Why You Should think Twice Before Joining ASCAP or BMI. Part III: Who Pays More?
In Part I of this three part series I addressed the key question: Should You Bother To Join Either PRO. Part II dealt with the fallacy of ASCAP & BMI’s self-postulated “non-profit” status BSand the PR they spread at trade shows as to why this makes them better than SESAC. Here in Part III, we’re getting to the bottom line… Who Pays More?
BUT FIRST…
Let me start by making one thing perfectly clear: Even though this entire three part series has been about vetting the sales pitches, organizational structures, and payment methods of the two main U.S. Performing Rights Organizations (“PROs”)—ASCAP and BMI— Without them, the economic viability of the writers of popular music would be endangered and the music business, in general, would suffer.
The PROs, aside from collecting the money due writers and publishers, also support the music community by giving grants to charities, helping writers get loans and receive healthcare benefits. They also go to great lengths to ensure that writers get paid their share of royalties even if a writer is unrecouped with his or her publisher. These services have important impact on our community and deserve recognition and consideration. But you can read more about these good deeds on their websites (Here & Here)
Here’s what you wont read…
WHO PAYS MORE?
When it comes to upfront money, BMI has been known, on rare occasions, to offer non-recoupable advances (called “guaranties”) to superstars, whereas ASCAP is emphatic that they will not ever give advances, because, they claim, their internal policies won’t allow it. However, it is no secret that they have, in fact given recoupable Advances in the multiple millions of dollars to several of their super-star writers.
So on the Advance side of the argument, BMI wins, hands down.
The case for who pays more when it comes to dispersants, however, here’s where it gets amusing: reps from both PROs make the claim that they pay the same as the other. However, this is about as truthy as the public policies regarding Advances. There are myriad songwriting teams where each member was signed to a different PRO, yet their checks for the same song in the same pay-period were very different. The fact that this happens with some degree of frequency begs the question: How can any discrepancies occur between them if they are, as commonly referred to, like Coke and Pepsi and function identically?
There are two factors that help explain the why their payments can be so different:
- How much does the PRO actually spend to collect your money?
- What method does the PRO use to calculate what they owe you?
We covered the first point in the first two parts of our series (Part I / Part II), so let’s look at the second point listed above. To do that we have to look at the PRO’s “pooling system.”
WHAT’S THAT FLOATING IN THE POOL? IS IT MY MONEY?
After ASCAP/BMI collect all their money (about $900 Million a year each) each applies its own proprietary slice-n-dice formula for paying members. Explained in very general terms: ASCAP’s method segregates the money into individual accounts, or “pools” for each source (radio, TV, stadiums, etc) and then applies a crediting formula which splits up the pool to each member in that pool. BMI, on the other hand, mixes all the money from the various sources into a master pool first and then applies a personal crediting code assigned privately to each member to figure on their share of the entire pool.
To assume this seemingly small distinction makes little difference is a huge mistake, as you’ll see.
To illustrate this let’s to turn the pooling system into a “canteen” analogy. A canteen holds a finite amount of water — let’s say 900 million sips. So naturally, since there is a finite amount of water in the canteen, if some people are going to get a few sips more, it will be at the expense of people who are going to get a few sips less. This seems fair. If you earned more credits (read: more public performances) you should get more sips. But… In reality, instead of one credit for one sip, it works more like this: the more sips from the canteen you take, the more credits you earn — to take a separate big gulp.
Kinda like that old cartoon joke, “One for you, one for me. Two for you and… one-two for me. Three for you and… one-two-three for me.”
And in fact, this is standard practice in the ASCAP/BMI pooling systems. The rich get richer, faster, because they earn more bonus credits towards a larger share of a finite pool of cash. However each system has their own separate and distinct ways of earning credits, depending on different factors, as I’ll show you now.
SO WHO GETS MORE SIPS?
The first factor is loyalty: ASCAP’s formulas don’t factor in your history with them. They don’t care how long you’ve been an ASCAP member — ten years or ten months. Their system is purely based on number of credits earned in that exact pay-period. Their applied Johnny Cochran-esque philosophy:
If you got a hit you get a split.
Whereas BMI’s math tends to favor their successful writers who are time-honored, over those who are new to BMI. The longer your music is earning money for BMI the more credits you earn. So on BMI the applied philosophy looks more like:
If you’re new to the game, your check might be lame but…
if you once had a hit you can still get a split.
And so, veteran writers in BMI’s pooling system get bonus credits despite not writing a new hit in years, at the expense of newbies with current hits.
The second factor is the type of music you write. And here it is more like what George Orwell wrote in his classic book, Animal Farm, “All credits are equal, but some are more equal than others.” (I changed it a little bit.)
The discrimination in ASCAP’s pooling system are eyebrow raising and have been written about extensively on other sites. In my research, a former ASCAP exec admitted to me that a pop song with vocals played on top 40 stations will pay about eight times more than say, the Star Wars Theme,, a non-vocal composition, played exactly the same amount of times on exactly the same stations because they are in different pools and the vocals pool earns credits in an 8:1 ratio over most other pools.
To help compensate for injustices in their systems, ASCAP and BMI both give away several million each year in awards to members who have “distinguished” themselves but who didn’t show up in that year’s surveys. (Read: are in tight with the board)
DECISIONS, DICISIONS, DECISIONS…
It should be obvious by now, that the often used analogy of Coke vs. Pepsi to describe the two min PROs in the US is not an appropriate one. In fairness though, neither ASCAP or BMI do anything to discourage the analogy. It keeps the public from focusing on their differences and distracts us from looking too closely at their mutual competitor, SESAC, the other PRO. (RC Cola?)
Which PRO you choose to join is an important decision, worth more consideration than a casual coin flip or worse, basing it on which rep got to you first with a drink ticket or an invitation to play at a showcase. The right choice for you may ultimately boil down to a few considerations some of which are outlined above. (BTW, we do special consultations to help clients make this decision. Shameless plug. Click Here to Email Me.)
Based on some inside sources, here are some simplified, general guidelines for your consideration;
- If you plan to be earning money from pop songs on the radio you may prefer ASCAP.
- If you plan to be earning money from copyrights that are instrumental soundtracks in films and TV, or in Broadway musicals, you may prefer BMI..
Ironically, these guidelines are often the opposite of what many reps and “informed” people will tell you (Especially BMI.) Here’s a couple more:
- If you have a fluke hit (that has vocals) and don’t plan on following up with a songwriting career, ASCAP might be the way to go.
- But if you’re in this for the long haul and plan on many hits, especially ones that don’t have vocal performances, BMI’s system my be kinder to you
CONCLUSION AND A PERSONAL NOTE
I have tried not to seem like I’m favoring either ASCAP or BMI in this post. But I would like the reader to note that in verifying my facts for what you have just read, representatives of ASCAP, knowing that I was going to write something sobering, were forthcoming and cooperative. I wish I could have said the same for BMI, whose only response was to forward me a press release. That might be a factor in your consideration as well.
Only time will tell if ASCAP and BMI will grow more powerful or if they will outgrow their usefulness or be outmoded by “direct licensing” technologies. But of this I am sure:
You can see from reading the three parts to this series that these two companies compete rather fiercely; as digital broadcasting and other new performance mediums evolve over the next decade, their collection potential will approach the tens of billions per year. I can’t wait to see how competitive things get for the “societies” then. I for one I plan to keep a front-row seat, with popcorn and drink in hand.
Coke anyone?
Mo out
If you found this post helpful in making some decisions about which PRO to join (and when) and you want more info to take your music career to the next level please consider purchasing a copy of my latest book 100 Answers to 50 Questions on the Music Business.
What about non-performing songwriters whose songs are being played by touring bands who do not get top 40 radio airplay, but often play large festivals and venues and whose music turns up on internet radio?
You can just about forget showing up in surveys for festivals. Internet radio is evolving slowly. But this hardly matters if the politics of the pooling systems are not democratized.
Thanks for the quick response.
So logging and reporting performances at venues with contracts with the prs makes no difference? The prs just take all the live venue money and dump it into the Top 40 pool?
I guess I am assuming the prs contract with the festrivals and other live venues.
Uh, no. I didn’t write that or anything close to that. Live venue pools are separate from broadcast pools. But how you earn credits in each pool is what I’m focusing on in this piece.
It would be very instructive for you to list the current ASCAP and BMI board members and their corporate affiliations.
Thanks and sorry I misundestood. Will you be dealing with earning credits in the live pool in a later installment or did I miss something else? My client is a hot original NE regional act with three indie releases that also plays the festivals and many small venues all over the US. In part 1 of the piece, you say for such an act, “..it is in your best interest to wait till you have established leverage before you join (a PRO)”.
The band has a co-writers that do not tour with the band, so we are trying to devise ways to compensate them. The pool the venues all pay into certainly seems attractive.
Hi Moses,
Good piece, ASCAP/BMI claim they are in competition, do we know how they compete?
Re Direct Licensing etc……. the answer is very simple, but not one remotely supported by any PRO…….. once the PRO is aware ‘product’ has been broadcast all they do is send an invoice [a collective of-course] to the broadcaster for each performance. There would have to be an agreed rate per broadcast which the broadcaster would pay any of the PRO’s as such payment to all writers would have to be the same, wouldn’t it !!
Then we might see real competition
There is another set of income to throw into the mix…… the Neighbouring Right, which as you know is now my pet issue.
I am concerned, as we all shuold be, how can ‘product’ be aired, surveyed/sampled whatever by an org re one set of rules PRO’s, yet the exact same product when aired, does not always turn up in the survey’s/samples etc of eg; the NRO’s?
Summats up with accounting !
Les
Interesting and educating piece. But, why so little info on SESAC? Do you not consider it a viable alternative?
The “pool-system” you described seem absolutely mind-buggling, unfair and scary to my European eyes……
B/C SESAC is by invitation only. If they want you, you’re already making some serious cash.
Hi Moses. Interesting that some of the different approaches of the PROs seem to reflect the way things are done in Nashville vs the way the are done in LA (and NY?). An example is the statement that “reps from both PROs make the claim that they pay the same as the other.” That has never been true in my experience of 30 years dealing with the Nashville offices of ASCAP and BMI. In fact both say they pay more than the other. Which of course is rarely true. But what is true is that the pendulum historically has swung back and forth. And when a BMI writer makes more money than a ASCAP co-writer on the same song (or vise versa), then ASCAP finds a way to “make it up” to their writer and to see that the pendulum takes a swing back in their direction. But that can only go so far and ASCAP in recent years has seen a drought around here and I believe is aggressively trying to “catch up”. As a matter of fact, all but one or two of the long time Nashville ASCAP writer and publisher reps lost their jobs last year, as did the long-time head of the office, Connie Bradley. Makes you think that somehow local decisions were causing the problems with the writers. I don’t believe that t be true. But I do believe that Connie and the reps were not skilled at soothing over negative decisions made by the Board and higher-ups. ASCAP’s Nashville office is now being led by one of the most popular industry execs in this town, Tim Dubois (former Pres or Arista Records among other positions). He has a fresh new staff of young writer representatives on board along with the remaining veterans.
Now a word about SESAC. In recent years SESAC has been openly competitive about signing writers. Yes it is by invitation but when I have taken new writers into meet with a SESAC rep they are just as competitive about signing them as ASCAP and BMI. I do not know if that would be true if the writers did not have reasonable expectations of getting signed to record deals which is the case with my presentations. SESAC probably will not take everybody but they are definitely more open to competing for the established and the baby writers who have potential. Plus – SESAC can and does give advances. As a matter of fact as seasoned veteran writers here began to exit ASCAP a few years ago many went to SESAC (rather than BMI) where they were given advances based on their track record.
Steve
Yep, I’d have to say that I concur with everything in your comments. Even the part about “we pay more” than the other, was in the original, much longer draft of this piece, but was removed for space considerations. Remember that this is a excerpt. The full 30 page analysis of the differences between ASCAP/BMI are in Confessions of Record Producer (4th Edition). This is just the teaser.
On the SESAC points, I’d like to write more, but there is not much to write about, scam-wise. They are by invitation. No one I know joins them without an advance and a lawyer, usually several, and a manager looking over the shoulder of the deal. So, if you get screwed by that deal, it’s hard for me to feel much sympathy. Especially, when one compares it to ASCAP/BMI who are like ants at every music conference spewing thier non-profit bullshit and that “were run by our members” sales pitch, which gets newbies to sign over thier most valuable rights over a cocktail.
good stuff, thanks moses. i frequently tell people who ask my opinion that maybe the best way to know who to join is: meet some reps, see if you click with one and if he/she will go to bat for you in opening doors, getting signed. they can be a big help, or they can ignore you. seen both. i’m ascap cause of a buddy over there that does go to bat for me….
Absolutely agree with Gary. I have seen the launch of a new career greatly assisted by a PRO rep. Of course they don’t advertise that – they can’t do it for everyone.
Steve
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[...] Let me start by making one thing perfectly clear: Even though this entire three part series has been about vetting the sales pitches, organizational structures, and payment methods of the two main U.S. Performing Rights Organizations (“PROs”)—ASCAP and BMI— Without them, the economic viability of the writers of popular music would be endangered and the music business, in general, would suffer. View Article Here [...]
Moses, is there no way to lobby ASCAP to level the playing field for the instrumental musicians, given that you found it’s 8:1 in favour of music with vocals?
Moses Avalon’s,
All of your comment are very interesting’When it come down to it all three work the same,we the small music
people are left out.No money to retain attorney so attorney don’t even try working with us. I’m a member
of BMI for many years,have many music released over sea.When ask to look in to things,no good answer from
representative.So all me can do,is keep doing our small
music thing.I’ll be buying your 100 answer to 50 question
on the music business.keep up your good works.
Looks to me SESAC is the way to go for me and my band. Maybe a combination of YouLicense, SoundScan, and other independent licensing methods could replace the money that would have been earned in a PRO. Thanks for the great series!
I didn’t say that they “should.” I think that they will though. Remember, Sep was a 4th round pick. I wouldn’t be surprised to see a similar thing happen.
Moses,
I would be interested in hearing your thoughts on Songtrust and Tunecore’s recent jump into the publishing adminstration business for independent songwriters.
Can we expect an email/blog post in the near future?
Yep.