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Yep, it’s really a dilemma. A great article but very troubling.
This is not something new. The demand for replay residuals is what nuked the musicians in the 1980’s. https://www.nytimes.com/1981/01/15/us/167-day-musicians-strike-ends.html
The history goes back decades before the 1980-81 strike. Music is considered a “performance” in the same way actors perform. The actors guild several decades before had taken the approach of a small wage but royalties on the performance if the movie became popular. The musicians’ union, on the other hand, chose the route of getting a higher wage but no residuals – the recorded performance was a buyout.
By the time the ’70’s came around, we had great wages for the day and lots of work. Granted, only a small percentage of musicians got the good work, but if you were in that elite group it was an amazing life.
However, some musicians got greedy – especially the string players. They wanted the high hourly wage and residuals. The producers wanted no part of it. They were paying lofty wages and were not willing to add residuals on top. The line in the sand was drawn.
The union voted to strike. I voted against the strike. The producers in response took the work to Europe. They found that they could get the music performed for only 10% of the cost in the U.S. At the time, a three hour date for a L.A. studio orchestra was roughly $25,000. London Symphony, $2500.
Remember all those movies in the early 1980’s, such as ET, that used the London Symphony? That’s why. After 167 days, the union went groveling back to the producers. We “went back to work” with a twenty percent cut in pay and no residuals. Oh, and by the way, 90% of the work was going to stay in Europe.
Now with the advent of all the technology that came around, it was probably a matter of time anyway that the studio work would go away. However, that ill-planned strike hastened the demise.
At the time, the technology was very expensive. I had a choice of going the technology route and paying a boatload of money to get in. I knew that the equipment would become outdated and almost worthless in just a couple of years. I decided to not go that route. I moved away from music being my primary source of income. Looking back, it was the right move for me.
There is lots of music out there with people willing to pay for it. However, it takes a lot of business savvy to sell the music. To be successful, the musician also has to be a skilled merchant. The unskilled are the ones who get taken by the business people. Law of supply and demand. Lots of artists out there who don’t understand business and are giving away their work for next to nothing. Why pay a lot of money when you can buy something that works dirt cheap.
However, the biggest weapon the musician has is their work. There is only one person that can write and perform that person’s song or cue. It can be imitated but it is not the same. A cover of a popular song is almost never as good as the original.
If your work is really top quality, there will be those who will pay a premium to use it. Again, law of supply and demand. The supply of your music is you and only you. If there is a demand for your music, there is only one place to get it. The right combination of artistry and business savvy is what it takes.
Europe has been undercutting the USA for decades because they never had a contract where “performers” (Musicians) were paid residuals for re-use. In London, if you were booked to play on a film score, TV spot score, or TV show/ documentary score, you received your session payment for the work you did that day and that was that.
AFM contracts still were going strong for TV spot scores up until around 2008. Then the great recession came along and that pretty much so killed that business model.
2008 also marked the year of the great expansion to on line music libraries. Scoring spots was replaced with on line data bases of production music. The AFM never had a plan to develop a contract for music licensing, but simultaneously, TV Networks, Production companies, ad agencies etc, found a massive cost savings opportunity with cheap and easily accessible on line library music.Traditional Scoring with a live orchestra under an AFM contract is pretty much so a dead craft with few, very rare exceptions. That has been replaced by all of us, sitting in our small, often from home studios creating music on computers with sophisticated software and sound libraries, and a microphone near by to capture a few overdubs.
The AFM union does not even know how to communicate with USA production music composers let alone develop an offering to all of that would protect us long term. Frankly, because we now all sell to the world as individual merchants, I am not sure any kind of contract can be developed.
I would gladly voluntarily report my royalties and sync fee income and pay union “work dues” if that lead to a pension at the age of 67 or so. Again, the AFM never figured out a plan for library production music composers. It went right over their heads.
The concept though of performing on a score, earning your session fee for that session, then getting residuals for life or for every re-broadcast is not sustainable in my honest opinion.
Side musicians, aka “session musicians” have to ask themselves, would they rather just get work for hire dates to play on a session and no residuals? or fight for residuals (free bonus money), but then watch all the live orchestra scoring work go to London or Prague?
I have been the beneficiary of residuals many times. They are great, but sometimes you started to earn so much money for doing nothing that you literally start thinking – is this sustainable? where is this money coming from?
You almost “felt guilty” for getting over paid.
The singers in the SAG union made ridiculous amounts of residuals “free money”…Sing for one hour on big brand jingle – earn a $500 or $700 “session fee”, but then pocket sometimes 100K in “residuals” over the next 2 years from all of the “performances” that aired.
Some professional LA, NYC, and Chicago Jingle singers in the 60’s to early 2000’s era had to hire personal book keepers just to count and deposit all the residual checks that were showing up in their mail boxes each day.
Anyway, indeed now that Apple, Disney, Netflix, Hulu, Amazon etc are now all “movie producers” or “content creators”…clearly we all need to find ways to grab some money from these companies launching these subscription services because .01 cent royalties for streams for background underscore is NOT SUSTAINABLE.
I would gladly voluntarily report my royalties and sync fee income and pay union “work dues” if that lead to a pension at the age of 67 or so.
I got a notice last week from AFM that it is seeking federal protection as the amounts it has in the pension fund are not enough to cover its liabilities. Effectively, the pension fund is bankrupt. While my pension was not huge, it was enough that I was looking forward to getting it. Kiss that goodbye.
While my pension was not huge, it was enough that I was looking forward to getting it. Kiss that goodbye.
Not exactly true. They still have $2 Billion in that fund and while they are now paying out more than they are taking in, they are only proposing to cut the payouts for folks under 80, you certainly will not be cut to 0. That issue is an on-going negotiation. That fund will be around for 20 to 30 more years.I know many people getting a beautiful monthly check from that pension fund. I will too one day. It will be small, but again, had they developed a plan for production music library composers, that fund could have been supported better from the “new music for film and tv” business.
As I wrote before, the “Oligarchy” is doing everything they can to strip away money from musicians to maximize shareholder value for google, apple, netflix, disney, CBS viacom, NBC Universal/ Comcast, Spotify and all “streaming” subscription companies.They all will profit greatly from subscribers but simultaneously not find any meaningful royalties to offer to musicians who help produce the content. Unions come in handy to negotiate that stuff. But libraries are divided and scrambling and undercutting each other….that’s exactly the way the Oligarchy wants it. When music libraries and film composers are scrambling, distracted, running to London and Prague to record Orchestra’s, screwing local union talent in LA and NYC, avoiding union contracts, and undercutting each other, the Oligarchy just stuffs more profits in the bank.
What you are describing is what the unions brought to the table in value. If content providers refused to provide content unless the “Oligarchy” agreed to pay x, there would be a break in the downward spiral.
Lucille Ball and Dezi Arnaz were the first to break from grips of the studios when they refused to give up their publishing rights and licensed all of their shows. Max Steiner learned in his later years that he actually had that power and refused to work unless he kept all of his publishing rights. He taught Earle Hagen and Henry Mancini the same lesson. Once they became a popular commodity, they refused to work unless they kept the publishing rights. Law of supply and demand again at work.
What if the production writers got together and withheld their material unless they got reasonable compensation? Where would the Oligarchy find content? Of course, it can be argued that there are so many writers that would “cross the line” that it would never work. When I was with Local 47, there were about 50,000 members, but only about 1500 were high enough quality players to do the studio work . It was those 1500 which had to stand together. The others didn’t really matter. Likewise, it is the writers who are competent enough to provide quality content which would have to stand together. The Oligarchy could not survive on inferior product.
The Oligarchy has a lot of currently licensed product. Refusing to provide new content would take awhile to feel the pinch. However, screen writers did it. https://www.wga.org/the-guild/going-guild/join-the-guild Why not commercial music writers?
I receive a pension from both SAG/AFTRA and AFM as I was fortunate to be able to make my living as a studio musician in L.A. SAG/AFTRA seems to be strong but there will be a cut for AFM, it’s not going away completely.
Just got this e-mail this morning and it details the calculation.
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What You Need to Know About the
Pension Benefit Guaranty Corporation (PBGC)As announced earlier this year, the AFM-EPF Trustees and the Plan’s advisors are preparing an application to the U.S. Treasury Department to reduce benefits under the Multiemployer Pension Reform Act (MPRA). These benefit reductions are necessary to prevent the AFM-EPF from running out of money to pay benefits in the future. By putting the Plan on stronger financial footing, we are taking the steps necessary for the Plan to be around to pay benefits to current and future retirees for decades to come.
Throughout this process, you will hear the PBGC mentioned again and again. In this issue of Pension Fund Notes, we’ll take a step back to explain what the PBGC is, how it works and why it’s important.
The PBGC “Insures” Pension Benefits
The PBGC is a government insurance agency that provides financial assistance to plans that no longer have enough money to pay benefits on their own. The PBGC receives no taxpayer funding. Instead, pension plans pay annual premiums to the PBGC. For multiemployer plans like ours, annual premiums are based on a flat rate per number of participants in the plan. For 2020, multiemployer plan premiums will be $30 per plan participant, increased from $8 per plan participant in 2007. The Plan’s required PBGC premiums increased from approximately $400,000 to $1,450,000 in just 12 years (from 2007 to 2019) due to the enormous increases in the per-participant annual premium.
However, the PBGC does not necessarily “cover” your full benefit amount. It only insures and pays benefits up to a maximum amount set by federal law, which is known as the PBGC “guarantee.”
How Much of My Benefit Does the PBGC Cover?
The PBGC guaranteed benefit is calculated in an entirely different way than your benefit is calculated under the AFM-EPF. In a nutshell, the highest PBGC-guaranteed monthly benefit available is $35.75 per year of “pension credit,” which for this Plan is the same as years of “vesting service.” If you have accrued partial years of vesting service under this Plan, the PBGC will take those into account when calculating your guaranteed benefit.
The PBGC calculates each participant’s guarantee by determining the average monthly benefit you earned (your total monthly benefit divided by your years of pension credit/vesting service); then it guarantees 100% of the first $11 of that monthly average plus 75% of the next $33, but not more than $35.75 per month. The result is then multiplied by your years of pension credit/vesting service to calculate your PBGC guaranteed monthly benefit.
For example:
Let’s say your monthly benefit is $600.00 and you have 20 years of vesting service. Your average monthly benefit earned is $30.00 ($600.00 ÷ 20). The PBGC will cover $25.25 per year of vesting service ($11 + (.75 x $19)). Therefore, your PBGC guaranteed monthly benefit would be $505.00 ($25.25 x 20).
If your monthly benefit is $200.00 and you have 20 years of vesting service, your average monthly benefit earned is $10.00 ($200.00 ÷ 20). The PBGC will cover the entire $10.00 per year of vesting service because the PBGC guarantees 100% of your average monthly benefit up to $11.00 per year. Therefore, the PBGC would guarantee all of your $200 monthly benefit ($10.00 x 20).
If your monthly benefit is $2,400.00 and you have 40 years of vesting service, your average monthly benefit earned is $60.00. The maximum the PBGC will pay is $35.75 per year of vesting service. Therefore, your PBGC guaranteed monthly benefit would be $1,430.00 ($35.75 x 40).
The PBGC’s website has more information on how guarantees are calculated.
What Does All This Mean for My Benefit and the MPRA Process?
The PBGC affects the proposed MPRA benefit reduction in two important ways.
First, the amount of your benefit:
If the Plan runs out of money and goes to the PBGC, the most you could expect to receive is your PBGC guaranteed benefit (as described above). Additionally, the PBGC guarantee does not factor in any of MPRA’s special protections that limit benefit reductions for participants based on age and whether they are receiving a disability benefit.
If we reduce benefits ourselves using MPRA, no participant’s benefit can be reduced below 110% of his or her PBGC guarantee. If your benefit is reduced under our proposed MPRA plan, it will still be higher than the amount you would get if the Plan became insolvent and the PBGC stepped in.
Second, the PBGC itself is in financial trouble:
Absent a change in the law, the PBGC currently projects its multiemployer insurance program will become insolvent by the end of its 2025 fiscal year. If this happens, the PBGC will only be able to pay out what it collects in premiums.
The PBGC projects that approximately 125 additional plans will run out of money over the next 20 years. Whatever money the PBGC has to fund benefits will have to be spread among more and more insolvent plans. Therefore, if the AFM-EPF runs out of money, participants’ benefits could be much less than even the current PBGC guaranteed amount.
The decision to apply for benefit reductions under MPRA was painful, but it is essential that we do everything possible to put the AFM-EPF on stronger financial footing. We want to be able to pay benefits to current and future participants for many years to come, and not have to rely on whatever help—likely very little—that the PBGC may be able to provide.
Participants can find answers to questions about the PBGC and a variety of other topics on the FAQ page of the Plan website.
Why not commercial music writers?
I am afraid that there are too many hungry young writers that charge forward so fast and will sign any contract presented to them. The attitude is “if i don’t sign this deal, someone else will.” So they sign exclusive in perpetuity deals where they give away all their rights. they aggressively participate in subscription models where accounting is entirely “opaque” and in total control of licensing platforms. They literally pay whatever they want because they collect ALL THE MONEY FIRST, and share 0 data with music producers.
When you have an army of music producers charging into the industry with 0 knowledge of how the old model worked, couple that with Eastern European and London under cutters, you have the perfect formula to feed the Oligarchy more power, control, and profits.
If artists want to continue to give away their work and grant rights to their works for very little money, strategically not join PRO’s to sell “performance royalty free” (free of all potential “problems” ) what can we do?
Then you have publishers caving into Scripps, Netflix, Disney, Apple, Google and so on by supplying music for very cheap, knowing that back end royalties are either non existent or just 01 cents. How do we convince all music producers and music publishers to hold their ground? and Yes jdt9157, I agree if streaming services simply do not get the content produced in the first place, this problem disappears. The problem is the willingness of the music business giving works away for very small costs under contracts that favor mainly the “oligarchy”.
Art, glad you have the SAG and AFM pension income streams! good for you!
[Removed, off topic]
I am afraid that there are too many hungry young writers that charge forward so fast and will sign any contract presented to them.
Bingo. That’s the dilemma. However, that issue also determines the value of your music, or my music. How are we differentiated? If we are not differentiated, the value of our music is the same – almost worthless. Law of supply and demand.
There are reasons why purchasers will pay more for yours or my product than the “hungry young writer”. Why was an Earle Hagen or John Carpenter hired instead of a novice? If dollars was the only concern, they would have been on the street at their prices.
Maybe those low compensation areas are to be left to the hungry young writers and the pros simply say no. At that point, the “Oligarchy” can decide whether to lure the pros in at higher prices. If the differentiation does not matter, the prices will not go up. If the quality is needed, the prices would rise. The market decides the price. The Oligarchy may be the primary purchaser, but if there is no supply of quality product, the price necessarily will go up to meet the demand.
There is a huge difference between world-class product and novice product. The market will pay the difference if the world-class supply is controlled by the pros. Will the $48 payment of downloads change your life if you don’t get it? Maybe the answer is to say “no”. If enough people say “no” the prices will rise. We control the supply. If we do not give them the music, there is nothing to sell. I suggest that if 30% of the quality music went away, prices would rise. The market is over-saturated of quality music. We can correct that problem.
At my point of life, if I am competing with the novices, I’m in the wrong area.
Just got this e-mail this morning and it details the calculation.
Thanks for the update. Congrats on you pensions! You were part of that “Golden Era”.
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