Why Netflix's New Agreement To Pay Royalties To Some Creators Is Such A Huge Deal

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While Netflix currently seems just as fond of cancelling its originals series as renewing them, the streaming service remains one of the most ideal places for entertainment creators to end up, with its big budgets and global reach. It would appear the future looks even brighter for some, as Netflix has entered into agreements to provide additional royalties to the creative teams behind some popular original series.

In connection with the European Union's Directive on Copyright in the Digital Single Market, Netflix has agreed to start paying additional royalties to the on-camera cast and behind-the-scenes crews of its German original series that are produced within the country itself, such as popular shows like Dark and How to Sell Drugs Online (Fast). The newly revised payments will be delivered on top of the wages earned up front, with the amount determined by the shows' streaming success.

At this point, royalty payments hinge on the worldwide total of Netflix subscribers that have watched 90% of more of a given series' season. (Which is far different from its metric for viewership totals.) The extra remuneration is set to be doled out to a show once a given season has been viewed by 10 million streamers across the planet, and the process will be repeated for every additional 10 million after that. Even if that audience threshold isn't met within set time parameters, Netflix will pay out a total that's proportionate to the number of views, per Variety.

The EU's Directive was created to ensure that there is less pay disparity between Internet streaming platforms and the TV series' content teams, as well as to guarantee acknowledgement and compensation for writers, directors, composers, set designers, makeup artists, sound designers and everyone else who adds creative input.

This is the first giant deal of its kind within Germany, but the United Services Union (Verdi) is aiming to make similar deals with other streaming platforms used in the country. Meanwhile, Netflix also recently signed a similar deal in Sweden, and it's expected that other countries will also join in as the EU's Directive is made official across the continent.

According to Netflix's senior counsel for international labor relations Rachel C. Schumacher:

Ensuring fair and appropriate remuneration is of central importance to us. We believe it is a cornerstone of our relationship with artists and of a sustainable and trusting partnership with the German creative scene.

This deal is truly a game-changer for Netflix and those who provide content to the service, in that it creates a far more level playing field for everyone invested in the day-to-day work of putting the TV shows together. Even though such a deal does not currently exist in the United States, one can easily assume that conversations are being had about how to make it happen.

To give an example of how big this agreement is, let's view it through the lens of a U.S.-originated show. Take the extremely popular horror drama Stranger Things, which has been touted in the past as one of Netflix's most-watched series. That show's creators and everyone else were paid for that first season based on the initial deal that was made. Their financial situation wouldn't change for them regardless of if Stranger Things was the most popular show in the world, or the most disappointing bust known to man.

But if the U.S. had such a deal in place, everyone working on Stranger Things (and other massively popular originals) would get additional compensation for as the show continued to gain popularity around the world. Not only would that give creative teams the extra incentive to produce top-quality content, but it would potentially make Netflix that much more selective when deciding what original series are worth ordering up.

Considering the abundant number of streaming services popping up in the U.S., such a directive would be extremely lucrative, though it's unclear if such a thing will ever exist on this side of the Atlantic. Here's hoping the rollout across Europe is successful enough that the powers that be in this country start making similar moves.

Now is definitely a great time to catch up on all the Netflix shows and movies you've been missing, with March giving audiences a lot to look forward to.

Nick Venable
Assistant Managing Editor

Nick is a Cajun Country native, and is often asked why he doesn't sound like that's the case. His love for his wife and daughters is almost equaled by his love of gasp-for-breath laughter and gasp-for-breath horror. A lifetime spent in the vicinity of a television screen led to his current dream job, as well as his knowledge of too many TV themes and ad jingles.