Getting Educated on Streaming Rates

Volume 119, No. 4April, 2019

John Painting

A report released in September by the Recording Industry Association of America stated that for the first half of 2018, “streaming” accounted for 75 percent of the revenue generated by the United States music industry. The report noted that streaming itself is a “broad category,” and this 75 percent total includes subscription services, digital radio stations and ad-supported on-demand services.

After the Academy Awards this February, Steven Spielberg generated controversy with his opinion that films released on Netflix should not be eligible for Oscars, with a spokesperson clarifying that he “feels strongly about the difference between the streaming and theatrical situations.”

Meanwhile, an enormous number of social media applications have jumped into the live streaming game since Twitter developed Periscope in 2015, though YouTube had been experimenting with the technology as far back as 2009.

All of these technologies and media count as “streaming,” making the term so ubiquitous as to be almost meaningless without further specification. These days, every corner of the music industry is affected by streaming technology. So, you may wonder, how do AFM recording contracts handle this new playing field?

There are three main areas where the AFM addresses streaming: sound recording, film and television, and the capture of live events.

Historically in sound recordings, “residuals” are paid from the Special Payments Fund, which collects money from the signatory record labels based on a percentage of album sales. But when streaming effectively replaced direct sales in the music industry, the paradigm shifted. Now the labels also have a “streaming obligation,” which stipulates the percentages the labels must pay into a variety of funds from the revenues they make in streaming. This includes not only the Special Payments Fund, but also the Pension Fund, and the Music Performance Trust Fund.

In the world of film and television, streaming platforms are largely considered “secondary markets” for motion pictures and television programming originally made for the big screen or the little one. Of course, now the production of films and television series specifically for these platforms has turned the secondary market into the primary market. As it did with sound recordings, this change has led to a paradigm shift in the film market. The film and television agreements all have sideletters meant to address the production of material “made for new media.”

However, perhaps the least well understood corner of streaming is the capture of live engagements. This is a fast-growing part of the industry with a wide variety of business models governing it, where project-to-project usage differs wildly. To that end, the AFM has four types of non-symphonic, non-theatrical live engagement streaming contracts. They all must be filed in conjunction with a live engagement contract and they are all covered by individual letters of agreement between the employer and the AFM’s West Coast Office.

The “Live Streaming Agreement” is designed for events that are truly being streamed live, simultaneous to the event, with no content remaining available after it is completed. The side musician scale for this agreement is $100 per hour with a one-hour minimum.

The “On-Demand Streaming Agreement” allows an employer to stream content that remains available on demand after the performance has ended. The side musician scale for this is $197.20 per hour, again with a one-hour minimum. The initial scale wage covers six months of online availability on subscriber platforms. Subsequent six-month cycles require the payment of 6.6 percent aggregate of gross receipts to be distributed pro-rata.

When a live engagement is recorded and split into individual songs for either subscription services (like Apple Music) or ad-supported services (like VEVO,) this is covered by the “Edited Concert Streaming Agreement,” with wage scales akin to a location recording under the Sound Recording Labor Agreement.

All three of these agreements carry a 15.59 percent pension rate, inclusive of rehabilitation, as well as a $24 health benefits contribution per musician, per day of work. Doubling rates are as prescribed in the film agreements and music preparation rates are according to the provisions in the AFM Non-Standard Television Agreement.

Under the fourth streaming agreement, the “Promotional Streaming Agreement,” an employer is permitted to use up to three minutes of material recorded from a live engagement to post on social media to advertise for other upcoming performances at a scale wage equal to an additional 10 percent of the live engagement wage. 13.2 percent of those scale wages is also paid as a pension contribution, inclusive of rehabilitation.

Remember, these terms apply to non-symphonic engagements; producers of orchestral and symphonic content should contact the AFM’s Department of Symphonic Electronic Media. Capture of live theatrical performances for streaming services also falls under a separate style of agreement and such producers should contact our national office in these instances as well.

As you can see, the word “streaming” can mean a lot of things to a lot of people, depending on what corner of the music industry you come from. As technology advances, streaming may come to capture even more forms of new media, styles one can’t even imagine now. And you can bet that where there is a new technology to be exploited, music will be involved somehow and there’ll be an AFM agreement to cover it.