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No talent agent in Hollywood would ever wish to be compared to a taxi driver, but take a trip to a few years back to the emergence of ride-hailing upstarts like Uber and Lyft. Quickly, the taxi industry complained to regulators throughout the world of illegal taxicab operations in their midst. On one side, proponents of Uber welcomed new technology that had the potential of disrupting the status quo and providing consumers with more convenience and lower prices. On the other, critics asserted that if Uber was able to skirt taxi licensing rules, that could lead to all sorts of calamities including more dangerous rides, over-congestion on streets and drivers unable to make a living wage.
The war between the Writers Guild of America and the Association of Talent Agents has mostly been viewed within the prism of fairness. Should agents be allowed to collect packaging fees or partially own equity in content? Is this too much of a conflict of interest when agents have been nominally tasked with ensuring top compensation for their clients?
But there’s another way to view this war: a story of competition that’s not unlike the battle between the taxi industry and Uber.
For decades, talent agents have enjoyed a premium position in the Hollywood hierarchy. Thanks to laws like California’s Talent Agencies Act, one must be licensed to procure employment on behalf of an artist. That has given WME, CAA, UTA and other talent agencies a competitive edge. Any manager who dares defy the licensing scheme and lines up a gig for a writer, director, actor or other artist risks the voiding of their agreements for compensation. Throughout the years, stars including Roseanne Barr, Cher, Lisa Kudrow and Richard Pryor have gone to the California Labor Commissioner with complaints that their managers were acting as unlicensed agents. In many instances, they were able to escape paying commissions.
In economics, there’s a concept called “regulatory capture,” whereby regulatory agencies become dominated by the very industries they are charged with regulating. Instead of acting on behalf of the public, these agencies start serving special interests with the rules really shielding those entrenched from new competition. Some will argue that occupational licensing such as California’s TAA is highly susceptible to pernicious regulatory capture.
But guess who has come to the defense of the Talent Agencies Act?
Last October, in an amicus brief to the 9th Circuit Court of Appeals, SAG-AFTRA stood up against a talent manager who has been waging legal war for years against the TAA.
“The nature of the entertainment industry gives the gatekeepers to employment immense power,” stated the brief. “The manner by which artists obtain employment and the brief duration common to most industry jobs leave few artists in a position to scrutinize or challenge those who control their employment opportunities. For these reasons, and in light of recurring abuses at artists’ expense, the California Legislature has long recognized the need to regulate the gatekeepers.”
And if managers cross the line to do the work of agents? Well, according to SAG-AFTRA, they know better.
“Just as unlicensed drivers know that an officer can be waiting around the next corner, personal managers know that each act of unlicensed procurement puts them at risk of being caught,” the brief continues.
Of course, there’s more protection for artists in the form of franchise agreements between the Hollywood guilds and the association representing talent agents. These deals establish standards of conduct and impose conditions and limitations that augment the TAA. SAG’s agreement expired in 2002, however, leaving SAG-AFTRA effectively without an agreement (although the AFTRA agreement is still in place).
It’s now the inability of the WGA and the ATA to come to a new franchise agreement regulating packaging fees and equity ownership that has put pressure on the entire system. And in fact, if one pays close attention, one will see each side increasingly raising allegations of unfair competition.
For example, as the WGA told its members to fire their agents, the guild also advised writers to lean on managers and lawyers to line up new work. The WGA claims a right under the National Labor Relations Act to delegate authority to other representatives. It’s legally questionable whether the NLRA preempts the TAA, since the federal law is more about collective bargaining and doesn’t say anything explicit about the “procurement” of employment, but it is nevertheless an important development that a Hollywood guild is suddenly shrugging its shoulders at an occupational licensing statute that until now has been seen as protecting artists.
Last Friday, the ATA’s lawyers warned in a letter that such delegation violated the TAA.
“The ATA considers any and all unlawful procurement entered into at the behest of the WGA to be unfair and unlawful competition that will harm the ATA and its member agencies” (italics ours).
Now caught in the cross-fire between agents and writers, many managers and lawyers are naturally skeptical about not being held to task down the line for procuring — and even negotiating — employment for artists. Upon certain attorneys and managers coming forward to express concerns, the WGA on Tuesday in a letter to its members stated it would reimburse managers and attorneys for any fights on the TAA front. Additionally, the WGA implied that “non-clients” (meaning agents) don’t have standing to pursue TAA claims against managers/lawyers and also that its “policy going forward is to encourage its members to honor any commitment to pay a talent manager or attorney for procuring or attempting to procure engagements or employment for the writer or for providing other representation notwithstanding any alleged violation of the Act.”
And if managers or lawyers withheld services? Well, apparently, that’s a competition issue, too.
“[T]he expert antitrust attorneys from Altshuler Berzon LLP have advised that any agreement, explicit or implicit, among two or more managers or attorneys not to provide services to writers who are not represented by a talent agent would constitute a combination in restraint of trade in violation of federal antitrust law,” continued the WGA letter to its members.
There’s no franchise agreement between the WGA and ATA at the moment, and while that is dominating the discussion, the larger issue might be the potential impact of softening the teeth of California’s agent licensing law. If managers and lawyers are able to procure employment for artists without consequence, would that Uber-ize the entertainment industry? In other words, maybe agents don’t need to be explicitly barred from packaging fees and equity ownership in content. Instead, if licensed agents were confronted by new competition from unlicensed agents, then perhaps the free market would dictate the future rewards for helping an artist find work. A question for the industry: Would such disruption be tolerable?
For more on this topic, visit THR‘s labor page.
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