Eisner's advice to striking writers: Blame Steve Jobs, not the studios

NEW YORK--In his keynote speech on Wednesday morning at the Media and Money conference hosted by Dow Jones and Nielsen, former Disney CEO Michael Eisner talked about writers as though they were a minority group that he didn't particularly understand well. "I like writers. Some of my best friends are writers," he said as though attempting to save face. But nevertheless, his foremost epithet for the ongoing Writer's Guild of America strike was "stupid."

"I see stupid strikes, and I see less stupid strikes. I see smart strikes," Eisner said in the keynote, which was structured as a conversation with Neil P. Cavuto, senior vice president and managing editor of Fox Business News. "This is a stupid strike."

The problem, Eisner said, is that the Writer's Guild is lobbying for a bigger cut of the profits from digital distribution--and according to the former Disney chief, those profits simply aren't there. Eisner, now the head of a private investment firm called The Tornante Company, has launched an online video studio called Vuguru, and said that it's still more or less a fruitless labor. Vuguru's debut series, a serial mystery called Prom Queen, "didn't make money," he said.

Cavuto, naturally, played devil's advocate and asked Eisner why he's sticking with it. "First of all, I'm doing it because I think it's fun, I think it's the future, and I think it's interesting," Eisner replied, "(but) I'm begging advertisers to give me enough money to break even."

At the moment, Eisner said, digital media is too new to be profitable. "The studios are there because they don't want to be in the transportation business and telling everybody that they're in the train business," he said. "They want to be in the entertainment business, and God forbid they should forget yet another distribution track." In other words, they don't want to get left behind.

He said it would take about three years for Web video and other forms of digital distribution to gain enough of a foothold to be profitable--and that's when the Writer's Guild would have a case to make. "What I'm saying is for a current writer, for six thousand people to give up today's money for a nonexistent piece today is stupid," Eisner asserted. "They can do it in three years. They shouldn't be doing it now." Right now, the profit from digital content is "a piece of a nonexistent flow, which won't be nonexistent, but it will be nonexistent for the next three years."

One thing Cavuto failed to ask Eisner, who estimated that the Writer's Guild strike would dissipate by the end of next week, was exactly how Web video would start to be profitable. Presumably, advertisers will warm up to the opportunity.

But Eisner acknowledged that the studios and networks aren't entirely faultless. Their problem, he said, is hyping up digital platforms as being more profitable than they actually are. "It's a double-edged sword. The studios deserve what they're getting, because they've been announcing how great (the Internet) is. But then they open their books."

Eisner, a well-known critic of Apple (whose CEO, Steve Jobs, is a powerful member of Disney's board of directors), suggested that the profits may be getting sucked up elsewhere. The studios "make deals with Steve Jobs, who takes them to the cleaners. They make all these kinds of things, and who's making money? Apple! They should get a piece of Apple. If I was a union, I'd be striking up wherever he is."

"Cupertino?" Cavuto offered.

[GSale51]

Eisner needs to grow up

If Eisner is s sore loser, he would be making these kinds of comments. Let's face it, the world of Disney and the 50's has changed. Eisner has some great abilities, I am sure. But Jobs is not responsible for all things bad. Change is not bad (when we are talking about anything but our freedoms), but getting defensive and attacking Jobs because he was able to figure out a new way of distribution for digital media is stupid. <br />Eisner needs to spend more time learning how to use a PC and an iBook, and less time explaining why he is the best thing Disney ever had.

[Below Meigh]

Eisner's arse still hurts from Disney's boot

Eisner: King of Moratorium and Licensing.<br /><br />The King is dead.

[john55440]

Yup, Jobs is a master con artist

Steve Jobs never does win-win deals with other companies, he only does win-lose deals where the "partner" gets screwed.

[mike.gw]

Bull!

If you are the CEO of a company and are incapable of evaluating the pros/cons of a proposed deal, then you are unqualified for the job. It's each CEO's job to look out for the wellbeing of the firm and the shareholders in any proposed deal.

[muskratboy]

yer right, ATT is PISSED

... at the extra $80 million they make every month now. man, Jobs SCREWED them over good.<br /><br />and i am a little fuzzy on how Jobs enters into a writer's strike at all. because he promotes iTunes?<br /><br />so TV writers hear that iTunes is making money and then strike because they want a piece of... itunes? because Steve Jobs is a big TV guy? what the hell is eisner talking about?

[there can be only one]

Eisner is just a sore loser

If you read the book 'DisneyWar' you'd know that Eisner was <br />wreaking havoc in the Disney empire and tried to beat down Pixar. <br />When he soured that unbelievably profitable partnership he lost all <br />remaining credibility with the Disney Board. He takes every <br />opportunity to sharpen his claws on Apple or Steve Jobs or Pixar <br />[though he's quieted his criticisms once Disney bought them up]. <br />Eisner is a bitter has-been.

[oxtail01]

wow-what an insight!

So devoid of actual facts and logic - you must be Eisner's buddy!

[_t3h]

In that case...

Why does Apple have so many partners if it's so well known that <br />they just get screwed?

[punterjoe]

So where's the conflict?

If Writers want a percentage of new media profits &#38; companies assert that there ARE no new media profits, then why would they resist giving ANY percentage of what they claim is 0?<br />Someone's not being forthright here.<br />...calling Arthur Andersen...

[dascha1]

Necessity and Associated

The history of both sides stems in the U.S. from inventors like <br />Edison, who ironically attended and promoted the launch of <br />Universal Pictures when it opened in the early 20th Century. <br />There's nothing new about this at all. But, when the food isn't <br />on the table for the creators, and there are Jumbo Jets flying an <br />individual's ego, then obviously there's a gap that isn't right. i <br />think both sides would agree with this. And, of note, don't you <br />think the egg was put before the chicken when the 1 millionth <br />music download occurred? Who promoted that? How did we all <br />come to know about that little tid-bit?

[M C]

Proof Eisner is a druggie...

...thinking that a mere 70% cut is "being taken to the cleaners" could only come from the mind of someone on dope.

[Penguinisto]

Calling Eisner out:

"[i]He said it would take about three years for Web video and other forms of digital distribution to gain enough of a foothold to be profitable[/i]"<br /><br />One word: Netflix. <br /><br />You can download a rented movie from 'em over broadband, and it takes very little time at all to do it. Netflix seems to be doing alright by themselves, even turning a profit and slaughtering the marketshares of traditional video rental houses like Hollywood Video and Blockbuster. <br /><br />So I suspect that if a media company CEO can't even acknowledge (and even refutes) something that big, he's either incompetent or trying to push an agenda. I'm thinking the latter, along the lines of "poor me, I'm going broke selling stuff online and those bastich writers want their cut too! *snif*"<br /><br />Whatever - Netflix is but one of numerous examples of companies who have zero problems with digital distribution, and the movie houses are going to have to get used to the idea that they're no longer the only game in town.<br /><br />/P

[mpitogo]

Hey did Zenith pay to get Radio and TV content?

Hey did Zenith pay to get Radio and TV content? Back before I was <br />born content was only available by Radio and TV. Today you have a <br />wide range of choices in the digital realm for distribution. So why <br />blame Apple for leading the way in online digital distribution. It <br />seems they have a well established system for paid content.

[Renegade Knight]

That was interesting.

Assuming they cut up the pie a certain way for standard media. They can cut up the pie the same way for digital. If they gave 10% of the Net to Writers (and I have no idea if it's 10% let alone if it's a percent at all) they can give 10% of the Net on digital.<br /><br />This isn't rocket science. If it is, then it's a good time to simplify.

[Pixelslave]

He's talking about profit!

Look, he's talking about "profit" -- I don't know enough to tell whether the studio is profitable or not. But let's just "assume" he is right. When the studio is at a loss, there's not pie to cut. You have negative cash flow for the digital distribution. Will the writer contribute back to cover the loss?<br /><br />That said, the writers aren't just looking to get paid from internet distribution. They are also eyeing the DVD royalty also. Correct me if I am wrong, but I think the studio makes money (A LOT OF THEM) from DVD. That's the pie they can definitely cut up and give to the writer.

[bitjunky]

Entertainment Executives...

Eisner sounds just like NBC's Zucker...<br /><br />The entertainment industry is populated almost entirely of <br />nephews and sons. When you get to about the third or fourth <br />generation of nepotism, with each previous generation "watering <br />down" the genuine intelligence of the first generation by <br />marrying vacuous bimbos to sire their children, you have little <br />but empty suits with no brains who have grown up in an <br />atmosphere of entitlement. Really, it's very much like the old <br />days of hereditary royalty. The first guy got to be in charge by <br />leading an army and hacking his way to the top with a sword, <br />but his great grandson sits on the same throne eating himself <br />stupid and surrounding himself with yes-men who tell him he's <br />brilliant.<br /><br />The big media companies do not create anything. In one of their <br />business practices, they do enable the creation of content by <br />providing the up-front capital. But because of their lock on <br />distribution, they can extract completely unreasonable terms <br />from anybody who wants to get paid for producing that content. <br />With the way that the business is structured, there's only one <br />game in town - it just has many faces. It's highway robbery in <br />the classic sense - they control a critical piece of the road from <br />creation to the consumer and get to take away as much as they <br />can carry. <br /><br />That is, there was only one game in town. Now comes the <br />Internet - you don't need a network of affiliates all over the <br />country, you don't need to buy into a basic cable distribution <br />package, you don't need to grovel at whatever deals the <br />incompetent cartel executives tell you are in your best interests <br />and ultimately you don't have to just swallow it when they tell <br />you to dumb it down and add more T &#38; A. If you can get it <br />created, the Internet will take care of the distribution for what is <br />essentially free (at least, if you can figure out a way to make <br />money, it'll be a tiny fraction of what people will pay). <br /><br />The content cartels' days are numbered, and they're going to <br />blame everybody they can for the extinction of their business <br />model when it's really just the march of technology that has <br />finally obsoleted their highway robbery. <br /><br />We're not there yet but Apple, and anybody else who can figure <br />out how to cut the cartels out of the decision making process <br />while still allowing content creators to make money, is going to <br />put these dinosaurs in the ground. And not a minute too soon.

[ModParent]

Well said

Damn, bitjunky, that's the best comment I've read on CNet all year. It should be printed up and passed out at business schools. You should be writing (er, formally) for CNet.

[complex09]

Great comment!

I agree, well said!

[dondarko]

bravo

...

[drod01]

NBC

If anyone has heard that one of the top media company has <br />pulled out of a contract from iTunes and are giving away free <br />shows on the web.<br /><br />The writers and producers and so on are NOT receiving a penny <br />from this free distribution to millions of consumers. NBC said it <br />is a promotional advertisement that is not part of the actors, <br />writers, producers, etc, contract to receive any residuals. Even <br />thought these free shows have paid advertisement or <br />commercials in them. In another words NBC is making a <br />substantial amount of money from these "Free" shows on their <br />web site.

[m.meister]

just doesn't add up

I don't know what cut Apple is taking for delivering movies. I do <br />know that in music, it's around 30%. Let's say its the same.<br /><br />For a studio, that means a 70% cut with essentially no extra <br />costs. There is some minimal one time costs to encode the video <br />in Apple's format and provide the necessary artwork. That's it.<br /><br />Apple pays for the bandwidth to download the movies and <br />studios get their 70% cut. <br /><br />Zero costs, 70% cut of revenue, umm, if you can't make money <br />in that scenario, you suck as a businessman.<br /><br />I love how folks are looking to blame Apple for everything these <br />days. There is no way the problem could be with the actual <br />studios, because THEY would never do wrong by the actors and <br />writers. They have the purest of hearts... which is why you <br />NEVER accept net revenues from studios. Instead, you look at <br />gross revenues, else you'll never see a dime.

[m.meister]

does this violate CNET's policy?

Policy: The posting of advertisements, profanity or personal attacks <br />is prohibited.<br /><br />I guess an article with the title "Blame Steve Jobs" is not considered <br />a personal attack.

[DrtyDogg]

quote

C|net is not saying that, they are quoting someone else.

[klinkenbecker]

This simply confirms...

Eisner is a prat - always was always will be.<br /><br />Begging for advertising?!?! How lame is that.<br /><br />Get a life, get some half decent content and get a CLUE!

[nickhronis]

The Devil Is Always In the Details

It's interesting that Mr. Eisner makes no mention of the DVD <br />market, which is the real reason for the strike. The writers were<br />told by Nicholas Counter III years ago to have a "wait and see" <br />attitude toward that market, and look what happened. Mr. Eisner <br />also fails to point out the phenomenal success of Itunes, which has <br />brought billions into the music business. Better to be late to the <br />table than never, Mr. Eisner.

[maeckg]

Eisner sacked Disney, should not complain

Eisner took Disney for a ride and left with enough money so he should not complain. Like a lot of comments here, it is the writers that have always gotten the raw deal, not the executives or media companies. Now is the time for the writers to protect their interests before the internet profits become so valuable that management won't give up anything.<br /> Right now I am seriously considering cancelling cable TV since it is mostly reruns, ads and infomercials and little good content. The internet may actually contain already more good content than TV. <br /> I am willing to pay for good entertainment, but cable is too inflexable so I pay for mostly what I do not want to watch. The internet offers targeted ads (googlization) but can offer targeted content that is worth more because I get more what I choose. Somebody will soon find a business model for this. Right now Netflix saves the day for me.

[sarasvatia]

Eisner v. writers

Eisner is projecting his decaying self-image, as he declares Jobs, the writers and the internet users to be stupid. By saying this, he is showing that has reached his useful limits. His inability to fathom the significance of the i/net and the fast emergence and acceptance of the alternative media almost destroyed Disney. He resisted the internet, b/c he neither understood it nor could he grasp its potential. And he still doesn't, as he is asks for a 3-year delay, blind to the fact that the technology is already here. As the price of the hardware is dropping in response to market saturation, dvd prices are kept up despite the surge of cheaper i/net alternatives. Eisner is not the only one responsible for the decline of dvds. The internet was vigourously resisted by the studio and tv brass until a decade ago, when a new crop of suits entered the corporate offices. Suddenly, everything internet was 'hot'. The most insane decision of those clueless converts was the enthusiastic purchase of aol by TW: at a time when AOL had already morphed into a dinosaur. Worse, they are still behind the curve. Their spokesman, Eisner The Redundant, cannot see that the evolution of the i/net which he is projecting for 3 years hence, is already a well-established, thriving and profitable reality. The writers know it and that's why they're striking. It's only fair that they profit from their work, without which hundreds of thousands of people would be working the assembly lines, cleaning streets, waiting on tables as a career..., including Eisner. It's time that he and the rest of the benighted suits and their obtuse sycophants retire before they're contracts are no longer renewed or the shareholders, following Disney sh/holders' lead, demand their resignations. Maybe they will go away when Armani creates a line of designer dungarees accessorized with museum-quality pitchforks. <br />These are the same suits who are deaf to the demands that the internet speed up. This country is lagging well behind the rest of the developed world that is closing in on speeds of 20Mbps, while we hover around... 3 (three) Mbps. If they think they will succeed in creating a two-tier i/net, they need to be retired, no - fired, right now! The phone companies wouldn't get with the times, and now they're replaced by Skype, Gizmo, Grand Central, EQO to name a few, free or cheap, alternatives. Cell phone carriers are next. TVs will be gone in a decade or so. Maybe sooner.

[Rita McKee]

Hey -- look over there!

Eisner's comments remind me of cartoons where Tweety or whoever was cornered says "Hey - look over there" just so they can escape danger.<br /><br />Eisner's comments about "nonexistent" income for writers is laughable... the number of DVDs sold each year just keeps growing, and I'm sure Disney has an income stream from them (as does each director). Why shouldn't the writers get income from their work?

[GSRich78]

Comcast On Demand!

You can catch reruns on Comcast's On-demand service. I think Comcast is killing Blockbuster also because theres alot of free movies on that thing.

[mikeburek]

Internet is good

What studio says the internet is good? They're on the internet only because so many customers have dragged them kicking and screaming into the internet.

[George Riddick]

Eisner is half right ... con artists beware!

Finally! <br /><br />Is Mr. Eisner the only business executive in the traditional media/entertainment industry who gets this? I sure hope not.<br /><br />Of course, the Internet crew is full of "con artists", as one of your readers noted earlier. Half the top billionaires in this country come from this lot. Do you really think they have gotten there by playing fairly or respecting the rights of writers, artists, and other copyright owners? <br /><br />And there are no profits in this entrie distribution channel to share with the original creators of content??? Give me a break!<br /><br />These traditional media executives should have their salaries cut by 1/3 every time they "strike" a bad deal with the Apple's, Google's, Yahoo's, or Microsoft's of the world. Problem is ... they'd all be on the streets by year's end.<br /><br />Where are the young "deal makers" in the modern media/entertainment companies? Can it be that every "modern" rocket scientist, investment banker, and spinmaster we have left in this coountry now works for someone in Silicon Valley or Redmond?<br /><br />Wake up folks. If there are profits to be made down the road, why can't those terms be written into a fair and equitable agreement today?<br /><br />A prolonged strike is not the answer. <br /><br />I am certain of one thing. This strike sure isn't stopping the overflow of cash in the bank accounts of these Internet self-proclaimed "visionaries".<br /><br />If the entertainment industry doesn't wake up soon, we'll see Google and Microsoft (and perhaps even China) stepping in to arbitrate these royalty issues. <br /><br />Who wants that to happen?<br /><br />George P. Riddick, III<br />Chairman/CEO<br />Imageline, Inc.<br /><br />[e-mail]

[substrata]

George P. Riddick, III is a man with a mission. A man with a singular and almost fanatical crusade to seek out and destroy those he claims to have violated his copyright and therefore should be burnt in hell (or pay out substantial amounts of cash, whichever the courts decide first, I guess)!<br /><br />What George P. Riddick, III is possibly unaware of however, is that his collection of bitmap clip art is vastly out-dated crap that no one in their right mind apart from the odd backwater church community or primary school would ever nowadays use. Although he still viciously pursues and targets those as well.<br /><br />With the immense and truly wonderful power of the Internet, search engines as powered by Google and Microsoft collect and index information that makes it easier for everyone to find images. Mr Riddick is ferociously against this as he believes they infringe his copyright by holding his images on their servers, and therefore people can search and use them freely.<br /><br />(Read his comment to an article here:<br /><br />http://seekingalpha.com/article/48337-microsoft-banks-170-million-in-first-day-of-halo-3-release)<br /><br />Well, I guess of course this would be correct them if the images you are so fiercely protecting do not have a copyright watermark on them!<br /><br />Oddly enough too, Microsoft, one of his hated targeted companies belongs to the Copyright Alliance Organization, of which George is also a proud member and hypocritically uses this fact when dishing out one of his so-called 'official' emails.<br /><br />The ironic twist to all this is that the bitter and resentful George P. Riddick, III should look no further for international infringement than within his own collection of shoddy and archaic bitmaps. I noticed one example of the United Nations flag here:<br /><br />http://www.imageline2.com/pages/ipics2_MAPSFlags.htm<br /><br />Now, even though such flags are ineligible for copyright they are still protected by 'Article 6' of the Paris Convention (Protection of State Emblems, and Names, Abbreviations and Emblems of International Intergovernmental Organizations).<br /><br />I wonder if Mr Riddick therefore realizes that depicted images (including but not limited to photographs and two dimensional drawings) representing partly or in whole of the UN emblem, name and flag are STRICTLY PROHIBITED FOR DISTRIBUTED COMMERCIAL USE without going through proper channels of procedure and obtaining permission.<br /><br />Mr Riddick claims to have never been accused of any violations within the last 25 years, well I have news, now you have. Yes George P. Riddick, III, you too are seriously infringing the industrial property rights of an international organization, how does it feel?<br /><br />So Mr Riddick, before you continue your tiresome, pointless and self-indulging evangelistic campaign, maybe you should look nearer home, hold yourself accountable and add Imageline, Inc. to that All Company Listing you so condescendingly produce. And how about sending the United Nations a grovelling apology and one of those huge out-of-court settlement fees that you so enjoy collecting from everyone else.<br /><br />And remember, an ignorant plea is never a defence in a court of law.