By: Marisa Cefola
Volume IX – Issue I – Fall 2023
Introduction
Hollywood and the entertainment industry have fallen since the COVID-19 pandemic and the ultimate rise of streaming services. As a result, studios need help to meet financial obligations, such as compensating screenwriters an adequate amount for their work. Besides receiving insufficient pay, an increase in artificial intelligence technologies threatening screenwriters’ jobs prompted 97.9 percent of the Writer’s Guild of America (WGA) to call for a strike to fight for fair protection and treatment in the industry [1]. On May 2, 2023, the strike shut down Hollywood industry-wide for 148 days, forcing late-night shows to air reruns and halting multiple productions such as “Stranger Things.” The WGA reached a tentative agreement with the Alliance of Motion Picture and Television Producers (AMPTP) on Sept. 25, 2023, which has set a precedent for the future of both writer payments in a streaming service-dominated industry and AI regulation in entertainment industries that stem beyond Hollywood.
I. The Minimum Basic Agreement (MBA)
The WGA is a labor union composed of those who write scripted series, features, news programs, and other related content [1]. After two months of failed negotiations with the AMPTP — which represents numerous major studios and streaming platforms, the WGA unanimously voted to begin a strike on May 2, 2023. The negotiations in question related to the Minimum Basic Agreement (MBA) renewal, as the contract was set to expire on May 1, 2023. The MBA sets an industry-wide standard for terms that ensure a writer’s employment and creative rights. As of May 1, the AMPTP’s relevant MBA offers in comparison to the WGA proposals are as follows [2] :
i. MBA Minimums Increase
Minimums refer to all types of compensation writers are eligible to receive based on the work they have done for a given piece of content [3]. Numbers on the minimum schedule are the lowest possible pay writers can receive for different types of work. For example, screenwriters are paid different amounts for original and unoriginal screenplays. Additionally, compensation varies for television released on basic cable networks and television released on “new media” including streaming services such as Netflix. From May 2, 2022, to May 1, 2023, writers received a minimum of $6,669 for a 20-35 minute television show streamed on a subscription-based platform — such as streaming services — with less than 20 million subscribers. In the same time frame, writers received a minimum of $10,645 for a 30-minute television show airing on Prime Time, or when television audiences are expected to be the greatest. The WGA proposed to increase all minimums, including residuals, by 6 percent in 2023, another 5 percent in 2024, and an additional 5 percent in 2025. However, the AMPTP’s original counteroffer was to increase minimums by 4 percent, 3 percent, then 2 percent with a one-time 2 or 2.5 percent residual increase. [4]
ii. Residuals for Streaming
A large aspect of writer compensation includes residuals, or payments made to reuse a writer’s work [5]. Writers have been entitled to residuals since 1953, but streaming services often pay writers higher rates upfront and neglect residual compensation [6]. This is likely due to changes in consuming content; audiences can choose what they watch on Netflix but cannot control what airs on cable television. Additionally, seaming service studios do not share viewership data with writers and writers do not know the value of their work as a result. Writers appreciate the guaranteed payment, but the upfront business model disproportionately compensates studios for writers’ work; all payments collected from additional streams are allocated toward the studios [7]. While streams increased, writers’ pay did not. Writer pay has decreased by 14 percent since 2018, with some writers claiming to have received checks that were less than a dollar and others failing to make a living wage [8]. Many agree residuals are important, as the checks are writers' main source of income in day-to-day lives. This is why writers ask for transparency and residual minimums for streaming platforms, as the previous MBA contract does not stipulate that. The MBA predating May 1, 2023 states writers must negotiate for residuals to receive any at all. The WGA proposed to extend television “Appendix A,” — which establishes residuals for cable television reruns — to include revenue earned from high-budget shows produced on a subscription video-on-demand platform (SVOD). They additionally asked to begin incorporating viewership-based residuals on streaming platforms The AMPTP originally rejected both ideas.
The AMPTP believed their offers were fair [9]. It is important to consider the financial losses Hollywood studios have experienced since the MBA was last renewed in 2020. Streaming services have dominated both the movie and television industries since the COVID-19 pandemic prevented people from watching blockbuster movies in the theater at the time of their release [10]. The services’ prevalence has disincentivized people from doing so even after it has become safe to visit movie theaters again. Additionally, increased competition from Netflix, Disney+, YoutubeTV, HBO Max, and other platforms has devastated cable television subscription revenue. Based on trends, 25 million people are predicted to cancel cable subscriptions in the next five years, resulting in a $25 billion revenue loss for Disney, NBC Universal, WarnerMedia, CBS, Fox, Discovery, Sinclair, and AMC Networks. Foreseeing this loss, many companies have already begun shifting towards streaming services completely and laid off tens of thousands of employees since 2020. When taking into account the money studios within the AMPTP have the potential to lose due to streaming, it makes sense they would be conservative with many of their initial offers.
iii. Current Artificial Intelligence Regulations
Artificial intelligence has become increasingly prevalent in the entertainment industry, raising concerns among Hollywood writers as a result. Due to its ability to practice machine learning — or use and detect patterns in a large set of data — computer AI can replicate the patterns and create content free of charge [11]. Studios are pushing for more AI in the entertainment industry for this reason. Before the WGA strike, AI was used to generate new ideas for pilot episodes or rework scripts in a way where a writer is not needed for filming. Much of what the computers use for machine learning, however, are writing samples from screenwriters. The WGA argues AI is plagiarizing their creativity and they should be compensated for it using their data. They are asking for new AI regulation laws that coincide with its modern uses.
As of March 2023, there were no AI regulations in the MBA or federal government to protect artists or authors from copyright. The United States Copyright Office declared that copyright can only protect material that is conceived by humans and will not register work that lacks human authorship [12]. They take an originalist perspective, stating, “Most fundamentally, the term ‘‘author,’’ which is used in both the Constitution and the Copyright Act of 1976, excludes non-humans.” Since AI regulation is a relatively new frontier of copyright, the original Copyright Act can't address protocols regarding AI adequately [13]. Yet, the United States District Court for the District of Columbia has recently reinforced the outdated standard in Thaler v. Perlmutter (2023) [14]. Plaintiff Stephen Thaler attempted to register art created with a computer system he invented — the “Creativity Machine” — for copyright. Thaler claimed that his artificial intelligence had the capabilities to generate original art, however, the Copyright Office denied the application for copyright because a human author did not create the art themselves. The case contests this aspect of the law because Thaler had created the AI capable of producing art, meaning the art had non-traditional human authorship. Nonetheless, the court held the Copyright Office’s denial to copyright the AI-generated art. The case reinforced the lack of protection from AI on human-authored art.
The AMPTP did not understand the impacts artificial intelligence may have on WGA writers at the time of the initial negotiation. Since AI content cannot be copyrighted and does not contain human authorship, studios can plagiarize writers’ work and face no legal repercussions. Writers would, in turn, be less needed and their jobs have become threatened, according to the WGA. They proposed in MBA renewal negotiations that AI should be regulated on MBA-covered projects and that AI should be prohibited from writing or rewriting literary materials. Additionally, it cannot be used as source material and material covered by the MBA cannot be used to train computers using machine learning. The AMPTP rejected all proposals and instead offered annual meetings to discuss broad technological advances. When assessing AI, AMPTP felt it was too complicated of a topic not to be met with more discussion.
II. What Changed and Which Group “Won”?
After five straight days of negotiations between the WGA and AMPTP, the two groups constructed a tentative agreement, and the WGA voted to conclude the strike on Sept. 26, 2023. The Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA), another labor union consisting of Hollywood actors, began a strike for similar reasons to the WGA and ended their strike on Nov. 9. This double strike was the first of its kind in over 60 years but was more significant for the precedents it set on future Hollywood labor and AI laws. The tentative deals regarding minimums, residuals, and artificial intelligence for the WGA are as follows:
i. MBA Minimums Increase
The AMPTP agreed to raise most minimums by 5 percent in 2023, an additional 4 percent in 2024, and another 3.5 percent in 2025. Select minimums will have lower or one-time increases. This deal is lower than the WGA’s original proposal but higher than the AMPTP’s initial offer, benefiting each somewhat equally.
ii. Residuals for Streaming
The AMPTP originally rejected the WGA’s proposal to include high-budget shows produced for SVOD platforms in the television “Appendix A” residual terms. However, the two groups were able to negotiate terms that significantly benefit the WGA. Television Appendix A now includes high-budget comedy-variety, quiz and audience, and other non-dramatic shows made for SVOD. As a result, foreign streaming residuals improved, now based on a given streaming service’s foreign subscriber number; the residuals increased 76 percent since 2020 on streaming services with significant global subscriber bases. A one-hour series episode on Netflix, for example, now accumulates $32,830 in foreign residuals: a drastic increase from the previous amount of $18,684. Additionally, studios added a new viewership-based residual to the ratified MBA. High-budget SVOD films viewed by 20 percent or more of a given streaming service’s domestic subscriber base within 90 days of its release earn an additional 50 percent bonus of both foreign and domestic residuals. This aspect of the MBA will take effect for projects released in 2024 onward. Views are operationally defined and calculated by hours streamed, making the deal clear for both parties. Maintaining a theme of transparency, streaming companies agreed to provide the WGA with data — such as the total number of hours streamed globally — of high-budget streaming programs the companies themselves produce. One example of self-produced content is Netflix’s “Stranger Things,” as it is an original series on the platform. Lastly, writers who create a given show will earn a 150 percent pilot episode script premium and a 115 percent backup script premium.
iii. Artificial Intelligence
New artificial intelligence regulations will significantly benefit the WGA and have either a neutral or detrimental effect on studios. The ratified MBA agreement establishes that writer’s original material cannot be used to train computers through machine learning, AI cannot write or rewrite literary material, and AI-generated work cannot be used as source material — or content that is considered original — as each discredits writers and diminishes their rights. Writers are allowed, but not required, to use AI to produce writing, and AI will not be considered an author under the MBA. [15] Finally, studio companies must be transparent with writers and disclose if material given to them has used or incorporated AI. With new AI regulations, writers’ jobs are protected and their leverage on studios has grown as they have become essential to producing scripts for television shows or films. In this way, studios are harmed, as they now have less power compared to the WGA. They may experience more financial loss as the MBA prohibits them from using cheaper AI. However, it can be argued that the new, modern regulations will not have a neutral or even positive impact on studios if approached from a sense of what AI is capable of. Since computers borrow content from writers to enact machine learning, AI would likely produce content at the same or worse quality than material directly from human authors. Based on the definition of machine learning, it is not clear if AI is capable of producing fresh ideas using human source material, however, writers can develop new ideas. Although AI is not fully understood, it seems to use an algorithm to produce content meant to be green-lit. As seen through an influx of live-action remakes and sequels in the past five years, franchises and the entertainment industry are becoming less creative [16]. Using AI, as opposed to human writers, would exacerbate that lack of creativity. The industry needs writers to generate new ideas, which could arguably impact studios positively by bringing in new audiences and more revenue.
After reaching the tentative MBA agreement and officially ending the strike, it is clear the WGA had more bargaining power and was able to negotiate better deals as a result. The AMPTP has control over multiple corporations with sizable financial power and they decide what is produced and distributed [17]. However, studios cannot produce and distribute content without writers or actors, therefore unions have the power to control when Hollywood’s industry-wide shutdown would conclude. While they have slightly different requests, SAG-AFTRA and the WGA strived for the same outcomes by striking: fair employment rights and more transparency from studios. As a united force, unions derive power from each other and public support. An August 2023 poll found regardless of political party affiliation, 67 percent of the public was in support of both strikes [18]. Additionally, when asked if they agree with the unions’ demands, 74 percent agree that AI should be regulated and prohibited from replacing writers and 82 percent agree both actors and writers should be fairly compensated for their work. This immense public support likely pressured the AMPTP to improve their initial offers and allowed both unions to maintain an unwavering stance.
III. Future Implications
The ratified 2023 MBA contract between the WGA stipulates writers are entitled to higher minimums, significant streaming residual compensation, and protection from AI. With its positive public support and powerful key players, SAG-AFTRA had similar success to the WGA in its agreement with the AMPTP. Popular actors such as Matt Damon, George Clooney, and Jessica Chastain were at the forefront of the SAG-AFTRA strike and were able to drive immense public support through their fan bases [19]. Notably, the ratified contract between the AMPTP and SAG-AFTRA highlights actors must provide consent and earn compensation for studios to be able to use AI to replicate them. Additionally, actors will now receive a substantial bonus on top of residuals for streaming to combat the modern streaming service business model. Like the WGA, it is clear SAG-AFTRA had more leverage in negotiations, as actors are the faces of franchises that cannot be made while the union is still on strike and studios have more to lose should they choose to continue the strike any longer. While the two strikes were separate, the groups ultimately demonstrated support for each other and, with that, had more strength and power than the AMPTP.
The WGA strike has set a precedent for the future of AI regulation and copyright laws with Hollywood being the first industry to establish them in a legal agreement. The laws restrict AI usage in the workplace and may be applied to other industries where human jobs are at risk of being replaced, such as the tech, media, and finance industries. One aspect of the ratified MBA states writers are allowed to utilize AI for their work, which implies that it will continue to be incorporated and used to enhance human intelligence and artistry within the Hollywood industry. As more industries begin to embrace AI, it will be interesting to see how each considers the WGA strike outcomes when establishing restrictions of their own.
Endnotes
[1] Writers Guild of America. “What We Won.” Writers Guild of America, 2023. https://www.wgacontract2023.org/the-campaign/what-we-won.
[2] Writers Guild of America. “Schedule of Minimums: 2020 Theatrical and Television Basic Agreement.” Writers Guild of America, November 2021. https://www.wga.org/uploadedFiles/contracts/min20.pdf.
[3] Writers Guild of America West. “Residuals Survival Guide.” Writers Guild of America. March 2022. https://www.wga.org/members/finances/residuals/residuals-survival-guide.
[4] Ibid.
[5] Colbert, Stephen M. “Understanding The Residuals Problem Between Actors & Streaming Services (A Full Breakdown).” Screenrant. July 29, 2023. https://screenrant.com/actors-strike-residuals-streaming-netflix-explained/#:~:text=Since%20studios%20aren%27t%
[6] The Associated Press. “What do striking Hollywood writers want? A look at demands.” The Associated Press. May 3, 2023. https://apnews.com/article/wga-writers-strike-demands-d403f5b4666f20e2ce3e379bcaef5f2a.
[7] Dalton, Andrew. “What residuals are — and why Hollywood actors and writers are striking over them.” WDSU News. July 20, 2023. https://www.wdsu.com/article/what-are-residuals/44601388#:~:text=While%20streaming%20companies%20technically%20pay,shows%20often%20get%20nothing%20now.
[8] Rogin, Ali & Corkery, Andrew. “Why artificial intelligence is a central dispute in the Hollywood strikes.” PBS News Weekend. September 2, 2023. https://www.pbs.org/newshour/show/why-artificial-intelligence-is-a-central-dispute-in-the-hollywood-strikes#:~:text=AI%20is%20one%20of%20the,don%27t%20get%20replaced%20entirely.
[9] 9 Johnson, Michael. “Hollywood survival strategies in the post-COVID-19 era.” Humanities and Social Sciences Communications. April, 21, 2021. https://www.nature.com/articles/s41599-021-00776-z.
[10] Writers Guild of America West. “Summary of the 2023 WGA MBA.” Writers Guild of America. 2023. https://www.wga.org/contracts/contracts/mba/summary-of-the-2023-wga-mba.
[11] United States Government Publishing Office. “Federal Register Rules and Regulations.” United States Government Publishing Office Vol. 88, No. 51. March 16, 2023. https://www.govinfo.gov/content/pkg/FR-2023-03-16/pdf/2023-05321.pdf.
[12] Copyright registration in general, U.S. Code 17 (2005), §§ 1 et seq.
[13] Stevens, Matt. “What to Know About the Actors’ Strike.” The New York Times. September 24, 2023. https://www.nytimes.com/article/actors-strikewhy.html#:~:text=But%20the%20rise%20of%20streaming,in%20a%20rapidly%20changing%20workplace.
[14] Thaler v. Perlmutter, Civil Action No. 22-1564 (BAH), 2023 U.S. Dist. LEXIS 145823 (D.D.C. Aug. 18, 2023).
[15] Writers Guild of America West. “Residuals Survival Guide.”
[16] FranchiseRe. “Current Movie Industry Charts.” FranchiseRe. 2023. https://www.franchisere.biz/movie-industry-charts-and-trends/.
[17] Georgetown University “Ask a Professor.” “Hollywood Strikes Explained by a Labor Negotiations Expert.” Georgetown University. August 23, 2023. https://www.georgetown.edu/news/hollywood-strikes-explained-by-a-labor-negotiations-expert/.
[18] Todaro, Rob & Blank, Lew. “A Majority of Voters Support the WGA and SAG-AFTRA Strikes, Overwhelmingly Agree With Key Demands.” Data For Progress. August 18, 2023. https://www.dataforprogress.org/blog/2023/8/17/a-majority-of-voters-support-the-wga-and-sag-aftra-strikes.
[19] Guardian Film. “‘We will not back down’: Hollywood stars on the actors’ strike.” The Guardian. July 18, 2023. https://www.theguardian.com/culture/2023/jul/18/hollywood-stars-actors-strike-sag-aftra.