David H. Lawrence XVII: Doing the residual math

[TangomegaXI]

Man... I had a chance to talk to DH on the phone when "Heroes" was cancelled. I want to say, this guy is as awesome as they come. A genuinely intelligent, insightful, and open person. I'm a huge fan. HUGE fan. Thanks for everything you do, DH.

[dgreener1]

pretty smart stuff...how do you know so much?

[SciFientology]

brilliant examples...

by the way, you did a great job in "Pool Party"

[davidhlawrence]

There are two models (and a third actually), one very common (cost per click - the price an advertiser pays every time someone clicks on a link in an ad), and one not so common (cost per thousand, which is what an advertiser pays once their ad is shown a thousand times). There are hybrids of those two models, but that's just as rare as CPM (cost per thousand). Internet advertising buyers are very keen to only pay for clicks (CPC ads), not views (CPM). (continued...)

[mandysteckelberg]

Is the "per click" income based on the amount of views an episode on the web gets? Or on the amount of "clicks" it gets that takes it to the advertisters site? Advertisters must be paying the networks for the pre-roll ad to be there, so I'm wondering if the "click" income is in addition to that (even though it is negligible)? So if no one ever "clicked" over to an ad site, then what is the ad revenue per view for an internet showing, or is it a flat rate much like the television structure?

[davidhlawrence]

...CPM, btw, is how TV and radio ads have been sold since the 40's. The Internet changed all that with banner ads and text ads sold on a CPC basis. The exception is PI (per inquiry) spots, like infomercials, where the local station or network is paid only when the advertiser sells one of their products - yet another model called CPA (cost per action), which is also used on the Net, and even more likely not to make the website any money.

[paulmize]

David,

Really interesting material. I appreciate the nuts and bolts of your math. It dovetails in with my faint knowledge of how google works.

Thank you so much for the information.

PM

[phantompanther]

I know that I've commented on this before, but I just wanted to say that I love this video. I come back and watch and/or listen to it once in a while. It's very informative. Thank you very much for making it and for sharing it with us.

[therealbabyxerxes]

Hey Miss 32! I didn't talk to you at ALL today, I missed you so much! Going over your comments, this issue oh so obviously bothers you. Yet... I take it by your lack of an answer that you didn't call the union today to check David's status in SAG?

Somehow... this doesn't shock me.

[michelesantopietro]

Uh huh. Well, ya see, that's where you don't seem to understand the law. I can PROVE that I have NEVER been FICORE. And you saying that is what constitutes "slander", because of that fact. That's a defamatory, slanderous comment posted in a public forum to a person who is very proud of her Union and her profession. By definition, illegal.

[therealbabyxerxes]

He can prove he's never been ficore, too... & has invited you to hear for yourself and you just don't seem to want to do it. I have nothing against anyone being proud of their union or profession. You work it, girl. But he's said that he's SAG, he's shown his card and ballot and invited you to check for yourself by calling the union on Monday. So far, all you're doing is repeating yourself. "FICORE! LIAR!" "No, I'm not" "FICORE! LIAR!!" "But I'm not" "LIAR!"

What is your reasoning behind that?

[therealbabyxerxes]

All I've done is respond to your "claims", girl. You're the one that's harassing David. So please, by all means, give your lawyer a copy of all the comments posted here. Don't worry about showing him/her your OWN comments - I'll do that for you. David's comments against yours? I know who my money's on, Miss Ficore.

[therealbabyxerxes]

You don't need to school me on what Ficore is, mami. He IS a SAG member, has a card to prove it and he's told you that you can verify all of his information with SAG. Yet you haven't done that... either that, or you did and you didn't like the answer you got. Dun dun DUUUUUUN! Call SAG on Monday, verify his information. Either that or you're just another koolaid drinkin' crazy person that only talks to talk. YOUR HAIR IS A BIRD. YOUR ARGUMENT IS INVALID

[jasonleemoore]

Correct me if I'm wrong but if David were in fact FiCore, doesn't that mean that he would be ineligible to vote in any SAG political process? If that is the case, then why would he have been sent the SAG ballot in the mail that is clearly visible in his "Vote Yes" video?

[therealbabyxerxes]

because it was FAKED! ALL FAKED! YOU DONT EVEN KNOW, OKAY? AND YOU NEED TO BE QUIET, DAVID H LAWRENCE THE 85th OR WHATEVER YOUR NAME IS, YOU GROSS FICORE BITCH.

*munches popcorn and enjoys Michele's fuckery*

[jasonleemoore]

lolz BBX

[therealbabyxerxes]

Girl, what the hell is wrong with you? He told you he's not ficore like fifty million times AND showed his SAG card. You seriously need to chill the hell out. It's people like you that give SAG a bad name - learn to fucking listen! Call SAG and verify the information yourself and stop being so laughably ridiculous right now. Or better yet, keep the ignorant comments coming. It's entertaining as hell.

[davidhlawrence]

One other thing: I do not agree with SAG, or AFTRA, that they have jurisdiction, without a signed contract, over productions made independently for the Internet. All of our Guild's contracts have been duly negotiated with representatives with the other side. No such thing happened with "the Internet", and to simply plant the flag and claim jurisdiction will be challenged in court and found to be illegal - but that's a separate issue that will certainly set you off all over again.

[CharlesLazaruz]

great info

[OLIVER912]

Boo Hoo. Im not an internet expert , but if the Networks are only making a tenth of a penny per view instead of $1 per view, then WHY ARE THEY DOING IT?!!! Why are they chosing to stream stuff on the internet in lieu of running it multiple times on network and forcing those people who want to see it to watch it, or tivo from their television. When did Networks suddenly become un-interested in generating profit.

[davidhlawrence]

Because the networks, at this very early stage of Internet performance, are trying to figure it out, and they have some money to do it. I'm sure they will figure it out eventually, and I'll be right there with Michelle, fighting for our fair share of the revenues generated with our faces and skills.

[Viddard]

Dear David, my ACN brother. Thank you for bringing sanity to the reality of the contracts. An for fleshing out the math for the average actor. SAG should be happy to have you as a member and a spokesman. You need to run for the National Board. .

You are immensely talented.

Wish we'd wored for ACN at the same time.

Ed Kelly

ACN prinicple voice talent

SAG National Board Rep

Detroit

.

[DrChebutykin]

Joe,

David is being reasonable.

And, I can only poke a hole in his older "back to work" argument line; not in this vid. Everything he says here is pretty solid.

In the end, I hope and pray, the residual package improves faster than the MOVE-OVER occurs. And I haven't earned any residual cash in many years. But, I'd go on strike for your right to residuals.

Peaceout.

SFL in NYC

[MsKingsley]

Wow. You know, I respect your right to fight for residuals. I hope SAG members DO get what they deserve. That's all well and good. But you're missing the point and you're skewing the issue. Honestly, you sound like a self-righteous moron. If you want to be taken seriously, maybe try not making fun of someone when you're trying to make a valid point. People pay far more attention to you when you aren't being petty and catty. Good day to you and good luck in your negotiations.

[davidhlawrence]

How then did we ever get residuals in the first place? Or safety procedures? Or grace? Or the overtime structure? In fact, we have been able to constantly improve our standing by elegantly negotiating with our employers. You can repeat things over and over and over - but that makes them just as wrong as they are now.

[davidhlawrence]

If our leadership assumes that all future negotiations flow from one template, and allows that to be the case, we should remove them and replace them with leaders that can negotiate appropriately.

[ztrooper]

That is an intelligent, thoughtful, and reasonable assessment. Even with the generous math, it makes an amazingly good case. Bravo, Mr. Lawrence!

[wigsuperstore]

Well put. People just don't understand that this, like Facebook and Twitter, aren't real businesses, yet. How do you cool these guys off till that time comes? That seems to be the question. Just keep trying to educate them, and remember, all disagreements stem from either misunderstanding or miscommunication.

[pdxdvd]

Very interesting analysis, thanks! At least from an outsider view it makes complete sense. And don't forget, you've got a whole different set of infrastructure costs on the online side -- data centers, storage, bandwidth, system administration, etc.

[walshsch]

As someone who has converted the entirety of my "TV" consumption to online or computer-based sources, I feel like I'm a bit ahead of my time, perhaps to negative effect here. As you say, while the situation now may not support residual demands, it will have to change in the next several years as more young people move to rely on a digital medium that supports our changing habits and shifting schedules. Now is certainly not the time to push, but I will support SAG if it comes to that.

[davidhlawrence]

As will I. What others who disagree with me fail to acknowledge is that the solution lies in letting the market find itself, and then putting the AMPTP members squarely in our sites, and strike if we have to over it. But not now, not until we have real numbers, not just conjecture.

[sherradawn]

Most people don't understand that on-line advertising is different from "traditional" advertising. I thought you spelled it out very well.

[phantompanther]

Thank you very much for this information. It might come in handy. =)

Unfortunately, I don't have any ideas on how to improve the situation at the moment. Hmm.

[AminAmin22]

PUPPET MANNNN

[icychap]

Outstanding video. I am not in the biz and have zero experience with your subject matter, yet I now understand your position perfectly and have a reasonable understanding of the "landscape" of your issue. Have you considered law? Many high-paid trial counsel have nowhere near your level of articulation.

I have many friends (incl. my girlfriend) in the entertainment industry, and will subscribe to learn more! Thanks!

[kkolack]

David,

Excellent, lucid response. I, too, am quite frustrated with the SAG infighting over the past decade or so. I do believe, however, that the internet offers us the most easily auditable measure of viewership in the history of broadcast media. It really puts the Nielsens to shame. If no one is making money online, I agree, it's foolish to attempt to compensate the creative team behind the content. But if a package of advertising is sold for $500K as reported in the latest issue of TIME...

[kkolack]

My error- it was the cover story in the 3/16-22 issue of Weekly Variety.

I guess to compare apples to apples, we have to distinguish between webisodes and rebroadcast of current and library network broadcast. If an advertiser is paying per view on Hulu (as opposed to per click) where you can't skip ads, and there is real money made, now or in the future, a residual model could/should be implemented, since that's where traditional broadcast may be heading. That's different from an Onion webisode.

[A5J4DX]

thanks for this david it was verrrry informative :D

[Kitus57]

Thank you David, very informative. Also interesting for myself as someone from the UK to see the differences over the pond!

Eg. People here pay a TV liscence of £141 ($196) a year to watch the BBC. So let's say 60million people pay, BBC gets $11760 million a year. For ALL their shows, TV and Radio. Big show over here is Doctor Who. Primetime, doesn't even get close to a budget of a million an episode, no where near.

It really does add up. So when adverts come on, be a little thankful!

[MissMovieFan]

Very informative post, thanks for doing this

[TarotLovesClaude]

Thank you very much for this video, Mr. Lawrence. Very informative and easy to follow. --Tarot

[drmanifesto]

I think what David is doing best here, is showing how diverse the NEW MEDIA market is and how in order for SAG has to actually fundamentally understand the business it's trying to extend reach to. From content re-run on HULU to Data sold on iTunes, these are all completely new revenue streams for networks and studios to get their product to the consumer, and the networks haven't figured out how to make real money yet.

[TomboysTv]

Excellent and informative!

[poormansversion]

Thanks for this. I'm getting a little overwhelmed with all the news out there about this possible strike. Every new development seems to be the next nail in SAG's coffin, and I'm tired of hearing it. This was clear and to the point. Again, thanks for the perspective.

[sparkfield]

Is it reasonable to think that someday (with technology going where it's going) everyone involved in a production would have something akin to a Paypal account number - Everytime something is watched, everyone involved in the production would get their particular percentage of whatever income is made on that viewing, deposited directly into their account? And this whole process could be transparent so everyone sees what money comes in and where it goes. Just an idea.

[davidhlawrence]

I think that's a great idea - one that is already in use in affiliate plans all across the web - a transaction occurs, and the various parties are paid immediately.

In the category of "I'm just as annoyed with AMPTP" as I am with SAG, this is exactly the kind of thing that studios and networks that love to play with numbers are frightened of. If the actual popularity of a show (as represented by the money it makes) was known, all hell would break loose in the PR machine that is Hollywood.

[sparkfield]

David, I just want to thank you for your posts. You've really educated me about this issue. I feel that you should be on the board of SAG or at least their communications person. We need people like you to explain the details of these complex issues. Thank you!

[walshsch]

You make an interesting point, on a side note, about perceived popularity versus value that actually connects to a point made in passing in your above video. The ability to turn on a TV is a given in our society, but internet reruns and webisodes greatly favor certain shows like Heroes or "sci fi" shows which attract a more tech savvy, often younger, dare I say even "geeky" audience. It's a much smaller audience overall, but also a significant demographic shift compared to regular television.

[DavidVRey]

The website I refer to is marketed online onyl. I don't know where the networks are currently with there sites, but I know that the profit potential is enormous. the reason google says 1% is most sites are designed by amateurs and this effects there ability get good return on there traffic, and the fact is people hate ads if there is too many they leave. if there designed by professionals which I am sure they are the click through can be as high as 10%. If seen these results with my own eyes.

[DavidVRey]

also while your math was correct I know that popular sites on theat get millions of hits a day. They sell cpm like you said in your video but in much higher numbers. I also contacted hulu about advertising on the site there is minimum of $25000 deposit and I am not a network. What Do I for my day is that I am webmaster I design and market websites all day and all kinds of sites. a small site which I can't mention the name becuase my contract with them pulls in 2.5 million a year in ad revenue.

[DavidVRey]

Just one last thing I think those people fired doug allen and put a gag order on the sag president greatly weakend sag position. they should just let the strike authoriztion go out and everybody even the people against would have had there say, but they decided to make unilateral decision for the rest of Sag and forced to go crawling back the amptp only find out the MF though hardliners where actually right.

[DavidVRey]

in my opinion they can afford to offer a substancial residual on move over streaming. for orginal new media wouldn't a percentage work. Also I was wondering if you would comment on the new devolopments. Just incase you haven't heard the board rejected the amptp's last, best and final offer as it is called.

[davidhlawrence]

I'm saddened by that. SAG has wasted incredible capital by waiting this long on this agreement, and there's absolutely no changing the minds of those on the board that only see the short term.

Please explain how move-over streaming makes money. Explain the income stream from that exhibition that can support a residual plan. And read my response to Kathleen regarding "meaningful" residuals.

[DavidVRey]

the income stream I was reffering to is the television money. The income from the product it supports will have to supplement our residuals until they can match the money they make on free tv.I think it is important that we establishment a residual structure that will garranty us profit participation in the future. off course noone wants 10% of 5 bucks but I was thinking long term. I don't the trust the amptp to suddenly give us residuals we will have to fight for them sooner or later!

[DavidVRey]

part 1

HI David Lawence  Saw your video I am glad someone else knows how internet ads are bought. While I believe your math makes sense I do not believe there is no money for residuels. I was just using that same arguement to tell someone there is money in new media. I don't believe anyone is expecting the same size resiudauls as a network. The point you seem to be missing is those of us who are not regulars on shows need residuals now not in 3 years.

[yayayarat]

Lets link and post this around. David is a smart guy and answer questions when asked. Middleclassactor does his video and dissapears. Yet the hardline Membership First contingent blame everyone but themselves.

[KathleenCecchin]

So, why not base residuals on a percentage of income produced? If the total is $10 million or $5, everyone would be paid accordingly. Or am I missing something?

[davidhlawrence]

Certainly doable, but the original demand of actors like John of SAG Elephant is for "meaningful" residuals, being paid for effort, not performance of the end product. So, would you, or he, be happy with even 10% of the producer's gross of $5? If so, all of this is moot. But I doubt that's what John had in mind.

Have I gotten your question properly?

[JuneMediaCollective]

Example is CPC, if Model was judged Apples to Apples IE: cost per impression (just like tv) & not CPC model then monetizing would be a better figure.

In advertising clients are seeking one of the two models, exposure or action mostly a combination of the two.

Exposure via a popular web TV would be considered a exposure opp. or sim. buy just like a tv ad (impression)

Fee based on # viewers & monetize ad exposure based on impression vs click= healthier residuals & better judge of value.

[davidhlawrence]

Great. So, until the industry decides your formula is best (and I'm not all that clear on what you're actually proposing as there are lots of nouns and verbs but no path for them to take in your comment), what do we do with the reality of the current standards?

[Unifex]

The problem here is that the tech exists for tracking impressions and click-thrus. Because this is the case, it's what the advertiser demands. If the tech to track advertising screentime vs conversions to sales existed television advertising would be using that too.

Personally I think a monthly subscription to various services that stream media (or make it available for download) without the advertising would work well. Make it available for free also, but supported by advertising.

[WolvenSpectre]

I think that part of the problem is that as you brought up there is no model of advertising that takes advantage of the medium and tries to pigeon hole it as though it suffered the same restrictions as Television or the Movies do.

Until then I think you have to base resids on where and how the content is being used, like I have read entry level positions in radio and TV ads work, largely being fee based upfront with a minor residual package that increases with the length the ad is used.

[TheOysta]

Geniusness!

[thehelpguru]

Saw your blog post, very interesting stuff and very cool questions raised :-)

[DaneFromKC]

Why isn't David running SAG?

[crimsong19]

Interesting explanation. Thanks for the info, David!

[romulusnr]

Are webisodes the only or even best example of online video content put out by studios, or is it just a strawman?

[davidhlawrence]

Although I also deal with a replay of a network primetime episode in this video as well, yes, since webisodes are a larger catch-all phrase for content made in an episodic fashion for play over IP (read that, over the Internet). That's what John was listing on Actor's Access in his SAG Elephant video, so that's what I addressed here.

[katerene]

thanks, as always, david, for cutting thru the b.s.

[Unifex]

Great explanation about the math of webisodes. I have to ask the inevitable question though; can you provide links to sources of of the numbers you're using? YT allows embeded links in the streams now. That would be a great way to reinforce the numbers.

[davidhlawrence]

I tried to post links, and it wouln't post the comment - I'm going to try again, or put them in the description at the top of the right hand column.

[danieldrysdale]

Excellent explanation, very clear.

[sweetnote01]

David if you don't run for SAG I will be sorely vexed with you. Your common sense, logic is a MUCH needed and sorely lacking commodity! RUN David RUN!

[superscott94]

Great video! I'm a big fan of yours, I'm subscribed to your channel here and follow you on twitter.

[GeekOfComedy]

Great explanation!!