Sound Recording Discussions Resume

January 1, 2023

Ray Hair  -  AFM International President

The Federation will meet with sound recording industry representatives this month to continue discussions toward a progressive successor Sound Recording Labor Agreement (SRLA). The existing predecessor agreement covered the period February 1, 2017, through January 31, 2020. It was extended by written agreement between the parties on the eve of the deadly COVID-19 pandemic that swept across the world, eliminating in-person negotiating sessions and affecting traditional business models in the production and consumption of media content and live entertainment. The 2017 agreement continues in full force and effect until a new agreement is reached.

That current agreement was bargained in six separate, difficult rounds beginning in September 2015 until its conclusion in February 2017. The Federation’s hard-fought gains in the negotiations leading to the current SRLA included ensuring that the Sound Recording Special Payments Fund (SPF), Music Performance Trust Fund (MPTF), and American Federation of Musicians and Employers’ Pension Fund (AFM-EPF) would receive sizeable payments, securing a portion of industry’s revenue from its exploitation of recordings through interactive streaming and licensing.

Leading up to the 2015-2017 negotiations, a two-decade slide in recording industry revenue had leveled off. However, physical product sales, which had continued to provide a small royalty to both SPF and MPTF, had been drastically reduced. Digital download sales, which benefitted SPF only, had declined as well. The consumption shift toward interactive and noninteractive streaming had begun. This business model represented solid revenue growth for the music industry. The Federation saw the industry’s new and growing revenue model as way to preserve and protect SPF, MPTF, and AFM-EPF, each of which, like the industry, had suffered from decades of decline in the music business, and the near-extinction of physical sales.

In addition, the Federation bargained innovative new use licensing provisions to further benefit MPTF, SPF, and AFM-EPF. Broadening existing provisions for licensing sound recordings into consumer products and consumer sync licenses on the internet, the Federation expanded nontraditional licensing provisions. This included licensing into podcasts and webisodes (excluding made-for-internet television programs, which require traditional new use payments), mobile applications, and life cycle videos (weddings, bar/bat mitzvahs, etc.), and foreign use.

Those additional licensing provisions with revenue percentages allocated toward strengthening MPTF, SPF, and AFM-EPF, together with revenue from the music industry’s subscription-based, on-demand streaming distributions, have produced a demonstrable positive impact on the financial viability of those benefit and residual funds. Instead of risk from financial uncertainty, the road ahead appears far more encouraging.

Soon, the AFM-EPF will apply for Special Financial Assistance (SFA) from the Pension Benefit Guarantee Corporation (PBGC), made possible under the provisions of the American Rescue Plan Act (ARPA). SFA funding, together with the streaming and licensing income afforded to AFM-EPF by the provisions of SRLA, are expected to restore the health of the fund through 2051 and beyond. Legacy benefit payments due current retirees will be safe and secure. New musicians who have begun their performing careers, when vested, can look forward to receiving a pension benefit payment upon reaching retirement age.

At the close of 2016, MPTF was on life support, with practically no further royalty income available to fund free public live performances due to the steep decline in its only source of income—sales of physical recorded product. The MPTF was set to wind up its operations unless a new source of income could be found. In 2023, MPTF will allocate $2.5 million in support of performances throughout the US and Canada, thanks to the 2017 SRLA. What an improvement.

Also in 2016, SPF was suffering similar declines in royalty payments from downturns in sales of physical products, digital downloads, and ringtones. Today, with the additional negotiated SRLA revenue, total special payment distributions to musicians working under the terms of the SRLA have tripled. SPF distributions will continue as a real incentive to encourage musicians to demand AFM coverage of sound recording sessions.

We were able to achieve these important SRLA contract improvements in 2017, together with increases in wages, pension contributions, and health and welfare payments because of the solidarity we brought to the table. The Federation, local officers, player conferences, and rank-and-file representatives all worked in unity to focus on growing all sources of industry income and creating new ones that would benefit our musicians, and the funds upon which they rely.

A resumption of in-person bargaining sessions this month will provide an opportunity to continue the trend established in 2017, with advances in wages, pension, and health and welfare contributions, and support for MPTF, SPF, and AFM-EPF.

I also want to extend to each of you my very best wishes in every way for a happy, healthy, and productive new year!

---