John August

WGA

Feature residuals in 2020

Film Industry, WGA

I’ve written about residuals many times, and it’s a frequent topic of conversation on Scriptnotes.

But as a quick refresher, let’s go to the definition:

RESIDUALS Payments made to a film or television writer when their work is sold to another venue, such as a feature film sold on DVD, or a network television episode shown in syndication. These fees are percentages negotiated and collected on behalf of writers by the Writers Guild of America.

The most important thing to remember is that residuals only happen after the the initial run/venue. So, for a feature film, you don’t get residuals on the money it makes in theaters.1 For a TV series, you don’t get residuals the first time it airs on television. When an episode runs in syndication, or a movie is sold on DVD, that’s what counts.

I’m mostly a feature writer, so that’s been the bulk of my personal experience with residuals. For example, here’s a look at the residuals I’ve earned from Go from 1999 to 2011.

bar and line chart of Go residuals

For feature writers, residuals are an important way of keeping money coming in the door in the years between getting movies made. Without residuals, it would be difficult for many feature writers to stay full-time writers.

As Craig and I often discuss on the podcast, most WGA members — including a lot of elected board members — don’t have firsthand experience with feature issues, including residuals. So I wanted to highlight some numbers about how feature residuals have changed over the years.

I’m comparing two movies I wrote: 2005’s Charlie and the Chocolate Factory and 2019’s Aladdin. I picked them because they’re very similar movies — four-quadrant family films that made a lot at the box office.2

Title Domestic Box Office Worldwide Box Office
Aladdin $355,559,216 $1,050,693,953
Charlie $206,459,076 $474,968,763

As the writer, I know exactly how much these films paid out in WGA residuals.3 Here’s what each film generated in its first 15 months after concluding its theatrical release:

Title Home Video Pay TV New Media – EST New Media – SVOD Total
Charlie $789,439 $272,283 $0 $0 $837,146
Aladdin $216,484 $247,324 $212,387 $712,104 $1,388,299

Home video is what you think: DVDs, or VHS back in the day. Pay TV is cable, like HBO. New Media EST means “electronic sell-through,” like iTunes and such. There are rates for both purchase and rental. New Media SVOD stands for “subscription video on demand.” Think Netflix or Disney+.

Here’s what this looks like in a bar chart:

residuals bar chart

A few takeaways:

  1. Residuals are still a thing. Aladdin has kicked off $1.3 million in WGA residuals so far.
  2. The home video market is much, much smaller than it used to be. My hunch is that Aladdin sold better on home video than many non-family movies, so for many titles, their home video percentage is probably even smaller.
  3. SVOD is huge, and largely makes up for the decline in home video.

As consumers, it’s obvious that SVOD is the future. We’re not buying many DVDs. We’re cancelling our cable. And while we might still rent a movie, we’re more likely to see what’s on Netflix.

As writers, we should be watching SVOD residuals very closely. They’re not built on the same foundations as our other sources, and could quickly collapse.

Unlike home video or EST, SVOD residuals aren’t based on how many times someone watches our work. The streamers are loathe to share any information about viewership. So instead, SVOD residuals are treated more like pay TV and broadcast residuals in that writers are paid a percentage of the license fee. Basically, we get a cut of whatever the studio charges the streamer.

That works great when Warners charges Neflix $100 million for Friends. But how do we make sure Disney isn’t selling Aladdin to Disney+ for less than it’s really worth?

One way to look at self-dealing is to bring in comps. If you can show that a streamer paid $5M for a three-year license to a similar film, it’s hard to argue that it’s “really” worth only $1M. But that only works when there really is a market. Every studio basically has its own streaming service, so it’s increasingly difficult to show any comparative prices.

An even bigger concern is what happens when these movies debut on the streamers. Remember: residuals are paid only on money earned outside of the initial venue. If Aladdin had debuted on Disney+ rather than in theaters, would it have generated residuals at all? I suspect that’s an open question, one that feels especially relevant as more movies are being pulled from theaters during the pandemic.

Craig and I talk about these issues on episode 472 of Scriptnotes.

  1. Or, weirdly, airplanes. ↩
  2. Inflation adjusting for 2019 dollars would put Charlie at $270M domestic and $621M worldwide. ↩
  3. For Aladdin, the residuals are divided between me and the co-writer, so I’ve doubled them here. ↩

My Non-Candidate Statement

WGA

To My Fellow WGA West Members,

Two years ago, you voted me onto the Board of Directors. Thank you. I’ve taken the responsibility very seriously.

I co-chaired the newly-created screenwriting subcommittee. After a series of outreach lunches and an extensive survey of members, we focused on three urgent issues for screenwriters: free work, one-step deals, and late payment. Then we got to work.

We met with the heads of Paramount, Sony, Warners, Universal and Disney to explain how their practices were harming not only writers, but the creative process.

We launched the “No Writing Left Behind” campaign to remind both writers and executives that free work hurts everyone. I spearheaded the Start Button project as a way to help screenwriters get paid on time.

We organized feature writers working in animation to discuss how to get more of our work Guild-covered—or at a least approach parity at non-signatories.

Finally, we started the discussion on how to best think about credits in the 2020s, when the definitions of “theatrical” and “first writer” are increasingly murky.

I’m also a member of the negotiating committee for the agency campaign. I’ve spoken and emailed with hundreds of you. Thank you for your engagement on this crucial issue. I want to make sure we get a deal for writers that will still look good five, ten and twenty years from now.

I’m not running for re-election this cycle because I’m planning to direct a movie. But I remain committed to making sure the Guild serves all its members. In that spirit, these are the candidates I believe can best deliver on the Guild’s promise. (I’ve included links to their candidate statements where available.)

DAVID GOODMAN (President)
The job of president requires empathy and experience. I saw both of these firsthand with David Goodman. He listens to members and knows how to get things done.

An example: Just a week into the job, I came to David with concerns that colleagues on Twitter had raised about submission packets for late night and variety shows. It felt like free work. David convened a group of late-night/variety showrunners and writers to hammer out a set of best practices to make sure writers were protected, then coordinated with WGA East for shows based in New York.

It wasn’t flashy. It wasn’t something he campaigned on. But it was protecting writers, and that’s the job of the Guild and its president. Time and again, David Goodman has done it.

MICHELE MULRONEY (Secretary/Treasurer)
Michele co-chaired the screenwriting subcommittee, and deserves the lion’s share of the credit for what’s been achieved. Her experience and dedication are unmatched. And with three feature writers leaving the board (me, Andrea Berloff and Zak Penn), Michele is more essential than ever. link

It’s been my pleasure to serve with the following incumbents, each of whom has shown remarkable insight and commitment on issues ranging from sexual harassment to the agency campaign. They’re ready for whatever the next two years bring.

MARJORIE DAVID (VP) link
ANGELINA BURNETT link
LUVH RAHKE link
MEREDITH STIEHM link
NICOLE YORKIN link

While these incumbents’ experience is crucial, it’s also important to welcome new voices. In my two years on the board, I’ve keenly felt some missing perspectives. Here are four writers I’m excited to see join the board:

LIZ ALPER
Recognizing a need, Liz created the #WGASolidarityChallenge Grid and the Comprehensive 2019 Staffing Grid. I can’t wait to see what she does next. link

ROBB CHAVIS
A former attorney, Robb rose up through diversity writing programs and can speak to both the promise and pitfalls of these efforts. link

DANTE W. HARPER
Dante is an experienced feature writer. We’ll need him on the board this coming term. link

ZOE MARSHALL
Zoe organized a series of five staffing and development mixers for more than 750 writers, showrunners and executives. She didn’t ask for permission; she asked for results. link

No matter which candidates you support this election cycle, let’s remember that the Guild needs to represent all of us because the WGA is all of us. Unity does not mean uniformity. Lively discussion shows an engaged membership ready to face the challenges ahead. Let’s get there together.

With thanks,

John August signature

The Myth of “No Negotiation”

WGA

For the past two years, I’ve served on the WGA board of directors and the negotiating committee for the agency campaign. I’ve spoken with hundreds of members in person, on the phone and via email.

Some are strongly in favor of the Guild’s action; some are vehemently opposed. That’s fine! A union doesn’t require uniformity of opinion. But it does need a common set of facts.

In that spirit, I want to address a pernicious myth that’s being amplified by some of the candidates running for office this cycle: that the WGA refuses to negotiate.

I hear this idea repeated so often that some very smart friends have stopped questioning the premise. It’s become a straw man, a false argument set up just to be knocked down.

Here’s Phyllis Nagy:

In refusing to negotiate with the ATA, current leadership has effectively refused to negotiate with the Big 4. Stalemate. That benefits no one.

Here’s Bill Schmidt:

But leadership is not negotiating. They refuse to negotiate until the Big Four end packaging and eliminate affiliated production companies. They cite as our biggest weapon the lawsuit filed on behalf of eight writers.

Here’s Jason Fuchs:

I want to win this fight, but we cannot win a game we refuse to play.

The solution these candidates offer is so reasonable as to seem obvious: just start negotiating!

The reality is that the WGA has never refused to negotiate. In fact, it never stopped negotiating.

But! But! What about back in June, when David Goodman put out a statement saying that we were going to stop negotiating?

Except he didn’t. Here’s what he actually said:

The truth is, the agencies in that ATA room are stuck. Agencies that have no financial interest in producing, and very little in packaging, are having their futures tied to entities like WME, which has gone into the IPO business and is currently committed to changing nothing. There is virtually no negotiation occurring, except for the concessions the Guild has made. Two months after our last meeting, they have now made us an offer that, as I indicated earlier, moved very little, and in some ways is worse.

So, we think it is time to start negotiating individually with the nine remaining agencies who represent a significant amount of writers, rather than with the ATA. The nine agencies are UTA, CAA, ICM, WME, Gersh, Paradigm, Rothman Brecher, Kaplan-Stahler, and APA. We are willing to meet with every agency that is willing to meet with us. We’ll reach out to each of them individually again in an attempt to hear their specific concerns with our proposals.

Spoiler: That’s what actually happened.

In the past month, the first of those nine agencies (Kaplan Stahler) broke from the ATA and signed a new negotiated agreement. I stress negotiated because members of the negotiating committee — including me — spent hours discussing and debating which compromises made sense, both for this deal and going forward.

Since then, the Buchwald Agency signed a deal, as did a new agency formed by leading agents who left Abrams.

In each case, the negotiations were quiet. The town didn’t know they were happening until the results were announced.

A July 20th LA Times article picked the wrong person to interview:

“There is no back-channeling going on,” said an agency leader who was not authorized to comment.

Whoops!

Not only was there back-channeling going on, there were active negotiations between agencies and the guild. The discussions were focused on specific issues. For example, in response to agency concerns, we clarified language on reporting requirements and increased the length of the deal to five years.

None of the announced agreements have been with big four agencies, nor do they offer concessions on producing or packaging fees, other than a one-year sunset clause.

In order to get the big four, Phyllis Nagy argues the WGA needs to return to the room with the ATA:

Yes, the conflicts and abuses of both [packaging fees and producing] have to be tackled head on and greatly curtailed or eliminated. That requires focused negotiation followed by presentation of terms to the entire membership for approval. It’s worth repeating — none of this will happen without rolling up sleeves and getting back to the negotiating table.

The Nagy plan will involve sitting at the negotiating table with forearms bared and then — what exactly? As far as I can tell, the checklist is:

  1. Sit down at the table with ATA
  2. (TBD)
  3. Present deal for membership vote

In contrast, the current Guild leadership has explained exactly what they intend to do: negotiate individually with each agency, with special emphasis on agencies 5 through 9, to hammer out specific issues. The WGA explained why: the different agencies have different needs and agendas.

Having been in the sausage-making room, I believe the process of reaching a resolution with the big four agencies is likely to be frustrating and exhausting, with multiple false starts, dashed hopes and occasional breakthroughs. It’ll take more than one shot. I think we can get there, but my hunch is it’s going to be a slog, because it’s been a slog. This is sloggy business.

That’s not the kind of statement a candidate can run on (“Vote for the Slog!”), but fortunately I’m not running for reelection. I’m only speaking as someone who’s spent hundreds of hours on this and wants my guild to come out of both this agency campaign and election season with clear eyes, compassionate differences of opinion, and a common set of facts.

Getting Started with the Start Button

News, WGA

Over the past month, the WGA has rolled out several new tools to help members better represent themselves without agents, including the Staffing Submission System, the WGA Weekly Feature Memo, and the Find A Writer directory.

For screenwriters working on assignment – and TV writers working on pilots – an existing WGAW tool can be especially helpful in confronting the twin problems of free work and late pay.

The Start Button is a simple way to record when you begin working on a draft and when you hand it in. It helps the Guild protect writers from abusive requests for unpaid rewrites and delayed checks.

I made a little video to walk writers through how the Start Button works, and why members should make it standard practice when beginning an assignment.

Like all WGA tools, the Start Button is designed to help members take more control over their work and career. In this period when most members don’t have agents, writers need to advocate for themselves and others. The Guild is there to back you up.

(Music by Matthew Chilelli, of course.)