RMALA

Buyouts

There has been a lot of talk about the subject of buyouts, and how might they impact our recording community. This divisive issue deserves a closer look.

A buyout means allowing an employer to "buy out" certain intellectual property rights by paying more for those rights up front. Here's how it works:

Say it costs xx dollars an hour to record a film score. Once the score is recorded, a buyout would allow the employer to exploit that music for profit in a commercial, a pop record, or a tv show theme. The intellectual property rights that are built into our contracts currently require that the employer pay for those additional uses. A buyout allows the employer unlimited use of the the music, forever.

Although this sounds like a simple solution to problems of unwieldy contracts, what effect does a buyout have on our community?

It makes the upfront costs higher per musician.
It puts musicians out of work by precluding additional original session employment.
Every time you add one dollar to upfront costs, fewer musicians are hired.
Let's say that again: WITH BUYOUTS, FEWER MUSICIANS ARE HIRED.
This results in lower employment for musicians as a community, fewer pension contributions and health insurance contributions. Ironically, many call buyouts more democratic, but the end result would be fewer people working for more money up front. When looked at from this perspective, buyouts are an elitist policy.

Some in our union are calling for "buyouts" with low wages . The argument for the recently proposed AFM buyout agreements by its advocates is to compete with non-AFM towns like Seattle, London or Prague. But lower pay - without new use protections and residuals - would result in substandard wages that couldn't support musicians in cities like New York, San Francisco or Los Angeles.

It is interesting to note that in this highly competitive global market, the motion picture industry is the one area in which the AFM has the most successful contract, in which the greatest percentage of work is done under union contracts by AFM members. In fact, there has been an increasing number of union contracts. This is attributable to the fact that motion picture agreements offer tiers of full budget, low budget and low low budget agreements - all of which have residuals attached to the back end. This is in line with industry standards - this is the way all other entertainment guilds' agreements are structured.

The trend in movie budgeting over the past several years has been to low-ball post production budgets in order to get financing. Thus, almost every project is in a budget crunch by the time it reaches post-production, and music is unfortunately at the tail end of post-production. Producers are out of time and money when the composer starts to work.

Contractors, who present budgets to producers, indicate that up front costs serve as the reason for scoring venue decisions, NOT back-end obligations. If the project being scored also employs SAG, WGA, DGA, IATSE talent, the musicians' residual consideration is peanuts by comparison - literally pennies on the dollar. These minimal residual expenses are passed onto the distributor; by delaying compensation, the project becomes feasible on a tight up front budget.

In order to finance a film project, the company pays just about everybody involved too little money up front. Whether it's big stars, middle class actors, writers, directors, cinematographers, grips; they all take low pay up front - with the promise of residuals if and only if the project pays off. By keeping upfront costs low, we compete successfully. By keeping upfront costs low but getting residuals, we ensure appropriate compensation as well as continued employment for our AFM community of musicians. Actors, writers, directors, grips, carpenters, costumers, and cinematographers all work with the same business model of "delayed compensation" in the form of residuals.

Residuals help ensure maximum employment for the maximum number of people.

The facts:

AFM share of the film scoring market is increasing, having broken records the last two years
A residuals based system that we are able to compete in the motion picture market while creating a full time livelihood for film musicians.
We are luring more foreign production to score here
Our talented union musicians prefer to stay at home (not in Seattle, or Prague)
By keeping costs down, we put more people to work who get health care, pension and residuals. (This is not 'elitist,' it's populist.)
The growth of the FMSMF, in spite of industry downward trends, is due entirely to the success of the different tiers of AFM Low Budget scales. Check your own statement for the number of LB titles - some of these projects might not have been scored under AFM agreements without a LB contract.

Knowledge is Power. Stay tuned for more knowledge!