Strike reveals a future feared

Not that some concerns aren't justified. The Internet has wreaked havoc on both the record industry and the newspaper business, making it difficult to monetize their products. Studios worry that younger consumers, who today pay $20 for new DVDs, may prefer an online rental model (via streaming or video on demand) that generates far less revenue. But there's a certain disingenuousness at work here. Every year I write a column grading the movie studios on their box-office performance. And every year, studio chiefs assure me that they're rolling in dough.

If you've ever heard an executive on an earnings call with financial analysts, you've heard the same upbeat chatter. I'm always told that somewhere down the endless ancillary revenue stream, whether its overseas box office, DVD sales, pay-TV revenue or showings on Singapore Airlines, virtually every movie will turn a profit. The same goes for TV, a veritable cash machine, at least for hit shows.

This past week Viacom reported an 80% leap in third-quarter earnings, boosted by a 57% rise in entertainment revenue. News Corp., which reported $732 million in earnings for the quarter, credited much of the gains to the box-office results from "The Simpsons Movie" and "Live Free or Die Hard." And even though Time Warner's overall earnings declined (to a paltry $1.09 billion), its movie earnings jumped 71%, thanks to the success of a new "Harry Potter" and "Oceans Thirteen."

So why are studios playing such hardball? They say they can't divvy up online revenue until they have a better idea of how much money is generated. Of course, when video came along, the studios persuaded writers to take a tiny cut of the profits, so as not to kill an emerging technology. But once they were accumulating windfall profits, did they ever revisit that deal? Not on your life.

The bottom line is that the strike is going to inflict a lot of pain, starting with the writers, who don't have the studios' deep pockets. But amid all the name-calling, what has gone relatively unnoticed is that a prolonged strike may cause all sorts of seismic shifts in the entertainment world. A younger audience, already growing distant from network TV, will spend more time than ever on the Internet, where -- with the playing field more level than ever -- the opportunity for exposure will be bigger than ever.