Three-Year Deal Reached with Sound Recording Industry

February 1, 2023

Ray Hair  -  AFM International President

I am pleased to report that on January 11, 2023, the Federation reached an agreement with recording industry representatives for a successor Sound Recording Labor Agreement (SRLA) for a period commencing the first Monday after ratification through January 31, 2026 (approximately three years).

I am even more pleased to report that the agreement brings significant gains in upfront session payments, including a 6% increase in scale wages in the first year of the contract, followed by 3% increases in each of the second and third years, together with Health & Welfare payment increases, which also become effective in the second and third years of the agreement.

The agreement continues to ensure that the Special Payments Fund (SPF), Music Performance Trust Fund (MPTF), and AFM & Employers’ Pension Fund (AFM-EPF) will receive sizable payments and a secure portion of the industry’s revenues from the exploitation of our music from digital streaming and licensing.

In addition, new provisions in the agreement provide for per-tune payments from live location audiovisual recordings and from audiovisual studio sessions. These gains were hard-won. Negotiations began January 7, 2020, and continued through four separate rounds, until the final conclusion on January 11, 2023.

Significant Increases in Up-Front Payments

We told industry from the outset of negotiations that we had to have significant improvements in session wages, and we got them. The scale wage increases of 6% in the first year of the agreement, and 3% in each of the second and third years, total for an aggregate increase of 12.45%.

Juneteenth was added to the list of holidays set forth in the agreement that require payment of two times the basic session and overtime rates for all hours of recording.

Health & Welfare payments will also increase in each of the second and third years: in year two, the H&W contribution amount will increase from $28 to $30 for the first session in a day. In year three, the contribution amount for each service beyond the first session in a day will increase from $22 to $25.

Streaming Revenue: Security for Pension, Residual Funds Continues

The new agreement continues to provide and ensure that our pension and residual funds—AFM-EPF, SPF, and MPTF—will share in the subscription and on-demand streaming revenue that has replaced the companies’ income from physical product. The streaming payment obligations represent a significant advance over the old physical sales formula and are calculated as 0.36% of receipts for streaming throughout the world. During the term of the agreement, Universal, Warner, Atlantic, Sony, and Hollywood Records will make the following combined lump sum payments to the AFM-EPF:

• $7 million in year one
• $7.5 million in year two
• $8 million in year three

Payments calculated in excess of those sums will be made to SPF and MPTF. Those funds will continue to share in this important revenue stream, so that significant payments from the recording industry’s new and dominant business model—streaming revenue—are made into the funds that have suffered so greatly from the decline of the old sales model—physical product revenue.

Expansion of Traditional and Nontraditional New Use Licensing

The negotiating committee was persuaded that the following limited expansions of existing nontraditional and foreign licensing provisions would be beneficial:

Mobile Applications. The agreement removes the sunset provision relating to mobile applications that was part of the predecessor SRLA and which permits the licensing of sound recordings into mobile applications for the payment of 3% of the license fee to SPF (2/3) and MPTF (1/3). These licenses shall require Federation approval. This provision does not cover music services on mobile phones, which are, instead, covered by the agreement’s streaming provisions.

Nontraditional Blanket Licenses. The agreement will now allow the companies to enter into blanket catalog licenses for any nontraditional use, including mobile applications and noncommercial “life-cycle” videos and montages (e.g., weddings, bar/bat mitzvahs, or nonpublic business conferences) with payments to be made in accordance with the audio streaming formula (36% of worldwide receipts with a cap of 55% of domestic receipts) and paid to SPF (2/3) and MPTF (1/3).

Foreign Traditional Use Licenses. The agreement will allow licenses for worldwide use of covered recordings to be issued to licensees domiciled outside the US and Canada for television and cable broadcasts, motion pictures, commercials, and video games. The fee will be 4% of the company’s revenue, with a $150 minimum and a $4,500 maximum, to be paid to SPF (2/3) and MPTF (1/3). If a licensed commercial is exploited inside the US and Canada, the fee will be equal to the full traditional new use payment, including AFM-EPF contributions and payroll costs in accordance with existing SRLA provisions. The company will work with its foreign affiliates to ensure that foreign licensees are informed of their obligations via a letter.

New Audiovisual Live Performance Capture and A/V In-Studio Provisions

Audiovisual Electronic Distribution of Songs from a Live Performance. Industry agreed to a Federation proposal to include audiovisual recordings produced from live performances (when not covered by Low Budget Location Recording provisions) that are to be distributed as individual songs within the scope of the agreement. For capture of the content, a payment of $250 is due to each musician for the first song released from such a performance, plus $125 for each subsequent song. All other SRLA premiums, benefit contributions, and doubling provisions are applicable.

Audiovisual Capture at Sessions. When musicians are engaged in the production of audiovisual content at a recording session, the rate payable to each sidemusician is $350 per three-hour minimum call, and 1.5 times pro-rata for work in excess of three hours. All existing SRLA premiums, benefit contributions, rest periods, and doubling provisions are applicable.

Our Negotiating Team

I’d like to thank our entire negotiating team for their contributions: AFM International Vice President Bruce Fife; Vice President from Canada Alan Willaert; Secretary-Treasurer Jay Blumenthal; and International Executive Officers Ed Malaga, president of Local 161-710 (Washington, DC), and Dave Pomeroy, president of Local 257 (Nashville, TN); Tino Gagliardi, president of Local 802 (New York City); Chris Anderson-Bazzoli, president of Recording Musicians Association (RMALA); Marc Sazer, president of Recording Musicians Association (RMA) and vice president of Local 47; Roger Blanc, second vice president of RMA and member of Local 802; Stephanie O’Keefe, president of Local 47; Pat Hollenbeck, president of Local 9-535 (Boston, MA); BJ Levy, president of Local 10-208 (Chicago, IL); Kale Cummings, president of Local 6 (San Francisco, CA); Dean Rolando, electronic media director of Local 10-208; Dusty Kelly, executive director of Local 149 (Toronto, ON).

A special thanks to former AFM Electronic Media Services Division Director Pat Varriale; AFM Electronic Media Services Division Director John Painting; Executive Director AFM Canada Liana White; Outside Counsel Susan Davis; In-house Counsel Jennifer Garner and Russ Naymark; and Symphonic Electronic Media Director Deborah Newmark.

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