The American Federation of Musicians (AFM) claims that the majors signed a collective bargaining agreement in 1994, and further amendments over the next decade, in which it committed to paying AFM members 0.5% of all receipts from digital statutory and non-statutory music licenses – including audio streams, ‘non-permanent downloads’ and ringback tones – both in North America and abroad.
The AFM’s Pension Fund has now filed a lawsuit in New York claiming its independent auditors recently discovered that the majors have failed to make promised contributions in three areas: (i) from streaming receipts outside the US; (ii) from non-permanent downloads outside the US; and (iii) from sales of ringback tones in the US and abroad.
“The record companies should stop playing games about their streaming revenue and pay musicians and their pension fund every dime that is owed,” said Ray Hair, AFM International President. “Fairness and transparency are severely lacking in this business. We are changing that.”
We’ll probably see a lot more of this over the next several years as we continue to navigate our covered wagons through the wild west of the streaming economy. It’s common knowledge — almost to the point of being grudgingly accepted — that the majors (and many independents) practice fuzzy mathematics when it comes to bookkeeping. But this will get tougher to obscure as the exact science of calculating ones and zeroes connecting to a user’s device replaces hand-counting the number of CD units leaving on a truck from the distributor’s warehouse. Keeping the gatekeepers honest (Spotify, Pandora, etc) will be the key. They aren’t angels, but they don’t have as much of an incentive for smoke-and-mirrors as a record label does.