The following is a summary of key provisions in the tentative contract deal between the Writers Guild of America and major studios, stipulating how writers will be paid for work distributed over the Internet.
The pact doubles the rate for reuse fees, or "residuals," paid for TV shows and films sold as Internet downloads, from about 0.3 percent of a distributor's gross revenues to roughly 0.7 percent. But the higher rates would kick in only after the first 50,000 downloads of a film or the first 100,000 downloads of a TV show.
This is essentially the same deal secured by the Directors Guild of America for its members last month. The Writers Guild originally had sought download residuals of 2.5 percent of distributor's gross, about eight times the current rate.
The deal establishes a new residual fee structure for advertising-supported online streaming of network prime-time television shows.
For a one-hour prime-time drama, the new residual would amount to about $650 per episode for 26 weeks of streaming, or $1,300 for a full year's worth of streaming.
But those fees would only be paid after an initial "promotional" window of up to 24 days of free streaming. A year after the initial window, the residual fee would jump from a fixed sum to 2 percent of distributor's gross revenues.
In the third year of the WGA contract, the favored rate of 2 percent of distributor's gross would kick in immediately after the promotional window ended, rather than a year later.
But the contract contains one further caveat to this benefit. It sets an "imputed" value for the 2 percent residual at a fixed sum of $800 for each 26 weeks of streaming in the first year after the window, unless the network's exclusive license for the show expires before then.
Other TV Streaming
Cable TV shows are excluded from provisions that pay streaming residuals as a percentage of distributors' gross.
Instead, writers earn a fixed sum, similar to those established for the first year of streaming broadcast network series.
But ad-supported streaming of "library" shows produced after 1977 are payable at 2 percent of distributor's gross receipts.
A union summary of the proposal did not clearly define what constitutes a "library" show.
The agreement requires studios to hire union writers when producing made-for-the-Internet content, whether it be original Web-based TV shows or "derivative" material adopted from existing programs.
But the contract exempts low-budget original shows in which production costs are less than $15,000 per minute, $300,000 per program or $500,000 per series -- whichever is lowest.
According to leading TV producer and past WGA West President John Wells, the popular Web-based drama series "Quarterlife" is being produced for three times that much.
'Separated' Rights for New Media
The deal preserves for creators of Internet content the concept of "separated rights" that already exist for creators of film and TV material -- retaining for them the rights to adapt that material for a stage play or novel. They also retain rights to characters they create for the Web.
The WGA is guaranteed full access to new-media deals, financial data and distribution statements to allow the union to evaluate and enforce the contract's revenue-based residual formulas for the Internet.
New media residuals based on transactions between related parties are subject to a test of "reasonableness" when compared to transactions between unrelated parties. The idea is to prevent the value of residuals from being manipulated through sweetheart deals.