Residuals: Overview, definition, and example
What are residuals?
Residuals refer to the payments made to individuals (typically performers, creators, or employees) for the continued use or exploitation of work that they have previously contributed to. Residuals are most commonly associated with the entertainment and creative industries, where actors, writers, directors, and other contributors receive payments for the reuse of their work, such as reruns of a TV show, syndication of a film, or streaming of a music track.
Residuals are designed to compensate individuals for the ongoing value their work generates over time. Instead of receiving a one-time payment, creators and performers are paid periodically whenever their work is reused, rebroadcast, or repurposed in some way. These payments are often specified in contracts or union agreements and are based on factors like the type of media, the scale of the project, and the frequency of reuse.
Why are residuals important?
Residuals are important because they provide ongoing compensation to individuals for their contributions to a project. In industries where works are often reused—such as television, film, music, and digital content—residuals ensure that creators and performers are fairly compensated as their work continues to generate revenue long after the initial production or release.
For creators and performers, residuals offer a way to receive continued income based on the success and reuse of their work. For production companies and studios, residuals help encourage long-term relationships with talented individuals and provide an incentive for creators to contribute to high-quality projects that can be reused or sold in different formats over time.
Understanding residuals through an example
Imagine an actor who stars in a popular TV series. The actor is paid a salary for each episode filmed. However, once the show is syndicated (sold for rebroadcast on other networks or streaming platforms), the actor continues to receive residual payments based on the number of times the show is aired or streamed. These payments are made periodically, even though the actor is no longer actively working on the show.
Similarly, a songwriter might receive residuals from the continued use of a song they wrote. Whenever the song is played on the radio, streamed online, or used in commercials, the songwriter receives a residual payment as compensation for the ongoing usage of their work.
Example of residuals clause
Here’s an example of how a residuals clause might appear in a contract for a television show:
"The Performer shall receive residual payments for each reuse, rerun, or syndication of the Program in any media or format, including but not limited to television, streaming services, and home video. The amount of the residuals shall be calculated in accordance with the terms set forth in the applicable union agreements and will be paid quarterly, based on the revenue generated from such reuses."
Conclusion
Residuals provide fair compensation to individuals whose work continues to generate revenue over time. They are a crucial aspect of the entertainment, media, and creative industries, ensuring that contributors are paid for the ongoing success and use of their work. Whether in film, television, music, or other creative fields, residuals allow creators and performers to benefit from the long-term value of their contributions.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.