October 6, 2008 by Voiceguy.

 Why the Study?

In recent years advertisers have confronted a number of fundamental shifts in the media available to them.  Not only have all sorts of new media proliferated, but audiences within traditional media have migrated in a way that makes those media seem less valuable.  Advertisers contend that the historical approach to talent compensation — having its roots in the simpler day when three major television networks dominated prime time — no longer closely matches their costs of talent to the return in audience eyeballs.  At the same time, from the union perspective, there has been no real innovation in approaches to compensate talent for their work that appears on the Internet or in New Media (as the latter term applies in the advertising world).  The current Internet and New Media approaches, such as they are, can only be described as ad hoc and crude.

The stated goal of the Booz-Allen study was to find a “balanced” way to “pay performers fair compensation” and “give advertisers a measurable return on investment.”  (Personally, I get nervous when I hear terms like “fair” and “balanced,” but let’s see how they did before jumping to any conclusions.)   The aspirations of the study included:

• Modernizing the current talent compensation system “to reflect the digital age”;
• Simplifying the current system; and
• Maintaining revenue neutrality

Booz-Allen’s task was to create several financial models for consideration by the JPC and the unions, through an extensive research process that involved gathering real-world data from actual commercial usage and talent payments during a test period in 2006.

What’s Covered and What’s Not

It’s important to keep this study in perspective.  It addresses only the financial compensation aspect of talent payments.  It does not address such things as working conditions or labor policies (meal periods, non-discrimination, working with animals, etc.), health or pension benefits, or provisions related to extras.  Also, early on, the study participants decided that current contractual provisions relating to radio were “close enough” for present purposes, and did not need the same kind of searching review given to television/internet/new media.  Thus, radio is not addressed by the Booz-Allen study.

Put another way, this study really only has impact on the first “W” of W&W:  the Wages part.  The actual contract negotiation will address all aspects, however.  Everything is connected.

Possible Financial Approaches Considered and Rejected by the Study Team

Flat rate:  One flat rate per principal performer for appearing in a commercial for a period of time, irrespective of use.  Not under consideration — does not track closely with exposure or ROI.

Pay per play: Payment per play for all use in TV or radio.  Not under consideration — considered too difficult to track and monitor.

Percentage of media spend: Payment of talent based on a percentage of media spend for the placement of the ad.  Not under consideration — too difficult to execute given privacy considerations (presumably those of the individual advertisers).

Percentage of production costs: Payment of talent based on a percentage of production costs of the ad.  Not under consideration — does not track with exposure or ROI.

Finalists Studied in Depth by Booz-Allen

Tiers based on channels: Payment per channel on which the ad is placed.  (A “channel” could be network TV, cable, syndication, internet etc.)  This approach is akin to the current contractual approach, although there are a number of potentially significant changes.

Ratings-based (GRP): Payment of talent based on number of viewers.  (”GRP” is advertising jargon for “Gross Rating Points.”  I will attempt to make sense of this in a later post.)  This is an entirely new approach that will take most people some time to wrap their heads around.

To provide tools to analyze these two proposed approaches, Booz-Allen gathered a significant amount of actual data from commercials actually exhibited during the measurement period in 2006.  In the next post, we’ll talk about that methodology.  Then, in later posts, we’ll get to the two financial approaches selected for study, and the two complex simulations that Booz-Allen built from the 2006 data to test these approaches, both on an individual-commercial basis and on an aggregate basis.

I’ll close by reminding everyone who works these contracts to make a point of attending one of the upcoming informational meetings.  Don’t just rely on what I write here — get the information directly, and ask questions.  It’s our responsibility to take command of what’s happening by understanding what’s being proposed.

Next:  Reconstructing actual commercial usage and payments, and building models

Posted in Commercials Contract, SAG-AFTRA | Print | No Comments »

October 6, 2008 by Editor.

It’s slow coming in, but Variety has an article, calling it “the first official step toward peaceful relations following a year of bitter battles between the performers unions.”The Hollywood Reporter seems to have taken the weekend off.  Curiously there has still been no statement from Membership First on the proposed SAG-AFTRA deal, under which the Commercials Contract would be jointly negotiated. To us that suggests they may be considering casting the Allens overboard. For those of you who haven’t read back through previous posts on this, there are several Membership First candidates on the AFTRA board. We’ve been told that in the AFTRA board meeting this weekend which approved the deal, a couple of them spoke in favor of the deal, but then voted against it, even though their group has been vocal in saying joint negotiations should resume and even though the Allens had pushed hard for the tentative SAG/AFTRA deal.It’s a strange and still unexplained situation. Maybe some of our readers can help out on it with some context. 

Posted in Commercials Contract, SAG Politics, SAG-AFTRA | Print | 6 Comments »