Jay Maidment/Marvel Studios
Johansson’s legal team has said that releasing Black Widow simultaneously in theaters and to stream has cost her up to $50 million in compensation.
When Scarlett Johansson unleashed a lawsuit last week against the Walt Disney Company over her compensation for the movie Black Widow, opinion-havers on the internet immediately dismissed it as millionaires fighting billionaires. But virtually everyone who works to create the TV shows and movies you watch could have a stake in the case’s outcome.
As films and television shows migrate from theaters and broadcast networks to streaming services owned by the same large companies that produce the content, the way in which above-the-line talent (A-list actors, but also some writers and directors and producers) has traditionally gotten paid will be upended. That shift in labor compensation could flow all the way down the production chain, giving powerful companies like Disney more influence to pursue higher profits at the expense of creators.
“What’s happening is the tech-ification of Hollywood,” said Peter Labuza, a lecturer at San Jose State University who focuses on legal history in entertainment. “I think this complaint shows a precipice of something in the marketplace that’s broken.”
According to the complaint, in 2017 Johansson signed a contract for Black Widow, the latest Marvel installment, with a guarantee that it would have a theatrical release on no less than 1,500 screens. This meant that for between 90-120 days, the only place to watch Black Widow would be in a movie theater, as was common for blockbusters before the pandemic.
The promise was directly tied to Johansson’s compensation. The bulk of her fee for Black Widow would be based on a percentage of worldwide box office receipts, as well as bonuses for hitting certain targets. This is known as “back-end participation” or “points,” and it’s common for top talent.
Disney has said that the lawsuit has no merit. But Emma Stone, whose Cruella was released in the same Premier Access fashion, is considering her own case.
But shortly after inking this agreement, Disney announced the launch of streaming service Disney+, and indicated that Marvel films would eventually all launch there. Johansson’s representatives asked Disney in 2019 to ensure that their deal would remain in place, and Marvel’s chief counsel agreed that, since Johansson’s deal was tied to box office take, “we would need to discuss this with you and come to an understanding.”
But Disney released Black Widow in June simultaneously in theaters and as a “Premier Access” stream that cost Disney+ subscribers an additional $30. Disney proudly announced that the film earned $60 million on Disney+ in its opening weekend, presumably limiting receipts from the theatrical release. Johansson’s legal team has said that this has cost her up to $50 million in compensation.
Disney has said that the lawsuit has no merit. But Emma Stone, whose Cruella was released in the same Premier Access fashion, is considering her own case.
Part of this is due to the circumstances of the pandemic; Black Widow was delayed multiple times before the simultaneous release. And few actors or producers get the guarantee of a theatrical release the way Johansson claims she did. But while triggered by the undesirability of congregating in movie theaters during a contagious outbreak, clearly streamers have seen the benefits of this approach. The marginal cost of one more stream next to nothing, compared with the per-ticket profits shared with a theater holding a screening. And streaming attracts a different type of customer.
“A lot of people who ‘go out to the movies’ want to go out on Friday or Saturday night,” said an official with the Writers Guild of America West, who spoke to me on background to more freely discuss the issue. “That’s a distinct market from two 40-something parents with kids who go to bed at 8pm. Studios have a point that these markets are pretty distinct. They can co-exist simultaneously.”
The problem is that it’s hard, if not impossible, to calculate back-end participation on streaming. With the exception of something like Black Widow, where Disney+ instituted a premium fee for first-run viewing (indeed, their release of the weekend take from that premium option is what triggered the Johansson lawsuit), most movies do not generate individual revenue on a streaming service. Streaming revenue usually comes from an overall subscription, and while new films or programs might boost subscriptions or retain subscribers, determining that is next to impossible, especially when the streamers control the flow of information about who’s watching on their services.
Marvel Studios
Johansson may be looking out for her own bottom line. But the impulse behind her lawsuit reflects a power imbalance.
That makes back-end participation on a streaming film useless. And residuals, which are extra bonuses given to talent when their films and shows run on cable or elsewhere, are much harder to figure out as well. “Moving into your own streaming company allows you to get rid of that old model of releasing the numbers,” said Labuza. “You can control and release numbers that you want. Talent has relied on this for dealmaking going back to the 1950s and 60s.”
When Warner Brothers announced that several of its 2021 releases would premiere on HBO Max, filmmakers and actors were apoplectic, and eventually Warner had to cut nearly $200 million in checks to compensate for the loss of back end. Other streaming companies have quietly done the same to placate their biggest stars.
Fortunately, Hollywood is a union town, and unions have long understood that they must get their fair share from online distribution.
But SAG-AFTRA, the actors union, has noted how the move to streaming will affect everyone on a production. Residuals will undoubtedly be affected if streaming services become the ultimate repository for all content, which would likely dramatically curb DVD sales, download-to-own, pay television, network and cable runs, and more. That’s fine in and of itself—the march of progress and all that—but workers signed contracts expecting to be paid over the life of a film. “It is important to all performers engaged on theatrical pictures that compensation is not undermined by the initial release strategy or by eliminating other exhibition windows,” a SAG-AFTRA spokesperson told the Prospect.
Fortunately, Hollywood is a union town, and unions have long understood that they must get their fair share from online distribution. The 2007 Writers Guild strike was largely about internet and video-on-demand rental residuals, and it’s been addressed in virtually every contract going back to 2001. And SAG-AFTRA has said that this issue “fit[s] the profile of issues that need to be addressed across the table in collective bargaining.” The actors union has been in touch with its counterparts over the issue, the spokesperson said.
But there is a metaphysical nature to what a piece of content on a streaming service is actually worth. Streaming companies have fought paying residuals to below-the-line unions, like the International Alliance of Theatrical Stage Employees’ (IATSE) healthcare and pensions. And in April, the WGA settled with CBS All Access (now known as Paramount+) for $3.4 million over shows first put on the service in 2014. The Guild thought the residuals were underpaid, and won the extra dollars through a negotiation. “We got a whole thing in the contract on how to measure this and the standard by which it’s valued,” said the WGA official. “It’s like real estate, measured by comparables.”
But that only goes so far. It’s a derivation of the gross revenue made by a Netflix or Disney+ or Amazon. But it doesn’t take into account the stock gains these large companies accrue from having a growing subscriber base. Talent doesn’t participate in that, the same way that musicians don’t participate in the run-up in stock price on Spotify or Google’s YouTube.
It’s clear that Disney investors, which have bumped up the stock price as Disney+ rises, are orienting itself toward the streaming model rather than theatrical distribution. “Investors want studios to reach scale over profit,” Labuza said. “Releasing a blockbuster like Black Widow is a huge moneymaker that will never meet profits on streaming. What’s coming to the fore is talent feeling they’re not getting paid the same way.”
Especially given that streaming is expected to consolidate over the next few years, what comes out of these lawsuits and negotiations will be critical for the entire entertainment industry. The top streaming companies have additional power from being the top studios producing films and TV shows. They can throw out the old model of compensation contracts, and use their dominance to rewrite them in ways favorable to themselves. Disney, which was responsible for nearly 40 percent of U.S. box office sales in 2019, is no stranger to trying to stiff creative talent in contract deals, for example. This creates another opportunity.
Putting aside the aesthetic desires of filmmakers to have their work shown on the big screen, actors, directors, writers, and others trapped in a streaming model might feel constrained against taking risks that can’t pay off with a back-end deal. “Your hope in pre-streaming world is in having a large blockbuster or an indie that does well,” Labuza said. “When you get to the streaming dynamic, it’s not in the streamers’ favor to get as many eyeballs on each individual product, as to make sure subscribers stay subscribed.” This has flattened out what gets produced, pushed mid-size independent producers to hope to get bought out, and could push workers to take a flat rate to get paid. As Labuza notes, “that’s part of the issue of the new monopoly being built.”
Long ago, the Paramount decrees separated production and distribution, because of precisely these power dynamics. Trump’s antitrust division effectively struck down those decrees last year, and now the same problems are cropping up. The decrees helped give creators a bigger say in what got made, and transformed the industry. Scarlett Johansson may be looking out for her own bottom line. But the impulse behind her lawsuit reflects how the power imbalance creators rectified back then is slipping, and needs to be restored.
