The Writer’s Strike – Why It Will Impact the Telecom Industry

Implications: The major stumbling block between the Writer’s Guild of America and the AMPTP centers on fees that writers want when their program are put on the Internet.   Everyone is entitled to make money.  The average writer is not making millions of dollars but is making enough to earn a living.   I am not choosing sides in the strike.  My goal is to provoke though tot the folks in the telecom industry who are now entering the media space.   David Letterman’s attempt to settle with the WGA shines a light on the issue with us telecom-media industry folks.  The telecom-media industry needs to see the issues discussed and settled because the entertainment professionals are a part of our revenue stream now.  

Analysis: To telecom corporate America folks like me show business sounds exciting.  However, it is an odd world.  It is the only business where the executive, like Steven Spielberg, actually plays the key role to the life of a company.  Name a founder of Dreamworks.  People go to see movies made by Steven Spielberg; the man is a super star.  Right now, name the CEO of AT&T.  Can’t do it easily can you?  You need to think about it and you need to go check your facts.  But you know who Spielberg is. 

Show business is the only business that is truly dependent on a cult of personality and talent.

If Steve Jobs left Apple, which he did once before, it would still continue.  True Wall Street would worry about who Jobs’ successor would be but that is the case with any departing CEO.  However, in show business, $100 Million movies don’t get made without big name actors, directors or producers.

If a celebrity director left a movie in the middle of it, you would be looking at an entire production on the verge of collapse or shutting down.  Big name CEOs in blue chip companies are nobodies compared to celebrity directors, movie stars, and television stars.  Show business is a very personal and talent dependent industry.

In the emerging telecom-media world, we have traditional telecom companies, wireless carriers, and Internet service providers moving into the content space.  In the old days of the Internet when we said “content” we were talking about websites, email, and cool portals where we could download pictures and technical white papers.  Nowadays, we are dealing with music, television programs, and movies.

Today, visual content created by professionals is critical.  Yes, despite the all of the funny content you see on YouTube and similar sites, at some point you need to think about the revenue equation.  At some point, that unknown artist discovered on YouTube is going to say, “Pay me”.

However, as I have said in past analyses, good content costs money.  Good content can be made for free or cheap but at some point the content makers want to make money.   Writers, actors, directors, producers, and stagehands are all needed to make a film or video.  It costs money to make content.  The production crews and talent are entitled to be paid.

Let’s assume a wireless carrier charges $1.99 for a video download for an old television program.  The studio gets a cut, the content owner gets a cut, and the carrier gets a cut.  Okay, how much of that trickles down to the actual folks who made the video?   Right now; the crew gets very little to nothing.

After the strike is settled, there is going to be a trickle down to online and wireless customers.  Advertising will play a critical in the months to come because there will be a necessity to generate as much money as possible to cover costs and pay all of the players.  The telecom revenue stream now includes new players – Show business folks.

Telecom companies need to think about how much this will all cost the carriers.  The carriers will not be able to say to the content companies that “its their problem they need to give me what I want”.  My dear carriers, it does not work that way.  Content is KING and the carriers do not control content.

The Writer’s Strike is the beginning of a new age for the telecom industry.