Back to the Basics of the Music Industry
We here at L4M had an original goal of making the music industry LESS confusing for musicians by attempting to simplify and decode the mythical “industry standards” that generations of music executives and attorneys had crafted. In our opinion, the standard of the industry was to confuse musicians so that they would willingly give up rights that they needn’t relinquish. The combination of a monumental change in the music industry (with the introduction of the internet) and the easier access to information (such as sites like ours), musicians no longer have an excuse when they enter into horrific label agreements.
If you look over the last several articles posted on L4M, we admittedly have wandered away from the path of simplicity. So, hand in hand with all the kids going back to the classroom this week, we will be returning to the basics. Today’s lesson, what do Performance Rights Organizations or PRO’s actually do and why do you need to register with one?
Most folks in the music industry and many outside of the industry have heard of ASCAP or BMI. However, the numbers decrease signficantly when you ask those individuals what ASCAP or BMI actually do for artists.
ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music Inc.) and SESAC (Society of European Stage Authors and Composers) are the three performing rights organizations in the US. They have international presence as well, but for this post we’ll just focus on their doings in the US. As their names suggest, PRO’s work with writers who have their music published and broadcast to the masses. They issue licenses to any one or any thing which broadcasts music for more than merely personal enjoyment. As part of those licenses they collect royalties to the composers of music which is broadcast to the public. According to ASCAP itself it:
“protects the rights of its members by licensing and distributing royalties for the non-dramatic public performances of their copyrighted works. ASCAP’s licensees encompass all who want to perform copyrighted music publicly. ASCAP makes giving and obtaining permission to perform music simple for both creators and users of music.” www.ascap.com/about
Think of it this way: You drive your car over to your favorite shopping mall. While en route you jam out to your local rock radio station (if it still exists). After parking, you saunter into the mall which is broadcasting some easy listening jams over its PA system. You wander into Abercrombie & Fitch to see if you can grab that hoodie that The Situation wore on last night’s episode of Jersey Shore and in the darkened perfumed laced store you are accosted by much too loud ska music. Working up a hunger, you then meander into TGIF where you are immediately accosted by 30 flat screen tv’s blasting a Black Keys track over a Cadillac commercial. Exhausted, you get back in your car and switch over to the smooth jazz channel for a relaxing drive home.
Every step of the way during your epic mall journey, songwriters were collecting performance royalties. Let’s take them one at a time.
1. Your car ride to the mall: The local radio station licenses its playlist from the PRO’s and pays a set amount for each song it broadcasts to the appropriate PRO (which is the PRO that the songwriter signed up with and registered its songs). The PRO then allocates the correct portion of that payment amongst the writers of each song which was broadcast. Eventually, the radio’s payment trickles down to the songwriters themselves.
2. The mall itself has a license with the PROs to broadcast its easy listening jams. The same process ensues. PRO’s collect from the mall owners and pay out the appropriate writers.
3. Franchises like Abercrombie and Fitch also have direct licenses with the PRO’s in order to continuously broadcast music to their patrons. So similar to the radio stations and the mall, individual stores will also pay a license fee to the PRO’s to pay for the right to broadcast music.
4. The network which broadcast the Cadillac commercial on television will also pay a license fee to ASCAP. See our article on Licensing to see the other compensation that may be owed for this type of use.
5. See number 1.
The amount of money paid every time a song is broadcast varies. How much does it vary? Well that depends (sorry, but it’s true). The PROs negotiate individual licenses and rates with its licensees. The terms of the licenses depend on a large number of variables including the size of the audience, the time of day of the broadcast, the method of broadcast and even the current financial climate. A song that is featured on a top network drama played at primetime on a Thursday night will surely be worth more in performance royalties as compared to a song that is played over the loudspeaker at Steak and Shake in rural Georgia. However, if you do not register your work with a PRO you will receive the same amount for either broadcast: $0.00.
We are often asked which PRO is better? BMI and ASCAP as the biggest PROs have standard answers as to why they are better than the other. However, as with most things in the music industry, we feel that it comes down to relationships. If you develop a relationship with a representative from a PRO you should stick with him/her. Finding someone to help you through the registration process and explanations as to what royalties are owed is invaluable to any artist. Neither of the organizations have long term contracts, but you have to be pro-active to know when to terminate or they will continuously renew.
This is obviously only a very cursory overview of a much more complicated subject. But, it is a start. If you have more questions, please contact us.
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