Who Pays Residuals to Actors?

Who Pays Residuals to Actors?

Residuals are a significant part of an actor’s earnings. They are paid for the reuse, rebroadcast, or syndication of a performance after the original airing, screening, or release. For actors, residuals can become a crucial source of ongoing income, especially if they’ve appeared in popular or long-running shows or films. However, many actors, especially those new to the industry, may not fully understand how residuals work, who pays them, and how they are calculated. In this article, we’ll delve into the world of residuals, explaining who is responsible for paying them and providing relevant examples to help clarify the process.

What Are Residuals?

Residuals are payments made to actors and other entertainment industry professionals whenever a project they have worked on is reused or rebroadcast in any format. These payments are part of an actor’s contractual rights and compensation for their work being used after the initial release or airing. Residuals are typically governed by collective bargaining agreements negotiated by unions like the Screen Actors Guild‐American Federation of Television and Radio Artists (SAG-AFTRA), the union that represents most actors in the U.S.

Residuals are intended to ensure that performers are fairly compensated for the continued use of their work. For example, if an actor appears in a television show, they receive a one-time payment for their performance when the episode airs. However, if that show is later syndicated, streamed online, or sold to international markets, the actor is entitled to receive residual payments based on the terms of their contract.

Who Pays Residuals?

In the entertainment industry, residuals are typically paid by the production company or studio responsible for producing and distributing the work. However, the actual mechanism through which residuals are paid is often managed by a third-party organization that oversees residuals administration. Here’s a breakdown of the various parties involved in the residual payment process:

1. The Production Company or Studio The production company or studio is usually the entity that initially hires the actors for a project. They are responsible for paying the actors for their performances according to the terms laid out in the actor’s contract, which may include clauses related to residual payments. Once a project begins to earn revenue through reruns, syndication, streaming, or other means, the production company or studio is responsible for ensuring that residuals are calculated and distributed.

   For example, if an actor appears on a popular television show, the studio behind that show is responsible for paying residuals whenever the show is rebroadcast. The amount of the residual payment depends on the terms of the union agreement and the specific contract that the actor signed.

   Example: Warner Bros. Television, the studio behind Friends, pays residuals to the cast members whenever the show is rebroadcast on cable or streaming platforms. The studio works with SAG-AFTRA to determine the amount of residuals owed and how they should be distributed.

2. SAG-AFTRA (or Other Unions) While production companies and studios are responsible for paying residuals, the unions representing actors—like SAG-AFTRA in the U.S.—play a crucial role in ensuring that residuals are paid fairly and in accordance with the agreements set out in union contracts. SAG-AFTRA negotiates the terms of residual payments with studios and production companies as part of the collective bargaining process.

   SAG-AFTRA has a dedicated department that monitors and enforces the residual payment system. The union ensures that the studios and production companies follow through on their obligations and that actors receive the appropriate payments based on their contracts.

   Example: If an actor is working under a SAG-AFTRA contract and appears in a television series that is later sold to a streaming service like Netflix, SAG-AFTRA is responsible for making sure that the actor receives their residuals based on the terms of their union agreement.

3. The Residuals Clearinghouse To facilitate the distribution of residuals, many studios and production companies work with residuals clearinghouses. These third-party organizations act as intermediaries, managing the calculation and distribution of residuals to actors and other performers. Residuals clearinghouses receive information about the use of a particular production (e.g., when an episode airs or a movie is sold to a new platform), calculate the amounts owed, and then distribute those funds to the appropriate performers.

   Clearinghouses play an important role in tracking the many different ways in which a project can be reused, ensuring that actors receive compensation no matter how or where their work is viewed.

   Example: The Residuals Department at the Directors Guild of America (DGA) or the Residuals Clearinghouse at SAG-AFTRA ensures that all actors involved in projects are paid residuals whenever those projects are distributed through various channels.

4. Distributors (For Films and TV Shows) For movies, TV shows, and other productions that are sold to international markets or broadcast in different countries, the distributors are often responsible for handling residuals. When a production is sold for international distribution, for example, the distributor may be responsible for paying residuals to actors based on the sales made in those regions.

   Example: When a film like The Avengers is sold for international distribution, the studio may pay residuals to the cast based on the revenue earned by the film in overseas markets. The distributor, in turn, sends residuals back to the actors through the studio or the appropriate clearinghouse.

How Are Residuals Calculated?

The calculation of residuals depends on several factors, including the type of work (television, film, streaming, etc.), the country in which the work is shown, and the nature of the reuse (e.g., syndication, reruns, or digital streaming). Here are some of the common factors that affect how residuals are calculated:

1. Type of Work Different types of work, such as television episodes, movies, or commercials, have different residual payment structures. For example, actors in television series typically receive residuals when their episodes are rebroadcast, syndicated, or streamed online. Similarly, actors in commercials might receive residuals based on the frequency with which their commercial is aired.

   Example: A supporting actor in a TV series may receive residuals each time their episode is aired on a network or through syndication. Conversely, an actor in a national commercial might receive residuals each time the commercial is broadcast, with payments typically decreasing over time.

2. Syndication and Reruns When a TV show is sold to syndication or rebroadcast, actors can receive residual payments based on the number of times the show airs. The more a show is rerun, the more the actors are compensated. However, residuals for reruns are generally smaller than initial payments made for the original airing of the show.

   Example: Actors on a show like The Simpsons, which has been on the air for decades and is frequently syndicated around the world, receive substantial residual payments each time their episodes are rebroadcast.

3. Streaming Services The rise of streaming platforms like Netflix, Hulu, and Amazon Prime has had a significant impact on the residuals structure. The terms under which residuals are paid for streaming content are governed by separate contracts negotiated by SAG-AFTRA and other unions. These contracts typically include provisions for how actors will be compensated when their work is streamed on digital platforms.

   Example: When The Office was made available for streaming on platforms like Netflix, the actors who appeared on the show, including Steve Carell and Rainn Wilson, began to receive residuals based on the revenue Netflix generated from subscribers watching the show. These payments continue as long as the show is available for streaming.

4. International Markets When a film or television show is sold to international markets, actors are typically entitled to residuals based on the revenue earned in those regions. The calculation of residuals for international sales can be more complex, as it may involve different rates and terms depending on the country or region.

   Example: The cast of Game of Thrones, a show that has been sold to audiences worldwide, receives residuals based on the distribution and airing of the series in various countries, in addition to payments from its original broadcast and streaming.

Why Residuals Matter to Actors

Residuals are a vital part of an actor’s financial livelihood, particularly for those who work on projects that receive ongoing use. While some actors may earn a one-time fee for a movie or TV show, residuals ensure that they continue to be compensated whenever their work is viewed, streamed, or rebroadcast. For many actors, residuals provide a critical supplement to their income and serve as a way to ensure that their contributions to the entertainment industry continue to be recognized.

Conclusion

In summary, residuals are paid to actors whenever their work is reused, rebroadcast, or distributed through various channels. The primary parties responsible for paying residuals include production companies, studios, distributors, and third-party residuals clearinghouses. Unions like SAG-AFTRA play a key role in negotiating and ensuring the payment of these residuals. While residuals are typically calculated based on the type of work, the medium through which it is distributed, and the country in which it is aired, they represent an essential mechanism for compensating actors for the continued use of their performances.

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