WGA strike mediator: Has anyone considered Candy Spelling?

Well, ain’t that a stitch. After the jump, a well-reasoned analysis of the strike circumstances from Mrs. Candy Spelling

The whispers about how our business is the only one that pays residuals are increasing. The auto workers who put together our cars do not get bonuses when we hit 100,000 miles. The doctor who performed successful heart surgery doesn’t get a percentage of our salaries when we return to work. I don’t like the logic or the implications, but I’m hearing it more and more and feel the strike may be an excuse to provide less, not more.

The biggest problem, though, is that, no matter how many pie charts, no one knows the size of the pie, how many flavors will be offered, if it’s good or bad for us in the long run and how many will be manufactured.

How can the writers negotiate for percentages when they don’t have an idea about the grosses, revenues, sales, overhead deductions or anything that makes this is a valid math problem?

And, how can the studios claim there isn’t that much revenue to be generated, when we all know there is?

Class, continue to discuss amongst yourselves. — Dana Harris

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  1. dp2 says:

    Sorry to hear that Crew. If it’s any consolation, I’ve been there too. I was part of the collateral damage resulting when the IT-bubble busted. I lost 15-30K in a flash (where many of my friends lost several hundreds of thousands of dollars), so I guess I count myself blessed. Times were tough for a while. Many of us ended up taking all kinds of odd jobs and short gigs until the market improved (several years later).
    As a result, I started doing some technical writing–among other things.
    Here’s perhaps another consolation–at least they probably won’t outsource (specifically offshore) your job as well anytime soon.

  2. Crew Member says:

    As someone who is about to be collateral damage and lose my job for the duration, I just want them to talk. I like the pie question. Do they even know how much they’re talking about? I get a salary. I’d like more, too. Just heard on the news that the Guvernator volunteered to mediate. I’ll take Mrs. Spelling.

  3. dp2 says:

    Nevertheless, I my heart still goes out to the writers, and I believe they are mostly right about all of this.

  4. dp2 says:

    LA and NYC are famous (or infamous–take your pick) for all their creative thinkers, but the irony is that I haven’t heard of or read about any creative or inspiring solutions proposed by either side. They’re both bickering like angry kids about what they don’t have and want: more money, power, and influence; and less risk.
    I’ve read plenty of comments from both parties arguing about a “fair wage”. Fair wages–just like unicorns–only exist in Utopia. In market-driven economies like ours, exploitation is the rule (or at least the norm). For example, during the go-go 1990s–especially during the latter 1990s–many IT workers, here in the US, were making a killing. Salaries spanned a range from mid-five-figure to low-seven-figure incomes. Pop goes the IT-bubble! And, in the words of Jackie Gleason, “away we go . . .” to find new jobs (that usually didn’t exist), because those jobs were sent offshore. Both of those events created a perfect storm which resulted in the salaries of the remaining IT workers getting haircuts–Mr Clean style. Employers usually strive to pay the least they can to get/retain an employee, and will try to work that employee to the max. Similarly, employees usually strive to squeeze as much as they can out of an employer, and will work the minimum amount required.
    Doctors, teachers, sanitation workers, and chefs all perform important services, but they all don’t get paid the same. Some might assume that doctors do–or at least should–get paid the most, and that sanitation workers do–or at least should–get paid the least. However, that’s not always the case. One’s pay usually has less to do with one’s education, and more to do with how well one markets/sells one’s self. For example, take a look at any major hospital. Many doctors, who often have had more schooling than their administrator counterparts, usually get paid less. Many teachers get paid less than many five-star chefs, and the list goes on. Is this fair? Fair or not . . . that’s life–now, deal with it.
    I admit that was a bit harsh–it’s like a shot: my comment might sting at first, but it might help one to heal later.
    Having stated all of that, I believe the real issue is how both parties can distribute the wealth, power, influence, and risk more equitably.

  5. Stephen says:

    “The auto workers who put together our cars do not get bonuses when we hit 100,000 miles.”
    Nor do Ford or General Motors. Nor do the auto workers create what they assemble.
    Other than that, a well-thought-out analogy.

  6. dp2 says:

    Stock options aren’t only used in compensation packages for cash-strapped startups. Most technology companies–whether blue chip or otherwise–offer them. I should know: I’ve been there–on both sides (as employee and owner). Ford, GE, GM, IBM, NCR, and Mercedes are all over 100 years old; they’re older and bigger than the studios, and they STILL offer stock options, and bonuses.
    It’s true that stock options aren’t exactly the same as residuals, but they’re similar enough in spirit–as are bonuses–that the analogy still works. Nevertheless, that’s really splitting hairs, but I’ll give you that one two. The claim is still false in spirit, because of stock options and bonuses. The claim is also strictly false, because franchise and network marketing businesses also pay residuals.
    Residuals aren’t the real issue. Writers put in at least as much work as directors, actors, and producers; yet, they–on the average–get compensated differently. Residuals should only be eliminated only if it’s eliminated across the board. You know that’s not going to happen. The studios wouldn’t spend so much time, energy, and other resource trying to track down peer-to-peer, file-sharing networks. The studios intend to continue to collect residuals, but they no longer want to pay them. They’re being cheap. The writers are only asking for 10 cents per DVD (most of which retail for about 17-21 dollars each). If a project, that went to DVD, had 20 writers on it, then only 2 dollars out of that 17-21 dollars would go to residuals for writers (9-11 percent of the revenue for a single DVD). The production costs for producing any DVDs, after having produced the first one, are nearly 0. I should know: I’m one of the technologists (IT) involved with creating the software and systems for producing that content.
    Residuals aren’t complex to calculate. Any spreadsheet with the right set of macros or formulas (using elementary arithmetic) will handle them just fine–which shouldn’t take more than a few seconds to execute. The mathematical computations for weather and nuclear warfare simulation, energy-grid calculations, and 3D modeling are much more complex–each of which involve equations performing trillions of calculations per second.
    Residuals are partially the result of copyright and patent law. Every content producer expects to get paid for his/her creations. The law gives him/her several IP rights each of which he/she may freely sell or lease. Writers–at least as long as the studios have existed–lease them, and the studios want the writers to now sell them.

  7. Bob says:

    What about putting her on a panel of mediators? She knows the issues from all sides and doesn’t seem to be profiting from any outcome.

  8. EJ says:

    OK. I keep hearing this stock options equals residuals notion. It is not the same. Stock options offer you ownership in a company. Typically they are used in startups because those young companies don’t have the cash to pay market salaries. So they offer the incentive to help grow the company. There is no cash flow on products sold. Your only hope is that the company is successful and the stock goes up. However, statistically most startups fail and you end up with nothing. (I should know, I’ve been there.) Stock options make little sense with the dinosaur companies like the studios. Their stock barely moves typically so those companies usually compensate through competitive salaries and bonuses. Under a normal scenario, i.e. the non-Hollywood world, companies produce a product and if it does well there are bonuses passed out. The studios should dump the residuals that are causing so many problems and focus on fair compensation for all contributors.

  9. dp2 says:

    One more thing . . . as if I haven’t already written enough stuff. :)
    I hope that the AMPTP and WGA resolve their differences soon. However, if they don’t, then it’s not going to matter much, because they both will lose their audience. The show must–and will–go on, and the public will obtain its content from elsewhere. Remember, we (the public) have other outlets for obtaining content: independent films, viral video (aka Youtube), and various foreign sources.
    Besides, armed with a mini-DV and a PC or Mac, I and many others will produce and share our own content on Youtube, and Google will gladly help show us how to monetize the effort. Amanda Congdon (and several others) has already shown us that this is possible and profitable.

  10. dp2 says:

    I think Candy has presented some interesting ideas, and I agree with several of her observations.
    However, I do take issue with one of her points (which I know she was simply restating a point that’s been circulating about town and in the press) about residuals.
    First, this statement is dubious. Ever heard of network-marketing businesses (like Amway, Avon, Mary Key, Primerica, Tupperware,etc) or franchise business (like McDonald’s, Subway, Pizza Hut, etc)? Some–not necessarily all–people involved in those lines of business earn residuals–so do musicians. Many bankers, insurance agents, real-estate agents, stock brokers, and most–if not all–executives receive some form of performance-based income (like bonuses and stock options) as part of their compensation package. Although one might argue bonuses technically aren’t the same as residuals, they’re certainly similar enough in spirit. Besides, there’s no argument about stock options–those ARE a form of residuals. I could provide a lot more examples; nevertheless, one needn’t take my word on this: check out monster.com. Furthermore, WGA writers aren’t the only writers who earn a portion of their income via residuals–many other writers do too. Again, don’t take my word on this; check out Writer’s Market for yourself.
    Second, the AMPTP’s claims about residuals are a red herring meant to divert the public’s attention from the bigger issues at stake. Mr Counter blasted writers in his rant on their residuals, but he never mentioned anything about his own (or the other producers’) residuals. As a Hollywood outsider, I–and I imagine many others–would empathize more with his position on the issue of residuals if he (and the other producers’) were to offer to rescind their own residuals as well. Of course, everyone KNOWS that’s not going to happen! Yet, the WGA leadership, in my humble opinion, hasn’t done much better on the PR front. Although I don’t think the WGA leadership has to respond publicly to every one of the AMPTP’s claims, but they do have to respond to some of them publicly if they want the rest of us (Hollywood outsiders) to empathize with and support their cause. Garnering our support is important, because we can help to change the dynamics of the market via protests, boycotts, lobbying, and other actions–the AMPTP leadership seems to get this. On the other hand, if the WGA leadership continues to shut us out of the process, then we also have the power to change the dynamics of the market against them–the AMPTP leadership seems to get this too.
    Third, the AMPTP’s claims that the residuals are cutting too deeply into their bottom-line, and their claims that the studios aren’t making any money are full of ____ (stuff). These kinds of claims insult my intelligence. I have family members in Northeast Ohio and Southwest Michigan who are struggling to make ends meet (due mostly to offshoring). People, who really aren’t making money, are losing their homes–all over the country. Nevertheless, I’m also annoyed by Verrone constantly whining that the producers won’t open their books. There are other ways to get the information. If the producers won’t give it to him, then he could form a team to reverse-engineer and extract the information from all of the data that’s publicly available. Since several producers have sought VC financing from Wall Street recently, they have to provide detailed numbers (assets, liabilities, profits, taxes, etc) on each of their projects. This information gets filed with the SEC, it’s published periodically throughout the year, and sent to shareholders in the prospectus. Armed with all of that information, any of the numbers you don’t have, could be extrapolated. After doing that, then Verrone could go back to the producers and show them in black-and-white how much they made, and it would be up to the producers to open their books if they’d like to make any adjustments (which shouldn’t be necessary, because P/L statements don’t lie–unless there’s fraud involved) to the figures.

  11. kasey says:

    She’s right. Does anyone even know what’s at stake? My sympathies are with the writers, especially since they’re at such a disadvantage.

  12. devon says:

    There’s a reason why Candy’s husband had current shows on the air for three decades+6 years. Spelling gave many producers/writers/actors their start and practically handed some their entire ‘brilliant’ careers, he knew that the show must go on, yet more importantly that’the show business must go on’.

  13. sasha says:

    Hey – I’m a teacher – I want residuals on all my students future paychecks!

  14. EJ says:

    The whole residuals thing is a mess. Pay the writers more up front for their work, a fair amount for the important work they do. The studios own the content and then are free to try to pursue new ways of distributing it wihtout trying to figure out when a profit is being made and how much to pay all the players. The Internet may not pay off for a while, but it is in everyone’s best interests to make it work. The current demands for percentages of an unknown quantity muddy the waters and tie the studios hands in trying new things in a changing world.

  15. Studio exec says:

    she’s right. No one wins. Maybe she and gov could team.

  16. Allen says:

    Is she serious? Michael Eisner? He almost single handedly drove Disney into the ground and was fired. He’s still angry about it too: “They made deals with Steve Jobs, who takes them to the cleaners. Who’s making money? Apple.” Get over yourself, Eisner. Suggesting Eisner is the worst opinion I’ve ever heard. He sure would be a great mediator since he stated “I’ve seen stupid strikes, I’ve seen less stupid strikes … This is a stupid strike,” and “”It’s a waste of their time, [The studios] have nothing to give. They don’t know what to give.”
    Hmm, yeah. Great suggestion. I agree that something has to be done, but some of her comments and suggestions were way too “stupid” a la Eisner.

  17. Holy shit... who saw that coming. says:

    Wow. Candy Spelling rocks. Someone give her a gun and a padlock. She can finish this negotiation up in a few hours.

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