What To Know About Musician's Union Fees

Posted by Michael Welsh on March 22nd, 2021

Ok, let's take a look at musician's "new use" and "re-use" fees and how they relate to music used in your ad campaign. If you intend to license a song/track for your spot, you may be wondering about musician's union back end fees. The most common question that comes up regarding licensing a track recorded under a union contract for a commercial use, is this: My production is non-union, so do I have to pay musician's "new use" and "re-use" fees? 

The answer is yes, no or maybe! There are at least three scenarios with regard to your obligations to pay musician's fees, which is connected to the master license terms and conditions that the label will issue to you. 

Three Scenarios 

Scenario 1 

If you license a track that was recorded in the US and was recorded under an American Federation of Musicians (AFM) commercial contract — (and that contract can be found by the AFM!) — and the labels master license requires these payments as part of your use agreement, then you must pay regardless of the union status of your company or production.  All three of the major label conglomerates (Warner, Sony, and Universal) require AFM payments by the user/producer as a condition of the license agreement they issue. This by-passes the common plea of the producer: "We are a non-union house. Our production is non-union. We shouldn't have to pay." By signing Universals master license, for example, you agree to act as if your commercial spot is actually a union job, complete with all the rules and regulations that the union enforces. Many other indie labels contain similar language, though not all. As a producer, there may be some wiggle room to negotiate with indie labels on this issue, but only in a few instances. 

Tracks recorded outside the US may also be subject to "new use" and "re-use" payments if they were recorded in a country with a reciprocal agreement with the AFM (like Canada), or recorded under their own musicians union, for example, the MU (Musicians Union) in the United Kingdom. Again, this is all provided that the applicable union can locate the original session report(s) and present them as evidence of your payment obligations. 

Scenario 2 

If the track was recorded in the US but there is no contract, the producer is off the hook for payments to musicians. The AFM must provide the producer with evidence that there was in fact, an original session report. Obviously these may be difficult to locate on very old recordings - (before the 1970's for example) - and can sometimes takes the union representatives several weeks to conclude their investigation. It's important to start the process of locating a session report as soon as you begin negotiating synch and master rights. 

Scenario 3 

In some cases a particular track may have an original session report (regardless of country of origin), but it cannot be found within the timeline of your first broadcast airing and/or exhibition schedule. The unions retain the right to come back to the producer if and when a session report is found and demand payment. I have found that in most cases, if a session report isn't located within the first three week period of the request to the union, it probably doesn't exist. So one should allow at least that amount of time to determine whether or not you'll be responsible for payments. 

How Are Payments Calculated? 

This is a complex one. The first thing to be aware of is the number of players on the track you are interested in licensing. If the track includes a large orchestra, there will be commensurate fees. However, even if there were only a handful of musicians on your track, be aware of high-profile musicians who command substantial fees over minimum scale; that is, they are listed on the session report as double or triple scale, for example. The number of players, what they played, any doublings on instruments, how many sessions it took to complete the track, over-dubs, etc., will all be in the original session report(s).  It should be noted that by licensing the track, the producer is also responsible for payments specified under the Sound Recording Labor Agreement, of health and welfare benefits and other special funds, etc.  

The session report is then applied to the specifics of your broadcast/exhibition use of your commercial spot: Term, Territories, types of Media the spot will be shown in, and the size, type and scope of your Media Buy. With respect to payment, the term is calculated in increments of thirteen (13) weeks. Even if your spot only airs for a day or two, you'll be responsible for one (1) full thirteen (13) week period. All this will be considered and calculated by the union for a grand total of what you'll owe. 

Where Do I Start? 

Start with a comprehensive audio review of the track you are considering licensing, and ask these two basic questions: 1) Generally, approximately how many musicians are playing on the track? and 2) Are there high-profile (famous) musicians on the track? At this point, your music supervisor can determine a ball-park number of players and then get specifics from the union, once the session report is found. Aside from how many players, it is in the details regarding above-scale players, doublings, over-dubs, etc. that will help determine your total payment obligation. 

Costs and Budgeting 

Calculating musicians "new use" and "re-use" payments should be taken into consideration before any negotiation of the synch and master licenses have begun. Generally, the total paid to musicians will be substantially less than that of singers. Unfortunately, both talent (singer) and musician payments can sometimes become a horrific surprise to a producer who only budgeted for basic synch and master license fees.

Both vocal talent and musician's fees can end up costing more than what you might pay for the synch and master license combined, so it’s important to first know what kind of fee the vocal artist - ("Principal Vocalist" in SAG-AFTRA terminology) - will demand and to determine your obligation to the AFM musicians as soon as possible. Payment of vocal talent and musician union fees are strictly regulated by the unions and must be paid on schedule to avoid substantial penalties. 

It's important to make this reiteration from my last article: The producer needs to juggle four elements of licensing a track in a commercial use – each with a different price tag: first, publishing and master license fees, and then vocalists talent fees, and musician’s union fees, where applicable. Knowing what your payment obligations for both singers and musicians can be used as a critical negotiation tool for synch and master rights. For example, if the publishers and label understand that you have X amount of money for the entire licensing budget, you can present them with that amount against what is due to the unions if the track is licensed. In most cases they will reduce their license fees to accommodate your total budget. I like to start with the client's optimum budget, then get initial licensing quotes, and then calculate talent and musician costs, and then work backwards from there. After receiving the initial quotes from the licensors, and determining the talent/musician fees, I can go back to the label and publishers with a realistic and firm counter offer for the proposed use. Remember, a good negotiator must have a full understanding of the "hard" numbers first - especially those numbers that are not negotiable, like talent and musician fees - before attempting the final negotiation of the synch and master rights. 

When choosing a Music Supervisor for your commercial spot or campaign it is important to find a company that specializes in these unique aspects of music used in advertising, one who speaks the language of the advertising world, and can pull each legal and creative element together, on time and within your budget. 

Michael Welsh is founder/CEO of Michael Welsh Productions, Inc. -  a company specializing in music licensing and supervision for advertising,  for over 30 years. You can send your questions on related issues to info@michaelwelshprods.com. www.michaelwelshprods.com. 

For more information about Musicians Union Advertising visit our website https://www.michaelwelshprods.com/