Hollywood got smacked (by Its own writers)

Welcome to The Level Ups, modern business news for future business leaders (in plain-Jane English).

After a long hiatus, we’re back. Thanks everyone for your patience.

Today, we cover:

• Details on the writer’s strike in Hollywood.

• The most interesting thing writers asked for.

• The final deal and what it means.

• What it means for the rest of us.

Estimated reading time: 3 minutes & 9 seconds.

Writers are the industry's heart; without them, producers have nothing to work with. It also means less money for everyone.

This will be one of the most important deals in modern entertainment.

Let’s get into it.

Writers say enough is enough.

A little context.

Two parties are involved—the Writer’s Guild of America (WGA) and the Alliance of Motion Picture and Television Producers (AMPTP).

The latter represents large production companies like Disney and Paramount and streamers like Netflix and Apple. They’re the “employer” the writers mobilized against.

The links will tell you much of the story, but here’s the summary:

• The AMPTP found loopholes to get out of paying writers well.

• The writers said no, and hit the picket lines.

So, what were the loopholes?

• Cutting residuals. These are like a commission. Every time the writer’s work is replayed, they get paid.

• So, platforms let their shows air, wait a week (roughly), and then take them down. No replays, no residuals. Most people have watched it by then anyway, right?

• “Mini rooms:” There’s a “writer’s room” where production companies hire writers, put them in a room, and have them figure out a show and the first few episodes.

• A mini room is a different deal. It pays the minimum, writers are often let go before the show airs, and they don’t get residuals (but the work is the same).

But why?

Streaming platforms are losing money. Disney’s streaming service lost $1.5B (with a “B”), which prompted Bob Iger to return (again).

The Most Important Term:

Here’s the most interesting thing writers asked for.

A clause that clearly states AI can’t be used to write content. Not even drafts that someone else will edit.

"AI can’t write or rewrite literary material; can’t be used as source material; and MBA-covered material can’t be used to train AI.” MBA is the baseline agreement for how these writers are paid.

You know why.

AI has already been used to cheat in school, beat human job applications, win art competitions, and absolutely crush writers’ livelihoods.

Chat GPT, the AI writing app specifically, is poised to take over. It’s literally the fastest-growing app of all time.

While AI is not there yet, and probably couldn’t do their entire job, the writers were smart to get ahead of this.

The Deal

The entire deal was published in full here.

Let’s get into the summary:

• Increased pension contributions for each team member (they used to split benefits). There’s a cap on these benefits.

• Writers can choose to use AI but can never be required to use it.

  • A studio might disclose any content written by AI, but AI cannot be used to write or rewrite any “literary materials” (check the full deal for definitions).

• The WGA added it "reserves the right to assert that exploitation of writers' material to train AI is prohibited by MBA or other law."

  • Meaning writers can call them out and will win.

Now the money:

• Minimum pay of $100,000 for feature-length streaming projects with a $30M or more budget. This is an 18% increase (feels low, right?).

• Residuals from streaming platforms were included.

• Bonuses:

  • If 20% or more of a service’s US audience watches within the first 90 days, there’s a 50% bonus on residuals.

  • That’s about $9K for a 30-minute show, $16k for a one-hour episode, and $40k for a movie (all at or above the $30M budget).

• A writer on a major film on Netflix could easily see $200K - $300k with residuals as a larger audience watches it past 90 days.

What it means?

Personally, I did not expect the writers to get what they wanted. I thought AI would take over, but they’ve gotten ahead of it. This is until 2026 because that’s when the deal expires (not a very long deal).

AI may be so good in 2026 that writers may actually be out of jobs by then.

Does this mean projects will budget around the $26M - $29M mark to avoid the bonuses? I doubt it.

Or could it be that the streaming platforms aren’t losing as much money as they say?

Time will tell.

Writing this, it begs the question:

Will every major industry on the verge of losing their jobs go on strike?

Should they? I’d say yes.

The problem is that so many industries are at risk, a real problem.

• Writers of all kinds. Again, Chat GPT is the fastest-growing app of all time.

• Designers and artists. Someone already won a state art competition with AI.

• Actors. (who are still on strike, by the way).

• Office workers, lawyers, engineers, etc.

The list goes on.

It’s a critical time, and I expect industries to mobilize to get ahead of this.

Thanks for reading.

See you soon.