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New media residuals: real differences

The devil’s always in the details.

When producers offered writers a proposal last week that guaranteed millions more in payments over a three-year deal, it sounded good to the uneducated observer. But now new details of the producers’ proposal and the writer’s recent counter-proposal have become available, and the two sides are not as close as it first seemed.

While some sources claimed the only significant difference was $120 million versus $150 million over the next three years, as we reported earlier, the differences are more detailed and in-depth. In fact, the two sides stand rather far apart.

According to Bloomberg.com, producers wanted to offer writers a $139 flat-fee residual when shows are broadcast on the Web or other new media sources, regardless of the number of viewings or “airings.”

The WGA is eschewing the flat-fee concept and want stepped payments based on a percentage of so-called “applicable minimum” per 100,000 views or “airings.” What does that amount to in real dollars?

Well, an hour-long series episode “applicable minimum” is $632, and it’s $348 for a half-hour show. Writers want only three percent of this applicable minimum, per 100,000 downloads/viewings/whatever.

That would be $18.96 per hour-long show, $10.44 per half-hour show.

For unpopular shows, $18.96 or $10.44 isn’t much; but with popular shows, the money could vary greatly from the flat fee producers were offering.

For example, let’s imagine an episode of the office is offered via iTunes and Verizon Wireless and Sprint TV. Let’s say new media goes wild over this episode and these figures result: 3.25 million iPod owners download it via iTunes. 1,335,000 view it on Verizon, while only 196,000 view it on their Sprint phones.

3.25 is rounded up to 3.3 for 33 times 100,000.

1.33 is rounded down to 1.3 for 13 times 100,000.

0.19 is rounded up to 0.2 for two times 100,000

That’s a show that, therefore, had 33 plus 13 plus two times the applicable minimum fee. The Office is a half-hour show, so the three percent of the applicable minimum in this case is $10.44

48 times $10.44 is $501.12.

Getting a 48x hit episode might be hard to come by, but when it does come along, $501.12 is a whole lot better than a $139 flat fee, wouldn’t you say? That’s what the strike is about, apparently. And at three percent, the writers share grows only as studio/producer profits also grow.

Makes sense to me, WGA!