The Urgent Need for Ratings Transparency
Our current 'information asymmetry' leads to market failure
This is one of two columns analyzing pressing issues around the WGA negotiations with the Alliance of Motion Picture & Television Producers (AMPTP). The second is How Raising TV’s Flat-Rate Residuals Could Backfire.
Over at the “Bulwark Goes to Hollywood” podcast, Sonny Bunch interviewed legendary TV show creator, writer and former WGA negotiating committee member Shawn Ryan after reading his piece in The Ankler about the issues at stake in the current WGA negotiations beginning March 20. What caught my ear was this response, after Sonny asked (~ minute 34) about the streamers not publicly releasing their performance data:
“I do think that secrecy has been used to probably hide some information... to hide some lower viewership and then I think it’s probably been used to underpay people on their most successful shows. It’s probably internally a good business model...
...when (his show) The Night Agent premieres [on Netflix] in March, will probably be very curious, “Are people watching it? Are you happy with how many people are watching? Do you have a sense of where people are watching it?” And I don’t know how much information they’ll give to me about that and I imagine that will be a little frustrating, but you kind of know what you’re signing up for when you sign up to do a Netflix series...
...I can’t say that it’s ideal, but that’s what it is.”
Can you imagine the WGA, around other issues that impact pay, saying, “Low pay? No job security? It’s not ideal, but that’s what it is.”
To me, the lack of streaming ratings data — which hurts writers and other talent— is a collective action problem. Looking at the upcoming negotiations between the WGA and the AMPTP,1 this feels like one of the most important issues for the WGA to demand, if not the most important.
In economics, when one side has more data than the other, that side has more power. Wikipedia actually summarizes its consequences pretty succinctly:
Information asymmetry creates an imbalance of power in transactions, which can sometimes cause the transactions to be inefficient, causing market failure in the worst case.
Today, I plan to argue for why the WGA needs to aggressively address this information imbalance. Tomorrow, I will explain how more information could