"This Is an Extinction-Level Event": Musicians Fear for Livelihood Without Streaming Residuals

As TV's center of gravity pivots to direct-to-consumer platforms like Netflix and, soon, Disney+, a lack of residuals is having a huge impact on below-the-line workers who create the scores and instrumentals for programming.

The life of a studio musician in Los Angeles is becoming increasingly precarious, and the rapidly changing tech landscape may play a large role. The denial of streaming residuals — layered on top of the offshoring of large amounts of scoring work to London and Eastern Europe — has been a growing source of anger for musicians as Hollywood conglomerates make bets on direct-to-consumer platforms, with Disney, Comcast and WarnerMedia all launching efforts within the year.

And while singers (through their membership in SAG-AFTRA) receive residuals, instrumentalists are left out. “I can’t understand why residuals are OK for vocalists but not for violists,” Donald Foster, the interim Recording Musicians Association president, told The Hollywood Reporter while on lunch break from scoring a theme park ride. “It’s demeaning and it stings.”

Talks between the American Federation of Musicians and the Alliance of Motion Picture and Television Producers are scheduled to resume Friday amid enduring frustration among musicians that studios deny them streaming residuals that above-the-line unions achieved in 2014.

As television’s center of gravity begins to pivot decisively to made-for-streaming product, the lack of residuals for such programming becomes more and more urgent for musicians. “This is an extinction-level event,” says Marc Sazer, long active in AFM Local 47 and the RMA, which is a related organization. “Our ability to make a sustainable living is facing extinction.”

Musicians' residuals amount to about $85 million per year, according to the latest available annual report of the Film Musicians Secondary Market Fund, which processes most AFM residuals. And a typical studio musician makes 75 percent of his or her income from residuals, said an AFM representative.

As motion pictures and series are increasingly produced for streaming, a large portion of those overall figures may be at risk. Even now, musicians are but a drop in the bucket: Entertainment residuals amount to around $2.2 billion per year, and adding in actors' and musicians' commercials residuals brings the total to about $3 billion.

Meanwhile, a negotiation session between the parties on Monday produced no movement.

"The studios’ labor relations attorneys maintained their position from our last negotiations," the union stated in a #BandTogether update to members. "They went through a long explanation of why there just isn’t any money available for musicians in the made-for-streaming business. Musicians’ … consensus was that the AMPTP’s economic explanation was misleading and omitted the billions they will collect in subscription fees. It was ridiculous."

A smaller session, called a sidebar, was held Wednesday, but no readout was immediately available. The AMPTP declined to comment.

Advances in motion picture technology have been a threat to musicians' livelihoods since 20,000 or more cinema palace players lost their jobs in the years following the introduction of talkies. Vinyl, too, put many live players out of work, while enriching a few fortunate bands beyond imagination. At the height of its power in the 1940s, the AFM played a key role in achieving entertainment residuals, but that’s cold comfort for musicians today, who find their union treated more as an afterthought than a co-equal player with above-the-line guilds.

Nowhere is that more obvious than in the residuals system. For above-the-line unions, virtually every combination of media that a product is originally made for and is being reused in has a residuals formula. Pay TV product reused on basic cable? There’s a formula for that. Basic cable product reused on broadcast? It doesn’t happen often, but there’s a formula for that, too.

For above-the-line unions, the residuals system can be represented as a grid of brightly colored cells, each color representing a different type of formula. But for the AFM, most of the cells are gray: no residuals. And where musicians do receive residuals, they’re invariably a percentage of the license fee for reuse when product is moved over to a different medium, as the chart reflects and as a source familiar with the studios’ thinking emphasized.

That’s a problem with shows and movies for services like Netflix and impending competitors such as Disney+ and HBO Max, because there’s little or no use on a different medium. Product usually stays on streaming services indefinitely. For that reason, the above-the-line unions’ streaming residuals aren’t based on the license fee; instead, they are a form of so-called fixed residuals that’s calculated based on a table of dollar figures in the relevant contracts, then adjusted based on the platform’s subscriber base — big platforms pay more — and the age of the product (the residual declines year by year as the product ages). But, says the source familiar with studio thinking, the AFM has never shared in fixed residuals and the media companies don’t want to set a precedent by making such a major change now.

Of course, musicians argue, the pivot to streaming and direct-to-consumer subscription models is a major change itself that might warrant changes in musicians’ compensation as well — that is, if the studios care about maintaining a Los Angeles talent base in the profession.

“It doesn’t seem like the producers are willing to acknowledge the [musician’s] creativity,” says Foster, attempting to define the line between those who receive residuals and those who don’t. But, in fact, the lines have always depended more on bargaining leverage and historical fortuity than any principled distinction.

Cinematographers and production designers — IATSE members — are creative yet don’t receive residuals (though their pension and health plan does). Assistant directors and unit production managers tend to handle administrative tasks more than creative functions, yet they do receive (some) residuals since they’re Directors Guild of America members. Composers and lyricists don’t get residuals, nor even have a union, yet the musicians and singers who bring their work to life do. And animation writers get residuals when their work is covered by the Writers Guild of America, but not when it’s under The Animation Guild, a unit of IATSE.

In short, it’s a hodgepodge, and the challenge for musicians is to somehow surmount the hurdle of low bargaining power. Meanwhile, the DGA and other above-the-line unions achieved streaming residuals in 2014, improved them in 2017 and are known to be looking for further enhancements in upcoming bargaining that may start later this fall ahead of mid-2020 contract expirations.

“The labor relations representatives sent to negotiate this deal are not real decision-makers at these studios,” said the AFM’s #BandTogether update. “The firmness of their position likely reflects the fact that they haven’t been given the authority to grant us what we’re asking for.” Maybe. But the implication — that the real decision-makers will be willing to make a deal and set things right — might be wishful thinking for a union that struggles more and more to stay on the favorable side of the residuals line.