Comedy Writers, VCs to Disintermediate TV Studios

I frequently criticize the Recording Industry for the short sighted stupidity; The Film industry has a history of being savvier than the record industry, but still is subject to frequent bouts of idiocy.

Its possible that the brain trusts running the television industry may make both of those groups look like rocket scientists: The L.A. Times is reporting that the writers strike has motivated the striking comedy writers to sit down with Venture Capitalists. The two groups are exploring new web based ways to reach comedy audiences, potentially bypassing the TV studios.

The TV studios have already lost. The VCs will find a business model that works on the cheap, and begin competing with the studios, even if the strike is settled tomorrow. I suspect that Television, as we know it, is now officially over.

Ubiq-cerpt:™

"Dozens of striking film and TV writers are negotiating with venture
capitalists to set up companies that would bypass the Hollywood studio
system and reach consumers with video entertainment on the Web.

At least seven groups, composed of members of the striking Writers
Guild of America, are planning to form Internet-based businesses that,
if successful, could create an alternative economic model to the one at
the heart of the walkout, now in its seventh week.

Three of the groups are working on ventures that would function much
like United Artists, the production company created 80 years ago by
Charlie Chaplin and other top stars who wanted to break free from the
studios.

"It’s in development and rapidly incubating . . ."

Regardless of whether the strike gets settled, and what cut the writers get, the situation has just unleashed a long tail of entrepreneurial energies of some of the most creative minds in the country. Just what television needed as their ratings have been sliding: competition from both within and without.

It appears that the TV studios and producers are drawing from the bottom of the same IQ talent pool of executives as the RIAA and MPAA . . .

>


UPDATE December 19, 2007 3:30pm

Portfolio addresses the same essential subject in their January 2008 issue:

Will Ferrell and the End of Media as We Know It

>

Source:
Striking writers in talks to launch Web start-ups   
Joseph Menn
Los Angeles Times, December 17, 2007
http://www.latimes.com/business/la-fi-webwriters17dec17,0,4998256,full.story?

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What's been said:

Discussions found on the web:
  1. Brian commented on Dec 18

    Why will the writers be any more successful at creating a profitable web based business model than the studios, and everyone else who’s tried to make this model work have been?
    Plan:
    1. Get Venture Money
    2. Produce Content for Web
    3. ??????
    4. Profit!

  2. Johnny Debacle commented on Dec 18

    Because they won’t have TV to compete with. Voila!

  3. samsin commented on Dec 18

    Brian,

    Besides “Chad Vader” and other amateur projects, there aren’t many web videos that are both shot and *written* well. And writers in Hollywood can bring over other talent (SAG actors for example.)

    Think Hollywood just before the golden age of silent cinema. That’s where web video I think is right now.

  4. m3 commented on Dec 18

    would the quality really improve?

    they guys writing crappy tv scripts would just be writing scripts for crappy internet tv shows.

    same sh!t, different toilet bowl.

  5. Christopher Laudani commented on Dec 18

    An infinite amount of VC money chasing a finite amount of ad dollars.

    The web 2.0 bubble will pop soon enough.

  6. Unsympathetic commented on Dec 18

    Nah. This proposal will create quality stuff, unlike most I-companies. I’d be happy to pay a monthly fee to Tina Fey’s group, d/l whatever shows I want to watch, rip ’em onto DVD’s, and play ’em on the same TV that used to be connected to NBC.

    30 Rock is genius – and the genius isn’t some fat old NBC exec’s. It’s Tina’s. 2 1/2 men isn’t a hit because of Charlie Sheen.. it’s a hit because his writers are amazing. How I Met your Mother isn’t a hit because of the presence of the girl from American Pie and Doogie Howser.. it’s a hit because of the writing.

    This isn’t pets.com – the analogy is only complete if you include : “this website is your only link to purchasing a pedigreed animal in the entire country. ”

    Brian, the reason nobody else has been successful with internet companies is precisely because the content has been S. GM execs have finally learned this about cars — Americans want a quality product.

    Must TV execs learn the same thing?

  7. Brian commented on Dec 18

    I don’t want to sit and watch tv shows at my desk on my 20 inch monitor, by myself. I want to watch them on the couch, with my family on the 50 inch TV in the living room.

  8. Buzz commented on Dec 18

    >>The web 2.0 bubble will pop soon enough.

    No No NO. You gotta strap on what all the ANALysts use – the “Buzz Light Year Extrapolator”.

    “To infinity and beeeeyooooond….”

  9. tj & the bear commented on Dec 18

    So, the writers solve their problems by becoming producers? Aren’t the most successful writer-producers already on the other side of the table?

  10. tj & the bear commented on Dec 18

    So, the writers solve their problems by becoming producers? Aren’t the most successful writer-producers already on the other side of the table?

  11. tj & the bear commented on Dec 18

    So, the writers solve their problems by becoming producers? Aren’t the most successful writer-producers already on the other side of the table?

  12. tj & the bear commented on Dec 18

    So, the writers solve their problems by becoming producers? Aren’t the most successful writer-producers already on the other side of the table?

  13. tj & the bear commented on Dec 18

    So, the writers solve their problems by becoming producers? Aren’t the most successful writer-producers already on the other side of the table?

  14. Vito commented on Dec 18

    Three things:

    1) You wouldn’t need to watch the programs on you computer terminal. Apple already has a product that downloads from the Internet directly to a Tivo-DVR and NetFliks is working on a model where you download a movie on your computer, create a DVD based on that download, and play it on your HDTV.

    2) The objective of the internet venture would be to make a profit NOT to make a blockbuster. Internet program would call a smaller audience but the audience would be more loyal and the writers/producers would not be beholden to create scripts that appeal to the widest audience. Many recording artist have found that they can create their own records, get virually no radio play, yet still make enough money to live.

    3) But most important is that the writer’s union can correct what Harry Shearer calls the “mark of Cain”. Whenever a writer sells a movie or TV script they give up all rights to that piece of work. With a new business model the writers can control their own material like they currently do in theater.

  15. speedlet commented on Dec 18

    Seth McFarlane, creator of “Family Guy” has just announced a deal with Google in which he retains 50 percent of his copyright.

    This may prove to be the most important deal in the entertainment industry since Lew Wasserman made the first profit-participation deal for Jimmy Stewart in the 1950’s.

    Barry Ritholtz gets it. TV, R.I.P.

  16. Chris commented on Dec 18

    People do not want to watch tv on their computer. While solutions exist (xbox media center, apple tv) to watch downloaded content on your tv – they are not popular and way to complicated for most.

    Let’s not forget the large portion of the population who do not yet have high speed internet connections.

    For these and other reasons a push only model, one so simple people do not need to think, will persist.

  17. worth commented on Dec 18

    I saw some picketing Writers Guild members outside of a local Fox affiliate’s news office in Dallas last week. I was struck by the utter lack of writing ability displayed on their signs! Things like “Reality TV Sucks,” “Support the Writers Guild,” etc. Just thought that was kinda funny, since their picketing location was obviously chosen in an attempt to make the local news, yet their WRITTEN signs were absolutely worthless and non-newsworthy – come on, show some creativity – what else are you doing with all the newfound hours in your days?

  18. comma8 commented on Dec 18

    If Ebay can sustain a system in which button and scrapbook sellers can build million dollar businesses, then I have to believe that something like this can be very successful.

    Spent some time running blogs and very niche sites through Quantcast and you’ll see the web’s true potential to deliver eyeballs.

    The problem with broadcast is the massive overhead and infrastructure involved with bringing you a primetime show — most of which is not show overhead.

    Cut that out and a show with a million viewers, well below the threshold of acceptable network ratings, will look like an absolute cash cow online — add in the fact that web allows folks to “time shift” “DVR” and “On demand” without the hassle of added equipment and you have a winner.

    Next gen media center pcs and appliances are probably only a few months off once the content moves forward. Streaming tech is already quite robust and with broadband being largely a given, the next generation – sans tv – can’t be too far away.

    Good riddance to the bloat.

  19. john galt commented on Dec 18

    speedlet,
    Do you have a link to the McFarlane news?
    Thanks.

  20. la ca commented on Dec 18

    Would also like to chime in to what Vito had said about the alternatives to TV. There’s a little something called bittorrent which allows anyone with a broadband line to download episodic TV extremely quickly due to the swarms that are the part of bittorrents popularity. Copyright violation? Yes, but so was what was happening with Napster in the late 90’s before they were shut down by the RIAA, thereby depriving that idiotic trade group one of the best chances to set a new and profitable means to distribute. Here we are 8 years later and the music industry is devastated and will ultimately be in shambles so long as they continue to think existing copyright laws protect them. Copyright laws need to be rewritten to account for the technology we now know and some of us love. But don’t hold out hope for that happening anytime soon; it is forsaken in these lands.

  21. david foster commented on Dec 18

    “I don’t want to sit and watch tv shows at my desk on my 20 inch monitor, by myself. I want to watch them on the couch, with my family on the 50 inch TV in the living room”…Christensen & Raynor, in their book “The Innovator’s Solution,” have shown how disruptive technologies usually attach from below..ie, appear in a form which appears to be lower-quality than the incumbent technology. Examples they use include transistor radios and steel mini-mills.

    This sounds like another example. A certain segment of the population will watch the programs on their PCs, just as teenagers were the first ones to put up with the relatively-inferior sound quality on the early transistor radios. As the ventures succeed, their financial strength will allow them to gain traditional cable distribution on favorable terms, or to use high-bandwidth Internet and appropriate appliances to make the shows available on standard TV sets, or both.

  22. James commented on Dec 18

    A couple of comments have brought up the fact that people do not want to watch TV on their computer and that getting internet content on the TV can be a complex process. These are both fair points however when thinking about these issues one needs to realize that a person who is willing to either watch TV on their computer or take the steps to watch internet on their TV are just the sort of people most companies embracing online advertising are going to be chasing. I am willing to bet these people tend to be younger and have more disposable income than the average American. An argument which holds true for the people without broadband as well.

    Beyond that the advertising dollar is not the only way of making a buck off of these online series. As long as the video quality is good the producers can turn around and sell DVDs or even offer syndication deals to television channels.

    I think this is where the entertainment industry has been headed for a while now, the strike and talks with VCs will just hasten the inevitable paradigm shift.

    (Yay! I got to use my buzz word for the day.)

  23. la ca commented on Dec 18

    I also do not like to watch programs on my computer. Talk about uncomfortable, but the thing with bittorrent is that they are usually downloaded as AVI files, which means they are playable by most DVD players nowadays. Any DVD player that says it plays “DivX” format will play these downloads and oftentimes, the quality is practically HD. I would have thought this fact would make the studio behemoths sit up and take notice….

  24. tj & the bear commented on Dec 18

    speedlet,

    Seth is the exception that proves the rule. If you’re that successful you can always write your own deals, and any writer with the power to do so doesn’t need union help.

  25. tj & the bear commented on Dec 18

    speedlet,

    Seth is the exception that proves the rule. If you’re that successful you can always write your own deals, and any writer with the power to do so doesn’t need union help.

  26. tj & the bear commented on Dec 18

    speedlet,

    Seth is the exception that proves the rule. If you’re that successful you can always write your own deals, and any writer with the power to do so doesn’t need union help.

  27. tj & the bear commented on Dec 18

    speedlet,

    Seth is the exception that proves the rule. If you’re that successful you can always write your own deals, and any writer with the power to do so doesn’t need union help.

  28. tj & the bear commented on Dec 18

    speedlet,

    Seth is the exception that proves the rule. If you’re that successful you can always write your own deals, and any writer with the power to do so doesn’t need union help.

  29. speedlet commented on Dec 18

    TJ,

    This deal was in the works before the strike even happened. The WGA was not involved in any way — the deal was brokered by Media Rights Capital Group, which focuses on making deals for artists such as Sacha Baron Cohen in which they retain their copyright and ownership of the brands they create.

    Now, as a result of the strike, the only deals that the McFarlanes and Cohens can make are with VC firms. The six media conglomerates have locked themselves out of the bidding. The WGA didn’t do this — the media cartel did it to itself, voluntarily.

    These deals are the only game in town right now. You can expect to see a flood of them announced over the next six months.

  30. Ant commented on Dec 18

    To all the commenters above saying they don’t want to watch TV on their computer – – you won’t have to. There is *zero* technological barrier to getting this done.

    I can already subscribe to video podcasts on my Tivo today. The reason most people don’t is that there’s very little good, feature-length content worth the trouble.

    The moment that 30 Rock / Entourage / Insert-your- favorite-must- watch-show-here
    becomes available via IPTV only is the day the floodgates break and the behavior goes mainstream.

    This is actually a perfect business for the VCs to be getting into. Net startups are too cheap to start now – – most of ’em don’t need the money. Entertainment, OTOH, is frequently capital-intensive, high-risk, and hit-driven. Plus, half of the VCs on Sand Hill Road secretly want to be Hollywood players anyway.

    Barry is right on. RIP and good riddance to the TV studios.

  31. Christopher Laudani commented on Dec 18

    Wait a minute. Aren’t the media companies you guys so despise some of the largest buyers of media & content websites? They have all been acquiring websites like crazy.

    These websites will blow through a bunch of VC money, make nothing interesting and either shut their websites down or, if they are somewhat successful, sell them to a large media company. (You think they are going to make a Soprano’s on the web out of the box on day one? Think again.)

    These media startups will have no existing content library, nor revenue stream, so a few flops will drive them to the brink very quickly.

    Two of the most successful movie producers in the biz, the Weinstein Brothers, have blown through $1 billion making movies and haven’t had a hit since they left Miramax. They are bleeding money out their eyeballs.

    Do you know how much content these companies would have to make to become a viable public company? A ton! A website with a handful of cute shows and a tiny amount of ad revenue isn’t going to make a big enough IPO exit for a VC.

    When Hulu launches (owned by NBC & FOX) it will have all premium high def content. It will suck the air out of the whole space. A few of the other media companies will join the site and that will be it for those little website guys. (Don’t believe me? How many youTube clones out there are all that successful??)

    It takes more than a script to make money on the net.

  32. speedlet commented on Dec 18

    Christopher,

    Google is not a “little website guy”. Their market cap is greater than Time Warner, Disney, Sony, CBS and MGM combined. If they decide to start financing the likes of MacFarlane, Sacha Baron Cohen, and Simon Cowell (of American Idol, another deal Google’s done recently), the networks will have to offer similar terms in order to compete.

    The model already exists, in the form of shows like Quarterlife, which has been a huge success. The only mistake Ed Zwick made was doing it through a traditional financing entity. If they want to own their copyright — and they do — they’ll now be able to use another source of financing, as MacFarlane did.

    The studios are already turning to hedge funds (Legendary Pictures, etc.) to finance their content. They are a middleman. At what point do creators go directly to the source, and disintermediate the studios? It’s already happening.

    And Hulu.com? Please.

  33. tj & the bear commented on Dec 18

    speedlet,

    Not disputing any of that, only the R.I.P. TV assertion. Not defending the studios, just the more things change, the more they stay the same.

    Any successful entertainment enterprise will inevitably come to resemble what they claim to despise — a studio. At that point they’ll just be butting heads with the next generation of writers.

    Not to mention that the majority of writers are still union wage slaves, and they depend upon the studios for jobs. These deals do nothing for them, just like Tom Cruise’s deals do nothing for regular actors.

  34. tj & the bear commented on Dec 18

    speedlet,

    Not disputing any of that, only the R.I.P. TV assertion. Not defending the studios, just the more things change, the more they stay the same.

    Any successful entertainment enterprise will inevitably come to resemble what they claim to despise — a studio. At that point they’ll just be butting heads with the next generation of writers.

    Not to mention that the majority of writers are still union wage slaves, and they depend upon the studios for jobs. These deals do nothing for them, just like Tom Cruise’s deals do nothing for regular actors.

  35. tj & the bear commented on Dec 18

    speedlet,

    Not disputing any of that, only the R.I.P. TV assertion. Not defending the studios, just the more things change, the more they stay the same.

    Any successful entertainment enterprise will inevitably come to resemble what they claim to despise — a studio. At that point they’ll just be butting heads with the next generation of writers.

    Not to mention that the majority of writers are still union wage slaves, and they depend upon the studios for jobs. These deals do nothing for them, just like Tom Cruise’s deals do nothing for regular actors.

  36. tj & the bear commented on Dec 18

    speedlet,

    Not disputing any of that, only the R.I.P. TV assertion. Not defending the studios, just the more things change, the more they stay the same.

    Any successful entertainment enterprise will inevitably come to resemble what they claim to despise — a studio. At that point they’ll just be butting heads with the next generation of writers.

    Not to mention that the majority of writers are still union wage slaves, and they depend upon the studios for jobs. These deals do nothing for them, just like Tom Cruise’s deals do nothing for regular actors.

  37. tj & the bear commented on Dec 18

    speedlet,

    Not disputing any of that, only the R.I.P. TV assertion. Not defending the studios, just the more things change, the more they stay the same.

    Any successful entertainment enterprise will inevitably come to resemble what they claim to despise — a studio. At that point they’ll just be butting heads with the next generation of writers.

    Not to mention that the majority of writers are still union wage slaves, and they depend upon the studios for jobs. These deals do nothing for them, just like Tom Cruise’s deals do nothing for regular actors.

  38. speedlet commented on Dec 19

    tj,

    You are correct: the system that rises out of the ashes of the current one will not be a utopia. In many ways, it’ll be even more feast-or-famine. Much like any successful Web business, the people at the top will benefit enormously from a venture’s success, while the code monkeys who do all the work won’t.

    The point isn’t that this is a dawning utopia for writers: it’s that the networks have blundered by driving their advertisers, their viewers, and now their talent away.

    It’s the same old story: old media’s cluelessness is new media’s gain. You’ve seen it with newspapers and music, and now it’s happening to television.

  39. david foster commented on Dec 19

    I’m wondering about legal issues…specifically, non-compete and non-solitication clauses. Anyone know how common these are in the industry, for writers and for actors?

  40. speedlet commented on Dec 19

    Non-compete and non-solicitation clauses are not used in talent and writer deals. It is very common for writers to work on projects for several studios at a time, except in cases where there is an exclusive term deal. Even in those cases, as soon as the term of employment lapses, the artist is free to work wherever he/she wants.

  41. Geoff Kole commented on Jan 7

    In a strke everyone looses. I feel that anyone who works for less money then the market will pay is undercutting themselves. I wish the joke thieves would go on strike. I wonder who they are stealing from these days…Re-runs? Maybe they’ll steal from Youtube? Good luck guys, hope everyone gets what they want and is back to work soon.
    Geoff Kole

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