Streaming Services and Residuals—How Do They Work?

Sydney Sweeney as Cassies in 'Euphoria'Credit: Warner Bros. Television Distribution
It seems that the old days of getting compensated for your talent on a TV series are gone.

It is always a strange feeling to see the familiar face of an actor over and over again when starting a new series. While it is nice to see an actor you recognize and often enjoy their performances, it feels odd that they seem to be everywhere all of the time. We can’t help but wonder why they are working so much—is it to make a name for themselves or has streaming made work harder for television actors? 

Unfortunately, the answer may be the latter. Many of these actors that we see time and time again often can’t afford to take a break from acting. Why? 

Euphoria actress Sydney Sweeney revealed in a recent interview with The Hollywood Reporter 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 actors, a residual check is their best shot at passive income, so what happens when that check is no longer guaranteed? 

What Are Residuals? 

Before 1960, the actors of the Screen Actor's Guild didn't make anything beyond what they made during production. After going on strike and negotiating, actors were entitled to residual pay. 

Residual pay goes beyond the original compensation and is a form of payment for on-screen performers that are members of SAG. According to the Producer's Guide: SAG-AFTRA Residual Pay, "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." 

Residuals for streaming services are a bit different. Instead of receiving residuals after the episode airs, residuals can occur after 10 exhibition days, or, in some cases like with streaming platforms like Disney+, performers can start earning residual pay after the first 90 days of a series going live. The rates can get complicated, and ultimately it boils down to negotiations made between the studio and the on-screen talent.

Streaming Services and Residual Pay 

The residual percentage rate is structured differently for streaming services. 

In 2019, SAG-AFTRA made an agreement with Netflix that applied to any scripted projects produced and distributed by the platform. The agreement established a residual structure for works licensed and produced by the streaming giant.

Currently, residuals are calculated based on the amount that a performer was originally paid and how many subscribers the streaming platform has. The percentage rate is applied for the first year, then continues to decline until year 13. From there, the smallest percentage rate is applied in perpetuity. 

Newer platforms with a smaller viewership are given a discounted residual rate, but the residual rate significantly increases as viewership increases.

While some performers will see a gain in revenue over time, the agreement to a new residual structure for television is costing actors over $170 million in network residuals, according to the Hollywood Reporter. Residuals still do get paid out, but traditional residuals have been replaced on streaming services with lower, less frequent fees, and not all streamers are upfront about their viewership numbers. 

The lack of residuals and payment toward on-screen talent and crew members allows services to potentially exploit talent while underpaying them. While established stars get paid well for their performances, many lesser-known actors end up living paycheck-to-paycheck and have to constantly have jobs lined up to financially survive in the industry. 

'Stranger Things 4'Credit: Netflix Streaming Services

Is There a Solution to the Issue? 

For Sweeney, she takes on brand deals, taking on gigs as a Miu Miu ambassador, and starring in beauty campaigns. Many actors in Sweeney’s position do something similar because, as Sweeney states 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.” 

A more maintainable and less mentally impactful solution would be for streaming services to pay on-screen talent and crew members a higher fee based on views. Streamers need to be more transparent with a show’s performance so members of a series know what they should be paid.

SAG-AFTRA's president, Fran Drescher, said in an interview with the Wrap that one of her priorities is improving the streaming wages and residuals. "It's frustrating to not 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." 

Drescher added that the current residual income from streaming services is comparable to broadcast residuals, saying," 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 the key to proper payment for the cast and crew. Everyone deserves to be compensated for their hard work, or they will eventually work themselves past their limit and end up burned out. 

Let us know what your thoughts on the matter are in the comments below!     

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