When Canada's performers went on strike last week, the issues included the usual grievances of workers versus management: pay, benefits and working conditions. But the sticking point was a multi-billion dollar question that could haunt the global audiovisual industry for years to come: how to share the revenue from the platforms of the future'

As the media orgy surrounding Apple's introduction of the iPhone makes clear, it is a future that is rushing towards us. And the stakes are enormous: Apple's share price rose in proportion to the drop of the share price of other mobile manufacturers. Nearly one billion mobile phones were sold in 2006, a scale that dwarfs theatrical and home entertainment categories.

It is not far-fetched to presume that each of the billion-plus mobile phones sold in 2012 (think China, think India) will be video-enabled.

As the conventional DVD market flattens and consumers sit on the HD-DVD-BluRay fence, the major US distributors are looking for a fresh surge of revenue. According to data released on January 8 by DEG: The Digital Entertainment Group, total consumer spending on home video dropped for the second consecutive year, from $24.5m in 2004 to $24.3m in 2005 to $24.2m in 2006.

And while part of this decline is attributed to the demise of the VHS format, DVD sell-through rose less than 2% between 2005 and 2006 - the lowest increase since the format was introduced.

But home entertainment holds historical resonance for Hollywood's creative community, especially the members of the Screen Actors Guild, Writers Guild of America and Directors Guild of America who feel the home entertainment deal they negotiated in the early 1980s was inequitable.

As Pamm Fair, the deputy national executive director for SAG, told Screen International, 'The (home video) market exploded and we were bound to a formula that didn't seem to give us our fair share.' This time around, the creative community employed to make the content is determined to cut itself a larger portion of the pie.

In this way, the Canadian actors' strike is seen as 'a canary in the gold mine', as Actra's chief negotiator Steven Waddell termed it.

Speaking at the formal strike announcement on January 8, Waddell quickly corrected his slip, but the analogy is more apposite than the intended coal mine. Should Canadian actors win better terms for a share in new media revenues, the precedent will be ammunition for SAG.

'It's not a one-size-fits-all,' says SAG's Fair, referring to the different issues facing Actra. 'But we're very cognisant that technology is changing both the nature of the work and the business model. We're preparing for our negotiations in 2008 with research, input from members and there are a lot of variables. But clearly that's why we have observers at (Actra's) negotiations.'

Those talks broke off when Actra declined to sign an independent production agreement with the people on the other side of the table, the Canadian Film and Television Production Association (Cftpa), the Association des Producteurs de Film et de Television du Quebec (Apftq), and the representatives of the major US studios that finance films and television productions shot in Canada.

As usual in antagonistic circumstances, misinformation is an issue. At the January 8 press conference, Canadian actress Wendy Crewson, who works frequently in film and television in both the US and Canada, uttered a provocative sound-bite: 'Professional performers don't work for free. Not on TV. Not on film. And not on the internet.'

An offer on the table

Actra's Steven Waddell admits the Cftpa and its co-negotiators are offering something for new media rights - 3.6% of distributors' gross revenue - but in exchange, he says, 'They want the right to repackage and repurpose any raw material for multiple platforms in perpetuity. And they want to take the last 45 years of extant material and apply it retrospectively without consent of performers and simply pay 3.6%.'

The 'free' part of Crewson's sound-bite, he says, refers to the producers' wish to stream episodes on the web for promotion 'without compensation'.

Waddell points to Actra's production agreement with the Canadian Broadcasting Corporation, which provides a 10% royalty, as a model. In its final counter-proposal, Actra suggested the issue be referred to a joint committee, 'with assistance of a jointly funded expert' to report in one year. If no agreement is reached, the matter would be referred to non-binding arbitration.

Across the table, John Barrack, the Cftpa's chief negotiator, suggests Actra's expectations are out of step with reality. 'Actors can't expect to be paid the same amount for a mobisode. We're not trying to undo the traditional model. It's all about work opportunities. My members have a different reality than we had seven years ago. You either accept and get on with it or it passes you by. The best agreement is useless if there is no work.'

Perfect timing

In that sense, Actra's timing is good. January is the low season for production in Canada. The majority of its membership is not working anyway. Meanwhile, those with contracts will continue to report for work.

This is one of the stranger aspects of the Actra strike. Productions in the affected provinces that are before camera or set to shoot have signed production-specific interim agreements, including a 7% increase in pay and benefits.

According to Actra's website, 89 productions have signed such agreements, including The Weinstein Company-backed Killshot, and Whiteout, the first production of Joel Silver's Dark Castle Productions under its new $240m, 15-picture slate deal with a Wall Street investment consortium led by CIT Group. SAG's Fair says her membership has been advised to respect the Canadian strike.

Similarly, the American Federation of Television and Radio Artists (Aftra), has informed its members to respect the strike.

Don Carmody, a Toronto-based independent producer who has guided dozens of US-financed features shooting in Canada, including Whiteout, says the strike comes at the worst possible time. 'We were poised to say, 'We're back in business,'' he says, referring to other labour woes in Ontario and Quebec that are nearing resolution, as well as a stabilisation of the Canada-US dollar exchange rate. 'And we've finally broken ground on the mega-studio [the long-anticipated Toronto Portlands film studio].'

Carmody says he had no choice but to sign Actra's agreement. 'I had a gun to my head. The film is set in Antarctica. I need snow.' He says he was setting up two other productions for Canadian shoots but will now put them 'on the back burner'. He declined to give details but added that signing the agreement is a way of covering his bets on Whiteout, which is in pre-production. 'I'm not 100% sure we're making the movie.'

Nor is the Alliance of Motion Picture and Television Producers (Amptp), the labour-negotiating arm of the Motion Picture Association of America (Mpaa). Last week, the Mptp issued a remarkably strident communique: 'The Actra strike has created a situation that could potentially have a devastating and long-term impact on production in all of Canada with the exception of British Columbia.'

That is true: according to the Cftpa's own statistics, of the $4.9bn in production in Canada in 2005, $1.62bn (c$1.9bn) was financed from abroad (read, the US) and almost all of that production would have been affected by an Actra strike. But the exception is false: while actors in British Columbia work under a separate production agreement, that agreement expires on March 31; moreover, the Union of BC Performers has said it will not allow its members to work on productions that relocate to avoid the Actra strike.

Whatever. Carmody puts it bluntly: the Canadian industry is driven by the US studios. 'They (Actra performers) bitch about not getting starring roles. But we hire hundreds of [Actra] actors a year, and at higher rates... It's hard to believe that the country's on strike over an issue that no-one can put a value on.' Carmody says Actra should sign the agreement and move on. 'It's a three-year agreement. This isn't going to be solved for years. We can negotiate again.'

But that would set a precedent. And precedents are what both sides are eager for and wary of. If Canada's actors can force the producers' hand, then what is to stop SAG, or the other US creative unions, from returning to the home video war of words'

In May 2006, WGA West president Patric Verrone was already looking ahead to the Guild's 2007 negotiation with Amptp regarding new media. In an interview with an internal WGA website, he told his membership: 'These have been galvanising issues for our members unlike anything I've seen in almost 20 years in the Guild.'

Canary in the gold mine' Perhaps the Marxist nostrum should be similarly updated: the workers want some control not of the means of production but the means of distribution.

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