The feisty union leadership of the WGA West and East, SAG, and DGA, has not unexpectedly come out with hands slapping and fists punching. The problem, they say: ABC wants to pay actors the home video residual rate rather than the pay TV rate, which happens to be four times higher.
Wait a second, says ABC. The only question here is what the existing guild agreements provide," ABC said in a statement. "We believe that the residual for sales and permanent downloads of programs to the iPod is covered by the home video residual formula. If the guilds have a different point of view" .... blah, blah blah.
When a new shop owner sets up business, everybody wants a taste. Everybody, as a character in "Godfather II" says, "wants to wet their beak."
This is the unions' first organized crack at the networks--in particular Walt Disney/ABC, which has seen consumers buy 3 million downloads of its shows. That comes to $6 million, or about $4.2 million to ABC.
Here's why the unions are upset: For the home video residuals, media companies can exclude 80 percent of wholesale revenues. Nice.
How did the unions allow this way back in the 1980s when the home video market was just starting to percolate? Media companies convinced the unions home video was just an unproven technology--that it wouldn't really amount to anything. Now, over 20 years later, more money comes from home video sales and rentals of content than from top theatrical movies.
For ABC and other networks, it will be difficult to convince the unions this time around that, like home video, iPods and other on-demand devices are still "unproven technologies."
The unions have been gunning for ABC ever since it broke the on-demand TV device barrier with an iTunes deal on Oct 12.
That same day the unions demanded answers. Now, four months later, the unions want quicker answers--on-demand.