RENEE MONTAGNE, host:
Hollywood writers and studios are set to resume negotiations today in the writers strike. The biggest sticking point between the two sides is how or if profits for so-called new media can be shared.
As NPR's Karen Grigsby Bates notes, even experts can't agree on a formula.
KAREN GRIGSBY BATES: Not so long ago, if you missed an episode of the 80's favorite "Dynasty," you'd have to get a friend to catch you up. Today, if you miss "Grey's Anatomy," you have options. You can download episodes for a couple of bucks on the Internet, or watch for free at its network site.
(Soundbite of Web site)
Unidentified Man: The following episode is presented with limited commercials.
GRIGSBY BATES: If you're willing to sit through a few strategically-placed advertisements.
Writers say their work on the Internet is garnering profit - in this case, advertising dollars - that they're not being paid for.
At a rally for the writers in front of Fox, the studio that produces the popular animated series "Family Guy," creator Seth MacFarlane makes their case.
Mr. SETH MACFARLANE (Creator, "Family Guy"): Because the strike is about the little guys. These residuals are extremely important to them, and paying them will not make a difference to the corporate bigwigs except maybe they can't afford to paint that unicorn on the side of their private jet.
(Soundbite of laughter)
GRIGSBY BATES: New media, the Internet-streaming video, and other methods of content delivery is the big reason the writers guild is on strike.
New media consultant Shelly Palmer says the writers demand that they share in profits whenever a producer makes a profit sounds reasonable, but they're using an incorrect model.
Mr. SHELLY PALMER (Palmer Advanced Media): The idea that you could tie percentages to one piece of creative makes all the sense in the world if you don't understand how producers produce and how studios produce and how the pool of risk capital is risked.
GRIGSBY BATES: Palmer says that for every hit, every "Grey's Anatomy" or "My Name is Earl," there are scores of expensive efforts that fail. Producers factor in the failure-to-success ratio when they figure their profits. But they are infamously secretive about what the actual accounting formula is.
Mr. PALMER: What the writers are saying is, you know what, Hollywood accounting is somewhat opaque, to use a polite term; we would like that accounting procedure to be much more transparent. All the money goes into one place. Whatever is left after expenses, you get paid, we get paid.
GRIGSBY BATES: Internet entertainment analyst Jim McQuivey believes the writers have a point.
Mr. JIM McQUIVEY (Internet Entertainment Analyst): What happens is that in the short run the producers, taking their content to the Internet, are actually making a very handsome profit. And this is a little secret that they don't want everyone to know.
GRIGSBY BATES: McQuivey says the producers' anxiety over new media hinges on uncertainty. They know new media will be the wave of the entertainment future.
Mr. McQUIVEY: But they don't know what it's going to be comprised of. Is it going to be subscription revenue, ad-supported revenue, paid video download revenue? No one really knows what that mix is going to be. We're still too early.
GRIGSBY BATES: Ted Sarandos thinks he might have a glimmer of an idea. Sarandos is chief content officer of Netflix, the company that pioneered mailed rentals of DVDs. Netflix is also one of the first companies to offer a limited number of movies streamed directly to your computer via the Internet. Sarandos says new technologies are allowing people to consume media in more and more different ways.
Mr. TED SARANDOS (Netflix.com): You know, people are watching content while they're waiting for a bus or waiting at the airport - actually watching an episode of a television show.
GRIGSBY BATES: It's a tantalizing glimpse of new media's potential profits.
Shelly Palmer says it also explains why the stakes in this strike are so high for both sides.
Mr. PALMER: In my memory, professionally, I don't remember a time where I think both sides needed to win more than this one. If I'm a writer, I wouldn't budge an inch. And if I'm a producer, I wouldn't budge an inch. So I have no idea how this one's going to come out.
GRIGSBY BATES: As they say in television, stay tuned.
Karen Grigsby Bates, NPR News.
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