What is a residual?
A is money that keeps arriving after the work is done. A writer, director or actor makes a movie once, and every time that movie is sold into a new market, whether that's broadcast television, home video or a streaming service, a formula in a union contract sends them another payment.
The formulas live inside collective bargaining agreements. The Writers Guild, the Directors Guild and SAG-AFTRA each negotiate a contract with the studios, and residuals are one of the most fought-over pages in every one of them. When a studio sells a finished film to someone else, the obligation to pay usually travels with it. The check follows the movie the way a mortgage follows a house.
The amounts shrink as a film ages, and some arrive in sums too small to buy lunch. The principle still holds up the whole system: the work keeps earning, so the people who made it keep earning. Every residual formula is a small argument about who owns the future of a movie.
That argument has a large and conspicuous hole in it, shaped exactly like the person who usually spent the most years of their life on the film.
Where did residuals come from?
Residuals were born in a fight over old movies. By the late 1950s the studios had found a second gold mine in their vaults: they were licensing their film libraries to television stations for millions, and the actors and writers in those films received nothing from the sales.1
In 1960 the Screen Actors Guild went on strike. Its president was a former B-movie leading man named Ronald Reagan, who led the negotiations himself. Actors were ordered off the job on March 7, and a residuals deal was brokered on April 8, about a month later.1 Two decades before he won the White House, Reagan closed the deal that still shapes how Hollywood pays its talent.
The compromise had a catch. Residuals applied only to films made from 1960 forward. For everything already in the vault, the producers paid $2.5 million toward the guild's pension and health fund instead, and the back catalog stayed residual-free. Bob Hope was among the stars who complained, since he received nothing for decades of earlier pictures.1
So the first residual deal was also the first time a guild traded the past for the future. Producers, as it turned out, were on the other side of that table.
Do film producers get residuals?
No. A producer who only produced the film receives no residuals from it. There is no producer residual formula, because there is no producer collective bargaining agreement for one to live in.
The Producers Guild of America describes itself as a professional association and says plainly that it is not a union. Producer pay is set deal by deal, in each producer's personal service contract, with no industry-wide minimum.2
The reason runs back to labor law. Producers are treated as management. The Producers Union, a group that launched in 2020 to try to organize producers, points to a 1974 that classifies producers as management, which it says has kept them from unionizing.3 The studios' own bargaining group is called the , and in 2023 the Producers Union launched a petition asking it to drop the second "P" from its name, on the grounds that it does not represent most people who actually produce.3
The exception proves the rule. A producer who also wrote the script collects writing residuals through the Writers Guild, and a producer who also directed collects through the Directors Guild. The residual attaches to the guild job. The producing job earns none.
If not residuals, how do producers get paid?
Producers get paid in two pieces: a fee and a .
The fee is the producer's salary on the film, negotiated up front and usually paid out across preproduction, production and delivery. On an independent film it is also the first number to get squeezed. Members of the Producers Union say upfront fees are often the first thing cut when a budget tightens, which is why protected minimum fees sit near the top of their demands.3 When a financier asks the producer to defer a fee, the producer is being asked to become an unsecured lender to their own movie.
The backend is a share of the film's profits. Everything depends on how "profit" is defined, and the definitions are where careers go to die. A pays from early dollars, before most costs are deducted. A participation pays only after the distributor has taken its fees, recovered its expenses, charged interest and covered overhead, which on most films means the participation pays nothing at all.
The most famous demonstration came from a newspaper columnist. Art Buchwald sued Paramount, claiming Coming to America was based on his treatment. Paramount's share of the film's worldwide gross was more than $140 million, and the studio argued that Buchwald and his producing partner, Alain Bernheim, were owed nothing because the film had not yet produced a net profit. In 1990 a judge ruled that the film was based on Buchwald's work and that many of the net profit terms were unconscionable. The case settled in 1995 for more than $1 million.4 A movie starring Eddie Murphy at the height of his powers, and on paper it was still underwater.
For a producer, the lesson from the Buchwald case is practical. A backend is only as good as its definition, and the definition is written by the side that keeps the books.
Did the 2023 strikes change anything for producers?
The 2023 strikes won writers and actors something new: a bonus for streaming hits. Under the Writers Guild deal, a show watched by at least 20 percent of a platform's U.S. subscribers in its first 90 days triggers a bonus worth 50 percent on top of the residual. For an hour-long episode that comes to $16,415. SAG-AFTRA's version is 75 percent on top of the residual, with another 25 percent going to a fund shared across all members. Early reported qualifiers included Bridgerton season three, Griselda and Fallout.5
Producers received nothing from that contract cycle, because they had no seat at the table. The closest thing to a gain arrived the next winter, and from a different direction.
At its 35th awards ceremony in February 2024, the Producers Guild announced a health insurance initiative. The guild asked studios, streamers and production companies to contribute to the on behalf of eligible producers, recommending at least $3.33 per hour per eligible full-time producer, or a budget line for producers to buy insurance directly when the plan isn't an option. Blumhouse, Legendary, Macro and Berlanti Productions were the first to sign on. The commitment is non-binding, and the guild's stated goal was to cover most qualified members by 2026.6
I wrote a longer piece on how that initiative works and where it falls short: how film producers get health insurance. The short version is that a voluntary pledge from a few good companies is a start, and a start is a strange thing to celebrate sixty-six years after the actors got theirs.
What should a producer negotiate for instead?
Without residuals, everything a producer will ever earn from a film gets decided in one contract, usually signed when the producer has the least leverage. Four terms do most of the work.
Credit belongs on that list because it is the currency the business actually uses to decide who gets hired next. I've written about what the p.g.a. mark means, and the companion piece to this one covers the difference between a producer and an executive producer, which matters more than it looks once money and awards get involved.
When the deal involves deferrals, the next question is where those deferred dollars land in the line of people waiting to be repaid. My piece on completion bonds explains who sits ahead of the producer when a film runs over budget, and the answer is usually everyone.
Questions people search
Do film producers get residuals?
No. Residuals come from union contracts, and producers are not covered by a union contract. A producer only receives residuals if they also worked on the film as a writer, director or actor and are covered by that guild.
Is the Producers Guild of America a union?
No. The PGA describes itself as a professional association, and producer pay is negotiated individually in each producer's contract.
Why can't producers unionize?
Producers are treated as management. The Producers Union points to a 1974 consent decree that classifies producers as management as the main obstacle.
Do executive producers get residuals?
Not for the executive producer credit. An executive producer who also wrote or directed the film receives residuals through that guild.
How do film producers make money?
Through a producing fee negotiated up front and a backend, which is a share of the film's revenue or profits. How profits are defined in the contract decides whether the backend ever pays.
What is the streaming success bonus?
A payment won in the 2023 Writers Guild and SAG-AFTRA contracts for shows watched by at least 20 percent of a platform's U.S. subscribers in their first 90 days. Producers are not covered by it.
Do film producers get health insurance?
Not automatically. Since 2024 the Producers Guild has asked companies to voluntarily contribute to the industry health plan for eligible producers, and a growing number have signed on.
- LAist, "How the SAG Strike of 1960 Foreshadowed Hollywood's Current Battle," 2023. laist.com
- Producers Guild of America, "Does PGA Do This?" producersguild.org
- "Meet the Producers Who Want That (Second) 'P' Out of 'AMPTP'," August 2023. ca.news.yahoo.com
- Deseret News, "Paramount Settles With Buchwald Over 'America'," September 15, 1995. deseret.com
- IndieWire, on the first shows to pay Writers Guild streaming bonuses. indiewire.com
- Deadline, "PGA Unveils Healthcare Initiative for Qualified Producers," February 2024. deadline.com
I'm a producer and a former film acquisitions executive, not a lawyer or an accountant. Nothing here is legal, tax or financial advice. Before you sign anything, talk to an entertainment attorney.