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Placards are gathered together at the close of a picket by members of the Writers Guild of America outside Walt Disney Studios, May 2, 2023, in Burbank, California. On September 24, a tentative deal was reached to end Hollywood’s writers strike after nearly five months.
The end of the five-month Writers Guild of America (WGA) strike was the most important thing that’s happened in Hollywood in a while, but another important development has been largely overlooked. Amazon has announced that it would start running ads in Prime Video series and movies, which viewers can escape by purchasing a more expensive “ad-free” tier.
With Amazon’s move, pretty much every streaming service now has at least one tier with advertising, from Netflix to Max to Hulu to Peacock to Disney+. It’s just one way in which the streaming model, which has lost enormous amounts of money for virtually every company that has tried it, is slowly but surely turning back into traditional television. Cable companies are also now replacing the TV bundle, where they sold a collection of channels at one price, with a streaming bundle, where streaming networks are tied together at one price.
It’s realistic to expect that, in a few years, TV customers will have a streaming bill instead of a cable bill, one that will cost about the same to watch the same shows littered with the same ads. It makes sense for consumers who are overwhelmed with different charges for different streaming networks. And it makes sense for the networks to combine “carriage” revenue, which used to come from the cable companies that distributed their channels, with advertising revenue.
The writers were on strike because the actual entertainment creators were poised to become the only ones to lose out in this transition. As I wrote when the strike began in May, entertainment writing over the past decade has shifted to a gig-economy model, making it next to impossible to earn a living. This was a function of streaming video popping up as a “new” distribution channel, unrestricted by the contractual agreements of broadcast and cable.
The WGA went into the strike to fight that trend, which the contract they’ve won largely does. It will earn writers $233 million more per year than their previous agreement, according to Guild estimates, nearly tripling the offer that the Alliance of Motion Picture and Television Producers (AMPTP) first made. More important, it begins to add the kinds of protections and revenue-sharing that made the entertainment business so successful for creators for decades. But there is one important caveat that must be spotlighted: Whether writers will get fairly compensated depends on the quality of streaming viewership data.
The agreement—you can read it in full, or this shorter summary, or this comparison of the WGA and AMPTP positions, which shows where the final compromise landed—attacks all of the facets that made streaming unsustainable for writers: the shrinking of writers’ rooms, the compressing of seasons, the loss of opportunities for career advancement, the reduction of the wage scale, and the threat of artificial intelligence dislodging writers from the creative process. It does so by inserting legacy rules from over-the-air television into streaming.
There are now staffing and duration minimums for all filmed programs, including minimums and guarantees for streaming comedy-variety series, which were not covered before. This, more than anything, guarantees that writers working on a show don’t have to worry immediately about lining up their next gig and stitching together a living. Writers will get separate script fees for high-budget streaming programs as well, and there are guarantees that writers will be employed on streaming shows through production, giving them needed experience to become showrunners later on.
You can see the problem here: One side controls all the numbers that are the basis for the residual paid to the other side.
AI’s large language models are contractually prohibited from writing or rewriting scripts, or being used as source material. Writers can opt to use AI themselves, but the companies cannot require them to do so. The Guild furthermore maintained “the right to assert that exploitation of writers’ material to train AI is prohibited by [the bargaining agreement] or other law.” The fear that first drafts would be done through ChatGPT and then handed to a writer for lower rewrite fees has been neutered. This may be among the first collective-bargaining agreements to lay down markets for AI as it relates to workers.
The other big piece of the contract is a new viewership-based streaming residual, the hardest thing to mirror from broadcast and cable TV. For over-the-air shows and films, some residuals pay a fixed payment for reuse on another medium, and some are tied to a percentage of revenue from that redistribution. But shows can live on streaming perpetually, and streamers are subscription-based, with revenue not tied to any one show. That makes it unlikely for streaming-native programs to be licensed to other streamers or media, and impossible to pinpoint the revenue percentage.
Current streaming residuals are paid annually based on fixed rates, which is why streamers often take down shows after a while: It enables them to avoid residuals. Streaming residuals are also tiny compared to those for network or cable programs.
The contract’s viewership-based residual is an attempt to get around all this, but it gets very technical and nuanced. The residual is reserved for streaming series and films that “are viewed by 20 percent or more of the service’s domestic subscribers in the first 90 days of release, or the first 90 days of any subsequent exhibition year.” There are separate foreign residuals based on foreign streaming.
The first problem is that 20 percent number. “It seems like a fairly high bar, especially for the small streamers,” said the anonymous author of the Entertainment Strategy Guy blog, one of the better aggregators and analysts of streaming viewership. “Based on my gut and reviewing the data weekly, the majority of shows won’t qualify.”
Per the agreement, a “domestic view” is determined by dividing the total number of hours streamed domestically by the total hours available in a series or long-form program, rounded to the nearest one-tenth of an hour. (This might actually benefit shorter shows and movies, which given the length creep of so much programming might also be a relief to viewers.) This data, which by and large is not disclosed today, will be confidentially provided to the Guild by the studios, which also control the subscriber data. A maximum of only six people at the WGA will be allowed to see the data, though a jointly selected third party could audit it, at the Guild’s expense.
You can see the problem here: One side controls all the numbers that are the basis for the residual paid to the other side. Any book author (guilty as charged) knows the fun with accounting that occurs when they get incomprehensible royalty statements that always seem to chisel down their payments. “For years Netflix has provided some showrunners/talent/producers individual data points on their show’s performance, and it often confused talent more than helped,” said Entertainment Strategy Guy, whose data all comes from third-party sources.
Some audited data is released publicly by Netflix and Disney+, but usually at the global level, while the new residual is domestic only. So it wouldn’t be that hard to claim that writers missed out on residuals, given that lack of transparency. “I think the publicly released data will be phrased in ways that don’t line up to the data reported back to the WGA, making one-to-one comparisons fairly tough to compare,” Entertainment Strategy Guy explained.
The AMPTP didn’t want to include a viewership-based residual at all, so getting one set up is still a huge win for the WGA. Negotiating committee members have said that the details reflect a compromise. But it’s also going to require significant vigilance and maybe demands for a public, independent ratings process for streaming. (Nielsen and other companies do estimate viewership for streaming, but obviously the streamers have the more granular data.)
Opening that black box, as writer Howard Rodman put it, has benefits beyond just the residual. It gives the industry critical feedback on what works and how to proceed. It’s never worth writing to completely cater to the audience, but the vacuum of information makes it impossible to understand audience tastes. More important, it makes it impossible to know how to share in the prosperity of the Apples and Amazons of the world that have established a foothold in streaming.
If the WGA’s deal works, it will have set up virtually all the elements of the traditional system: guaranteed minimum employment and rates, merit-based payment for success, and assurances that humans will create entertainment for humans. The actors, who are also on strike, will likely want at least a similar deal; talks are scheduled to resume Monday for the first time in two months.
More than anything, the WGA agreement shows that just transitions are possible. There is not much difference between writers fighting for their share of the profits from streaming and autoworkers fighting for their share of the profits from electric vehicles. Automation, AI, and other labor-saving technologies are not to be feared as long as everybody gets to share in their value. The WGA strike is a road map for how to get there.
