Thread by @bergopolis

There's been a lot of press lately about the tension between the WGA (Writers Guild of America) and the ATA (Association of Talent Agents).

Most of it is as one-sided as you might expect given that writers aren't the ones who have ownership stakes, buy advertising, or tip off reporters in the trades.

Here are some facts and perspectives that you might not otherwise hear in regards to the WGA-ATA negotiations. Feel free to share or rage, but first... buckle up.

What are agents? Agents work for writers. Although technically they're not our employees, by law they are fiduciaries. Power is entrusted to them to provide client services which means, by law, their income is tied to ours and they're prohibited from conflicts of interest.

Agents make 10% of a writer's gross income. If the writer is also represented by a manager, that's another 10%. Lawyer? 5%. Business manager? 3 to 5%. That's as much as 30% of a writer's gross income off the top... yes, before taxes.

I have all of the above. So you can see why someone like me might want their representatives to have their best interests at heart.

Agents work for writers. Did I mention that? Their job is to help us secure employment and negotiate contracts on our behalf. Many times they don't even do the latter as many writers have lawyers who do the negotiating.

In 1976, an agreement was entered into between the WGA and the ATA called the Artists' Manager Basic Agreement (AMBA). The AMBA hasn't been renegotiated since that time. That's 43 years ago. Even I can do that math. As you can imagine, the industry has changed a lot since then.

Since then, the major agencies have essentially become an oligopoly of four: CAA, WME, UTA, ICM. Three of them have sold stakes to private equity funds. Undoubtedly these investors are seeking higher than usual returns and are demanding a renewed focus on the bottom line.

This focus shift means that clients are often coming last in the pecking order of priorities. Yet, by law, we are supposed to be their only priority.

Starting to feel sticky yet? Because I haven't even gotten started.

The major four agencies are incredibly cash-rich and profitable – did I mention the $3 billion in venture capital alone that CAA and WME have received? And yet, for some reason, writer income is in decline.

Weird, huh.

Is it possible that talent agencies have found other sources of income and no longer rely on the salaries of the clients they're supposed to serve? Surely they'd never do that. That'd be a conflict of interest. Not just unethical, but illegal.

Well, guess what.*

*Note the lack of question mark.

Let me back up a second. Every three years, the WGA negotiates with studios and streaming companies to secure minimum payments for writer services (scripts, outlines, story bibles, weekly employment, etc). This agreement is called the MBA.

These minimums are contracted in the MBA, which means the only thing agents are negotiating for is something called "overscale" – the amount above the minimums that have been set by the Guild's negotiation with the studios.

For many writers, even the most successful, overscale amounts to the difference between living well and barely living.

Right now, the amount of overscale writers have been receiving is far below the average they received in 2013. And the erosion of writer income started well before then.

So why haven't agents been fighting as hard as they once did to secure overscale for their clients? It's simple. Their income is no longer exclusively tied to ours.

Packaging and producing fees. That's where the money is for agencies these days. Both of which are illegal practices representing huge conflicts of interest.

Packaging is when agents bring multiple clients together onto a single TV or film project. For instance, one of my TV pilots is co-produced by a fellow UTA client. The actor client brought a book property to UTA and the agency put us together due to my interest in the subject.

Packages themselves aren't the problem. That's just an agency doing its job well. They get the most bang for their buck by securing multiple 10% commissions on a project. But that income is not enough for the agencies anymore.

The big four are using their monopoly control of top writing talent to demand to be paid directly by the studio rather than working off commission. In television, they do this through a formula called 3-3-10 (3%, 3%, 10%). They're calling these packaging fees.

The first 3% is from the network license fee and is taken directly from the budget of a series. Typically that amounts to 30K to 100K of the budget per episode. That's money that could be spent on hiring more writers that the showrunner now no longer has to work with.

The second 3% is also from the license fee, but deferred. The kicker is the 10%... they receive 10% of the gross profits for the life of the series. Yes, gross. Yes, for the life of the series. Even if their clients leave and they no longer represent anyone on the show.

Agencies are making more money than their clients, aka the ones doing the work. All this for a few phone calls and emails before a writing staff assembles, and then nothing thereafter.

Agents have no responsibilities on the shows or films that they're packaging. Occasionally they field a complaint from a client or wade into a political fray. But that's their job. That's servicing the client. At no point do they service the projects themselves.

In the attempt to secure packaging fees on every project, not only are they not serving their client's best interest they are sometimes working AGAINST their clients in negotiations.

Agencies have blocked deals from going through before their package fee is in place. They've not negotiated in good faith in trying to secure overscale for clients because... why bother? Their money is coming straight from the studio, not the client.

And some won't even fight to get their clients on projects they're packaging – it better serves them to place them on projects where they don't have a package so they can get their 10% commission.

It works much the same in independent feature films. Agencies take a 5% packaging fee, coming from the budget of a film that's often already navigating a difficult road to get made... worse, they still charge their clients commission on top of it.

It's not just packaging that's the problem, agencies are also now launching their own studios to produce their own projects. Why is this a bad thing? Well, put it this way: would you want an affiliate of Paramount representing you in a negotiation with... Paramount?

If your agency is also your employer, you don't have an agency. It's that simple. This is a fundamental conflict of interest that, again, is not just unethical but illegal.

Agents work for us. At least, they're supposed to. That's why this is a fight. That's why we're in the right. That's why we're trying to negotiate a new agency franchise agreement.

More later. Tired now.

Hard to know how many folks this thread has reached (I had to give up on my notifications due to thousands of “RT with comment” posts), but I’m pleased it’s resonating. Part II coming later today. Hopefully.