Saturday, October 30, 2010

The Pareto Principle, or How 20 Percent Control 80 Percent

The Pareto principle, also known as the 80/20 rule, is a management rule of thumb stating that often, the few (20 percent) control the many (80 percent). For example, perhaps 20 percent of the people own 80 percent of the wealth, or 20 percent of the pea pods contain 80 percent of the peas.

President Ray Hair, judging by his October 2010 letter in the International Musician, seems to have taken a cue from the Pareto principle. The letter gives a voice to the heads of the five player conferences to explain their organizations, apparently ushering in a new era of influence for them.

Along with the appointment of new staff, new trustees for the pension fund, and removal of old barriers to meaningful dialogue between player conferences and AFM, the letter from the player conference heads represents President Hair's full-scale adoption of the twenty-one year old Roehl Report.

In 1989, the Roehl Report called for a change in the focus of AFM, discussing "the concept of restructuring the player conferences in order for AFM to be even more effective in representing the membership in general and symphony and recording musicians in particular."

The Roehl Report never mentions AFM's membership count in 1989, or how many members were affiliated with player conferences. Today, of about 75,000 members, only 15,000 — or 20 percent — are affiliated with player conferences. 60,000 AFM members — 80 percent — have no affiliation with player conferences.

In the last AFM administration, player conferences were ignored, with RMA in particular virtually boycotted. The new administration must make certain that in remedying this, it doesn't ignore the other 80 percent of members.

As an example of the potential for conflict between the 80 percent and the 20 percent, look to the case of Parmeter et. al. v. AFM, in which three recording musicians sued AFM over "work dues" assessed under promulgated agreements. The case has cost AFM an unknown amount in attorney fees, but an educated guess might be around $500,000 (see update below). As of this writing, attorney fees have not been billed to plaintiffs, and AFM has presumably paid them. Is it fair for this cost to be borne by the 80 percent?

As a result of winning the case, AFM has collected $79,130 in disputed "work dues" held in escrow by the court during the suit. The recording musician plaintiffs are on the hook for a further $10,000 in costs, mostly for deposition transcripts. These are small amounts relative to the attorney fees and the unknown, but presumably large, amount owed in "work dues" which the court declared within AFM's power to levy.

But will AFM pursue the plaintiffs for attorney fees? What about the formerly assessed "work dues"? Now that the newly elected International Executive Board has deleted those particular "work dues" from the bylaws, will the prior assessments be ignored?

These are questions which should not simply be reflexively answered in favor of the few.

Update 3/21/2011: President Ray Hair at the New England Conference reports $379,000 in attorney fees for the Rishik and Parmeter cases.