Wednesday, November 07, 2007

WGA Strike Stuff
For Writers Trying To Break In

Lately I’ve been answering a whole bunch of strike related questions on message boards, so I thought I’d set down my picket sign and put together a blog entry on the subject. I did a script tip on the strike a few weeks back (before there was a strike) and this will probably repeat some of that information.

WHAT IS THE WGA?

Some of you may have heard the Writers Guild Of America is on strike. The WGA is a labor union, just like the United Auto Workers. Basically, once you sell a script to a union signatory company, you have to join the union. And that’s a good thing - the union is designed to protect the writer from being exploited. So they set up a minimum wage for writers and workplace rules to protect us, and a pension fund and health plan. The union is really just all of the members - if a studio tries to exploit one writer, all of the other writers (the union) back that writer up. A union of writers all looking out for each other. Every 3 years they get together with the studios and hammer out a new contract. Just like the United Auto Workers, they try to get raises and keep the studios from slashing heath & pension funds... unlike the UAW, there are often creative issues involved in the contracts. You know, until a couple of contracts back, writers were not allowed on the sets of their own movies, not were they invited to the premieres of their films. The WGA fought for those things and won them.

WHY STRIKE?

The contract was up on October 31st, and despite negotiations before that date, both the WGA and studios were far from agreeing on the key issue: Residuals.

Residuals are the royalty writers make when their films are shown on TV, sold on DVD, etc. Actors get royalties, directors get royalties. When a studio makes extra money from some source outside of theatrical, we all get a share. Not a big share.

Way back when VHS was brand new the writers, directors & actors asked for residuals from home video. The studios said that video was new and who knew if it would catch on? Plus, those danged video tapes are expensive to manufacture.That was back when VHS tapes came in huge clamshell boxes and sold only to rental stores - at about $100 each. No one *bought* VHS tapes. The studios wanted to wait and see what happened before giving everyone a share of the profits. Well, eventually the three creative unions managed to get the studios to budge a little, and they agreed on a small royalty on this new VHS technology.

And nothing has changed since then.

Even though DVD has replaced the expensive VHS tapes. And everyone *buys* DVDs.

Though the residual formula is kind of complicated, it averages out to about 4 cents per disk. That’s not 4 cents for every dollars they make, it’s 4 cents on every disk they sell for $20 (or more). And this home video thing seems to have caught on. Do you know anybody who doesn’t have a DVD player in their home? I know people who have two or three DVD players... and I personally am addicted to DVDs and probably own over 500 of the things. I don’t think I’m the only one with a collection.

DVDs are cheap to manufacture - most studios have theirs made in Mexico. I just googled “DVD manufacture cost” and found a place that will burn my DVDs, do the labels and box and shrink wrap the whole thing... for 38 cents each.

http://www.copycatsmedia.com

You know, I’ll bet the studios get a better price. This guy says studios pay around 25 cents for a ready to sell DVD, and that seems about right. So cost to make the DVD is 25 cents, cost to the customer is $20-$30 retail, after the store takes its cut the studio ends up with about $17.26... of which the writer gets around 4 cents. (source) When you add up the SAG, DGA and WGA residuals, you end up with around 50-60 cents (there are lots of actors in movies). So the *total cost* to studios for a DVD is around 75 cents (including residuals) and they make $17.26... so, what does that make the profit going into the studio’s pocket? $16.50 per DVD? Okay, that iffy home video market is now a $16 billion (with a b) business... and writers are still getting 4 cents a disk. Not a good deal. One that the WGA is trying to renegotiate (and SAG and the DGA will deal with early next year). It’s obvious there is money to share, here... and the studios aren’t sharing.

NOTE: "profit" here refers to the DVD disk, not the the movie. A big budget flop like SUPERMAN RETURNS may require all kinds of revenue streams before it makes a profit. * - see below. (thanks to Fun Joel.)

WHY SHOULD THEY?

Well, that’s a very good question, Frank. I mean, writers are rich enough already, right?

According to the stats, the median income for a *working* WGA member last year was $106.756.00. Not millions. Not even the $200k that gets bounced around in the media. Just over $100k. Now, that may not sound too bad...

But that’s for *working* screenwriters. And last year, only 57% of screenwriters made any money writing scripts. What about the other 43%? Well, they were living off savings and residuals. This is a business where you may go a couple of years without *any* income from writing.

And here’s what sucks - writers are independent contractors (who, oddly, write on work for hire contracts so that the studios can keep copyright) - so we aren’t eligible for Unemployment. Actors are, we aren’t. So when we have no writing income, the only thing we have to live on is our residuals. Oh, and as you know from reading this blog - just because you aren’t earning any money doesn’t mean you aren’t *working*. Writers are constantly creating new spec scripts... which usually don’t sell. They go to endless meetings where they try to set up some project. Producers are always giving us books to read and magazine articles, so that we can come back and pitch our take on the story - hundreds of us do this, an *one* gets the job. For the rest of us, we read the book and developed the story for *no income*. I have gone 3 years without any sales or assignments... but that entire time I was doing *constant* meetings trying to set something up. No pay for that. So when a writer *isn’t* earning any money, they are usually working ten times harder than when they are earning something... and we need our residuals to survive.

One of those other stats - the average WGA writer writes 9 screenplays before making a cent. Name some other business where you do that much work for nothing. And even after you make that sale, not every script you write sells - most don’t. But you need to write a new script so that you have something to send out to producers so that they can have you come in and pitch your tale on some novel or magazine article... on the slim chance that they may actually hire you to write a script. Lots of work without pay. I like to think of residuals as the money that covers the time spent spinning your wheels on things that never happen.

WAIT, THERE’S MORE!

Hey, there’s a *second* residual issue involved, too! “Internet and new media”. Right now, when you go to Amazon or Netflix or some other site and download a movie... the writer gets *nothing*. No residuals at all.

The studios are saying the same thing they said about Home Video - internet is a new media and who knows if it will catch on? We should just wait and see what happens before we start handing out money. This is an rerun of the Home Video thing, and my guess is that people will like the idea of instantly downloading a movie... and that may take the place of rentals in the not so distant future. Technology doesn’t get worse, it gets *better*. This isn’t some thing that is happening in the future, you can download a movie on Amazon and Netflix *right now*...

And there are no residuals for that. All of the money goes to the studios. All of it. And the manufacturing costs? There aren’t any! No disk, no box, no shrink wrap! It’s 100% profit!

Um, why should *all* of that money go to the studios? Can’t we get a fair share?

CAN I SELL A SCRIPT?

The biggest question people ask is if the strike will open any doors for new writers. The answer is... no.

Today some of the studios told employees in development that pink slips are on their way. The strike has pretty much closed down every aspect of the biz that has to do with scripts. I have a couple of friends who are readers - and they are not being given anything to read. Now the studio employees involved in buying scripts and developing them are being laid off. The script part of Hollywood is closed until the strike is over.

There was a huge rush to get scripts for projects already greenlit polished and ready to shoot (even over the weekend before the strike). They will be busy making those films over the next *year* - and not be thinking much about new scripts. TV sows have been shooting back-to-back episodes, and most shows have a majority of the season shot. No real need for new scripts there (with a few exceptions like 24). With the holidays only a couple of weeks away, the development folks who aren’t being laid off are either closing up early or just hanging out on the clock for a couple of weeks before closing shop... until the strike is resolved.

So there is no one to read your scripts.

And no reason why they will read your script.

(NOTE: Fun Joel says he's reading novels for producers... so now may the time for you novelists to make your big Hollywood deals.)

By the way, one of the side effects of the strike is that lots of producers on studio lots are being kicked off. If they aren’t making movies right now, the studios are using this as a good excuse to end their contracts. Clearing out the dead wood.

From Hollywood Reporter: "20th Century Fox TV became the latest TV studio to send out suspension letters to writers with overall deals, joining CBS Paramount Network TV, ABC Studios and Universal Media Studios.

"20th TV also began notifying writers assistants Wednesday that they are being laid off effective immediately, but the studio will pay their health benefits through the end of the year, sources said."


Everyone in Hollywood is being sent home... no one to read scripts, let alone buy them.

And one of the things that happened with those stockpiled scripts - well, writers who had been given 3 script deals... but the studio never liked their scripts? Well, the studios went ahead and commissioned those scripts, but now that there’s a strike the scripts are shelved *forever* after only paying the first draft fee. Again, cleaning out the dead wood.

The strike really doesn't open any doors for non-WGA writers. Sig producers aren't scrambling for scripts - they have plenty. TV has already been stockpiling episodes. The main problem will be the topical shows like SNL and Tonight Show and Daily Show... and those shows are just closing down. Jay Leno was handing out donuts on the picket line yesterday - his writers are *his* writers. He hired them. Probably took him *years* to find those writers. They make him funny. He's not going to just hire some writer off the street to fill in. Hey, he's not in his office anyway - so even if you tried to get a job, there'd be no one there to hire you.

A studio isn't going to hire someone off the street to replace Steve Zaillian. If you are as good as Zaillian you have the same chance of breaking in during the strike as you had before (and as you'll have after). Actually - a worse chance during the strike, because they aren't looking for scripts. It's still about the talent. If you have it, you're going to break in... if you don't, the strike isn't going to help you.

The thing with TV shows is that they are writer driven - in other words, the producer of most TV shows is the head writer. They can't keep making shows because the *producer* is on strike. We’ve had a bunch of TV shows close down - they aren’t looking for writers because the guy who would be looking is carrying a picket sign. TV show stars are showing up on picket lines, too.

The strike has not created any openings for non-WGA writers. No one is hiring. No one is reading scripts.

My guess is that Agents and Managers will also be taking an early holiday vacation - since they can't really sell any of their client's scripts. Not a great time to seek representation.

SILVER LINING?

But a non-WGA writer can do one thing that a WGA writer can not do... sell a script to a non-signatory producer. They could always do this. There are companies who are not signatory, most are foreign or low budget companies. They’re still making films - even during the strike - and still buying scripts. I do not have a list of non-sig companies, but they will be the only ones looking for scripts until the strike ends.

Here's a list of *signatory* companies - so if it's not on this list, a non-WGA writer may be able to sell to them: Signatory companies WGA is striking against.

Another door that is open to non-WGA members... "Negative pick ups". That isn't just a description of my love life, it's a loophole studios often use to bypass unions by making deals with an Independent non-sig producer. How it works: the studio buys a completed film... that hasn't even started shooting. The studio isn't *making* the movie, they are just buying a piece of property - a movie someone else has made. But they pay up front - basically funding the film. The rules say the studio can not give notes or be involved in the production of the film... even though it's their money. I think they probably get past that by "making suggestions" to the indie producer who then passes them on to the writer as notes. But the end result is a film made by a non-sig that is distributed by a big studio.

And these deals may be springing up more if the strike continues. Some forward-thinking indies may already be gearing up to do them right now. So, that's the silver lining for you guys trying to break in! Good luck!

My basic advice for strike time - write some great specs. That way you'll be prepared for when the strike ends... and everybody needs scripts.

- Bill

THE FINE PRINT

* A couple of things about "profit" - studio accounting usually makes sure no film is ever in profit. The famous COMING TO AMERICA case exposed that film made $300 million domestic alone... yet was still deep in the red. Studios have all kinds of overhead charges they tack on movies... and also tack overhead costs onto budgets.

I was talking about the strike with a producer at AFM (which may have been technically against the rules, but I wasn't selling him a script) about the profit issues. Some films really end up in the red, and need all the money they can get to get in the black. Couldn't we just make a deal to take our cut *after* the film gets in the black? That was what the studios offered up front, and I think that would be a fair deal... if the studios didn't use that creative book keeping that keeps every film in the red. If they were honest and had open books and didn't throw in all of those fake overhead charges, then didn't do those deals where one division (say Paramount) sells the movie to Showtime (which they own) then sells it to CBS (which they own) then sells it to... the problem is that the big congloms own everything and are able to hide money by shuffling a film from division to division. If there was an honest and open accounting, I think it might be fair to take a % from actual profits. But even Peter Jackson is suing for his % of the LORD OF THE RINGS movies because, you know, those films didn't make any money.

Plus, if the film costs too much to make any money, how is that the writer's fault? When you run down the list of costs on a film, writers are not at the top... actually, nowhere near the top. We are the worst paid key creative people on the film. Let John Travolta fly commercial... don't pay for Travolta's plane. Get rid of the star perks - let them pay for that crap out of their salaries. By the way, that's not anti-SAG - most SAG members are like writers. We work our butts off to earn a living while stars get $25 million and $10 million in perks per film.

TWO PRODUCTION MODELS

Since I was just at AFM, let's look at the difference between the studio spending model and the indpendent spending model. Studios often seem to either be gambling or deficit spending (making a movie too expensive for theatrical to cover and hoping to make the money on DVD, etc). That's just crazy. The AFM model is to never make a movie for more than it can return... in fact, to make the movie at a price that guarentees a profit.

How do they do that? Well, let's use my film BLACK THUNDER as an example.

Based on hard numbers from previous films in the same genre with the same star, they can guess what the film should make. There are actually consulting companies that will take script, cast, director and analyze them using past films and give you the number the film can expect to make. I linked one of these companies to a script tip after attending a presentation - they are amazing accurate - films they have done analysis on have made almost exactly what they predicted. Studios never use these guys - I have no idea why. Probably because they don't really want to hear the results - better to gamble.

So they have a basic budget number for the film, and then they do something strange... They remove the risk (and remove any possible gambling wins). An AFM company will typically sell off rights to the movie before the film is even made! Often they will hold on to some rights to "gamble" with... but they cover the actual production cost before making the film. So a $2 million film like BLACK THUNDER was in the black before they made the film. No risk.

Speaking of Travolta, this production model was used on BATTLEFIELD EARTH... and the film was deep in the black before it was ever released. It could not lose money. It was a major flop for Warner Bros... and that was the "gambling" element. Had the film done okay, that would have been all profit (actual profit) for the producer. Gravy. Now, the "risk" here is, if the film becomes a huge hit... all of those rights you sold won't make you any more money. They make money for the guy you sold them to. But these deals are attractive to AFM companies (indies) because if the film tanks, they won't go bankrupt. They live to film another day. It's a "safe bet" - you don't win as much, but you can't really lose. You know, BATTLEFIELD EARTH made enough money (using this method) that they were thinking about making 2 sequels!

On BLACK THUNDER, the film did so well that it kind of backfired for me. They sold off *all* their rights for top dollar - and were so deep in black they *cut the budget*. They had already made as much as they were going to make, why spend that much on the actual film? Though this is a great way to burn your bridges ahead of you as a producer, it happens all the time.

A studio could play it safe on films, but I think they like the idea of holding on to all the rights and scoring big. I personally think if that's the path you pick, you're stuck with the destination... and it's not my fault.

- Bill

21 comments:

Fun Joel said...

Hey Bill! I agree with almost everything you have to say here, but I would like to clarify/qualify two points.

First, what is left over to the studios after paying for DVD manufacture and residuals should not be considered "profit" but rather as "revenue." The truth is that some of the money the producers make on DVDs is covering marketing and advertising, distribution and even (yes) production. Is it still highly disproportionate and ridiculously unfair to writers to give them a mere 4 cents per $20 DVD? Yes, of course. But at the same time, we should be fair and honest about what the studios are making.

Secondly, as you know, I'm a reader as well. And while I'm not getting scripts to read (which is your key point anyway), I have been getting a few books/manuscripts to read for option purposes.

Alex said...

A fascinating and enlightening read for someone who's completely outside of the industry. My hat off to anyone who's principled enough to lay so much of their livelihood on the line for something they believe in so strong.

As someone who's had a 9-5, non-unionised job for his entire career, your description of how writers earn their money and actually work so hard to then start earning money is massively alien to me. I'm truly boggled how an industry that works like that can pay people enough to live. Do many writers have jobs besides writing?

Oh, and I'm 100% behind you all on the issues of the strike. I'm really fascinated by how this all will work out in the end.

James said...

Now I feel very moronic for having had the position I've had for years as an emerging writer.

I still dislike unions, but health benefits (obviously are important), but I had no idea that residuals for TV-play were no go for writers.

Thanks for this post Bill. (feels so inappropriate calling someone you don't know by their first name. But I guess its better than 'Sex In A Submarine' ... wait ...)

James said...

This is a diff James than the one above...

I completely agree.

However, I've been getting more meetings and callbacks than ever before since this past Monday. Maybe it's just coincidence. Maybe it's just bored producers with nothing better to do.

I just wanted to point out, it's not all bad. Everything being scattered and up in the air, the normal lock-out "I'm too busy to even blink" attitude of Hollywood has dissapated, slightly.

Granted, producers on successful TV shows are stressing like never before, but people seem more willing to talk about what is going on and the future... and for me the future is writing, and my projects.

Christian M. Howell said...

Also, with people looking for non-sigs, many of them have deals with the struck companies.

For all in the NYC area, if you want to shmooze with stars and writers you've never heard of, come out and join the line.

I got to serve coffee to Tim Robbins, Patti D'Arbanville, Holly Hunter, and actors from the Wire, Law and Order and several others whose names escape me.

I'm just glad I was able to do it. Maybe I'll come to LA if this lasts awhile. It's cold here.


To the second James, I'd say don't take any calls. Or at least don't try to make a deal.

wcmartell said...

Chris - Correct! Hey, maybe I should mention that.

"Negative pick ups" aren't just a description of my love life, it's a loophole studios often use to bypass unions. How it works: the studio buys a completed film... that hasn't even started shooting. The studio isn't *making* the movie, they are just buying a piece of property - a movie someone else has made. But they pay up front - basically funding the film. The rules say the studio can not give notes or be involved in the production of the film... even though it's their money.

And these deals may be springing up more if the strike continues.

That may even account for James (the 2nd)'s flurry of meetings.

Fun Joel - I've ammended the post to make it clear I was talking about profit on the individual DVD, not profit on the film.

Then I added a bunch of stuff about movie profits.

- Bill

Steve Peterson said...

Another great post and thanks!

I do want to mention that Jared Wynn from InkTip mentioned in an email that he's been talking with a lot of agents and managers who are saying that they're looking for stuff to keep busy, and reading is high on their list. So perhaps it's not such a bad time to seek representation.

Anonymous said...

Say if the strike is still going on two to three months from now,(and I presume it will) how do you tell someone like James not to talk with producers.

Christian M. Howell said...

You know something you said is why I never really got serious about this.
Ownership. It's a real stickler for me.

I actually decided that I would write two different types fo movies, the passion project that would have to be pried from my cold dead hands and the fluff projects that - hopefully - will finance the passion projects.

I just hate the fact that when you do sell, that's exactly what it means, you no longer have any rights to do anything with the movie, characters or story.

And now they're wanting to stop paying until a film is profitable?

But the studio mentality is, only worry about tentpoles and let some creative director destroy lots of what could be good films.

I guess there's some kind of write-off for a flop that is too tempting to trade for profit.

BTW, where did you find that consulting company that does earnings estimates?

James said...

Bill,

LionsGate is infamous for the negative pickup, particularly in the horror genre.

If you can put together anything with the slightest hook that can be shot for 100k, you'll probably get a deal.

I had friends that got this, the real problem was that they wanted three named stars, and on that kind of cash ... good luck.

P.S. I'm not saying my situation is unique or anything. I'm just saying that there's still opportunities out there, and in terms of networking, it's probably the easiest it is ever going to be.

For guys used to getting paid, its a graveyard. But for networking, you can actually get face time with showrunners just by showing up to a picket line.

Maestro said...

>"a non-WGA writer can do one thing that a WGA writer can not do... sell a script to a non-signatory producer."

This is where the WGA is shooting themselves in the foot. The contract expired, so the only thing stopping WGA members from selling to non-sigs is the WGA. And that, not a strike, is your biggest weapon.

Start selling your revenue generating content to the AMPTP's competition!

M

P.S. Lion's Gate (TV) is on the list of struck companies.

wcmartell said...

If non-sig companies paid sig prices (or even close) that would be a strategy... but they don't. The whole reason for the WGA is the first place is to raise wages and improve working conditions. The non-sigs? Bad wages and bad working conditions.

- Bill

Anonymous said...

"- so even if you tried to get a job, there'd be no one there to hire you.

A studio isn't going to hire someone off the street to replace Steve Zaillian. If you are as good as Zaillian you have the same chance of breaking in during the strike as you had before (and as you'll have after). Actually - a worse chance during the strike, because they aren't looking for scripts. It's still about the talent. If you have it, you're going to break in... if you don't, the strike isn't going to help you."


TAKING the audacity to speak for all of us "off-the-streeters" out here...

I think you PROs should be a bit more thoughtful whilst you strike.

We "off-the-streeters" study your websites, and literally hang on to every word...trying to learn the fine art of structuring a screenplay from our daunters (oops I mean our cyber-mentors :~)

wcmartell said...

Anon,

Don't understand your point. Are you Steve Zaillian's equal?

I had 2 films come out on DVD this year - one from Lions Gate, one from Sony. I've spent close to 18 years earning a living as a screenwriter. For every film that got made (poorly) there's at least one more script sitting on some producer's shelf somewhere that I was paid for... and will *never* be made. I have a column in a screenwriting magazine (for which I get paid $600 a year - thank God I sell a script now and then). Heck, David Fincher was attached to direct my first Hollywood sale... before it was shelved forever. And I'm nowhere near as talented as Steve Zaillian. Three Oscar nominations, one win. No one is ever going to hire me to replace Zaillian - and no one is going to hire me to do those high level on set production rewrites on a $200 million film. Just not going to happen.

"It's still about the talent. If you have it, you're going to break in... if you don't, the strike isn't going to help you."

Nothing there says you don't have talent... unless that's how you want to take it.

- Bill

Anonymous said...

Hey Bill,

I suppose I do have a weird and unorthodox way with the compliments; however, that was my intentions.

In the future I will simply post...
"We nonProfessionals diligently study your websites."

In response to:

"Don't understand your point. Are you Steve Zaillian's equal?"

I suppose that could depend quite heavily on "Marketing".

Maestro said...

>"The non-sigs? Bad wages and bad working conditions."

Yes, but is that because the non-sigs can't do any better or because they don't have a reason to do any better? In other words, would the non-sigs be able to up the ante if they could get a script written by a WGA member?

wcmartell said...

Maestro,

Many of the AFM companies are non-sigs... and my Talent Shortage posts kind of sum it up... most of these companies are making sausages. They don't seem to care much about quality.

Not all non-sigs are like this, but I'll bet the majority would rather hire some writer for $1,000 than hire a great writer for $1,001 To them, all scripts are the same... and all screenwriters are the same.

I think if you could show them that spending the extra money really does mean the film sells better, they might spend the extra money. So far, they'd rather spend less on the writer and more on the "star".

- Bill

Maestro said...

Bill,

Thanks so much for taking the time to answer questions here, and on your website, and on the various message boards and newsgroups. If I may impose on you by asking one more:

Since you've been to Raindance a few times, what's your impression of the folks across the pond? Do you think any of them might be receptive to a script from a WGA member? (I ask because it's been noted elsewhere that the Brits pay 5.6%, which is actually better than what the WGA is asking for.)

Thanks - M

Hugo Fuchs said...

Just a point.
$0.39/disk is for burnt disks not stamped disks (which is what pros use).

But even so, it is still under a dollar at the number they print. So you figure it probably takes a couple bucks to print and pay the costs for writers/directors/stars/etc. then they sell it to wholesalers for about $10 over that. The rest is what the wholesalers & retailers price it up to.

union man said...

In case there are unestablished screenwriters who want to try to use the one advantage they have during the strike, I found a page where someone compiled the names and addresses of a lot of non-signatory production companies. If there does happen to be a good writer out there who isn't in the WGA, this could be a good time to pitch: List of non-signatory production companies

_ram-jaane' said...

Hi Bill,

Though I haven't posted earlier, I've been following this post and it's comments a while now. It's been very insightful and a made me knowledgeable enough to argue the cause of writers.

A subset of the average audience doesn't know all this, they simply see the lack of product (TV-shows) at the moment & jump to the conclusion, well it's if they're striking, it's their fault. Anyway, I do have a question:

You mentioned that negotiations occur once every 3 years. How come DVD's haven't been raised previously? It would seem the WGA have already had 3 opportunities.

I understand there may have been time constraints & higher priorities, but perhaps there's a story to tell here?

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