Hollywood’s fight is your fight

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The most-frequently aired concern when it comes to Hollywood’s current labour strikes seems to be the risk of missing new episodes of our favourite shows. But worker unrest in media and entertainment is an early indicator of the sort of technology-driven business disruption that many other industries will soon face as well. 

Actors and writers are striking for lots of reasons — pay, benefits, residuals and the effects of artificial intelligence on their business. But in a core way, the fight is about the value of intangible assets and intellectual property like story ideas or digital images and voices, and the question of how that value should be shared. 

Intangible assets make up the vast majority of corporate wealth in most industries. Things such as software, patents, digital data, trademarks and other intellectual property represent about 80 per cent of the value on large company balance sheets. That percentage will probably rise further as tech investment goes up, new technologies make their way into old industries and online commerce increases.

Few industries are as dependent on intangible assets as Hollywood. But in recent years, Silicon Valley has disrupted the business model of film and television in much the same way as it has the music business and news media. 

Just as the algorithmic ad market fundamentally changed how people consume and produce news, digital streaming services such as Netflix have shifted the production and consumption methods of Hollywood’s offerings. With the internet, Silicon Valley offered up a new distribution channel for filmed entertainment along with more production investment in new shows to fill that endless digital pipeline. But Big Tech also secured greater control over content. 

A decade ago, for example, it wasn’t uncommon for creators to own some piece of the final product, like a series or a special. As streaming services such as Netflix and Hulu took off, they had such high valuations that they were able to offer bigger flat rate payments for, say, an episode of a new show or a streamed series. But they were far less inclined to offer back-end ownership of the final product.

That was fine when money was cheap. But as overproduction and higher interest rates have lowered the valuations of big streaming platforms, entertainment bosses are less willing to make the big one-off deals for new content. Meanwhile, many actors and writers have no stake in future revenues. The result is that both sides feel squeezed. 

Hollywood talent has battled management during periods of technological change many times in the past. Back in 1919, when the boom in the modern film industry led to consolidation and calls for salary caps, Mary Pickford, Charlie Chaplin and other stars decided to start their own studio, United Artists. During the TV boom of the 1950s and ‘60s, future US president Ronald Reagan, then a liberal Democrat and Screen Actors’ Guild president, helped secure better residual rights. 

Now, the middle class life enjoyed by many in the entertainment industry is being squeezed by streaming, which pays lower residuals if any at all. If you are a writer on a hit show such as Netflix’s Stranger Things, for example, you don’t share back-end profits in the way you might on a broadcast program. You are also likely to work longer hours, for less pay and less security than you might previously have done. 

You can imagine studios applying their version of ChatGPT to, say, a new Marvel script . . . giving authors $15,000 a week instead of $500,000, with no ownership

One could argue that there is actually more work to be had than in the past, since the internet enables an endless stream of content. But very often, the quality of that work has declined since content commoditised. The Writers Guild of America claims that pay for the average writer-producer has gone down by four per cent over the past decade. 

Artificial intelligence has the potential to put these trends on steroids. Many actors got their start in the industry, along with membership in the union (and thus healthcare and other benefits), through a few stints as a film extra. But digital imagery is now eliminating many of those jobs. Even established actors could see their incomes slashed if studios are able to use their digital images repeatedly in new films. 

What goes for them goes for writers, too. “You can imagine studios applying their version of ChatGPT to, say, a new Marvel script with digital images they already own and spitting out a screenplay in three weeks instead of six months, giving authors $15,000 a week instead of $500,000, with no ownership,” says former producer Jonathan Taplin, a USC professor and author of the forthcoming book “The End of Reality,” which examines Silicon Valley’s effect on our economy and society. 

This may seem like a “world’s tiniest violin” problem compared to those faced by, say, an Amazon warehouse worker. But AI has the potential to disrupt jobs at all levels, from factory or call centre work to law or radiology. Many professionals do high paid but rote tasks which may be better done by algorithms. Furthermore, in a world in which intangibles represent more and more wealth, but intangible-rich firms create fewer and fewer jobs, the problem of how to divide the IP pie will inevitably spread.

In short, Hollywood’s current battle may be just the prequel to a long-running, multi-part series coming soon to a workplace near you. 

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