Residual (entertainment industry)

Last updated September 26, 2023

Residuals are financial compensations that are paid to the actors, film or television directors, and others involved in making TV shows and movies in cases of the cable reruns, syndication, DVD release, or licensing to streaming media. Residuals are calculated and administered by industry trade unions like SAG-AFTRA, the Directors Guild of America, and the Writers Guild of America.^[1] The word is typically used in the plural form.

History

Technological advances gave rise to residual payments, and their evolution can be traced in terms of those technologies.

Radio

Residuals were established in U.S. network radio. Live radio programs with nationwide audiences were generally performed either two or three times to account for different time zones between the east and west coasts of the United States. The performers were paid for each performance. After audio "transcription disc" technology became widely available in the late 1930s, it was initially used to make recordings to send to radio stations that were not connected to the live network. As sound quality improved, radio networks began using them for time-delaying west coast broadcasts, eventually eliminating the need for multiple performances. The performers were kept on standby and paid for a second performance in case there were technical problems. This established the precedent for residual payments from recorded performances.^[2]

Television

In the early 1950s, a similar transition occurred in television. Initially, most television broadcasts were either live performances or broadcasts of older films originally produced for theaters. Kinescope recordings were made of live east coast performances so they could be broadcast several hours later on the west coast, which also made it possible to broadcast these shows later as many times as they wanted. In 1952, residual payments were extended to these television reruns, thanks in large part to Ronald Reagan, whose first term as president of the Screen Actors Guild (SAG) ran from 1947 to 1952.^[3] In 1953, the WGA negotiated residuals for up to five reruns for made-for-TV shows.^[4]

That said, film actors were still not paid residuals for reruns. As Americans increasingly watched TV at home instead of going out to the movies, movie attendance plummeted by over 65% between 1948 and 1959, studios were grappling with decreased revenues, and actors felt like they were being deprived of significant income that was owed to them. The studios, however, took a hardline stance on residuals for movie actors due to their shrinking revenue as well as the fact that if they paid residuals to actors, they would also have to pay directors and screenwriters as well.^[5]

This stalemate led SAG actors to re-elect Ronald Reagan as SAG President in fall of 1959. Reagan asked SAG for a strike authorization in February and the actors agreed on a work-stop date for March 7, 1960, Hollywood's first-ever industry-wide strike. Starting with Universal Pictures, studios ended up agreeing to film residuals, but only for movies made after 1960. They would issue a one-time payout of $2.25 million for movies made between 1948 and 1960, and movies made before 1948 would not be eligible for any residuals. (Unrelated to residuals, Reagan also secured health insurance and pensions for SAG actors.) This upset older actors like Mickey Rooney, Glenn Ford and Bob Hope, who blamed Reagan and the SAG board for weak negotiating, but in April 1960 SAG voted to accept the offer and returned to work.^[5]

In 1988, WGA launched its longest strike, lasting 22 weeks, over a disagreement over residuals for TV shows broadcast in foreign countries. The new contract allowed writers two formulas for calculating foreign residuals: the existing formula ($4,400 maximum for a one-hour show) or the new formula (1.2% of the producer's foreign sales). On the other hand, domestic residuals were adjusted to take a sliding scale, which would incentivize producers to syndicate one-hour shows, whose revenue performance was poor, to independent TV stations.^[6]

New media

In 2007, the Alliance of Motion Picture and Television Producers (AMPTP), the industry bargaining group that deals with the trade unions, called for an end to the current residual payment system in response to the rise of online media. Instead, it proposed that residuals be pooled so the studios would recoup their costs paying the actors, directors, and writers based on a profit-based formula,^[7] which would solve the problem that residuals remain the same despite decreases in TV profits.^[8] Writers in the Writers Guild of America (WGA) decided to negotiate for higher residual payments. The AMPTP adamantly opposed extending residuals to online movie and TV show sales for at least three years, citing the need to "adapt to the realities of the marketplace, the new demands from our audiences and new technologies",^[3] while a WGA representative countered that they "already had effective business models".^[7]

In 2011, SAG-AFTRA, WGA, and DGA negotiations kept residuals for network primetime TV (considered "among the most lucrative" residuals) frozen at previous levels.^[8]

Process

Residuals are administered by the unions—SAG-AFTRA, the Directors Guild of America (DGA), and the Writers Guild of America (WGA)—for their members, who are paid between one and four months after the air date. According to SAG-AFTRA, it processes around 1.5 million residual checks a year.^[9] WGA receives between 100 and 5,000 residual checks a day.^[4] The DGA processes "hundreds of thousands of checks" a year, and in 2016 it processed $300 million in residuals for its members.^[10]

Residual calculation is complex and depends on several variables, including guild membership, initial payment, time spent, type of production (e.g., network TV, DVD, ad-supported streaming, online purchases), and whether it involves a domestic or foreign market. Additionally, residuals change a lot: guilds negotiate new contracts with the AMPTP every three years, and residuals for primetime TV tend to increase every year because they are "directly or indirectly keyed to salary minimums, which increase several percent per year".^[8]

In acting, extras are generally not eligible, but stunt performers, puppeteers, singers, and actors with lines or scripted physical interactions with characters ("supporting actors" or "day players") are eligible.^[9] Principal performers generally get larger residuals.^[11] In fact, the more prominent the actor, the more generous the residual. Big stars like Tom Cruise, for example, would get a portion of DVD sales in addition to his "regular" residuals.^[12]

All "credited" writers are eligible for residuals, and the specific credit determines the amount of residual. For example, the "written by" credit yields a 100% residual allocation, "screenplay/teleplay by" yields a 75%, and "adaptation by" yields 10%.^[4]

Examples

Residual payments can sometimes be very small if the role was small or the movie or show was not successful. For example, actor Jeff Cohen received a residual check for $0.67 after appearing in one episode of The Facts of Life ; he took it to a former bar in Studio City called "Maeve's Re$iduals", which used to trade free drinks for any SAG-AFTRA residual checks for less than $1.^[13]

By contrast, Bob Gunton, who played Warden Norton in The Shawshank Redemption , noted that the movie, one of the most-rerun films, generated "close to six figures" in residuals for him in 2004, ten years after the movie was released, and even as of 2014, that he continued to receive "a very substantial income".^[14]

In 2014, actor Lisa Kudrow of Friends was ordered to pay $1.6 million to her former manager, who argued that he was owed 5% of Kudrow's residuals earnings from work that he negotiated.^[15]^[16] Using figures that were publicly disclosed, one analyst estimated Kudrow's residuals to be at least $2.3 million, and likely much higher.^[11]

Related Research Articles

<span class="mw-page-title-main">Screen Actors Guild</span> American labor union (1933–2012)

The Screen Actors Guild (SAG) was an American labor union which represented over 100,000 film and television principal and background performers worldwide. On March 30, 2012, the union leadership announced that the SAG membership voted to merge with the American Federation of Television and Radio Artists (AFTRA) to create SAG-AFTRA.

The Writers Guild of America (WGA) is the joint efforts of two different American labor unions representing writers in film, television, radio, and online media:

The Directors Guild of America (DGA) is an entertainment guild that represents the interests of film and television directors in the United States motion picture industry and abroad. Founded as the Screen Directors Guild in 1936, the group merged with the Radio and Television Directors Guild in 1960 to become the modern Directors Guild of America.

The American Federation of Television and Radio Artists (AFTRA) was a performers' union that represented a wide variety of talent, including actors in radio and television, radio and television announcers and newspersons, singers and recording artists, promo and voice-over announcers and other performers in commercials, stunt persons and specialty acts—as the organization itself publicly stated, "AFTRA's membership includes an array of talent". On March 30, 2012, it was announced that the members of AFTRA and of the Screen Actors Guild (SAG) had voted to merge and form SAG-AFTRA.

Financial Core refers to a legal carve-out that permits workers opposed to participating in a labor union to be employed under the benefits of a union's contracts without compelling them to be a member of that union.

The Writers Guild of America West (WGAW) is a labor union representing film, television, radio, and new media writers. It was formed in 1954 from five organizations representing writers, including the Screen Writers Guild. It has around 20,000 members.

The 2007–08 Writers Guild of America strike was a strike action that occurred from November 5, 2007, to February 12, 2008. All 12,000 film and television screenwriters of the American labor unions Writers Guild of America, East (WGAE), and Writers Guild of America West (WGAW) went on strike.

The Alliance of Motion Picture and Television Producers (AMPTP) is a trade association based in Sherman Oaks, Los Angeles, California, that represents over 350 American television and film production companies in collective bargaining negotiations with entertainment industry trade unions that include, among others, SAG-AFTRA, the Directors Guild of America, the Writers Guild of America West and East, the American Federation of Musicians, and the International Alliance of Theatrical Stage Employees.

The 1960 Writers Guild of America strike was a labor dispute between the Guild and the Alliance of Television Film Producers. It lasted 148 days, from January 16 to June 12, 1960.

Jay D. Roth is an American lawyer who for over two decades served as the National Executive Director of the Directors Guild of America (DGA), the 17,000 member entertainment guild representing the economic and creative rights of directors and members of the directorial team working in film, television, documentaries, news, sports, commercials and new media throughout the world. Following his long-planned retirement in May 2017, Roth began a new role with the Guild as Senior Advisor.

The Screen Actors Guild-American Federation of Television and Radio Artists is an American labor union representing approximately 160,000 media professionals worldwide. SAG-AFTRA is a member of the AFL-CIO, the largest federation of unions in the United States. SAG-AFTRA is also a member of the International Federation of Actors (FIA).

From October 2016, to November 2017, SAG-AFTRA, representing voice actors went on strike against 11 American video game developers and publishers over failed contract renegotiation terms of the Interactive Media Agreements that had been in discussion since February 2015. Principally, the union sought to have actors and voice and motion capture artists that contribute to video games be better compensated with residuals based on video game sales atop their existing recording payments, while the industry companies asserted that the industry as a whole eschews the use of residuals, and by giving the actors these, they would trivialize the efforts of the programmers and artists that are most responsible for the development of the games. In exchange, the companies had offered a fixed increase in rates and a sliding-scale upfront bonus for multiple recording sessions, which the union had rejected. Other issues highlighted by the strike action include better transparency in what roles and conditions actors would perform, more safety precautions and oversight to avoid vocal stress for certain roles, and better safety assurances for actors while on set.

A nationwide strike by the members of the Screen Actors Guild and the American Federation of Television and Radio Artists against the American Association of Advertising Agencies began on May 1, 2000, and ended on October 30, 2000.

The 1980 actors strike was a labor strike held in July–October 1980 by the Screen Actors Guild (SAG) and the American Federation of Television and Radio Artists (AFTRA), two labor unions representing actors in the American film industry. The strike was caused by a breakdown in labor contract negotiations between the two unions and representatives of film studios, television networks, and other independent producers. The primary point of contention regarded residuals from home media, such as videocassettes and pay television. Specifically, the union was seeking a form of profit sharing wherein they would receive a percentage of the revenue made from home media releases. Additionally, the unions wanted a 35 percent salary increase across the board for their members. By mid-July, the union and industry representatives were at an impasse, and the strike started on July 21. Several days later, the American Federation of Musicians also went on strike for similar reasons.

Jonathan Handel is an American entertainment lawyer, journalist, author and commentator.

The 2023 Writers Guild of America strike is an ongoing strike action that began on May 2, 2023, at 12:01 a.m. PDT At that time, the Writers Guild of America (WGA)—representing 11,500 screenwriters—went on strike over an ongoing labor dispute with the Alliance of Motion Picture and Television Producers (AMPTP). It is the longest interruption to American film and television production since the COVID-19 pandemic in 2020, as well as the longest labor stoppage that the WGA has performed since the strike of 1988, which lasted for 153 days. Since July 14, 2023, it has coincided with a SAG-AFTRA strike as part of a series of broader Hollywood labor disputes.

The 2023 SAG-AFTRA strike is an ongoing strike action that began on July 14, 2023. The American actors' union SAG-AFTRA went on strike over an ongoing labor dispute with the Alliance of Motion Picture and Television Producers (AMPTP). It has coincided with a Writers Guild of America (WGA) strike that began in May in a series of broader Hollywood labor disputes.

Since May 2, 2023, a series of ongoing labor disputes within the film and television industries of the United States has been taking place, mainly focused on the strikes of the Writers Guild of America and SAG-AFTRA. It is the second time two Hollywood labor unions are striking simultaneously — the first having occurred in 1960 – and as such, the American news media has named this phenomenon the "Hollywood double strike," and is expected to surpass the 1960 dual strike as well.

References

↑ Grimes, Gerlinda (18 June 2015). "Can a TV actor live off royalties forever?". HowStuffWorks. Retrieved 3 February 2018.
↑ Barnes, Brooks (5 August 2007). "In Hollywood, a Sacred Cow Lands on the Contract Table". The New York Times . Retrieved 13 November 2007.
1 2 Verrier, Richard (16 October 2007). "Residual resentment slows Hollywood talks". Los Angeles Times. Retrieved 3 February 2018.
1 2 3 Residual Survivals Guide (PDF). Writers Guild of America. October 2016. Archived (PDF) from the original on 3 February 2018.
1 2 Federman, Wayne (14 November 2011). "What Reagan Did for Hollywood". The Atlantic. Retrieved 3 February 2018.
↑ Harmetz, Aljean (8 August 1988). "Writers Ratify Contract, Ending Longest Strike". New York Times. Retrieved 3 February 2018.
1 2 Cieply, Michael (12 July 2007). "Hollywood Officials Seek End to System Of Paying Residuals". New York Times. Retrieved 3 February 2018.
1 2 3 Handel, Jonathan (23 July 2011). "Residuals Revelation: Network Primetime Residuals as Chilly for SAG/AFTRA and DGA as WGA". The Hollywood Reporter. Retrieved 3 February 2018.
1 2 "Residuals FAQ". SAG-AFTRA. Retrieved 3 February 2018.
↑ "Residuals". Directors Guild of America. Retrieved 3 February 2018.
1 2 Andres, Tommy (24 October 2014). "How do actors make money off residuals?". Marketplace. Retrieved 3 February 2018.
↑ Handel, Jonathan (2011). Hollywood on Strike!: An Industry at War in the Internet Age. Los Angeles: Hollywood Analytics. ISBN 9781438233857.
↑ Cohen, Jeff (14 November 2008). "Calculating SAG Residuals". Backstage. Retrieved 3 February 2018.
↑ Weisman, Aly (4 June 2014). "The Actors From 'Shawshank Redemption' Still Make A 'Steady' Income Off TV Residual Checks". Business Insider. Retrieved 3 February 2018.
↑ Rothman, Michael (26 February 2014). "'Friends' Star Lisa Kudrow Loses $1.6 Million Lawsuit". ABC News. Retrieved 3 February 2018.
↑ "Friends star Lisa Kudrow must pay ex-manager $1.6m". BBC. 28 February 2014. Retrieved 3 February 2018.