AFM, Media Convergence and Performance Rights Part 2

March 1, 2016

Ray Hair  -  AFM International President

In this five-part series, we look briefly at AFM’s origins, structure, media agreements, historical challenges from the rise of technology, disruption of established media business models, institutional stress from a new techno-economic paradigm, and opportunities for new money for musicians from performance rights. In part two below, we examine early efforts to organize and monetize media services, modern Federation media agreements, and the underlying pressures to lower standards.

The future of the Federation depends in part on its ability to bargain progressive media agreements despite global competitiveness and a burgeoning background of web-based, user-generated-content that has blurred the lines between broadcasting and other media across all elements of consumption. To understand what is happening now in music and media, we look to our past to remember who we are, where we came from, what we did, and to see where we go from here.

Our Founders’ Goal – Unionism and Organizing

In 1896, after fleeing the National League of Musicians (an elitist confederation of musicians’ locals that spurned the AFL’s all-in, labor organizing philosophy) the 26 founding locals of the new American Federation of Musicians and its first president, Owen Miller, set about the business of building power through unionism. AFM officials and local officers believed that with an organizing approach, where all musicians are encouraged to join the union, act together, and speak with one voice, rather than separately or as elitist hierarchies, they could more easily establish, maintain, and improve wages and conditions of musical employment. The AFM’s founders sought to give meaning to the phrase, “In unity there is strength,” through a strategy of setting standards for wages and conditions for musical performances.

A Standards-Setting Union

Prior to the 1935 adoption of the National Labor Relations Act, which enshrined collective bargaining in US law, AFM locals set conditions with musical employers by agreeing on wage scales voted upon at membership meetings. This activity revolved around developing, promulgating, revising, and amending standards of engagement and was intended to address the needs of constituent groups of musicians who performed in vaudeville theaters, concert halls, hotels, bars, and saloons.

Union members enforced their area standards by standing together and refusing to perform for less than the minimum established scales. Establishments that failed to conform to locally-set standards were sometimes designated “Forbidden Territory.” Scales and conditions were codified and published as part of a local union’s constitution and bylaws, which members were sworn to abide. The early standards-setting strategies also set the stage for the AFM’s first media agreements.

The advent of commercial radio in the 1920s made it possible for thousands of listeners to enjoy live and in-studio musical performances. As radio grew in acceptance, in large part due to the popularity of musical programs and the musicians who performed them, AFM locals successfully organized the broadcasters by curtailing the supply of available musicians unless acceptable agreements for appropriate air rates were reached.

In 1926 and 1927, local radio employment came under intense pressure when the NBC and CBS radio networks were created, making it possible for a single program to be broadcast into each local jurisdiction across the United States and Canada. The AFM won agreements with the networks that promoted employment at local radio stations according to locally-set standards and that also covered national broadcasts. 

Today, locals continue to set wage scales voted by members, by ratifying collective bargaining agreements (CBAs) with local employers, and by adopting rules in local bylaws. National and international standards exist in AFM bylaws. They also exist as part of industry-wide, Federation-negotiated collective bargaining agreements, and in promulgated agreements that contain the same or better terms as their industry counterparts.

Federation Media Agreements

From the earliest days of radio broadcasting and transcription, phonograph recordings, and the invention of talking motion pictures, Federation agreements with media producers set fair wages and conditions for recording session work. The agreements invariably contained provisions governing additional use of recorded material, or “content”—restricting its use to the original medium for which it was first recorded. Those contract features still survive today. If a phonograph record or sound recording is subsequently used in a motion picture or licensed into a radio or television advertisement, an additional “new use” payment is due and payable to each musician, orchestrator, arranger, and copyist involved.

For television broadcast or cablecast programs, subsequent airings after initial use also require reuse payments. For radio and TV jingles, use and reuse payments are payable, in addition to original session payments.

Residual media payments originated in 1944, when President Petrillo settled a two-and-a-half-year strike against the phonograph industry with the creation of the Music Performance Trust Fund (MPTF). The settlement required record labels to pay up to 2.5% of sales directly into the AFM’s treasury.

In the 1960s, after MPTF provisions had been added to the AFM’s film, television, and jingle contracts, a portion of MPTF was converted to pension, reuse, and residual payments to benefit original session participants.

AFM international agreements, applicable in both US and Canada, include the Sound Recording Labor Agreement (SRLA) with record labels, Motion Picture TV Film Agreement with film and TV producers, and Pamphlet B Touring Theatrical Musicals Agreement with Broadway League producers. Agreements for use in US-only include Live Network TV, Radio-TV and online Commercial Announcements (jingles), Cable TV, Video Game, Symphonic Media, and National Public Radio and Television.

Canadian agreements include Canadian Broadcasting Corporation (CBC) for radio and television, Canadian Commercial Announcements, National Film Board, and Canadian Media Producers.

Employer Resistance
and a Shift in Global Economics

The Federation’s early all-in organizing approach, coupled with efforts by locals to establish and enforce local workplace standards, resulted in the first national and international agreements with the developing media industry nearly a century ago. The successors to those agreements, which today generate more than $200 million in wage, benefit, and residual payments, are listed above.

In the 1920s, as the newly formed Federation was obtaining the largest possible share of returns for musicians from fledgling media enterprises, the fierce resistance thrown up by employers was easily understandable. Unions take a bite out of profits. Union employers earn less on capital investment than nonunion employers. Each dollar a musician earns is a dollar the employer can’t keep.

The tensions that exist in today’s media negotiations are inherently the same as those at the dawn of the industry. In the new frontier of digital media and digital performance rights, higher financial stakes are driving employer pressure to force standards lower here at home.

Today, media employers in the US and Canada operate in a global marketplace. In an effort to avoid union wage, benefit, and residual patterns and lower costs, producers seek to capture media services from musicians with little or no upfront payment. They want unfettered use of content without residual obligations, plus all intellectual property rights and royalties including musicians’ new performance rights. Many producers attempt to misclassify musicians as independent contractors, and compete for state and federal tax credits to escape union production centers and offshore our members’ jobs.

Increased labor market efficiencies in the United Kingdom and Eastern Europe, costs adjusted for differences in foreign currency exchange, government subsidized health care and retirement, tax incentives, and residual payments have lured media work offshore and escalated workplace tensions in the US and Canada. 

After nine decades of productive AFM agreements in media industry, producers are delighted to see some local officers, orchestra committees, composers, contractors, and agents call for the loosening of Federation standards as a hedge against fear of unemployment, job offshoring, and in response to the disruption of existing media business models.

Next month, we discuss the emergence of a new techno-economic paradigm prompted by a disruptive convergence in new media.

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