What residuals are — and why Hollywood actors and writers are striking over them

LOS ANGELES -- "The residuals are out there," read a picket sign held by actor David Duchovny, echoing the tagline of his TV series, "The X Files."

Residuals are a central issue of the current simultaneous strikes of Hollywood actors and screenwriters, and a subject of constant comment on picket lines. While they once handsomely rewarded stars with rewatchable hits like Duchovny, union members say they've since diminished to a trickle as the industry has shifted to streaming. Here's a look at how the system works and the experience of those who receive them -- or don't.

WHAT ARE RESIDUALS?

Residuals are long-term payments to those who worked on films and television shows, negotiated by unions, for reruns and other airings after the initial release. The basic pay structure was developed in 1960, the last time writers and actors were on strike together.

Traditionally, actors and writers are paid for each time a show runs on broadcast or cable television, or when someone buys a DVD, a Blu-ray disc or (long ago) a VHS tape.

The payments, which decline over time, are pegged to several factors including the length of a movie or show, the size of a role, the budget of a production, and where the film or show is offered.

While streaming companies technically pay residuals, both unions and their members say the amounts and pay timelines leave actors and writers with a pittance of what they once received -- and those who were once paid for reruns of network shows often get nothing now.

"I did an episode of 'Criminal Minds' and was getting residuals," said actor Whitney Morgan Cox, who has a handful of credits for small roles. "And then 'Criminal Minds' moved to Netflix and those checks stopped coming. And then it did a resurgence on cable TV, I got a couple more checks. It went to streaming, the checks stopped coming."

HOW MUCH ARE THEY WORTH?

Like all money in Hollywood, the amounts run the gamut. More than a decade after the show ended, the cast of "Friends" was still making millions annually.

But residual payments can easily amount to just a few cents. Some actors are sharing their residuals on social media, including Kimiko Glenn of Netflix's "Orange Is The New Black, who made a TikTok video of a statement showing only $27 in total for foreign residuals earned over the decade since the show began.

"I'm always like, 'But why even cut it?'" actor Zoe Lister-Jones said of cashing residual checks.

"It's not worth the paper it's printed on," actor and writer Paul Scheer added.

Getting paid pennies is so common that there's even a bar in Studio City that offers free drinks for actors and writers who show they received a check for less than a dollar.

But even modest payments can be essential to a lower-tier performer's livelihood.

"Residuals, that's how we live," Cox said. "There are our initial paychecks, which helps, but then there are our residuals which help us with our groceries and our day-to-day lives."

The lack of such a steady income can mean the loss of union health insurance for members, who are required to earn $27,000 annually to qualify for coverage. The vast majority don't qualify.

WHAT'S THE POPULARITY PROBLEM?

Streaming residuals are largely untethered from the popularity of the movie or show they are tied to. Most streaming services are loath to release specific viewership figures at all. Performers say being part of a hit now has little meaning.

Actor Chris Browning appeared in the movie "Bright" with Will Smith, which Netflix touted as a heavily watched hit.

"If it was back in the old DVD residuals days, I would have got a $25,000 residual check," Browning said. "I got $271 from Netflix."

David Denman, who appeared on 31 episodes of "The Office," which aired on NBC, said "it doesn't matter if you watch that show once or you watch it 100 times, you're not going to get any more money because more people watch it."

"When it was the Number 1 show on Netflix, they are able to make a significant profit off of that, but that doesn't trickle down to the blue-collar actors like me," Denman said. "We're just asking to share in the profit when the show is successful, that's it."

Quinta Brunson, creator and star of "Abbott Elementary" on traditional broadcast network ABC, said she has had a far better experience in many ways than friends who have had similar roles on streamers.

"I think that ... streamers could learn from what networks had done in the past right now," Brunson said. "I think there's a lot of benefit to the way network TV works."

WHAT WAS ON THE NEGOTIATING TABLE?

While little has been publicly revealed about the details of writers' contract negotiations, which ended May 2, the Screen Actors Guild-American Federation of Television and Radio Artists on Monday released an outline of the negotiations when talks broke off July 12.

The union said negotiators asked studios to consider a "comprehensive plan for actors to participate in streaming revenue, since the current business model has eroded our residuals income." The answer, the union said, was simply "no."

The Alliance of Motion Picture and Television Producers, which represents the employers, said in response that SAG-AFTRA's public descriptions "mischaracterize" and "deliberately distort" the negotiations.

SAG-AFTRA said the AMPTP rejected outright its residual proposals for lower budget productions. They included requiring residual payments for the ongoing showing of movies on streaming services, regardless of specific budget or length, and paying for shows that stream first and later air on TV at the same rate as shows that aired first on TV. They also proposed an increase in the residuals that apply when a traditional media production then airs on a free streaming platform like Amazon Freevee.

On higher budget productions, the union said it sought improved residuals for the continued availability of movies and shows on subscription streaming services. SAG-AFTRA said there was progress in negotiations on this issue, but that "significant gaps" remain between the two sides.

The AMPTP released far fewer specifics on its take on negotiations. But the group said it included a 76% hike in residuals on overseas streaming video for high budget productions.

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Associated Press Writers Krysta Fauria and Leslie Ambriz contributed.