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New frontier of AI and streaming residuals central to Hollywood strikes

The last time Hollywood saw a double strike of writers and actors was in the 1960s. In the decades since, each respective union has gone on strike at different pivotal points in the industry. Now, Hollywood is at another turning point about the business models of the streaming world and AI’s place in a creative sphere.

The current compensation infrastructure in union contracts were developed for a profoundly different business model than the ones now employed for visual media content. Streaming has completely transformed how content is produced and paid for in the past decade, and it has also upended the traditional pathways to financial and career stability in the acting and writing professions. The breakneck advance of AI, as well as production companies’ hopes to use AI to slash the number of necessary writers and actors on a production, have pushed SAG-AFTRA and WGA to insist upon clear protections.

SAG-AFTRA president Fran Drescher touched upon the microcosmic nature of the strikes for labor and tech in a speech she delivered at the outset of the strike.

‘What happens here is important because what’s happening to us is happening across all fields of labor, by means of when employers make Wall Street and greed their priority, and they forget about the essential contributors that make the machine run,’ she said.

The Writers Guild of America (WGA) is a 20,000 member union encompassing film, television, radio, and other media writers. It was the first to go on strike on 2nd May after contract negotiations broke down with the Alliance of Motion Picture and Television Producers (AMPTP). AMPTP is composed of companies such as Amazon, Apple, Netflix, HBO, Warner Bros, NBC Universal, and Disney. AMPTP is also the party actors are also striking against.

In May, the WGA released a press release stating that the Negotiating Committee ‘began this process intent on making a fair deal, but the studios’ responses have been wholly insufficient given the existential crisis writers are facing.’

The press release went on to argue that the business model adopted by streaming giants has ‘created a gig economy inside a union workforce’ and that the companies’ behavior is shoving writing into an ‘entirely freelance profession.’

Writers argue that their role in television production has been marginalized at every stage of the production process. Before streaming, writers usually worked together in person in production company organized writers rooms to develop a pilot. Pilots were then produced and shopped to networks to be picked up. Now, this practice is near extinct, and a different model labeled as ‘mini-rooms’ has become the norm, as well as a key sticking point for writers on strike.

In mini-rooms, a small number of writers work together to write multiple scripts for the first season of a series. The problem is that writers, regardless of experience, often get paid a minimal flat fee for potentially long stretches of work that have no guarantee of pay off. The contract may expire, and residuals earned from streaming are a fraction of what would have been netted from network or cable television.

The second battleground for the strike concerns AI. The Writers Guild wants to prevent AI from being used as a generator for new material and limit its use to a tool for writers to use in their own work. Computers should not, the Guild argues, compete for writing credits.

The allocation of writing credits is already hyper-specific, requiring niche legal language to respect copyright law. Writers want to bar their work from being used to teach and develop AI without consent or cooperation.

SAG-AFTRA headed to the picket lines when its own contract negotiations with AMPTP broke down, similarly over AI protections and residuals in the streaming era. Actors’ residuals from streaming are also a fraction of what would be earned under traditional residual models. Actors’ residuals under streaming isn’t reflective of viewership metrics, or, in other words, the popularity of the show. In fact, streaming companies are notorious for refusing to provide precise viewership data.

SAG-AFTRA’s demand for AMPTP is that 2% of streaming revenue be distributed among performers in streamers’ most successful content. SAG-AFTRA proposed that a third party, such Parrot Analytics, could measure the popularity of streaming platforms’ programs. AMPTP has so far refused both requests, arguing that ‘viewership doesn’t necessarily translate to more subscriptions’ and that ‘not all the platforms are profitable.’

In an additional parallel to the WGA strike, actors are fighting for protections from AI impingement. Background actors are especially concerned about being ‘replaced altogether.’ Actors across the board do not want their likeness used without their consent, and they want to be compensated if consent is given. Actors also want compensation if their likeness or work is used to train AI.

WGA and SAG-AFTRA’s concerns over AI is emblematic of an emerging legal field about the intersection of existing copyrighted source material and AI.

A 2022 United States class action case Andersen v. Stability AI et al concerns three artists, Sarah Andersen, Kelly McKernan, and Karla Ortiz, who sued the generative AI platforms Stability AI, Midjourney, and DeviantArt over copyright infringement. The plaintiffs claim that the AI companies downloaded and stored copyrighted works, as well as used copies of the works to train AI generation models.

Harvard Business Review argues the outcome of the cases will most likely hinge on the court’s interpretation of the fair use doctrine, which permits the use of copyrighted images so long as they are transformative from the original works, among other scenarios.

Along with the pending Doe v. GitHub and Getty Images (US), Inc. v. Stability AI, the case’s outcome will lay the groundwork for precedence that will shape the new field of AI regulation when it comes to copyright.

Issues about likeness may overlap with security and data privacy. While activism in recent years over the latter topics focus on government and police use of such data, the central questions are the same: who owns someone’s face, and what protections over people’s likeness are fundamental?

The future of the Hollywood strikes reflects the same business and legal questions that will likely face other sectors. As actor and writer Johnathan McClainin put it, the strike is ‘a canary in the coal mine’ of a larger conversation about the reaches of tech, the advancement of AI, and sustainable business models.


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