Commentary and Analysis by Nancy Prager of Prager Law
As of July 15, 2023, the members of SAG-AFTRA, the union that represents actors, stunt people, voice over artists, and other screen talent, went on strike against the member companies of the Alliance of Motion Picture and Television Producers (“AMPTP”). It is the first time since 1980 that the actors have gone on strike. More importantly it’s the first time since 1960 that the actors and writers are on strike at the same time. Like today, the writers went on strike first on January 16, 1960, with the actors joining them on March 7. Then the actors were led by Ronald Reagan, now they are led by Fran Drescher.
Interestingly, the issues the writers and actors faced in 1960 are similar to those they face today when negotiating with, for lack of a better term, employers. Both then and now, the issues the writers and actors are striking over relate directly to new and emerging technology. Prior to the end of the 1950s, the vast majority of shows that aired on television were live broadcasts. Until that time, the only way to record a moving image was on film, and it was terribly expensive. In 1958, it became possible to record productions ahead of time to be aired at a later date.
By 1960, prerecording shows had become widely adopted as had replaying movies that had previously been shown in theaters. Both actors and writers alike wanted to receive residuals from the broadcast of their previously produced theatrical works that were now airing on television. Writers wanted residuals for “reruns” of shows after their initial airing, something actors already had previously negotiated with the predecessor of the AMPTP. Additionally, both unions were fighting for health and pension funds for their members.
The last time writers went on strike in 2007 streaming was an emerging technology, with nascent services launching on-demand streaming and Netflix just dipping its toe into the waters. Writers fought hard to have their agreements extend to what was then deemed “new media” productions and for reruns of content on “new media” platforms. The actors were then able to negotiate an agreement to extend their contracts to streaming platforms without going on strike.
Significantly, the incumbent media companies were heavily investing in streaming technology at the time in hopes that streaming would redress the economic impact of “commercial skipping” that the widespread adoption of Digital Video Recorders (e.g. TIVO) brought. While Netflix launched its streaming service in 2007 as a way to leverage technology to cut down on labor and postage expenses (someone had to deliver those red envelopes), executives at Viacom, Fox and NBC saw streaming as a way to get their programming directly to consumers to capture revenue that was otherwise being lost to commercial skipping technology. Fox and NBC Universal launched Hulu to provide on-demand access to current programming, as well as some back catalog.
Advertising has been a significant source of revenue for broadcast companies since the beginning of commercial radio and television. Historically, the only out-of-pocket cost families incurred to listen to the baseball game or radio-play, and later watch Ralph threaten to send Alice to the moon in the Honeymooners, was the price of the radio or television. Instead of paying for the content like they did when they went to the movies, the cost was the time listening to or watching commercials. Even when cable became widely adopted, advertising remained an important source of revenue to broadcast and cable channels.
In the early days of streaming, incumbent media companies continued to license their programing to Netflix as well as syndicate on cable networks. Therefore, they could continue to report residuals to actors and others who receive residuals from long-tail uses of content. However, in 2013 Netflix pioneered the direct to streaming model with “Orange is the New Black.” Seeing Netflix as a competitor, incumbent companies started to pull their legacy content from the Netflix streaming service in favor of platforms they own like Disney+ and Max.
In its short history, streaming has evolved from an opportunity to distribute legacy content to consumers to a distribution model that competes with broadcast television and motion pictures alike. To feed the demand, 559 English-language scripted shows were produced in 2021 with 599 produced in 2022. The total amount of content produced for broadcast and streamers in 2021 and 2022 could have been close to double when you take into account unscripted and scripted shows in different languages. These shows are divided between a wide range of streamers from premium platforms like AppleTV to free platforms like Tubi.
Significantly, the voracious appetite for programing on streamers has been a boon to the Georgia economy. The tax credit provided under the Georgia Entertainment Industry Investment Act has drawn productions for every streamer and network to the state. In the process, local economies throughout the state have benefited as documented in the recently issued report from Georgia State University’s Creative Media Industries Institute.
Yet, somehow, actors and writers have made less money in the past few years even as content production has proliferated. While more writers have been employed over the past few years to work on made-for-streaming shows, their employment is vastly different than writers who work on shows airing on network television. Most streaming shows have 8-10 episodes per season, sometimes as few as six. Many streaming services have created “mini-rooms” which engage writers for even shorter periods of time to help outline the series or provide culturally appropriate guidance to the producers. Writers are finding it impossible to piece together a full-time income when their engagements are limited.
Similarly, actors are facing a strange calculus when working on made-for-streaming film and television. The formula off of which actors are paid under the most recent SAG-AFTRA is complicated and the amount they are due goes down every year even if the show remains popular on the streaming platform. For example, the actors in “Orange is the New Black” receive a pittance from Netflix even though the show remains one of its best performing programs. Actors and writers are negotiating for residuals from streaming media that mirror those they receive from broadcast television and theatrical films.
On top of the issues actors and writers are facing as a result of the mushrooming streaming ecosystem, they face an existential threat from emerging AI technology. Not only are writers concerned on a number of levels about generative AI being used in the industry, actors are also worried about its use to supplant them. Allegedly during recent negotiations with SAG-AFTRA, the AMPTP offered to pay background actors one day of pay in exchange for allowing productions to capture their images for use in future projects in perpetuity.
The issues at the heart of the overlapping strikes in 1960 stemmed from the expansion of new technology for distribution. The writers’ strike began on January 16, 1960, with the actors going on strike on March 7 that year. The actors were able to resolve their concerns by April 18, 1960, while it took the writers until June 12, 1960, to settle. Both the writers and actors negotiated historic deals that laid a foundation for both writers and actors to thrive alongside the companies that produced the content. In 1960 the Gipper brought it home for the actors, in 2023 the Nanny will lead the way.
Nancy C. Prager provides corporate and intellectual property legal services to a wide range of clients in technology, business and entertainment. She focuses on all aspects of a business or project’s lifecycle, from idea through execution to exit. Her breadth of experience allows her to address regulatory issues, from privacy to financing, and advise clients through evolving standards to seek opportunities in non-traditional outlets. For more information visit her web site or email nprager@pragerlaw.us.
