Crash producer Bob Yari wanted the opportunity to thank the Academy. The movie won an Oscar, but all Yari got was the chance to sue the Academy -- a poor substitute for a golden statuette, even in litigation-happy Hollywood. And even more of a letdown, his suit isn't winning any awards either.
The backstory: Crash won the Academy Award for Best Picture in 2006. Best Picture Oscars are given to the producers of the winning movie. Yet, of the six Crash producers, only two received Oscars, and Yari wasn't one of them.
That's because the Academy -- relying on judgments rendered by the Producers Guild -- only awards Oscars to producers who perform the "major portion of the producer function" on the winning movie (and, even then, there's a limit of three producers). That rule was adopted in 2005 in response to the proliferation of producer credits.
So, the Producers Guild evidently decided that Yari didn't meet the criteria. Yari disagreed, and sued both the Academy and the Producers Guild, claiming that the alleged denigration of his role on the picture damaged his professional standing. He argued that the Academy and Producers Guild are quasi-public organizations and thus have an enforceable duty to use fair procedures. The trial court was unpersuaded, and granted judgment in favor of the defendants.
Now, in a decision reported earlier this week, the Court of Appeal has agreed with the trial court, holding that the Academy and Producers Guild are private organizations, and thus not subject to the duty of fair procedure. That seems right (and is also not clear what, if anything, was unfair about the Academy's procedures). The Court also pointed out that Yari's career does not actually seem to have suffered. All in all, not a good day for Yari.
Thursday, March 27, 2008
Sorry Yari: No Legal Relief for Crash Producer Denied an Oscar
Thursday, March 20, 2008
NY Online Privacy Push
Albany’s an interesting place, and not just because residents of the New York Governor’s mansion seem to spend as much time bed-hopping as signing budgets. On a more important – although less salacious – note, downstate Assemblyman Richard Brodsky has introduced legislation that would shore up Internet users’ rapidly deteriorating privacy, reports the New York Times today.
The bill, as the Times explains, would apply to targeted advertising companies – companies that monitor the websites you visit, typically using cookies for that purpose. It would prohibit those companies from using information about you for advertising without your consent.
Because this would be a state statute – Brodsky’s a state legislator – the bill could not directly establish national standards. However, the seamless nature of the Internet and the relative expense and difficulty of geotargeting mean that the statute might become a de facto standard nationwide, or perhaps worldwide.
I took a look at the language of the bill, and found that it’s complex and has a number of apparent gaps and gaffes. For instance, the language may not cover websites that sell their own advertising (rather than rely on third parties like Doubleclick, now a subsidiary of Google).
Another example: the consent requirements seem to apply, ironically, to non-personally identifiable information, but not to personally identifiable information (often called “PII”). In addition, although the bill is intended to require opt-in consent, it doesn’t actually use the legal term of art “opt-in.” The legislation also requires that the advertising company’s website provide “robust notice” to the user, but doesn’t define that rather novel term.
In light of all this, I spoke to the Assemblyman’s Legislative Director, Kent Sopris. He took note of these issues, and explained that the bill was a work in progress. The Assemblyman’s office is getting lots of feedback – I suggested a few organizations for them to talk to – and revisions to the draft are expected.
To get a broader perspective, I spoke directly to the Assemblyman. He told me the bill is “part of [my] long-term focus on privacy.” He’s also introduced, for instance, a constitutional amendment that would create a right to privacy in New York.
That’s significant, because there’s no explicit right to privacy in the U.S. Constitution, nor in most state constitutions. The exceptions are Alaska, Arizona, California, Florida, Hawaii, Illinois, Louisiana, Montana, South Carolina, and Washington – ten states – according to the National Conference of State Legislatures.
The thrust of the new legislation is straightforward, Brodsky says: “you can’t have my stuff” – my data – “without my permission.” In his view, that principle’s as American as “apple pie, motherhood, and the American flag.” Big Brother is not the government, in his view, it’s big companies, and “Big Brother is watching, and creating dossiers.”
It’s not so simple though. As the Assemblyman acknowledged, “the economic model of the Internet is free [i.e., free content], because of advertising.” Opt-in schemes, where the consumer has to expressly agree to allow data collection, typically produce much smaller levels of consent than opt-out approaches, where the consumer has to expressly refuse to accept ads.
Perhaps the answer is opt-out, although that’s certainly a weaker form of protection. A compromise might require opt-in for PII – which is what the European Union (EU) Data Protection Directive requires, incidentally – but allow opt-out for non-PII.
Keeping up with technological change is another difficulty. Business models evolve – already, for instance, the Times reports that a company called Phorm wants to collect targeting information directly from ISP, by monitoring traffic, rather than using cookies. Would the legislation apply to this? The Assemblyman says yes, because the bill “asserts a broad legal principle.” I’m not so sure – many courts are wary of broad legal principle, and stick closely to legislative language.
Will the bill pass? As the Assemblyman said, “you never know.” Company lobbyists are sure to get involved, and there are many ways to kill a bill. Indeed, just getting the legislature to focus on anything other than passing a budget and adjusting to the new Governor won’t be easy.
Brodsky says he’ll “proceed on the merits” of the bill – “I’ve gotten a lot done on that basis and expect the same way here,” he assured me. That sounds more like a high school civics class than an actual legislature, but we’ll have to wait and see.
Tuesday, March 18, 2008
Arthur C. Clarke dies at 90
Arthur C. Clarke has died, reports the New York Times. A science fiction writer and futurist, he's remembered for three things of particular interest to readers of this blog:
Communications Satellites. In 1945, before the first orbital rocket flight, Clarke foresaw the possibility of communications satellites. He realized that an object orbiting the equator at about 22,240 miles up would exactly match the Earth's rotational speed, making it hang motionless in the sky relative to the Earth.
Clarke also explained that such an object could relay signals beamed from a point on the ground back down to a wide swath of the planet. That's how most communications satellites - and satellite TV - work today, which is why DirecTV customers need a clear view of the southern sky to aim their dishes. Speaking of DirecTV, they should do an in memoriam documentary.
Not all satellites are in geosynchronous orbits, by the way. GPS satellites and the satellites that power Iridium satellite phones are in lower, and not necessarily equatorial, orbits. That means that transmitters and receivers on the ground - GPS devices and satellite phones - don't need to be as powerful, but also that locking on to a signal may be more complex.
“2001: A Space Odyssey.” Clarke was the author of this 1968 science fiction novel, which became a celebrated, if somewhat confusing, movie by Stanley Kubrick.
Clarke’s Three Laws. He was also the creator of three aphorisms about technology, of which the most notable was “Any sufficiently advanced technology is indistinguishable from magic.”
Net Neutrality Nice
As I previously blogged, the major Hollywood studios recently came out against net neutrality. Now the Independent Film & Television Alliance (IFTA), which represents independent producers and distributors, has taken a position - and they're for it. In a letter to the MPAA (organization of the six major studios), IFTA head Jean Prewitt says her org "strongly disagrees" with the MPAA position, and even that she was "astounded" by the MPAA stance.
Why? Net neutrality, remember, is the principle that that ISPs should not discriminate against small users when providing network bandwidth. Independents are smaller, and they need all the distribution options they can get; as Prewitt points out, "The Internet offers the only truly open opportunity for independents (whether or not commercially oriented) to reach consumers because both free and cable television have been foreclosed in the wake of massive industry consolidation."
Her letter is so well written that I reproduce the remainder of it it here (with a couple extra paragraph breaks for clarity). 'Nuff said.
The Internet offers a new system of distribution as well as new ways of communicating ideas to audiences. It is vital that this channel remain open and competitively accessible to all users.
That openness is threatened by the power of a small number of broadband providers to discriminate unilaterally against some categories of users or types of traffic or to accord preferential treatment to certain content providers over others, all under the ambiguous claim of "network management".
While these providers may have some legitimate issues related to the technical management of their networks, there have already been cases of different treatment of users and it is clear that there must be transparency, equal treatment and an avenue of redress when the providers' private decisions trespass fair rights of others and the public interest.
Thus, the issue is not whether government should regulate the Internet but whether there will be effective oversight to prevent a handful of corporate giants from imposing their own version of private regulation to the public's detriment.
Your ShoWest speech suggests that efforts to regulate or legislate "net neutrality" will interfere with the fight against online copyright infringement of films and programs. Comcast's recent throttling of peer to peer traffic illustrates how easily piracy concerns and network needs can become excuses for private vigilantism to the detriment of legitimate users and innovative service providers. Copyright enforcement is crucial to our industry but that cannot be the rationale for abandoning the principles of open and competitive access, which are critical to ensuring a vibrant film industry and a diversity of programming. It is the appropriate role of government to strike the balance between competing needs in such a circumstance.
IFTA's members have experienced the steady erosion of opportunity in the traditional distribution channels despite producing and distributing most of the awardwinning films. This has been the result of massive deregulation of the broadcast and cable industries and the resultant substitution of corporate decisions for ones previously overseen by government in the public interest. Allowing the Internet to become an exclusive province of a small number of giant companies would inevitably harm the future of independent art and commerce.
From its outset, the Internet was designed to be the ultimate open and democratic network. Maintaining that and ensuring that there are no private chokepoints over content and use is the goal of net neutrality. This is in everyone's interest, including your members. Accordingly, IFTA will support public policy efforts to ensure open and competitive access to the Internet and to foster the innovation and creativity that is so vital to our future.
F**king Expletives!
Can the Federal Communications Commission impose harsh fines on TV networks when on-air presenters make fleeting and isolated use of an expletive? In other words, if the enthusiastic recipient of a Grammy or Golden Globe says an unscripted "fuck yeah!," can the broadcaster be fined?
That's an issue the Supreme Court will take up next year, reports the New York Times. The Supremes will be reviewing a decision by the Federal Court of Appeals for the Second Circuit (which includes New York), which was skeptical of the FCC's power to levy such fines. A 2-1 decision of that court criticized the FCC for failing to "articulate a reasoned basis" for changing its policy to impose such fines. The court also suggested, but did not decide, that "the F.C.C.’s indecency test is undefined, indiscernible, inconsistent and, consequently, unconstitutionally vague.”
Always worth remembering: the FCC has certain powers to regulate language and content, but in the area of broadcast television only. Cable channels are essentially unregulated. The public airwaves - the broadcast spectrum - are viewed as a limited resource, justifying some limitations on the First Amendment in broadcast television.
That's why "f**k yeah!" may (or may not) be prohibited on broadcast TV, but actual f**king is ok on cable. On broadcast TV, Janet Jackson's "wardrobe malfunction" garnered massive fines (also being challenged in the courts), whereas, on cable, shows such as Queer as Folk, The 'L' Word, and Californication (not to mention the Playboy channel) garner ratings, not fines.
Thursday, March 13, 2008
Net Neutrality Naughty?
Hollywood studios are taking a position on net neutrality – the principle that ISPs should not discriminate against small users when providing network bandwidth – and they’re against it. In reported remarks at the annual movie exhibitors conference ShoWest, MPAA chief Dan Glickman claimed that net neutrality would inhibit industry efforts to combat piracy – presumably because it would ensure that even pirate sites receive sufficient bandwidth for efficient uploads and downloads. (Glickman’s reported comments don’t include this, or any other, explanation, however.)
The argument in favor of net neutrality, let’s remember, is that it enables new websites – potential new businesses – the opportunity to innovate, and possibly become the next Google. That’s one way of maintaining the level playing field that has enabled the Internet’s phenomenal growth. Net neutrality also maintains the net’s role as history’s most dramatic bastion of free speech and citizen access to (virtual) printing presses.
Glickman’s remarks, in my opinion, are just one recent attack on non-MSM (mainstream media) websites. The other was a judge’s decision several weeks ago, to shut down an entire website (WikiLeaks) because of one document a plaintiff objected to. That decision resulted in a barrage of criticism, leading the judge to overturn his ruling two weeks later. Meanwhile, legislation regarding net neutrality sits in Congress, but has little chance of moving during an election year.
A related threat, though, is that telco and cable co. investment in last-mile infrastructure to homes and businesses is lagging demand, leading to Internet speeds in the U.S. far slower than in other countries. As traffic increases, U.S. ability to accommodate video sites, videoconferencing and other apps may not keep pace. Congress may have to weigh in here as well.
The MPAA, by the way, is the movie industry trade association that takes positions on public policy issues, as well as issues movie ratings. It’s not to be confused with the AMPTP, which negotiates Hollywood labor contracts such as the recently concluded writers and directors deals, or with AMPAS (the movie Academy), which awards the Oscars, or, for that matter, with ATAS (the TV Academy), which awards the primetime Emmys. Hollywood’s not only a jungle, it’s an alphabet soup.
Viacom Can't Get Punitive Damages in YouTube/Google Suit
Viacom's suit against YouTube and Google slowly works its way through the legal system. In a decision rendered last week, but only generally reported yesterday, the Federal District Court in New York hearing the case denied Viacom's motion to amend its complaint to seek punitive damages against the defendants.
The Court's reasoning: the Copyright law doesn't provide for punitive damages. Thus, the decision says nothing about the strength of Viacom's case, or the thorny issue of whether the DMCA safe harbor - the notice and takedown procedures that govern one-off infringements on websites - applies in the case of the massive infringement alleged in this suit.
Punitive damages are damages intended to punish particularly conduct by defendants that's particularly egregious, as Viacom alleges is the case here. If available, they would come in addition to actual damages (the plaintiff's actual losses) or statutory damages, which are an alternative to actual damages where it's difficult to show actual damages (or where none have occurred).
Tuesday, March 11, 2008
Hollywood Labor: What’s Up with the Actors?
AFTRA, a
First, if you’re just tuning in to the
We’ll blaze through what’s happened to date. Skip the numbered paragraphs if you’re already au current.
1. Negotiations last year between the writers (the Writers Guild of America, or WGA) and the AMPTP (Alliance of Motion Picture and Television Producers, i.e., the studios), over revisions to the contract expiring October 31 last year, began in earnest at the end of October and collapsed at the beginning of November, largely due to studio intransigence.
2. The writers went on strike Nov. 5.
3. Negotiations restarted in December, but promptly collapsed again, for the same reason as the early go-round.
4. The studios began negotiations in January with the directors (the Directors Guild of America, or DGA) – whose deal was not expiring until five months later – and reached agreement that month.
5. The studios resumed negotiations with the writers, this time sending several studio heads, and reached agreement in February. The writers agreement achieved a few, relatively small improvements over the directors deal.
6. The strike ended and the deal was approved in mid and late February, respectively (two separate votes about two weeks apart).
Now it’s time for the actors, whose deal expires June 30 (the same date as the directors deal was set to expire). The Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA) jointly negotiate the film and primetime TV deal, primarily found in a contract called the SAG Codified Basic Agreement. This joint negotiating posture is called Phase One, because it’s supposed to be the first phase in an eventual merger of the two unions – something that SAG has repeatedly rejected, however.
The two unions have 50-50 representation on the bargaining committee, even though AFTRA jurisdiction includes no films (so far as I’m aware) and only three primetime series. SAG has 120,000 members, AFTRA 70,000, and dual members (“dual cardholders”) constitute 40,000 of those two figures.
What about daytime TV shows? They’re under sole AFTRA jurisdiction, and subject to a separate contract, called the Network Television Code. (Exhibit A of the Code covers primetime, and basically cross-references the SAG agreement.) In general, SAG covers filmed productions and AFTRA covers tape, with digitally-shot productions subject to overlapping jurisdiction, but this is said to be something of an oversimplification.
More specifically, SAG covers the big ticket items – primetime shows, episodic cable shows (i.e., scripted dramas and comedies), and films. AFTRA covers syndicated dramas, daytime serials, game shows, talk shows, variety and musical programs, news, sports, reality shows, and promotional announcements.
SAG board member Justine Batemen describes the jurisdictional breakdown as follows:
“SAG has work that is recorded, no matter the medium upon which it is recorded, for later play (sitcoms, dramas, films) and AFTRA has live shows (newscasts, talk shows, etc.) and those recorded in a "live manner" (awards shows, Saturday Night Live, and then variety shows and soap operas which used to be live).”
The two unions have very different positions on the proper relationship to management (which is one reason that past merger attempts have failed). SAG’s national leadership – headed by president Allan Rosenberg and National Executive Director Doug Allen – and its
In contrast, AFTRA – led by Roberta Reardon, AFTRA President and Chair of the Negotiating Committee and National Executive Director Kim Roberts-Hedgepeth – usually takes a more conciliatory approach to management, and feel that aggressive tactics simply drive more production to go nonunion, or to flee to Canada, where U.S. union minimum wage scales don’t apply. SAG
SAG, reflecting its assertive approach, has refused to begin negotiations on the expiring agreement until April. This, they feel, will give them maximum leverage. That’s because mid-April is the deadline for what’s referred to as a de facto strike. This is the date past which few films are being greenlight for start of production. That, in turn, is because a typical film production schedule provides for 60 days of principal photography (i.e., shooting). April 15 plus 60 days equals mid-June. Any films started later than mid-April would risk having actors walk off the set come June 30, if a strike materialized.
In contrast, AFTRA, and a group of prominent actors such as George Clooney, wanted negotiations to begin immediately. In the last day or so, it appears that some fence mending has occurred, and the unions will negotiate jointly, but that talks will start in April.
SAG has identified three or four areas on which they’ll focus in negotiations on the Codified Basic Agreement. In addition, of course, there are always a host of other issues in any union negotiation, but the ones identified here are likely to be the most contentious.
First, they want improvements over the WGA deal in new media. Bateman identifies two aspects of the deal as inadequate: the WGA deal (which I summarize here) has a 17-24 day window during which no residuals are payable for ad-supported streaming of new television shows (she feels this is unfair, and wants no window); and there are budget floors below which certain shows produced for new media are not covered by the union agreement (she feels this will create a pool of non-union actors, but doesn’t specify whether she wants lower floors or none at all). I’m guessing the studios left themselves enough headroom to give a little on these issues, allowing the actors to ultimately claim a victory.
The second area in which SAG wants improvement is the conditions for middle-class actors. It’s unclear if this means SAG is seeking significant increases in minimums – i.e., even greater than the typical increases – or if they’re looking for something else (or both).
The third area is forced endorsements. This refers to product integration, which is product placement on steroids. Product placement means a product appears passively on screen in a film or, increasingly, a TV show; for example, a Coke bottle appears on the table during a scene. Product integration, which has become more prevalent lately as the film and TV business have become economically tougher, means that the product is touched by an actor – he or she drinks the Coke – or is referred to verbally, e.g., the actors asks for a Coke. It also mean the situation where a product or service appears pervasively in the film or TV show, i.e., repeatedly.
In both product placement and product integration, the production company receives either a payment from the brand (i.e., the product manufacturer) or consideration in kind. These latter, referred to as barter deals, entail the brand giving product or services to the production company. For instance, an airline featured in a film might give air tickets, allowing the production to fly to locations at no cost when the film is shot in various cities. Product placement or integration deals can also be hybrids, involving both cash and goods or services.
Currently, actors do not receive any compensation from product placement or integration deals. Their concern focuses on product integration, and is several-fold. One issue is that, having touched or called for a product by name, they no longer have a chance to do a commercial deal with the product’s competitor(s). or instance, an actor in character who calls for a Coke can scarcely do a Pepsi commercial.
Secondly, the further value of the actor to the integrated product is reduced. For instance, the actor might get a Coke deal, but it might be at a lower rate than on the open market, because the brand already has footage of the actor (in character) calling for a Coke.
Finally, the actors are unhappy that they (in character) are being used to sell a product and garner revenue for the production company, yet not sharing in the bounty. For instance, a famous actor is hired, in part, to attract an audience, and he or she shares in the (hoped-for) success of the film or show through residuals and profit participations. Likewise, goes the logic, if famous actor attracts a brand to do an integration deal, they want to share in that success as well.
A fourth area the actors indicated they want improvement over the writers deal is DVD residuals. These rates (percentages) have been low since 1984, when the directors accepted what the writers and actors view as a bad deal, one which has persisted to this day, as I explain here. SAG president Rosenberg mentioned this issue in January, but his more recent statement of issues that SAG will focus on omits DVD residuals, and lists only the first three issues. Thus, it’s unclear whether SAG will emphasize this issue, and it’s unlikely they’d get much traction on it, now that the other two unions abandoned attempts to reopen a quarter-century old deal. That’s unfortunate, because the DVD formula will continue to matter for decades, as I discuss here.
The AFTRA deal announced yesterday includes provisions on new media residuals and on jurisdiction over content created for new media (as well as increases in traditional media minimums, and new or revised approaches to a host of other issues). I’ve been informed by an AFTRA spokeswoman that the deal tracks the writers’, but details have not been announced yet, so it’s unclear what differences there might be.
Two other SAG issues are in the mix. One is whether the Phase One joint bargaining relationship will collapse, leading to two separate negotiations of the film and primetime agreement. This would dramatically undercut SAG’s leverage, since producers would presumably be able to do less expensive deals with AFTRA.
The other issue is qualified voting. This is the concept that membership voting for a strike or voting on the new contract, when a tentative deal is reached, should be restricted to members who have worked at least a minimum number of days (or earned a minimum amount) from acting in a given year. This is a concept being pushed by moderates, who fear that less-employed or unemployed actors (who constitute a large percentage of the union) are more likely to vote for a strike, having less to lose (since they’re not, or are scarcely, working anyway).
Reportedly, the SAG Board could institute this system, but I think it’s unlikely to do so, precisely because it would reduce the likelihood of a strike (and thus SAG’s leverage) and because any Board member who voted in favor of disenfranchising a large number of members would be voted out of office next election.
So what happens next? I think we’ll see a de facto strike starting in April – indeed, we already are, as a number of films have been postponed, and few are being greenlit already for production starts after mid-April.
We may also see a strike authorization vote, which would then allow the SAG and AFTRA Boards to call a strike without further membership vote (assuming this process is provided for in the bylaws of those unions, which I’m not sure about). I think a strike authorization vote will probably only occur if talks in April are not promptly fruitful.
The big question is whether we’ll see a strike. Everyone wants to speculate on this one … but it’s simply too early to predict. I think we do have to take the prospect seriously though, as studios already are. Stay tuned.
Monday, March 10, 2008
AFTRA reaches tentative agreement on Network TV Code
Here's a press release from AFTRA:
----------------------
Thursday, February 21, 2008
WGA Deal: Details
Want to know the gory details of the tentative writers deal (now being voted on by the Writers Guild members)? If so, read on.
The Writers Guild has released a deal summary at http://www.wga.org/contract_07/wga_tent_summary.pdf, and actual contract language (not posted, but I can email it to you). Below is my analysis of the contract language, generally in the same order as in the deal summary.
Note that this is just a summary; for definitive answers, refer to the actual contract language (which is over 50 pages in length, in three separate documents). Also, more information, and updates, are available on my blog, at http://www.jhandel.com.
Made-For New Media Provisions
Made-For New Media Jurisdiction
If a professional writer writes original programming for new media (such as Internet and cell phones), the work will be covered by the Guild agreement, even if the budget levels for the programming are low. This has a rough equivalent in the DGA deal.
Derivative works for new media – i.e., spinoffs of existing TV shows – are covered regardless of budget level; and original programming for new media is covered above certain budget levels (must be over $15,000 per minute and $300,000 per single production and $500,000 per series). These provisions are the same as the DGA deal. (It’s unclear how, or if, derivative works based on theatrical or direct-to-video, product are covered.)
Some writers have criticized the budget levels for original programming as high, but bear in mind that the studios have to compete at lower budget levels with content generated by non-union
Made-For New Media Compensation
For derivative works, relatively low compensation minimums apply, on a per-minute basis, with a floor of two minutes’ compensation. Not great for writers, but better for them than the current practice of often pressuring show staff writers to do this work for free.
For original works, compensation is negotiable. That’s not so good for the writers – given the relatively high budget thresholds for jurisdiction, they would have hoped for some minimums.
Pension and health provisions apply to new media.
Made-For New Media Credits
The Guild determines credits on new media programs within the above jurisdiction, and credits must appear on-screen or via a link if anyone else receives such credit. This provision is consistent with one of the WGA’s core functions – recall that the Guild was founded 70-plus years ago with credit as a key motivator (to counter abuses in credit granting that were then common).
Made-For New Media Residuals – Derivative Works
Initial compensation covers 13 consecutive weeks of ad-supported exhibition and 26 consecutive weeks of consumer-paid exhibition.
Thereafter, (a) reuse on ad-supported platforms within one year of expiration of the 13 week period requires payment of small fixed residuals; after the one-year period, the rate is 2% of distributor’s gross. And, (b) reuse on consumer-paid platforms after the 26 week period, the rate is 1.2% of distributor’s gross
When derivative new media programs are reused on television, residuals for television programs apply, with some modifications. No residuals are specified if such content is released on home video (quite conceivable) or even (albeit unlikely) theatrically.
Made-For New Media Residuals – Original Works
Initial compensation covers 26 consecutive weeks of consumer-paid exhibition, and all uses on ad-supported platforms.
Thus, no residuals are payable for ad-supported uses. Also, no residuals are payable for uses on consumer pay platforms if the program is budgeted below $25,000 per minute.
Above that budget threshold and after the 26 week period, the residual is 1.2% of distributor’s gross.
When original new media programs are reused on television, residuals for television programs apply, with some modifications. No residuals are specified if such content is released on home video (quite conceivable) or even (albeit unlikely) theatrically.
Note – reuse on television is exemplified by Quarterlife (a backdoor series), and could also represent the situation where the Internet is used to create a backdoor pilot. This is important coverage, because such backdoor series and pilots may become increasingly common – for instance, as an alternative to traditional, expensive pilots.
Made-For New Media Separated Rights
For derivative works, if the writer introduces a new character that is used as the basis for a new TV series, then separated rights apply. For original works, certain separated rights apply if separation of rights would have applied had the work been written for free television.
Also, if a writer writes for new media, then later writes a television program or theatrical motion picture based on the new media content he or she write, the fact that there was such source material will not preclude separated rights.
Note: separated rights are complex, even prior to the introduction of this concept into new media. The WGA’s own booklet explaining separated rights is 40 pages. I can email you a copy of the booklet if you wish.
Made-For New Media – Other Provisions
Writers of covered new media programs must join the WGA. Also, disputes are subject to arbitration (as with disputes in existing version of the Guild agreement).
New Media Residuals
This applies to reuse of TV programs and theatrical movies in new media (it’s unclear how made-for-DVD movies are treated). Pretty much the same as the DGA deal, with a couple notable exceptions, discussed below. Details are as follows:
Definition of New Media
Internet, mobile (such as cell phones or PDAs), and “any other new media platform known as of February 13, 2008.” Thus, we can expect further discussion (or discord) as additional new media platforms are developed over the next several years and beyond.
Distributor’s Gross
Note below that many of the formulas are based on distributor’s gross, not producer’s gross. This is excellent for the writers, because distributor’s gross is higher, and is more transparent.
Paid Rentals
Residuals for paid rentals – i.e., downloads or streaming where the user pays on a subscription or per-picture basis, and the payment covers viewings for a limited time period or a limited number of viewings – are paid at 1.2% of distributor’s gross.
Electronic Sell Through (EST) (paid downloads, such as iTunes)
0.36% of distributor’s gross below certain thresholds for number of units sold. Not a great rate for talent, and same as existing DVD formula (more particularly, there are two existing DVD rates, and this is the higher of the two). The thresholds are high, but probably become more likely to be met as this medium eventually replaces DVD/Blu-ray.
Note – “same as existing DVD formula” actually probably means less than the existing DVD residual payment (four cents on average DVD) per unit, because EST prices will probably be lower than DVD average selling price, at least eventually. (The four cent DVD residual is actually a percentage, not a fixed amount.) But, the total residual payment may be the same or higher, because unit sales would increase at lower per-unit prices.
Above the threshold number of units sold, the rates are higher: 0.65% (theatrical) or 0.7% (TV) of distributor’s gross. Not huge numbers, but an improvement for talent over DVD.
Theatrical Ad-Supported Streaming
1.2% of distributor’s gross. Note – only applies to post-July 1, 1971 films (measure from start of principal photography). For older films, apparently no residuals.
Television Ad-Supported Streaming for Library Content
TV library content is payable at 2% of distributor’s gross. Library content means programs that (a) are post-1977 (and, apparently, some prior programs, but it’s hard to determine which) but (b) as to which the literary material was written prior to February 13, 2008.
Television Ad-Supported Streaming for New Programs
This area is complex, and was the subject of enormous conflict. That’s probably because, when such content is rerun on TV, a high fixed residual is payable. As reuse migrates to ad-supported new media, but still exists on TV, then studios will have to pay both the high fixed TV residual and the new media residual, so they feel burdened by high costs, in a business that already is under a lot of financial pressure.
Here’s the deal:
There’s an initial “streaming window” of 17 to 24 days where no residual is payable. This isn’t great for the writers, because much viewing will occur during this time, since viewers will probably not wait weeks before they catch up with TV programs they missed on TV (or that they prefer to watch on a PC in the first instance, which is the case with many young people).
After the streaming window, there’s a residual payable. For network prime time shows, it works like this: in the first year or second year of the WGA contract (WGA contracts are three years), the residual is a percentage of the applicable TV residual base. That translates into a fixed residual of roughly $1400 per year for one-hour programs and roughly $700-$800 for half-hours.
In the third year of the new deal (literary material written on or after May 2, 2010), the residual is seemingly 2% of distributor’s gross, which would be an improvement for the writers as compared to the DGA deal. But what one hand gives, the other hand takes away: distributor’s gross is deemed to be fixed at $40,000 for one-hours and $20,000 for half-hours, resulting in a fixed residual of $800 or $400, respectively. So, the residual doesn’t actually scale as distributor’s gross increases.
By setting out a distributor’s gross framework, this provision arguably makes it (somewhat) easier for the WGA negotiators in three years to argue for true scaling (or, at least, an increase in the deemed level for distributor’s gross).
For other than network prime time shows, there’s a fixed residual. It’s unclear whether this is lower than the residual for network prime time – I believe so, but the contract language is quite ambiguous.
Paid Streaming (Non Time-Limited) or Ad-Supported Downloads
Unclear how (or if) residuals for these uses are paid, because the deal seems to assume that all streaming is ad-supported or for a limited time (in the latter case, it would be paid under the rental formula) and all downloads are user paid. I previously blogged that these assumptions were problematic, because this leaves a gap in the contract for paid streaming or ad-supported downloads. That could engender disputes, if the deal summary is accurate.
Transparency
New media residuals based on transactions between divisions of the same company have to be based on a fair market value, and the issue would presumably be arbitrable. Also, the studios and networks have to provide the WGA with new media contracts and distribution statements, without redactions (deletions), and usage data. These provisions, I believe, were not even attained by the Guild previously in traditional media (nor in the new deal).
Clips
Clip residuals are low for ad-supported streaming, which will hurt late-night writers when, for instance, a Leno monologue is made available online for free preceded by an ad. Where the user pays, the residual is 1.2% of distributor’s gross, but this is an unlikely scenario on the Internet. Such a business model might be more common cell phones – i.e., the user could pay $5 extra per month on your cell bill and get unlimited comedy clips.
There are provisions for residual-free clip usage when used to promote programming.
Other Issues
Contract Expiration
May 1, 2011 – synchronizes with likely SAG (and announced DGA) expiration of June 30, 2011. This arguably increases the WGA’s negotiating leverage, because it allows for the threat of concurrent WGA and SAG strikes; but, on the other hand, it eliminates the WGA’s opportunity to easily interrupt the fall TV season mid-stream or implode the awards shows.
Minimums
Various minimum compensation levels will increase by 3.5% or 3% per year under the proposed deal. Appears to be generally the same as DGA increases.
Cable Minimums
Basic cable minimums were not increased to the same degree as achieved by the DGA. Specifically, under the DGA deal, directors of high-budget basic-cable programs got a 12% pay increase. However, under the proposed WGA deal, writers of such programs do not receive an equivalent bump.
Given the increasing amount of scripted content on cable (basic cable, such as FX, USA and AMC, as well as pay TV such as HBO and Showtime) – and the decreasing amount on network TV, at least for the time being (since strike-replacement reality programming is occupying time slots formerly held by scripted programming) – it seems shortsighted and unfortunate for cable TV to suffer second-class citizenship.
Favored Nations
If the Screen Actors Guild gets better deal terms in its upcoming negotiations than the writers, will the writers retroactively get the benefit of those improved terms? This is called “favored nations.” (See http://digitalmedialaw.blogspot.com/2008/02/favored-nations.html for discussion.)
The WGA says they achieved a limited form of favored nations – it applies only to the new media provisions of the proposed agreement. So, if SAG attains better terms in another area, such as DVD residuals (which SAG has highlighted as an issue it will focus on), the writers would not get the benefit of SAG’s efforts. The WGA deal on favored nations is apparently a handshake deal.
However, the issue may be academic – AFTRA has announced that it will negotiate separately with the studios, undercutting SAG’s leverage and perhaps reducing the likelihood of any gains. Still, this story is very much in flux, and it’s too early to know whether SAG might nonetheless achieve further benefit.
Other Technology-Related Issues
The parties established a committee to address the reuse of movies and TV shows on alternative digital broadcast channels, which are new channels such as LA ch. 4.1, 4.2, etc. (controlled by ch. 4) which are broadcast digitally in spectrum space used for digital transmission.
The parties also agreed to meet on a company-by-company basis to discuss electronic data transfer of residuals information. The companies first expressed the intent to move to such transfer (as a replacement for the paper transfer of information that then has to be rekeyed by the Guild) more than ten years ago, so it might not be realistic to expect a change in procedure anytime soon.
Foreign Remakes of TV Series
The parties added a new sideletter setting out residuals for foreign remakes of U.S. TV series.
Other
There are many other, more minor, changes; see p. 4 of the deal summary for information.
Reality and Animation Jurisdiction
The WGA abandoned these demands, as I predicted back in October, and recommended. Thus, reality and animation jurisdiction are not part of the new deal.
DVD Residuals
The WGA several months ago abandoned its demand to double the home video residual rate, so it remains the same as always: 0.3% of the studio’s gross below a certain threshold, rising to 0.36%. No change from the previous version of the contract, and no difference from the DGA. Note that SAG considers this issue still on the table for its contract negotiations, as of their last published statement on the topic, a couple weeks ago. I have argued that this decision by the WGA was a mistake for writers; see Slipped Disc: Why DVD Residuals Still Matter – and Always Will (http://digitalmedialaw.blogspot.com/2007/11/slipped-disc-why-dvd-residuals-still.html).
Bargaining History
Ambiguities in the Guild agreement (MBA) are usually resolved, or at least addressed, with reference to bargaining history, composed of notes taken or exchanged during formal negotiations. However, since much of the 2008 deal was worked out in informal sessions, it’s unclear how much bargaining history will be available as disputes arise.
Administration and Enforcement
As the complexity of the new media provisions suggests, this deal is going to be very complicated to administer and enforce, notwithstanding the transparency provisions. Expect errors in new media, especially early on, while studios implement and debug new computer software to pay these residuals and compensation minimums.
And, because of the low dollar amounts in new media over the next few years, individual audits will generally not be cost effective. Hopefully the Guild will develop sufficient in-house capability to conduct audits, perhaps as part of the Tri-Guild (WGA, DGA and SAG) audit process.
Format of Contract Language
Interestingly, the new media provisions of the MBA continue to be contained in two Sideletters buried at the end of the contract. This will seem increasingly peculiar as the Internet grows in importance.
Strike Termination Agreement
There is a separate Strike Termination Agreement that deals with return to work and extension of personal services agreements, among other issues.
