Summary:

The Directors Guild of America has reached a tentative deal with the Alliance of Motion Picture and Television Producers (AMPTP), after only six days of negotiations. The agreement puts an enormous amount of pressure on the WGA — whose ongoing strike has effectively ground Hollywood to […]

The Directors Guild of America has reached a tentative deal with the Alliance of Motion Picture and Television Producers (AMPTP), after only six days of negotiations. The agreement puts an enormous amount of pressure on the WGA — whose ongoing strike has effectively ground Hollywood to a stop — to resolve its disputes with the studios.

The full fact sheet for the DGA agreement is after the jump, but there’s one provision in there that has me scratching my head. Under the “jurisdiction” provision, the agreement provides coverage for:

All original content above $15,000/minute or $300,000/program or $500,000/series, whichever is lowest. Original content below the threshold will be covered when a DGA member is employed in the production.

$15,000 a minute? No wonder studios claim they aren’t making any money on the Internet. As we’ve written before, most webisodes currently average $1,000 a minute. Granted, those are created mostly by amateurs cashing in favors with their friends, but a single, five-minute-long, original show for the Internet would have to cost $75,001 in order to qualify.

Also, how are “programs” and “series” defined? What if an hour-long show is created and then chopped up into webisodes? Or made available as both a standalone show for download and bite-sized bits for streaming?

The striking writers’ United Hollywood blog has additional concerns over original content:

Original Internet-first content
The good: there’s coverage for productions costing $15,000/minute, when before there was no coverage at all.

The bad: No minimums are mentioned. We don’t know for sure, but that could mean the DGA didn’t negotiate any. Also, no mention of separated rights in the summary for Internet-first.

Here is a nightmare scenario: Networks start making inexpensive pilots with a budget of $299,000 and put them up on the Internet (on say, Hulu) to gauge their popularity. It’s bargain-basement R&D. If a pilot hits, it gets aired on conventional TV, but pays no residuals, contributes no health & pension, provides no separated rights… provides no protections at all. Fifty years of hard-fought creator rights would vanish.

The ambiguous: Regarding coverage of original content below $300,000 per episode, the summary says: “Original content below the threshold will be covered when a DGA member is employed in the production.” That language is unclear. If a single DGA member is employed in a sub-$300,000 production, is the whole production covered (including btl crew)? Or just the DGA member? If it’s the whole production, that’s a “good.” But if it’s just one person? That’s a “bad.”

Ironically, the hard-fought strike of the writers helped pave the way for a quick DGA resolution. And now the out-of-work writers, faced with mortgage payments, are backed up against a wall.

Here’s the fact sheet taken from the DGA’s site:

New Media

Jurisdiction over:

  • All new media content that is derivative of product already covered under current contracts.
  • Original content:
  • All original content above $15,000/minute or $300,000/program or $500,000/series, whichever is lowest.
  • Original content below the threshold will be covered when a DGA member is employed in the production.

Electronic Sell-Through (Paid Downloads)

  • More than doubles the rate currently paid by the employers on television programming to .70% above 100,000 units downloaded.
  • Below 100,000 breakpoint: rate will be paid at the current rates of .30% until worldwide gross receipts reach $1 million and .36% thereafter.
  • Increases rate paid on feature films by 80% to .65% above 50,000 units downloaded
  • Below 50,000 breakpoint: rate will be paid at the current rates of .30% until worldwide gross receipts reach $1 million and .36% thereafter.

Distributor’s Gross

  • Payments for EST will be based on distributor’s gross instead of producer’s gross, a key point in our negotiations. Distributor’s gross is the amount received by the entity responsible for distributing the film or television program on the Internet. We would not have entered the agreement on any other basis.
  • Companies will be contractually obligated to give us access to their deals and data, enabling us to monitor this provision and prepare for our next negotiation. This access is new and unprecedented.
  • If the exhibitor or retailer is part of the producer’s corporate family, we have improved provisions for challenging any suspect transactions.

Ad-Supported Streaming:

  • 17-day window (24-day window for series in their first season).
  • Pays 3% of the residual base, approximately $600 (for network prime time 1-hour dramas), for each 26-week period following 17-day window, within first year after initial broadcast.
  • Pays 2% of distributor’s gross for streaming that occurs more than one year after initial broadcast.

Clips

  • Provides the companies with limited windows where they can distribute clips of feature films and television programs in new media to promote a program. Provides for payment for all other uses in New Media.

Sunset Provision

  • Allows both sides to revisit new media when the agreement expires.

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