Actors Now Fighting For Royalties That Will Make It Harder For Big Studios To Compete

from the short-sighted dept

Mon, May 12th 2008 8:44am — Mike Masnick

After the TV writers' strike from earlier this year, we noted that the final settlement actually was not in the best interest of the writers, even though they got much of what they wanted in demanding royalties from online usage of their content. The actors unions are now gearing up for that same battle, as well, as they, too, are demanding rights over online usage, including royalties and the right to demand permission before any of the works they appear in can be used online. It's difficult to feel sorry for Hollywood producers here -- as they very much brought this on themselves, convincing lots of people that they should get paid every single time any of their content was used. Thus, it's no surprise that the writers and the actors are now demanding the same rights.

However, just as it was wrong for the producers to be demanding a fee for every usage, so is it wrong for the writers and the actors to be demanding such a fee. All it will do is make it much more difficult, time consuming and expensive for any of that content to go online. And that will open up much wider opportunities for other content to go online instead, decreasing the overall value of the content made under these agreements. It's hard to fault the actors (like the writers) for looking out for their short-term interests and demanding the same sorts of things that the producers have demanded of everyone else -- but it's setting up a bad situation over the long-term, where the studios under these agreements won't be able to adapt to the changing media landscape.

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Filed Under: actors, entertainment industry, hollywood, online, producers, royalties, streaming, strike

20 Comments

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Bored, 12 May 2008 @ 9:23am

Like they need more money. Cry me a F'n river
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mobiGeek, 12 May 2008 @ 9:24am

Where's their risk?
I don't support most of the way that Hollywood does business, but I gotta wonder what it is that the actors/writers are risking that makes them deserve this?

The producers (typically) are the ones putting up money to have a work of art created. The writers/actors/support crew are all paid for their time. But they have no risk, no investment in the effort.

If these folks want to yield gains, then let them invest in the risk. Drop your wages for a percentage of the return, or make a lump-sum investment. That's what I've done in the software sector. I don't turn around and demand that my company give me a cut of the profits for something I produced under salary.
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Paul, 12 May 2008 @ 9:38am

money
when i was reading a book about the making of "the crow" the studio would agree on the budget but YOU (producer,etc) would have to go to the bank and get the loan but you would have a promissary note. If you lived up to your end of the deal (giving them the movie they asked for, in the time they wanted, etc and they couldn't turn it down for any contractual reason you've already laid out) they would pay off the loan.

if not, you have to pay it... somehow.

NOTE: i worked 11 hours last night and i haven't been to bed yet and i have carpal tunnel so my spelling is off and i don't care ;)
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Jake, 12 May 2008 @ 9:43am

I'm with you up to a point, but not entirely. If online viewing and downloading start to replace DVD sales, as they probably will once the major players give up on DRM as a lost cause, it's going to be increasingly difficult to justify the studio keeping all the money it makes from the 'promotional' use of such materials. Scriptwriters -and to a lesser extent actors- probably don't have as many options for value-added scarce goods as musicians, either; many people will be willing to hear Nine Inch Nails play live after downloading all their albums, but I suspect that rather fewer will go out and buy a DVD for the deleted scenes and making-of documentary after streaming a movie or TV show off the Internet.
Ultimately, if and when Hollywood starts experimenting with free business models, I reckon they're going to have to either give their script guys a cut from the ad revenue as well as the scarce goods they market on the back of their movies, or all future movies will be written by people who have a regular job the rest of the time and just write scripts because they enjoy doing it. The question of whether the second option would necessarily be a bad thing is perhaps a bit beyond the scope of this blog...
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Anonymous Coward, 12 May 2008 @ 9:53am

As a software developer, it would be nice to get royalties for any commercial product I worked on, but I don't have a union forcing it on my employer. And a that's a good thing because that would distort the entire software market.

If I want royalties, then I'll negotiate on my own behalf. I'll probably get stock options, or a bonus instead, but I can invest that. No biggie.

I agree. It's a short term fix, and in my opinion on behalf of the people that can't negotiate for themselves.
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mobiGeek, 12 May 2008 @ 9:54am

Re:
But in the case of music, it is typically the musicians/band that absorbs the risk of producing the work. They typically do not get paid for the time they put into the creation of an album, other than maybe an advancement from the label (which is essentially a loan).

In the case of Hollywood, the actors do have a scarce resource to leverage: themselves. They are paid like any employee. If they value their work, they shouldn't accept a lower contract for the initial work.
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sehlat, 12 May 2008 @ 10:02am

Re: Where's their risk?
If these folks want to yield gains, then let them invest in the risk.

That sounds fair, until the "gross" gets to the accountants and by the time the bones have been picked clean by the studio, the people who actually did the work end up with nothing but their salaries. Sigourney Weaver once remarked how amazed she was that she never got a dime of the profits she was promised from "Ghostbusters" because (you ready for this) IT LOST MONEY! (Yeah, right!)
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Mike, 12 May 2008 @ 10:04am

Good.
The more the Hollywood folks shoot themselves in the feet the better, I am counting on their entire business model failing so we can get some decent stuff out of them someday...
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ehrichweiss, 12 May 2008 @ 10:11am

wonderful
Instant Karma's gonna get you....

I can't wait. Maybe this will signal the beginning of the collapse of the big studio movie industry altogether because, as you said, the independent studios are gonna get their content online much faster.

I could also see a situation where the actors simply let their agent, or other semi-trusted entity, approve/deny permission for online use making the approve/deny process equally as redundant. I see the whole "permission" thing as laughable anyway because it means any one actor can have veto power if they don't like the final cut, or where it is being used. I don't see this situation ever occurring since if I can see it then surely someone at the studios can...but I have been wrong about that before.

Either way, I'm pretty sure this is where the movie industry should realize that with the Pro-IP bill passing Congress...they could have their assets seized if they accidentally included something to which they didn't have permission from one of the actors. Imagine there suddenly is no MGM or WB because of one slip up. It wouldn't take long afterward for the pendulum to start swinging the other direction as a result.
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Anonymous Coward, 12 May 2008 @ 10:12am

Re: Where's their risk?
I disagree with you here. "The writers/actors/support crew are all paid for their time. But they have no risk, no investment in the effort."

The Actor assumes a huge amount of "risk" - of course this is comparative risk - in starring a movie. Look at the huge list of Actors who have appeared in duff productions and had their careers go down the crapper. To say the Actors and writers asssume no risk is wrong, they assume no immediate financial risk would be a more appropriate way of putting it.

They're all scumbags though top to bottom.
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mobiGeek, 12 May 2008 @ 10:30am

Re: Re: Where's their risk?
If the risk is that they show that they are a bad actor (i.e. poor employee), then they get fired and look for another line of work.

If they feel that they are risking, then their current model would dictate they negotiate a better salary.

Don't get me wrong, I'm happy for them to negotiate (ahead of time) for profits from the works revenue stream. But this should not simply be in addition to the current compensation structure where they are paid specifically for the time/effort put into production.

When I negotiate for a bonus or stock option structure, that is taken into consideration with my salary. My employer doesn't separate the two, and I certainly don't go and demand money from last year's work because it is selling well today.

I do ask for more money for the upcoming work if past work is successful...and this is exactly what actors do too.
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Jake, 12 May 2008 @ 10:44am

Re:
True enough; that's why I was focusing mostly on scriptwriters, who have traditionally received a percentage rather than a flat fee and are lower down the food-chain in terms of reputation than actors and directors. The risk to the studio is also probably lower with Internet distribution, especially ad-supported content that's free to view.
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James, 12 May 2008 @ 11:16am

anti-union
I think they should just agree to pay these people a fee up front then they can just do whatever they want with it.. unions completely suck.
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Overcast, 12 May 2008 @ 12:11pm

And that will open up much wider opportunities for other content to go online instead,

Please God yes - we need something else out there - some new media companies.

It's happening with the news - hopefully Music and TV next.
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Chronno S. Trigger, 12 May 2008 @ 1:57pm

Sure
Sure, you can have a part of the profit, but instead of the $20 million I was going to pay you, you will only get $20,000. You don't like it? Then go find another movie.
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mobiGeek, 12 May 2008 @ 7:31pm

Re: Sure
Precisely! If the movie is a smash hit, then the returns on the investment ($20M - $20k) would be a very worthy investment. And in so doing, all parties have a very vested interest in making the movie the best it could possibly be (or, rather, the most successful it could be...success does not necessarily relate to quality).
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Panskeptic, 12 May 2008 @ 7:38pm

Permission
First of all, only a few actors/actresses make any money at all. Seven eighths of the SAG/AFTRA membership are out of work at any one time. So don't go green from counting other peoples' money - they're not doing that well that you can get jealous.

Secondly, the denial of permission for usage is a rollback. As it stands now, if you're in a movie, and the producers want to sell a clip starring you to, say, the Ku Klux Klan, the Friends of Robert Mugabe, the Six Year Olds Aren't Too Young To Boogey Fan Club, the Goatf*ckers Chowder and Marching Society, they have to get your permission before selling the clip that will forever associate your face with those people.

So that's already in place for theatrical and broadcast. Why shouldn't it be extended to online? Because they're greedy bastards, that's why, and they don't care if you, yes you, become the public face of some people you'd otherwise cross the street to stay away from.

Just imagine the people you hate most in the world, then imagine your smiling face on their website. There's nothing you can do to stop the implied endorsement, the rest of the world associating you with that cause for the rest of you career/life.

The actors are right to ask. The producers are wrong to challenge.
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Anonymous Coward, 12 May 2008 @ 8:24pm

Actors & Writers not driving fees
This post makes the assumption that writers and actors want to impose their own schedule of fees on online content. In reality, they only want a share of what the producers collect either via fees from stores like iTunes, or from advertising attached to "free" streaming. They have no desire to be online royalty police and instead see free downloads as an effective form of promotion.

Waste no pity on the Big Studios not being able to compete. They don't need actors and writers to help them lose market share, and fail to seize the opportunities to exploit online distribution, the same way they fought the video age.
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SunKing, 13 May 2008 @ 8:47am

Don't make a wave!
Haha, hey writers/actors, don't worry about missing out on whats yours!! It's going to be all golden and rosey in the future.... Mike says so!!
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Anonymous Coward, 13 May 2008 @ 11:20am

Re: Actors & Writers not driving fees
The problem is that if actors want a piece of the pie they either have to tack on their own rates (leading to higher prices for those who play their game) or they have to take it from the piece producers are getting. Producers aren't going to be satisfied with a SMALLER piece themselves, so they'll raise their rates (leading to higher prices for those who play their game). What this means is that studios that are bound by such agreements will beless able to compete against those inevitable upstarts who use other sources for their content -- such as actors or producers who are satisfied with a wage rather than constant royalties. Even if such a creature doesn't yet exist, it will eventually, and then these studios will be in trouble.
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