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The PRO - Music Industry's 'Workhorse'
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
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While much of the public complaining and attention on royalty accounting and disbursement are focused on the practices of major labels, performing rights organizations are not immune. The average songwriter I've spoken too use terms such as confusing, archaic, antiquated, arbitrary and unfair to describe how royalties are determined by PROs. The response below from Billie Jay from JazCraft is pretty typical:

"To tag onto a couple of the responses to IT'S NOW TIME FOR RADIO TO PAY UP, namely Brian Lee Corber and Rob Parker. Yes, ASCAP, et al were formed to collect monies from broadcasting stations relevant to airplay, and to pay those monies out to its members. But, it's not that simple.

"ASCAP, unlike BMI, does not rely on playlists, saying that playlists can be falsely manipulated. Instead, they rely on tapes of broadcasts, retaining an independent company of listeners to identify each song broadcast over particular stations. This process is also open to suspicion and fallacies. The listeners must be able to identify an instrumental song, for example, one he or she has never heard before even when the title has not been mentioned by the programmer.

"I know an artist-publisher member of ASCAP who released an instrumental album on his own label several years ago, which aired out over 350 stations. This was substantiated with playlists that ASCAP would not recognize.

"The album was also reported in Jazz Times, a major nationally distributed magazine, to be among the "Top 10" most-played albums in jazz airplay in the United States during the period of its initial release.

"ASCAP never caught any airplay of that album. The artist and the label received not one cent from that society. All attempts to rectify this, entailing years of correspondence and phone calls, were stonewalled by that society."

Now while I don't really want to get into the whole ASCAP v. BMI things, I feel that a few points need to be said. First, while the recording industry may be suffering from the growth of new technology, PROs have seen their revenues grow on the coattails of new technology. ASCAP for example announced a record $587 million disbursement to members for 2002 - the largest for any PRO in the world - much of it fueled by settlements from the cable industry. They've also been collecting royalties from websites for years and have reached agreements with the major satellite radio providers.

Secondly, I feel that the argument rests on a false assumption: that there is such a thing as the perfect, meaning fair & equitable, royalty system. Any royalty system is likely to benefit some members over others - basically, we're not clones. If, for example, ASCAP were to change its system closer to BMI's, it would make some subset of its members better off while making others worst. The same can be said for BMI were it to move closer to ASCAP's. In the end, it is the songwriters responsibility to research, compare and choose what system best meets their specific situation. And who knows, they may even choose to sign up with SESAC.

The ultimate responsibility PROs have to their members is increasing the overall pie versus figuring different ways to slice it. On this point, the PROs have done relatively well in comparison to their counterparts in the recording industry. The other responsibility is to manage the collection & distribution of royalties at the least cost and greatest efficiency, an achievement claimed by ASCAP with "one of the lowest operating ratios in the world for a performing right society 14.8 % -- and the lowest in the U.S."

Is there room for improvement? Always. But at least on a global scale, PROS seem headed in the right direction.

When it come to PRO's, many people only write about ASCAP and BMI but most writers forget about SESAC. SESAC use BDS to compile the number of spins and therefore is more accurate. Moreover, SESAC also pays retroactively for any corrections for audits. I think your article should have provided the reader with more information regarding each of the PRO's and how they work.
- Gary S Smith, President of Three Keyes Enterprise

Your commentary on PROs is right on. I also had a single being played on about 30 stations and charting in Gavin (back when it existed) and I didn't see a cent from ASCAP. However, at this year's annual members meeting for ASCAP, they announced a new system for tracking plays. I don't remember what they called it, but they will basically be tracking digital "thumbprints" of pieces. This will allow them to automate much of the listening now being done by humans, which will lower costs. It will also allow them to track more music on more stations, including bed music in ads and such. And better tracking is what we all want. So, at least they're making an effort to update what they are doing.
- Phil Johnson, Roadside Attraction, ASCAP writer-publisher

A most interesting discussion, especially following the one on potential streams of revenue from radio for record companies and artists (as opposed to songwriters and publishers).

The biggest problem in this area is that the U.S. - unlike just about every other territory in the world - has three performing rights organizations, which compete with each other, thus increasing the overhead factor. This situation infuriates music users (who have to pay for three different repertoires), minimizes a consolidated effort to change copyright regulations, and generally confuses and clouds the situation. Only in America, they say - and rightly!

Worse, one of the organizations is owned by the radio broadcasting industry, not its members, while another is a privately-held for-profit company. SESAC is irrelevant, ASCAP has a long history of stuffiness and exclusion, and BMI (Broadcast Music Inc.) is owned by radio - probably the best example in history of the foxes running the chicken coop. BMI's very existence has, for the last 60 years, worked to depress the money due to songwriters and publishers.

The result of all this is that American composers and publishers earn less money, per capita, than members of performing rights organizations in other territories. Ah well, that won't be changed - but sooner or later songwriters will realize that the much-vaunted American system is broken. Single organizations in Denmark - or Holland, or, for that matter Canada - do a better job for their members than any of the three American organizations can possibly manage.

And I'm amazed that composers and publishers have failed to even realize what's going on, let along doing anything about it.
- Richard Flohil

In fact, there is a lot of room for improvement. Specifically, ASCAP, BMI and SESAC have adopted highly discriminatory "weighting" rules which pay a one-minute cue within a film or television program only ¢16 on the dollar compared to the same music usage if the music had lyrics. This despite the broadcasters who pay the money into the PRO's for redistribution to their members make absolutely no difference in pay rates under a blanket license.

This kind of wholesale copyright devaluation is unparalleled anywhere else in the world - most major PRO's worldwide pay instrumental and song within a television show or film at the same rate. Why ASCAP has taken the lead (and BMI and SESAC followed) with this blatantly pro-songwriter, anti-composer stance is unbelievable - almost as incredible as the double talk and tap dancing that it does on when a member asks ASCAP why these "weighting formulas" exist and why ASCAP leads worldwide in discrimination against instrumental music. The broadcasters pay the same for all music, then ASCAP's songwriter-controlled board starts playing with the rules and all of a sudden song is valued at 600% of instrumental music, for a one-minute cue (the most common length) within a film or television project. All done in secret at ASCAP, since board meetings and all records from them are kept confidential and not available to members.

Interestingly, according to a recent survey, song represents only about 5-7% of music on television. How some of the least performed music can rate such a massive pay bonus is truly a wonder.

You pointed out a great situation, re: the jazz album that never got picked up because ASCAP's tracking systems are rigged to detect songs and not much else. Unfortunately for us instrumental composers, the payment system is similarly rigged, and that's something that I fear will be the death knell of the PRO's as we know them today. In this enlightened age, how this kind of blatant discrimination can survive is amazing.

It's time for ASCAP to stop playing politics and trashing the value of copyrights of instrumental music on film and television. Score composers deserve better than 16 cents on the dollar... heck, that's not even a good tip!
- Mark Northam, Film Music Magazine

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» ASCAP 2002 Financial Results Announced At West Coast Membership Meeting

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