Why Doesn’t Netflix Pay Residuals?

By Webmaster

  • Why Doesn’t Netflix Pay Residuals?

    Exploring the controversy behind Netflix’s approach to compensation and residuals for creators.

    (By Carmichael Phillip)

    (Photo: Cottonbro Studio | Pexels)

    The Rise of Streaming Services and the Shift in the Industry

    In recent years, streaming platforms have taken over the entertainment industry, changing the way viewers consume content. Netflix, once the pioneer in this space, has led the charge, amassing millions of subscribers worldwide and offering an immense library of shows, movies, and documentaries. However, one major issue that has created significant friction with creators is the fact that Netflix does not pay residuals, a standard practice in traditional TV and film contracts.

    Residuals are payments made to actors, writers, directors, and other creators when a film or TV show is rebroadcast or continues to generate revenue after the initial release. In the traditional model, this serves as a form of ongoing compensation for the creators whose work continues to earn money long after the initial airing or release. However, Netflix’s business model, which emphasizes its subscription-based service and a different approach to content licensing, does not fit neatly into the residuals structure.

  • What Are Residuals and Why Do They Matter?

    Residuals are an important part of the compensation structure for those working in television and film. When a show or movie is successful, residuals ensure that those involved in its creation continue to be compensated fairly for its continued success. These payments can add up to a substantial amount of money over time, particularly for actors, writers, and directors who work on long-running series or major hit films.

    For example, an actor who stars in a television show that airs for several seasons may continue to receive residuals for years after the show has ended. These payments provide a steady source of income, particularly for those who may not be consistently employed in other projects. In this way, residuals help ensure fair compensation for the long-term value that a project provides.

    However, streaming services like Netflix operate under a different model. The company pays for content upfront, purchasing the rights to stream shows and movies for a fixed period. This creates a stark contrast with traditional television networks, which often generate additional revenue through syndication or reruns, giving creators the opportunity to earn residuals from the continued airing of a show.

  • Netflix’s Business Model: Why Residuals Are Not Part of the Deal

    Netflix has made a conscious decision to avoid paying residuals, citing their unique business model as the main reason. The platform operates on a subscription-based model, where users pay a monthly fee for access to a broad library of content. Rather than making money from individual advertisements or additional licensing deals, Netflix generates its revenue through its subscription base. As a result, the company argues that paying residuals for individual pieces of content would not align with their business structure.

    In addition, Netflix often acquires the rights to stream content for a set period, typically a few years, rather than entering into long-term syndication deals. Once the licensing period expires, the content is removed from the platform unless renewed. This differs from traditional television networks, which can continue to air the same episodes for years, generating additional revenue streams that would trigger residual payments.

    In a statement made to Variety, Netflix’s Chief Content Officer Ted Sarandos said, “Our business model is very different from traditional networks, and we believe in paying upfront for content. Our content creators know exactly what they are getting when they sign a deal with us.” While this upfront payment offers financial stability for creators during the initial contract period, it also means that they forgo potential residuals in the long term.

  • The Impact on Creators: A Growing Discontent

    While Netflix’s model may seem attractive to some creators due to the upfront payment, it has led to increasing discontent among those working in the industry. Writers, actors, and directors who had become accustomed to receiving residuals are finding themselves without a safety net as their content continues to earn money for Netflix. This shift has led to concerns over fair compensation, particularly for those who have contributed to shows that become massive hits.

    A report from the Writers Guild of America (WGA) highlighted the fact that many creators of popular Netflix series have not seen any residual payments. Writers, in particular, have been vocal about this issue, with some claiming that Netflix’s lack of residuals is contributing to a widening income gap within the industry. According to WGA member and writer for Orange is the New Black, Liza Minelli, “It feels like we’re being asked to give our work away for free. Netflix is making billions off our labor, but they don’t want to share the wealth.”

  • The Legal Battle: Attempts to Bridge the Gap

    The issue of residuals for streaming content has not gone unnoticed in the legal and political realms. In 2020, the WGA and other unions representing creative professionals in the entertainment industry began pushing for better terms in their contracts with streaming platforms like Netflix. These efforts have included demands for a system that compensates creators for the ongoing success of their projects, much like the traditional model.

    In response, Netflix has argued that the streaming model is too new and unique to be governed by old rules. The company claims that its payment structure—offering an upfront fee—is a more straightforward and fair model. However, this position has been met with resistance from union leaders, who argue that creators should be compensated for the continued value their content brings to the platform.

    In 2021, the WGA filed a petition calling for streaming companies to adhere to the residuals system, stating that creators should be entitled to fair pay as their content continues to be viewed by millions. “It’s time for streaming platforms to recognize the value of our contributions,” said WGA West president David A. Goodman. “We want residuals because it’s a fair way to compensate writers for the success of their work.”

  • Alternatives and Proposals for Residuals in Streaming

    Several proposals have been made to address the issue of residuals for streaming content. Some have suggested that streaming services like Netflix adopt a hybrid model that combines upfront payments with ongoing residuals based on the success and viewership of a show. Others have proposed implementing a system that would allow creators to receive a percentage of the revenue generated by their content based on the number of times it is viewed or the length of time it remains on the platform.

    One such proposal was presented by the International Alliance of Theatrical Stage Employees (IATSE), which suggested a “viewership-based residual” model. According to this plan, creators would receive a set percentage of the revenue generated by their content depending on how frequently it is streamed. This would ensure that creators are compensated for the ongoing success of their work, while also acknowledging the differences in business models between traditional television networks and streaming platforms.

    However, such proposals face significant resistance from Netflix and other streaming platforms, which argue that the cost of implementing such a system could be prohibitive. As one anonymous Netflix executive put it, “The business model of streaming is very different. If we were to pay residuals, we’d have to change everything about how we work.”

  • The Future of Streaming and Residuals: What’s Next?

    The issue of residuals in the streaming era is far from resolved, and it remains a point of contention between content creators and streaming platforms. As the industry continues to evolve, it’s likely that this debate will intensify, with creators demanding more compensation for their work and platforms like Netflix holding firm to their business model.

    For now, it seems that the status quo will persist, with Netflix continuing to avoid paying residuals. However, with increasing pressure from unions and advocacy groups, there may be changes on the horizon. As the battle for fair compensation in the digital age continues, the future of streaming and residuals will remain an important issue for creators, platforms, and viewers alike.

  • Recommended Posts

  • Ad

  • Who is the voice in Reese’s commercials?

    Who is the voice in Reese’s commercials? Unwrapping the deep, devilish tones behind Reese’s iconic ads (By Carmichael Phillip) Introduction: The unmistakable voice of Reese’s When Reese’s launches a new product or playful…

    Who’s Voice Is on Home Depot Commercials?

    Who’s Voice Is on Home Depot Commercials? Uncovering the familiar—and often divisive—voice behind one of America’s most heard ad campaigns (By Carmichael Phillip) Introduction: that unmistakable tone Love it or hate it, the…

    Who is the woman in the Viagra commercial?

    Who is the woman in the Viagra commercial? Uncovering the actresses behind Viagra’s memorable ads (By Carmichael Phillip) Kelly King: The “Cuddle Up” Commercial Star Kelly King, a Los Angeles–based actress, gained attention for starring in…

    Who is the voice actor for Ford Pines?

    Who is the voice actor for Ford Pines? Unveiling the voice behind Gravity Falls’ brilliant author (By Carmichael Phillip) Introducing Ford Pines & the Voice Behind Him In the eerie and enchanting town of Gravity…

    Who is the actress in the Tampax commercials?

    Who is the actress in the Tampax commercials? Unpacking the faces behind today’s bold and talkative Tampax ads (By Carmichael Phillip) For years, Tampax has taken a refreshingly direct—and often humorous—approach to normalizing menstruation….

  • Ad

  • Who is the voice of the Sugar Bear cereal?

    Who is the voice of the Sugar Bear cereal? Unwrapping the smooth‑talking crooner behind Golden Crisp’s beloved mascot (By Carmichael Phillip) Introducing Sugar Bear: Cereal Icon Through the Decades Sugar Bear—Post’s sweet-talking mascot for…

    Whose voice is on the Harbor Freight commercials?

    Whose voice is on the Harbor Freight commercials? Unveiling the deep, commanding voice behind the “Job Well Done, Great Price” slogan (By Carmichael Phillip) The Sound You Know: Harbor Freight’s Signature Voice You’ve…

    Who is the voice in the Mucinex commercial?

    Who is the voice in the Mucinex commercial? Unveiling the voice behind Mr. Mucus — from classic goo to modern giggles (By Carmichael Phillip) Meet Mr. Mucus: The Mascot with an Accent One glance at…

  • Ad

  • Who is in the Olympic commercial with Ray Romano?

    Who is in the Olympic commercial with Ray Romano? Unpacking the comedic duo behind NBC’s Milan‑Cortina promo (By Carmichael Phillip) Getting to Know Ray Romano Raymond Albert Romano, born December 21, 1957 in New York…

    What actress does the Home Shield commercial?

    What actress does the Home Shield commercial? Unmasking the face behind Warrantina, the quirky Home Shield icon (By Carmichael Phillip) First Look: Who is “Warrantina”? Every now and then, a commercial character captures…

    Who is the voice on the Huggies commercial?

    Who is the voice on the Huggies commercial? Unpacking the unmistakable tone behind “We Got You, Baby” and what makes it so memorable (By Carmichael Phillip) Huggies diapers have built a powerful brand…

    Who is the girl in the Claritin commercial?

    Who is the girl in the Claritin commercial? Meet the face (and sneeze-resistant smile) behind the allergy relief ads… (By Carmichael Phillip) Claritin’s allergy season campaigns often feature bright, engaging characters—there’s the little…

    Who does the voice of the bear in the Robitussin Honey commercial?

    Who does the voice of the bear in the Robitussin Honey commercial? Meet the grizzly guest who insists your cough needs more than honey—it needs a friendly nudge (By Carmichael Phillip) Robitussin’s “Window…

  • Ad

  • What commercials does Ray Romano do?

    What commercials does Ray Romano do? A look at the funny side hustles of Everybody Loves Raymond’s beloved star… (By Carmichael Phillip) Ray Romano has entertained us for decades—as the everyman dad on…

    Who is the girl in the new Kohl’s commercial?

    Who is the girl in the new Kohl’s commercial? A close-up on the face behind the friendly shopping assistant everyone’s been talking about… (By Carmichael Phillip) Kohl’s viewers across the country have been…

    Who is the blonde actress in the Rakuten commercial?

    Who is the blonde actress in the Rakuten commercial? Unpacking the Glamour, Wit, and Fame Behind the Face of Rakuten (By Carmichael Phillip) The Star of the Show: Who Is She? The blonde…

  • Ad

  • Who are the actresses in the Poise commercial?

    Who are the actresses in the Poise commercial? Unmasking the Women Behind the Confidence-Inspiring Campaign (By Carmichael Phillip) The Face of Confidence: Who is the Main Actress in the Poise Commercial? Poise commercials…

    WHO ARE THE ACTORS IN THE KINETICO WATER COMMERCIAL?

    WHO ARE THE ACTORS IN THE KINETICO WATER COMMERCIAL? Unmasking the faces behind the flow (By Carmichael Phillip) Kinetico Water Systems has been known for its engaging TV commercials featuring real people—families, homeowners,…

    WHO ARE THE ACTORS IN THE SCRUBS COMMERCIAL?

    WHO ARE THE ACTORS IN THE SCRUBS COMMERCIAL? Reunions, celebs, and the story behind the viral ads (By Carmichael Phillip) The nostalgic “Scrubs” cast didn’t just drop off the medical stage—they’ve been starring…

    WHO ARE THE ACTRESSES IN THE L’ORÉAL HYALURONIC ACID COMMERCIAL?

    WHO ARE THE ACTRESSES IN THE L’ORÉAL HYALURONIC ACID COMMERCIAL? Unveiling the faces behind the glow (By Carmichael Phillip) When you think of the radiant visage behind L’Oréal’s Revitalift Hyaluronic Acid ads, one…

    Who is the actress in the Maison Perrier water commercial?

    Who is the actress in the Maison Perrier water commercial? Uncovering the face behind the sparkling campaign (By Carmichael Phillip) In recent months, the Maison Perrier sparkling water commercials have graced TV screens…

  • Ad