SAG-AFTRA, Labels Announce Online Payment Formulas

SAG-AFTRA and the recording industry, including Sony Music Entertainment, affiliates of Warner Music Group, Universal Music Group, Capitol Records LLC and Hollywood Records Inc., announced a tentative successor sound recordings agreement, which includes a payment formula for online streaming and non-permanent digital downloads that encompasses revenue from these types of exploitations generated outside the United States.

The successor collective bargaining agreement is the latest legacy contract negotiated since the merger of SAG and AFTRA in 2012 and will now be known as the SAG-AFTRA National Code of Fair Practice for Sound Recordings (or, the “Sound Recordings Code”). The code originated in 1951 and covers session singers, royalty artists, announcers, actors, comedians, narrators and sound effects artists who work on recordings in all new and traditional media and all music formats, as well as audiobooks, comedy albums and cast albums. The agreement covers work for the major record labels and sub-labels, as well as signatory independent record labels. The previous agreement expired Dec. 31, 2014. The new contract covers the period from Jan. 1, 2015, through and including Dec. 31, 2017.

“The Sound Recordings Code is one of SAG-AFTRA’s most important contracts, and I am very pleased that we have achieved groundbreaking changes in this first agreement post-merger,” said SAG-AFTRA National Vice President, Recording Artists Dan Navarro. “SAG-AFTRA and the labels recognize the need for change in order to deal with the challenges and opportunities presented by new economic models in the industry. This deal starts us down that road.”

Key terms of the agreement include:

• Groundbreaking inclusion in payment formulas of label revenue generated from worldwide exploitation of member work in online streaming services and as non-permanent digital downloads
• For the first time, payment of AFTRA Health and Retirement (H&R) contributions on a portion of domestic and foreign streaming payments
• Substantial restructuring of the compensation system for licensing of sound recordings, streamlining and making licensing more effective for the industry, while generating more revenue for performers
• Overall increase to minimums of 2 percent each year of the contract
• Improvement to H&R contributions, including: Increase of 0.25 percent in the basic H&R contribution rate effective Jan. 1, 2017; 12.5 percent increase in the cap on H&R contributions for groups of three or more performers; and substantial increase in cap on label payment for roster artist health insurance eligibility.

SAG-AFTRA’s 15-member negotiating committee was chaired by Navarro, with vice chairs Jon Joyce, Janice Pendarvis and Pat Alger. Stefanie Taub, Duncan Crabtree-Ireland and Randall Himes were co-lead negotiators for the union. The labels’ lead negotiators were Plum and Michael Lebowich of Proskauer Rose LLP.