The start of a new round of labour talks often has Hollywood on edge. But this summer the anxiety level will be higher than usual when representatives of the Writers Guild of America (WGA) and the Alliance of Motion Picture and Television Producers (Amptp) begin negotiations over a new contract between film and TV writers and their studio and network employers.

It is not just that the negotiations' July 16 start date leaves only three-and-a-half months before the current WGA contract expires on October 31. Nor that recent tough talk from both sides has raised fears of the first writers' strike since the costly five-month stoppage in 1988.

What is really ramping up the tension is the fact the writers' negotiations will probably set precedents for imminent negotiations involving the US Screen Actors Guild (SAG) and the Directors Guild of America (DGA), whose contracts with producers both expire in summer 2008. And the fact that, by dealing with issues now facing industries across the globe, the whole round of US talks could set precedents for future talks between producers and unions worldwide.

Some of the most crucial issues arise from the changing make-up of the industry's revenue pie. With the theatrical slice of that pie becoming smaller and the ancillary slice bigger, the WGA for one (neither SAG nor the DGA made representatives available for interview) is determined that new residuals agreements should give their members a bigger share of revenue than the home-video formula to which Hollywood unions agreed in the mid-1980s, when the studios argued that home video was still a developing market.

"We've been down that road and we don't want to go there again," says David Young, executive director of WGA West and the writers' lead negotiator. "We're going to be fair, but we're determined this time to get a deal that works for our members from the beginning."

Producers, meanwhile, want to discuss a 'recoupment formula' that would allow them to cover the cost of a project before any residuals became payable. "We think the time has come that we no longer pay residuals until we've recouped our costs," says Amptp president and chief negotiator Nicholas Counter. "We should be in a position to pay residuals on profits, not on losses."

New media distribution, discussion of which has been largely skirted in the last two rounds of US labour talks, will be a central issue this time, one that will be of particular interest to producers and unions in the rest of the world.

The Amptp, says Counter, believes "it is too early to know the precise revenue streams and the precise costs" involved in the distribution of film and TV material over the internet or mobile-phone networks. So the most appropriate approach to the issue, he suggests, would be for the two sides to set up a joint study on new media technologies and business models that could present recommendations.

To the writers, says Young, "it makes no sense to wait years to figure out which of those technologies wins out. One or some of them will win out and we need to have a formula in place from the beginning."

New media issues have already come up in a string of specific cases that have yielded a couple of tentative agreements as well as considerable contention.

Over the past year, the WGA has reached agreements with Disney's Touchstone Television on mobile phone spin-offs from the ABC series Lost and with CBS on 'webisodes' spun off from the network's daytime soaps As The World Turns and The Young And The Restless.

But the guild (as well as SAG and the DGA) has clashed with ABC over the network's decision to pay residuals at the home-video rate - rather than the higher pay-TV rate - on iPod downloads of programmes. And it is awaiting an arbitration decision on its dispute with NBC over TV writer-producers asked to work on made-for-internet content associated with such hit series as The Office and Heroes.

The clashes have contributed to what Ivy Kagan Bierman, an entertainment industry labour attorney and partner at law firm Loeb & Loeb, describes as "a very politically charged and volatile" Hollywood labour relations environment. New WGA West president Patric Verrone and SAG president Alan Rosenberg "have been very vocal about their efforts to bring about significant changes for their members in the next negotiation," Bierman says.

Though both the WGA and the Amptp say they are prepared for a strike, a stoppage is only one possible alternative to a quick agreement this summer between the guild and producers. The guild could stay at the negotiating table and instruct its members to continue working without a contract (as they did for five months during the contract talks of 2004). Or it could seek a one-year agreement and then renegotiate next year alongside both SAG and the DGA.

Or the guild and producers could once again put off an agreement on new media issues.

"We're in for a struggle," says veteran entertainment attorney Alan U Schwartz, of Greenberg Traurig, "but it may not be a struggle that's going to get a really satisfactory resolution in the next round."

Total earnings under WGA west contracts by area of work
Source: WGA West annual report 2006.