A residual is a payment made to the creator of performance art (or the performer in the work) for subsequent showings or screenings of the (usually filmed) work. A typical use is in the payment of residuals for television reruns. The word is often used in the plural form. Besides members of performers' unions (e.g. SAG-AFTRA), members of unions that work behind the camera (such as members of the Directors Guild of America and the Writers Guild of America) receive residuals as well.
The residual system started in U.S. network radio. Live radio programs with nationwide audiences were generally performed either two or three times to account for different time zones between the east and west coasts of the United States. The performers were paid for each performance.
Audio "transcription disc" technology became available in the late 1930s and was initially used to make recordings to send to radio stations that were not connected to the live network. As the sound quality of these recordings improved, the radio networks began using them for time-delaying the west coast broadcast and eventually eliminated the need for multiple performances. The performers were kept on standby and paid for a second performance, in case there were technical problems with the recording. This established the precedent for residual payments from recorded performances.
A similar transition between live and recorded performances occurred on television in the early 1950s. Initially, most television broadcasts were either live performances or broadcasts of older films originally produced for motion picture theaters. Kinescope recordings were made of live east coast performances so they could be broadcast several hours later on the west coast. These recordings also made it possible to repeat broadcast these shows at a later time. In 1952, residual payments were extended to these television reruns.
Meanwhile, the Screen Actors Guild began a long battle to gain residual payments for movies that were shown on television. The Guild relinquished any claim for residuals from movies produced before 1948, but there was a long-standing stalemate over residuals for newer movies. Finally in 1960, the Screen Actors Guild reached an agreement with the movie studios that paid residuals for movies produced after the date of the agreement. Movies produced before 1960 were not required to pay residuals.
The original residual agreements for television shows never anticipated the number of repeat broadcasts that some well-loved television series would eventually see in syndication. As a result, the residual payments were generally limited to about six broadcasts. This was changed in the mid-1970s, when contracts for new television shows extended residual payments without limit on the number of repeats.
Under the current system, the television production company retains 80% of the fees earned from reruns. The other 20% is paid to the various performers and off-camera crew.
Disabled members of these three unions, by IRS Rules Publication 15 Circular E (for 2014) page 36, are not supposed to have FICA (Medicare and Social Security) removed from their residuals. Some studios do comply if the disabled member contacts the movie studio, but there are other studios that choose to violate the IRS rule.
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