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Performance Royalty

by Ben McLane, Esq.

There are several ways that songwriters can make money in the music business. One of the most significant is from royalties generated by the public performance of their songs. These royalties result from what are called "performance rights".

In the United States, "performance royalties" are paid out mainly by two performance rights societies, BMI and ASCAP. (Most foreign countries also have their own societies.) Under the copyright law, a songwriter controls the public performance of that songwriter's songs. In essence, a songwriter designates either BMI or ASCAP as his or her agent for the public performance rights of that songwriter's songs. A songwriter can only affiliate with one society at a time. BMI or ASCAP have arrangements with the parties - such as radio, television, concert venues, restaurants, etc. (essentially any user who performs music publicly) - who want to use the songs in the societies respective catalogs. For a licensing fee, BMI or ASCAP will grant to that user what is called a "blanket license", which means that the user can play any song, by any songwriter or publisher affiliated with that society, any number of times. It must be stressed that fees are collected from the entity or venue user, not from any actual performer.

The money earned by a songwriter from the societies (i.e., the performance royalty) is proportionate to the volume of airplay of the songwriter's songs. Performance royalties are based on extremely complicated formulas. Basically, however, the societies monitor radio and television airplay to determine how often a song is heard and by how many people. The larger the audience and the more times a song is played, the more the income. Since it is impossible to cover all media outlets, BMI and ASCAP rely on estimates based upon samples. BMI obtains its samples from radio station logs and television cue sheets (lists of compositions used on television). ASCAP gets its samples from taping radio stations and from television cue sheets. After deducting operating expenses, the societies divide the fees up and pay it to their affiliated writers and publishers. Both societies pay quarterly.

BMI and ASCAP represent both songwriters and publishers. It should be noted that even where a songwriter is represented by a third party publisher, that songwriter needs to also join a society because songwriters and publishers are paid separately by the societies. To join ASCAP, a songwriter must have at least one song either published, recorded, or publicly performed. To join BMI is a bit easier. The writer must have a song either published, recorded, or likely to be performed publicly. As for which organization is best, each songwriter will have to decide that for themselves because it is difficult to say with certainty which society pays more. Both BMI and ASCAP will be happy to send out information brochures to interested applicants. Call BMI at (310) 659-9109 and ASCAP at (213) 883-1000.

Choosing a performing rights society is an important decision for a songwriter to make because if a song ever becomes a hit, the performance royalties can be substantial. Thus, any serious writer should find out about affiliating with either BMI or ASCAP.

Copyright 1998, Ben McLane
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