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After the sunset - January 18, 2008

The wisest thing the two sides did in the deal between the studios and the Directors Guild of America was agree to a sunset provision that allows the terms of the agreement to be revisited in three years. For all the homework the DGA clearly did in preparing its negotiating position, it's impossible to have much certainty right now about the shape and direction of the business three years hence. Three years is an eternity in the rapidly changing world of digital media. The sunset provision lowered the stakes for both sides by lowering the risk of getting stuck with a bad deal in perpetuity if you guess wrong today about where things will stand in 2011. Lowering the stakes probably made it easier to reach a deal.

Less wise, perhaps, is the implicit assumption that those around the bargaining table in Encino have it in their power to determine shape and direction of the industry. If anything should be clear from the industry's experience over the last few years it's that distribution paradigms, consumer preferences and monetization models can change on a dime the moment some geek somewhere comes up with a cool new application that lets people find, use and repurpose content in a new way. The geeks aren't covered by guild contracts

Distinctions such as "producer's gross" and "distributor's gross" could turn out to be meaningless, or at least severely attenuated, in a super-distribution environment. Categories like "paid" and "ad-supported" may not be a good fit for device-level licensing deals. Consumer-driven narratives could blur concepts like authorship and direction.

All the more reason to revisit the deal in three years.

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