Friday, July 24, 2009

Fixing the Residuals System

The residuals system is broken. It’s expensive to administer and is an invitation to conflict as platforms such as new media evolve. Yet we need residuals, because talent survives on these payments between gigs. Can the system be fixed?

Yes, I believe so. For a proposal, see my piece in today’s Hollywood Reporter.

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Rosenberg v. SAG Lawsuit Reply Brief Filed

The appeal grinds on. SAG president Alan Rosenberg and three other Membership First hardliners (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) filed their reply brief earlier this week.

I'm told there will be oral argument (unscheduled as yet). That'll drive up the price to SAG of this nonsense by probably about $5,000 more: I'd imagine several attorneys for a mock practice session for several hours, then two attorneys for oral argument for a half day or so. Members' dues money at work, thanks to MembershipFirst.

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Subscribe to my blog (jhandel.com) for more about entertainment law and digital media law. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles. If you work in tech, check out my new book How to Write LOIs and Term Sheets.

Thursday, July 23, 2009

“Octomom the Musical” Opens in LA to Sellout Crowds

A play loosely inspired by the LA-area mother who had octotuplets opened last Saturday to standing-room only crowds in Los Angeles. The so-called Octomom is not the only character skewered in the zany musical: other include Bernie Madoff, Fed Chairman Ben Bernanke, Vince Shamwow (of magic towel fame) and even Octomom’s fertility doctor, who has a mad and somewhat creepy crush on her.

The show has garnered enormous publicity, even including a segment on the CBS Early Show, and generally strong reviews. The two opening night performances were sold out, as is half of the five-weekend run of the show.

I saw the show and loved it. In fact, the entire audience was laughing and applauding throughout the show. Full disclosure: I’m not an objective observer, since I’m legal counsel for the play. So, go to the show’s website to read the independent reviews, and watch the CBS Early Show segment:




(click here if you don't see the video window above)


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Credits: Book and Lyrics: Chris Voltaire; Music: Rachael Lawrence; Cast: Stu Barron, John Combs, Blake Hogue, Alexandra Holtzman, Lynnette Li, Molly McCook, Chris Voltaire, Dinora Walcott; Direction: Chris Voltaire; Musical Direction: Rachael Lawrence; Choreography: Dean McFlicker; Props: Sarah Robinson; Assoc. Producer: Max Smerling; Publicity: Tany Soussana; Legal Counsel: Jonathan Handel; Producers: Beverly Leech, Chris Voltaire; Presented by Cabaret Voltaire. Running time: 65 mins. Runs: July 18 – August 15, Sats. 8 p.m. & 10 p.m. Venue: THE FAKE, 4319 Melrose Ave. at Heliotrope, Los Angeles, CA 90029. Tix: http://www.octomomthemusical.com/.

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Wednesday, July 22, 2009

Culture Clash on the Internet

The Internet has devalued content to the point where it is often offered at no charge—newspapers, for instance—or widely misappropriated, as with music and movies. Either way, many people expect much of their content to be free. Why is this, how did it happen, and, focusing on music and movies, what can be done about it?

I’ve previously written about the why, in Huffington Post and Vanderbilt Journal of Entertainment and Technology Law articles, and identified six factors. Let’s focus on two: the culture of piracy, and the rise of ad-supported business models. Underlying both is the belief that content on the Internet should be free (a notion reinforced by the other four factors).

How did this attitude arise? The answer lies in the origin of the Internet. At first glance, this is paradoxical: the Internet began in the late 1960’s as the ARPANET, a project of the Department of Defense Advanced Research Projects Agency, or ARPA. The DoD, of course, seldom fosters self-gratification, a trait that underlies the “free content” culture of the Internet.

However, take a second look. The ARPANET was developed not in-house by ARPA, but primarily by defense contractors orbiting Harvard, MIT and Stanford, and by universities. Their faculty and staff used the ARPANET for social purposes as well as research, for instance by setting up news groups encompassing a variety of recreational interests. No one charged for participation in those groups, or anything else on the ARPANET, and there was little regulation of content—or of file transfers via the network. Those files were primarily documents, data and software, since digitized music and video were effectively non-existent. Still, the precedent was set: file sharing was virtually unfettered.

The predominance of researchers on the ARPANET fostered an academic ethos that includes the concept that information, i.e., content, should be free, since only by openly sharing research can science and other disciplines advance. As the ARPANET grew, the DoD installations on the network were split off in 1983 into a separate MILNET, leaving the ARPANET as primarily an academic facility. The transformation to a free-oriented environment was complete. Significantly, though, the network was primarily used by students and faculty in the computer science field. Its evolution towards the Internet occurred with little public notice until the early 1990’s. By then, its norms were set.

At the same time, an “information should be free” movement was growing, initially focused mainly on the software arena rather than networking. This coincided with the rise of personal computers, and was a reaction to the concurrent rise of consumer software, which of course was generally offered for sale, not for free. As the movement grew to encompass other forms of content, it reinforced and made latent the norms that had developed on the ARPANET.

In contrast to these trends, pre-Internet commercial timesharing systems were being deployed in the late 1970’s and early 1980’s, offering consumers email, information and entertainment, but on a paid basis, as befits a commercial offering. Thus, these systems had different cultural norms than the ARPANET—different histories, expectations, rules and practices. Ultimately, though, these systems were overshadowed by—and their commercially grounded norms had little effect on—the Internet.

During the same period, copyright law began to have meaning for the public in a digital context, but at first only for the limited population who traded in pirated software and games. Prior to this time, the only infringement committed by significant segments of the public involved physical media: mix tapes, concert bootlegs, and album copies on cassette made for friends. Although relatively common among young people, these forms of music (let alone any form of video) weren’t distributed digitally, because personal computers and networks at the time couldn’t process the large files involved. Thus, creation and distribution of these analog tapes was a time-consuming, manual process that didn’t imperil the music industry.

That began to change with the availability of the compressed MP3 audio format in 1995. The format exploded in popularity in 1997 with the release of the free, computer-based Winamp player software and even more so in 1998, with the introduction of the Rio portable MP3 player, a forerunner of today’s iPod. Accelerating these trends, modems were becoming faster, personal computers more powerful, and the Internet more pervasive. People began to rip CDs—that is, copy them to personal computers in MP3 format—and share the MP3 files over the Internet. (Ripping was possible because the audio CD standard, developed in 1980, omits copy protection, perhaps due to a failure to anticipate the capabilities that developed 25 years later.)

The above history, cultural trends, and technical factors appear to be what led to widespread copying and distribution of music and, later, motion pictures. Although educational campaigns have informed and reminded the public that such conduct is infringement, the underlying norms have proved difficult to dislodge, an effect that scholars refer to generally as the “sticky norms” problem. Thus, many people continue to violate the law.

But why? Or, to turn the question on its head, why do people ever obey laws (criminal or civil), even when it may be in their self-interest not to do so? This question has been studied by scholars such as Prof. Tom Tyler of NYU, who lays out several reasons that researchers have examined: (a) people consider the “tangible, immediate incentives and penalties . . . [i.e.,] personal gains and losses” resulting from obeying or disobeying a law (alternatively, the certainty, swiftness and severity of punishment); (b) people decide whether a particular law is moral (i.e., just); and (c) they decide whether a law is legitimate (i.e., promulgated by an authority that has the right to do so).

Evaluated against these metrics, copyright law as applied to content on the Internet falls woefully short. The immediate incentives to infringe copyright are clear: free music and movies. The penalties, in contrast, though severe, are neither swift nor certain, since only a small percentage of infringers are sued (and usually only uploaders of content, not downloaders). In addition, the prevalence of legitimately free content on the Internet—whether user generated content or ad-supported commercial works such as newspapers—probably undermines the perception of copyright law as just; after all, if some content is free, why not all of it? Finally, the perception that content companies are driving the copyright laws (and, of course the fact that they are filing the lawsuits), and a widespread disdain for music labels in particular, delegitimizes those laws.

Two other factors that drain perceived morality and legitimacy from copyright law are the fact that the targets of demand letters and lawsuits were often young people or their sometimes unknowing parents; and that the damages sought or obtained were sometimes grossly disproportionate to the offense. As scholars have discussed, these factors may have precipitated a backlash that actually decreased rather than increased compliance. In any case, ineffectiveness and negative public perception appear to have put a halt to copyright lawsuits against consumers.

What next? When noncompliance is widespread, sometimes the laws change (as in the elimination of prohibition and of sodomy laws) and sometimes behavior changes, as in the case of drunk driving, which was reduced significantly by a combination of stricter laws and broader education. In the case of copyright, though, the laws are strict already, but neither that nor education have been effective.

Perhaps what’s needed is penalties that are less strict—in the scholarly terminology, “gentle nudges” rather than “hard shoves”—but more widely enforced. If demand letters and infringement lawsuits targeting “first offenders” sought significantly lower damages (assuming litigation costs permit this approach), but such letters and lawsuits were issued much more often, public perception might change. Setting the damages at a level that young people or their parents would find affordable but quite unpleasant could reduce the perception of unfairness, but still have sufficient bite. Coupled with widespread enforcement, such damages might change people’s cost-benefit analysis while avoiding backlash. Something has to be done to reduce misappropriation of music and movies, at least until ad-supported business models (or other alternatives) become sustainable, if they ever do. Maybe this is the way.

This article benefitted from discussion with Prof. John Tehranian of Chapman University.

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Sunday, July 5, 2009

SAG President’s Anti-SAG Suit Continues

For those who like keeping up with legal dockets, SAG a few days ago filed its Respondent’s Brief in the appeals court case that stems from the lawsuit filed by SAG president Alan Rosenberg and three other Membership First hardliners (1st VP Anne-Marie Johnson and board members Diane Ladd and Kent McCord) against their own union.

Rosenberg et al will shortly file another brief, then (as I’ve previously outlined) there may be oral argument and then there will ultimately be a decision. But that’s just on the appeal. The case also proceeds in the lower court as well, and will probably continue to do so regardless of the outcome in the appellate court. Not that there’s any good reason for this case to continue in either court . . .

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Monday, June 22, 2009

Film on the Downswing

Factoid: Kodak gets 70% of its revenue today from digital products, and an outgoing Kodak exec says that the company plans to stay in the film business “as far into the future as possible,” which isn’t exactly a ringing endorsement of analog formats. This all is courtesy of an AP story in the NY Times on the discontinuation of Kodachrome (yes, the story mentions the Paul Simon song), which also points out that Kodak has introduced new still and motion picture stocks in the last few years.

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WGA Candidates for President and Board Announced

SAG’s upcoming elections have been getting some attention, but the WGA West is having an election this summer as well. The ballots go out sometime in late July or August, and are apparently due back September 17. Current WGA West president Patric Verrone is running for one of the open board seats, but not for president (I believe there are term limits). Instead, the candidates for president are John Wells and Elias Davis. For more details, see the press release below.

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WGA press release:

WRITERS GUILD OF AMERICA, WEST ANNOUNCES CANDIDATES FOR 2009 OFFICERS AND BOARD OF DIRECTORS ELECTION

LOS ANGELES – The Writers Guild of America, West’s Nominating Committee has announced its initial list of candidates for the 2009 WGAW Officers and Board of Directors election. The officer candidates are as follows: President – John Wells, Elias Davis; Vice President – Tom Schulman, Howard Michael Gould; Secretary-Treasurer – Christopher Keyser, David N. Weiss.

There are 16 candidates nominated to run for eight open seats on the WGAW’s Board of

Directors, as follows: Luvh Rakhe, Linda Burstyn, Mick Betancourt, Jan Oxenberg, Howard A. Rodman (inc.), Patric M. Verrone, Dan Wilcox (inc.), Eric Wallace, Jed Weintrob, Chip Johannessen, Andrea King, Steven Schwartz, Jeff Lowell, Billy Ray, Carleton Eastlake, David Wyatt. [The list is in random order. “inc.” means incumbent.]

In addition to the candidates selected by the WGAW Nominating Committee, eligible members may also be nominated by petition. Members seeking nomination for the office of President, Vice President, or Secretary-Treasurer must obtain 50 member signatures in support of their petitions. Members seeking nomination for the Board of Directors must obtain 25 member signatures in support of their petitions. The deadline for submitting signed petitions to the WGAW is Thursday, July 23, by 5:30 p.m. Members may submit online nomination petitions by visiting the members-only section of the WGAW’s website at: www.wga.org.

The WGAW will host its annual “Candidates Night” town-hall election forum for Guild members to meet and pose questions to their prospective Officer and BOD candidates on Wednesday, September 2, at WGAW headquarters in Los Angeles.

Guild members will receive candidate and non-candidate statements and rebuttal statements, if any, with their ballots prior to the election. Members may mail additional campaign materials at their own expense. Members may vote by mail or in person at the WGAW’s annual membership meeting on Thursday, September 17. Ballots will be counted on Friday, September 18.

LA Goatherd Wanted

Sometimes going off-topic can't be resisted. I live in Laurel Canyon, which as LA residents know is in the middle of the city yet is a still-rustic hilly area from the 1920's that even has a few dirt roads remaining. The ethos still has echoes of the 60's and 70's (can an ethos have echoes?).

Usually the echoes are faint, but not always. Here's an email I received today:

We live in laurel canyon and have two mini-mancha dairy goats. Currently I am milking one doe and will start milking the other in a few months when her kids are big enough to wean. We have more milk and cheese than we can consume. I'm hoping that there is someone in the neighborhood who would be interested in some fresh goat milk or cheese in exchange for doing some goat chores. Can you send this request out for me please?

Who'd have thought? And, by the way, if anyone does want to do some goat chores (whatever that may entail) in return for milk or cheese, let me know and I'll pass your info on.

Wednesday, June 17, 2009

WGA Institutes Qualified Voting

The WGA membership has approved new rules limiting members’ eligibility to vote on strike authorization and ratification of the feature-primetime contract: members now have to have earnings of $30,000 under a WGA agreement during the six years preceding the vote or 15 or more qualified years as a pension plan participant, Variety reports.

The change passed by a margin of 96% to 4%, with turnout a low 15%. This level of support, and lack of angst as signaled by the low turnout, contrast with the reaction within SAG when a “qualified voting” or “affected voting” system having income requirements was proposed in that union. Of course, a higher percentage of SAG actors would have been disqualified since more than 2/3’s of SAG members earn little or money from the TV/theatrical contracts in any given year, even when residuals are included in the calculation.

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Tuesday, June 16, 2009

Independent New Media Productions

There are casting notices out there for SAG new media productions under the “SAG New Media Contract.” A few notes may help clarify what these are, and help performers enforce a few of their rights.

First, this is not the new media sideletter recently negotiated with the AMPTP (major studios) as part of the theatrical contract. Rather, it’s a new media contract (the SAG New Media Agreement) that’s been available to independent producers for a number of years—that is, producers who are not signatories to the theatrical and/or TV agreements. So, disagreements that a performer may have with this agreement simply don’t relate to the compromises in the new TV/theatrical deal.

Second, under sec. 3 of the SAG New Media Agreement, wages are freely bargained by the employer and the performer.

Third, performers should recognize that independent producers are unlikely to make much, if any, money on these productions. Even the studios are shutting down their new media production entities (Stage 9, 60 Frames). And CPMs (advertising rates) for new media are at about $10 rather than $40-$50 (TV) or more, and with viewership on new media much less as well. These two factors, as well as the difficulty of finding any new media distribution at all, mean that independent producers will generally receive very little income from their new media efforts.

Fourth, it’s reasonable for performers to negotiate for back end (a piece of the producer’s gross or net revenues), so that if the producer does make money, so will the performer.

Fifth, when the producer offers to compensate you only in the form of “credit and meals,” or “credit, meals and tape,” that’s illegal. They have to pay you the greater of California minimum wage (if the production is in California) and federal minimum wage. California’s is higher—$8/hr.

Overtime requirements are more complicated. See complex discussion of exemptions and exceptions (also here) regarding overtime for actors. Also, for workers with less than 160 hours of “employment in occupations in which they have no previous similar or related experience,” the producer can pay 85% of minimum wage. (I don’t know if acting classes count toward the 160 hours, since they’re not employment.)

In any case, if the producer doesn’t pay you the required minimum, you can file a wage claim with the state. You can also call SAG. Although they don’t enforce the minimum wage laws, they may call the producer and suggest that he follow the law.

Sixth, SAG does enforce terms of an agreement between the performer and the producer. So, rather than relying simply on the minimum wage law, it would be a good idea for the performer to include an explicit wage in the SAG new media deal memo with the producer (or a rider), even if the wage is just $8 per hour. SAG would then enforce the agreed wages, meaning that the performer wouldn’t have to rely on the vagaries of the state.

Original made for new media productions are still experimental, and the difficult reality for performers and other talent and workers, above and below the line, as well as their representatives, is that compensation is dramatically lower than in TV and theatrical, just as the revenue for producers is. However, that doesn’t mean that performers shouldn’t insist on some minimums, and hopefully the above suggestions are helpful.

Note: This blog post is intended as general information, not specific legal advice. Check with a lawyer about your particular situation if you want definitive advice.

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Subscribe to my blog (jhandel.com) for more about entertainment law and digital media law. Go to the blog itself to subscribe via RSS or email. Or, follow me on Twitter, friend me on Facebook, or subscribe to my Huffington Post articles. If you work in tech, check out my new book How to Write LOIs and Term Sheets.