This thing is fresh from its vote, and I’m presuming that it will be signed into law, although there might be some additional drama in the Senate.

What does it mean for us?

Well, for those of us already covered under the WGA-Industry Health Plan, there seem to be three specific areas to note.

First, the bill indicates that dependents living at home must now be eligible for coverage until the age of 26 (the current cut off age in our plan is 19…or 23 if the child is a student).

Second, the bill disallows limits on lifetime benefits. Currently, our plan limits total lifetime benefits to $5,000,000 (I think to the insured, including his or her dependents…not $5M per family member).

Third, and most significantly, there is a tax on “Cadillac plans,” i.e health plans with high premiums (presumably for better benefits or service). From CNN…

So-called “Cadillac” plans costing more than $10,200 a year for individuals or $27,500 for family coverage (not counting dental and vision plans) will be subject to a 40% tax on the portion of the cost that exceeds the limit. Though the tax would actually be paid by insurers, it’s expected that it would be passed along to plan holders in the form of higher premiums.

I’m pretty certain all of the major entertainment union plans will be considered Cadillac plans. Currently, the cost of these plans is borne primarily by our employers. Apart from our small yearly deductibles, the companies make all of the contributions to the plan (as a percentage of a portion of our salaries), and those contributions are determined by our collective bargaining agreements.

The last sentence from CNN quoted above is the obviously the key one; most employers don’t live in a world where they have to suffer this new financial burden on their own. And the increase on dependent age and the eliminate of lifetime benefit maximums will also serve to increase the amount of money the WGA plan will need to maintain its current service.

So what’s going to happen? Will our deductibles and premiums go up? Will our coverage decrease? Will eligibility tighten?

Or will we duck it all somehow?

The truth is that we’ve always had to fight hard during negotiations to keep our plan where it is (which is among the best in the nation). Happily, we’ve succeeded. The 2004 deal was entirely about that, and it’s done the trick for six years now.

But if the Cadillac Tax goes into effect, that fight will get harder, and the total war of negotiation gets a little tougher with every new front we have to manage.

Even so, I’m hopeful that we can see our way through this without ending up with a health insurance plan that’s worse than we had before this vote. No doubt it’s going to be a pivotal issue in 2011.

Comments welcome, but only on the boring specifics of how this affects our WGA plan. No political debates, please.

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Carleton Eastlake, a current member of the WGAw board, has some thoughts on net neutrality, and he asked me to clarify mine. Here goes, with my responses in context…

Craig – I’m not sure I follow how piracy issues and genuine net neutrality issues are linked. I don’t mean this rhetorically, I’d really like to hear the expanded, not soundbite argument of how the sort of net neutrality the WGA or responsible Internet interest groups advocate precludes successful anti-piracy measures. Your post doesn’t give any concrete illustrations of what the problem might be. And on reflection, I’ve never actually seen a concrete description of the problem in the media or the tech magazines – just sloganeering.

There are two kinds of piracy that impact our (writers, that is) bottom line. The first is physical piracy: a factory in China duping DVDs of a handheld video recording of a theatrical screening of Avatar, for instance. The second is electronic piracy, in which legitimate DVDs are ripped and illegally distributed over the internet, almost exclusively via peer-to-peer channels.

I’m a little surprised by your admission that you don’t follow how piracy issues and genuine net neutrality are linked, because they’re so closely and clearly linked. I’m hardly the first person to point this out. The fundamental principle of net neutrality is that all information distributed over the internet be treated equally, i.e. internet service providers ought not censor, throttle or favor the transmission of any particularly web site or channel.

However, if we do not have net neutrality, it’s quite easy to see how the major ISP’s could, as part of content provision deals with the studios, throttle or completely block out the major P2P channels. In fact, the efficacy with which this could be accomplished is one of the battle cries for net neutrality by those who support it. This isn’t a question of conjecture.

You argue in one of your replies to Jeff Lowell that pirates won’t mind waiting long times for their theft. I disagree. If the time to download a DVD went from one hour to two days, it would have a massive negative impact on piracy, and hopefully a positive impact on our bottom line as writers.

I’m a big believer in free speech on the internet. However, let’s be honest about P2P networks. They exist almost primarily to circumvent licensing agreements on software, music and video. And they’re stealing money from writers every day. What an odd institution for the WGA to be defending…

Yes, to be sure, if the Internet were entirely privatized and a handful of companies allowed to monopolize its content, there would be no piracy. But there would also be no private email (email attachments would have to be scanned to be sure they weren’t communicating pirated content), etc. I know you’re not advocating that, but short of that, how concretely does piracy and equal access by non-criminal users on the Web interact?

I don’t think you quite understand what net neutrality is, Carleton. No one can “own” or monopolize the internet. The internet is nothing more than a connection of gazillions of individually-owned websites. And, of course, we still live in a free market. If I don’t like the way AT&T is delivering the content located on all of those individually-owned websites, I can opt for Charter or satellite service or WiMax from Clear…and that list is only going to grow.

If we do not have net neutrality, here’s what it means. ISP’s can tier their service so that some web sites deliver information faster to the end users than others…or slower to their end users than others. That’s the bottom line. Net non-neutrality doesn’t mean that your ISP will own your content, rifle through your email or sleep with your wife.

What is means is that I could theoretically pay a base fee of $20 a month for standard service, and $40 for standard service plus access to superfast downloadable movies. That extra twenty bucks would get split between the ISP and the content providers, and we…as writers…would get a piece of the content providers’ ten bucks per subscriber. That’s a simplified vision of how it could work, but all I can tell you is this: it’s vastly preferable to the current model of, say, streaming network shows for frickin’ FREE…supported by “ads” that no one watches, and which do not add a dime to our residuals base.

As for maximizing the revenue of the surviving major media companies on the net by allowing a degree of monopolization, that’s a point I’m ready to debate. I agree that no one should want out of spite to reduce the revenue pool that writers and other talent share in from the major companies. But I’d much rather see independent and specialty production and distribution companies also thrive on the Net. Having worked for several years at Cannell, a successful writer-owned TV production and distribution company that expired along with fin-syn “broadcast neutrality”, to coin an analogy, I’ve directly experienced the model of how net neutrality can restore an era of independent production that creates enormous opportunity -and revenue – for writers.

This is kind of shocking, coming from a board member of the WGAw. Let me get this straight. You favor the economic prospects of individual EMPLOYERS over the economic prospects of individual EMPLOYEES? Cannell the man was a writer. Cannell the company was an employer. As union members, our interests have to first run to the employees, Carleton. I, for instance, write movies for studios. My salary generates dues and P&H contributions to the union. Are you honestly saying that my financial bottom line is less important than the financial bottom line of a company hiring writers for an internet show?

See, the thing is, we’re writers until we’re not writers. The day I create The Mazin Internet Studio and launch a web show and hire writers to write on that web show, I’m an employer. I’m on the other side of the table. That’s not to say that I can’t be a good guy. However, it is to say that my interests as an employer shouldn’t be anywhere in the same galaxy of concern for the WGA as the interests of my employees.

In short, while I think it’s nice that writers can be as entrepreneurial on the web as they wish, the Writers Guild of America has to serve its primary function, which is to protect my interests as an employee. That’s what it’s federally chartered to do. That’s what all labor unions do. It’s fine for the WGA to help its employees grow into businesspeople, but not at the expense of the writers who still get hired to write.

Yes, we want to make sure that there are lots of employers for our services, and in that regard, I understand the desire to avoid anything that feels like it will throttle competition between the employers. But let’s be real…the companies that will challenge Fox, Disney, Sony, Universal, Paramount and Warner Brothers aren’t internet shops set up by individual writers. It’s the other big monsters out there like Microsoft, Google, Clear Channel, etc.

Why? Unlike print media, which…on the internet at least…has the potential for very low-cost production, movies and television shows tend to require serious capital investment.

If you think the future of the Internet is 5 minute webisodes, sure, there’s no point in paying it any attention. If you think in the next 5 or 10 years Netflix-like streaming or rapid mail delivery services are going to continue to grow in market share, and that independent producers may produce directly for these services and by-pass the studios, then you may care much more about Net issues, and really not want to encourage economic concentration on the Net.

Carleton, it’s precisely because I think the delivery system is going to get better and better that I worry about the impact of net neutrality. We will be able to download a feature film or television episode in HD in five minutes or less. At that point, why on God’s green earth would we want to limit the ability of the studios to monetize that speed and convenience? That’s our money too!

As another example, about the time Farscape was canceled by Sci-Fi, we made the simple calculation that if our hard-core fans made a micro-payment of 25 or even 50 cents an episode and there was a way to distribute it to them…we’d be in profit on the first day of release…and without broadcasters or cable services taking a share, giving notes… or canceling us. This wasn’t a daydream about writers owning the company or cooking up something in their basement, it meant that six sound stages in Australia and offices in the US and Britain, etc., originally founded by Jim Henson would be producing the same show with the same values and same budget…and that the same numbers watching us just in the US – not even the rest of the world – coughed up a direct tiny payment.

This is important. If I stipulate that your math is correct, then the obvious question is: why didn’t you do it? Profit on the first day of release without any middlemen or creative meddlers…surely you didn’t walk away from the holy Grail of television writing without good reason?

Of course you didn’t. Farscape didn’t become a web series because you (meaning the writers) didn’t have the money to deficit finance the show until the episodes were ready to air.

That said, you would have also been the first show of its kind to prove that lots of micropayments could support a series with a cable or network level budget.

I’m not saying that it’s impossible. Who knows? Maybe one day it will happen. But in the meantime, there’s that saying about the bird in hand. We have a pretty big bird in hand. I question the wisdom of mortgaging the health of our traditional, dominant revenue stream in pursuit of a maybe-one day-no one yet, but who knows and wouldn’t it be cool? revenue stream.

Some of this makes me wonder if your perspective as a tent-pole feature writer may differ from the perspective of a TV writer or feature writers who want to work on smaller budget, independent films. Sure, to make a big-budget feature film, it’s handy to have very big studios around to finance them. But i think you may be underestimating the negative impact on every other category of production.

First off, thanks for “tent pole,” although I don’t quite think I’ve earned that. 

I actually think it’s television writers who stand to lose the most from net neutrality. As a feature writer, I know that while the DVD market is dwindling, there’s a real chance that the internet rental market (iTunes, essentially) will take off, and our internet rental rate is an outstanding 1.2% of gross. That’s five times the DVD rate.

Television, though…yikes. Right now, the traditional rerun system has gone bye-bye. In its place, the networks stream reruns on the web, and they basically do it for free. That’s no kind of model. Television writers really need a system in which their network and cable shows are generating legitimate license fee revenue. Net neutrality limits the companies’ ability to maximize that revenue, IMO.

In general, extreme concentration isn’t a good thing for an economy. We’ve all seen what banking and investment concentration, defense industry concentration, even concentration of seed production for farmers (see this week’s LA Times) has done. The ultimate concentration, after all, is state central planning like in the good old Soviet Onion. Perfect capitalism requires a perfectly efficient marketplace with an infinite number of sellers and buyers with perfect knowledge – a neutral Internet is just about the most perfect capitalistic marketplace one can conceive. I really think we ought to give it a chance.

That does sound scary, but I don’t think it’s accurate. First, we have about the same number of major and minor studios as we’ve always had, going back to the 20′s. Second, the studios all hate each other and compete viciously for every dollar out there.

You view the studio system in too dystopian a fashion, and the internet in too utopian a manner. But in the end, I don’t really care whether or not the internet is a worker’s paradise.

Here’s what I care about.

My union has a contract with a number of companies. That contract pays me money as a percentage of their revenue. That revenue accounts for 100% of my income. It accounts for essentialy 100% of every WGA members’ income. The higher their applicable revenue goes, the more money I make.

If I’m going to support anything that negatively impacts or otherwise limits the growth of that revenue, it has to be really clear that I will net out positively.

In short, I think it’s unreasonable for the WGA to ask its members working in traditional media to subsidize the dreams of its members trying to strike it rich on the internet…particularly when it’s been years now, and web content creators haven’t really come close to duplicating the kind of income traditional media affords us.

41 Comments »

My daughter loves iCarly. For those of you without young children, iCarly is a sitcom on Nickelodeon about three middle-schoolers who create and webcast their own show on the internet. The webcast is extremely popular, and it gets them into all sorts of hijinks. How popular? In one recent episode, a Howard Hughes-ish billionaire invites the kids from iCarly to travel into space and do their web show in orbit.

Now that you’re up to speed on what my preschooler watches, let me whiplash segue to the WGA.

For a while now, the WGAw has been deeply enamored of New Media. Part of its interest has centered around proper residuals formula for the creation and exploitation of works by the companies. That’s largely what we struck over.

However, it’s just as fascinated with the creation of independent internet content by WGA members. At first blush, it all makes sense. Writers have always (and properly) insisted that we are the prime originators of motion picture entertainment. Why shouldn’t the WGA promote a brave new world in which WGA members own their own product…a world that eliminates the need for the rapacious companies? The internet kills the middle man! The stronger we are on the internet, the weaker the companies’ hand is during negotiations.

These are all reasons why, for instance, the WGA has taken a position in favor of net neutrality; the union wants to make sure there’s an even playing field for its own members as they create the new Foxes and Warner Brothers of the great cyber future.

There’s just one problem with all of that.

We don’t need the WGA to help us put material on the internet any more than we need the companies. That’s the point of the internet. Middlemen be damned. If I have an idea for a great web show, and I get it on the internet, and it becomes a real life iCarly that people visit in droves, then I certainly don’t require the assistance of a labor union. The WGA exists to represent employees of a cartel, for lack of a better word.

And, of course, the folks running the union understand this. So why all this evangelism of “stop being an employee” from an institution that does nothing but service the needs of employees?

Resentment.

Sometimes, the WGA goes after the companies because it wants more for its members. Thank God it does. Credit determination, residuals, health care, pension, creative rights, separated rights, minimums, parity in advertising…these are just a few of the benefits we enjoy because the union (i.e. leadership and membership together) did its job and did it well.

Sometimes, however (and more and more since 2005), the WGA goes after the companies because it just presumes that “if it’s bad for the companies, it’s good for us.”

Usually that’s true. But not always. And not this time.

It’s fun to promote a vision of the future where sisters are doin’ it for themselves. “Screw the fat cats! We don’t need them anymore!” is a great chunk of red meat to throw to a group of people who are understandably aggrieved. Unfortunately, and perhaps counterintuitively, we’re probably just making things worse.

How? Well, consider the paradox of iCarly. It’s a show about a really, really popular internet webcast. That part, of course, is an absurd bit of fiction. There is no such thing as an independent variety show on the web as popular as iCarly is implied to be. There are blogs like this one, there are podcasts that occasionally light up in exciting ways (Kevin Smith of late), but an actual show that people watch episodes of for entertainment? The web just isn’t very good at that kind of persistent viewing experience. It’s great for sketches, bits, one-offs…but a show with consistent characters working over the course of multiple episodes, season after season?

Not really. There have been some (I enjoyed Red vs. Blue for a while), but did any of them actually make it out there in the way that a hit TV show does?

And there’s the paradox. iCarly, a show about the cutting edge world of cyberentertainment, is actually incredibly old school. It’s a half-hour sitcom. Running on a cable network.

And because it’s a sitcom running on a cable network, it is vastly…and I mean VASTLY…more popular than any webcast out there.

As exciting and empowering as the web suggests it can be, there’s still no real money out there for us. It’s not like people haven’t tried, but the exceptions seem to prove the rule. Dr. Horrible was an internet hit and pretty much the best thing anyone’s done for the web (IMHO), but any given episode of Buffy was probably seen by more people.

Remember Strike TV? Well, that was WGAers doin’ it for themselves…but the bright future seems to still be in the future.

The lesson of iCarly is simple, to me. The idea of internet programming is cool and interesting and fresh. The reality is that traditional programming still dominates the culture. It’s fine for the WGA to find and use wedges against the companies, but let’s not shoot ourselves in the foot. iCarly, which I believe is covered under the guild, generates so much more for its writers than any web show ever has.

So shouldn’t we be concerned primarily with protecting the actual writers of iCarly, as opposed to the theoretical writers of internet shows like the one portrayed on iCarly?

If net neutrality reduces the companies’ ability to monetize their programming on the internet, it reduces the basis upon which we draw residuals from internet reuse…which was the thing we all struck over back in ’07/’08. Is that really what we want?

When it comes to negotiating the formula, what’s good for us is bad for them. It’s a purely adversarial relationship that must be negotiated, and occasionally resolved on the field of battle.

But when it comes to protecting the revenue on which those formulas apply…what’s good for us is what’s good for them, and we can’t let our resentment get in the way of that.

I love the internet (obviously). Still, the WGA needs to carefully evaluate its approach to New Media. The kids on iCarly are actors, and their webcast is make-believe.

But the men and women sitting in a room writing the cable program about that make-believe?

They’re real. They’re employees. They’re supporting our membership with real dues and real P&H contributions.

And they should come first.

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