If you are ever searching for an area where the phrase “move forward or die” applies to the music industry, the three U.S. — based performing-rights organizations (PROs) are prime candidates. While many artists, companies, and fads have come and gone in the music business, ASCAP, BMI, and SESAC have each successfully weathered the changes within the industry. In fact, performing-rights organizations provide a valuable business lesson on how to survive by adapting to technology and trends.
Let's begin with a brief review of what these organizations are and why they exist. When the copyright law was written at the turn of the 20th century, it addressed the need to protect the performance of copyrighted works. With vaudeville and musicals already thriving and the new technology of radio right around the corner, a mechanism had to be put in place for licensing the use of songs, collecting royalties based on those uses, and paying out the royalties to the owners of the copyrights. From that need came the American Society of Composers, Authors, and Publishers (ASCAP). About 20 years later, ASCAP was joined by Broadcast Music, Inc. (BMI) and SESAC. (SESAC was originally formed as the Society of European Stage Authors and Composers, but because it is no longer strictly for stage writers or for Europeans, it now goes only by SESAC.)
The world has experienced an explosion of technology in the past decade, and the growing pains associated with that phenomenon are visibly evident in the entertainment industry. New ways to deliver music have presented PROs with continual challenges.
When the Internet revolution enabled anyone with a computer to broadcast, distribute, sell, or share music, it became clear that copyrights and technology were on a collision course. ASCAP, BMI, and SESAC each responded by creating special technology departments within their organizations. The societies took on active roles in the copyright and technology communities to educate others and to create and enforce policies that encouraged the growth of technology while protecting the rights of those who create music. Experts from the PROs championed the causes of writers and publishers by attending conferences, visiting think tanks, and participating in debates nationwide.
Technology has always been a challenge in the business of entertainment, but the issue of music on the Internet is probably the biggest challenge PROs have ever faced. The initial problem was determining which money model was appropriate for protecting copyrights and collecting royalties. The PROs, in accordance with various new U.S. laws and U.S. treaties with other countries, have adapted accordingly. The PROs monitor the streaming of music over the Internet and treat that activity very much like a broadcast. In fact, Internet tracking by the PROs can be more accurate than radio tracking because the technology involved makes it easy to identify songs and track how often they are used.
Recent controversial lawsuits and settlements with those who broadcast simultaneously on traditional radio and the Internet have resulted in the broadcasters' payment of additional licensing fees to the PROs for the use of music on the Internet broadcast. A more difficult question has been how to deal with smaller, nontraditional broadcasters such as individuals who want to put music on a site. The PROs had to maintain a delicate balance between protecting the rights of copyright holders and allowing independents to develop within the industry. They adapted by negotiating licenses on a case-by-case basis with those who stream music on the Net. Those licensing fees are based on how many people visit the site, whether the site is generating any money (by selling advertising or merchandise, for example), and how much music is being used. These licenses are for Internet streaming only and do not address music downloads, which require a mechanical license rather than a performance license.
As you can imagine, the licensing of music broadcasting on the Internet is still in flux. At press time, a number of agreements, lawsuits, proposed laws, and settlements by large and small music users are at some stage of progress. Currently, Internet aggregators (ISPs and other Internet service companies) and people who stream music are on their honor to seek licenses from the PROs. In time, the PROs are likely to become more efficient and aggressive in their efforts to identify users of music, develop fair licensing fees, and collect and distribute royalties. It would serve you well to keep up with the news on this front so that you know the status of your royalty stream.
CAN'T BEAT 'EM? JOIN 'EM
In addition to responding to the legal ramifications of technological progress, PROs are using new technology in an effort to make song licensing and royalty payments easier and more efficient. They have established systems to protect performance rights regardless of the type of new media used to broadcast musical works. For example, ASCAP's easy-to-use RateCalc system lets Web developers calculate the potential licensing fee for using music on their sites before deciding to obtain a license from ASCAP. You can access the RateCalc system on the ASCAP Web site (see the sidebar “Performing-Rights Organizations” for contact information). SESAC was the first of the PROs to track the radio broadcasting of songs using Broadcast Data Systems (BDS) and ConfirmMedia Watermarking technology. In those systems, CDs are encoded so that songs played on the radio are automatically tracked, allowing SESAC to turn around royalty payments to artists quickly.
The court battles fought by the PROs over unlicensed uses of music continue to make headlines, but less publicized are the PROs' cooperative efforts within the industry. By working with music, media, and business-community partners, the PROs are using a nonadversarial approach to get the word out about legal uses of music. For example, I have attended California Lawyers for the Arts lectures, Northern California Songwriters Association conferences, and California Copyright Counsel lectures and panels in which BMI, SESAC, and ASCAP representatives spoke about ways to work together rather than resorting to legal battles.
THE POLITICS OF MUSIC
The more art, commerce, and law become complex and intertwined, the more songwriters need to organize and exercise their own political clout. The PROs are obvious avenues to this influence because they already represent the concerns of writers and publishers within the music industry.
Having a voice on Capitol Hill goes a long way and the PROs know it. BMI has an office of government relations based in New York. According to the BMI Web site, “The department works with representatives of federal, state, and local government to educate them about issues of copyright that could affect our affiliates. Fred Cannon [vice president, government relations] and his staff strive to educate our affiliates about legislative activity that could affect them, and run grassroots initiatives. These include letters to Congress, meetings with government representatives, and visits to Capitol Hill.”
Visitors to the ASCAP Web site can check out Capitol Connect (at www.capitolconnect.com/ascap), which the PRO uses to dispense information on legislative and political issues of interest to songwriters. ASCAP also has its own political action committee that raises funds for legislative purposes.
In short, if you are a songwriter, hooking up with PROs can be one avenue toward exercising some political clout. Bear in mind, though, that the PROs also represent the interests of their affiliate publishing companies, and your interests may not always be the same as those of multinational corporations such as Sony, BMG, and EMI. But any voice is better than no voice at all, and your PRO might be a good place for you to start.
DIVIDE AND CONQUER
The industry has become increasingly specialized over the years. With the fractionalization of radio formats, record-label marketing efforts, and audience tastes, specialization has become a buzzword throughout the industry. All songwriters have certain common needs, but let's face it, the needs and servicing of classical composers and hip-hop artists sometimes don't match. Specialization is necessary, and the PROs have accommodated their affiliates accordingly.
All three organizations now have specialists who work with their writers and publishers by musical genre and by geographical area. When working with your PRO, you can develop relationships with representatives for pop, Latin, film and television, R&B, and hip-hop — all under the same roof. These specialty reps are all well versed in their specific genres and have their own sets of contacts and knowledge of industry practices, including awards shows. The geographical specialization also works in a writer's favor. If your local PRO rep has a good relationship with you, he or she can introduce you to another rep in another office if you will be relocating or working in that region.
One of the biggest trends in the industry is the emergence of independent artists: the grunge scene from Seattle, the hip-hop artists from the Midwest, and the R&B scene from Atlanta are all testaments to how quickly unknowns can become known. ASCAP, BMI, and SESAC now offer a variety of services that allow and encourage indies to join the party.
The PROs are reaching out beyond the traditional music markets of Los Angeles, Nashville, and New York City to markets that were virtually ignored a decade ago. At music-business conferences in almost any part of the country, you can find PRO representatives sharing information about their companies. The PROs have gone a step further by initiating educational programs, contests, workshops, and showcases in a variety of regions. Any of the PRO Web sites will give you an idea of the upcoming events that they make available to their members as well as to the general public.
Performing-rights organizations have become more involved in songwriters' careers in the past few years. They are all embracing the notion that an informed writer is better for the industry than a naïve one. ASCAP and BMI have long dominated the performing-rights scene, but SESAC has made no secret of its recent and aggressive efforts to turn the choice of a PRO into a three-horse race. That healthy competition can help your career and ultimately benefit everyone involved.
Music educator and entertainment lawyerMichael A. Aczonis experiencing the joy of listening to his son Evan's recent discovery of playing a Fender Stratocaster through a 400W amp in the Aczon garage.