AFM Sues Atlantic, Sony, Warner for Failing to Fund Musicians’ Pensions

August 12, 2015

This week the AFM filed suit against several recording companies over digital music distribution revenue. According to the suit Atlantic Recording Corporation (Atlantic), Hollywood Records (Hollywood), Sony Music Entertainment (Sony), Universal Music Group Recordings, Inc. (UMG), and Warner Brothers Records, Inc. (Warner) failed to make pension fund contributions from foreign audio stream revenue and foreign and domestic ringback revenue.

The major recording companies’ long-held contracts with the AFM require the companies to share a portion of sales revenue with musicians. Most of the revenue was originally from record sales and later CD sales. In 1994 AFM and the recording companies entered into an agreement, subsequently renewed, requiring the companies to pay 0.5% of all receipts from digital transmissions including audio streaming, nonpermanent downloads, and ringbacks.

“The record companies should stop playing games about their streaming revenue and pay musicians and their pension fund every dime that is owed,” says AFM President Ray Hair. “Fairness and transparency are severely lacking in this business. We are changing that.”

Last year independent auditors discovered that the recording companies had not made the required revenue payments from foreign audio streams, ringbacks, and foreign non-permanent downloads. Attempts to reconcile the issues outside of court have gone on for several months to no avail.

This is the fifth lawsuit filed against major media corporations for contract violations in the past few months. Under Hair’s leadership, AFM has begun to aggressively enforce existing contracts and stand up to large corporations that fail to pay musicians when their work is reused or offshored.

The suit seeks payment for all missing revenue owed the AFM Pension Fund, late payment penalties, interest, damages and legal costs.