Health Care for Recording Artists?

Recording artists may soon have improved health care coverage, should an historic agreement be ratified by members of the American Federation of Television and Radio Artists (AFTRA).

On Monday, September 29, the union's national board of directors unanimously approved a tentative agreement with the music industry's "Big Five" (BMG, EMI Music, Sony Music Entertainment, Universal Music Group, and Warner Music Group) and sent it on to the union's Health & Retirement Funds board of trustees and to the general membership for ratification. The agreement would make available health care insurance to all union-affiliated performing artists under exclusive contract to a recording label, for the duration of their contracts. It would also cover "session vocalists," according to an announcement released the following day. AFTRA president John Connolly called the agreement "a quantum leap forward for recording artists."

Under an old agreement that officially expired June 30, 2002, health care coverage was limited to artists whose annual royalty earnings reached or exceeded the union threshold of $10,000/year, after their first year with a label. The new deal will cover performers whose annual royalty income falls below that figure; recording labels will contribute to a fund for that purpose.

"We are thrilled that we were able to reach an agreement to provide these benefits, especially given the current economics of our business," stated Recording Industry Association of America (RIAA) chairman & CEO Mitch Bainwol. "AFTRA commends the recording industry for recognizing the importance of providing basic health care to the artists whose music fuels this business, and for working with AFTRA's negotiating committee to develop a breakthrough solution on this issue," Connolly said.

The four-year deal also provides a 3% per year increase in base session rates, added "contingent scale" payments for session performers whose recordings top 157,000 units in sales, and better pension terms for artists with yearly royalties above $120,000. Negotiators also laid the groundwork for improved sharing of information among artists, producers, engineers, and executives. AFTRA associate national executive director Kim A. Roberts called the deal "an agreement that both sides can be proud of." This past summer, the Screen Actors Guild narrowly voted down a proposed merger with 80,000-member AFTRA, an issue that is likely to be considered again.

In other music industry news, the International Federation of the Phonographic Industry (IFPI) announced October 1 that worldwide sales of recorded music dropped 10.9% during the first half of 2003, compared to the same period during the previous year. The London-based organization estimated that during the first six months of this year the total value of recorded music sold was $12.7 billion, compared with $14.3 billion in the first half of 2002.

On September 29, the RIAA reported that it had reached settlements with approximately 20% of the 261 people charged with online piracy earlier in the month. Of the 261 cases so far, 64 have agreed to settle. The trade organization has also accepted 838 affidavits under its "clean-slate program," in which file-sharers promise to cease and desist in exchange for amnesty.

The RIAA's board of directors has also voted to make SoundExchange, Inc. a "stand-alone entity," according to a September 30 announcement. Previously an unincorporated division of the RIAA, SoundExchange tracks recorded music broadcast on the Internet and collects and distributes royalties. Its new board of directors will consist of nine artists' representatives and nine from the recording industry. SoundExchange claims to have distributed almost $10 million in royalties to date.

Finally, beleaguered music retailer Wherehouse Entertainment, Inc. has been purchased by a joint venture led by Trans World Entertainment Corporation. The $41 million sale was approved September 29 by a Wilmington, DE bankruptcy court in charge of Wherehouse's Chapter 11 filing, its second in seven years. Prior to the purchase, Wherehouse had been aggressively shuttering its under-performing outlets and focusing its efforts on its best locations. The new owners plan to close 34 more stores and liquidate their inventories, keeping only 111 open, according to a September 30 item by Peg Brickley of Dow Jones Newswires. In its bankruptcy petition, Torrance, CA–based Wherehouse listed $222.5 million in debts and $228 million in assets. The retailer's reorganization plans foundered when no new source of financing could be found, Brickley reported.