It’s been 87 days since the writers hit the picket lines and 14 days since the actors joined them, yet the divisions between the guilds and the studios remain as deep as ever. One of the biggest fights that remains is how performers and writers should be compensated for work they create for streaming services.
“The question is: Are you or are you not willing to share some of the revenue you generate from actors, and also from writers, directors and crew, with them or not? The answer needs to be yes. It is not okay anymore for companies to just bring in huge amounts of revenue from people’s work and not share it with them,” SAG-AFTRA National Executive Director Duncan Crabtree-Ireland told FilmmakerFocus.
Writers and actors do receive fixed residuals for their work on streaming services, but they are not tied directly to the success of a show, and even the most high-profile creatives have been known to receive pennies for some of their work.
But now, both guilds agree that a fixed residual is not enough to properly reflect their members’ contributions to the streaming services. In its proposal to the Alliance of Motion Picture and Television Producers, the WGA suggested a “viewership-based” residual model, in addition to the fixed residual already in place. That was rejected, according to the union. SAG-AFTRA took that suggestion one step further, proposing that performers receive a 2% share of the revenue generated from streaming content. That proposal was also flat-out rejected, according to the guild.
“We had this proposal on the table on day one of negotiations on June 7. To this very day, throughout that entire 35 days of bargaining and even since, the companies have never come back to us with any substantive response,” Crabtree-Ireland said. “Their answer was, ‘We aren’t interested in talking about it.’ So it’s going to be very hard to reach an agreement on something when the companies won’t even discuss it with you.”
The AMPTP tells a different story, saying that the 2% revenue share had come up “numerous times” and the studios expressed “fundamental objections” to the proposal. While they are willing to increase residuals made from streaming content, a blanket revenue share “creates a one-size-fits-all approach” that studio insiders say is “unworkable.”
It’s clear that both sides are far from an agreement on how to fairly compensate writers and actors on the backend. But the discourse has begged the question: Is a direct revenue share possible in the current streaming landscape and, if so, what could that look like?
Several experts stressed to FilmmakerFocus that the central argument isn’t about whether there is infrastructure to support such a deal. It’s about getting the major studios, as well as the guilds, to agree on a measure of success that would make everyone happy. Which, it seems, might be an impossible exercise.
Any concession from the studios on this front would likely require some sort of data transparency. Thus far, streamers have kept all audience data close to the chest, occasionally self-reporting metrics as they see fit. Netflix is the only service that consistently self-reports viewership data, but does not provide full data transparency.
“Data transparency is related to power. This is a fight about power. Because right now, the streamers have power, and they don’t want to give it up,” David Offenberg, an associate professor of entertainment finance at Loyola Marymount University, told FilmmakerFocus. “They have the data about how valuable things are and they’re exploiting it by not paying the creators as much as they’re worth for seasons two and three and four, because creators don’t know how much the show’s worth, because they don’t have the data.”
SAG-AFTRA has suggested using Parrot Analytics’ content valuation tool to determine the revenue generated by each piece of streaming content. The guild proposed that each quarter, producers would pay 2% of the quarterly “Revenue Contribution” for each series or film, and this would be divided pro rata among the principal cast “based on time and salary units or ratable distribution,” on top of the existing Streaming Revenue Sharing payment.
Unlike Nielsen or self-reported metrics from some of the studios, which use viewing time as their primary measurement, Parrot Analytics, a data analysis firm for the entertainment industry run by Wared Seger, which works with companies such as Sony, Lionsgate and Starz, uses other metrics such as Google searches and social media engagement. The goal is not to determine viewership but rather to understand the impact of a piece of content on a studio’s revenue. It uses quarterly earnings data as well as subscriptions and ad revenue to estimate that impact for each series or film on a platform.
The AMPTP, however, rejected this proposal, calling these metrics “opaque” and highlighted the fact that they are not available to anyone who doesn’t subscribe to Parrot. They also “lack any demonstrable link to the actual revenue received by the service in the form of new or retained subscribers.”
Crabtree-Ireland told FilmmakerFocus that the guild thought Parrot’s approach “reflected a more broad-based and objective approach to evaluating that without the kind of insight data that the companies have been unwilling to share.”When it comes to success in the streaming world, there are two types of series or films: those that attract subscribers and those that retain them. Studios gather a wealth of data for each title, including hours viewed globally and in the U.S., the number of unique accounts that viewed a title, and the completion rate for each account. They also analyze how much engagement a show generates and how successful it is at reducing churn.
While all of this data could theoretically be used to determine the financial success of a show, each studio values different metrics, making it difficult to reach a consensus. It’s not just about getting the studios to agree, but also finding a metric that satisfies the guilds. Data can be used to tell any story, so it’s important to determine which story is being told. If actors are open to being quantified for their impact on engagement and churn, that could be a valuable conversation to have.
The Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) is willing to discuss any metric proposed by the Alliance of Motion Picture and Television Producers (AMPTP). The guild simply wants its members to be fairly compensated for their work in streaming. They are looking back to the days of broadcast television, where creators and casts of popular shows like Friends and Seinfeld made millions of dollars in profits from reruns and syndication. Residuals were a key part of negotiations in the past, allowing creatives to share in a show’s success.
Regardless of the chosen metric, it will need to be translated into a monetary value, which is where things become even more complicated. Calculating revenue share is a challenging task that involves making assumptions and building mathematical models. It’s nearly impossible to make everyone happy with such a system.
However, the infrastructure is in place to support a revenue share, especially with the introduction of ad tiers. Advertisers need audience data to justify their ad spend, so the capability exists to support this type of deal. While the studios may be hesitant to use third-party data to quantify success, having a third party verify the metrics could help alleviate concerns.
The question remains of how much to share with the creatives. SAG-AFTRA has proposed a 2% share, but any number is likely to cause controversy. Streaming has drastically changed the value of content, and this trend will continue as the industry leans more towards this medium. The nature of the streaming model makes it difficult to estimate what actors are entitled to, as the value of content has been radically altered.
In the end, finding a fair and agreeable solution will require open discussions and compromises from all parties involved.For Rosen, this contract negotiation battle has revealed a crucial truth about the world of streaming. When Netflix took off and left traditional television behind, every studio tried to catch up. However, the transition happened too quickly, and the studios’ business models couldn’t keep pace. Now, with Apple and Amazon entering the streaming wars, legacy studios like Disney, Warner Bros Discovery, and NBCUniversal find themselves at an even greater disadvantage. “The dirty secret of streaming is that nobody’s making a profit, except for Netflix,” Rosen explained. “The problem with the guilds’ demands is that they’re asking an unprofitable business to share its future profits with them. The studios, on the other hand, argue that if they’re already struggling to become profitable, it will only become harder if they have to meet these demands. The less likely they are to turn a profit, the less likely they are to stay in this business.” Despite this, it seems that the studios are increasingly placing their bets on streaming. However, one thing is clear: this new era will be less lucrative for everyone involved. “None of these businesses will resemble the traditional linear model. None of them will generate the same revenue that syndication used to provide for directors and actors,” Rosen pointed out. “The challenging question for Hollywood right now is whether the current leadership, the individuals who excel at managing studios, linear networks, and theme parks, are the right people to solve this problem. It’s becoming increasingly apparent that they may not be, as this standoff between the Screen Actors Guild, the Writers Guild, and the studios reveals.”
