Whenever a guild renegotiates their contract, there are a number of issues in play, but it seems that most of this conflict stems from a stark disagreement on how writers should be compensated for home video and online distribution. Writers are typically paid a during the pre-production process for writing & revising scripts; they also get residuals when their produced work is resold, whether it's in TV broadcasts or DVD sales. The current agreement on home video sales was created in 1985 for the newly emerging VHS market - 80% of the revenue gained by selling videotapes was deemed 'manufacturing costs' and not subject to the typical residual rate of 1.2%. But remember that in the early 1980s, most videotapes were priced for rental markets, at upwards of $80 per tape, so the residual numbers were reasonable. Fast forward 20 years - the cost of manufacturing is minimal, the revenue per DVD is much smaller, and thus writers typically get less than a nickel per DVD sold.

The WGA is proposing to double the portion of DVD revenue subject to residuals, effectively raising the residual rate to around .6% of revenues (it's a little more complicated than that actually). This would still be a tiny portion of DVD revenues, which are a major income stream in Hollywood - the WGA sees this as a major correction of an unfair policy that has been in place for years, as there's no doubt that producers see net revenues of more than 20% of DVDs. More importantly, they want to undo this precedent for newer media of downloadable and streaming content, where they hope to establish residual rates more consistent with other distribution avenues like syndication and airline use.

And whether these residual policies are even being followed effectively is in question. As veteran sitcom writer Ken Levine writes in his fabulous blog: "The producers say we already receive royalties from DVD sales. There are no less than fifteen box sets of TV series with my scripts in them. I haven't received a dime. I have gotten $0.19 from American Airlines for showing eight of my episodes on maybe 10,000 flights. If I save my AA royalties for 147 years I might be able to buy a snack box."

Not surprisingly, the producers (represented by the AMPTP) see things a little differently. They highlight how much money writers make - neglecting to compare writer compensation with producer & executive salaries - and how the entire industry is falling apart due to increased competition, eroding audiences, and those nasty file-sharing pirates. The AMPTP proposal is to extend the DVD formula to online and downloaded content, which is patently ridiculous given that the manufacturing costs of a digital file is virtually nil. And they claim that free online content (like on network websites) should not be subject to residuals, as it is 'promotional' for the broadcast or video sales, even when it is ad-supported - and the presence of online content reduces its syndication value, which is a major potential revenue stream for writers.

Yes, the media industries are transforming and the old business models are less stable. But much of the competition is shifting internally - viewers are migrating from network programs to cable channels that are owned by the networks. And even though ratings are dropping, ad rates are not falling at the same rate - as ratings become more scarce, their value rises. So ignore the industry's cries of poverty and desperation. What the AMPTP is doing is trying to maximize its own profits by squeezing creative workers who generally have little leverage. While some writers make a lot of money, most make very little, and residuals are most important to writers who achieve modest success by getting one or two scripts produced. I've yet to see any arguments in favor of the producers that doesn't rely on misleading claims of industry collapse, or spurious accusations of writer greed and overcompensation.

One interesting facet of the strike that particularly concerns television - as many have noted, TV is a 'writer's medium.' Most scripted programs are run by the head writer & creator, and that showrunner (officially an Executive Producer) has an ownership stake in the show. That means that many WGA members are also serving as producers, overseeing not just writing programs but the production and post-production process. There's a lot of debate between the different guilds as to how such 'hyphenates' are supposed to act during a strike - officially, WGA members are forbidden from doing 'writing activities,' but should a showrunner overseeing an edit of a program be considered writing? According to the WGA, cutting a show for time is a writing activity, but the Director's Guild feels otherwise. It will be interesting to hear how the programs with scripts already completed are produced and edited, as it complicates the division of labor within the industry and highlights how central writing is within television.

So here's hoping that the AMPTP is shamed into negotiating on DVD & digital residuals quickly, as erosions in audience share for television will probably be long-lasting, and felt immediately in the more quickly-produced forms of late-night comedy and soap operas. We cannot afford a world without Daily Show and Colbert Report, so I'm banking on a quick and decisive victory for the WGA!