The Business of Buyouts

The 2007 AFM Convention is over and the musicians’ union has re-elected the current President (Tom Lee). But the AFM President has a long way to go to heal the gaping chasm that has developed within the AFM between recording musicians, especially those in LA, and the rest of the union. There are major differences of opinion about which direction the union should go in terms of being competitive, offering buyouts (or not), and about union finances.

Composers are asked by the AFM to be “loyal” and hire AFM players only, but composers at all levels of the business record non-AFM routinely, in Seattle, London, Eastern Europe and elsewhere. But the reality is that film and television composers usually have no control over whether a project is recorded AFM or not, and more and more composing contracts contain legal language preventing the composer from using AFM recording agreements.

When composers do have influence in the decision, they must act according to what’s best for the music, not the AFM. That often means getting the most players for the budget allowed, and on small and medium budget projects that often means recording non-AFM.

If the AFM wants to recapture work that is being done overseas, it needs to listen to the production companies and offer competitive terms for small and medium budget projects so AFM players can do this work legally. Yes, that means a buyout contract in some cases, because that’s the only type of contract that many of these small and medium sized production companies will work under. These companies want to pay once for their music recording and not have to keep their books open for future potential payments to musicians, and the reality today is that most recording orchestras worldwide with the exception of the AFM offer what amounts to a buyout.

What’s more a higher hourly scale for these small jobs could benefit musicians more in the end, as many of these projects never generate future special payments for the musicians. Indeed, musicians could end up much better off getting the pension and insurance benefits from these jobs as union buyouts and investing the increased amount of scale payments into their own investment funds that could generate their own future payments. But that would require a change in thinking by the musicians from that of being employees where everything is provided by the employer, to being independent businesspeople who manage their own investments. And that kind of thinking can be viewed as quite alien to those who are used to working under the protective supervision of a union.

In reality, though, we’re all independent businesspeople, and the concept of taking care of your own business matters rather than leaving it to a protective organization like a union is one that is gaining momentum. I believe in order to stay relevant, unions are going to have to start considering the idea that new levels of independence for their members might be a good thing. The fraternal, protective nature of unions may always remain to some degree, but that’s no longer sufficient to inspire loyalty from either union members or those who employ union members.

Too often, unions see change as an inherently dangerous thing, and put themselves in the impossible position of trying to preserve historical business models that they no longer have the power or competitive position to force employers to accept. Instead of looking for new business models and progressive deals, they see a loss of past benefits as a “race to the bottom” and spend too much time looking backward, not forward.

With a lack of industrial leverage to force change and a globally competitive open marketplace, unions like the AFM need to look for new ways to promote the interests of their members and embrace the rapidly changing marketplace as an opportunity for progress and positive change, rather than a threat to the existing status quo. This may require the AFM to consider their members more as independent businesspeople, but also creates new opportunities for the AFM to deliver new benefits to its members such as financial and investment consulting, distribution, marketing and promotional assistance, and other services independent businesspeople need. In the end, musicians and composers will both benefit from a more contemporary, forward-looking and competitive AFM.

1 Comment

  • James McLean
    June 15, 2009 @ 5:30 am

    As with cars, once again the planet shows America how it should be done – and here’s another union with its head in the sand! Will you ever learn?

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