What's the Special Payments Fund?

By Brian Dojack
Regina Musicians Association

I have taken an article written by the International Representative for Canada, Mr. Alan Willaert. Alan is a former touring musician who now works out of the AFM's Canadian office and is extremely knowledgeable about the recording industry. I must point out that the benefits he describes are available to AFM members only. If you want more information, you can contact me by phone (352-1337), fax (359-6558) or email (doj@sasktel.net). What follows is only one benefit of many, and is excerpted from Alan's article:

"I am always deeply disturbed by the fact that so many of our members record, and relatively few do so for a signatory, and therefore without a recording contract. Members pay good money to get their tunes recorded, pressed and packaged, with a view to obtaining a product they may sell off the stage or shop to major labels, MTV and MuchMusic, or perhaps just as a demo to promo the band's live performances. These members are missing out on three major benefits; protection of the tape; pension contributions and Special Payments, or SPF for short.

The players I talk to regard their band's recording as outside AFM jurisdiction; however, nothing could be further from the truth, both in terms of the International Bylaws and reality. These players are reluctant to file papers because they are afraid of paying work dues, or misunderstand the session rates. I implore you, if you are going to record, have a talk with your Local about the right way and the wrong way.

Let's briefly take an example. We have a self-contained band who is about to do a demo. (They already have a little side letter signed among themselves stating that no one is responsible for paying the others any session fees - they are going to split expenses and any future profits. This is advisable in any event, as bands break up, and not always amicably, and this puts to bed any future claims). Now in this case, somebody, likely the leader, must become a signatory to the main Agreement - the Phonograph Record Labour Agreement. This carries a one time fee of $100.00, payable to the Recording Industries Music Performance Trust Fund (or MPTF for short), which is a pre-payment against amounts that may be owed in the event that sales of any one product exceed 25,000 copies, at which time the signatory is required to remit .5% of sales to the Trust. Once somebody becomes a signatory, you may record as much product and file as many contracts as you wish. You WILL be responsible for the work dues, which in most Locals is 2 1/2% of scale.

Scale is roughly $300 (per man/per session) and one session allows for a maximum of 15 minutes of recorded product. Most bands record enough material for a CD, plus having a few extra tunes "in the can", will have enough material recorded to file in approximately 10 sessions. This means work dues of about $75 (per man), and the signatory is responsible to remit pension on everyone at 10% of scale, which means a contribution of $300 each. Now with pension, this comes out of one pocket and goes in the other, so to speak. It's still your money, and you will be a participant in one of the best paying pension plans in North America. But you're still stuck with paying the work dues - that's $75.00. What a bummer. But wait! What about the SPF - Special Payments?

When you file a contract, you become a participant for the next five (5) years. The current return, over those 5 years, is approximately 2/3 of the session fees. Therefore, the cheques from SPF for those 10 sessions will total - you got it - (ka-ching, ka-ching, ka-ching), roughly $2000.

If you do another CD, and file more B4 contracts the next year, the payments start to compound, and will continue for additional years. And by the way, the number of CDs or tapes that you have to sell to get your Special Payments? Zero. Your payments are based on the number of sessions, not sales. So why are you not filing contracts for all those basement DAT tapes? DUH. Talk to your Local officer, take advantage of the benefits which have been arranged on your behalf. This is YOUR AFM."

Now I don't know about you but this seems like a pretty good investment to me. Get in touch about what other benefits we have that will be to YOUR benefit.

Above, we pointed out a way in which you can benefit financially from the recording of your CD regardless of the number that you sell. Even better, this pool of money is created by the major record labels.

Before you balk at the idea of joining the union, keep in mind that

a) union dues are fully tax deductible and
b) becoming a "union band" does not mean you have to charge a set fee for every gig.
c) there are many other benefits besides the SPF - including pension, medical/dental, insurance, road coverage, etc.

What exactly is the Special Payments Fund (SPF)?

This fund is created from the sales of major label recordings (every label is required by law to contribute a certain amount), and this pool is distributed to musicians like yourself on the basis of "Sessions Played" (not number of albums sold).

The Money You Put In

These are the rates used for Limited Pressings (2000 units or less), which is what most indie bands manufacture. To access the SPF, you have to:

a) fill out and file a contract
b) use standard union rates to pay your players. The standard "session" rate is $285.47 per player, and the average number of sessions required for an album is 10. Yes, in most indie bands you don't pay yourselves for the recording sessions because you are all paying for the costs of the project. But check out this example.

Costs for an album

4 Players @ $285.47/session x 10 sessions = $11,418.80

Union Dues for 4 players = $480
Signatory Fee $100
Work dues @ 2.5% = $285.47
Pension contribution @ 10% $1141.88

Upfront outlay $1907.35 for 4 members
($501.84 each)

What You Get Back

The union and work dues are tax deductible (assuming you pay income tax). The pension contribution is in your name. So technically, this money will return to you. Now using the SPF, you will each receive cheques totalling roughly $2000 over the next five years. The first payment is the largest, and then they drop by 20% per year (unless of course you do another album under the SPF - that will increase your pool again).

Again keep in mind that you are paid on the basis of sessions, not sales. If you sell NO albums whatsoever you still receive the same SPF payments. Think of it as a short-term, no-risk financial investment.

The SPF is just one benefit that the union has bargained for on behalf of musicians, so take advantage of it!