Ronald Reagan won the cold war. Lazy students may remember him for a different reason. He said: “It’s true hard work never killed anybody but why take the chance?”
As US president, he worked an average of three hours a day. He was inattentive, even when he was at his desk. His staff prepared briefing notes on national security and the economy. The former actor ignored them. Instead, he was happier watching the Johnny Carson show on TV.
Reagan was more industrious as an actor. Though he was a B-grade movie star, he was the head of the actor’s union. In 1960, he masterminded a double strike in Hollywood. He both got the actors and the writers to stop work.
Back then, a new platform was disrupting the cinema business — TV. This was at the heart of the dispute.
The proportion of American households with TVs had risen sharply. In 1950, less than a tenth of households had a TV. By 1960, more than 90% had one.
TV networks started showing movies. This threatened the income of the actors and the writers. They were not paid royalties from TV viewers. They wanted a share of the residual income from movie reruns on TV. They were also demanding medical insurance and pension.
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In 1960, the movie business was paralysed. Cinemas could only show reruns. Cinemas became empty.
Eventually, the studios and the talent reached a settlement. The writers and actors received medical cover and a share of the residuals.
Last month, the actors and writers joined hands again. Hollywood has been rocked by the first joint strike in 63 years.
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Reagan died 19 years ago, but today’s strike is similar to 1960. The bone of contention is another disruption — streaming.
The compensation structure has not adjusted to the Netflix era. In the broadcast TV era, writers and actors would be paid a flat fee for their work. They would be later paid “residuals” for the reruns.
For instance, the writers who had crafted Friends would get residual fees for decades after the TV show had been produced.
The rise of streaming has made this system irrelevant. The residual fees for reruns on streaming platforms are minuscule.
The writers of Friends might get US$25,000 a year for reruns in the broadcast era. Today, they would be lucky to get US$1,000 from Netflix.
This strike has lasted for months. Nearly 200,000 Hollywood workers have participated. There is a danger that the latest Mission Impossible movie, released just last month, may be one of the last blockbusters.
The entire movie industry is on the precipice of a cliff. The Hollywood strike has energised the value of the creator economy, which refers to the market of online influencers.
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The Hollywood talent may be overtaken by the creators. The creator economy is valued at US$104 billion ($140 billion) by Bloomberg.
The growth of the number of creators has been accelerated by Covid-19. There are 300 million creators performing and pontificating online. Over half of them have joined the fray since 2020.
The smartphone has given independent performers a scale that was unheard of in Reagan’s time. In 1960, an independent dancer could at best perform at a few nightclubs in a single night. Today, Charlie D’Amelio, a pink-haired 19-year-old, has 151 million TikTok followers.
TikTok is at the heart of the creator economy. This platform has 1.1 billion users, which is almost the population of China. Most of the content consists of 60-second videos.
Though TikTok is open to creators, it is closed to public investors. It is controlled by Bytedance, a Chinese giant that has a private market valuation of almost US$300 billion.
A few private capital platforms like Alta provide accredited investors with exposure. Public investors may need to look elsewhere.
They may not have to wait long. Triller, an American creator platform, has filed for a listing on NYSE. Its partners include Mike Tyson, the hard-punching boxer.
It has 450 million users, which is less than half of TikTok’s user base. It is different from TikTok in that it allows the creators to keep most of its royalties. This is 10 times the ratio for TikTok.
Also, Triller uses generative AI for content creation. Investors may not need to slog hard for their dance routine. Instead, they may want to watch the moves in the IPO market.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era. He does not hold any position in the stocks mentioned in this column. This column does not constitute investment advice of any kind
