Hollywood Eyes European Residual Models Amid Labor Struggles

Hollywood has been wrestling with labor strikes recently, with residuals becoming the contentious point between the creative cluster of the industry, and studios, networks, and streamers. Both the WGA and SAG-AFTRA have pitched changes to the current residual system. WGA proposed a viewership-based residual model, and SAG-AFTRA insisted on actors receiving a 2% share of streaming content revenue. But, the AMPTP rejected these suggestions as unworkable. With no end in sight, Labor Day passed without any deal announcement, despite speculation.

Trying to reform the residual structure, some U.S. industry members are exploring the success-based residual models used in parts of Europe, particularly on Netflix. In Europe, copyright legislation guarantees authors to receive what business affairs executives term as "fair and appropriate compensation." This essentially pays for creating shows or films that make a global impact. Netflix has signed collective streamer residual agreements in France, Germany, and Scandinavia, with varying degrees of transparency. The problem boils down to what the unions and streamers view as a fair deal, primarily because of the amount of data that digital players like Netflix and Prime Video can part with.

Streaming services in Europe are more strictly regulated. EU law mandates that at least 30% of the films and TV shows they offer in the region are from Europe. They are also obligated to fund European content via direct commissions or local film funds. This led to the development of "success-based" systems in Europe, while U.S. writers and actors receive fixed annual payments for every year their show is featured on a streaming platform.

In Germany, Netflix struck a controversial deal early in 2020 with the service union Verdi and actors guild BFFS, that covers series and has varied compensation thresholds based on viewership. The film contract works on a sliding scale dependent on the project's budget size. Nonetheless, payments have only recently begun to trickle through. There have been frustrations about the contract only covering original series and not acquired shows, reducing projects that require compensation.

The Swedish system echoes that of Germany's. The Swedish union for performing arts and film, Scen & Film, announced a staggered, success-based, additional remuneration that is distributed to all entitled participants when the film or series hits a certain threshold of 'completed' views globally.

In France, compensation is based on clicks. For each click that launches a French film or series episode during a particular quarter, Netflix pays the SACD a confidential percentage of its French sales. The SACD then remits this to its members. Non-disclosure agreements result in a lack of transparency around viewing figures.

Now, here's something trendier than high-waisted jeans on the rack of a Silverlake boutique - does America import Europe's ideas again?

Hollywood has been known to take inspiration from Europe's film and TV aesthetics, but now the entertainment industry looks eastward once more. Only this time, they're examining the continent's intricate framework of residuals and copyright models rather than narrative structures.

In the era of streaming, with borders thinner than the line between mockumentary and reality TV, it's evident that old rules need a facelift. The European way, ensuring that writers and actors receive a share of the financial windfall if their work goes global, seems like the ticket. After all, if your script could potentially reach billions globally, why wouldn't you hop on the royalty bandwagon?

While Europe nudges us towards the future of residuals, it’s clear that each country has its recipe, both sweet and sour. Germany and Sweden's arrangements seem tantalising, offering creatives a shot at higher pecks if their automaton brainchild, let's say, turns into the next 'Dark.' Yet, Europe serves another dish - a heaping portion of opacity. With everything swathed in a fog of non-disclosure and aloof agreements, it seems that we've entered a Kafka-esque ancillary rights labyrinth.

At heart, Hollywood's flirtation with European revenue models reflects a drive towards fairness - ensuring artists, writers, and everyone else who contributes to a show or film receives their deserved piece of the pie. Money doesn't always equate to freedom, but adopting a success-based model could liberate talent from the shackles of fixed payments.

The reality, however, is that the Transatlantic tango between Europe and America is a dance of complexity and uncertainty. Each country, each guild, has its unique concerns and challenges. Industry players are also often tight-lipped about their contractual arrangements. Whether this European import turns out to be a succulent Bordeaux or leaves a sour taste, only time will tell.

So, as Hollywood peeks at Europe's playbook, let's hope reciprocity becomes the word du jour. Only then can this global industry truly gel together, transforming the streamer-era residuals from an issue into an opportunity.