Movies

Since the rise of digital music technology in the 1990s, royalties from online music have proved bountiful for star performers.

But back then, forward-thinking music industry executives and musicians helped make sure that non-featured performers on recordings, like session players and backup singers, could also share in digital music royalties. One of those income streams — the AFM & SAG-AFTRA Intellectual Property Rights Distribution (IPRD) Fund, which marks its 25th anniversary this year — reports paying out $650 million to date to such artists.

For the 12-month period ending March 31, 2021 — the most recent full year for which its finances are available — the nonprofit fund has distributed $57.2 million to eligible performers.

Most of the fund’s revenue comes from SoundExchange, which collects royalties for every song played on digital radio like Pandora, webcasters like iHeartRadio and satellite radio services like SiriusXM. Those royalties are split: 50% to the record label, 45% to the featured artist and 5% to non-featured performers.

Fund participants span a spectrum of musical skills and styles. They include vocalists such as Carmen Carter (who has recorded with Beyoncé, Céline Dion, Whitney Houston and Luis Miguel), Wendy Moten (Carrie Underwood, Buddy Guy, Cece Winans) and Dan Navarro (Dolly Parton, Julio Iglesias, Neil Young), as well as musicians like guitarist Michael Landau (Enrique Iglesias, Diana Ross, LeAnn Rimes), keyboardist Greg Phillinganes (Michael Jackson, Mariah Carey, Elvis Costello, Stevie Wonder) and drummer Abraham Laboriel Jr. (Paul McCartney, Sheryl Crow, Miley Cyrus), among many others.

But while collecting royalties from Sound Exchange is easy and many musicians are easy to find, tracking down every performer who should get a cut can be a challenge. Though the fund paid out royalties to some 27,000 non-featured musicians last year, many are still unaware of its existence — or that they might have royalties to be claimed, says fund CEO Stefanie Taub.

“The big thing for us is we really want to make sure that the non-featured performers are aware that we’re here and there is this money source for them,” says Taub, a 25-year AFTRA and SAG-AFTRA veteran who prior to leading the fund sat on its board of directors.

The SoundExchange royalties paid to labels and performers are the result of the Digital Performance Right in Sound Recording Act of 1995 and the Digital Millennium Copyright Act of 1998, which between them amended copyright law so that, among other things, digital and satellite radio services pay royalties for recorded music. (Terrestrial radio doesn’t make any payments to record labels and performers but pays royalties to songwriters and music publishers.)

As part of the revamped copyright law, AFM (American Federation of Musicians) was designated to be the agent to pay out half, or 2.5%, of the 5% due to non-featured musicians on songs played on digital and satellite radio, while AFTRA (American Federation of Television and Radio Artists) was designated to oversee the other half (2.5%) of the royalties for non-featured singers.

The two unions agreed to collaborate on a single administrator to collect and pay out the royalties. Thus, the AFM & SAG-AFTRA IPRD Fund was born.

“Back then, it made sense to create this fund so they didn’t waste money with duplicate efforts,” Taub says. “So it’s very unique that these two completely separate unions came together to create this fund.”

Stefanie Taub

Courtesy of AFM SAG-AFTRA Fund

How do you view this anniversary of the fund?

We’re very proud of the fact that we paid over a half-billion dollars to non-featured performers in our 25 years. We’re in a unique space because many people are aware of how featured artists — name artists on recordings — get paid for their music. But there’s not as much awareness that our fund exists and that it pays the non-featured performers. People really don’t know we exist, especially when we first started out. Back then, we were collecting a very small amount: under $100,000 a year. Nowadays, we collect more than $50 million a year. So that is something we really want to promote: This money is there for these performers, and we are here to pay it to them.

Does a musician need to be in the union to qualify for funds?

That’s a misconception. Even though the unions created this fund, their executives sit on the board, and our name includes the unions; the fund distributes to all performers without regard to union status. We’re required by law to distribute to everyone [regardless of] status.

Where does the Screen Actors Guild, which represents and pays actors, come into the picture? Are its funds blended into what you collect?

SAG represents mostly actors but also other performers in film and TV, [so] if a singer did a song in a film, that would be represented by SAG; if they do a record, they are represented by AFTRA. But the SAG funds are completely separate, and what we collect is completely separate from anything that the unions do on their own.

Your financial statement for the fiscal year ending March 31, 2021, shows that the fund collected $63.1 million in royalties. How much came from SoundExchange?

It fluctuates, but it has been around $50 million or more for [each] of the past five or six years.

Foreign royalties also flow into the fund. What’s the source of those monies?

They are due to copyright treaties and to reciprocal agreements with collection organizations in other countries — and those royalties consist of many different things, including what they call “private copying”; in some foreign countries, they collect a royalty on devices like iPhones and iPads and things like that. Some countries do pay the U.S. [royalties] on broadcast terrestrial radio and even [on] what they call “communication to the public,” like songs played in nightclubs and restaurants. Every country is a little bit different in what royalties they pay to the U.S.

So, percentagewise, what would you say the breakout is from SoundExchange versus the other sources of income?

I would say SoundExchange is about 80% of what we collect. But we’re growing in the international space every year, and we’re hoping to increase that as time goes on. We had a very good year last year. Our financials are not showing yet for that, but we collected over $25 million internationally last year.

Are there other challenges your organization faces in paying out royalties?

When we reach out to people [eligible for payments], some don’t believe us because no one has ever gotten a secondary income stream from their recordings. Of course, we need to verify their identity and we ask for certain information. And these days, everybody’s concerned about their privacy, so they think it’s a scam sometimes. But the more we can get our message out, the more that creates awareness, so [that] people actually do sign up for us.

How do you reach musicians who might be due money?

We have a whole department called artist relations, and their only job is to either take incoming inquiries or to actively search for folks where we’ve seen their names on credits but need to find them. We use all types of resources, whether it’s the internet, social media or other publicly available information. We also try to get other participants who have been paid to let their friends know about our fund.

A big question for funds like yours is, how much of what you collect do you match with eligible recipients and pay out every year?

Our current percentage is about 82% payout, and we are reducing the unmatched number every year.

And your administrative costs are about 14% of your revenue.

We have an obligation to make sure we’re doing the right thing with other people’s money. It’s not my money, so I always look at the most efficient way to get the job done so that as much of what we collect as possible can go out the door to the performers.

What if the album credits don’t specify who played on what song?

When we get the money from SoundExchange, we do our research on a track-by-track basis and by individuals. It’s very difficult because, depending particularly on the age of the recording — or where it was done — sometimes there’s no information at all. That’s why we really encourage people to also look at the list on our website of all the recordings that we have money for. If they make a claim on a recording, then we always require proof that shows they are on the recording. That proof could be a union contract, liner notes or something printed somewhere on the internet. And we cross-check multiple sources to make sure that everything’s matching.

What if the featured artist says, “Yeah, he played on my track”?

We accept that, too. Or often there might be other side musicians on the track who vouch for the third, and we will accept that.

How many titles do you research and pay out on?

In April 2023, the fund distributed royalties on 50,000 titles. And we’re increasing that every day. But it’s very time-consuming to research non-featured artists, especially now when there is often no printed [credits] because there is no physical recording. But there’s a current drive to get more metadata to be included in a lot of [digital] tracks.

It’s the record labels that should make sure songwriters, publishers, side musicians and singers are listed.

Yes, and they’re not as driven to make sure that the non-featured artists are getting credit.

There have been some recent grievances with the fund, including a suit over $45 million in undistributed funds and another complaint about a data purchase and service fee paid to the unions. What has happened with those complaints?

The former was settled in November 2020, and the latter was resolved in March 2022. We welcome the resolution of these matters so we can focus our resources on what we do best, which is putting money into artists’ pockets.

Are there any other messages you would like to get out?

Just to let people know that they should take a look at our website and make sure that if they’ve done any non-featured work on songs, they should sign up and create an account so that we can find them and pay them. That’s the whole reason we exist — to pay performers. We want to make sure that we’re creating that awareness.

This story originally appeared in the July 15, 2023, issue of Billboard.