Striking Developments - WGA, Strikes, and the Impact on Talent of Exclusive, Single Platform Streaming
Having previously discussed the impact of single platform streaming on originality and creativity in Episode One, 'Creative Destruction' we move to the next problem: Talent.
Everyone who writes, acts, composes or directs will say they do it for the love of their art. We all do. I’m even sitting here writing this for free (largely because it’s too warm to go outside for a walk today). But when you make it for your career, ‘ars gratia artis’ isn’t enough. People need rent money, mortgages, food to buy, power for their houses and fuel for their cars. Such things are not free. They don’t accept costume designs or quirky comedy scenes for payment at the petrol station.
They also need something else: stability. Landlords expect rent payments every month. Mortgages are due every month. Children need to eat every day.
And previously, this created a happy compromise between talent and those who produced telly. Talent was incentivised to take part in production because they got to share in the show’s success, and a studio’s success. They got paid to do it. If the show did super super well, and made heaps of money for a studio and network, the talent – without which the show would not exist, at all – would get a slice of that in the form of royalties. They could also expect to be called back, and studios could expect to draw on the best talent. This has two effects:
Firstly, really good talent is attracted to work for those who produce really good shows, creating a virtuous circle. This meant studios wanted to keep good talent, rather than let it go elsewhere. This meant more stable careers and guaranteed incomes for good talent, and it guaranteed a steady supply of good talent for studios.
Secondly, it was fair. If a show succeeded, those responsible for making it a success would share in that success, and studios want good royalty agreements because it persuades good actors, writers and talent to work with them.
Now let’s look at exclusive platform screening and why it’s killing that model dead, putting at risk what studios absolutely depend on and cannot exist without.
Where did all the money go?
As we’ve seen, once a show is produced and released on a single, exclusive streaming platform, it just sits there. Doing nothing. It might attract new subscribers, but these numbers, in terms of cheese slicing, are so low, they are vastly – vastly – disproportionate to the cost of the show per viewer (once again we reference Netflix’s ‘The Crown’, which costs over ￡10m an episode to make, but draws in over 2+m viewers. Given most of these viewers aren’t even new and already paying a sub, this isn’t… reassuring).
This creates huge problems for studios. It drags on the price that platforms are willing to pay for shows, which is the amount of money studios have to pay talent. It also reduces the return of successful shows on a single platform. Basically because… there isn’t one. Just a few cheese sliced subscriber increases disproportionate to the cost of a the show is not, categorically not, a healthy return on a good, expensive production.
The knock-on effects are now seriously beginning to seep through, creatively (as in the cancellation of successful shows like ‘Star Trek Prodigy’ and ‘Warrior Nun’). Not only does this seem counterintuitive - not just to the writers working on them, but also the viewers, who are getting irritated they invest their time in a show only for it to be torn away from them, it’s also partly, if not mostly, responsible for the WGA writers’ strike.
Cutting costs incentivises studios to bring in writers for a one off writers room, hire and fire if it can’t bring in the best talent, pay as little as it can legally get away with, and not guarantee future work. It’s also affected royalties’ contracts. If a show is sitting there making no extra money as audiences soar with its popularity, then platforms literally cannot pay royalties. Royalties are a slice of the profits of a show, and if a show is not making profits, there is nothing to pay royalties with (we will discuss what happens to PLATFORM profits in the next episode).
You get what you pay for
The US felt this first because it has a system hugely dependent on major buyers on platforms, studios’ own platforms, and cable networks. Other markets, such as Canada, the UK, New Zealand and France, have public service broadcasters and heavier oversight and regulation of broadcast competition - basically a different model, usually meaning shorter seasons and moderately well-paid writers each covering either an episode or whole season, and a smaller talent pool of good writers, making it likely good writers of successful shows will be called back or given a staff contract.
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But in the US, studios and major platform providers like Netflix, are disproportionately influential in price setting – which includes wages. They churn vast numbers of shows and thus the writers room - bring in, chuck out crews to bash out twenty odd episodes as fast as possible - became a feature of the market. The US also has few, if any, of the employment protections that European and Oceanic workers enjoy, including freelancers and those on zero hour contracts.
US talent found itself on shorter and shorter hire and fire contracts, immense pressure on wages (talent price), no future stability, and the insipid emergence of royalty-free contracts. And this is all combined with poor employment protections (more drastically for women, who have childcare responsibilities and may need maternity support). US writers became more stressed, less well paid, lost their royalties, found their careers became increasingly unstable and, basically, got fed up with it.
But this isn't just about strikes inconveniencing the studios. It's also lethal for those who make shows: really good talent is more mobile, able to go where the money is, and can simply up sticks and work for those who pay them more. It reduces studio bargaining power to keep good talent, because what are they offering them if they have no royalties, no permanency and no guarantees? Prestige? Prestige doesn't pay the bills, and in the US won't get their kids through college. It's not worth anything unless underwritten by real actual money.
Moreover, writers also tend to be higher educated – and definitely very eloquent – giving them greater career mobility. If telly doesn’t want them, journalism, teaching, advertising, academia, etc. will. They can just… leave. For an industry that depends on good people to succeed, vast numbers of very talented people leaving the sector is not good news.
There’s also reduced incentives for talent to… try. This sounds counterintuitive for professions who love what they do. But incentives are incentives. The media isn't 'special' that way. People put in extra effort if they feel they are appreciated and working on something worth it, and exciting. If they do not feel valued, and working on something they have no vested interest in the success of, well, don't be surprised if you get exactly what you pay for.
There are basic rules of economics. If you want the best production components, you pay for them, you incentivise them, you attract them and make an effort to keep them. If you don’t… You don’t. The visible and marked decrease in writing quality over heavily churned shows is not a coincidence.
Brain drain
The problem with exclusive platform streaming is it undermines the whole model – because the profit does not derive from the content that content creators… create. It depends on something else… The performance of the platform subscription stats.
You would think this depends on how good the shows are, right? To some extent, yes. People will not subscribe long to a platform with ‘meh’ shows. They will switch, or end their sub. But the point is per head, the gain of not losing a disgruntled subscriber, or the gains per new subscriber, bear a flat rate relationship to the quality of content – and the cost of good quality content (which is very expensive).
It also means those creating content no longer share in its success, they don’t get a part of those profits of subscriber increases. Partly because it’s not actually possible to accurately attribute how much a show contributes to subscriber churn, secondly because no platform would be willing to guesstimate how much… And thirdly because the profit margins are only tangentially related to the show’s ACTUAL value – so the money to pay royalties mostly just… isn’t there.
So where does that profit go, and why are single streaming platforms so successful and increasing, not decreasing in value? Netflix is capitalised in the billions! Surely this is the future.
This is where we need to talk about the difference between making money from shows, and making money from subscription video rental services. Tune in next week for episode three: The Wellington Welles of Wall Street.