Why Moguls Hate Writers

Pakistan is burning, and Sarkozy is making an ass of himself grinning in line with Bush and Cheney. But let's look at Hollywood for a minute. The Writer's Guild of America has been on strike since Monday, largely over the failure to get concessions from the studios about royalties on either DVD sales or "electronic sell-through" (EST), otherwise know as digital downloading or "new media." There are all sorts of ins-and-outs to this labor-management conflict, including the blurring of the lines between the two. I refer those not too exhausted by details of Hollywood to read Nikki Finke's blog for one of the best running commentaries; her regular column in yesterday's issue of L.A.Weekly offers a good overview for the latecomer.

But the deeper issue is why Hooy-wood honchos couldn't care less about writers. Some reasons:

They are orthodox American capitalists. This means they think all value comes from technology and not from labor - and of course from their "entrepreneurial" management of technology. They get this from old-school innovation economists like Joseph Schumpter, who make technological innovation the center of wealth creation and economic development. A million economists have echoed him since, including "new growth theorists" like Paul Romer at Stanford. This means that shifts from big to small screens, from broadcast to cable, from broadcast-cable to taping, from analog to digital taping, from VHS to DVD, from DVD to EST - these are the shifts that define the industry. Writers are irrelevant. They who master process innovation and assemble the giant corporate machine for technological control shall rule the universe.

Moguls assume labor doesn't matter. Market placement and network effects matter. Thus a tiny handful of writer-kings create nearly all of writer-value - the hit machines. More important are the producers who do the series concepts, especially the ones like American Idol that can avoid writers altogether.

Moguls see inequality as natural. the Writers Guild of America is a poster-child white-collar union enjoying forms of inequality that would make Darwinian selectionists blush. A good piece by Brooks Barnes points out that "Among the Writers Guild’s 12,000 members are television writer-producers like Shonda Rhimes, the creator of Grey’s Anatomy and Private Practice, who take home up to $5 million a year. On the other extreme are junior writers who — if they work at all — make $50,000 or less. About 48 percent of West Coast members are unemployed." The whole industry is like this - billionaires and millionaires on one side, the mass unemployed on the other, plus a small and unstable "middle-class." Is tis America's overall future economy? Yes, if we all think this is normal. On this point, an LA Weekly piece by Steven Mikulan quotes one picketer as saying that "There’s this myth that it’s millionaires versus billionaires. But the median income of a WGA member is $5,000. I rent an apartment in Sherman Oaks. I have a 4½-year-old son and a baby due in December. The only reason my wife and I can live in a nice part of town is because of the union contract." (On the other hand, "The average working writer in Hollywood takes home about $200,000 a year, according to the studios and networks, which are represented by the Alliance of Motion Picture and Television Producers." Note the difference in source, and also between "median" and "average" - the later can be skewed up but huge packages at the top.)

Moguls live in the world if truly insane legal and financial fees. Lawyer contingency fees can run 33-40 percent for major civil lawsuits. The law firms in the successful Vioxx suit against the pharmaceutical giant Merck will run over $2 billion of the $4.85 billion settlement. Hedge funds operators get "2 + 20," meaning a straight 2 percent of assets under management put 20 percent of profits.

Of course all this makes moguls think like a lot of middle-America. Too bad the latter make zero money from it - less than zero, to be exact.