^
You can think of it like an employee. Instead of getting paid per scene (like freelance work), you get a fixed salary and do are available for a certain amount of scenes per month or so.
Some contract stars are exclusive to a company (so that they are also getting paid for NOT shooting scenes with other companies), some aren't (so there's only the obligation to shoot a certain amount of scenes with the company, but there could be scenes with other companies, too. Sometimes this is limited to g/g scenes only or vice versa).

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