The union representing striking Hollywood writers said Wednesday that contract negotiations with studios were finally "substantive," including on the key issue of digital media.

But the Writers Guild of America, while sounding a rare optimistic note in the dispute, cautioned it had yet to get a response on proposals including residuals for movies and TV shows streamed online.

The latest round of talks with the Alliance of Motion Picture and Television Producers, which began Tuesday, was set to resume Thursday. The strike is in its fifth week.

"For the last two days we have had substantive discussions of the issues important to writers, the first time this has occurred in this negotiation," the guild said in a statement. Among the issues: union jurisdiction over the Internet and reality TV.

The producers alliance also offered optimism Wednesday, saying in a statement it believed the sides could find common ground that would allow the industry to "survive and prosper" in a changing global marketplace.

In a statement issued during Wednesday's talks, the guild said it was calling for a different formula for the thorny issue of online compensation than the one producers put on the table last week.

It accepted the idea of a fixed residual for TV shows in the first year of online use, the guild said — but the payment should be adjusted upward for each 100,000 streams per quarter.

"This is a readily ascertainable number," the guild said. "In fact, companies are already keeping records of streams for their advertisers."

After the first year, the union wants 2.5 percent of a distributor's gross for TV shows and movies streamed over the Internet.

Studios had proposed a flat $250 payment for a year's use of an hourlong TV show on the Web. That contrasts with the $20,000-plus that writers now earn for a single network rerun of a TV episode.

The strike has shut down production on dozens of prime-time and late-night shows, sending a number of programs into reruns.

A writers strike in 1988 that lasted 22 weeks was said to have cost the industry $500 million. Estimates for damage from the current walkout, if it lasts as long, have hit $1 billion.

But the quarterly Anderson Forecast by the University of California, Los Angeles, said a close examination of this year's strike suggests a more "modest and transitory impact" on the Los Angeles economy that would be a third or less than the billion-dollar predictions.