Business Musings: Learning, The Future, and CES (Contracts/Negotiations)
In November, 2007, the members of the Writers Guild of America (East & West) walked off the job as part of a contract negotiation with the Alliance of Motion Picture and Television Producers. (AMPTP) That strike was consequential for a variety of reasons.
But what caught me at the time, and catches me now, was how prescient that strike was.
The writers walked off because, at the time, they got almost no money from any properties that they wrote which showed up on the internet or in the (baby) streaming platforms. What was then called “new media” did not have profit participation for the writers. And writers knew—or perhaps the heads of the WGA knew—that the future wasn’t appointment television or even network television.
The future lived online.
I watched that strike with great interest. I figured the writers would eventually lose. But they didn’t. They stayed off the job until mid-February of 2008, and managed, as The Harvard Law Record explained at the time, to get compensation:
… for new media in most circumstances. Writers will receive 1.2% of distributor’s gross receipts for download “rentals” (where the consumer pays for time-limited access to media) and 0.65%-0.7% of receipts for download purchases. Similarly, writers will receive 2% of distributor’s gross receipts for ad-supported streaming of television programs and feature films, but only after a 17-day streaming window in which no residuals must be paid.
The strike was so traumatic to the industry that when the guild threatened to strike again in 2017, AMPTP came to the table for a last minute deal that included:
… gains on the issue of short seasons in television, winning a definition (which has never before existed in our MBA) of 2.4 weeks of work for each episodic fee. Any work beyond that span will now require additional payment for hundreds of writer-producers….a 15% increase in Pay TV residuals, roughly $15 million in increases in High-Budget SVOD (Subscription Video On Demand) residuals, and, for the first time ever, residuals for comedy-variety writers in Pay TV.
Why am I telling you all of this in a blog post for fiction writers that is ostensibly about the 2019 Consumer Electronics Show? Because one of the reasons I went to CES was to see the future of content in the modern era.
My brain keeps playing with the prescience of that first strike. The big fight was over DVD revenues, which isn’t as important as it once was. But the new media stuff was visionary. A lot of people in the WGA saw that the new media was the wave of the future, and they knew that if screenwriters did not get portions of the revenue in that negotiation, then screenwriters would be harmed tremendously in the future.
Seeing the future is the job of any negotiator. When you negotiate a contract, you need to have an educated guess about the future that contract will operate in. You won’t be able to see the actual future—who knew ebooks would take off in 2009, when they’d been around since the 1990s?—but you need to do your best.
I handle the early negotiations on all of the licensing of my work. I do the negotiations by email, and continue to have a dialogue with the potential licensor until it becomes clear that the deal (whatever it is) will have enough money attached that I can, at minimum, cover my attorney fees. I’m clear about that goal up front. The mention of money and attorney’s fees scares away the scammers and the jokers who want to license my content for nothing.
But, because I do this, I need to know what I’m asking for. I have to understand clearly what I want.
I know that inside out, upside down, and backwards in the book realm. I realized in 2015 that I had no idea what had been going on with television (except peripherally) when I found myself in my first TV rights negotiation since 1998. I did some hasty research, consulted friends in the industry, and—in that early negotiation—ended up setting aside certain details to be negotiated later on terms that would be beneficial to both parties. (Yes, setting these details aside was part of the initial contract.)
That negotiation was a wake-up call for me. It made me realize that I needed to keep my finger in as much of the content pie as I possible could.
What do I mean by “the content pie”? Dean often calls licensing rights to an existing property as a magic bakery. (We also have an online workshop about the same topic.)
You can license whatever right you want to license, defining that right as narrowly as possible. We had no idea defining a single narrow license was even a possibility until we had a discussion with Robert Asprin in the early 1990s when we were co-guests of honor at a science fiction convention in Texas. He talked about licensing 200+ gaming rights to a single property that week, and he was chuckling about it. Both Dean and I—who had agents at the time and less of a clue than we should have had—quizzed Bob on a bunch of things, and got an education in negotiation and possibilities in the space of a single evening.
Combine that concept with the WGA strike of 2007, and George Lucas’s very smart decision to hang onto the merchandising rights for Star Wars, back in the 1970s. To keep those rights, he had to lower his director’s fee by $500,000. He ended up making billions on that trade-off.
This is how negotiation works, by the way. You give a little to get a little. And you make mistakes. Sometimes you ask for the wrong things. Sometimes you hang onto things you don’t exercise. Sometimes you make a bad decision for what you consider to be a lot of money. (See Michael Connelly’s essay in Hollywood Vs. The Author to understand what I mean.) And sometimes the decision pans out. Sometimes it’s even better than you expect.
But the key is to be as educated as possible.
So I went to CES as part of my education. (I also read books like the one mentioned above, and pay attention to other writers’ deals. I look at what musicians do, and how other creatives get nailed by bad decision/contract terms, and I look to see what truly successful business-creatives do, to get where they are. There is no one-size fits all here. It’s by-gosh-and-by-golly. And it’s all about your own brand of personal courage—and your willingness to make mistakes.)
I had hoped to see a lot of future tech. If something is in the beginning stages, then I can usually see the possibility of it, and where it leads. I didn’t see much new in tech that applied to content, but I didn’t see everything on the show floor.
I wasn’t the only one doing this, by the way. I heard part of Viacom CEO Bob Bakish’s talk while I was waiting for something else. The interviewer, Andrew Wallenstein of Variety, asked everyone he interviewed the same closing question: What did they see on the floor that caught their attention for the future of the industry? (Most speakers didn’t have any imagination or clearly hadn’t walked the floor.)
Bakish had wandered in and out of the self-driving cars area (it was large) and asked himself what people would do while the cars drove them to their destination. He saw it not as something cool, but as a new area that would open up demand for content.
He was one of three people in the film/TV panels I attended who actually was looking toward the future. (The other two, Ben Lerer of Group Nine Media, and Radha Subramanyam of CBS, actively made the other people on their panels nervous as they spoke.) My big take-away from the film/TV part of CES was that the people running the large companies were terrified of the new media, and did not know how to monetize it properly.
They are shockingly like traditional publishers, which leads me to believe that innovation will come from elsewhere—a good lesson to learn. I’ve been noodling with experimenting with nontraditional video markets, and I will probably do more than noodle now.
Right now, the film/TV industry, like the traditional publishing industry, is trying to figure out how to make money. One of the speakers reminded everyone in the audience that TV was an advertising and distribution business, because those two things were how they made their revenue. But advertising growth has stagnated these past three years, and everyone is running scared. The “new media” as it were, isn’t making up for the money being lost right now, because —as indie writers know—the money comes in differently through online platforms.
The fear came through in a variety of ways, in a bunch of discussions. The people I was listening to were, generally, the heads of distribution. And they were grappling with the changes from inside their business model.
It’s always good to see how people on the other side of the desk are thinking. And it was pretty clear to me that, with the exception of Radha Subramanyam who is the chief research and analytics officer for CBS, no one else on the panel was thinking outside of the box far enough. (If you read the post “The Growing Importance of IP” a few weeks back, you’ll note I mentioned Simon & Schuster as being one of the traditional publishing companies that was on the cutting edge. S&S is part of CBS.) CBS is experimenting with a wide variety of platforms and subscriptions models, as well as ad-driven models.
Whether those work for CBS or not will remain to be seen. But I put a mental flag in place to remind myself to keep an eye on what they’re doing.
I also learned a lot from Ben Lerer of Group Nine Media, a digital media company backed by the Discovery Channel. He believes that new product in the digital space has to be screen agnostic (it can play on big movie screens as well as phones and whatever else is developed). Everything he said, pretty much, was about marketing across platforms, and within brands and content.
The other thing everyone said was that content is the key. It was pretty clear that most of the presenters had no idea what to do with their content or how to monetize their back content.
One group of panelists got into a fight about the importance of branding as curation (meaning, say, a TV network should be known as a curator for content). Which sounded to me like traditional publishers saying that they’re major curators too.
The younger innovators got angry at this, and angrily and somewhat loudly reminded the more established brands that consumers don’t look for content by the name of the company that produced it. They search by shows and talent (actors, etc.).
Does that sound familiar? It’s the same for books. Readers search by series and author, not by who published it.
And everyone, even the younger innovators, agreed that making a hit was harder in the modern era, because eyeballs are everywhere. They’re not just focused on one small area. That too replicates what is going on with publishing.
I got a lot of insights that were specific to what I’m doing, and others that will filter into future posts. But let me leave you with something Alex Kurtzman said in his presentation on Star Trek: Discovery.
Kurtzman is a content guy. He is producing a show, and cares less about data analytics than I’m sure his corporate masters are happy about. (His talk was all about Star Trek, which bored me, honestly, because I wasn’t there for that.)
He said that as they developed Discovery, he realized that the line between TV and movies “is gone because people are paying for TV now.” He meant paying for things like CBS All -Access, which a lot of folks subscribed to just to get Trek, but that sent my mind tumbling down a different rabbit hole.
I have one long-running option that we recently redid the deal on. It was initially a film deal, but the producer was running into questions about whether TV rights would be available concurrently. I had been watching trends, and figured that someone would want to wrap up TV rights as well as film rights. So, when it came time to renew, I was on the right page. We came up with a formula for bundling TV rights that satisfied both of us.
Shortly thereafter, a friend completed a megadeal with a major studio which will have a TV show produced at the same time as an in-theaters movie.
And Netflix has been struggling hard to get a lot of its films into the theaters so that they can be considered for movie awards, like the Oscars, which again blurs the contractual lines. (In the past, contracts were for film that ran on screens in movie theaters or for TV which played on the small screen.)
The blurring though is more important than that. The internet is a big leveler, and it means that blurring will go across platforms—and formats. Not just screen agnostic, but form agnostic.
Consumers have been form agnostic for a long time. If they like a game, they will read a novel based on that game. If they like a film, they’ll read a comic book based on that film. Or vice versa. Fans of a book will see a movie based on that book.
This is why so many big companies are trying to wrap up the entire copyright in a property. They want the opportunity to make a film, a book, a game, and a comic book based on that property. They want that property to evolve into new media formats, whatever they might be. They want to control how that property is used.
Lerer called it building IP across platforms. He was speaking about the digital brand reinforcing the TV brand, but we writers can take it wider than that.
When we write something, we control all of the copyright. Then we determine how that something goes into the world. Usually, writers try to sell a paper or ebook. But there are a lot of other choices as well—from old fashioned movie/TV rights to rights for short videos on new platforms like Snap to translation rights to VR rights for games.
The more the writer controls these rights and is judicious about licensing, the more money she will make.
I think I needed to see the possibilities on a much wider level to have that lesson brought home.
The same week I was at CES, I got information from the Licensing Expo I’ll be attending in June. I’m going mostly as a learning experience there as well, with an eye toward licensing work next year. But I needed the CES experience to remind me to keep my eyes open to opportunity and my ear to the ground for possible experimental deals.
What I saw in these panels was a snapshot in time. As I write this, only a few days after CES ended on January 11, news came across one of my feeds that consumers might end up buying a bundle of streaming services in the future. It’s being called a one-bill streaming service. Rather than paying for Netflix, Hulu, and Amazon separately, they would be bundled together with other streaming services for one price.
Note that this is yet again old distribution companies trying to figure out how to work their way through the new reality. Over the week, I heard all kinds of things proposed, from brands creating their own streaming platforms to skinny subscriptions to bite-size subscription modeling, as well as ad-based internet shows and the use of free.
We’re in an age of experimentation on content, and everyone—all of the content-based companies—are feeling this.
What happens when everyone is grappling to find the new is that there are a lot of opportunities. I’m not sure what those opportunities are at the moment, but I’m sure we’ll find out.
The key is to continue to pay attention, do your best to cover your ass when you’re negotiating any new license on your copyright (even if it seems small to you) and hang onto as many of your rights as possible.
Realize that everyone is focused on content right now, and they want to own yours. Don’t let them. The more pieces of the pie you hang onto, the better off you’ll be.
And that’s a lesson for any age.
I wrote a blog post shortly after CES titled “CES For Writers” which is available for free on my Patreon page. do occasional posts there that are not available here. A lot of these posts are available early there as well. As my health returns, I find that I want to comment on something in real time without getting away from the mid-week rhythm of this website. Patreon gives me the platform to do that.
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“Business Musings: Learning, The Future, and CES,” copyright © 2019 by Kristine Kathryn Rusch. Image at the top of the blog copyright © 2019 by IEEE.org.