How Do Streaming Services and Residuals Work?

Money (1)

How Do Streaming Services and Residuals Work?

The days of being overly compensated for your profession on a TV series are over. It's always an odd sensation to repeatedly see a well-known actor's face when starting a new series. Seeing an actor you know and enjoy their work is a strange feeling, while it is nice to see them all the time. We can't help but wonder why they're working so much—is it to get a name for themselves, or is streaming making work more difficult for television actors?

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Unfortunately, the answer may be the latter. Many of these individuals who seem in so many movies can't afford to take a break from acting. Why?

In a recent interview with The Hollywood Reporter, Euphoria actress Sydney Sweeney revealed that she doesn't "have [the> income to cover that. I don't have someone supporting me…

They don't pay actors like they used to, and with streamers, you no longer get residuals." For most performers, a residual check is their best chance at passive income, so what happens when it isn't sure?

What Are Residuals? 

Before 1960, SAG actors earned only what they made during production. Actors were granted residual payment after going on strike and negotiating a settlement. Residual pay is extra money given to SAG members for on-screen work. The Producer's Guide to SAG-AFTRA Residual Pay says it this way: The residual pay is the amount earned after deducting your agent fee from what you deserve., "For a TV show, the original compensation covers the first broadcast airing of a show and time on set. Residuals kick in for free television after one airing and a week of AVOD." 

The residuals for streaming channels are a bit different. Instead of being paid out after an episode has aired, performers may begin earning residual pay after the first 90 days of a series going life instead of waiting ten exhibition days. The rates might become complicated, and in the end, it all comes down to the terms that the production and on-screen talent reach.

Streaming Services and Residual Pay 

For streaming services, the residual percentage rate is calculated differently. In 2019, SAG-AFTRA reached an agreement with Netflix that covered any scripted content produced and distributed by the company. The contract established a residual compensation plan for works licensed and made by Netflix.

Today's residuals are based on how much a performer was initially paid and the number of subscribers the streaming service has. For the first year, a percentage rate is used; after that, it decreases until year 13. The lowest percentage rate is applied in perpetuity from there.

The residual rate of newer platforms with a smaller audience is reduced, but the residual rate rises rapidly as viewership grows.

According to The Hollywood Reporter, the new residual arrangement for television costs actors over $170 million in network residuals. Traditional residuals have been replaced on streaming services with lower, less frequent payments, and not all streamers are upfront about their viewership figures.

Services may take advantage of talent while underpaying them if there are no residuals and payment is made to on-screen talent and crew members. While well-known actors make good money for their work, many lesser-known actors find themselves paycheck to paycheck. They must keep employment options open to financially survive in the business.

Is There a Solution to the Issue? 

Many actors in Sweeney's situation take on similar activities because of Sweeney's comment in the interview: "If I just acted, I wouldn't be able to afford my life in LA. I take deals because I have to." 

Instead of paying on-screen talent and crew members a fee based on views, streaming services may pay more outstanding royalties to them depending on how many people watch. Streamers must be more upfront about the success of a program so that series members know what they should be paid.

President of SAG-AFTRA Fran Drescher, also an actress on the show, told The Wrap in an interview that her number one goal is to raise streaming pay and residuals. "It's frustrating not to know how well a show does on a streaming platform and that our members are not benefiting equitably," said Drescher. "There must be a clean relationship where everyone makes money as well as gets benefits, as long as the project does." 

According to Drescher, streaming residual income is comparable to broadcast residuals today." I know that many of our members survive on their residuals. We want to make sure that we're continuing to do the best for them." 

Transparency from streaming services about viewership is critical for fair payment to the cast and crew. Everyone deserves to be paid for their time, or they will become exhausted and burned out.

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