Most of us assume that between “starving actor” and “celebrity,” there has to be a sweet spot where professionals in the field can find modest work and still make a respectable income. That’s all cool until a show is canceled. Can an actor who played a small part on a modestly successful show live off the television royalties forever?
Maybe. Most television actors don’t live like royalty off their royalties — but some make a decent living. Royalties are referred to as “residuals” in the television world. A residual is a payment an actor is due when a show plays in reruns or is sold to syndication, released on DVD or streamed online. Calculating residuals is a tricky business, one that the TV industry leaves to its trade union, Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA). Much like BMI or American Society of Composers, Authors and Publishers in the music world, SAG-AFTRA collects and pays out any residuals that are due to members.
SAG-AFTRA calculates residuals based on formulas that consider an actor’s contract, time spent on the production, the production type and the market where the show appears. The amount paid out decreases after each rerun — so by the 13th rerun, the amount has decreased to 5 percent of the original fee the actor was paid for her appearance in an episode. This 5 percent will be paid every time an episode is run forever. In general, only “principal performers” receive residuals. Background actors or “extras” (random storm troopers on “The Mandalorian,” for instance) do not usually receive residuals.
According to one rough calculation, if each of the stars of the hit ’90s sitcom “Friends” received residuals at the normal SAG-AFTRA rates, they would get around $10,000 in residuals for each episode of the show in syndication [source: Andres]. With 236 episodes in reruns, that would add up to a handsome residual check of $2,360,000 per actor. In actuality, the “Friends” cast negotiated even higher residuals, with one estimate earning them closer to $20 million a year in syndication.
Getting a big residual depends a lot on what the stars of the show negotiated during their time on the series. In 2016, Dawn Wells, star of ’60s hit and perennial rerun “Gilligan’s Island” said that a “misconception is that we must be wealthy, rolling in the dough, because we got residuals. We didn’t really get a dime. Sherwood Schwartz, our producer, reportedly made $90 million on the reruns alone”.
Actors who play bit roles, or even leading actors whose shows are less successful, also receive residual income, but the amounts are often small — sometimes laughably so. The mega-rich rapper Drake started off as a teen actor with a starring role on “Degrassi: The Next Generation” from 2001 to 2007. In 2016, he posted a pic on Instagram of a check for $8.25 (Canadian dollars or U.S. $6.58) that he claimed was a residual check from the show. “Degrassi money still coming in don’t sleep…” posted Drake sarcastically.
Actor Jeff Cohen, who appeared in one episode of the 1980s sitcom “The Facts of Life,” wrote an article for Backstage magazine describing how he spent a $0.67 residual check. He took it to Maeve’s Re$iduals, a pub that once traded a free drink for any SAG-AFTRA check of $1 or less. Maybe actors who can’t live off their royalties can at least drink off their royalties forever?
Learning The Types of Residuals
There are two types of residuals that you should be familiar with:
1. Variable Residual (also known as a percentage-based payment)
This type of residual takes into account the gross income (not the profit) of a title that is sold by a company, studio, or distributor and then applies each particular Guild’s percentage rate to the gross income. That number then gets divided amongst the qualified talent on the project.
Typically, the DGA (Director’s Guild of America) and the WGA (Writer’s Guild of America) have equal percentage rates, while SAG (Screen Actors Guild) has about a 3x increased percentage rate because they include a larger pool of talent with actors.
Depending on which made-for market that a project is released on (Syndication, Basic Cable, Network TV, New Media) can impact the variable rate, based on the different rules in effect by the Guilds. For example, projects made for Basic Cable and then released on Netflix (New Media) can see a change in the residual rate.
2. Fixed Residual
This is a flat payment based on different criteria and a formula that has no relation to the income of a project. In some instances, a particular talent could have more fixed residuals than the money that was brought in by a project. When the studio, distributor, or producer submits the revenue for the project, then each Guild’s percentage rate gets applied to it and distributed to that particular talent, based on how much time they worked and how much money they were paid. These factors give them a greater share in the residual.
Every time a title reruns in a particular market (Syndication, Basic Cable, or Network TV), the fixed rate is applied with stipulations. Network Television has the highest percentage rate; Basic Cable and Syndication have declining scales, meaning the first rerun pays out the highest fixed percentage rate, and then declines in scale to a minimum fixed rate that goes into perpetuity.
Fixed residuals are designed for initial release in the made-for market, but once the project is released in other markets, usually become a variable residual.
Getting to the New Media side of things
Because New Media (On Demand, Streaming) allows viewers access to content 24/7, the residual percentage rate is structured differently. If a project is up on a streaming service, the percentage rate is applied for the first year, then continues to decline until year thirteen; from there, the smallest percentage rate is applied in perpetuity.
Newer platforms with smaller viewership numbers are given a discounted residual rate (i.e. Apple and Peacock), but as viewership increases, as in the case with longer established platforms like Netflix, residual rates significantly increase as well.
Below the Line (BTL) Crew Members, however, do not directly receive residuals. Rather, they are paid into a pension fund. Once a BTL crew member retires, they are able to tap into a health and welfare fund (applicable to BTL members in the Western thirteen states only). These are crew members who are the general members who work on the set directly or facilitate the production of a film (i.e., Costume Designers, Lighting Crew, Camera Crew, Prop Makers, Post-Editors, etc.)