224 !!Chapter 13
Payroll Companies
Handling fees (for talent and residuals) are included in most budgets.
Sometimes the music company receives this fee, but most often external
companies that specialize in performing this service manage the pay-
ments. Handling fees may include the preparation of union contracts, issu-
ing checks to performers, the preparation of residual payment estimates,
and budget estimates in addition to other services. Payroll companies han-
dle payments for music companies and/or agencies. They receive a han-
dling fee that is based on a percentage of the budget. Include the handling
fee when calculating a budget. (This service is often not needed.)
If the music house is required to pay the talent, make certain to receive
the payment from the client or agency prior to the recording session.
Because of cash flow problems, when dealing with small agencies, arrange
to be paid before paying the expenses. Refuse to begin work until payment
is received since the music company will be responsible for all costs.
Most agencies submit a condensed contract, also called a heads-of-
agreement letter, stating the agreed-on terms of an assignment.The
terms of the agreement should be specific; if not, the music supplier could
be held responsible for payments that were not agreed on during the basic
negotiations. For instance, if a jingle is being recorded and the agency
changesonelyric (one word) at the end of a session, overtime might occur.
The music company should not be charged for the overtime and performer
fees because the lyric change was not anticipated prior to the recording.
Always state the number of commercials and, in the case of jingles,
the number of lyrics to be recorded (even if the backing track remains
the same for each lyric).For instance, if one line of a lyric is changed, it is
considered an additional version of the commercial (e.g., a city name, such
as ‘‘in San Antonio’’ instead of ‘‘in Los Angeles,’’ as stated in a prior ver-
sion), and the singers must be paid for an additional commercial.
The American Federation of Musicians (AFM) allows a certain number
of commercials to be recorded in one recording session. Thus, even though
the singers might receive an additional payment because a lyric has
changed, the musicians might not receive an extra session payment. How-
ever, when the commercial is broadcast, the session is listed as a separate
commercial, allowing the musicians to receive residual payments for the
additional commercial.
The terms of the Screen Actors Guild (SAG) agreement (the SAG repre-
sents singers and other performers) differ from the terms of the AFM
(musicians) agreement. As mentioned, singers are paid for each commer-
cial. Since union contracts change, always be aware of the most recent con-
tractual revisions.
Most large agencies ask music houses to supply completed union
contracts.The agencies (or a payroll company) pay the contracts. Check
the bylaws of each union to determine the date a contract must be paid.