Residuals are negotiated between the producers, and the union
performers belong to. In terms of movies and television, this means
that most residuals are negotiated with the Alliance of Motion Picture
and Television Producers. However, in 1995, the three biggest
television networks broke away from the AMPTP due to their
disagreement with the way residuals for the Fox network were
calculated. The three main unions involved with residuals are SAG
(Screen Actors Guild), the WGA (Writers Guild of America) and DGA
(Directors Guild of America). Because the most information was
available concerning SAG and residuals, this answer will focus mostly
on SAG.
The first broadcasting residuals were paid in 1941, and concerned the
medium of radio. Radio performers would perform the show twice (once
for the Eastern time zone, then again for Pacific time zone). When
ways were found to record the first performance and broadcast it a
second time, the union of radio performers (AFRA, American Federation
of Radio Performers) insisted on the payment of residuals.
In 1951, the first residuals were paid for movies being shown on
television. These residuals were paid to members of the American
Federation of Musicians.
In 1952, the first residual-related strike was held when the Screen
Actors Guild struck against Monogram Pictures. This was the very first
strike conducted by SAG. Walter Pidgeon was the president of SAG at
that time. In 1953, the WGA also conducted a strike to win residual
payments.
A second SAG strike, in 1955, was held to increase television
residuals.
In 1960, SAG struck again, for residuals for movies broadcast on TV.
The producers’ guild had to pay a $2.65 million settlement. Ronald
Reagan, who was president of SAG at that time, resigned his position.
The WGA also had a strike in 1960 for residuals.
In 1973, when Dennis Weaver was president of SAG, a new contract
awarded residuals in perpetuity. The WGA got residuals in perpetuity
in 1977.
In 1978, SAG went on strike for better commerical residuals. Residuals
increased again under a new contract in 1989.
Later, in the 1970s and 1980s, residuals were negotiated for new media
including videocassettes, cable, and pay-per-view. Residuals continue
to be negotiated for new media, including DVD and video on demand; and
have played a part in at least 18 union strikes. In the year 2000, for
example, the commerical actors belonging to SAG went on strike to
protest outdated language in their contracts regarding residuals paid
on commercials.
During the 2000 strike, many famous actors such as Helen Hunt, Tom
Hanks, Nicholas Cage and Kevin Spacey donated money to help support
commerical actors.
Residuals on movies are calculated as a percentage of the
distributor’s gross receipts (basically, the money a film earns at the
box office). Current residuals on television broadcasts of movies are
3.6%; video and DVD is 4.5% on the first million and 5.4% thereafter.
For television shows, SAG residuals are calculated by episode, based
on a percentage of the performer’s original pay rate and the number of
times the episode has aired. Writers earn 2% of the license fee as
residuals on TV shows (the license fee is the amount the network pays
the studio per episode for a show).
It is difficult, without the actual contracts, to know how residual
payments have changed over time. In 1965, when SAG added foreign
distribution residuals, residual payments were $1 million per month.
Compare that to 1985, when for the first time SAG members collected
$100 million in residuals. In 1993, SAG noted residuals had doubled in
six years to top $2 billion; however, whether that was per year or
cumulative is not stated (cumulative seems more likely).
