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President’s Message


Ray Hair – AFM International President

    Media Talks Driven by Streaming Growth

    This is the first of two articles on the continued rise of streaming and its effect on Federation media industry negotiations.

    Mid-year revenue statistics released by the Record Industry Association of America (RIAA) on September 20 underscored the value of the Federation’s January 2017 deal with the recording industry, where major record labels agreed to earmark a percentage of domestic and foreign streaming revenue toward the AFM-EP Fund (US), Music Performance Trust Fund (MPTF), and the Sound Recording Special Payments Fund (SPF).

    For the first half of 2017, estimated US retail revenue from recorded music grew by 17% to $4 billion, led by streaming revenue growth, which accounted for a whopping 62% of total income. Total record industry revenues from all streaming platforms were up 48% year over year to $2.5 billion. The industry’s streaming revenue sources include paid subscription services such as Spotify and Apple Music, revenues distributed by SoundExchange (Pandora, Sirius XM and other Internet radio services), and ad-supported, on-demand streaming services (YouTube, Vevo, and ad-supported Spotify).

    Across all sources of streaming income, record high levels were reached. Record industry revenues from paid subscription services grew 61% to $1.7 billion and accounted for 43% of total revenue. Ad-supported, on-demand streaming revenue grew 37% and total revenue from digital radio was up by 21%.

    Digital download sales declined by 24% over the first half of 2016, but sales of physical product (CDs and vinyl albums) decreased by only 1%, much lower than recent trends, due mainly to a resurgence in popularity of vinyl.

    The record industry’s mid-2017 statistics show that the Federation has effectively addressed the decline of digital downloads and physical product by negotiating streaming royalties to provide new revenue for MPTF, SPF, and the AFM-EP Fund.

    But what is happening in the live television and motion picture/TV film industries, where the Federation has bargained musicians’ residual and supplemental market royalties for decades? Has new media—the buzzword for streaming distribution of digital content— disrupted traditional consumption models in TV and film? 

    According to a March 2017 report by the Consumer Technology Association (CTA), the percentage of free and paid streaming video subscribers in the US has caught up with the percentage of paid cable and satellite TV subscribers. The report also says that the time spent watching traditional TV (down 11% from 2012) is now equal to the time spent watching video content on all other consumer technology devices, including laptops, tablets, and smartphones.

    The latest quarterly TV viewing figures, issued in July 2017 by Nielsen, confirm that youth aged 18 to 24 are watching less traditional TV, down 41% since 2012. The report also says that viewers aged 18 to 34 spend more time accessing apps and the web on smart phones than they do watching traditional TV.

    Across the board, the numbers for live and pay TV are bad, according to a May 2017 article by Business Insider. Adult viewership of traditional TV is down 6%, cable TV subscriptions are down, and TV ad revenue is stagnant. Over half of US consumers now own a smart TV capable of streaming Internet video and subscribe to streaming video on-demand (SVOD) services, even though traditional TV still represents the majority of viewing.

    Viewers with smart TVs say they spend 39% of their time watching live TV, compared to 24% for streamed video, but daily digital TV streaming is growing quickly. Streaming viewership has doubled in two years, with viewing of original digital video content produced by Netflix, Amazon, and YouTube on the rise. Just like streaming in the music industry moved sales away from downloads and physical product, the increased competition from digital video services and new hardware to access content is accelerating a shift in video consumption away from live and traditional linear television toward streaming.

    What about the film industry? Some say Netflix is snuffing movie box office receipts. The US stock market agrees. Shares of AMC Entertainment (AMC Theaters), the world’s largest movie chain, hit an all-time low in August, after the company said it would report a $175 million net loss for the second quarter of 2017. Regal and Cinemark also took hits. The summer 2017 movie box office is projected to be the weakest in 25 years.

    Some analysts believe the film industry has been too slow to react to changes in consumer habits. Doug Creutz, media analyst at Cowen and Co., told the Los Angeles Times, “People are only going to see movies they think they have to see in theaters, and there aren’t that many of them.”

    A global forecast released in May 2017 by Dublin-based Research and Markets estimated the video streaming market will grow from $30 billion in 2016 to $70 billion by 2021 driven by online streaming, with mobile devices cited as the fastest growing platform.

    Compare those numbers with 2016 global box office receipts of $38.6 billion reported by Motion Picture Association of America (MPAA), a paltry 1% increase over 2015.  Against the background of shrinking home video sales, down 7% as consumers switched to streaming, subscription movie streaming grew 23% in 2016. Physical rentals and sales continued to evaporate during 2016, down 18% and 10%, respectively.

    As noted above, the change in traditional consumption habits for live television and motion picture films toward the growth of streaming has negatively impacted TV and film producers in prime markets of traditional TV viewing and movie box office, and in supplemental markets such as pay TV (cable) and home video/DVD sales and rentals. These trends have presented extraordinary challenges at the bargaining table in our current discussions with the major television networks, and will factor greatly in our discussions with the film industry early next year.

    With the recording industry, the Federation overcame the challenges presented by digital distribution and concluded a progressive agreement. These issues will be tested in film and television.

    Next month: What streaming provisions does the AFM have in TV and film? What do we want, and what do other unions have?

    Read More

    Donate to AFM’s Hurricane Irma Relief Fund

    On September 6, Hurricane Irma passed just north of Puerto Rico with ferocious winds of 185 miles per hour as a category 5 hurricane, then roared past Cuba and ashore onto the US mainland Sunday, September 10, battering the entire state of Florida with an enormous reach of more than 400 miles. Irma made landfall on the southern tip of Florida as a category 4 hurricane with sustained winds in excess of 130 miles per hour, causing massive flooding and storm surges, resulting in more than five million power outages, and creating catastrophic tornadoes. The fury of Hurricane Irma occurred on the heels of Hurricane Harvey, which made landfall August 25 on the Texas Gulf Coast, between Port Aransas and Port O’Connor, Texas, just east of Houston and Galveston as a category 4 hurricane as well, marking the first time in recorded history that two hurricanes as powerful as category 4 made landfall in the same year, in the United States.

    These disasters have hit AFM members hard. Hurricane Harvey displaced more than one million people along the Texas Gulf Coast. The storm affected all Houston Arts District organizations, flooding Jones Hall, the home of the Houston Symphony. It totally devastated Wortham Center, which hosts performances by the Houston Ballet and Grand Opera. “No one knows when the opera and ballet can get back in there,” Local 65-699 (Houston, TX) President Lovie Smith-Wright reported.

    The Houston Symphony has managed to continue operations by moving concerts to other locations around town, pending Jones Hall repairs. The homes of dozens of Houston AFM members were totally destroyed. In South Texas and across Florida, scores of freelance musicians who work steady and short-term casual club dates and single engagements in restaurants and nightclubs have suffered loss of work.

    Hurricane Irma’s trail of wind and storm surge destruction in Puerto Rico, the Florida Keys, Miami, Naples, and up the east and west coasts of Florida resulted in a coast-to-coast pummeling. Officials are still trying to assess the extent of damage. A stunning
    13 million Florida residents were without power for days. Irma’s parting blow to Florida, as it moved on to Georgia and South Carolina, was record flooding in the Jacksonville area. Together, Irma and Harvey may have caused up to $200 billion in damage in Texas and Florida, according to Moody’s Analytics.

    In one bit of good news, Local 389 (Orlando, FL) Secretary Sam Zambito reported that Disney advised that it will pay its Orlando theme park employees, including musicians, for all shifts cancelled as a result of the storm. Bravo Disney!

    How You Can Help

    In an effort to respond to the epic devastation and to help affected AFM members and their families residing in federal disaster areas in Puerto Rico, Florida, and Texas who are fighting to recover from one of the most destructive US natural disasters in history, we have established the AFM Hurricane Relief Fund. It’s more important than ever that we stand together and help our brothers and sisters. Please open the home page and click the “DONATE HERE” link.

    If you prefer to write a check, send it to:

    AFM Hurricane Relief Fund
    American Federation of Musicians,
    1501 Broadway, Suite 600
    New York, NY 10036

    Please note: contributions to the AFM Hurricane Relief Fund are not tax-deductible.

    How to Get Help

    If you are a victim of Hurricane Harvey or Irma, here’s how you can get help.

    AFM Hurricane Relief Fund

    Download the instructions and application for hurricane assistance here:

    The Actors Fund

    Musicians affected by Harvey or Irma should contact The Actors Fund for information on emergency financial assistance and other resources.

    For Harvey assistance: The Actors Fund’s Los Angeles office at or 323.933.9244, ext. 455.

    For Irma assistance: The Actors Fund’s New York office at or 212.221.7300, ext. 119.

    AFL-CIO Union Plus

    Musicians who have been impacted by Hurricane Harvey or Irma, and who are participating in certain Union Plus programs may be eligible for financial assistance through the Union Plus Disaster Relief Grant program. Please visit the Union Plus Disaster Relief Fund at to learn more about Union Plus benefits and eligibility requirements.

    Texas AFL-CIO

    Union musicians affected by Harvey may apply for assistance from the Texas Workers Relief Fund established by the Texas AFL-CIO here:

    If we stand together and act now to take care of each other, we can make a difference. Please donate to the AFM Hurricane Relief Fund today by visiting and clicking “DONATE HERE.”

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    Unallocated Contributions Support Each Participant’s Pension

    Note: Fund updates appearing in this column are not applicable to the AFM’s Canadian pension fund, known since August 2010 as Musicians Pension Fund of Canada. 

    To improve its funded status and restore its health over the long term, the American Federation of Musicians and Employers’ Pension Fund (Fund) needs additional employer contributions as well as good investment returns. For the plan year that ended March 31, 2017, higher employer contributions and strong investment performance kept the Fund out of critical and declining status for the plan year that began April 1, 2017. Whether the Fund can stay out of critical and declining status in the future will depend in part on income each year from employer contributions and investment returns.

    Read More

    Public Radio, Live TV, and Relocation

    I am pleased to report that, after two rounds of negotiations, the Federation has reached a successor public radio agreement with representatives of American Public Media and Minnesota Public Radio, which will set the pattern for wages and conditions for musicians who perform services for some two-dozen producers of public broadcasting programs, including Performance Today and Prairie Home Companion. Our successor public radio agreement becomes effective upon ratification and extends three years to January 31, 2019, with wage and applicable benefit contributions retroactive to February 1, 2016.

    Important to this agreement are groundbreaking new media provisions that establish use fees and residual payments for musicians whose public radio performances are licensed to interactive digital service providers such as YouTube, Hulu, Amazon, and Netflix. In addition to a new use fee payable to each musician whose performance is embodied in any clip or program exhibited via new media, 5% of producers’ gross receipts derived from the license for exhibition of any clip or program will be distributed half (2.5%) to the AFM and Employers Pension Fund, unallocated to any particular individual, and half (2.5%) to musicians.

    Thanks are in order to AFM Secretary-Treasurer Jay Blumenthal, In-house Counsel Jennifer Garner, Electronic Media Services Division Director Pat Varriale, Symphonic Services Director Rochelle Skolnick,
    Symphonic Electronic Media Director Debbie Newmark, and Local 802 (New York City) President/AFM IEB member Tino Gagliardi for their invaluable help with
    these negotiations.

    Live TV Negotiations

    The Federation will convene its fourth round of negotiations with the NBC, ABC, and CBS television networks August 14 toward a successor agreement covering musicians performing in live television variety shows like Saturday Night Live, The Voice, and Dancing with the Stars; late night shows like The Tonight Show Starring Jimmy Fallon, Jimmy Kimmel Live, and The Late Show with Stephen Colbert; and specials like the Academy Awards and Grammy Awards shows.

    As we all know, employers in all quarters of the commercial television industry have continued the fight to deny fair compensation to musicians, to expand their own production rights, and to deny union jurisdiction (and thus the path to negotiating fair deals) over products made for new media platforms.

    Unfortunately, with previous AFM administrations, television employer intransigence was never met with a firm union-like resolve to fight through to reasonable conclusions. As a result, my administration inherited a tangle of television agreements that were expired and/or enmeshed in years-long and seemingly endless negotiations.

    It has taken time to put our television house in order, but we have done so. We took on the tough negotiations, fought nose-to-nose when necessary, and showed the various employer groups an unflagging commitment to asserting our rights and obtaining fair deals. Using an approach that has been both militant and deliberate, we worked through the AFM’s outstanding television agreements and concluded deals—including successors to the TV Videotape Agreement, the Country Music Television Agreement, and the Basic Television Film Agreement—that benefited musicians and put the Federation on a firm footing for the current round of negotiations.

    Of highest priority in our current TV negotiations are our efforts to improve coverage and residual compensation for musicians when programs are exhibited and streamed in new media. With the viewing public transitioning away from traditional linear television, switching off their sets in favor of on-demand online video alternatives, the watching of regularly scheduled broadcast television is dying. Against this background, the Federation’s TV new media proposals, which mirror provisions bargained successfully by our sister entertainment unions, have taken on added importance.

    We have advised the networks that any successor agreement must contain on-demand streaming revenue participation for musicians at least commensurate with levels enjoyed by other workers in the industry. We will be negotiating hard for fair TV new media provisions this month, and given the networks’ difficult attitudes, I expect additional negotiating sessions will become necessary later this year, most likely in Los Angeles.

    Headquarters Relocation

    With the Federation’s lease at 1501 Broadway in the heart of New York City’s Times Square set to expire January 2019, and with full authorization by the International Executive Board, Secretary-Treasurer Jay Blumenthal and I have entered into negotiations to purchase an office condo in the financial district in lower Manhattan to serve as the Federation’s new home.

    After comparing the costs of leasing versus purchase, we have determined that owning our offices is significantly more cost effective and will stabilize and reduce office occupancy expenses in the years and decades to come, putting to rest the Federation’s decades-old struggle over acquiring and owning its International Headquarters.

    Protecting the Federation’s long-term financial interests by owning our headquarters office is a no-brainer. We will create equity, and reduce costs. We will reduce liability and increase Federation assets, all made possible by the Federation’s improved financial condition—a direct result of the hard work of our staff and the diligence, dedication, and fiscal responsibility of our magnificent International Executive Board. Watch for more details in this column next month concerning Federation media negotiations and our relocation journey.

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    Pension Fund Avoids Critical and Declining Status Due to Higher Investment Returns and Increased Employer Contributions

    Note: AFM-EP Fund updates appearing in this column are not applicable to the AFM’s Canadian Pension Fund, known since August, 2010 as Musicians Pension Fund of Canada. 

    At its May 2017 Board of Trustees’ meeting, AFM-EP Fund actuaries advised that better than expected investment returns and increased employer contributions—most notably, $20 million in new contributions over the next three years from the Sound Recording and Motion Picture industries negotiated by the Federation—enabled the plan to avoid “critical and declining” status for at least another fiscal year.

    Although the odds are that the Fund may become critical and declining at some point in the future, even as early as the next fiscal year (beginning April 1, 2018), that status will depend on investment returns, employer contributions, and other results during this fiscal year.

    Busting the Myths

    With the speed of today’s Internet, inaccurate information can be disseminated quickly. Here are a few myths I’ve seen, along with the facts.

    Myth #1: The Fund is not critical and declining so we’re “safe.”

    Though plan status has been certified critical each year since 2010, avoiding critical and declining status this year doesn’t mean the plan is healthy. High investment returns coupled with innovative increases in Federation-negotiated employer contributions kept the Fund out of critical and declining status this fiscal year. As recently as the plan year concluding March 31, 2016, employer contributions covered only 42% of benefit payments.

    Increases in the percentage of employer contributions are essential to the health of the Fund. This cannot be accomplished if members opt to work off-contract without pension contributions for signatory employers, rather than insisting that Federation and locally-negotiated agreements with pension benefits be honored.

    Myth #2: The Keep Our Pension Promises Act (KOPPA) proposed by Senator Bernie Sanders is good for participants.

    Fund trustees would strongly support legislative changes that would help the Plan secure participants’ pensions without relying on benefit cuts. Unfortunately, KOPPA as currently drafted and sponsored by Senators Bernie Sanders (I-VT), Al Franken (D-MN), and Tammy Baldwin (D-WI) provides the Fund with no relief whatsoever.

    Why not? Because a key provision in the bill disqualifies the plan from coverage. Relief provided by KOPPA pertains only to plans with a certain percentage of their funding problem attributable to employers who withdrew from the fund without paying their withdrawal liability. One example of this was the 2011 Philadelphia Orchestra bankruptcy. However, because the plan does not meet the bill’s required threshold percentage, KOPPA, if enacted, would fail to provide any relief.

    KOPPA would also eliminate the plan’s ability to avoid insolvency (running out of money) by reducing benefits. While no one wants to see benefit reductions happen, that option is important as a last resort. Benefit reductions could allow the plan to continue paying higher benefits than if it became insolvent. As written, Congressional adoption of KOPPA, though highly unlikely in the current Congressional climate, would shorten the life of the plan.

    Local 802 (New York City) President and Fund Trustee Tino Gagliardi and I met with senior staffers for Senators Sanders, Franken, and Baldwin in Washington, DC, June 6 to discuss what changes to their proposed KOPPA legislation would be needed to permit the plan to benefit from it. Unfortunately, none of those staffers believed that KOPPA would ever move through required congressional committee hearings where amendments could be made, let alone be adopted.

    Myth #3: The plan lost 40% in investment returns when other plans lost 25%.

    The Plan lost 29% in investment returns for the 12 months (fiscal year) ending March 31, 2009, not 40% as some have alleged. This misunderstanding was tracked back to the trustees’ December 2016 letter to participants that said plan assets declined by 40% over 18 months. Some have read this to mean the plan’s investment return was negative 40% over that period—but that was not the case. 

    Myth #4: The Fund office received huge staff pay increases in 2009.

    This misunderstanding was tracked back to the change in IRS reporting requirements for the compensation numbers shown on IRS Form 5500 Schedule C. The rules changed in 2009 to expand the definition of compensation to include, not just salary, but all payments made on behalf of staff—including, for example, health insurance and other benefit costs, travel reimbursements, and other expenses incurred while performing their jobs.

    Fund Office staff cost increases have averaged only 2.16% a year from fiscal year 2009 to 2016. This modest increase, only slightly more than CPI, includes an increase in staff health care premiums over a period when premiums rose on average more than 25%.

    What’s Next?

    Because the Fund remained in critical status this year, benefit reductions to already earned benefits, which might be necessary if the Fund becomes critical and declining, will not be considered this year. Next year, the Fund will go through the same process—as it has every year in the past—to determine the plan’s status. Critical and declining status could be in the Fund’s future at some point and appropriate preparations will be made. Until then, the Fund will continue to monitor its progress, review its investments, collect employer contributions, and manage expenses.

    The Federation, in each of its negotiations, will push hard for increases in employer contributions to increase the plan’s overall funding percentages and improve assets available for distribution.

    I am committed to keeping you updated with the most current information about the Fund’s status. In addition, please visit the Fund website,, register and log on for easy access to FAQ’s and updated information as it becomes available.

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Official Journal of the American Federation of Musicians of the United States and Canada