Residuals, which are key to Hollywood strikes, are an imperfect answer to the threat posed by recording technology.
That is the question at the heart of both the Writers Guild of America and SAG-AFTRA strikes. It’s also a deep question, with roots in the history of technology and its impact on labor going back nearly a century.In the simplest terms, they are the payments that artists receive for reuse of their work. Unique to the entertainment industry, they are calculated through obscure and mysterious formulas.
In the 1930s, live radio performers would do a show for the East Coast, and then three hours later another show for the West Coast. Radio networks figured out how to record the first performance and replay it, cutting the performers’ wages in half. The royalty plan was the foundation for residuals that took hold a few years later among the Hollywood guilds.in its April 1945 issue. The payments, it argued, were were partial compensation for the unemployment caused by record companies.
“Television was fundamentally different than film, in terms of an economic structure,” Porst said. “Everyone had to wrap their heads around what it meant to be an advertising medium. Who is a customer? What is a ‘ticket’? You’re trying to take this equation for theatrical film releases and you’re trying to force it on the television model and it didn’t fit.”
Since the 1950s, each new entertainment medium has led to a residuals fight — videocassettes, basic cable, premium cable, the internet, and now streaming. Each time, unions have tried to adapt the old formulas to a new distribution technology, to arrive at something that feels fair. That is an unprecedented bounty for consumers. But it has also collapsed traditional release windows, eliminating the scarcity that once ensured a generous harvest of residuals for artists. In 2013, unions tried to figure out a residual that would make up for that lost scarcity.
But over the last decade, streaming has gone from a niche market to the dominant form of television. And that HBO-based formula no longer feels fair to the writers and actors. They want something that works more like regular TV.In 2005, residuals made up about 22% of total compensation paid to writers, according to data released by the WGA.
In the old system, writers on “Cheers” and “The Cosby Show” would not get more money if their shows got higher Nielsen ratings. But they would get a check every time their episode re-aired on primetime or in syndication — which would add up to a lot of money for popular shows.
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