Overview
Films and television shows, just like songs, are creative works that are protected by copyright. As such, the owners of film copyrights are entitled to royalties when their products are used.
In film and television, the copyright owners are typically the producers. The directors, performers, writers and other key creatives involved in the work's production usually sign contracts relinquishing copyrights and stipulating royalty terms. Hollywood has a long history of power struggles between creatives, resulting in the varying royalty rates seen in their contracts. Performers (actors and actresses) typically command the highest rates, collecting approximately $639 million in royalties in 2012.
Residuals
Royalties, in film and television, go by the name 'residuals' and are paid when a film or program is rebroadcast. Creatives are typically paid a large upfront fee for a film's theatrical release or a television show's first airing and are then paid residuals for any subsequent airing, including DVD release, broadcast TV syndication and new media use such as Netflix streaming.
The valuation of residuals takes into account the amount of time spent on the production, the type of production and the market in which the production appears (e.g. TV, DVD, new media).
Guilds
Most creatives are members of unions, called guilds, which sets the terms of their members' contracts, including residual rates. Major guilds include Writers Guild of America (WGA East and WGA West), Screen Actors Guild / the American Federation of Television and Radio Artists (SAG-AFTRA), Directors Guild of America (DGA), Producers Guild of America (PGA), Motion Picture Editors Guild (MPEG) and International Alliance of Theatrical Stage Employees (IATSE).
The guilds routinely lobby for higher residuals and have staged strikes during particularly contentious Hollywood power struggles to ensure that residuals continue to be paid.
