Today, the 12,000 members of the Writers Guild of America went on strike. Among the issues in dispute is a share of income from new media. No doubt you can find much commentary on the web on the substance of the negotiations, I’m concerned with a more practical matter: How long will the strike last?
Publicly, of course, there is much posturing. The writers have to give all appearances of being ready to strike for as long as necessary, while producers have to give the appearance of being ready to endure as long as necessary. Nobody is saying (publicly at least), “Let’s get this wrapped up by Thanksgiving so we don’t upset the holidays.” The last writers’ strike, in 1988, lasted 22 weeks.
A good forecast of the duration of the strike would have economic value — the writers would know better how to budget their savings over the next few months (weeks? days?), producers could reorganize production schedules (or not), and networks could decide how much more of their spring schedule they’ll be giving over to reality programming (too much, but the programs are cheap). Advertisers, too, might want to know when the current crop of new shows will dry up, and how long it will be before more new shows will be broadcast.
Tax collectors in Los Angeles county also will be concerned. A Los Angeles Times news story reported the 1988 strike cost the entertainment industry some $500 million, and that means fewer taxes collected in and around Hollywood. In Forbes, Southern Cal business professor Mark Young extrapolates from a 2001 Milken Institute study to estimate that a five-month strike could cost the Los Angeles area nearly $8 billion. Young notes that in 1988, the strike may have cost networks 9 percent in lost viewership. With more options for today’s viewers, the drop off from a long strike could be more dramatic.
So a good forecast would be handy, but I’m not sure it is possible to produce one. Reading the newspaper commentary, clearly the pundits have no idea. I’ve set up a play-money prediction market at Inkling asking, “How long will the Writers Guild of America strike last?” It is free to participate, so if you are interested then go sign up and spend your Inkling $$ on what you think is the right answer. The early trading favors a short strike, with prices suggesting a 20 percent chance the strike is finished in a week and another 25 percent saying no more than a month.
I’m not sure whether a prediction market can do a good job here. But, of course, the question is whether prediction markets do better than the alternatives. So far the alternative seems to be random speculation by random people, and prediction markets probably are better than that. What other forecasts are out there?
(The L A Times also reported that outside Disney in Burbank, CA, writers were handed lyrics to several pro-union chants, including, “Network bosses, rich and rude, We don’t like your attitude!”
This is what they came come up with? You’d think with 12,000 professional writers among the membership, they’d be able to do just a tiny bit better.)