Record Companies Sued Over Pension Contributions

Several well-known music recording companies are named in a lawsuit tied to music streaming revenues and other sources of potential pension contributions.

The American Federation of Musicians and Employers’ Pension Fund (AFM Pension Fund) says it is suing Atlantic Recording Corporation, Hollywood Records, Sony Music Entertainment, Universal Music Group Recordings and Warner Brothers Records for failure to meet pension fund contribution obligations.

The suit states that the five recording companies “failed to make pension fund payments from foreign audio stream revenue and foreign and domestic ringback revenue.” Followers of the music industry will already be familiar with the issue of audio streaming revenues, which have surfaced time and again as music consumers migrate towards online streaming as a primary listening platform.

The complainants note the American Federation of Musicians of the United States and Canada (AFM) has had various contracts over the last 75 years “requiring the companies to share a portion of sales revenue with musicians.” Most of the revenue historically was from record sales and later CD sales, the complaint alleges, but in 1994, AFM and the recording companies entered into an agreement, subsequently renewed, requiring the companies to pay 0.5% of all receipts from digital transmissions including audio streaming, non-permanent downloads and ringbacks.

Ray Hair, AFM International President, suggests the record companies have not treated the pension funds with fairness or transparency in making these payments. 

“Last year independent auditors discovered that the recording companies had not made the required revenue payments from foreign audio streams, ringbacks, and foreign non-permanent downloads, Hair says. “Attempts to reconcile the issues outside of court have been ongoing for several months to no avail.”

The suit has been filed in a New York district court, according to AFM, and seeks “payment for all missing revenue owed the AFM Pension Fund, late payment penalties, interest, damages and legal costs.”

The full complaint is here.