John August On Why Writers Get Residuals

John August (Go, The Nines) is not only the most successful underrated screenwriter working not working in Hollywood today, but he's also a damn good blogger. Each of the posts that I've written about the writers strike has resulted in some interesting comment discussions. And one argument that gets brought up each and every time without fail is: "Writers don't need residuals, they get paid enough already. I don't get residuals for the work I do at my office."

August has written a comprehensive blog post explaining why writers get paid royalties. He explains the situation far better than I could have (and heck, he's not writing screenplays so it makes perfect sense that he's instead creating great blog content).

"Most songs don't become hits. Most novels don't become best-sellers. Songwriters and novelists may only generate new, money-generating work every few years. Royalties are what pay the bills in the meantime. Without royalties, very few people could afford to write songs or books for a living. These pursuits would become hobbies for the rich, or patrons of the rich. (And in fact, Western literature was largely written by the people who could afford to write.)"

August explains the legal reasons why screenwriters get residuals and not Royalties, and argues that residuals allow for a middle class and for a larger pool of talent.

"Residuals are like the research and development fund for the industry."

"You'll note that the studios aren't talking about eliminating residuals altogether. Even in one of their earlier proposals for "profit-based residuals," they were acknowledging that writers are entitled to them. Without some form of residuals, the charade of authorship-transference ceases to be mutually beneficial."

And more importantly, August explains why the guy at the soda bottling factory doesn't make residuals on all the pop he bottles, or why his friend Jeff doesn't make a royalty on a spreadsheet he created in 2003.

"When he created it for his boss, he was an employee of the company. Copyright-wise, everything he did for them was a work-for-hire. They owned it outright. When a screenwriter writes a script, she's transferring this bundle of authorship rights to a corporation. In exchange for these legal and creative rights, she gets paid an upfront fee and royalties (called residuals).

Readers from the technology and medical fields might recognize an analogous situation with patents and intellectual property. It's not uncommon for an inventor to get paid per unit for the right to use some proprietary innovation. So it may help to think of screenplays as "literary inventions," subject to a strange but industry-standardized procedure to protect both creators and corporations."

Read John August's full blog post on JohnAugust.com.