Royalties & Residuals

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What's the difference?"Don't try to lay no boogie-woogie on the king ofRock 'n' Roll!"Long John Baldry

Usenet · Accepted Answer

[nq:1]What's the difference?[/nq]
Royalties are what live in the castles, residuals are what leave the castle's outhouse?

Usenet · Answer

[nq:1]What's the difference? "Don't try to lay no boogie-woogie on the king of Rock 'n' Roll!" Long John Baldry[/nq]
Well, as I understand it, residuals and royalties are rather the inverse of one another.
That is, when you get paid money up front, say, by a publisher, that's considered an "advance against royalties."
That's because, in principle, all that you're ever really owed, is a negotiated percentage of what the sale of the copies of your book brings.
There's no upper limit to how much that is, beyond the limit of the endurance of the copyright. Once the advance is paid off, they'll continue to pay you your royalties as long as the book sells. If it's twenty cents a book, every book that sells, that's another twenty cents for you. Forever.
Of course, from their perspective, if the book doesn't sell, and sales never equal the initial advance, then they've lost money and you never get any royalties but you don't have to pay back the advance.

Residuals are sort of the reverse. From the perspective of the guild, it's not as if the money we get paid initially is an advance against the potential earnings of the work we do. Rather, the residual payments are viewed as money that we were always owed, but which is deferred, because, given the high initial cost of production, often, in the case of TV, the deficit cost of production, we contractually agree not to get paid until the episodes in question go into repeats and thus make money for the producers who are then in a position to pay us money that, in effect *we* have advanced to them.
That's why they're called residuals. It represents the residual the remaining money that is owed to us.
That's why residuals, unlike royalties, are structured on a sliding scale. The thinking is that we'll defer a majority of what's owed a little bit, and so the lion's share of residuals the big checks, come during the first four or five re-runs. After that, the percentages taper down until you're really getting very small percentages per episode.
Now, you may say - but, hey, sure, it goes down to a tiny percentage but you still get paid forever, just like royalties. Why is that, given that it's considered to be just a percentage of your initial pay?
Well, the advantage (and the advantage of having negotiated a reasonably decent contract when unions had some power, as opposed to now) of this initial construction is that the unions argue is that a lot of work essentially every show that fails to go into syndication, fails to pay the residuals at all that is, those shows fail to pay the money that is owed forever. In compensation for that, the shows that do go on forever, ought to take up the slack by paying out for as long they're profitable.

Which, let's face it, isn't going to be forever. There are a certain number of shows a certain kind of show, that will tap into the nostalgia market, for as long as the people who watched those shows as kids have fond memories of them and want to relive those memories. But "Gomer Pyle" isn't being going to be rediscoved by a whole new modern audience. It ain't coming back. I have a feeling that those who are waiting for the "Gomer Pyle" boxed DVD set are probably going to have a bit a wait too.

(Now watch somebody will direct me to the link what I can buy it).

NMS

Usenet · Answer

[nq:2]What's the difference? "Don't try to lay no boogie-woogie on the king of Rock 'n' Roll!" Long John Baldry[/nq]
[nq:1]Well, as I understand it, residuals and royalties are rather the inverse of one another.[/nq]
Thanks. Very clear and a keeper.
Should go into the FAQ.

"Don't try to lay no boogie-woogie on the king of
Rock 'n' Roll!"
Long John Baldry

Royalties & Residuals

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