The big news in my corner of the world is the writers’ strike. And I do mean my corner; CBS Studio Center is located just one-half mile down the road from my home, and I walked past the picket line yesterday on my way to get a sandwich at Subway.
So it seems only right that I should comment on the strike, and I do have some thoughts – but most of them aren’t conclusions. What makes it difficult to analyze the situation is my confusion about a more basic question: why are unions so powerful in the entertainment industry, when unions are generally weak and in decline in most other sectors of the economy? If you’re familiar at all with the entertainment industry, you’ll have realized that virtually every profession in it, from the actors to the writers to the directors, is unionized.
When I’ve posed this question to non-economist friends (including some in the industry), they have often pointed to various unusual or unique features of entertainment, such as its heavy reliance on creativity or its tendency to create superstars. But these features don’t really explain anything for me. Yes, the industry does rely on creativity; yes, it creates superstars; but why would these things make unions more powerful? There are missing links in the economic argument.
I have a hypothesis, though I’m not terribly confident about it. The entertainment industry is characterized by projects – films and TV shows – that require shifting constellations of players (studio, actors, director, writers, etc.). This is what makes the Kevin Bacon game fun – you can connect any actor to any other actor via a sequence of projects. I think this structure might enable a union-based equilibrium that would not be sustainable in industries with a more traditional structure. Imagine a studio trying to run a non-union production. Unless it’s doing a low-budget independent film, chances are it will want to employ at least some union members – if not now, then in some future project. But those players won’t participate in this project if it’s non-union. Why not? An actor – just like the studio – might want to do one non-union project, but he also wants to take part in future union projects. If you’re a union member, you can get kicked out for taking non-union jobs. The same goes writers and directors. While any given player – studio, director, writer, actor – might be willing to go non-union for a single project, they avoid doing so because they could get blackballed on future projects that require union participants.
Thus: Lots of people stay in their unions (by avoiding non-union projects) so they’ll be able to work in future projects that require union players; and future projects will indeed require union players because so many people are staying in their unions. Yes, it’s circular, but circularity is the essence of many an equilibrium: you drive on the right because everyone else drives on the right, and they drive on the right because you, among other people, are also driving on the right....
Anyway, that’s just my best guess. As I said, it’s really a mystery to me. It makes me feel better that Tyler Cowen is also perplexed by the power of unions in Hollywood. Feel free to offer alternative hypotheses in the comments... but if you do, be specific about the mechanism. I'll offer more thoughts on the strike in future posts.