The Hulu Debate and SAG Goals

Over on SAG Watch, Membership First supporter Matt Mulhern asked:

“Just so I’m clear, Steve Diamond is arguing that, since (according to him) Hulu is NOT making money, that SAG should NOT pursue a percentage of distributors gross as a fair and reasonable formula to enter into the new media, now media landscape?”

I posted the following in reply:

No, Matt, that is not what I said.

I simply pointed out that SAG and Miller were wrong when they said Hulu was profitable. It is not profitable, yet. It is estimated to have lost $22 mn last year. Those losses are likely to continue.

When Miller attempted to steer the discussion to gross revenues, I pointed out that since Hulu is not likely a distributor its gross revenues are not directly relevant.

The 6% Distributors Gross formula that kicks in after year one for move over residuals is keyed to those who distribute the content to Hulu.

Those post year one residuals could result in new earnings for many actors who would otherwise never see residual payments if we lived just in the old media world. That is discussed on my blog in my latest post, SAG’s Risky Business.

Of course, a sign that the new media world is healthy and that producers can afford to pay residuals is related to the success of Hulu so its gross sales revenue has some relevance. And some analysts, though not all, argue that Hulu is proving to be a successful model.

In fact, the leading research report on Hulu says it may have a chance of defeating the YouTube model. That should be very good news for SAG because Hulu puts union content up on the web whereas YouTube sell ads based on non-union user generated content.

In other words, in the burgeoning arms race between the unionized content world of Hollywood and the non-union content world of Silicon Valley, Hulu is a potential example of the progress of the union world. For those who want to prevent actors from suffering the way musicians have from the assault of web based technology like Napster this is a very good thing.