The 3 A.M. Handshake: How the American Federation of Musicians and AMPTP Came to Terms on Streaming Residuals and AI Protections
The contract talks finally reached the handshake point at 3 a.m. PT on Feb. 23. But the real breakthrough in the negotiation between the American Federation of Musicians and Hollywood’s major studios came in the afternoon of Feb. 22 — after AFM president Tino Gagliardi called in reinforcements to the conference rooms at AMPTP headquarters, famously located on the former site of the Sherman Oaks Galleria.
“I was starting to do something rash,” Gagliardi told Variety. “When I was getting the signal that they weren’t going to budge, I contacted my negotiating committee to tell them we needed to prepare for a strike authorization vote. I got about 60 to 65 people in the room at the Galleria. It had an impact.”
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The sides had been facing an April 30 expiration of AFM’s existing agreement. The union had already granted the Alliance of Motion Picture and Television Producers multiple extensions of the prior contract. Gagliardi had made it clear there were would be no more extensions. The AFM has about 60,000 members in the U.S. and Canada. About 2,000 of those members work under the Basic Theatrical Motion Picture and Basic Television Motion Picture contracts. After last year’s long strikes by SAG-AFTRA and Writers Guild of America, the industry has been warily watching the AFM negotiations as a precursor to the AMPTP’s contract talks set to begin March 4 with IATSE and Hollywood Teamsters. AMPTP representatives declined to comment for this story.
For AFM, the biggest hurdle to overcome was getting AMPTP companies to grant musicians a residual payment for their work on scores and soundtracks for TV programs and movies produced for streaming platforms. The AFM contract’s lack of coverage for streaming originals became a big problem for musicians as streaming content became the dominant source of employment for musicians who focus on TV and film.
The movement that brought the sides together came when the AMPTP sweetened its offer. The studios initially offered to pay residuals that would kick in after a streaming original movie or TV program was sold to a “secondary market,” meaning after the rerun rights to a title were sold to a different platform. In streaming, however, those second-window deals can be few and far between because streamers typically hold on to library rights for years after a title’s debut.
“We did feel that musicians were being undervalued — our work was not being respected in the same way as the actors, writers and directors and that needed to change,” Gagliardi said. “We made it clear that we would do anything we needed to do to make that happen.”
After some arm wrestling across the table, the AMPTP moved to offer players residuals on the first-run airings (aka the “primary market”) that begins after an initial 26-week exhibition period. Morever, the AFM secured the “performance bonuses” along the lines of the 2023 contracts for the WGA, SAG-AFTRA and Directors Guild of America that generate additional payments on popular series that hit pre-determined viewership benchmarks.
“They did offer us secondary residuals but that was not going to be meaningful for us,” Gagliardi said. “They absolutely were very reticent to accept the idea of a fixed residual in a primary market.”
The other burning issue for AFM was to achieve protections for musicians against the threat of AI being used to replace human players on soundtracks and scores. Gagliardi would not reveal much about the specifics in the proposal but said it was similar in concept to the protections secured by SAG-AFTRA in November after a five-month strike.
“We don’t want our product being put into an AI engine to create a musical line or score from whole cloth,” Gagliardi said. “We don’t want a sax solo from one of our members being thrown into an AI engine to have something created artificially.” Gagliardi, who worked as a trumpet player in New York before becoming president of Broadway’s Local 802 and then international president of AFM in 2018, observed that while “musicians have been dealing with instrument replacement technology for years,” the current wave of generative AI tools present an unusually severe threat to the livelihoods of AFM members.
The level of disruption across the industry coupled with AI-fueled anxiety made for tense moments in the negotiations room. But in Gagliardi’s experience, the bargaining process this time around went more swiftly than he expected, with a deal reached after a dozen negotiating sessions held since January.
“For the AFM, these negotiations have always been a slog. To be able to accomplish what we needed to with 12 sessions is, in and of itself, a victory for us,” Gagliardi said. “It usually takes several months.”
Gagliardi credited AMPTP president Carol Lombardini with engaging in “give and take” that moved the needle for the union. Gagliardi, Lombardini and other key players worked all night Thursday and into Friday in person at AMPTP headquarters until the 3 a.m. accord was reached.
“The process itself I believe was more collaborative than it has been in the past,” Gagliardi said. “It was getting a little edgy…but I believe the companies came together to realize the importance of our contributions” to film and TV programs, he said. The AFM tentative agreement was clinched about a week after the AMPTP reached a deal with SAG-AFTRA covering animated films, without any fireworks.
“At the conclusion of the negotiations, Carol and I had a very pleasant exchange,” Gagliardi said. “We want to strengthen our relationship. It’s all about relationships.”
(Pictured: Tino Gagliardi, international president and chief negotiator for AFM, addresses a Writers Guild of America rally in Times Square in June 2023.)
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