After six weeks of tense negotiations, the Writers Guild of America (WGA) and the Association of Motion Picture and Television Producers (AMPTP) remain deadlocked in a heated battle over digital distribution dollars. No, this isn’t Perseus versus the Kraken. But it is an epic battle, the end of which will have an enormous impact for Hollywood in the years to come, as the industry moves headfirst into the electronic age.

Consumer needs are changing, along with the technology used to meet those needs. In the age of the Internet, where movies and television shows are readily available by networks and retailers online, a new distribution model is emerging, one that circumvents the traditional forms of television and DVD and allows consumers to download content straight to their computers, iPods and a vast assortment of portable devices.

Says Tim Kring, writer-producer of the hit series “Heroes,” and screenwriter of such films as Teen Wolf Two and Sublet, “We are heading in this direction where people are going to be watching and getting most of their entertainment from the Internet—and are currently working under a contract that has no provisions for anything we write or put on [the Internet].”

That contract, now in dispute, represents a preemptive strike by the WGA, not wanting to miss out on any profit sharing from this new form of digital distribution. However, the form is far from certain. And the revenue model is not clearly defined. Because of this, both sides are hesitant on any type of compromise.

Says Jack Honour, CEO of StereoVision Entertainment, “They’re trying to force the producers into making a decision on something that nobody knows yet… Is it going to be a hundred, a thousand, a million?” With so much at stake and so much uncertainty, it’s no wonder the two sides are clashing.

At the heart of the matter lie these key issues:

*Reality television and animation. The WGA wants to make membership in the union mandatory for those who work in these industries. Furthermore, that networks don’t air any programs that are not produced in the terms of the WGA agreement. The AMPTP is concerned that this will cost many producers and writers their jobs; specifically, those who have chosen not to join the union.

*”No strike” provision. The WGA wants to change the provision to allow writers the ability to join strikes of other labor unions.

*Internet compensation. The writers are asking for more compensation through Internet distribution while the producers feel the current proposal would actually cost them more money than they take in.

*Advertising revenue. The WGA is asking for a piece of advertising revenue. However, producers would be footing the bill and they do not receive any advertising revenue themselves.

*Third-party transactions. The WGA wants to set an artificial value on transactions instead of allowing the market to determine the worth. The AMPTP feels this would unfairly enable writers to draw more money than producers would ever receive.
According to the AMPTP, the demands are unrealistic. The WGA is asking for money that doesn’t exist, is attempting to impose restrictions that are questionable, and is trying to exert control over individuals who have freely chosen against joining the union.

According to the WGA, the AMPTP demands are unfair, requiring writers to give up Fair Market Value and any proposal that uses a distributor’s gross as a basis for residuals. Additionally, forfeiting their Internet proposal altogether just to continue bargaining.

Back and forth it goes with no tangible outcome.

Says Martin Wade, CEO of “It’s just about splitting up the pie. You narrow in on the contract so that when a piece of content is digitally exploited and the studio gets the revenue, they must share it. They must share it with the originators, whether it be a writer or a producer. What makes it difficult, of course, is that they don’t want to!”

That want and desire to settle is clearly lacking. After more than 24 bargaining sessions since July 16th, there appears no end in sight. As of last week, the AMPTP walked away from the negotiating table, making their position clear. Said Studio head, Nicholas J. Counter: “We are leaving. When you write us a letter saying you will take all these items (above) off the table, we will reschedule negotiations with you.”

Likewise, the WGA countered, with a response by John F. Bowman, chairman of the negotiating committee: “We reject the idea of an ultimatum. Although a number of items we have on the table are negotiable, we cannot be forced to bargain with ourselves. The AMPTP has many proposals on the table that are unacceptable to writers, but we have never delivered ultimatums.”

No matter which side sounds more convincing, common consensus in Hollywood is that a prolonged strike is not a good thing. Certainly, no one wants to be reminded of the six-month strike almost 20 years ago—the longest in history, commonly referred to as “the bloodbath of 1988.”

For one, it’s costing the industry roughly $21 million a day. Also, failure to resolve the situation with the writers will undoubtedly domino into an even bigger work stoppage, as the Directors Guild of America (DGA) and Screen Actors Guild (SAG) contracts are set to expire on June 30, 2008.

On a related note, the AMPTP recently engaged the DGA in negotiations with the hopes of coming to terms well before June 30th; however, many writer-directors have petitioned the DGA and asked that they not discuss any details until the WGA and AMPTP have come to better terms. At least, for a few more weeks.

But with the holidays approaching, it’s likely the strike will linger well into next yea, which is bad news for the 10,000-plus members of the WGA in addition to the many production workers who work behind the scenes on film projects.

How long into next year? How long can the writers, most of them living far below the average annual income of $230,000 (reported by the AMPTP publicity department), hold out without work? How long can Hollywood continue to lose millions and millions in revenue and advertising with no original material?

“My opinion is that the writers will cave,” says Honour. “In talking to people in the Writers Guild who are out of work and living paycheck to paycheck like lots of other people, I don’t think it’ll take too long.”

Optimistically, says Wade, “It’s imminently feasible [to settle]… I don’t know if I can put into the context of when, but if everybody goes back to work, everybody wins.” Only time will tell, of course. Whether this week, next week or next year, something’s gotta give.