The Prof G Pod with Scott Galloway - No Mercy / No Malice: Struck

Episode Date: May 20, 2023

As read by George Hahn. https://www.profgalloway.com/struck/ Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for this show comes from Constant Contact. If you struggle just to get your customers to notice you, Constant Contact has what you need to grab their attention. Constant Contact's award-winning marketing platform offers all the automation, integration, and reporting tools that get your marketing running seamlessly, all backed by their expert live customer support. It's time to get going and growing with Constant Contact today.

Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca Support for PropG comes from NerdWallet. Starting your slash learn more to over 400 credit cards. Head over to nerdwallet.com forward slash learn more to find smarter credit cards, savings accounts, mortgage rates, and more. NerdWallet. Finance smarter. NerdWallet Compare Incorporated.

NMLS 1617539. I'm Scott Galloway, and this is No Mercy, No Malice. Hollywood writers are walking picket lines, and the media has embraced their cause, bringing us stories of hardworking writers trying to make ends meet. We get it. However, this movie does not end well. Scripted television is in structural decline. TikTok is eating Hollywood's lunch, and the robots are coming. does not end well. Scripted television is in structural decline. TikTok is eating Hollywood's lunch,

and the robots are coming. Struck, as read by George Hahn. Forty years ago, 190,000 British coal miners went on strike. Parts of central London are brought to a halt as thousands of miners and sympathizers march through the city in support of the miners' strike. It's Britain's longest and most bitter since 1926, and the most expensive ever.

The UK government, which owned the mines, met none of the strikers' demands. Mr. Chairman, what we have seen is not union gravely weakened. Over the next few years, the British coal industry dwindled to nearly nothing. This month, TV and movie writers walked off the job, demanding higher pay and protections from technological disruption. I believe the Writers Guild of America, like the UK's National Union of Mine Workers back in the 80s, has incorrectly assessed the situation and will exit the strike severely impaired. There are real differences between the miners and writers'

strikes. The miners' strike was controversial within the union itself, and some regions refused to take part. In contrast, the Writers Guild voted 98% in support of this action. The media is fawning over the writers as our Hollywood stars. What they're asking for is not too much. They're just asking to be properly competent. It's very hard to prepare in any way other than, you know, to say that the writers are the best friends that we have as actors. I believe very strongly in our union. I think that our solidarity is the most powerful tool that we have. If the writers have to work so hard and get paid as little as possible

in order to bring these things to fruition, that's not good for the food chain. Actors who command millions bringing coffee to writers who make $2,000 per episode of Jimmy Kimmel Live are just adorable. We stand with you. Please don't touch me. Anyway, the differences won't make a difference. None of that solidarity matters, as British mining and scripted entertainment share one thing. Both were, are, in structural decline and on the wrong end of a tsunami of alternatives.

UK coal production peaked in 1913, and by the 1970s, an erosion in demand had morphed into a collapse. The problem wasn't a lack of coal, the British Isles sit on a 300 million year old layer of carbonized jungle. But changing consumer preferences and surplus competition. Electrical generation shifted to cleaner North Sea natural gas, even as imported coal was undercutting Newcastle's finest on price. The situation was so bad, the UK seized the mines to keep them running, as the operations were losing hundreds of millions of pounds per year. What prompted the final face-off by the striking miners was existential, the planned closure of dozens of mines. They screamed at change, but progress wouldn't listen. Today, entertainment is no less relevant than energy was in the 1980s.

But we are increasingly getting it from somewhere other than a Hollywood writer's room. The rise of reality TV, birthed by a writer's strike in 1988, created an entire genre that relies less on writers. Cops, one of the first big reality shows, was conceived as content that could be produced during the strike. Live sports are more popular than ever. 94 of the top 100 telecasts in 2022 were sporting events. Apple paid $2.5 billion to stream Major League Soccer and is rumored to be readying a bid for the Premier League.

There's more of it to come. MLS, XFL, WNBA, PLL, hockey in Las Vegas. Even within the narrowing genre of scripted TV, there's the accumulated competition of history. Friends wrapped in 2004, but in 2015, Netflix paid $118 million to infinitely stream all 236 episodes.

The threat isn't other TV. It's other than TV. Social media is, at its core, unscripted entertainment. YouTube has 122 million US users every day, and YouTuber MrBeast has three times more subscribers than Hulu. I recreated every single set from Squid Game in real life. I put 100 people inside of a giant circle. And whoever leaves the circle last wins $500,000. I'm gonna spend the next 50 hours buried alive in this coffin.

But the biggest hands around the windpipe of scripted TV belong to TikTok. Short form video, written and produced by amateurs, floods our lives by the gigabyte, endless in volume and variety, commanding 95 minutes a day of our attention. The younger the viewer, the more they prefer TikTok to television.

Stranded on a desert island with Wi-Fi and only one screen, two-thirds of Gen Z say they'd choose TikTok over the entirety of television and streaming. Put another way, writers shouldn't be picketing outside studios in Los Angeles, but ByteDance HQ in Beijing. Also, the culprit isn't some cartoon villain studio exec, but your nephew who's never had cable and prefers to spend 45 minutes scrolling TikTok to paying $6.99 a month to watch The Witcher. He's never heard of Stephen Colbert.

It's tone deaf to ask dad for an increase in your allowance the week after he's lost his job. Comcast's gross margin has melted from 27% to 4% in the past five years. Disney's from 16% to 4%. Warner Brothers Discovery, once a cash-generating titan, posted $7 billion in losses last year. Paramount lost $511 million last quarter on streaming and is cutting its workforce by 25%. Netflix is the only streamer that's been able to increase its margin, but subscriber growth has hit a wall. So it's cutting $300 million in costs. Of its existing viewership, 100 million are using passwords borrowed from friends, siblings, kids.

Similar to the miners watching the mines close, writers have felt winter coming for years. Adjusted for inflation, the median writer-producer salary has declined 23% in the past decade. Much of this is due to streaming. While a traditional 22-episode broadcast program guarantees writers 30 to 40 weeks of work, the average 10-episode streaming series only guarantees 20. And streamers pay writers little or nothing in residuals, payments received when a show goes into reruns and syndication, once a huge source of security in an insecure sector. Studios are also getting craftier about relying on junior writers, reducing the number of writers

on a show, and barring writers from working on other shows for longer periods. Ten years ago, a third of writers worked at what's called the minimum basic agreement, the minimum amount studios have to pay. Today, half do. In anticipation of the 1984 miners' strike, Thatcher built up massive coal reserves, key to breaking the strike. The staggering overinvestment in content that streamers engaged in over the past decade hammered profit margins, but also built a reservoir of shows consumers can't see beyond. I watch a lot of TV, but my Netflix queue will outlast the writer's strike fund by a decade. Question.

What do late-night TV and downtown office space have in common? Answer. Neither will recover. Few kids grow up dreaming of being a minor. One sign of how fucked up our nation is? The most cited career American youth aspire to? Influencer. A creator who runs ads during their content. Entertainment professionals have always had to contend with bus and plane loads of hopeful young people arriving in LA and NYC. Now those millions arrive each day on people's phones. On our Markets podcast this week,

Prof. G Media analyst Mia Silverio interviewed some of the picketing writers in New York. And they assured her that what they did, the magic of their creativity, was a distinctly human trait, not something AI could replicate. I mean, it's a stochastic parrot, right, as they say. So it's very good at giving you what the predictable next thing is. If you want more predictable things in the world, then I guess that's what you want. Their union isn't as confident as they are, though. One of the sticking points in the negotiations has been the use of AI. Specifically, the union wants to bar the studios from using it.

While the writers have a valid point asking for a form of residuals from content that informs large language models, generative AI, asking studios to not use AI has the same probability of succeeding as demanding they give up texting and air conditioning. As with near every technological innovation, AI will inspire job losses in the short run and then, over the long term, net job creation. Automation destroyed jobs on the factory floor, but at first we didn't see the jobs that heated seats and car stereos would create. There will be a plethora of new service providers in the streaming business that leverage AI. In addition, there is usually a winner-takes-most effect. A decent writer gets called. A great writer earns more. In sum, AI won't take your job, but someone who understands AI will.

Pro tip, while you're on strike, let your Netflix queue grow and play with Notion AI. The writer's strike and its outcome will boil down to incentives and leverage. The studios need a pause that cauterizes their unsustainable spending. However, the break would need to be multilateral, so no one company grabs share by maintaining those higher levels of investment. Enter the gift to end all gifts, providing the studios a recalibration of the economics of streaming without the risk of losing share. I just don't feel a sense of urgency to end this strike, said every studio head. When I moved to New York, I began practicing yoga,

believing I'd meet hot women and find inner peace. Neither happened, so I took up boxing. My trainer was blown away by my hand speed and suggested I enter a tournament. Twenty seconds into the first round of my first bout, I was distracted by bright lights. They were the ceiling lights staring down on me as I was flat on my back regaining consciousness. I had grossly miscalculated the parties involved and their relative strength. In six to twelve months, Hollywood writers will see the light.

A light that inspires one question. What the fuck just happened? Life is so rich. Hello, I'm Esther Perel, psychotherapist and host of the podcast, Where Should We Begin, which delves into the multiple layers of relationships, mostly romantic. But in this special series, I focus on our relationships with our colleagues, business partners and managers. Listen in as I talk to co-workers facing their own challenges with one another and get the

real work done. Tune into How's Work, a special series from Where Should We Begin, sponsored by Klaviyo. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you? And what privacy issues should you ultimately watch out for? Thank you.