Hollywood's striking writers have promised not to picket next month's Grammy Awards, as they begin high-stakes talks to save the Oscars from cancellation and reach a long-term deal with their studio employers.

The talks are the most promising breakthrough so far after an acrimonious three-month strike — largely over the way internet royalties are paid — that has cost LA's spluttering economy more than $1 billion (£500 million) and thousands of jobs, not to mention delayed production on countless TV shows and movies, and a cancelled Golden Globes ceremony.

It is thought that there is an informal deadline to reach a deal before February 24, when the Academy Awards are set to be broadcast.

The event's organisers fear that if writers are still on strike at that point, and choose to picket the ceremony, actors will not cross the picket line, and the event will have to be turned into a press conference. This could be a disaster for the studios' awards-based marketing campaigns and for the Academy itself.

The Oscars have been held ever year without interruption since 1929.

Neil Portnow, president of the Recording Academy, which puts on the Grammys, said that he was pleased with the WGA's “goodwill” decision not to picket outside the event, and that the ceremony would “focus solely on the great music, artists and charitable work resulting from our show”.

It is thought that the WGA might allow some writers to help produce the show, although Mr Portnow said that this was still a “fluid situation”.

The Writers' Guild of America and the Alliance of Motion Picture and Television Producers said in a joint statement that they would start informal discussions yesterday, with the writers immediately dropping their demand for jurisdiction over reality TV and animation.

“We have responded favourably to the invitation from the AMPTP to enter into informal talks that will help establish a reasonable basis for returning to negotiations,” the WGA said. “During this period, we have agreed to a complete news blackout. We are grateful for this opportunity to engage in meaningful discussion with industry leaders that we hope will lead to a contract. We ask that all members exercise restraint in their public statements during this critical period.”

The last time the two parties met was December 7, when a dispute over reality TV and animation resulted in a long stalemate over Christmas.

During the first two months of the writers' strike, YouTube viewership went up 18 per cent as America's late-night talk shows went off the air and long-running TV comedies and dramas ended, with no new episodes to replace them. It is feared that the strike might have permanently reduced the market share of “scripted entertainment” versus other forms of entertainment, such as reality TV shows and video games.

Payment for movies and TV episodes streamed over the internet, especially when such broadcasts are supported by paid-for advertising, will be the biggest issue during the talks. The writers are also asking for improved royalties on DVD and on movies and TV shows downloaded online via services such as iTunes. A blueprint for an agreement has already been put in place by the Directors' Guild of America, which reached a similar deal with the studios last week, long before its contract runs out in June. The Screen Actors' June, which will also have to renew its contract in June, is also thought to be looking at a way to based a deal on the directors' contract.

Nevertheless, the WGA is asking for 2.5 per cent on downloaded material — about three times what the directors were given. And during the strike, the writers have already made several interim side deals with independent studios and producers giving them 2 per cent on movies and 2.5 per cent on TV shows.

It remains to be seen if they will be able to get anywhere near these percentages in their new talks with the studios.

Editor's choice

• The 100 Best Films of 2008
• Hitler and the Downfall mash-ups
• Britney Spears: The Circus