A Restructured MPTF Resulted in Pension, Film, TV, and Sound Recording Residuals

Part 2 of 2: Last month, my column discussed how former AFM President James Petrillo’s proposals to end two strikes against US recording companies—in 1942 and in 1948—led to the establishment of the Music Performance Trust Fund (MPTF).

This month, I will describe how MPTF became a royalty feature of other major Federation media agreements, and how it was eventually restructured to create the AFM US and Canadian pension funds and royalty and reuse funds that are attached to the Federation’s Sound Recording, Motion Picture Film, Television Film, and TV and Radio Commercial Announcements (jingle) agreements.

The settlement of the first strike in 1944 led to a 2.5% royalty obligation on the record labels’ gross revenue paid into a fund known as the Recording and Transcription Fund, which was located in the AFM’s treasury. Those payments accumulated $4.5 million through 1947 and were distributed on a per capita basis among all locals across the US and Canada for use in arranging admission-free public performances of live music.

The Taft-Hartley Act, passed by Congress in 1947, forbade employer payments to unions except for joint health and welfare funds and pension funds. It made the Federation’s trust fund illegal, as it was originally set up.

In January 1948, the Federation called another strike in response to the labels’ refusal to explore legally permissible ways to continue the trust fund. Lasting 11 months, the second strike was resolved when agreement was reached to establish the Music Performance Trust Fund as an independent entity, jointly overseen by the Federation and the recording industry.

The parent firms of RCA Victor and Columbia record labels—the National Broadcasting Company (NBC) and the Columbia Broadcasting System (CBS)—were the last holdouts in settling the 1944 strike. They were concerned that any such royalty arrangement would spread to their broadcast divisions. That turned out to be an accurate prophesy. In its first fiscal year ending June 30, 1950, revenue for the newly reconfigured MPTF was received solely from recording and transcription industries. Payouts to musicians that year totaled $900,000.

As 1952 dawned upon the phonograph, television, and motion picture industries, four distinct trust funds were consolidated into the MPTF, which received percentages of industry revenues as follows:

•3% from record sales

•5% from movie producers’ release of theatrical films to television

•5% from producers making films exclusively for television

•$100 per spot from producers of jingles in radio and television

By the end of the 1950s, with income multiplied by the three additional funds, annual disbursements would reach $6.325 million. Total funding from MPTF jobs over the entire decade of the 1950s would exceed $28 million.

In spring 1958, Petrillo announced his decision to forgo nomination as president at the forthcoming June AFM Convention in Philadelphia. He recommended the delegates choose Vice President Herman Kenin of Portland, Oregon, as his successor. Kenin was elected as the AFM’s fourth president in a landslide vote.

Kenin went to work bargaining successor industrywide agreements in the sound recording, motion picture film, television film, and jingle industries, with the prospect of reducing the employers’ trust fund obligations, in favor of developing pension benefits and residual payments that could supplement musicians’ income from original session work long after the recordings were performed.

In 1959, Kenin and the recording industry established the AFM and Employers’ Pension Welfare Fund (AFM-EPW Fund), which later became the AFM-EP Fund. The pension fund became a feature of the AFM’s successor Phonograph Agreement in 1959, with MPTF contributions reduced from 3% to 1%, and pension fund contributions established at 8%.

At first, the pension fund was available only to musicians doing record label sessions, but it was eventually incorporated into all Federation media and touring agreements and became available for inclusion in local collective bargaining agreements.

In January 1961, Kenin negotiated a new TV film and motion picture film scoring contract featuring a 12% raise in minimum scoring pay, residuals on TV theme use, and a historic new provision permitting the licensing of film to television for a 1 2/3% residual payment. Known as a “secondary market payment,” the new film-to-television residuals were paid to musicians who performed the original score through a new fund known today as the Film Musicians Secondary Market Fund. Pension fund obligations were set at 3%.

In the AFM’s successor television network agreement, pension contributions were set at 5% of scale. The new pension contribution and TV replay residual payment features were adopted in lieu of MPTF contributions.

Also in 1961, Kenin announced his intention to create a new residual fund for musicians who performed sessions for the record labels. The AFM and the recording industry agreed to establish the AFM Phonograph Record Special Payments Fund, where the 1% revenue-based MPTF obligation was split—50% to MPTF and 50% to the Special Payments Fund. It made an annual payment to each session musician based upon the cumulative number of session hours worked each year.

The $100 per jingle spot payment to MPTF was converted to a producer obligation to make a 13-week or 52-week cycle reuse payment to each musician who recorded the spot announcement.

And so it went. From the early 1960s onward, the Federation negotiated groundbreaking contract provisions introducing pension contributions, jingle 13- and 52-week use payments, film and TV film secondary market payments, phono residuals, and new use payments for sound recordings licensed into film and other media. These priceless fringe benefits improved the lives of musicians whose recordings continued to bring joy to the consumer long after the conclusion of production. It all began with the creation of MPTF in settlement of the two legendary strikes in 1944 and 1948.

The MPTF will celebrate its 75th anniversary in 2023. Its evolutionary relationship with AFM’s pension fund, Sound Recording Special Payments Fund, Film Secondary Markets Fund, and all other AFM ancillary residual funds should be celebrated as well.