Wednesday, January 2, 2008


The issues in the Hollywood writer’s strike, which began Nov. 5, are symptomatic of a broader challenges that online and mobile media pose for all content creators. The fundamental issues for all media involve how to obtain revenue for content distributed by digital media and how to share revenue from those downloads.

In the Hollywood case, the central issues revolve around new media residuals for advertising supported video downloads of content prepared for TV and motion pictures, made for Internet content, and other streaming video. Screen writers, who did not foresee the success of VCR and DVD sales of motion pictures and television programs in past negotiations, are determined to receive greater compensation for the growing business in digital downloads.

The Alliance of Motion Picture & Television Producers argues that business potential of new media is uncertain and does not wish stipulate a monetary value for it. The Writer's Guild of America has asked for a $250 residual for one year of unlimited streaming of an hour-long show and 3-cents-per-download—the rate writer’s receive for DVD sales.

The rhetoric of the dispute has involved standard finger pointing with the producers’ group accusing writers of “quixotic pursuit of radical demands” and the writers accusing the producers of “corporate greed.”

Whatever the truth of those claims and the outcome of the work stoppage, there will be more disagreements in the coming years among those who actually produce content and those who employ creators or ultimately own the content because the issues are far broader and deeper than the screen writers challenging program and film producers. The underlying issue of what compensation creators deserve is growing in all media industries and digital downloads increasingly play important roles in their businesses.

In the past 20 years, at the behest of large commercial media firms, Congress past more copyright legislation than in all the years of the previous century combined. It extended the length of copyright, gave copyright protection to performers, games, and broadcasts, provided more protection and stronger penalties for digital than analogue content, and criminalized copyright violations.

The rhetoric of the media industry throughout the debates was consistent: If creators of content aren’t protected and compensated, no one will create articles, books, music, scripts, etc. However, the effect of the copyright legislation did not effectively strengthen the position of authors, composer, performers, or artists, but reinforced the power of copyright owners--essentially film, television, and recording companies, newspaper, magazine, and book publishers. Today, creators of content are now beginning to use the rhetoric that media firms used in copyright debates in their attempts to gain more compensation because of the growing revenue streams in digital media.

Although the full financial future of digital media is uncertain—as in any emerging industry, media firms are investing billions based on an upbeat assessment of its business opportunities. Twentieth Century Fox just announced a deal to rent its movies through digital downloads from the iTunes Store, which sold more than 200 million video downloads in 2007. Viacom signed a $500 million online advertising and content distribution deal with Microsoft covering the websites they both operate such as MTV, Comedy Central, MSN, and Xbox Live. You Tube was purchased by Google for $1.65 million and subsequently acquired the ad-serving firm DoubleClick for $3.1 billion in order to improve its ability to earn ad revenue on You Tube and other sites.

Although there is business risk involved in these ventures, digital media are clearly growing and are expected to produce handsome rewards. Downloads of movies and TV produced only $250 million in 2007, but are forecasted to reach nearly $2 billion in just 2 years. Digital downloads of music have already surpassed that mark and U.S. newspapers had online advertising revenue of $2.6 billion in 2006. There is money to be made in digital media and the amount is rising rapidly.

The growing value of digital downloads is one of the reasons why Viacom sued You Tube in 2007 for $1 billion in damages when 160,000 clips of its programs that were found on the online site. When media companies sue each other, you know that real money is at stake.

Arguments made by Hollywood producers that they are uncertain if there is money to be made in downloads are hollow given their own investments. It appears they are trying to reduce their business risk and to increase their profits by keeping writers’ compensation low and stropping them from gaining a stake in the growth of downloads.

The issues of compensation that led screenwriters to strike are confronting writers and photographers for newspapers, magazines, and books, independent video producers posting material on social media sites, and citizen journalists whose articles, photos, and videos are being use by commercial media and their digital sites--sometimes replacing paid content of professionals.

Now that online services are beginning to generate significant revenue streams for print media, journalists’ and writers’ desires to gaining more compensation for those uses of their work are rising. Although some papers and magazines agreed to provide nominal payments or salary increases for secondary uses of print content online, most have not yet come to terms over the growing revenue stream and how its benefits should be shared.

One can expect issues of compensation for digital materials to gain greater significance as negotiating points for the Newspaper Guild and the National Writer’s Union in the years to come. Both have lent their support to the Writer’s Guild of America and their members are increasingly aware of the effects of the new revenue streams on the companies that employ them.