In one way, the Hollywood strike currently happening with actors and writers joining forces on the picket lines is a classic tale of workers fighting for better pay against their bosses. However, what sets this battle apart from others is the unique challenge it poses and its significance in our current moment. Although technology is often blamed for these issues, the real problem lies with the studio executives, both new and old, who have embraced the flawed thinking promoted by Silicon Valley over the past decade.
Studio heads are championing the disruptive nature of digital streaming and the transformative power of artificial intelligence (AI), presenting a new and unpredictable world for entertainment. They argue that writers and actors must adapt to this future, but in reality, this rhetoric often serves as a distraction while executives and investors profit, leaving workers to suffer the consequences.
Adam Conover, the star of “Adam Ruins Everything” and a member of the negotiating committee for the Writers Guild of America, explains that these companies have replaced a successful and profitable business model that the public enjoyed with a mishmash of changes. However, they are refusing to update contracts to reflect these changes.
We’ve heard how studios want to use AI to create digital replicas of actors and generate scripts that writers will be paid less to fix. We’ve also been told about the economic shifts brought about by streaming, with the industry undergoing significant changes and the need for cost-cutting measures. Yet, when we delve deeper, we see that Disney CEO Bob Iger makes $27 million a year while Netflix earned $1.5 billion in net profit last quarter. These figures beg the question: what is truly going on?
To understand the current situation, we must recognize that the 2010s can be characterized as a decade of magical thinking for Silicon Valley. Flush with success from innovations like Google, Amazon, the iPhone, and social media, tech investors sought the next generation of startups. The formula for success was simple: a high-tech, app-driven alternative that promised to disrupt an established industry, achieve massive scale quickly, and attract billions of dollars in investment.
While some early 21st-century tech companies found profitable markets, the startups of the 2010s, such as Uber, Lyft, WeWork, and Theranos, were built on unrealistic promises. They relied on huge investments, charismatic founders, and the belief that Silicon Valley was the ultimate arbiter of the future. However, Uber and Lyft remain unprofitable, WeWork’s flawed business model led to its collapse, and Theranos’ technology was revealed to be fraudulent.
At the start of the 2010s, Netflix stood between the old Hollywood guard and the new disruptive wave. It had already introduced online streaming in 2007 and had established a DVD-by-mail rental service. However, emboldened by Silicon Valley’s ethos, Netflix aimed to disrupt Hollywood on an even grander scale. With the backing of big-name investors, it produced original content, such as “House of Cards,” with massive upfront investments. It offered all episodes at once, on-demand, and viewers could consume them whenever they pleased. Cable was declared obsolete, and the future was seen as cord-cutting.
The success of Netflix led other companies like Amazon, Disney, and Apple to adopt its business model. However, secrecy played a significant role in this transformation. Netflix and other streaming platforms kept data about viewership and performance closely guarded, allowing them to control the narrative for customers, performers, writers, and investors alike. But this secrecy complicates negotiations when it comes to fair compensation for actors and writers on streaming shows.
Now, we are witnessing the consequences of this fantastical thinking. Netflix and its counterparts are realizing that endless expansion is not sustainable. The number of Netflix subscribers dropped for the first time last year, and they had to implement strategies to regain lost users. However, executives and Wall Street remain aware that the era of revolutionary technological transformation is coming to an end. To compensate for this, they are resorting to cutting labor costs, mirroring what happened in Silicon Valley when their grand ventures failed.
Historically, labor disputes in the entertainment industry have occurred during technological shifts, such as the rise of home television or online content. Executives often capitalize on new technology as an opportunity to justify lowering wages for workers. In the past, CEOs knew they had to negotiate with unions, but the new generation of executives does not hold the same mindset. As a result, workers are left fighting for their rights.
In conclusion, the Hollywood strike is not just about technology or the disruption caused by streaming. It is about studio executives using Silicon Valley’s flawed thinking to exploit and squeeze labor. This cycle has repeated itself throughout history, and it is crucial for actors and writers to fight for fair compensation in this new landscape. The future of the entertainment industry depends on it.
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