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The Phonograph Record Labor Agreement – A Great Deal for Media Giants

By Pete Vriesenga
Published in the Denver Musician, Jan-Mar, 2004

Every day the music industry endures another revolution. New technologies facilitate music downloading and video swapping with as many as 250 million illegal song trades per week in the MP3 format, and yet, this same technology has enabled new marketing methods, allowing growth for small independents. Tower Records was the music retail giant of yesterday, and now they’ve filed for bankruptcy protection as Apple’s iTunes sold 19.2 million units in 2003 (surpassing physical singles) without ever opening a warehouse or talking to a customer. Last month Norah Jones’ second album, Feels Like Home (Blue Note – EMI) helped break a three-year industry slump by selling 1.7 million copies in three weeks.

What does this mean for professional musicians working in the recording industry, and how should the AFM respond? There’s no stopping consumer-driven technology, so how do we use it to our advantage? The AFM has made great advances by securing digital performance rights, and the RIAA is succeeding in their efforts to educate and protect against illegal infringement of copyrights. How can we respond to consumer demand, while at the same time shore-up the AFM’s defenses against downward economic pressures that harm the major recording centers? How can we unify AFM recording musicians to prepare for an uncertain future?

The “Phonograph Record Labor Agreement” (PRLA) has been the foundation of AFM recording policy since 1944, and is the AFM’s agreement with Warner Brothers, Atlantic Recording, Elektra Entertainment, Sony Music, Universal Music Group, Polygram, BMG and EMI Music. These major labels have negotiated with the AFM to establish all working conditions from session rates to mandated residual payments. This is great for the musicians who do this work, but it’s even better for the major labels because in recent years these negotiated terms of employment now apply to “the industry.” AFM Locals retain the right to establish rates for Demo and Limited Pressings Recordings (under 10,000 units sold); otherwise “the industry” is expected to be on par with the major labels.

Independent producers can and do sign as signatories to the PRLA, and others name third-party payroll services as the signatory so they can choose where and when to use the agreement. But the use of the agreement is largely confined to the major recording centers where much of that work continues to be lost to non-union or foreign production. Maybe it’s time we take a closer look at this agreement, if only because sixty years is a very long time in the music industry.

It was 1998, and the Colorado Symphony Orchestra was about to record an original soundtrack for a new fantasy film, Warriors of Virtue. The Law brothers, four Denver doctors produced the film. They wanted a full symphonic soundtrack because of their appreciation and support for the arts. They wanted the Colorado Symphony because they live and work in Denver. The only hitch: the Law’s refused to sign as a signatory to the PRLA, which is mandated by the AFM before such a recording can take place.

The logic of the agreement is that royalty payments are collected and distributed to musicians through the AFM’s “Special Payments Fund” when a film is successful. If the film is a box-office flop (as was Warriors of Virtue) it is unlikely that it will go to secondary markets and residual payments will not be made.

I contacted the attorney representing the Law’s to explain their obligation, as well as the mutual benefits of signing as a signatory to the PRLA. He was very familiar with the contents of the agreement, but his primary objections were the complex secondary market and assumption aspects of the agreement. Without wavering, he said he would not allow the Law brothers to enter into a 100-page contract that was bargained and refined over the course of many years by the major labels. The Law’s, by comparison, were already out on a limb after raising $12 million to produce the film. This was their first attempt at such and effort, so it was his responsibility to ensure the Law’s would not be bound, now or into the future, to an unfamiliar or overly restrictive contract.

AFM Symphonic Services advised that it was my obligation to prevent the recording from taking place. After much thought I chose not to interfere with the project, and quite frankly because I found myself agreeing with Law’s attorney. Why should a small, independent producer be forced into the same agreement that has been negotiated by and adapted for the needs of Warner Brothers?

The recording went as scheduled and I was then bracing for damage control. Within a matter of weeks word got out that the CSO “was open for business” and very soon the orchestra was presented with more than a dozen offers of non-union recording work. To their credit, the musicians elected not to follow the path of the Seattle Symphony by accepting this work, preferring instead to honor AFM agreements. But it was the unanimous view of the musicians that the AFM’s recording policies should be more accommodating for a first-time, independent producer.

Origins of the Phonograph Recording Labor Agreement

From 1912 and into the 1940’s, the Hollywood film industry was the subject of antitrust and restraint of trade suits from the federal government. Related negative press worked in the AFM’s favor during this period since musicians largely viewed the recording and film industry as a threat. In 1929 the AFM launched an extensive public relations campaign aimed at swaying opinion against the “dehumanizing entertainment of canned music.” By 1930 the AFM estimated that 22,000 theater jobs for musicians accompanying silent films had been lost to recorded music, while fewer than 200 jobs for musicians performing on soundtracks were created.

Finally in 1942 the AFM took serious action against the recording industry. Musicians who made phonograph records were “playing for their own funerals,” charged AFM President James C. Petrillo, who then called for a ban on all recording by AFM members. The only exceptions would be the making of “Victory Discs” or “V-Discs,” which were created by the War Department to boost the morale of US troops overseas. The recording ban was finally lifted when Decca signed with the AFM in September 1943, Capitol a month later, and finally RCA and Columbia in November of 1944.

By this time the recording industry was anxious to get back to business. The film industry was still under Federal scrutiny for anti-trust violations, so they were looking for an image makeover. Is it possible they agreed to complex and enticing union agreements as a means to maintain their stronghold in the industry? Eager to bargain, they agreed to establish the “Transcription Fund,” which would soon become the Music Performance Trust Fund (MPTF). The idea behind MPTF was to provide employment for thousands of musicians who were displaced by recordings. But it wasn’t long before many recording musicians viewed MPTF as little more than a payoff to AFM Locals. Is it possible the major labels had foreseen how the well-established system of AFM Locals throughout North America could then wage their trade battles for them, thus insulating them from federal scrutiny?

“Shutting down illegal filmscoring” was a common phrase in the AFM, and we all read about these efforts in the AFM’s International Musician, and sometimes even the local newspaper when there was a good turnout. Surely some of these efforts were justified, but hindsight is 20-20. With the exception of the motion picture and television strike of 1980, all of these actions were against independent producers – not the major labels. Press coverage of musicians claiming unfair treatment while combating questionable, new production companies served the interests of the major labels very well. As the public saw the issue, it was the musicians and the AFM beating on their new competition – not the deeply entrenched industry that was hiding under the perception of innocence.

Somehow I can’t help but to picture the top brass of the major labels gathering to watch this in celebration saying: “here’s a toast to the AFM … solidarity forever.”

One Size Fits All with Jingle Production

In 1982 the AFM, SAG and AFTRA were jointly objecting to the cut-rate recording practices of Tuesday Productions, which was a non-union jingle studio based in San Diego. Tuesday Productions sued AFTRA for antitrust violations and secondary boycott charges, meaning that the unions were wrongly targeting the studio when they should have gone after the producer. Tuesday Productions ultimately won the case, and because of severe secondary boycott laws Tuesday was awarded $10.5 million and AFTRA was forced into bankruptcy.

Fearing similar retaliation, the AFM rightfully backed off and negotiated a special rate for Tuesday productions in an effort to maintain a union presence. But Los Angeles studio musicians strongly objected to the special rate claiming that it would undermine their established scales. AFM President Victor Fuentealba defended the deal stating: “I don’t think that the agreement that was eventually signed adversely affected our negotiations with the industry…and although it was naturally raised by them [management] at certain points in the negotiations, we were able to restrict it in such a fashion that it did not impact on the national agreement. What we did was the best that could be done under the circumstances.”

Nonetheless, this would become the AFM’s last attempt at compromise as the Tuesday deal galvanized LA studio musicians in opposition against AFM involvement in recording negotiations. The Recording Musicians Association (RMA) seized on this momentum ultimately to become accepted as an official player conference at the 1989 AFM Convention. Consequently, RMA now has the power to establish regional and national recording policy, and the AFM president is fortunate to even be present at negotiations.

As it stands today, RMA writes the rules and we’re supposed to enforce them. All of our collective bargaining agreements contain a mandatory clause that states “the employer shall fulfill all conditions required by the appropriate agreement of the AFM.” This little clause would be a wonderful tool to put more money in our members’ pockets IF they had say in the matter, but we don’t have that right. The members of the Colorado Symphony Orchestra believe that AFM policies have to loosen up, but it’s impossible for me to represent that view. I’m pushing my luck to have AFM Symphonic Services bend the rules sufficiently with the Boulder Ballet to allow a videotape of the Sugarplum Fairies as a free keepsake to proud parents.

If it wasn’t fractionalizing the AFM this would be laughable. Imagine the CEO’s of Warner Brothers and Disney watching the Law brothers as they produce their first film, betting 2 to 1 odds that Local 20-623 would perform its rightful duty under AFM bylaws and do everything possible to stop them. I’ll bet they even raised the odds hoping that the Colorado Symphony would follow Seattle’s lead and decertify from the AFM.

Fortunately we didn’t produce the result they hoped for, but it’s only a matter of time before corporate CEO’s gather again to watch another AFM Local fight off their competition. And the best part of this game is that they have no need to fear reprisal from the government as they once did before the Phonograph Record Labor Agreement.

“Another toast…to the RMA”

Note: As of 2002 the Phonograph Record Labor Agreement has been officially renamed the “Sound Recording Labor Agreement.” This is important because it shows that the agreement is changing with the times by recognizing that the phonograph and phonograph records are no longer relevant in the industry.

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