Photo credit: Robby Klein

In my last column I wrote about the AFM’s pursuit of a new federal law to require AM/FM broadcasters to pay royalties to all musicians. The bill—nicknamed Fair Play, Fair Pay—would level the playing field so that AM/FM radio no longer has an unfair advantage over digital music services, and so musicians could finally be compensated for their artistry.

Now I’d like to examine some of the AFM’s activities in the area of recording and how they might impact ICSOM.

We are all well aware of how the delivery of music has changed over the years. What began as phonograph recordings years ago—and grew to include tapes and compact discs—now runs the gamut from streaming services and downloads both tethered (or non-permanent, meaning you can download it to your device but only as long as you maintain a subscription), and untethered (or permanent, meaning you can download it permanently to your computer, phone or listening device), to other types of digital material such as ringtones, ring backs (the tunes you hear when someone puts you on hold), musical greeting cards, etc.  There have been enormous and accelerating changes in the music delivery medium. As the revenue from these delivery methods has decreased, it has become almost impossible to accrue enough money in some formats to make it cost-effective to collect, administer, and pay individual musicians for their work.

Following the passage of the Digital Performance Right in Sound Recordings Act, SoundExchange was formed to administer, collect and distribute the digital royalties to featured artists and copyright holders. The AFM & AFTRA Intellectual Property Rights Distribution Fund (renamed AFM & SAG-AFTRA IPRD Fund after the SAG and AFTRA merger) was formed by the AFM and the American Federation of Television and Radio Artists (AFTRA) to receive and distribute the non-featured artists’ five-percent share from SoundExchange to session musicians and vocalists. At the ICSOM conference we hear yearly reports from the AFM & SAG-AFTRA Fund because it also handles the royalty distribution for a special group of featured artists: symphony orchestras. Our orchestras have only recently begun to receive royalties for the digital broadcast of their recordings, and those amounts are increasing.

The health of the American Federation of Musicians and Employers’ Pension Fund (AFM-EPF) is of direct concern to many ICSOM orchestras, and in the area of recordings the AFM has worked to identify additional income sources in a number of distinct ways. First, AFM-EPF revenue was increased by raising pension contribution rates in multiple national recording agreement negotiations, including the Symphony-Opera-Ballet Integrated Media Agreement (IMA).

Second, with the approval of Local representatives and Recording Musicians Association (RMA) members negotiating the Sound Recording Labor Agreement (SRLA, also called the “Phono” Agreement), the AFM negotiated language that provides the AFM-EPF with a portion of revenue from non-traditional licenses of sound recordings such as licenses for musical greeting cards. The amounts of money involved in the kinds of licensing agreements covered by this new language are relatively small and would have been difficult and costly to disperse to individual musicians. The AFM found a new way of thinking about these licenses: benefit musicians by benefiting their pension fund.

Third, an agreement negotiated in 2012 provides that specified payments from the record companies for certain digital streaming revenues that are not subject to SoundExchange collections be paid to the AFM-EPF. These payments had previously been directed to the AFM & AFTRA IPRD Fund under a 1994 agreement known as “The 1994 MOU”. These two new forms of contributions to the AFM-EPF are not attributable to individual musicians and, unlike most other types of contributions to the Fund, they don’t create additional liabilities—they just help pay for the existing liabilities. In total these two types of contributions have already exceeded $8 million, and the AFM expects streaming revenue in particular to increase exponentially over time.

As a bit of background, a major activity undertaken by the AFM-EPF is to audit the major signatory recording labels, television studios and motion picture companies, amongst other employers, to assure that they are making the appropriate contributions as defined in the various AFM contracts. The most difficult and time intensive audits are those of the record labels. As a result of these audits, The Fund discovered that, in many cases, required contributions have not been made. The AFM-EPF subsequently filed a lawsuit in August 2015 against many of the major record labels, contending that they are failing to comply with their obligations to make contributions on foreign streaming revenues, foreign non-permanent downloads, and ring backs. While the finer points of the lawsuit are beyond the scope of this article, a favorable outcome to the lawsuit would be beneficial for the AFM-EPF and all its participants, because it would ensure the pension fund receives a share of the revenue the record companies collect from the foreign streaming and non-permanent audio downloads of the recordings they own, including back catalogs.

The AFM has also gone to court in an effort to obtain record industry compliance with its agreements.  In July 2015, the AFM filed suit against Sony Music Entertainment for hiring musicians to record material under the SRLA rather than the AFM Motion Picture Agreement, even though Sony’s intent was always to include it in the film Michael Jackson This Is It. Sony has also refused to sign a single project agreement, which would provide years of residual payments from the Motion Picture Secondary Markets Fund to those musicians who performed this work. The suit also alleges additional violations by Sony in regard to new-use payments for This Is It and other multiple high profile projects and artists.

So how do our orchestras benefit from these actions? In the case of the AFM-EPF lawsuit, aside from the obvious additional funding for the pension fund, it would directly confirm the continuing economic value of orchestra recordings, including the many older commercial recordings by our orchestras. And of course many of our orchestras have recorded under the terms of the Sound Recording Labor Agreement (SRLA), so a positive outcome in regard to foreign streaming would mean additional payments for those recordings as well. A favorable outcome of the AFM lawsuit against Sony could mean additional wages for many AFM members.

The AFM will continue to look for new income sources. The AFM-EPF and AFM lawsuits reinforce to employers that they must honor the agreements they sign.