Striking Distance: Will Online Video Shut Down Hollywood?

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By Anthony Kaufman October 24, 2006

There is a storm brewing over the online video industry. As has been reported recently in particular pockets of the worrisome media, it could blow up in a major way over the next 21 months.

That's when the Writers Guild of America and the Screen Actors Guild renew their contracts (Oct. 31, 2007 and July 2008, respectively), and when these artists -- who produce much of what we love to watch online and off -- will demand a piece of the newly exploding digital revenue pie. "Gone is the entente cordiale that has long kept labor peace," write Jill Goldsmith and Dave McNary in a front-page story in Variety. "What worries Hollywood's guilds is … the prospect that they won't get their fair share of revenue from such outlets as digital downloads."

In another article published in the Los Angeles Times on October 19, "Residuals Debate: Old Script on New Set," staff writer Richard Verrier explains that standard Hollywood labor contracts are vague about payments for films and TV shows that appear on the web. "Actors and writers now make pocket change from downloading because the business is new," he writes, noting that a strike could take place. "In many cases, talent isn't paid at all because the download is considered promotional for a show."

Labeling streamed content "promotional" is a clever way for corporations to get around paying their creators. But unlike most promotional material, the entertainment companies are not spending money, but making money off these deals. Does CBS, for instance, which shares revenue from advertising sponsorships of its content provided to YouTube, also share that revenue with the stars, writers and directors behind that content?

When another video revolution – the arrival of VHS tape – hit the entertainment industry several years back, a revaluation of residuals had to take place. And you can bet this time around that artists are going to fight even harder to be a profitable part of this latest technological shift.