Can Revenue Sharing Be A Bad Thing?

There’s an interesting mini-exchange going on in the “comments” section of the article from this week about the new Milwaukee Symphony Orchestra e-label. Although the exchange has been exclusively between musicians, I think it’s something managers should be taking note of…

In particular, one musician raised a reasonable question over whether or not the MSO project would be capable of generating enough money from digital downloads to make the project worthwhile. The commenter suggested the only reason the musicians at the MSO would consider the project is because they are in financial straits.

In response to that comment a member of the MSO who participated in the e-label deal as a musician representative pointed out that the musicians have already been compensated for the radio broadcast performances per their regular electronic broadcast remuneration. As such, the recordings were simply sitting on a shelf collecting dust, not generating any additional income. Therefore, it was a better deal for them to continue receiving their radio broadcast remuneration and receive the revenue sharing on top of those payments.

In fact, both individuals make very valid points.

Apparently, the first musician may not be aware that the MSO musicians had already negotiated compensation via a standard electronic music guarantee and thought their only remuneration for the digital recordings was the revenue sharing plan. If that were an accurate assessment of the MSO deal, then I think the musicians in that orchestra should be very concerned.

Why? Because revenue sharing on face value for a project without a sizeable portion of expenses subsidized just doesn’t stand much of a chance for actually making any money in this business. It’s like the board of directors telling the musicians and staff they’ll be paid via a percentage of the net ticket sales for a concert without any sponsors. “Check’s in the mail…”

I’ll wager there’s an orchestra manager out there right now (inspired by the thought of adding a few more bullet points to their resume) who is looking at the MSO deal and wondering how they can convince their musicians to participate in revenue-sharing-only deal for digitally distributed recordings. Hopefully, any musician group presented with such a plan will have enough sense to pick up a phone and call the people at the AFM Electronic Media Services Division and learn about the ins and outs of the AFM Internet Agreement. At the very least they should contact the musicians in Milwaukee and learn from their experiences and insight.

I also hope that orchestra managers out there would have enough sense to do exactly the same thing and contact the AFM Electronic Media Services Division to learn about the agreement as well as contact their peers in Milwaukee. The worst thing that could happen is if an orchestra manager is successful with taking a good idea and doing something terrible with it.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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3 thoughts on “Can Revenue Sharing Be A Bad Thing?”

  1. Both musicians have good points, as you say, but the individual who was skeptical of the revenue sharing arrangement has good reason – most orchestras never make any money (as in profit) on these projects, and essentially the musicians give away their compensation for the recordings (as opposed to the advances on royalties that they would get for a conventional recording under the a/v or phono agreement).

  2. “most orchestras never make any money (as in profit) on these projects, and essentially the musicians give away their compensation for the recordings (as opposed to the advances on royalties that they would get for a conventional recording under the a/v or phono agreement).”

    To reiterate: the Milwaukee deal provides for the musicians to get paid starting from the first sale. I don’t see how that’s “giving away compensation.” By the way, there is no revenue sharing or royalties under the phono agreement (now called the Sound Recording Labor Agreement) and, while there is revenue sharing under A/V, sales seldom reach the level at which it kicks in.

    It’s worth noting that most of the American orchestras recording under SRLA are doing so using electronic media guarantees, which essentially means that the musicians are seeing little or no compensation above and beyond their weekly salary.

  3. Robert – thanks for your comments, especially for clarifying the compensation under the “old” agreements.

    I also was not aware that you were compensated per sale, regardless of profit. Profit-sharing was what I was thinking of, and not the arrangement that you’ve worked out in Milwaukee.


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