Last week the Writer's Guild of America's (WGA) 12,000 members went on strike. By my estimates -- which could be way off -- the strike makes no sense for the members of the WGA.

Based on one scenario I calculated, the strike will cost the WGA $486 million in the next year. Here's how I got there: If the strike lasts six months, it will cost the WGA $540 million in lost wages -- assuming that the average member takes home $90,000. If the WGA wins what it's fighting for, it will get an additional $54 million. This represents a doubling of their payments from DVD sales to 8 cents per DVD sold -- worth $35 million assuming 2007 DVD sales of 863 million units -- plus $19 million -- which is 2.5% of the revenues from new media such as Internet downloads of the shows they write -- which one analyst expects to total $775 million in 2007.

From what I've read, the WGA may already be withdrawing its proposal for doubling its per DVD pay. But it's currently sticking to its guns over the 2.5% share of new media revenues. This is important for historical reasons. During the last WGA strike in 1988, work stopped for 22 weeks and was estimated to cost the industry $500 million. The WGA ended up settling for what it now regrets was a too tiny portion of home movie revenues which ended up dominating the industry -- constituting 73%, or $4.8 billion of 2004's total -- with the other 27% from theater sales.