Sound Recording Guidelines

Background and Definitions

Authority

The AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund (“Fund”) is a non- profit Trust organized under the law of New York and tax-exempt pursuant to Section 501(c)(6) of the Internal Revenue Code for the purpose receiving and distributing royalties or remuneration to artists in accordance with the US Copyright Act and such agreements for receipt and distribution of remuneration as are entered into by AFM and SAG-AFTRA with the relevant collecting societies, rights organizations or other appropriate entities. It collects and distributes the following types of royalties:
1. Audio Home Recording Act of 1992 (“AHRA”) – Independent Administrator for Non-featured Performer Royalties. (a) Pursuant to 17 U.S.C. § 1006(b)(1), the interested copyright parties and the American Federation of Musicians (“AFM”) have appointed the Fund as the Independent Administrator to distribute AHRA royalties to non-featured musicians who have performed on sound recordings distributed in the United States. (b) Pursuant to 17 U.S.C. § 1006(b)(1), the interested copyright parties and the American Federation of Television and Radio Artists (“AFTRA”) (currently and hereinafter, the Screen Actors’ Guild – American Federation of Television and Radio Artists (“SAG-AFTRA”)) have appointed the Fund as the Independent Administrator to distribute AHRA royalties to non-featured vocalists who have performed on sound recordings distributed in the United States. (c) Pursuant to 17 U.S.C. § 1006(b)(1), the Fund distributes AHRA royalties to non-featured performers whether or not they are members of the AFM or SAG-AFTRA.
2. Digital Performance Right in Sound Recordings Act of 1995 and Digital Millennium Copyright Act of 1998 (together, “DPRA”) – Independent Administrator for Non-featured Performer Royalties. (a) Pursuant to 17 U.S.C. § 114(g)(2)(B), the copyright owners in sound recordings and the AFM have appointed the Fund as the Independent Administrator to distribute Digital Performance Right in Sound Recordings (“DPRA”) royalties to non-featured musicians who have performed on sound recordings. (b) Pursuant to 17 U.S.C. § 114(g)(2)(C), the copyright owners in sound recordings and SAG-AFTRA have appointed the Fund as the Independent Administrator to distribute Digital Performance Right in Sound Recordings (“DPRA”) royalties to non-featured musicians who have performed on sound recordings. (c) Pursuant to 17 U.S.C. § 114(g)(2)(B) and (C), the Fund distributes DPRA royalties to non-featured performers whether or not they are members of the AFM or SAG-AFTRA.
Royalty Source
1. AHRA. In accordance with the procedures established by the Copyright Royalty Judges, the Fund shall file claims for the AHRA royalties allocated each calendar year pursuant to 17 U.S.C. § 1006(b)(1) to non-featured musicians and non-featured vocalists who have performed on sound recordings distributed in the United States. The calendar year for which royalties are received shall be the AHRA Source Year.
2. DPRA. Pursuant to 17 U.S.C. § 114(G)(2)(B) and (C), the Fund shall receive from SoundExchange (or other collective designated by the Copyright Royalty Judges) the share of digital performance royalties allocated to non-featured musicians and non-featured vocalists who have performed on sound recordings. The calendar year for which royalties are received shall be the DPRA Source Year.
Musicians’ and Vocalists’ Sub-Funds
1. AHRA. In accordance with the provisions of 17 U.S.C. § 1006(b)(1), the share of AHRA Source Year royalties allocated to non-featured musicians shall be known as the Musicians’ AHRA Subfund for that Source Year, and the share of AHRA Source Year royalties allocated to non-featured vocalists shall be known as the Vocalists’ AHRA Subfund for that Source Year.
2. DPRA. In accordance with the provisions of 17 U.S.C. § 114(G)(2)(B), the share of DPRA Source Year royalties allocated to non-featured musicians shall be known as the Musicians’ DPRA Subfund for that Source Year, and pursuant to 17 U.S.C. § 114(G)(2)(C), the share of DPRA Source Year royalties allocated to non-featured vocalists shall be known as the Vocalists’ DPRA Subfund for that Source Year.
3. The Musicians’ AHRA Subfund, Vocalists’ AHRA Subfund, Musicians’ DPRA Subfund and Vocalists’ DPRA Subfund for each Source Year shall be accounted for separately from each other and from any other royalties administered by the Fund.

Methodology

Method to Determine Sound Recordings List
1. AHRA. For the purposes of composing the Distribution List for any AHRA Source Year, the Fund shall consider the sound recordings reported by SoundScan as sold in the United States during the AHRA Source Year to be the sound recordings distributed in the United States. The Fund shall rely on the SoundScan sales rankings for tracks.
2. DPRA. For the purposes of composing the Distribution List for any DPRA Source Year, the Fund shall rely on the data provided by SoundExchange showing the digital royalties attributed to sound recording performances in the Source Year pursuant to the Section 114 statutory license for digital performances (“DPRA Royalties Report”).
Method to Determine Distribution List for each Source Year
1. AHRA. It is the goal of the Fund to distribute the AHRA royalties received for each Source Year to as many non-featured musicians and non-featured vocalists as possible without issuing checks for de minimis amounts. Due to the fact that the non-featured performers’ share of AHRA royalties has been quite low in the past and is expected to remain quite low for the foreseeable future, the Fund is only able to make distributions on a limited number of sound recordings for each AHRA Source Year. Therefore, for each AHRA Source Year, the Distribution List shall include a minimum of the top 100 SoundScan ranked recordings. At the CEO’s discretion, the Distribution List for an AHRA Source Year may be increased to a maximum of the top 250 SoundScan ranked recordings. Approval of the Trustees shall be required for any Distribution List that does not meet the 100-title minimum or exceeds the 250-title maximum. The Trustees shall review this policy no less frequently than every three years.
2. DPRA. It is the goal of the Fund to distribute the DPRA royalties received for each Source Year to as many non-featured musicians and non-featured vocalists as possible without issuing checks for de minimis amounts. Due to the fact that the number of sound recordings on the DPRA Royalties Report for each Source Year is extraordinarily large in relation to the amount of the royalties allocated to non-featured performers pursuant to 17 U.S.C. § 114(G)(2)(B) and (C), the Fund is unable to make distributions on every sound recording on the DPRA Royalties Report for each DPRA Source Year. Therefore, based on current Fund resources, for each DPRA Source Year, the Distribution List shall include a minimum of the top 25,000 unique Sound Recording titles. At the CEO’s discretion, the Distribution List for DPRA Source Year may be increased to a maximum of the top 50,000 unique Sound Recording titles if the resources are available to warrant such an increase. Approval of the Trustees shall be required for any Distribution List that does not meet the 25,000-title minimum or exceeds the 50,000-title maximum. The Trustees shall review this policy no less frequently than every three years.
3. Distribution List. The application of the above steps shall result in the AHRA and DPRA Distribution Lists for the applicable Source Year. The respective Vocalist and Musician Subfunds shall be separately distributed to the same AHRA and DPRA Distribution Lists for the applicable Source Year.
Method to Determine Royalty Share of Each Sound Recording on the Distribution List.

Each sound recording on the Distribution List for a Subfund shall be entitled to a pro-rata share for that Source Year and Subfund. A sound recording’s pro-rata share shall be determined by dividing that sound recording’s percentage market share by the cumulative percentage market share for the sound recordings on the Distribution List: Sound Recording % market share / Cumulative % market share = Sound Recording Pro-rata Share. If a sound recording on a Distribution List has no non-featured performers, its pro-rata royalty share will be allocated to the remaining sound recordings on that Distribution List, on a pro-rata basis.
Method to Determine Royalty Share of Each Non-featured Performer on a Sound Recording.

The amount to be distributed to each non-featured performer on a sound recording shall be determined by dividing the royalty share for that sound recording by the number of non-featured musicians (in the case of the Musicians’ Subfund) or by the number of non-featured vocalists (in the case of the Vocalists’ Subfund) identified on the recording.

Distributions

Timing of Distributions
1. Annual Distributions. At least once per calendar year, the Fund shall distribute AHRA and DPRA royalties. In order to achieve an efficient scale of operation, a calendar year distribution may include royalties from one or more AHRA Source Years, one or more DPRA Source Years, and one or more other royalty sources administered by the Fund (“Annual Distribution”).
2. Partial Distributions of Source Year Royalties. The Fund in its discretion may conduct a partial distribution for an AHRA Source Year and/or a DPRA Source Year on recordings for which it has completed (or partially completed) the identification of non-featured performers, while continuing to research the identity of non-featured performers on those recordings and on remaining recordings for that Source Year for subsequent distribution.
3. Supplemental Distributions. In addition to each Annual Distribution, the Fund may make, in its discretion, additional supplemental distributions when it determines such distributions to be practical or feasible.
Omissions Fund and Omissions Distributions

Prior to each distribution, the Fund shall withhold a sum not to exceed 1.5% of the distributable amount, for the purposes (i) of resolving disputes, and (ii) correcting errors and/or omissions from any prior regular or supplemental distribution of the royalties for that calendar year. Such withheld sums shall be known as the Omissions Fund. This guideline goes into effect with the 2018 source year.
1. Omissions Claims. Within three years following a sound recording’s first publication on a Covered Sound Recordings List, a performer may submit a claim to have performed on that sound recording. After the close of the three-year period for claims, any such claim shall be extinguished, and any remaining Omissions Fund shall be distributed on a pro-rata basis to the performers who received royalties in the relevant Annual Distribution.
2. Omissions Distributions. The Fund may, in its discretion, make omission distributions concurrently with an Annual Distribution or at such other times that it determines to be practical or feasible.
Administrative Expenses.

The Fund shall deduct administrative expenses from the funds to be distributed prior to distribution. Administrative expenses may include, but shall not be limited to, costs of staff, administration, services, distribution costs or other fees at the discretion of the Trustees.
Non-featured Performer.

A non-featured musician or non-featured vocalist (together, “non-featured performer”) for purposes of the Fund’s AHRA and DPRA distributions is a musician (including music preparation personnel) or vocalist who is not identified most prominently in print on, or otherwise in connection with, the sound recording actually being performed, for which the Fund is making a distribution.
Identification and Location of Non-featured Performers.

It is the goal of the Fund to identify and locate the greatest possible number of non-featured performers who performed on each sound recording upon which it is distributing royalties, consistent with effecting fair and efficient distributions. The Fund shall use the following procedures to identify and locate non-featured performers on sound recordings.
1. Non-featured Performer Database. The Fund shall maintain a database of sound recordings as to which it has identified non-featured performers in accordance with the following procedures. That database shall include all contact information obtained by the Fund for identified performers.
2. Information Available to the Fund. The Fund, in its discretion, may rely on information available to it, including session reports and information provided by the unions, record labels, producers, project coordinators, managers and contractors, as well as research databases such as the Social Security Administration Database and Lexis-Nexis, to identify and locate non-featured performers on sound recordings.
3. Information Available to the Public. The Fund, in its discretion, may rely on information available to the public (e.g., liner notes and on-line services such as All Music Guide, Discogs and other general, genre-specific, band-specific and/or performer-specific websites and social media) to identify and locate non-featured performers on sound recordings.
4. Information Submitted by Non-featured Performers. The Fund, in its discretion, may rely on information provided by a performer who claims to have performed on a sound recording. The Fund shall have the authority to determine the validity of a non-featured performer’s claim.
Website and Outreach
1. Website. The Fund shall maintain a website to provide distribution information and performer access for inquiries and related matters. In addition, the Fund shall publish regular notices or advertisements in various trade publications informing non-featured performers of possible payments from the Fund, and directing them to the website and/or the Fund for further information.
2. Covered Sound Recordings List. Annually, the Fund will post a list of sound recordings upon which it has distributed royalties in the calendar year (“Covered Sound Recording List”). For each sound recording title, the Covered Sound Recording List will: (a) identify the non-featured performers who have been credited with performing on that sound recording; (b) enable such credited non- featured performers to submit contact or other information to the Fund; and (c) enable omitted non-featured performers to submit a claim to be credited for performing on the recording. Each Covered Sound Recording List shall remain posted on the website for three years from the date of the initial posting to enable performers to submit contact or other information to the Fund and/or make claims for credit on the recording.
3. Unclaimed Royalties List. In addition to the Covered Sound Recording List, the Fund shall post a list of non-featured performers who have been identified as having performed on a sound recording for which a distribution has been made, but for whom the Fund has insufficient contact or other information to process a royalty payment, or from whom a check has been returned due to an incorrect address, in order to facilitate both the Fund’s efforts to locate those performers and the performers’ ability to provide contact and other necessary information to the Fund.
4. Outreach The Fund, in its discretion, may take additional steps to inform non-featured performers of possible payments from the Fund, including attending music industry conferences and trade shows, serving as an exhibitor and/or panelist at industry events, engaging in social media posting, and other appropriate outreach.
Unclaimed Royalties.

No non-featured performer has a claim to any AHRA or DPRA royalties until he or she has been identified as having performed on a sound recording for which an AHRA or DPRA distribution has been (or is about to be) made in an Annual Distribution. In the event that a non- featured performer has been identified as a performer on such a sound recording, but the Fund has been unable to obtain sufficient contact or other information to process his or her royalty payment in the Annual Distribution, or in the event that the Fund has issued a check to that performer in the Annual Distribution but the check is returned or remains uncashed, the royalties allocated to that performer in that Annual Distribution shall be considered unclaimed royalties. Unclaimed royalties shall be held for a period of three (3) years from the date of the relevant Annual Distribution. During that period, the Fund will continue to seek sufficient contact or other information that will enable it to process a royalty payment, including via the posting of the Covered Sound Recording List and the Unclaimed Royalties List. At the end of the three-year period from the Annual Distribution, the non-featured performer’s claim to those royalties shall be extinguished, and the royalties shall be distributed on a pro-rata basis to the performers who received royalties in the relevant Annual Distribution. The application of any State law (including common law) concerning escheatment or abandoned property, or any analogous provision, that might otherwise apply, is superseded by section 114(g)(7) of the US Copyright Act.

Payments

Participants

All payments issued by the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund to Participants shall be issued as follows:
1. Individual Participant. Payment shall be issued in the name of the Participant only.
2. Participant’s Corporation. Payment shall be issued to a US corporation in which the Participant holds 50% or more ownership interest, as directed by the Participant in an appropriately authorized Letter of Direction.
Foreign Collective Societies.

The Fund may, in its discretion, make payments to foreign societies, on behalf of performers represented by such societies, with whom the Fund has negotiated an agreement.
Beneficiaries.

If a deceased performer is entitled to a distribution of royalties under these Distribution Guidelines, The Fund shall pay royalties due to a deceased performer to the performer’s successors only in accordance with the following provisions.
1. Where the performer’s or successor’s date of death is on or after November 1, 2014: Any person(s) claiming the right to receive the royalties must file documents with the Fund that demonstrate the right to receive such payments under the law of the state in which the decedent had his or her legal residence at the time of death. The Fund shall provide a Claimant Questionnaire and Application to assist claimants in filing such claims. The Fund’s website shall list the performers for whom the Fund has payments, in order to enable potential claimants to contact the Fund.
2. Where the performer’s or successor’s date of death is prior to November 1, 2014: If a performer or successor died prior to November 1, 2014, and had previously filed a beneficiary designation card with the Fund, the Fund will pay his or her royalties to the beneficiary(ies) named on the beneficiary designation card on file with the Fund. Where no beneficiary designation card is on file with the Fund, a person claiming the right to receive the royalties must satisfy the claim requirements set forth in 1. above.
Tax Identification
1. US Residents. The Fund shall not make a distribution to any Participant, except as provided herein, who does not possess a valid Tax Identification Number (TIN), which may be any of the following:
  1. Social Security Number “SSN”
  2. Employer Identification Number “EIN”
  3. Individual Taxpayer Identification Number “ITIN”
  4. Taxpayer Identification Number for Pending U.S. Adoptions “ATIN”
2. Non-US Residents. When a foreign withholding tax obligation exists with respect to a distribution to a foreign resident, the Fund withholds the default IRS statutory amount (currently 30%) unless the Fund is provided with a fully completed Form W-8BEN, in which case the Fund applies the provisions in accordance with the applicable treaty of the country in which the participant resides. Foreign residents should consult their tax professional with any questions or to receive advice with respect to these payments. Information on Form W8-BEN may be found at: https://www.irs.gov/pub/irs-pdf/iw8ben.pdf.
3. Qualified Intermediary Status. Notwithstanding the foregoing, a collecting society may elect to obtain Qualified Intermediary status and assume U.S. tax reporting obligations in lieu of having distributions be subject to statutory withholding deductions.
Minimum Threshold for Payment
1. Direct Deposit. Notwithstanding anything contained in the paragraph below, the Fund will generate payments to a performer or beneficiary who is entitled to receive a payment of any amount, with no minimum threshold required, where the performer or beneficiary has elected the direct deposit option.
2. Paper Checks. In order to achieve an efficient scale of operation, the Fund will not generate a check or a royalty statement to an individual performer or beneficiary who is not entitled to receive $50.00 or more (“minimum threshold”). The Fund will establish a carry-over procedure and will issue a check and royalty statement to that individual when the minimum threshold has been cumulatively satisfied. In determining whether the cumulative minimum threshold is met, the Fund will aggregate any sums from distinct revenue sources subject to a distribution from the Fund. If the cumulative minimum threshold is not met within three years, a paper check will be issued to the performer or beneficiary, regardless of amount.
Statements

Individual statements issued to participants shall identify each distinct source and amount of the royalties combined in the distribution to the performer.

Claims and Appeals

Time Period for Claims

A performer may submit a claim to have performed on a sound recording within three years following the sound recording’s first publication on an Annual Distribution List. Thereafter, any such claim shall be extinguished as to that Annual Distribution, and the Fund’s identification of non-featured performers on the recording for that Annual Distribution shall be considered correct and complete. If a recording is published again in a subsequent Annual Distribution List, a new three-year period will begin to run in which a performer can submit a claim to have performed on the sound recording, but only as to the new (and any subsequent) Annual Distributions.
Claims Determination

A non-featured performer whose timely claim to have performed on a sound recording is approved by the Fund will be (i) included in the Fund’s database of performers who performed on the sound recording; (ii) paid the share held out for the performer in past distributions, if any, or paid out of the Omissions Fund for past distributions on the sound recording; and (iii) entitled to share in any current or future distributions on the sound recording. A non-featured performer whose timely claim is denied by the Fund may appeal that determination in accordance with the procedures set forth below.
Appeals
1. In the event a non-featured performer feels aggrieved by the actual or proposed distribution of royalties, but not by the distribution formula, s/he may seek an adjustment by writing to the CEO of the Fund within 90 days of the distribution and setting forth the grounds for the complaint. The CEO shall review the complaint and provide a written decision within thirty days.
2. If the non-featured performer does not accept the decision of the CEO, s/he may appeal the decision to the Trustees of the AFM & SAG-AFTRA Intellectual Property Rights Distribution Fund. The appeal must be sent to the Trustees at AFM and SAG-AFTRA Intellectual Property Rights Distribution Fund at 4705 Laurel Canyon Blvd., Suite 400, Valley Village, CA 91607 within sixty days of the CEO’s decision, and must set forth the grounds for the appeal in writing. The Trustees shall review the appeal and reach a decision no later than sixty days from the date of the appeal. The Trustees shall advise the CEO and the non-featured performer of their decision, which shall be final.
3. In reaching their determinations, the CEO and the Trustees shall follow the distribution methodology set forth in these Guidelines, supplemented by the principles of law and equity. The CEO and the Trustees shall not consider the complainant’s union status.