The WGA writer’s strike in protest of the AMPTP’s refusal to negotiate in good faith (putting it gently) is into its 100th day today, I think. The SAG-AFTRA actor’s strike is a few weeks in. One of the many issues they’re campaigning to resolve is fair residuals in the streaming age. And there’s a lot of poor understanding of why residuals exist and why actors and writers get them in the first place.
The complaint against them that comes up a lot is along the lines of “someone on a car factory line doesn’t get a little bonus every time you drive your car, why should actors or writers?”
Or “the guy that made my mattress doesn’t get a payout every time I go to sleep” or “the plumber that installed my new toilet doesn’t get a payout every time I take a dump”, etc etc. Or “no other industry gets residuals, why should they?”
Rather than sitting on Twitter (no, I’m still not calling it what Phony Stark wants to call it) feeding his bullshit machine’s algorithms and blocking every single advertiser I scroll past, I thought I’d just get my replies to these silly arguments down on my own website.
“No other industry does this, why should Hollywood?”
For one thing, it’s irrelevant how other industries operate. Every industry has its own system, and residuals have been part of contract negotiations with the AMPTP for decades.
For another, this is actually untrue. There are a bunch of industries that determine long-term pay based on the long-term fluctuating value of the original product, and it’s no coincidence that all the ones I can think of are creative industries.
For example, musicians get residuals in the form of performance payouts from radio stations, and per-stream fees from Spotify etc. They can also demand fees when their work is sampled by other musicians, long after the track was originally recorded, as the work is providing additional value to someone else who didn’t spend any time or skill creating it to begin with. But nobody knew how many it would sell or how often it would be played or sampled when it was written, so it wasn’t possible to compensate the creator fairly at that time.
Photographers can charge license fees for the use of their work beyond the scope of the original booking. For example, a photo from an event may later be used in the content of a published book; or it may be licensed for an advertising campaign. The original value assessment of the photos in question didn’t take these uses into account, therefore an additional fee is appropriate to reflect the increased value those images now have to those that want to use them commercially.
“My plumber doesn’t get a payout every time I take a dump.”
Your plumber fitted a toilet. That toilet is a known quantity with a fixed value that has been agreed by you and the plumber that sold it to you. It can only be sold once. Nobody is making any more money off that toilet, all things being well. Everything about its value is known.
Art is totally different. Nobody really knows what the value of the art is. Nobody knows if this show is going to take off. Nobody knows if it’ll make it past the first few weeks on air, let alone get to the magical 100 episodes it needs to qualify for syndication, whereupon it can be re-sold around the world. Nobody knows how many thousands or millions of people will tune in; but if those millions do tune in then adverts sold against the slot become more valuable.
And so nobody really knew how much to pay people because the value of their work wasn’t understood at the start. Sure, an actor has a quote based on previous works, but that only really works out for established megastars.
The value of a show or film only becomes clear in the years to come, starting with the box office, or the first run on TV, and then continuing into DVD/Blu-Ray sales, and syndication sales, and advertising revenue, and merchandise, and so on. A member studio of the AMPTP can theoretically continue to sell and profit from each single show or movie for decades to come.
And so residuals are simply a form of performance-related bonus for actors and writers. Take them away and you’d really need to compensate everyone upfront on the basis of the as-yet-unmade show being a global smash hit for decades to come.
But not all productions are smash hits. Studios aren’t going to pay ‘smash hit’ fees for something that could feasibly fail to break even (assuming we trust their dodgy accounting designed to make it look like all their productions fail to break even, but that’s a whole other murky swamp the AMPTP swims in).
What’s the solution? Performance related bonuses. AKA residuals.
“The studios take all the risk, they should be the only ones that profit if their risk pays off.”
Actors also take a risk. It’s their name on the poster, their face on the screen. They are literally the face of the product. If the product bombs all of the top named people take a repetitional hit, especially the director, writers, actors, and key producers. Of all of those affected I’d argue the studio probably suffers the least from one movie flopping, they’ve got others on the way. Nobody is gonna go “Oh isn’t this new movie from Warner Bros? Didn’t they release a movie that flopped last year? Yeah maybe lets skip this one…”
But I think people absolutely allow the performance of the last movie starring (insert actor here) to inform their decision about seeing the next movie starring that same actor. And writers will similarly suffer a much bigger reputation hit than the studio will.
The studio execs don’t rely on each movie to do well in order to be able to have a chance at being able to pay their rent and buy food. Writers and actors are much closer to that breadline, if not on or under it. So yeah they are taking risks too.
“I don’t think Tom Cruise is struggling to pay his rent, actors are just greedy striking for more pay.”
Tom Cruise and his fellow AAA-list colleagues are doing fine, yep. But they represent a teeny tiny fraction of a percentage of the working actors in Hollywood. Same as Aaron Sorkin and his ilk represent a teeny tiny fraction of a percentage of the working writers. They’re fighting together for all their colleagues’s rights.