Writers' Strike: Why the Web Wins

After three-plus months on picket lines over issues of new media compensation, Hollywood scriptwriters can return to work this week pleased. They didn't get all they wanted, but the walkout got them the most important thing of all: A stake in the future.

Never mind the percentages, fees and rerun royalties. By gaining jurisdiction over any original material Hollywood produces for the Internet, the Writers Guild of America has ensured its survival. "It's a toe-hold; we placed a flag on the Internet," says Charlie Craig, whose TV credits include X-Files and the Sci-Fi Channel's Eureka, of the agreement. "We claimed part of it as our own, and that's a gain for the future of the guild."

The studios should be pleased as well. Though they argued that paying writers for online projects would smother the new medium with financial burdens before it could really take off, the opposite may happen. By reaching this deal with the writers, the studios bet (unwittingly and against their will) that Hollywood's talent pool can best Silicon Valley's when it comes to content--that professional writers and producers can trump whatever your neighbor is filming and uploading to YouTube, and the studios can figure out how to make money off of it better than Google can.

The stakes are huge. According to industry projections, video streaming revenue and video downloading revenue is expected to reach $3 billion and $1 billion by 2010 and 2011, respectively. And while that's a fraction of the revenue for entertainment as a whole, PricewaterhouseCoppers predicts that within the next five years nearly half of the total industry growth will be generated through Web and wireless technologies.

Newsweek subscription offers >

Under the new agreement, writers will earn a fixed residual amounting to roughly $1,300 for the early part of the contract's three-year life (excluding a two- to three-week window of free usage for promotional purposes) and 2% of the distributor's revenue in the deal's final year. For new material, writers get $618 for dramatic programs produced for "new media" up to two minutes plus $309 for each additional minute; $360 for two-minute comedy videos, with $180 for each minute after. What's more, new media writers get credits as well as health insurance.

For the time being, it's not a lot. But the agreement legitimizes the new medium within the industry, guarantees the writers a stake in it and aligns the interests of everyone in Hollywood in seeking Internet success. "Three-plus months on strike is nothing compared with the huge cost to writers if these issues were not dealt with now," says Brian Sawyer, a co-creator and writer behind the Jamie Kennedy television project Model Family.

Craig feels the same way: "This deal may have saved the guild from becoming irrelevant," he says. "So was the strike worthwhile? Absolutely." Someday soon, the studios may agree.

Newsweek subscription offers >

Writers' Strike: Why the Web Wins | Business