On strike since May 1, the Screen Actors Guild and the American Federation of Television and Radio Artists have been engaged in a tug-of-war with advertisers over Internet royalties, and so far, neither side seems willing to budge. At the heart of the impasse is how advertisers will pay actors for their work on commercials. Actors currently get flat fees for commercials that run on cable networks, in contrast to the residuals they receive for appearances that air on broadcast TV. The striking actors are fighting to have that residual structure extend to all work they do, including appearances on cable – and the Internet. "When the Internet started, nobody realized what a big deal it would be," said a Screen Actors Guild spokeswoman. But nowadays, celebrities endorse Web sites and get paid handsomely to do so. Although certain clauses in the actors' existing contracts protect "repurposing," the practice of converting content from existing TV commercials for use on the Net, there are currently no rules governing commercials made expressly for the Internet. SAG wants this to change. "The strike has lasted as long as it has because we are going in opposite directions," says Greg Krizman, acting director of communications for SAG. "Advertisers want flat payments, but we want to continue a pay-per-play across the board." Krizman argues that pay-for-play is in everybody's best interest. Under that model, actors would receive a daily session payment in addition to payments when their commercial airs on one of the broadcast networks. Krizman contends that such an arrangement ultimately saves advertisers the expense of paying actors to air commercials that could bomb and get pulled down the road. The advertising industry, represented by the Association of National Advertisers and the American Association of Advertising Agencies, sees things differently, arguing that the expired SAG/AFTRA contract is outdated. Advertisers maintain that the current contract is based on the ad and media world of the 1950s and '60s, when most of the TV-viewing audience tuned in to just three networks, ABC, CBS (CBS) and NBC. Today, there are six broadcast networks (ABC, CBS, NBC, Fox, UPN and WB) as well as numerous cable and satellite channels, making for a splintered market. John J. Sarsen Jr., president and CEO of the Association of National Advertisers, and O. Burtch Drake, president and CEO of the American Association of Advertising Agencies, argue that the realities of the TV marketplace of the 21st century require a new, equitable approach to talent compensation. To that end, they have proposed to pay actors an up-front, guaranteed residual of $4,200 for one day's work no matter how many times a commercial airs in a given "cycle," or 13-week period. The two sides have agreed to attend a meeting mediated by the Federal Mediation and Conciliation Service on June 13 and 14. Although TV, radio and cable will be the focus of most of the discussions, the Internet promises to become an increasingly important point of argument. "Both sides are aware that the Internet is upon us," says Ira Shepard, counsel for the joint policy committee on talent relations for ANA and the AAAA. "But I don't know that we are on the same page on what role it will take." Shepard says advertisers are willing to talk about payment for existing commercials that get converted for Internet use. But because broadband hasn't yet gone mainstream and commercials aren't yet being produced exclusively for the Internet, it's hard to determine an equitable arrangement at this point. To date, the only thing both sides agree upon is that the outdated contract should be updated, but figuring out how to appeal to each side's interests will be tricky. Given the inflamed rhetoric surrounding the ongoing strike, next week's talks are certain to be heated. SAG's Krizman emphasizes that the mediated meeting is only preliminary, "to see if there is wiggle room on either side." Shepard says he hopes for a "continuing productive dialogue," but ending the strike and working the Internet into payment discussions might have to wait for another day. © The Industry Standard