Sound Recording Labor Agreement

Part 3: Managing Artist Relationships

Chapter 11

Start Thinking. . .  What role do unions play in record company

contracts?  What are the important issues that should be negotiated in a recording contract?

Chapter Goals  Learn the basic elements in a recording contract.  Be able to distinguish between royalty artist issues and

nonroyalty artist issues.  Understand union involvement in the process and the standing agreements that the AFM and AFTRA have with record companies.

AFTRA Agreements  American Federation of Television and Radio Artists  AFTRA National Code of Fair Practice for Sound

Recordings  covers all singers on a recording

AFTRA Agreements Vocal Contractors

 Union contractor  3+ AFTRA singers in recording  singing member of the group  supervises adherence to AFTRA code  Overdubbing and tracking  Sound recording copyright shares  AFTRA’s Sound Recording Sessions Report

AFTRA Agreements Scale

 Classifications of employment  Recording funds/advance

 Contingent scale payments  Payments to nonroyalty singers  AFTRA Health & Retirement Funds

AFTRA Agreements Acquired Masters

 Recordings by small companies and indie labels  Signatory third party acquiring master:  must ensure nonsignatory producer complied with AFTRA code  must comply with all obligations 

H&R and contingent payments

 New use of masters

AFTRA Agreements Nonunion Recording

 Advantages of collectivism  Changing technology

 But AFTRA obligations must be met when distributing

nationally  Money not saved in the long run by initially circumventing AFTRA and the AFM

AFM Agreements

Sound Recording Labor Agreement  Instrumentalists, conductors, arrangers, orchestrators,

and copyists  Covers provisions for production of music videos and concert DVDs  Employer pays wages + AFM Health & Welfare Fund + AFM Employers Pension Fund

AFM Agreements

Sound Recording Labor Agreement  Contract provides  200% of sidemusicians’ pay for the leader  AFM contractor for 12+ musicians  doubling, cartage, etc.  backup artists  Royalty artists  “Outside” masters

AFM Agreements

Sound Recording Special Payments Fund  Phonograph records  record companies make payments to fund twice a year  paid to musicians who performed in preceding 5 years  same scale payments for all musicians  Motion pictures  Film Musicians Secondary Markets Fund  payments reflect relative success of project

AFM Agreements

Music Performance Funds  Nonprofit organization to keep live music available to

public  Trustees schedule live music performances by AFM members  If no admission charged live performances may be broadcast  Digital downloading adversely affected physical sales and therefore MPF

AFM Agreements Nonunion Recording

 Taft-Hartley Act and right-to-work laws  AFM control  professional symphony and popular music recording  less control in gospel, Christian, jazz, and country fields  Young Sounds of the AFM  Spec sessions

Royalty Artist Contracts Types of Deals 1. 2. 3. 4. 5.

The label signs the artist; a producer handles project in-house; artist gets royalties The label already has artist under contract; retains independent producer Independent producer and artist produce master tape, then convince record company to acquire it Master lease deal Artist forms a production company to deliver a master tape to a label

Royalty Artist Contracts Negotiations  

 

Conservative signing policies Terms of contract Maximize self-interests versus compromise Royalty rate adjustments or bonuses as plateaus reached

Royalty Artist Contracts The Issues  

     

Term Exclusivity Royalties, advances Production budget minimums Creative control Commitment to promote Chargebacks Ownership of masters

Royalty Artist Contracts The Issues  

    

Publishing rights, controlled compositions Video rights Foreign releases Assignment Right to audit Default, cure Royalty discounts

Royalty Artist Contracts 360 Deals 

Power shift between artists and record companies Two types of 360 deals/“artist brand” agreements:

 1.

2.



record company gets traditional revenues + percentage of the artist’s other income streams true partnership

Environment = double-edged sword

Royalty Artist Contracts

New Use and Legacy Royalty Rates  

  

Dramatic changes in technology Historically, new uses fitted into existing categories Digital downloads Telephone ringtones Instant recording at live performance venues

For Further Thought. . .  What is the difference between a royalty artist and a

nonroyalty artist?  What contractual issues related to creative control should be negotiated by an artist?  Why is it possible for an artist to have fulfilled all recording obligations under a contract, have some recordings that sold well, but still not receive any royalties?