Jay Roth, the executive director of the Directors Guild of America, addressed the IA convention this morning with a pithy speech about the movie industry and where he believes it's headed. (Mr. Roth had just flown from the DGA's convention in Los Angeles where new officers were voted into office.)
Here, in summary form, are many of the things Mr. Roth had to say:
For the past fifteen years the D.G.A. and IATSE have worked closely together for the betterment of workers in the motion picture and television industry. Prior to that, they mostly ignored each other, which wasn't good for either labor group.
I addressed this body at your last convention in 2005, ad at that time made some predictions about where our industries were going. In '05, the WGA, SAG, the DGA and IATSE were just starting to focus on their next contracts, and starting to plan for them.
In 2006, the DGA spent millions gathering data about new media, so that we had facts to back up our proposals for our next contract. We shared a lot of this information with the IA. At the same time, the movie companies were hyping potential "New Media" profits to shareholders (although they didn't really exist), and SAG and the WGA were deciding that it was time to fight over the money that they believed would come from New Media.
The DGA wasn't convinced, based on its research, that there were big profits coming from the internet. At the time of our study ('05-'06) most thought that the iTunes model was going to dominate. But since '05, Hulu has decimated iTunes. People are downloading 1/4 the content from iTunes that they were purchasing four years ago. Most individuals would rather watch content for free on Hulu than buy it on iTunes ...
74% of the revenue earned from theatrical features comes after the features end their run in theaters. 50% of the money from television product happens after the initial plays on t.v.
More television is being watched today than ever before, and it's being watched on televisions and computers. Yet even now, two weeks of viewing on Hulu equals one hour of viewing on network television of American Idol. But we don't yet know the dominant distribution pipeline for movies and television in coming years.
We also don't know what leadership will be in charge of the WGA and SAG during the next round of contract talks, or if the economy will have recovered. But there is one thing I know. There is nothing that management wants more than to see the house of labor divided against itself.
Studios will be willing to pay a premium for early contract agreements, but the test of those agreements is the quality of the deal, not who made the deal or when the deal was made. The DGA will negotiation up to contract expiration if it has to.
Finally, the biggest issue out there as I see it is internet piracy. This is the biggest threat to the industry, Legal recourse is costly, time-consuming and ineffecitve, but if means aren't found to counter piracy, where content can be stolen with the push of a button, then it will mean economic meltdown for out industry, for digital theft destroys downstream markets (where most of the money is now made.) There are companies like Google who have an interest in keeping free access the way it is, but it threatens creators' rights and creators' product. We'll need to balance internet rights with on-line protections. This will have to be done legislatively, administratively, and through public opinion ...
Jay Roth is one of the savvier labor leaders in the entertainment business, and I've found him to be prescient in the past. Therefore I pay close attention to what he says behind the podium at the convention hall.