recognize what's behind it, cut your loss and move on which is what I did. When it came up in the other topic that a company was demanding you to prove your mileage expense in order to be paid for it, that's when I suggested it could be legit or could be a red flag for a company having trouble meeting payables. Petit Four filed for bankruptcy leaving all kinds of chaos for brides, sub contractors.

 

[drboffa]

I was shooting weddings for Petit Four Films. They would pay 50% in advance and stiff you for the back half. You can cry about it or recognize what's behind it, cut your loss and move on which is what I did.

Again, I think this is a difference of opinion. In my view, this is theft, and would ideally be punishable in the same way as if someone stole the missing dollar amount from you. But because we prioritize owners/investors, we don't consider this theft in the same way as if someone stole your wallet.

 

[Tom Roper]

The real answer is if there is the potential to balance risk versus reward, a way forward will be found. If not, there will be impasse.

 

[Doug Jensen]

Read a little further:
"However, “secured creditors” are first in line, and therefore ahead of employees, for repayment. (Secured creditors are banks or other commercial lenders who are entitled to repossess or seize property if payments are missed.) Because secured creditors are generally owed the most money (usually for property and equipment loans), there often is not much money left over to give to the creditors, such as employees, who are in line after them. Sometimes, creditors in line behind secured creditors may only receive a penny for every dollar they are actually owed."

Good point. But a secured creditor generally has actual physical assets (building, machinery, real estate) that the company has borrowed against. Of course they should get those assets back becaue the company doesn't actually have ownership of those assets if there are liens or mortgages against them. For example, if you have a mortgage on your home, the bank actually owns your house until you pay off the loan.

I don't know what any of that has to do with freelance writirs and actors, though, who think they are entitlted to a share of the profits beyond their paycheck.

 

[cpreston]

From my understanding, the streamers don't have any desire to settle or offer residuals. They are happy to sit on their library and make money on subscribers. If they need new material, they can buy foreign shows cheaper than producing new material in the US. Most of what I've been streaming is foreign. I'm guessing that the unions will blink before the studios.

 

[Mitch Gross]

Theoretical arguments ignore the actual history. If residuals never existed then there may be an argument against starting them. But they have existed for more than 60 years. The payment structure was based on there being a residual system, basically the producers claiming that they're not making money in the beginning so share the risk with us and if it's a success we'll pay you more on the back end. OK fair enough, but then when the streamers first came around they were dubbed "experimental" forms of new media and no one would know how they might work out, so the unions agreed not to enforce a strong residual system on them (a big mistake IMHO). Now it's a decade later and pretty much ALL of the other systems are dead, there is pretty much no rerun or syndication and everything is being dumped onto streaming platforms. So no one is receiving the residuals they used to count on. For some union members it can be as much as a 70% loss of income. The basic position of the unions is that these platforms are now mature forms of distribution so it is time for a residual structure that is in some way equivalent to the structure of the other now-defunct distribution systems. It's not really asking for something new as much as it is asking back for something they had and went away.

The other choice is to pay people much more up front. This example isn't really the same as it is about people very much above the line, but the streamers refuse to pay any form of profit sharing Several big directors and stars have contract deals where they get an upfront fee for a movie as well as points. Nancy Meyers was supposed to make a romantic comedy starring Scarlett Johansson, Penélope Cruz, Michael Fassbender and Owen Wilson for Netflix. But because Netflix would only pay an upfront fee and then nothing else all of their salaries went up. The budget ballooned to over $130 million and Netflix canceled the project.

So you don't want to pay residuals to all those working writers and actors? Okay, then pay them WAY more upfront to make up the difference. And for all of those productions already in the can and under contract you now have to pay a buyout fee that is equivalent to the lost residuals. We're talking about everything since the last contract negotiation, millions of hours of product, so that would be several billions of dollars which is why it will never happen.

Pay them residuals or pay more upfront. But ya gotta pay people.

 

[Tom Roper]

SAG expects a long strike. Nothing is happening right now. There are no talks and each side is waiting for the other side to blink. They are on a 'Call me, and then we will talk' hiatus. The producers have stated that the gross profit revenue sharing is the roadblock for them; it's a 'non-starter'. You can see why. It's a commitment no one can make because no one can share profit if there isn't a profit. So giving away gross-profit points doesn't compute to a producer. But then, we understand the other side as well; there are never any net profits, so that won't work for the actors.

Here's the other thing I think the producers are concerned with. Residuals are a model that works for them. They can share profits as they are made and the profits are clearly there. But if they give away profit points, it opens up a box they don't want to open...... If they give points to SAG then of course, the WGA and DGA are going to say "Where's ours?" and they are off to the races giving away more and more of the pot. That's just not something that works for them. If they give 2 points away to the three unions, hey, suddenly 6 points are gone. And then each union will want another point at every new contract negotiation.

It's an interesting conundrum. Maybe the 2% share is a 'we know we can't get it, but it will make alternatives look a lot better' negotiating point from SAG's side.

The highlighted point above has been the basis for all of my remarks, but in light of what Mitch just said, it caused me to take a deeper dive into the specific demands of SAG AFTRA, and I don't see where one has been made for "gross profit revenue sharing." Residuals on the other hand are specifically listed as a demand, but residuals are items of accrued expenses, not profit. If you have specific information about a demand for the sharing of profits, please share it.

Like wages and salaries, residuals are an expected part of the negotiation.

 

[Paul F]

If you have specific information about a demand for the sharing of profits, please share it.
.

They want 2% of the revenue, which is a bigger demand than 2% of the gross profit. I've been misusing the term 'gross' as an equivalent to revenue. Gross can mean revenue in a lot of conversations, but to be clear, 'gross profit' is not the same as revenue.


I take Variety as a reliable source. - "According to sources on both sides, the biggest sticking point is the union’s demand for 2% of the revenue generated by streaming shows." https://variety.com/2023/biz/news/sa...ts-1235670826/

Parrot Analytics is setting itself up to be the Nielsen of the streaming age (well, more that what Nielsen is). According to them, they are 'trusted' by the big-name streamers. Hey, so what's the problem? If they trust Parrot, then they should be happy to provide residuals for streaming based on Parrot's data. But a flat 2% of the revenue, I can see why that is a non-starter for the producers.