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How Does the Fund Work?

Contributions to the Film Musicians Secondary Markets Fund do not include any revenue from a Primary Market:

No Domestic Box Office
No Foreign Box Office

Residual obligations to contribute to the Film Musicians Secondary Markets Fund are triggered only if a theatrical film or television production generates revenue in one or more of the supplemental markets.

Films initially produced for the home-video market (i.e. pay-TV and videocassette) make no payment for videocassette and pay TV sales.

The contribution formula is generally 1% of the Producer's Gross (gross revenue) directly received from the applicable supplemental market(s), minus certain allowed deductions.

All residual contributions are made before income taxes are paid on revenues, thus reducing IRS obligations.
By executing a Buyer/Distributor Assumption Agreement, a Producer can transfer and/or terminate residual obligations, as is routinely done with the DGA and SAG.

For Example: A Producer with gross earnings (i.e. Producer's Gross) of $995,000 from a supplemental market would make a payment to the Fund of $9,950.

If a film makes no money in supplemental market exhibitions, then no contributions to the Film Musicians Secondary Markets Fund are due.

Generally, productions have the bulk of their supplemental market exhibitions three months to two years after initial release. Contributions to the Fund are to begin on or before 60 days after the end of a calendar quarter in which those payments were accrued.

Following are some examples of typical employer contributions based on the film's applicable supplemental market activity:

A 2000 Low-Budget Independent film with a Domestic box office gross of $58 million, Foreign box office of $5 million - none of which resulted in any payments to the Fund - has contributed a cumulative total of $260,000 to the Fund only as a result of pay TV, free TV and substantial cassette revenues.
This 1994 "thriller" feature generated a Domestic box office gross of $16.6 million, and Foreign box office of $14.9 million, has generated cumulative contributions of $94,000 to the Fund.
A Major Studio 1998 International "action" feature with a Domestic box office gross of $202 million, and Foreign box office of $350 million, plus millions more in DVD/Cassette and TV sales has yielded contributions to the Fund of $1,460,000 to date.
A 1998 theatrical release with a Domestic box office gross of $6.3 million has yielded contributions to the Fund of $36,500 to date.

For the fiscal year ending March 31, 2003, the Fund will collect approximately $64 million in revenue generated by close to 6100 films, making the average contribution only $10,500/per film.

The Film Musicians Secondary Markets Fund is governed as a multi-employer alliance trust in accordance with the terms and conditions of the AFM Basic Theatrical Motion Picture Agreement and the AFM Basic Television Motion Picture Agreement. This document offers only a very general overview of the formula for paying residual contributions, and nothing in it supersedes the provisions of those Agreements.