By Dylan Brandes
In an era where home entertainment has been largely dominated by the streaming model, questions emerge regarding the payment of creatives for use of their work. Under the traditional broadcast system, residuals were relatively straightforward: writers, actors, and directors received additional compensation each time their work was re-aired, sold internationally, or redistributed in physical formats. These residuals were handled with transparent metrics such as rerun counts, syndication deals, or DVD sales, that guilds and unions could audit with relative ease.
Streaming platforms have changed the way at which talent receives residuals by relying on private, proprietary data to determine residual amounts to be paid for talent involved with a project. Streaming has created a black box of exploitation where creatives are left blind regarding how their work product has performed or how much they should be owed.[1] The European Union has introduced several legal mechanisms designed to regulate online creatives.[2] Meanwhile, the United States has fallen behind as creators frequently cannot verify how many streams their projects gather or how much money they generate.
While transparency may not solve all problems surrounding artists compensation, it will lead to more accountability amongst streaming platforms and restore the link between labor and digital value-based payments. Transparency rules do not distort markets; they correct information failures that prevent markets from functioning competitively.[3] Given this, Congress ought to adopt an act which mandates disclosure amongst streaming services as it relates to residuals. Sharing data with guilds and labor unions will create a fairer system for the creatives involved.
Although film and television residuals have always been the product of collective bargaining, not statute, Congress has long recognized the principle that creators deserve continuing compensation for ongoing use of their works. Several sections of Title 17 of the United States Code already establish statutory royalty systems for other creative industries. For instance, 17 U.S.C. Section 111 requires cable systems to pay royalties for retransmitting broadcast content[4]; Section 114 mandates digital-performance royalties for sound recordings distributed through services such as Pandora and SiriusXM[5]; and Section 115 governs compulsory mechanical licenses for songwriters.[6] These provisions embody the idea that Congress has previously dealt in the area of residuals and should expand their legislation to protect creatives from unfair data protection. When creatives generate value, they should be entitled to a clear window of how their value is measured.
Dylan Brandes is a second-year student at Vanderbilt Law School from South Florida. This summer, he will be working in Paul Hastings LLP’s New York office as a summer associate, where he hopes to launch his career in corporate law.
[1] See Andrés Ferraro, Xavier Serra & Christine Bauer, What Is Fair? Exploring the Artists’ Perspective on the Fairness of Music Streaming Platforms, 18TH IFIP INT’L CONF. ON HUMAN-COMPUTER INTERACTION (INTERACT 2021), at 562.
[2] Martin Senftleben & Elena Izyumenko, Author Remuneration in the Streaming Age – Exploitation Rights and Fair Remuneration Rules in the EU, JOINT PIJIP/TLS RESEARCH PAPER SERIES NO. 137 (Oct. 16 2024), available at https://digitalcommons.wcl.american.edu/research/137/.
[3] Brett M. Frischmann & Paul Ohm, Governance Seams, 37 HARV. J.L. & TECH. 1130, 1130 (2024).
[4] 17 U.S.C. § 111.
[5] 17 U.S.C. § 114.
[6] 17 U.S.C. § 115.
