NEWSLETTER
At AMF Management business and industry education is one of the key success factors in client development. Below are articles selected to help clients develop in the business of entertainment:
Advertising Industry Negotiates Modest Wage Hike for Performers, Gains Agreement to Test New GRP Compensation Model
May 27, 2009 - New York, NY - The ANA / 4A's Joint Policy Committee on Broadcast Talent Union Relations (JPC) enthusiastically welcomed ratification of a new Commercials Contract by rank and file members of the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA). JPC leadership cited the spirit of collaboration that characterized the union negotiations, which produced a comprehensive new agreement - retroactively effective from April 1, 2009 - that includes a modest wage hike for performers over the next three years and a commitment to conduct a comprehensive pilot study of an entirely new compensation model based on gross rating points.
"Both the advertising industry and the talent unions negotiated in good faith, with the goal of improving our relations with one another," said Douglas Wood, the JPC Chief Negotiator and a partner in the law firm of Reed Smith LLP. "We came to the table looking for ways to agree rather than disagree."
Over the three years of the contract, wages will increase an average of less than two percent per year, a modest hike that reflects marketers' economic realities and is well within ranges being negotiated in collective bargaining agreements throughout the nation and in the entertainment industry.
The advertising industry also won agreement from the unions to jointly conduct a two-year multi-million dollar pilot study of the GRP Payment Model developed by Booz Allen & Company in a 2007 Study commissioned by the JPC and the unions. This study will provide the industry and the unions with a fully tested and operational system.
"The GRP project is a historic effort by management and labor to create a modernized compensation approach that takes into account the changes in the media landscape, while fostering a fair and efficient compensation scheme," said Wood. "We believe there will be a compelling case for both sides to adopt the new model when the next Commercials Contract is negotiated in 2011."
Other gains for marketers in the new contract include a cap on Pension and Health contributions, ending a forty-year inequity in the payments made by commercial producers when compared to television and motion picture producers. The P&H cap will provide substantial savings to the industry over the course of the contract, as will an agreed exemption for CEOs appearing in commercials and liberalization of filming employees at work.
In the public service arena, the unions accepted the industry's view that PSAs could be used in all media covered by the contract and agreed on a standard template for waivers. As part of the new contract, the industry secured a three-year waiver for the Ad Council, allowing it to produce PSAs that directly solicit contributions.
While the industry conceded a minimum rate for commercials made exclusively for the Internet and new media, that provision is not effective until April 1, 2011. Other concessions by the industry related to session fees, Spanish language provisions and payments to extras for travel - all of which were important to the unions but have little impact on advertisers when viewed from a total cost basis.
Actors Seek New Scale for New Media
As advertisers shift their television focus to include more Internet and mobile forms of video advertising, what's an actor worth?
PAYING NEW MEDIA ADS FORWARD: Advertisers will meet with two actors' unions this weekend to hash out a digital-age payment structure.
April 7, 2006
Representatives of the advertising community will meet this weekend with executives of the two largest actors' unions to sort out just how performers will be compensated for ads delivered digitally on computers, MP3 players, cell phones, PDAs, DVRs, and video-on-demand.
The ad industry's Joint Policy Committee on Broadcast Talent Union Relations (JPC) will meet with representatives of the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA) to hash out a new agreement as the old one will expire in October.
The two sides will not offer competing proposals. Instead they will consider retaining an independent consultant with expertise in TV, radio, labor relations, and perhaps technology to help develop a payment structure that acknowledges the complex realities of digital entertainment.
The negotiators will also discuss an extension of the current contract, scheduled to expire in six months, to give the consultant more time to complete the study and give the two sides time to review and agree or disagree on the proposed compensation structure.
The original payment scheme for actors in commercials was developed more than a half century ago and has been retrofitted over the years to meet the demands of new media.
Outdated Payment Scheme
The two sides kept adding "silos" to the old outdated compensation scheme, creating a kind of Frankenstein that is now so bogged down by misshapen and misplaced parts, it has lost its mobility.
The payment math has remained fairly stable over the years as actors are paid a percentage of media cost. But as the audience fragments into smaller and smaller segments, the payment to actors can be more than the real-world media cost, said Douglas Wood, the JPC's lead negotiator.
That is because the cost bears no relationship to the audience size. Gone are the days when the nuclear family sat around a single television set and watched the same shows. Now mom is watching Lifetime in the family room, dad is watching ESPN in the den, Junior is playing video games in his room, and little Lisa is watching music videos on her iPod.
The cost of reaching this increasingly fragmented audience is going up, according to Mr. Wood, and advertisers fear that absorbing the increasing costs and the incremental expenses of management of the system are getting out of hand.
TV Losing Ad Credibility
Advertisers are growing increasingly suspicious of traditional TV's audience metrics so they can't simply go back to basics. They must deal with the fragmenting audience.
A recent survey by Forrester Research found that advertisers are slashing their TV ad budgets and increasing the amount of money they are spending on online advertising. They are losing confidence in the audience metrics of traditional TV.
Ninety-seven percent of advertisers told Forrester that the TV industry will need new audience metrics, other than traditional program ratings for the advertiser, to truly measure the reach and effectiveness of their ads.
The two sides have a lot to talk about at this weekend's Ad Summit in Los Angeles.