A sequel with the same ending

The writers guild keeps saying that its strike against the studios is about the future, but one need only look back to the 1988 strike to see that in key ways it is a repeat of the past. Nearly 20 years ago, when the writers asked for a bigger slice of the pie, the studios shrugged and Hollywood sank into a malaise. But out of that emerged new ways of doing business, a scenario that’s happening again.

During the 1988 strike, writers worked independently on “spec scripts” (written on the speculation that they would eventually sell them) and a pipeline-dry studio system snapped them up. TV producers also sought alternatives to traditional, high-cost scripted series. The strike resulted in the 1990s’ spec script boom and reality television -- two new business models.

It’s not strikers’ demands but the work stoppage itself that creates a new paradigm. By fighting the writers over the new-media issues today, the studios are effectively creating what they fear most: a major tectonic shift in the entertainment business that will reduce the role of the studios even further.

Generally speaking, before 1988, movie studios -- which then housed genuinely creative executives -- used to “develop” movies starting from source material such as a book, play, life story or pitch and hire a writer to nurture it into a screenplay. They would pay the writer usually a five-figure sum, maybe more, and both sides would see the project through to completion.

In the decade after the ’88 strike, studios more often bought fully written “specs,” and millions of dollars were thrown at ready-to-shoot scripts. The role of the executive was less creative and more business. The prices for specs escalated to obscene amounts even as studios, in essence, discovered that they were buying only “an idea” and then hiring even more writers to revise, rework and polish it. The process was often financially wasteful and ushered in concept-driven, amusement-park-ride movies. The money’s been good, but studios largely relinquished the creation of heartfelt, character-driven films to the independent art-house world.

Flash forward to the current debate, in which studios claim that digital media are too new for them to commit to a particular payment structure. Their response is based on a fear that’s haunted them since the arrival of the Internet: “disintermediation.” This is cyber-speak for cutting out the middleman. In such an environment, the studios’ role (as managers of content) is reduced to nonexistence. Sound a bit like what’s been happening to the music industry?

The studios balked at writers’ request for a 2.5% sliver of the digital media revenues, and the current strike began. Immediately, many writers emigrated to the Internet, at first generating short videos to virally market their labor messages and now to give creative outlet to their talent. The studios have maintained a misguided “talk to the hand” strategy, so the writers have sensibly picked up their toys and gone to play somewhere else.

The transition to making money from the new paradigm will naturally take time. Right now, anybody with a computer connection can create an overnight sensation on YouTube -- but that’s not enough to quit your day job. Yet the Internet is on its way to becoming the public’s preferred mass distribution system -- and that means Google, Microsoft, Yahoo, Apple and telephone companies will compete with traditional networks by piping broadband content into home theaters. This sea change has the potential to turn the studios as we know them on their heads.

This evolution is progressing with the creation of every Break, Heavy, FunnyOrDie and MyDamnChannel: sites that give writers total creative control and up to 50% of revenue. Of course, these outlets are tiny compared with the networks’ reach -- and nobody thinks the studios will disappear -- but they represent the first step toward the new paradigm that the studios fear.

Even before the strike began, many writers were wondering, “Why are we fighting for only 2.5% of a studio process that’s so invariably inefficient?” And now the creative genie is out of the bottle. The longer the strike lasts, the more accelerated the disruptive technology becomes.

The companies will likely make a deal with the WGA in the coming months because all reality, all the time is a losing proposition. (Remember when ABC ran “Who Wants to Be a Millionaire?” every night and destroyed its prime-time viewership?) If the deal is as bad for writers as the studios’ original proposal, the companies will feel that they have won the war. But the writers will have effectively won the most important battle: Their role as the creative center of the new entertainment business model has been confirmed.

The studios could have learned a lesson from the U.S. auto industry, which didn’t adapt when it faced more efficient Japanese competitors. The car companies forgot that it all starts with innovation. Somehow the studios have forgotten that it all starts with the word.