US-based orchestras have a rich history of making sound recordings of classical repertoire. Have you ever wondered if and how the performers are paid when those sound recordings are sold?
This question came up while we were working on a case study of a young professional orchestra player as part of our Artist Revenue Streams project. While categorizing his income streams, we realized we didn’t know how sound recording revenue flowed back to performers. Was it a profit split with all current members? What about the money generated from legacy recordings that are still sold?
Below is a description of how it works for unionized orchestras, in other words, the orchestras where the performers are members of the American Federation of Musicians (AFM). This includes all of the major professional orchestras in the US.
If an AFM orchestra goes into the studio to record, the performers must be paid in accordance with the Sound Recording Labor Agreement (SRLA).
First, they get studio scale wages under the SRLA — which are quite high and generally exceed $1000 for the total amount of music on a recording. These are separate from their orchestra earnings under the collective bargaining agreement (CBA).
Performers also receive a payment on the backend, but it is not based on its own sound recording’s sales. The musicians who participated in the recording become part of the Sound Recordings Special Payments Fund (SPF) beneficiary pool. As a result, they are entitled to a share of annual SPF payments for five years. These payments aren’t tied specifically to the success of their own recording, they are based on industry-wide sales of signatory recording companies. Twice a year, each record company pays SPF a portion of its revenues on sales of all the sound recordings produced by the company and recorded in the US or Canada, or recorded elsewhere using AFM musicians. Payments are required on all revenues generated on sales of these recordings, whether the configuration is physical (CD, tape or vinyl) or digital.
The Sound Recording Special Payments Fund collects these payments from signatory labels, and then distributes them to orchestral members once a year. In 2011, it distributed over $6.4 million to the musicians who worked on signatory recordings in every genre.
But, as Bob Dylan sang, the time’s they are a-changin’. And AFM has amended and expanded its recording agreement options for orchestras over the years to reflect new recording and distribution possibilities.
If an AFM orchestra is a signatory to the AFM’s Live Recording Agreement (LRA) or its Integrated Media Agreement (IMA), it is entitled to make a live recording CD under the terms of that agreement. The musicians will have to specifically approve the project. If they do, they make the recording for a low upfront payment to the musicians (based on a percentage of weekly scale) and a revenue share which varies from 50-60 percent of net revenue to the institution. This live recording structure dates back to 2006.
Live recordings for digital download only
If they make a live recording only for digital downloads (no CD or physical product), they may agree under certain conditions to do so with no upfront payment to musicians, but the revenue share in some circumstances will be based on gross rather than net.
Different scenarios, different payment structures
- For an SRLA recording, the musicians will get high SRLA scale wages up front, and modest SPF payments for a limited time on the back end.
- For a live recording under the SRLA or IMA, they will get a modest upfront payment, and a chance at a revenue share. Not all such projects generate revenue share payments, however, because they don’t all sell enough to cover net costs.
- For internet downloads only, musicians have had the right since around 2000 to agree to make them with no upfront payment and only a revenue share on the backend; in these cases, musicians may or may not ever see a payment, depending on how the download does.
Orchestras and the future of sound recordings
For most of the 20th century, the top orchestras in the United States – Boston, New York, Chicago, Philadelphia, St Louis, San Francisco, Cleveland, to name a few – were signed to recording contracts with the classical division of the major labels. As part of this relationship, orchestras frequently recorded repertoire pieces and, sometimes, new works. These were expensive endeavors for the orchestras and the major labels; a full orchestral recording would involve guaranteed payments to hundreds of players and a conductor, not to mention the costs of rehearsals, recording engineers, producers, and top notch recording facilities. In addition, the labels made payments into the Sound Recording Special Payments Fund, as described above.
That largely changed in 1990s as the major labels began to struggle with higher costs (including union scale payments) and meager sales. Philadelphia Orchestra lost its major label contract in 1995. Boston Symphony Orchestra was dropped in 2004.
Orchestras have drastically reduced the number of studio recordings they have made in the past ten years, but interesting alternatives have emerged. And, some of the bigger orchestras — including Boston Symphony Orchestra, Chicago Symphony Orchestra and New York Philharmonic — are recording live performances and self-releasing their own works. They are using their own websites, as well as iTunes, Amazon and classical retailers to sell or stream the music. Since these are recordings of live performances, we assume that the AFM players in these orchestras have agreed to a low upfront payment, in exchange for a revenue split on sales of the product in the future. A shared risk for a potential reward. Some of these recordings were made on the “low up-front payment plus revenue share” model, others at rates that scaled up to SRLA rates as sales thresholds were met. But they have in common a high degree of union-management cooperation and willingness to explore new models.
While they may rarely enter the recording studio again, a number of orchestras are working with players and the AFM to better leverage their assets, most importantly, their live performances. With the low cost of digital distribution, hurdles that would have made this kind of work impossible for an orchestra to do on its own are now disappearing.
We’d like to thank Patricia Polach, counsel for AFM, for describing the payment structures to us in fascinating detail.