Unease hovers over the strike like a black cloud: no one in Hollywood can agree on the value of entertainment.
By Patrick Goldstein, Los Angeles Times Staff Writer
December 4, 2007
THE writers strike negotiations disintegrated again last week, with an allegedly "groundbreaking" proposal from the studios dismissed by writers as a massive rollback. With much of Hollywood grinding to a halt and widespread pessimism about how long a strike will last, everyone is asking why the two sides can't find common ground.
There's a simple answer, but it has nothing to do with what's going on -- or more accurately, not going on -- at the negotiating table. On the surface, the impasse revolves around how to divvy up future Internet media revenues. But the real problem is that nobody knows the value of anything anymore. Whether we're reading horror stories about the mortgage meltdown, watching the dollar plummet or gagging on the prices at our neighborhood gas station, we're all stumbling around with a nagging feeling that the value of things has become unmoored.
It's this sense of growing unease that has hovered like a black cloud over the strike negotiations. No one in Hollywood can agree on the value of entertainment.
"It's in the zeitgeist now -- we're at a moment in time where people don't how to value things," says Michael Lynton, chairman of Sony Pictures Entertainment. "Art and media are a reflection of society. And if you no longer have an internal sense of what the dollar or a tank of gas is worth, it's no surprise that you don't know what content on the Internet is worth either. It goes to the heart of why we're at an impasse with the Writers Guild. If no one has a clear understanding of what entertainment is worth, then no one really knows what they're negotiating about."
Everywhere you look in today's culture, there's an uproar over the price structure for entertainment. That's particularly true when it comes to new media. For example, YouTube has driven media companies crazy by letting fans watch free clips from TV shows that studios hope to make huge profits from in various ancillary areas. Are those clips stopping us from watching the shows or are they making us fans of them? If you can't agree on that, you can't agree on their value.
There's a good reason why the WGA negotiations have foundered over Internet revenues. The Web is often described as a disruptive technology, but what it's really done is undermine a long-held consensus over the value of information and entertainment. "It started with downloading music, but now it involves all sorts of things," says TV writer-producer Marshall Herskovitz, co-creator of the Web series "Quarterlife." "People feel, 'If something is in my house, why should I pay for it? It's a private transaction between me and my computer.' People today have a real confusion over why some things are free on the Internet and others aren't."
The music business, which has become something of a canary in the coal mine for worried media conglomerates, has been buffeted by value-of-product clashes for years. The entire record company economic model has crumbled after young music consumers decided, almost overnight, that they preferred sharing downloads on the Internet to buying CDs full of songs they didn't want.
Radiohead released its latest album only on the Internet, allowing fans to decide how much they wanted to pay for it. In a sign of just how little consensus there is today about the value of entertainment, a big chunk of fans downloaded the songs for free while, in the U.S., 40% of the fans paid an average of $8 for it. Even the band's own fans had very different ideas of how much the music was worth.
The concert business is especially full of value-inspired tumult. The top ticket to see Miley Cyrus (star of Disney's "Hannah Montana") this fall had a face value of $63, but a donnybrook broke out when parents discovered that most of the tickets were in the hands of scalpers selling them for up to $3,000. Older fans have been swamping message boards with complaints about sky-high ticket prices for everyone from Neil Young to Eric Clapton and Steve Winwood, whose upcoming tour tickets are going for $250.
No one can agree on a fair price for a concert ticket because market forces have upended the entire price structure. Thanks to the Internet, scalpers are making mass ticket buys through automated computer programs. This day-trader-style speculation has put pop artists, who worry about their images just as much as movie stars do, in a public-relations conundrum. If you keep fans happy with low ticket prices, you empower ticket scalpers, who make millions off your drawing power. If you raise prices to take the air out of the scalper's secondary market, your fans trash you as greedy.
The booming art market has been in a tizzy in recent weeks after a Hugh Grant-owned Andy Warhol portrait of Elizabeth Taylor, expected to sell for as much as $35 million, barely went for $23 million, inspiring commentators to fret about a market collapse. It turns out Grant bought the painting six years ago for $3.6 million, so while all those art insiders were wringing their hands, I was thinking about calling Hugh for tips. But in terms of value, everyone saw the sale in a different light.
Perhaps both sides in the writers strike should start studying the new economic model operating in today's pop music world. If your product has lost its value in one arena -- meaning if no one's buying your CDs anymore -- you can create value in a new arena. That's why Prince gave away millions of copies of his latest CD, because the real money for him was in concert tickets. It's why Beyoncé and Gwen Stefani have launched clothing lines and the fragrance industry is chock-full of perfumes from Britney Spears and Jennifer Lopez.
"Successful pop artists represent something to people, so their value is in loaning their persona, their music or their likeness to other marketers," says Ken Hertz, a veteran music industry attorney who represents Beyoncé and the Black Eyed Peas and does strategic marketing with such companies as Hasbro and McDonald's. "That's where the new equity lies. Music is the best way for a marketer to build trust with people. And if you trust them, you're going to buy their product, but the real engine for creating trust is the music."
That's not to say that screenwriters will strike it rich endorsing Dell computers (although "Daily Show" contributor John Hodgman will surely make more money for his appearances in those Mac vs. PC ads than writing books like "The Areas of My Expertise," a hilarious almanac of utterly unreliable information). My point being: No one knows where the real value of writing will come from five years from now. It may still be in residuals from TV and films, but it may be from some new YouTube-style Internet buzz site fueled by outside money from Wall Street or Silicon Valley.
While the WGA and the studios flail away at the negotiating table, snarling at each other like the warrior ice bears in "The Golden Compass," new entrepreneurs from Wall Street and Silicon Valley are entering the fray every day. The studios have been buying up or trying to co-opt many of the new entertainment streams, but the writers have a lot to say about the future, since the Internet is a medium where the word has retained tremendous power.
"We're entering an era where, just as there are 300 cable and satellite TV stations, there will be 300 different economic models for different kinds of entertainment," says veteran film producer Michael Shamberg. "There will always be a primal need for people to tell stories, but no one knows what the price structure for those narratives will be. It's a time of extraordinary experimentation of how to sell things, therefore it's an extraordinary time in terms of what you can sell."
So the writers can count on one key advantage. Even when it's difficult to agree on the value of almost anything, it's not hard to understand that in a business of storytelling, everything starts with the storyteller.
