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Tentative WGA Pact Sets New-Media Residuals

The Writers Guild of America has been at loggerheads with studios over the issue of residuals and compensation for content that is used on new-media platforms, from the Internet to cellphones.

If approved, the new deal would give the union jurisdiction for content created for new media, as well as content -- movies and TV shows -- that downloaded or streamed over the Internet. The contract sets a window, which varies from 17 to 24 days, when TV shows can be streamed for promotional use with no residuals paid.

Below, from the WGA, is a summary of the terms of its tentative contract with the Alliance of Motion Picture and Television Producers relating to new-media compensation:

Writing for Made-for New Media
Coverage: The WGA is recognized as the exclusive bargaining representative for writing for new media (such as Internet or cellular technology). Writing for new media is covered by the MBA if:

(1) it is written by a “professional writer” (anyone with a single TV or screen credit, 13

weeks of employment in TV, film or radio, a professionally produced stage play credit or a published novel) or

(2) the program is derivative of an MBA-covered program or

(3) if the budget is above any of three thresholds: $15,000 per minute; $300,000 per

program; or $500,000 per series order. If initially not covered due to the projected

budget but later costs exceed a threshold, the program/series is covered retroactively.

Compensation: If a new media program is derivative of an MBA-covered program, minimums for initial compensation apply. The minimum for derivative dramatic programs is $618 for programs up to two minutes, plus $309 for each additional minute. The minimum for derivative comedy-variety and daytime serials is $360 for programs up to two minutes, plus $180 for each additional minute. The minimum for all other types of derivative programs is $309 for programs up to two minutes, plus $155 for each additional minute. Regardless of the length of the program initial compensation can be no less than the two minute rate. For original programs

initial compensation is negotiable.

Pension and Health Insurance: MBA pension and health provisions apply to all covered writing for new media programs.

Credits: The Guild shall determine credits on all covered new media programs. Credits must appear on-screen (or on a link to the program) if anyone else receives such credit.

Television Reuse: If a covered new media program is reused in traditional media, the usual residuals for a television program apply with minor modifications.

Separated Rights: Creators of original new media material are protected as follows:

(1) If you create an Internet program that becomes a TV series or feature film which you write, traditional separated rights apply.

(2) If you write original material for an Internet program and the Company wants to use it for a TV series or feature film to be written by someone else, the Company must purchase rights from you. The Company may acquire the rights at any time, but

separate compensation must be paid. If you want to sell those rights to another studio,

the Company has a right of first refusal.

(3) If you create an Internet program that is the equivalent of a traditional TV series

(over $25,000 per minute and 20 minutes in length) you are entitled to the same rights as in (2) above, plus sequel payments for each Internet episode based on your program.

Internet Residuals: Initial compensation covers writing services and 13 weeks of availability in new media when the viewer does not pay, and 26 weeks of availability in new media when the viewer pays. After those periods, certain residuals are payable: (i) if a new media program derived from an MBA-covered program or an original new media program with a budget higher than $25,000 per minute is reused in new media, the new media reuse provisions described below apply, except that electronic sell-through is paid at 1.2% of distributor’s gross receipts; and (ii) for original new media programs, the residual for ad-supported streaming is negotiable, while reuse where the viewer pays is compensated at 1.2% of distributor’s gross receipts.

Other Guild Provisions: A number of standard guild provisions apply to all covered new media programs: Guild shop (writers must join the WGA), no-strike/no-lockout, grievance and arbitration, and timely payment.

Reuse in New Media

* Distributor’s Gross Receipts: All revenue-based residuals in new media employ a definition of “distributor’s gross” which eliminates the accounting uncertainty inherent in the concept of “producer’s gross” as found in the home video/DVD formula. 

* Download Rentals: If the viewer pays for limited new media access to a program, residuals are paid at the rate of 1.2% of distributor’s gross receipts.

*Download Sales (Electronic Sell-Through): If the viewer pays for permanent use of the

program, residuals are paid at 0.36% of distributor’s gross receipts for the first 100,000 downloads of a television program and the first 50,000 downloads of a feature. After that, residuals are paid at 0.7% of distributor’s gross receipts for television programs and 0.65% for feature films.

Theatrical Ad-Supported Streaming: Ad-supported streaming of feature films produced after July 1, 1971 is payable at 1.2% of distributor’s gross receipts.

Television Ad-Supported Streaming (Library): Ad-supported streaming of television programs produced after 1977 (and a small number produced prior to 1977) are payable at 2% of distributor’s gross receipts.

Television Ad-Supported Streaming (New Programs): Ad-supported streaming of television programs is payable at 2% of distributor’s gross receipts one year from the end of an initial streaming window.

Initial Streaming Window: There is an initial window of 17 days (24 days for episodes of the first season of a series, one-off television programs, and MOWs) with no residual. This window must include or occur contiguous to the initial television exhibition.

Residual Payment (Network Prime Time): In the first and second years of this contract, after the initial window, for network prime time television programs, a fixed residual of 3% of the residual base (“applicable minimum”) is paid for each of up to two 26-week periods. For an hour program, this fee is $654 per period in the first year of the contract; $677 per period in the second year. For a half-hour the figures are $360 and $373. In the third year of this contract, the 2% of distributor’s gross formula is applied immediately after the initial streaming window. The contract sets an imputed value for up to 26 weeks of such distributor’s gross at $40,000 for an hour program and $20,000 for a half hour program. So, for the third year the formula pays a residual of $800 for an hour program and $400 for a half hour program for each potential 26-week period in the year after the initial streaming window. If the Network’s exclusivity expires prior to one year after the end of the initial window, the 2% of distributor’s gross receipts begins without the imputed value. In the case of a 26-week period being truncated by the end of the year after the end of the initial streaming window, the payment is prorated. Residual Payment (All Other Programs): After the initial streaming window, a fixed residual of 3% of the residual base (the “applicable minimum”) is paid for each of up to two 26-week periods in the first two years of this contract. In the third year of this contract, the payment rate rises to 3.5% of the residual base.

Fair Market Value: New media residuals based on transactions between related parties are subject to a test of reasonableness when compared to transactions between unrelated parties.

Access to Information: The companies agree to provide the Guild with access to new media deals and distribution statements, without redaction, and usage data during the term of the contract.

Clips: Clips are defined as excerpts of less than five minutes for episodic TV or ten minutes for features or long-form TV. A company can use a clip for a promotional purpose without payment. Where a clip is not promotional and the viewer does not pay, the fee for the clip in new media is paid at the rate of the lesser of $50 or the residual payable under the Reuse Sideletter for a clip under two minutes; the lesser of $150 or the residual payable the Reuse Sideletter for a clip between two and four minutes; and for a clip longer than four minutes, the residual payable under the Reuse Sideletter. Where the viewer pays, the fee for use of a clip is 1.2% of distributor’s gross receipts.

Promotion: A clip can be used without payment to promote theatrical, television or new media exhibition if the clip contains “tune-in”, rental or purchase information. No payment is due for non-commercial “viral” release of clips from a theatrical or television motion picture. Promotion does not include the use of clips if the primary purpose of the exhibition is to permit viewing of archived or aggregated clips on a new media site (e.g., dailyshow.com).


A full summary of the WGA's tentative deal is available here.