Here's an update on the industry battle that’s thrown Hollywood into chaos.
According to Deadline, the Writers Guild of America and the Association of Talent Agents have RE-re-opened negotiations, but they’ve hit a snag.
What’s the problem? The agencies have offered to cut writers in on the revenue sharing. The WGA has rejected that offer, because “any offer from agencies must realign agencies’ interests with writers'.” So even if the WGA accepted the offer, the agencies would still have a conflict of interest. No deal.
How Did We Get Here?
If you’re looking for a more in-depth recap, we’ve covered this story extensively, but let’s do a quick review for anyone who hasn’t been following along.
The Writers Guild of America represents Hollywood’s screenwriters. Most of those writers are represented by agents from the big talent agencies: CAA, WME, UTA, and ICM. Those agencies and many smaller ones make up the Association of Talent Agents, which governs how the agencies are allowed to operate.
In their quest for higher profits, the agencies started carving out fees for doing the things that producers usually do: finding financing, casting, and selling the projects. They called this packaging and commanded a percentage of the budget. The problem is, they were often making more money than the writers they represent—at the writers’ expense.
The WGA called them out and said they can’t work that way anymore. In the absence of an agreement, writers were ordered to fire their agents.
Agents used to make 10% of what their clients made, which meant they were incentivized to negotiate higher fees for their clients. Now, the agencies are competing with their clients for fees, so there’s a clear conflict of interest. WGA president David Goodman has said there is no room for compromise here—agencies must realign themselves to be working FOR their clients, not against them. Naturally, the ATA doesn’t agree. The WGA is now suing the agencies.
How Does This End?
There’s no resolution in sight for this writer/agency argument, but we can make a few educated guesses as to how the whole thing will shake out based on the information we already have.
First of all, the agencies are making millions of dollars from packaging fees. Abandoning that kind of profitability, especially when the big agencies are owned by private equity firms that demand huge returns on their investments, is simply not going to happen.
Second, writers don’t miss their agents. I’ve spoken to several WGA writers who fired their agents, and they’ve not only survived, they’ve thrived. In an era of instant communication and free-flowing information, agencies aren’t the bottleneck they once were for access to talent. The WGA has implemented several script submission tools on its website that have helped fill the agency void.
Third, agencies aren’t agencies anymore. They’re part studio, part venture capitalists, part brand management firms. Their endgame is money, not prestige, so they don’t mind giving up a 10% commission from a writer’s fee if it means they keep 3% of profits forever on a hit TV show. Being able to synergize their in-house businesses is more important to them than talent relationships. The agencies will probably lean on their in-house production companies even more.
A Brave New World
It’s an unusual time to work in entertainment. Everything is changing, and the business has to move fast to adapt. Writers and agents are simply responding to market forces, and the WGA and ATA are trying to protect their own interests. Unfortunately, if you take a look at the arguments that both sides have laid out, it’s pretty clear who is negotiating openly, honestly, and in good faith. As one writer told me, “If this is how bad the ATA is at negotiating, we should have fired them years ago.”
One thing is for sure: Hollywood isn’t going back to the way things were.