Money Blues For Special Fund For Musicians Reflects Record Industry’s Downturn

More than 3,000 musicians are owed money that’s been collected on their behalf by the Sound Recording Special Payments Fund, which distributes annual supplemental wages to music makers. Among those owed money are Bob Dylan, Lady Gaga, Lionel Richie, Eric Clapton, Kanye West, The Who’s Roger Daltrey, the E Street Band’s Steven Van Zandt, actor-musician Johnny Depp, Booker T. Jones of Booker T. and the M.G.’s and all four members of U2.

The estates of many late rockers, bluesmen and jazz greats also have unclaimed money coming to them, including Jimi Hendrix, James Brown, Barry White, The Who’s Keith Moon and John Entwistle and saxaphonist John Coltrane. Read the full list here.

Established in 1964 by collective bargaining agreement between the record labels and the American Federation of Musicians, the fund’s contributions are based on revenue generated by the sale of music recordings, whether in the form of CDs, tapes, vinyl or digital downloads. The payments average about three cents per physical unit sold, and four-tenths of a penny per song downloaded.

The Sound Recording Special Payments Fund has distributed more than $112 million to musicians and their heirs since 2004, but contributions to the fund have been in a steep decline in recent years, mirroring the fortunes of the sagging record industry. The fund distributed more than $13.5 million to musicians and their heirs back in 2004 but only paid out $3.2 million last year – a precipitous 75% decline of more than $10 million that’s largely attributed to the way consumers pay for music, and the proliferation of online piracy.

As the fund’s administrator, V. Robert DiPaola, explained to participants in 2016, that year’s distribution of $3.2 million was down $1.4 million from the prior year as a result of “the continued decline in sales of CDs and permanent digital downloads of sound recordings as more and more consumers turn to streaming services, which do not generate contributions to the fund.”

He noted in 2012 that “sales of CDs have steadily declined for many years due to the transition from physical product to digital downloads and the proliferation of online piracy of sound recordings.” That year, he said, “Contributions received on sales of digital downloads were modestly higher, up 7% to $3.5 million, though not enough to replace the lower contributions from sales of CDs.”

Here are the distributions over the 14 years for which data is available from the fund’s annual reports:

• 2017: $3.2 million

• 2016: $3.2 million

• 2015: $4.6 million

• 2014: $6 million

• 2013: $6.1 million

• 2012: $7 million

• 2011: $6.5 million

• 2010: $8 million

• 2009: $9 million

• 2008: $11.9 million

• 2007: $11 million

• 2006: $10.4 million

• 2005: $12.4 million

• 2004: $13.5 million

The reports also show that far fewer musicians are receiving the payments today than in years past — 10,000 fewer last year than in 2004, down from some 25,000 to only 14,300. This shows the year-by-year decline in recipients:

• 2017: 14,300

• 2016: 14,200

• 2015: 14,500

• 2014: 15,500

• 2013: 16,100

• 2012: 17,100

• 2011: 18,200

• 2010: 18,700

• 2009: 19,400

• 2008: 20,600

• 2007: 22,400

• 2006: 22,840

• 2005: 24,850

• 2004: 25,000 (estimated)

Average payments to musicians are also getting smaller; last year, they were less than half of what they were in 2009.

• 2017: $223

• 2016: $225

• 2015: $317

• 2014: $387

• 2013: $379

• 2012: $409

• 2011: $357

• 2010: $428

• 2009: $464

• 2008: $578

• 2007: $491

• 2006: $455

• 2005: $499

• 2004: $540

And while the cost of administering the Fund has also gone down – by more than half since 2006 – as a percentage of contributions coming in, it’s actually been going up. Last year, nearly half the money contributed to the Fund was spent administering it.

Expenses Contributions Received % of Expenses to Contributions

2017: $2,413,000 $5,164,000 46.7%

2016: $2,239,000 $5,179,000 43.2%

2015: $2,758,000 $7,180,000 38.4%

2014: $2,908,000 $7,913,000 36.7%

2013: $2,850,000 $7,012,000 40.6%

2012: $3,664,000 $8,997,000 40.7%

2011: $3,578,000 $8,801,000 40.7%

2010: $3,622,000 $10,313,000 35.1%

2009: $3,876,000 $10,593,000 36.6%

2008: $3,922,000 $13,229,000 29.6%

2007: $4,288,000 $11,544,000 37.1%

2006: $4,813,000 $13,061,000 36.9%

2005: $5,204,000 $14,690,000 35.4%

2004: $6,293,000 $15,818,000 39.8%

Much of the expenses incurred involves identifying and locating musicians who are owed money. Last year, DiPaola wrote, “The fund was able to identify and locate musicians for over 97% of this year’s distribution,” but noted that “there are still over 3,000 musicians who have not claimed money owed them for one or more of the past three distribution years.”

After three years, the unclaimed monies are forfeited and go into the general pool to be reallocated to other musicians as part of the following year’s distribution. Unclaimed funds from the last three years total $474,000. On average, each unclaimed check is worth about $158, though many are considerably larger and many more are much smaller. The fund’s website does not say who is owed how much.

June 30 is the cutoff date for inclusion in this year’s program and for submissions of direct-deposit applications; changes of address must be reported no later than July 15, and this year’s disbursement will be made on August 1.

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