Acting Up

CANNES, France – Do loose clips sink ships? Apparently the actors think so. Their ongoing union negotiations with the studios are hung up over clip consent – the issue of whether studios can use short excerpts from movies and TV shows without an actor’s permission. In particular, the question is whether actors should have a veto right when the studios make clips available online or via cell phones.

The issue is arcane, like so much that’s recently bedeviled Hollywood labor. Studios say that seeking consent from every actor in every clip is uneconomical, which would mean no clip revenue for either side (although significant digital revenue is years away in any case). It’s a compelling argument.

Actors respond that they want to control their own images and avoid being overexposed, let alone mashed-up and morphed. That also sounds sensible – until you consider the tens of thousands of clips already available online illegally. Neither the actors nor the studios can control those clips, or pretty much anything else on the Internet. That horse left the barn several years ago, yet management and labor are still arguing over whether to ride English or Western.

There are other major issues in the negotiations as well: Should actors get a bigger piece of DVD revenue? Yes, but they probably won’t, because the writers and directors already passed on the issue, leaving the actors with little leverage. What about union jurisdiction over low-budget new media production? The parties should adopt the nuanced deal agreed to by the directors and writers. Product integration? Force majeure? The former is a type of product placement on steroids, and the latter’s scarcely worth explaining, although it’s not without economic impact; the actors should yield on the first, the studios on the second.

On and on it goes, with mind-numbing complexity. Further confusing matters is a tussle between the two major actors unions, the Screen Actors Guild and the smaller American Federation of Television & Radio Artists. SAG and AFTRA used to negotiate jointly with the studios, but a bitter split led to negotiations this year in alternating bouts: a few weeks of discussions between the studios and SAG, then a few weeks between the studios and AFTRA, then back to SAG again. It’s like a French farce, with doors slamming as parties enter and exit the negotiating room.

Granted, these are complicated talks. Digital media is clouded with uncertainty, subsidiary issues abound, and the contract being amended runs to hundreds of pages. Yet, a sense of perspective seems nowhere in evidence. As the June 30 contract expiration approaches, we slide closer to a second possible work stoppage in the entertainment industry within a year. That could take the form of a lockout – a studio refusal to continue or restart production during labor uncertainty – rather than a strike, which would require a 75 percent affirmative vote, for SAG at least. Even now, feature film production has all but ceased in anticipation of the contract expiration.

If this seems dysfunctional, it is. Hollywood labor is a machine with an enormous number of moving parts, none of them well-oiled. In addition to conflict between SAG and AFTRA, there is disagreement within SAG as well, on geographic lines. Several of the unions are riven by internal strife on class lines also, and most of the unions are at odds with each other, notwithstanding some overlapping membership. Meanwhile, the studio alliance whose only responsibility is to make labor deals was unable to do so this year with either the writers or directors. Instead, several studio chiefs had to be called in to do the job, which will probably be the case with the actors as well.

While the industry endures dissension, strikes and lockouts, Silicon Valley entrepreneurs, none of them unionized, enjoy snacking on Hollywood’s bacon. They’re growing – and gloating – while Hollywood’s slowing. That’s not good news for Los Angeles. In addition, Hollywood is hurt by depression in the global film business, evident in diminished activity here in Cannes at the film market that accompanies the film festival. On the heels of the recent Writers Guild strike, the Los Angeles economy can ill-afford another multi-billion dollar hit.

What to do? It’s time to close the deal, first with SAG, whose productions are more affected than AFTRA’s. Let’s get the studio chiefs back in the room, then hope for rational, mutual self-interest from both sides. The SAG deal would lead to a quick conclusion with AFTRA as well, and the whole industry could get back to the hard work of making light entertainment – and of sustaining the local economy.

First published in the Los Angeles Business Journal.

Workers of the World, Unite -- and Strike

Call it poetic (in)justice. After months of analyzing Hollywood's labor troubles, I took a sojourn to Cannes to enjoy the film festival and do a little business. Now it looks like I may have to involuntarily extend my stay. The culprit: a French transportation strike that's been occurring intermittently for the past few days. Lovely.

Spinning the Web - Seminar at the WGA

Interested in writing original scripted content -- web series -- for the Internet? If so, come to Spinning the Web, a seminar on June 21 at the WGA, sponsored by the Writers Guild Foundation. It's an all-day affair with a host of speakers (including me). There is a registration fee.

Hollywood Actors – What Now?

The Screen Actors Guild primetime and film contract talks collapsed Tuesday, and the next day, the American Federation of Television & Radio Artists began their own primetime TV talks with the studios, raising fears of a SAG strike and heightened inter-union strife between SAG and AFTRA.

The talks between SAG and the Alliance of Motion Picture and Television Producers (AMPTP) – the studios – were less nasty than the WGA talks, but no less contentious. SAG had several goals:

• Improvements in new media, above and beyond the DGA and WGA deals.
• Doubling the DVD residual – which would be a renegotiation of a 24-year old deal, albeit one quite unfavorable to talent. SAG later revised this to a proposal that DVD residuals be subject to pension, health and welfare contributions, which would amount to a 15% increase.
• Requiring the studios to obtain actors’ consent for reuse of movies and TV shows in new media, particularly in the form of clips. The studios don’t want existing consent requirements from traditional media to apply to new media. This has proved to be an area of great disagreement.
• Increased compensation for middle-class actors – i.e., actors who regularly work but are not stars. SAG’s backed off on some of these demands.
• Compensation for “forced endorsements” – i.e., product integration (product placement on steroids, so to speak), in which the actor is, for example, required to handle or extol the benefits of a product while in character, as part of a scene in a movie or TV show. It’s not clear whether SAG has compromised or even abandoned this demand.

Management has resisted these demands, and the talks, although extended twice, apparently resulted in little progress. In part this may be because SAG seriously underestimated its own vulnerability. For the last 27 years, SAG and AFTRA had jointly negotiated the primetime and film contract with the AMPTP, under an arrangement called Phase 1. However, of late, SAG’s Hollywood leadership became increasingly disenchanted by AFTRA’s 50% representation on the negotiating committee, in light of the fact that AFTRA represents no films and almost no primetime TV shows.

Nettled by the mismatch, SAG Hollywood tried through various proposals and procedures to reduce AFTRA’s influence. This angered not only AFTRA, but also SAG’s New York and regional branches, which, with AFTRA, tend to be more moderate than SAG Hollywood. The final straw for AFTRA was an alleged incident of inter-union poaching by SAG – a purported attempt to decertify AFTRA’s representation of a soap opera (an area of previously unquestioned AFTRA jurisdiction) and replace it with SAG.

Thus, AFTRA ended Phase 1 and elected to go it alone in negotiations. This undercut SAG’s leverage enormously, since AFTRA is expected to take a more moderate approach to the issues than SAG. Rather plaintively, SAG leadership has asked AFTRA to rejoin it at the bargaining table – most recently, in just the last several days, after talks collapsed. AFTRA’s rejected that out of hand, twice.

Now what? AFTRA and the AMPTP are talking, and will probably reach a deal in 2-3 weeks. That’s roughly how long it took AFTRA to reach agreement on its Network Code covering daytime programming. Indeed, the AMPTP has told SAG that it is willing to resume talks at the end of May – i.e., after an AFTRA deal is reached.

Now we face an odd spectacle: the actor’s union that represents no features and almost no primetime TV will set the template for the much larger union whose primary focus is exactly those areas. As a result, SAG will then find itself in an almost untenable position, and one that’s even worse than what the WGA faced even after the DGA did its deal. At least the WGA still had some leverage: namely, the threat to destroy the Oscars (as it had done to the Globes) and the prospect of joining SAG on strike after June 30. SAG, in contrast, finds itself the caboose: all of the other unions have done their deals, or will do so without rancor.

Thus, on new media, for instance, SAG will try to seek improvements over a deal that has, or will have, been agreed to by the DGA, WGA, AFTRA (in its daytime agreement), AFTRA again (in the primetime agreement), and, it appears, by the IA (the representatives of below-the-line workers … the IA has publicly expressed support for the DGA new media deal, but has not yet negotiated its own contract incorporating those terms). That’s an almost vertical fight.

On DVD residuals, same story. None of those other unions achieved an increase in DVD residuals – only the WGA even attempted the feat – and AFTRA’s not expected to do so in its primetime negotiations either. Although SAG has a good argument on the merits for some increase, as a practical matter, it’s a complete nonstarter.

The various other issues above are pretty much unique to actors, so there’s no weight of precedent established by the DGA, WGA or IA. But AFTRA’s setting that precedent right now in its talks, while SAG is sidelined. We can hope that AFTRA seeks and achieves a deal that SAG can, and does, accept without many changes, just as the DGA did with respect to the WGA. Unfortunately, AFTRA has little to gain by bargaining on SAG’s behalf, because they’re at war with SAG, whereas the DGA’s and WGA’s interests were somewhat aligned (since the WGA strike idled directors as well).

What will SAG do? If, or when, it returns to talks, its leverage will be even closer to zero. On the table will be a copy of the AFTRA agreement and a yellow sticky note that says “sign here.” Further talks will likely go nowhere unless SAG yields on most points.

If talks stall, as is likely, the assertive approach would be to take a strike authorization vote, in which the union leadership asks the members to allow the leadership to call a strike at any time after contract expiration, June 30. But there are risks to SAG Hollywood leadership in calling for a strike authorization vote. For instance, the other SAG leadership (New York and regional) will probably vote against such a call, signaling a divided union.

However, it’s likely that SAG Hollywood would succeed in passing a resolution calling for a strike vote, if it called for one, since SAG Hollywood is a majority of the SAG National Board. Then the action would shift to the membership. There, the minimum threshold for approval is 75%, and SAG Hollywood leadership may fall short, because the union is sharply divided regionally, and because it will be hard to convince members that a deal that’s good enough for the DGA, WGA, IA, and AFTRA is nonetheless so bad for SAG that it’s worth a strike – indeed, a second strike, coming just months after the WGA’s.

On the other hand, SAG might well achieve a 75% vote. An enormous percentage of SAG members don’t work even a day a year as actors – I spent more time in Tokyo last year and still scarcely had time for sushi – and so they are probably more likely to vote for a strike authorization than working actors. A strike wouldn’t affect non-working actors greatly, since they’re already not working, but working actors (and directors, writers, crew members, industry suppliers, and others in the LA economy) would suffer greatly.

Some interesting numbers from five years ago: in 2002, SAG members voted on whether to approve a new contract between SAG and talent agents. The contract was voted down, 55% to 45%. The Association of Talent Agents claims that 75%-80% of SAG members voting on the agreement made less than $2,000 the previous year. See http://www.agentassociation.com/frontdoor/news_detail.cfm?id=43 (4/26/02 entry). 55% is a majority – but it’s a lot less than 75%. That suggests that achieving 75% may be difficult, especially since a strike is a more serious matter than failure to reach an agreement with agents.

That agreement with agents was never ratified, by the way, and, to this day – six years later – SAG members are without the protection of an agreement between the union and the agents, although they (SAG members) do continue to be represented by agents, of course.

However, even if a strike authorization passed, a mere 75% is not enough in practical terms. Achieving a bare 75%-80% would underscore the divisions in SAG, and raise questions as to how much support there would be for a strike.

In any case, there are risks to an actual strike, as well. With SAG on the picket lines, AFTRA would be free to organize new TV shows without competition from SAG, and would likely do so aggressively. As a nuclear option, AFTRA might even seek to decertify SAG shows and replace SAG as representative, although this process apparently takes months or more. Another possibility, even more unlikely, is that AFTRA might start organizing feature films, at least those shot on DV (since tape is historically an area of AFTRA jurisdiction).

Also, a strike would put the 44,000 dual cardholders – actors who are members of both unions, and who comprise over one-half of AFTRA membership and almost one-third of SAG – in a very difficult position, working one day, then picketing the next, and perhaps urged by SAG Hollywood leadership not to work at all. AFTRA, and the other branches of SAG, would send the opposite message, presumably. There might be little solidarity, and some actors would probably go financial core, allowing them to cross picket lines (and while continuing to receive most benefits of union membership) or work non-union, all without fear of punishment from the union.

So, if renewed SAG-AMPTP talks prove unproductive, yet SAG Hollywood leadership has reasons to avoid a strike authorization vote, let alone an actual strike, what’s left? One possibility is that SAG will not take a strike authorization vote and will, instead, offer to continue to work without a contract, post-June 30. That might have support from much of SAG leadership: SAG New York and SAG regional because they’re opposed to a strike, and SAG Hollywood because they’re uncertain of achieving ratification of strike authorization vote.

This would be roughly analogous (factually, although not legally) to the situation between SAG and the talent agents noted above. However, there’s a key difference: under federal labor law, the terms of the existing SAG-AMPTP agreement would continue to apply, pretty much unchanged, even after it had expired. (That’s not the way contracts usually work in the non-labor world, of course.)

This development would leave a cloud of uncertainty hanging over the industry. Studio feature production, which halted several weeks ago, would not resume, because the threat of a strike at any time would make movies unbondable and unfinanceable. One ray of light: true independent features – those with no studio financing or distribution deals – would continue to be produced, under interim agreements called guaranteed completion contracts. SAG’s issued 95 of those already.

Television production would probably not resume either; even though the production cycle for any given episode of a show is short, the risk of a truncated season is too great. Thus, although SAG might offer to work, management would probably be unwilling to resume production.

That sounds like a de facto lockout. SAG might file an Unfair Labor Practices complaint with the National Labor relations Board, but management’s response would be that resuming production is not feasible without some guarantee against a walkout mid-show. In any case, ULP’s take months to resolve. Talks would probably continue fitfully, but progress would be slow. A de facto lockout might continue for months, until someone finally blinked. Just such a lockout occurred at an opera company in New York in 1983. It continued for 2-1/2 months.

I hope this isn’t where we’re heading. The industry can ill-afford a second full-blown, extended work stoppage this year, whether from a strike, a lockout, or some ill-defined hybrid. But that may be just what we’ll get – or continue to get, since a de facto lockout’s already started in features. Stay tuned.

SAG Talks Start Today

Just a reminder: formal talks between the Screen Actors Guild (SAG) and the studios (represented by the AMPTP) start today (Tuesday, April 15). And, in less than two weeks - on April 28 - talks begin between another actors union, the American Federation of Television & Radio Artists (AFTRA), and the AMPTP.

AFTRA's likely to drive an easier bargain with management, which means that if SAG doesn't reach agreement first, their harder-line approach will be undercut the more moderate template that AFTRA's likely to set. That, in turn, reduces SAG's leverage dramatically.

And will there be a strike? Who knows, but AFTRA's scheduling move reduces the likelihood, since a SAG strike would allow AFTRA to start negotiating deals (at least for new shows) and keep production running while SAG is sidelined.

Still, no one's taking any chances. Most movie and television) production is currently scheduled to cease by mid- to late June, to avoid the risk of actors walking off set and shutting down on an active production.

We may know more later in the week, if we learn (through public announcements or leaks) how the SAG-AMPTP talks are proceeding. However, informal talks ended last week, apparently on a cordial but unproductive note. Stay tuned.

A Fine Mess at the FCC

The FCC's enforcement of the indecency rules is stalled, reports the LA Times. The reason: a perfect storm of three factors: a Court of Appeals ruling against the rules (as I previously blogged), a pending Supreme Court case that will rule on the rules, and (finally) a growing broadcaster willingness to fight FCC fines, probably in part because the FCC has increased minimum fines ten-fold.

Now, even conservative-owned Fox is fighting back -- and that's just fine with me. The rules are more indecent than the content, and many if not most of the complaints are ginned up by the bluenoses at the Parents Television Council. They seem to think that night-time broadcast television needs to be cleansed of curse words to protect children -- the same children who hear these same words on cable TV, see, hear and write the same words on the Internet, hear the same words in school, and text the same words to their friends.

In short, a faux Victorianism benefits no one -- except perhaps the (often hypocritical) right-wing candidates for public office who fan the flames of the culture wars -- and reduces adult programming to silly doses of saccharine.

Working With the Media

If you're ever interviewed by print, television, radio or online reporters, do you know what to say and how to say it ... what to wear and how to speak? If not, check out my media guide - two articles I wrote that appeared in the Daily Journal.

Is Content Worthless?

“Content is king,” many people believe, meaning that films, television shows, music, news and information are more profitable assets than the technology used to deliver them. But there's an older, cautionary aphorism that applies as well: “Uneasy lies the head that wears the crown.” Content may be king, but, ironically, its perceived value today is being driven towards zero. In the eyes of consumers, content is becoming a commodity – more a commoner than a king.

Everyone focuses on piracy, but there are actually six related reasons for the devaluation of content. The first is supply and demand. Demand – the number of consumers and their available leisure time – is relatively constant, but supply – online content – has grown enormously in the last decade. Some of this is professional content set free from boundaries of time and space, now available worldwide, anytime, and usually at no cost (whether legally or not). Even more is user generated content (UGC) – websites, blogs, YouTube videos – created by non-professionals who don’t care whether they get paid, and who themselves pay little or nothing to create and distribute it.

The second is the loss of physical form. It just seems natural to value a physical thing more highly than something intangible. Physical objects have been with us since the beginning of time; distributable intangible content has not. Perhaps for that reason, we tend to focus on per-unit costs (zero for an intangible such as a movie download), while forgetting about fixed costs (such as the cost of making the movie in the first place). Also, and critically, if you steal something tangible, you deny it to the owner; a purloined DVD is no longer available to the merchant, for instance. But if you misappropriate an intangible, it’s still there for others to use. That’s why, even before the Internet, sneaking into movie theaters – stealing the right to view a movie – seemed a mere rite of passage, whereas shoplifting a video did not.

The third reason is that acquiring content is increasingly frictionless. It’s often easier, particularly for young people, to access content on the Internet than through traditional means. When it’s easier to get something – when transaction costs decline – the thing costs less and loses value.

Fourth is that most new media business models are ad-supported rather than pay per view or subscription. If there’s no cost to the user, why should consumers see the content as valuable, and if some content is free, why not all of it? True, ads impose a cost in the form of user attention, but many online ads are easily ignored, and, today, even television advertisements can be skipped using TiVo.

Fifth is market forces in the technology industry. Computers, web services, and consumer electronic devices are more valuable when more content is available. In turn, these products make content more usable by providing new distribution channels. Traditional media companies are slow to adopt these new technologies, for fear of cannibalizing revenue from existing channels and offending powerful distribution partners. In contrast, non-professionals, long denied access to distribution, rush to use the new technologies, as do pirates of professional content. As a result, technological innovation reduces the market share of paid professional content.

Finally, there’s culture. A generation of users has grown up indifferent or hostile to copyright, particularly in music, movies and software. The reasons for this vary, but in music, for instance, some blame lies at the feet of the music labels, which maintained unrealistically high CD prices and attempted to sue piracy out of existence. Only now, almost ten years after Napster, are the labels offering the non-copy protected MP3’s that consumers demand.

All these developments have led to a migration away from paid media. Why buy music when there's so much free music available, albeit much of it pirated? Buy a movie or watch TV on a conventional set? No need, when YouTube and BitTorrent make videos, and pirated movies and TV, free for the asking. Subscribe to a newspaper or magazine? Don't bother; most are free online, and there are literally millions of other sources for news, ranging from blogs like the Huffington Post to user generated content. (Full disclosure: I’m a blogger, which makes me part of the problem.) The TV news? Also becoming irrelevant. And books, magazines and journals? So much information is available online that whole categories of publications seem less important.

It's true that people still consume media the old-fashioned way – but fewer and fewer do so every day. Most of the content industries are seeing flat or declining revenues and audiences. And these trends are particularly notable among younger people. As a result, the music industry is a shambles; the film and television businesses are running scared; and newspapers are disappearing or instituting cutbacks and layoffs. The handwriting is on the wall, or the laptop screen.

User generated content is often a poor substitute for professional content or traditional media. But that’s little comfort. Alternate goods don’t have to be perfect substitutes in order to acquire market share at the expense of the competition. And, yes, in some cases, new media make money for creators and companies – but the money’s much less than it used to be. As NBC Universal’s Jeff Zucker lamented, the content industries are being forced to “trade today's analog dollars for digital pennies.”

Another effect is that the market for professional content is becoming more concentrated and less diverse. Thus, at least in some media, audiences are shifting more of their spending to hit properties – the most popular movies and books, for instance – to the detriment of specialized content such as art house films and mid-list titles. Similarly, in a trend that predates the Internet but continues today, media businesses are consolidating and becoming conglomerates, as individual companies find it harder and harder to compete.

Some commentators welcome these changes. “Information wants to be free,” they say, and more content is good for users. Persuasively, they point to the variety of viewpoints that new technologies bring. That development is indeed valuable – very much so, in a democracy premised on freedom of speech. But when everyone’s a creator, there’s less room for high-quality professional content. It’s a dilemma with no easy answers. The future of traditional media is murky, but one thing is clear: disruptive change will be with us for many years to come.

SAG Thinks, Blinks

The Screen Actors Guild bowed to the inevitable yesterday and set a concrete date -- April 15 -- for commencement of talks with the studios. Had SAG not done so, it faced the prospect of a rival actors' union, AFTRA, setting a date for talks first, and thereby setting a template for SAG's negotiations.

That prospect -- which seems unlikely now -- would have undermined SAG's leverage, a situation unacceptable to SAG. That's because SAG represent movies and almost all primetime television shows, whereas AFTRA represents no movies and only three primetime shows. The contract being negotiated concerns movies and primetime shows (as well as some other areas).

The problem for SAG is that AFTRA may not be looking for the same deal points SAG is. The situation's unclear, because the committees of both unions reportedly agreed on the same package of demands. Yet, the recently-agreed AFTRA daytime pact (an agreement that is soley negotiated by AFTRA) doesn't track with SAG's publicly-stated demands, suggesting that AFTRA may be more willing to compromise than SAG. That's been SAG's concern with AFTRA in general; each union has a rationale for the approach -- hard line or conciliatory -- that it takes.

In any case, the key publicly-discernible differences are as follows (for detailed explanation of these issues, see my previous blog article):

First, SAG wants improvements over the WGA deal in new media, apparently in at least two areas: elimination of the 17-24 day window during which no residuals are payable for ad-supported streaming of new television shows; and elimination or reduction of the budget floors below which certain shows produced for new media are not covered by the union agreement.

Second, SAG wants compensation for forced endorsements (product placement on steroids). AFTRA's daytime agreement gained some improvement in a related matter, which is announcer endorsements of products, so perhaps the unions are close on this issue.

Third, SAG wants 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. AFTRA, in contrast, did not obtain (nor, presumably, seek) such improvements when it negotiated its daytime deal.

Another point worth considering: if SAG does strike -- which seems less likely now -- will the strike rules prohibit SAG actors from working not only on SAG projects but also on AFTRA contracts? (Although this by definition exceeds the jurisdiction of the SAG agreement, recall that the WGA strike rules prohibited writing for animation, even though this is beyond the WGA's jurisdiction.) If so, the 44,000 dual cardholders -- i.e., members of both unions -- would be put in an untenable position if working on AFTRA-covered shows: violate the rules and be subject to SAG discipline, or obey the rules and face discharge by their employers for breaching their employment agreements. Quite a dilemma.

Trademarking Movie Titles

Book and movie titles fall in a gray area in U.S. law. For instance, although a book or movie is protected by copyright, its title isn't. Copyright simply doesn't cover titles. Officially, trademark doesn't either (except for series titles like Harry Potter). Nonetheless, I've developed ways to protect single-work movie titles using trademark registration -- effectively circumventing the long-established rule. For more, visit http://www.jhandel.com/news/2014/8/13/trademarking-movie-titles.