by Kim Roberts Hedgpeth, Fund Administrator, Film Musicians Secondary Markets Fund
The secondary market residuals negotiated as part of the AFM’s Theatrical and Television Agreements, which are collected, processed, and distributed by the Film Musicians Secondary Markets Fund (FMSMF), are an important part of supporting the livelihood of professional working musicians. Each year, the fund distributes thousands of residual payments to musicians that can range in amounts from double digits to more than seven figures. And because many films and TV shows continue to generate revenue and secondary market residuals for years, if not decades, after their initial release, a musician can continue receiving residuals well after his/her active career ends—operating almost like a second pension payment to help support a professional musician’s retirement security.
Each year, between 600 and 1,000 “new” musicians are added to the fund’s participant rolls because they are credited for the first time with residuals resulting from their work on an AFM covered film, TV show, or streaming product. During Fiscal Year 2019 (which ended March 31), 760 musicians were credited with residuals for the first time.
However, each year the FMSMF must expend extra efforts to spread the word about the fund, as there are musicians whose residuals are sitting unclaimed because we do not have good mailing addresses, complete contact information, and/or other details needed to process payments for such musicians. In addition to providing information to existing participants via FMSMF’s e-newsletter Music Notes, the fund has expanded its social media presence on Facebook, Instagram, YouTube, Twitter, and LinkedIn to get the word out to reach some of those musicians with unclaimed residuals.
Further, the fund is continuously expanding its outreach to meet musicians and their representatives at key venues. For the past five years, FMSMF has programmed a panel at South by Southwest to introduce the fund to musicians, emerging filmmakers, business managers, and music attorneys. The fund has programmed a similar panel at the American Film Market for the past three years, and our panel this year will be programmed in partnership with the Society of Composers & Lyricists (SCL). In 2019, the fund also gave presentations at an SCL membership meeting, a Music Managers Forum-US panel discussion and, of course, the AFM’s 101st Convention in Las Vegas.
As the film and TV business continues to undergo change, musicians are increasingly focused on their long-term economic security. The residuals distributed by the fund are an important part of that security, and ensuring musicians are informed about how they earn and receive secondary market residuals is a key focus of the fund’s work in 2019 and beyond.
The Road Ahead?
As reported in the June issue of International Musician, secondary market residuals collected by the FMSMF once again hit a record high during Fiscal Year 2019. The growth during the past 10 fiscal years—from $76 million in Fiscal Year 2010 to $115.7 million in Fiscal Year 2019—represents an increase of almost 51%.
The first six months of Fiscal Year 2020 are running slightly ahead of the first six months of Fiscal Year 2019 by approximately $3 million. If this trend continues for the next six months, Fiscal Year 2020 will mark another record-breaking tally of residuals collected on behalf of professional musicians.
However, as positive as these results have been during the past decade, the question remains: How long will this upward trend continue? The growth in residuals collected by the FMSMF has been driven by two key factors: increased compliance activity by FMSMF staff, outside auditors, and attorneys to recover residuals not voluntarily paid by obligated companies; and primarily by the rapid growth in residuals from secondary release of theatrical motion pictures and TV programs into digital platforms such as subscription video on demand (SVOD). In fact, residuals attributable to secondary market release of “traditional” product into digital platforms has offset the decline in residuals generated by secondary release into the home video market.
In the next few years, the industry will undergo a sea change in the distribution market. Companies are increasingly investing in content made directly for digital streaming services while simultaneously creating their own digital streaming services that will retain exclusive rights to both their made-for-streaming content and digital release of their theatrical films and TV programs. These changes in the business model paradigm will have a significant impact on the residuals generated for musicians in coming years.