The New WGA Agreement and What It Means For Labor Relations Nationwide

in Employment/Entertainment/Labor Law/Volume VI

By Kristine Khosrovyan

Introduction

The Writers Guild of America (WGA) strike has been at the forefront of the public eye since May 2023, resulting in a recent, groundbreaking agreement with major Hollywood studios. In the rapidly changing world of the entertainment industry, negotiations and agreements between industry stakeholders often shape the future of the entire field. The industry, known for its glitz and glamour, is underpinned by complex legal frameworks that govern everything from intellectual property rights to labor relations. The WGA, representing the interests of thousands of screenwriters in film and television, plays a crucial role in shaping these legal dynamics. Their negotiations with Hollywood studios have far-reaching implications not only for the industry’s creative talent but also for the business entities that fund, produce, and distribute content to global audiences. This article delves into the intricacies of the WGA’s agreement with Hollywood studios, shedding light on the key issues, challenges, and implications for both writers and entertainment conglomerates. As we explore this critical development at the intersection of business and law, we will dissect the nuances of the agreement and analyze its potential impact on the future of the entertainment industry and labor relations nationwide. 

Evolution of the WGA: Chronicles of Struggle and Triumph

The history of the WGA is a testament to the enduring pursuit of creative rights and fair compensation for writers in the entertainment industry. Spanning eight decades, the WGA’s journey has been marked by continuous adaptation to the ever-changing landscape of the entertainment world, shaped by technological advances and shifting industry dynamics.[1] Through unity and collective action, the WGA has achieved remarkable milestones in its quest to safeguard the interests of its members.[2]

1941: Pioneering Contracts

In 1941, the Screen Writers Guild (SWG), a precursor to the Writers Guild of America West (WGAW), marked a significant milestone by negotiating its first contract with Hollywood studios.[3] This groundbreaking agreement laid the foundation for writer control over screen credits through the Guild, established written contracts, introduced dispute arbitration mechanisms, and set minimum compensation standards.[4]

1953-1954: Reshaping Television and Contractual Copyright

The SWG embarked on a 13-week strike in 1953, targeting the Alliance of Television Film Producers (ATFP).[5] The strike resulted in monumental gains for writers, including the introduction of residuals for the reuse of made-for-television content and the establishment of contractual copyright through separation of rights.[6] Additionally, sequel payments for creators of original works and control over television credits became pivotal accomplishments.[7]

1960-1970: Residuals and Industry Benefits

The 1960 Writers Guild of America strike marked another transformative moment. This strike yielded the first residuals for theatrical motion pictures, setting a precedent with payments of 1.2% of the license fee when features were licensed to television.[8] Notably, the strike also led to the creation of an independent pension plan and a 4% residual for television reruns, domestic and foreign.[9] The establishment of an independent pension fund and participation in an industry health insurance plan were groundbreaking developments.[10] 

1970-1981: Expanding Rights and Residuals

In 1970, the Guild combined screen and TV agreements into a single Minimum Basic Agreement (MBA).[11] The MBA extended Domestic television residuals to 10 reruns, and provisions allowed screenwriters to reacquire unproduced original material.[12] In 1981, another Guild strike advanced writers benefits by introducing terms for made-for-pay television programs and adjusted residuals for these programs on basic cable channels, anticipating their future significance.[13]

1982-1995: Pioneering Negotiations

In 1982, the WGA engaged in negotiations that led to the reconstitution of the Alliance of Motion Picture and Television Producers (AMPTP). [14] Subsequently, in 1985, a strike unfolded when the WGA disagreed with the studios over the interpretation of the formula used to calculate home video residuals.[15] Ultimately, the Guild arrived at a resolution that involved basing residuals on 0.3% of the distributor’s gross. [16] Following, the year 1988 saw the WGA undertake its longest strike in history, lasting a remarkable 22 weeks, against the AMPTP.[17] The strike yielded substantial achievements for the writers. Notable accomplishments included increased residuals for the reuse of free television content on basic cable set at 2.0% of license fees and secured improvements such as creative rights for writers in the creation of original screenplays and television movies.[18]

1998-2004: Health Fund and Banking of Points

The late ’90s and early 2000’s witnessed negotiations concerning health fund allocation, expedited arbitration methods, security interests in films, and banking of health fund “points” to extend coverage during work gaps.[19] Retiree health coverage for the “baby boom” generation was also pre-funded, ensuring their well-being.[20]

2007-2020: Adapting to New Media and Health Benefits

The 2007-’08 strike brought about coverage for new media content and residuals for its reuse.[21] Subsequent agreements addressed health fund contributions, options and exclusivity provisions, and increased residuals for streaming and digital platforms.[22] 

2020: A Forward-Looking Agreement

In 2020, the WGA secured a significant increase in pension contributions and introduced a paid parental benefit.[23] Additional improvements were made to most minimums, compensation for high- and low-budget Subscription Video on Demand (SVOD) programs, span protection, and options and exclusivity.[24] The elimination of the writer discount and trainee wage marked steps towards fair compensation for writers of underrepresented groups.[25]

The New, 2023 WGA Agreement & Its Components

The recent WGA agreement, marking the end of a 148-day strike against the major studios, has generated widespread praise among Hollywood writers.[26] This new agreement encompasses crucial provisions, including regulations on the use of artificial intelligence (AI), increased wages, assurance of residual compensation for writers involved in streaming shows and movies, and stipulated minimum staffing levels for writers’ rooms.[27] It is one of the biggest contracts that the WGA has won in decades, and they estimate the deal’s worth at $233 million annually, “nearly three times the value of the AMPTP’s original proposal.”[28] The significance of this agreement extends beyond the WGA and resonates with all union members. It underscores the power of collective action and strikes as effective tools for securing better and more equitable deals. From addressing AI use to wage increases, improving transparency, and ensuring fair compensation for streaming work, the WGA’s agreement may set a new benchmark for expectations in various creative industries while reshaping several critical aspects of the entertainment industry.[29] 

Regulations on the Use of AI

Of all the sections in the new agreement, AI regulations were of utmost importance and heavily scrutinized issues.[30] AI has garnered significant attention in 2023, with generative AI tools becoming more accessible, and the new WGA contract is one of the early adopters that pioneers AI regulations in Hollywood.[31] While it doesn’t outright restrict AI-generated content, it places vital safeguards in which AI cannot be used to write or rewrite literary material, and AI-generated content will not be considered source material.[32] Writers can choose to use AI with the company’s consent,but companies cannot mandate its use.[33] Furthermore, companies must disclose if materials provided to writers have AI involvement and the WGA retains the right to assert that using writers’ material to train AI is prohibited.[34] The contract further clarifies that if a studio provides a writer with an AI-generated script and instructs them to rewrite it, the writer must be paid and credited for writing the script, not as a rewrite.[35] Additionally, if another writer is assigned to rewrite the initial script, they will also be paid and credited for a rewrite.[36] The AI-generated material will not be considered the original source, affirming the primacy of the writer’s work.[37] 

Increased Wages

The WGA secured significant wage increases under the new agreement. Yearly minimum pay will rise by 5% in 2023, 4% in 2024, and 3.5% in 2025.[38] The specific rates vary based on roles, as outlined in the MBA overview.[39] Staff writers will immediately benefit from this increase, while story editors and executive story editors will see pay increases post-ratification.[40] The agreed-upon increases align closely with the WGA’s earlier proposal, deviating only slightly from the 6%-5%-5% requested, with the AMPTP offering 4%-3%-2% during previous negotiations.[41] 

Streamer Transparency and Residuals 

Compensation for streaming platforms emerged as a primary concern for the WGA. The lack of transparency in viewership data, particularly for streaming services like Netflix and Disney+, has made it challenging for writers to assess their show’s success and negotiate fair compensation.[42] While the new rules don’t mandate public viewership disclosure, they require streaming platforms to share the total hours streamed for self-produced high-budget content domestically and internationally.[43] This transparency will lead to viewership-based residuals, providing writers with additional earnings.[44] Projects released on or after January 1, 2024 would “receive a bonus of $9,031 for a half-hour episode, $16,415 for a one-hour episode, or $40,500 for a streaming feature over $30 million in budget.”[45] 

Writer’s Room Minimum                                                                                        

The contract addresses the downsizing of writers’ rooms, which have transitioned to “mini rooms” with only two or three writers—compared to the traditional rooms of about eight writers—thereby reducing job opportunities and pay for writers.[46] The new agreement mandates a minimum duration for contracts and writers’ room minimums that vary depending on the type of project.[47] Development rooms, where shows are created, must guarantee writers a minimum of 10 consecutive weeks of employment.[48] For “post-greenlight rooms,  shows with 13 or more episodes must employ a minimum of six writers,” including at least three writer-producers, for a guaranteed 20 weeks of pay or the entire duration of the post-greenlight room, whichever is shorter.[49] These provisions aim to support early-career writers by providing them with essential production experience.[50]

Effect of The New Agreement on Labor Relations Nationwide                                       

The agreement has far-reaching implications beyond the entertainment industry. It sets a monumental reference point for labor relations in the digital era, particularly regarding the use of AI.[51] Traditionally, technology decisions were the exclusive purview of management, with workers and their unions excluded from discussions.[52] However, the new WGA’s contract challenges this status quo, establishing that AI can be a central subject of bargaining.[53] 

AI is poised to impact workers across all sectors, regardless of their educational background or attire, and the WGA has bestowed a valuable precedent for future union negotiators, illuminating an effective strategy for dealing with technology-related negotiations and exemplifying how a white-collar workforce can harness collective solidarity for the mutual benefit of both management and employees.[54] Notably, the WGA contract doesn’t seek an outright ban on AI tools, but ensures that if AI enhances productivity or quality, writers receive their fair share of the gains.[55] The contract defines that AI platforms are not writers, preventing studios from replacing credited guild members with AI alternatives.[56] Workers can exert pressure on employers to employ technology as a means of enhancing, rather than replacing, human labor, asserting that technology contributes to more than merely expanding the workforce’s share; it enlarges the overall opportunity.[57] By guaranteeing human writers’ involvement when AI is used, studios protect their copyright interests as well.[58] 

The success achieved by the WGA will also be significant in more conventional contexts.[59] For instance, negotiators representing the United Auto Workers, are currently focused on the transition from conventional gasoline-powered vehicles to electric ones, a shift necessitating workforce reskilling and the potential relocation of production from established manufacturers such as GM, Ford, and Stellantis to smaller, nonunion suppliers.[60] The union is not interested in making the shift, instead, they aim to secure a portion of the profits generated during this transformation into wage increases, investments in workforce development, and employee relocation.[61] The WGA agreement now provides a viable roadmap for such resolution. 

This breakthrough in negotiating the role of AI in the creative process contrasts with past labor struggles that resisted technological change and ultimately resulted in job losses.[62] The new contract provides a model for future negotiations around technology, showing that unions can leverage labor solidarity to benefit both workers and employers.[63] 

Economic Consequences of the Contract and What it Means for the Industry

The entertainment industry faces inevitable economic ramifications as a result of the contract, with a broader trend of price increases in the streaming industry. 

For instance, Netflix is considering raising the prices for its ad-free streaming service within several global markets.[64] The increase is likely to commence in the U.S. and Canada, however, details regarding the extent of the price hike and its exact start date remain undisclosed.[65] This move follows a recent trend of major streaming platforms raising their ad-free subscription costs, resulting in a roughly 25% price increase over the past year.[66]

Recently, Warner Bros. Discovery announced an increase in the monthly price of its ad-free Discovery+ streaming service, but the cost of its ad-supported platform remains unchanged.[67] Streaming services are also exploring new pricing tiers centered around exclusive content like live sports.[68] Disney, for instance, is considering launching a live-sports tier for Disney+ outside the U.S., while Warner Bros. Discovery plans to add live sports to its Max streaming service at an additional cost.[69] Amazon is also planning to introduce a new pricing tier for Prime Video, which includes ads and comes at a higher cost.[70]

Unlike its competitors, Netflix, known for its profitable streaming business, has generally refrained from raising prices and rather focused on curbing password sharing.[71] It made its latest price increase in January 2022 but has not raised prices since.[72] However, it now plans to increase prices as the ongoing strikes by Hollywood writers and actors have concluded.[73] In July, Netflix discontinued its basic ad-free tier in the U.S., expanding the price gap between its standard ad-free and ad-supported plans. [74] These strikes have already led to increased talent costs from settlements with writers and directors, which streaming platforms will need to manage.[75] 

Conclusion 

The WGA’s pioneering agreement, significant for labor relations within the digital sphere, serves as an influential model, extending its impact beyond the film industry. This landmark deal, relevant to everyone from car factory workers to office executives, sets a major precedent as it demonstrates the vital role of employee participation in technological decisions. It offers guidance for other unions like the United Auto Workers, who are navigating their own technological shifts. This is especially relevant as industries worldwide are grappling with the integration of AI and other digital technologies into their operational frameworks. Most notably, the WGA’s agreement shines a light on a progressive approach in which technology is used to augment human capabilities rather than to automate jobs entirely. This perspective advocates for a balanced and synergistic relationship between workers and technology, aiming to enhance productivity and innovation while preserving employment and workers’ rights.

Citations

[1] “A History of WGA Contract Negotiations and Gains.” Writers Guild of America West , 2023, www.wga.org/the-guild/about-us/history/a-history-of-wga-contract-negotiations-and-gains

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[26] Carpenter, Nicole. “6 Major Takeaways from Hollywood Writers’ New WGA Contract.” Polygon, Polygon, 28 Sept. 2023, www.polygon.com/23893273/wga-hollywood-writers-strike-tv-movie-contract-explained

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[28] Jarvey, Natalie. “Done Deal: Here Is What’s in the New WGA Contract and What It Means.” Vanity Fair, Vanity Fair, 27 Sept. 2023, www.vanityfair.com/hollywood/2023/09/done-deal-here-is-whats-in-the-new-writers-contract-and-what-it-means. 

[29] Carpenter, Nicole. “6 Major Takeaways from Hollywood Writers’ New WGA Contract.” Polygon, Polygon, 28 Sept. 2023, www.polygon.com/23893273/wga-hollywood-writers-strike-tv-movie-contract-explained

[30] Stenzel, Wesley. “Writers’ Strike Is Officially Over – Here’s a Look at The New WGA Contract.” Entertainment Weekly, Entertainment Weekly, 27 Sept. 2023, ew.com/tv/writers-strike-over-whats-in-new-wga-contract/. 

[31] Carpenter, Nicole. “6 Major Takeaways from Hollywood Writers’ New WGA Contract.” Polygon, Polygon, 28 Sept. 2023, www.polygon.com/23893273/wga-hollywood-writers-strike-tv-movie-contract-explained

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[34] Stenzel, Wesley. “Writers’ Strike Is Officially Over – Here’s a Look at The New WGA Contract.” Entertainment Weekly, Entertainment Weekly, 27 Sept. 2023, ew.com/tv/writers-strike-over-whats-in-new-wga-contract/. 

[35] Carpenter, Nicole. “6 Major Takeaways from Hollywood Writers’ New WGA Contract.” Polygon, Polygon, 28 Sept. 2023, www.polygon.com/23893273/wga-hollywood-writers-strike-tv-movie-contract-explained

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[47] Stenzel, Wesley. “Writers’ Strike Is Officially Over – Here’s a Look at The New WGA Contract.” Entertainment Weekly, Entertainment Weekly, 27 Sept. 2023, ew.com/tv/writers-strike-over-whats-in-new-wga-contract/. 

[48] Carpenter, Nicole. “6 Major Takeaways from Hollywood Writers’ New WGA Contract.” Polygon, Polygon, 28 Sept. 2023, www.polygon.com/23893273/wga-hollywood-writers-strike-tv-movie-contract-explained

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[51] Litwin, Adam Seth. “Hollywood’s Deal with Screenwriters Just Rewrote The Rules Around A.I.” The New York Times, The New York Times, 29 Sept. 2023, www.nytimes.com/2023/09/29/opinion/wga-strike-deal-ai-jobs.html

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[64] Toonkel, Jessica, and Sarah Krouse. “WSJ News Exclusive | Netflix Plans to Raise Prices after Actors Strike Ends.” The Wall Street Journal, The Wall Street Journal, 3 Oct. 2023, www.wsj.com/business/media/netflix-price-increase-actors-strike-792de9be

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