Here's a video the WGA put on YouTube describing the reasons behind their strike. Obviously this presents only one side of the dispute, but if you're unclear on what this is all about, this might help.
Over the weekend, the WGA took the DVD issue off the table, essentially saying, "Fine, we'll stop fighting you on this point, so now maybe you can give a little on this other point." Nothing doing, at least not yet.
I've heard two arguments against producers giving residuals for Internet distribution, at least as it pertains to this strike. The first is that Internet distribution is really just promotional, and not, I suppose, true distribution. This seems just silly to me. Maybe if you never paid $1.99 on iTunes to get a TV show, or if no ad space were sold on web sites that distribute the shows. But you do pay on iTunes, and ads are sold. That's distribution, not promotion.
The second is something that seems less insane, but doesn't really make a great argument: the studios say they don't make any money on Internet distribution. This could be true; at this still early stage of internet video distribution, broadcasters (or should I say "distributors") are spending plenty in development costs just trying to figure out what models are going to stick. Seems quite credible that thus far these ventures are money losers.
But the thing is, some will eventually make money. If the distributors didn't believe that, they wouldn't be investing the money up front. That's just logic.
So say the you're developing one of these online distribution ventures. You probably lose money, but say you have, or hope to soon, managed to work hard and build up so you start to turn a profit, even if it's just few percent of revenue. Obviously you aren't going to thrilled if you have to pay a few percent in residuals to writers (and, soon, actors and directors). Those could add up, and significantly hamper the growth of a venture that is experiencing fragile beginnings.
To be clear, I ultimately side with the creative folk here: of course they need to get residuals from distribution of content; TV or internet shouldn't really matter. I wonder if there isn't a compromise that allows the broadcasters to have the flexibility to grow these new ventures, but guarantees the appropriate residuals will kick in, perhaps after a set period of time, or after some revenue or profit target, etc.
I don't know the business side of the industry well enough to conjecture any further. Specifically, I'm a little unclear on the producer/distributor relationship here. If you're reading this and have any additional insights, or additional facts, please add them in comments.