Moving to new media

MOVING TO NEW MEDIA: Aaron Mendelsohn, a Writers Guild board member known for the “Air Bud” franchise, is in a group that plans to produce programming for the Internet independently of Hollywood studios at odds with the union. “It’s in development and rapidly incubating,” he says. (Handout)

Dozens of striking film and TV writers are negotiating with venture capitalists to set up companies that would bypass the Hollywood studio system and reach consumers with video entertainment on the Web.


At least seven groups, composed of members of the striking Writers Guild of America, are planning to form Internet-based businesses that, if successful, could create an alternative economic model to the one at the heart of the walkout, now in its seventh week.

Three of the groups are working on ventures that would function much like United Artists, the production company created 80 years ago by Charlie Chaplin and other top stars who wanted to break free from the studios.

"It's in development and rapidly incubating," said Aaron Mendelsohn, a guild board member and co-creator of the "Air Bud" movies.

Writers walked off their jobs Nov. 5, virtually shutting down television production and throwing 10,000 people out of work. The Writers Guild is fighting the major studios over how much their members are paid when their work is distributed online.

Silicon Valley investors historically have been averse to backing entertainment start-ups, believing that such efforts were less likely to generate huge paydays than technology companies. But they began considering a broader range of entertainment investments after observing the enormous sums paid for popular Web video companies, including the $1.65 billion that Google Inc. plunked down last year for YouTube, a site where users post their own clips.

They also have been emboldened by major advertisers, which prefer supporting professionally created Web entertainment to backing user-generated content on sites such as MySpace that can be in poor taste.

"I'm 100% confident that you will see some companies get formed," said Todd Dagres, a Boston-based venture capitalist who has been flying to L.A. and meeting with top writers for weeks. "People have made up their minds."

What effect this would have on the strike is unclear. So far, the percentage of the guild's 10,000 striking writers who are in discussions with venture capitalists appears to be small. Any deal of this kind, however, could put pressure on the studios and help the writers' public relations campaign. Writers who are talking to venture investors say the studios would suffer a brain drain if high-profile talents received outside funding and were no longer beholden to them.

Mendelsohn and others said they would stick with their ventures after the strike ended.

The Alliance of Motion Picture and Television Producers, which represents the studios in negotiations, declined to comment on the issue, as did the Writers Guild.

Already this year, a handful of sites have received venture backing, including FunnyorDie.com, co-founded by comedic actor Will Ferrell, and MyDamnChannel.com, launched by former MTV executive Rob Barnett.

MyDamnChannel pays for the production of original content by a handful of artists and splits ad revenue with them.

Under the Hollywood system, writers, in most cases, are employed by the studios to create and manage TV shows and movies. The studios own the copyrights and pay writers for the initial use of the material and a small percentage of the licensing fees they collect when the work is rerun or sold on DVD.

With television viewership and DVD revenue declining in the digital age, writers have sought bigger rewards when their work is distributed online. There have been isolated successes, such as Viacom Inc.'s agreement in August to give the co-creators of "South Park" 50% of a new online entertainment venture based on the TV program.

For the most part, however, the studios have argued that Web economics are still too uncertain for them to give a larger share of the proceeds to writers.

Most writers who have been talking with venture capitalists declined to discuss their plans on the record, saying it was too early to provide details. Yet an array of strategies have emerged from interviews with writers, investors and others involved in the process.

The groups modeled after United Artists (which eventually was bought by Metro-Goldwyn-Mayer Inc. and recently was revived with the help of Tom Cruise) envision creating and distributing programming for the Web and recouping their investments by selling rights to the most successful properties to TV networks or movie companies.

The initiative would change the career paths of many writers. They would be leaving well-paying jobs in television and film for the Internet, which often has been viewed as a steppingstone to Hollywood.