• A Fight in Hollywood (and Why It Matters for Everyone)

    While many might dismiss the current fight between Hollywood writers and agencies as “rich people’s problems,” the fight actually illuminates important issues about intellectual labor in the current economy — issues that are directly related to the general erosion of the middle class across the country.

    A short recap: last April, the Writers’ Guild of America voted in favor of requiring agencies to adopt a Code of Conduct that bans conflict of interest. This was a response to a fundamental shift (going back to the 1970s) in the business model of major agencies, from commissions paid by clients to “packaging fees” paid by buyers. (A package involves multiple staff elements, such as writer, actor, or director, attached to a project).

    The WGA believes that, by securing their own separate revenue stream, agencies lost the incentive to pursue better compensation for clients. In fact, it’s now possible for agencies to make more while their clients make less. According to the Guild, this conflict of interest resulted in several examples of malpractice, and stagnant writer income, even in the current era of “peak TV.”

    An additional issue is that major agencies have branched out into production through affiliated companies (which they own, but do not operate). This means writers’ representatives can be working under the same corporate umbrella as their employers.

    At the beginning of the WGA campaign, the agencies denied that the conflict of interest existed. Gradually, denial morphed into the notion that conflict exists, but is a natural expression of the complexity of the business. Accordingly, the conflict should be managed, rather than eliminated. To that end, agencies put forth a proposal based on the notions of individual choice and transparency, and offered writers a 1% share of the revenues from the contested fees (subsequently increased to 2%). The WGA insisted on the notion of conflict-free representation, and called for writers to exit all agencies that no longer had an agreement with the Guild. Lawsuits were filed, the fight escalated, and resolution does not seem imminent.

    As a member of the WGA (speaking strictly for myself) I share the Guild’s ultimate goal to realign the interests of agencies and clients. Much as I appreciate all the agents who do their job with dedication and integrity, I believe the systemic issues transcend individual virtue. The purpose of this piece, however, is not to elaborate on the specifics of the dispute, but to look at the big picture, and discuss some of the trends that got us to this point.

    Over the last twenty years or so, many writers (myself included), started realizing that the business was changing dramatically through a simple observation: original ideas were becoming harder to sell. Producers and executives much preferred ideas based on underlying material, and even if they liked an original idea, would suggest backing it into “existing IP.” “Doesn’t need to be very similar. Or even very good. It just needs to be an existing IP.” This seemed counter-intuitive: why change something that already works? Why add cost to the project? Why make it dependent on rights that come with an expiration date? The reason is that the whole machine had switched to a new default setting: “IP” was inherently sexy, and “Original” was becoming a mild pejorative.

    The fetishization of IP comes from the assumption that intellectual property has a built-in value, which can be quantified and transacted. Property = Ownership. As the entertainment business fell under the control of a few publicly traded mega-corporations, owning assets that can drive up valuation became the overarching imperative. (Consider Disney, which now controls the eponymous brand as well as Pixar, the Star Wars franchise, and the Marvel Universe: while the company can be expected to continue producing a certain amount of original content, the bottom line is that it no longer needs to).

    From the standpoint of executives, being managers of “branded content” is far more attractive than developing original ideas, because the established value of a brand confers value and power to the executive in charge of it.

    From the standpoint of agents, any IP (book, game, toy, song, Korean film, podcast, blog, Scandinavian TV format, etc.) is a packageable asset that can be used to leverage representation into an ownership stake. Not only is this more lucrative, but it makes the job easier: while an original idea must be artfully presented (to an often disinclined buyer), an existing IP can simply be shown as proof of concept.

    Over time, buyers wanting a quantifiable asset and agencies wanting to package IP created a feedback loop that reduced the market for original content (essentially limiting it to those ideas with the potential to generate their own derivatives).

    As a rule, the bigger the IP, the bigger the budget, and the bigger the budget the more the product is designed for mass appeal, based on precedent and testing. The result is that it will typically be homogenized and safe. Risk aversion is baked-in.

    The film industry was always fond of recycling its own product (just look at the history of Zorro movies), but the obsession with branded content has now reshaped its entire culture and power structure. It’s as if the industry chose to depend on a form of fossil fuel rather than develop new energy sources — never mind that a dearth of original content can only hasten creative decline.

    More and more creative work is funneled into the reanimation of old content and the updating of established formulas. Movies are reverse-engineered from a marketing perspective. Executives accrue status as stewards of brands. Lawyers play essential roles in the transfer, separation, or integration of rights. Owners of IPs get paid by charging rent. IPs are optioned even when no one likes them: the mere construct of “source material” keeps everyone in their place, securing a lopsided distribution of revenues and a top-down creative process.

    In this environment, writers must constantly audition for adaptation jobs, with several important consequences, starting with the fact that minimum fees for adaptations are lower. Another consequence is that writers pitching their takes on an adaptation provide cost-free development to buyers, who get to cherrypick and remix ideas from multiple sources.

    Of course, big IPs entail large writing fees — but those will only benefit a tiny group, as most writers will not have access to those IPs at all. While anybody is free to come up with a great original idea, no emerging writer has much of a chance to even read a high-profile book before established writers are already pitching their take on it.

    Finally, big IPs make writers more expendable. Being a working writer in Hollywood pretty much means getting hired and fired, even when the project is based on an original idea (screenwriters made the devil’s bargain a long time ago, surrendering copyright to the studios). Working on an existing IP strips away another layer of power from writers, who are being employed to service a brand and/or the buyer’s creative agenda. This leaves them more easily bullied, overruled, and replaced.

    The devaluation of original content (and original thinking) makes it harder for personal voices to emerge. A 2017 Los Angeles Times article asked the provocative question: “Has film become a board-of-directors medium?” Superhero movies — the Holy Grail of corporate Hollywood — are Exhibit A that this might be the case. These movies are tightly controlled machines where every decision is vetted by multiple layers of management. As to what kind of artistic worldview is governed by a Board of Directors, it’s interesting how, despite their message of inclusivity, these movies created a modern Pantheon of interplanetary royalty, demigods, tycoons, tech masters, and genetic elites, in charge of the fate of mankind.

    Concentration of resources into big-budget tentpoles means fewer mid-budget movies, and fewer mid-budget movies means fewer “middle-class” writers. Not coincidentally, this has happened at the same time as the middle class contracted across the spectrum of the economy.

    A niche, award-driven, small-budget business for more artistically adventurous film content does survive — it is needed to fill out libraries, launch stars, and endow hedge fund managers with artistic credentials. More and more, this content must rely on patronage, in a cultural equivalent of the charity circuit, a networking and reputation-laundering apparatus for the mega-rich. For writers, it’s a gig economy, with relatively modest financial rewards.

    In television, writers have more power, because they always create a brand (the serialized nature of a show, where every episode is a sequel, automatically produces brand identity). Furthermore, writers are indispensable to the brand’s maintenance, being the only ones with the institutional memory and the vision to track the long course of a show. Still, even in television, writers are under pressure to perform more and more free work, especially when trying to develop an original idea.

    All these trends have contributed to an erosion of writers’ income, status, and creative freedom, in favor of employers and middlemen. Writers have become more alienated from the product of their labor — a product which others control, and which increasingly benefits others more than writers.

    Now let’s go back to the agency dispute, and put it into this larger context.

    In the agency business, a successful client allows an agency to improve its role from advertiser and advocate to gatekeeper (from “outgoing call” to “incoming call”). Controlling access to a critical mass of established talent eventually allowed the agencies to charge packaging fees.

    With agencies moving into sports, live events, new media, etc., the talent became an asset in a portfolio of assets, which has been used to raise enormous investment capital. WME is now launching the first major agency IPO. Talent representation thus translates not just into short-term “receivables,” but into “futures,” whose projected long-term value can be leveraged in the stock market. Before the actual work product even exists, shareholders can already make money from it. In the presence of packaging fees (which are locked in even if talent leaves the agency, or is fired from a show) this move into the stock market seems to create the ultimate conflict of interest: the agency’s fiduciary duty to its clients, versus its mandate to extract maximum profits for shareholders.

    The overarching theme is the evolution of capitalism into financialization and corporatocracy. As George Monbiot wrote:

    The largest fortunes are now made not through entrepreneurial brilliance but through inheritance, monopoly and rent-seeking: securing exclusive control of crucial assets such as land and buildings, privatised utilities and intellectual property, and assembling service monopolies such as trading hubs, software and social media platforms, then charging user fees far higher than the costs of production and delivery.

    The WGA battle is not a revolution: it is ultimately about increasing the power and income of content creators, and enabling all agents to work as allies unconflicted. In a larger sense, it’s about rescuing capitalism from the oligarchic, monopolistic, and rent-driven mutations that have been destroying the middle class.

    How will it end? So far, the big agencies have been entrenched in their refusal to give up packaging fees. On the other hand, the WGA has shown great resolve and resourcefulness, signing smaller agencies, introducing networking tools that could shift the paradigm of how talent connects with buyers, and setting the stage for a process of legal discovery that may expose more than the agencies care to reveal.

    This isn’t to say that the campaign has been smooth sailing. The WGA strategy lacks a firm timeline, and it relies on unequal sacrifice (film writers had to exit un-franchised agencies just like their TV brethren, though they had far less at stake; meanwhile, writer-directors could retain representation for non-writing work, allowing them not to sever relationships). These issues are part and parcel of any collective action, but they helped expose an internal rift.

    A few writers objected from the beginning to the campaign’s goals, the strategy, or the very idea that their personal allegiance to an agent might be subject to a collective decision (as if putting collective above individual interest wasn’t the existential baseline of a union). Eventually, a larger group formed a slate of WGA Board candidates, now up for election, who view a negotiation focused on revenue-sharing as the pragmatic solution to the impasse. The counter-argument is that revenue-sharing would maintain a distorted set of incentives, and invert the fundamental principle that agents should make more when their clients make more.

    Whatever the WGA elections will tell us, there is vast consensus within the Guild, and the industry at large, that the underlying problems are real. Change can always be difficult, but change is needed, and writers took on the job.

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