A funny thing happened on the way to the future of entertainment.

Last year, Hollywood and the New York television studios ground to a massive halt. Screenwriters went on strike for three months over the right to get paid for newfangled media-distribution methods, such as online video streaming and DVD extras, before the studios finally signed a new contract standard.

Afterward, ER and Ugly Betty got back on air, movie scripts started flowing again, and the Oscars weren't canceled. It was a beautiful life for General Electric (NYSE:GE), for Walt Disney (NYSE:DIS), and for screenwriters everywhere.

Or perhaps I should yell "Apocalypse now!" and duck for cover behind my TV-watching sofa.

Intermission over?
The Writers Guild of America, West (WGAW), which authorized that strike and played a major role in negotiating the new deal, says that media powerhouses aren't paying for those instrumental "new media" rights the way they were supposed to. The guild is taking legal action, by filing for arbitration against members of the Alliance of Motion Picture and Television Producers (AMPTP).

According to the WGAW, the standard contract covers movies and TV shows produced all the way back to the 1970s, but the producers are sending out "new media" checks only for work completed after the negotiations last February. In addition, TV episodes seem to stay downloadable long enough to trigger residual payments, "but so far we've seen nothing," says WGAW executive director Donald Young.

While this legal brouhaha is going down, the AMPTP's website sports a couple of brash counters that keep track of "lost wages" that members of the Screen Actors' Guild have sacrificed by working under an expired contract. This will go down as a watershed year in entertainment history, with the Internet throwing wrenches into every contract-renewal negotiation.

The companies are finally starting to understand just how big the white elephant in your living room is. CBS (NYSE:CBS) is mixing video streams with live chat rooms, the TV networks all have video-streaming services now, and Hollywood is finally letting Netflix (NASDAQ:NFLX) pixelate lots of old and new movies. Even if Sony (NYSE:SNE) still won't let you use a Microsoft (NASDAQ:MSFT) Xbox to watch its movies, well -- you can't please everybody.

It's sad to see another meltdown in relations between media producers and the people actually creating their content, just as the industry was beginning to look progressive and modern. At best, AMPTP members such as Viacom (NYSE:VIA) could simply pay up and get back to business -- or show why the WGAW's accusations of wrongdoing are off the mark. At worst, I can imagine another strike, which would drive viewers away from theaters and TV networks toward online entertainment -- or some fresh air. That's the last thing anybody wants or needs -- producers, creative talent, and TV and movie audiences alike.

If I ran Hollywood, I'd settle this issue posthaste. This is no country for old men.

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Fool contributor Anders Bylund owns shares in Netflix and Disney, but he holds no other position in any of the companies discussed here. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.