Writers’ strike.27 On November 5, 2007, the Writers Guild of America, representing 12,000 writers, struck the Alliance of Motion Picture and Television Producers. A key issue in the strike was the writers’

demand for residuals from distribution of their work in “new media”—Internet downloads, Internet Protocol TV (IPTV), streaming video, smart phones, and on-demand cable/satellite programming. The Writers Guild asked for 2.5% of gross income from new media.Writers are normally paid a percentage of future revenues, but excluding those from new media. Is it ethical for a recording studio to keep making money on their work without compensating them?

Hints. It is not enough simply to say that fair compensation is whatever the market dictates. Any such claim should be defended by appeal to the conditions of rational choice. The outcome may depend on some factual issues. To deal with this, analyze the case under the four scenarios in Table 6.2, where the propositions

(a) and

(b) are:

a. There is reason to believe that paying writers the 2.5% would create more overall utility, because they are currently underpaid and spend much of their time making ends meet by other means.

b. There is reason to believe that the movie/television industry as a whole would not be profitable enough to attract investors if all executives paid writers the 2.5%.