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The New York Times reports that the writer's who have been on strike since November look like they're going back to work. But the strike probably cost the writers more in lost wages than they'll make from the new contract they signed. So, I don't understand the economic point of the strike.
How much did the strike cost? Los Angeles's chief economist estimated that the strike cost the area $3.2 billion; writers and production workers lost $772 million in wages; and businesses that serve the strike lost $981 million in revenue. And this doesn't count the cost to the economy from New York writers who were also on strike.
So what did the writers get for their lost $772 million in wages? According to The Times, writers get a percentage of "distributor's gross receipts" -- but it's not clear how those are calculated -- from new media which varies between 0.36% and 2% depending on the type of program. For example, if the user pays for the download, the writers get 0.36% of the distributor's gross receipts for the first 100,000 downloads. Writers get 2% of receipts for advertising supported TV streaming after the first 17 days.
Was this worth it? It depends on how big those distributor gross receipts end up being. But to offset the $772 million in lost wages from the three-and-a-half month strike, they would have to reach $38.6 billion (assuming 2% residuals). I doubt that will happen soon.
In case you missed what the writers were writing, here's some information about when the reruns stop and the new shows return to a TV near you.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter
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