Some Old PCA Content Resurrected

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Historic Meeting at ASCAP

More than one hundred composers, producers and publishers of ad, promo and library music filled the ASCAP cafeteria on Friday, May 8th, and delivered to ASCAP a clear and united message: “We will no longer tolerate the discriminatory policies of ASCAP.”

Composer and PCA Director Doug Wood began the meeting by noting with surprise that not one of ASCAP’s Board of Directors was available to be at the meeting. He reiterated the themes of the meeting – that the Board must rescind the 10% Cap placed on ad and promo music, and that the Pop Premium must be abolished. He called for the end of ASCAP’s use of the word “incidental” to describe ad and promo music, and urged the commercial music community to work together to accomplish these goals.

Al Wallace, ASCAP’s Chief Operating Officer, asked everyone to respect ASCAP’s request that the meeting not be taped. He said that ASCAP wanted everyone at the meeting to be able to speak freely, without concern that inadvertent or unintentional remarks or comments taken out of context could be used in a negative way. With the room packed to the edges with witnesses to the proceedings, there was little dissent from the audience.

Wallace then explained in detail how the recent processing error had occurred, and how ASCAP was initially unaware of the magnitude of the problem. He apologized for ASCAP’s mistake, and made it clear that ASCAP was trying to fix the problem as quickly as possible. He also announced that ASCAP would stop using the word “incidental” to describe ad and promo music.

Ross Charap, ASCAP’s Director of Legal Affairs, described the legal history which had resulted in the 10% Cap being imposed. (ASCAP was careful to use the word “fund” instead of “cap” to describe the pool of money being set aside for ad and promo music, but did not deny that the purpose of the cap was to limit the amount of money paid for these performances.) He also described the effects of the per-program license on ASCAP and its members.

Peter Boyle, ASCAP’s Chief Economist, explained how the distribution of royalties had changed in the past year due to the per-program license and ASCAP’s “follow-the-dollar” principle. He also forecast what the approximate distributions for ad and promo music would be during the next year (down slightly).

Mark Morgenstern, ASCAP’s Director of New Media told of ASCAP’s plans for the future, including it’s leading role in international registration and utilization of ISWC codes. He said ASCAP was actively looking at encoding systems.

Finally, Al Wallace introduced Phil Crosland, ASCAP’s new head of marketing, who floated the idea of calling ad and promo music “CPA Music.” This was met with mixed reactions from the group, some of whom suggested that “CAP Music” might be more appropriate under the circumstances.

Wallace then announced that ASCAP intends to hold a meeting on the West Coast to discuss these issues, possibly May 19th. He also suggested that the commercial music community form a committee to meet on a regular basis directly with representatives from the ASCAP Board of Directors.

At that point, it became clear that the group was restless, and the meeting was opened up for questions. Over the next 90 minutes, ASCAP was grilled by attendees who demonstrated their clear understanding of the issues and the depth of their frustration with ASCAP. Here are a few highlights:

In response to a question about the Pop Premium, ASCAP claimed that “qualified works” (hit songs and old standards with at least 25,000 featured performances in the ASCAP Survey) were more valuable to the repertoire than original jingles or library music, and therefore deserved to be awarded extra weighting. They were unable to explain why all other ad, promo and library composers and publishers should pay for the extra weighting, or why the synch license wasn’t the proper vehicle for determining the value of the music.

In response to questions about the 10% Cap, ASCAP claimed that it was a Judge who had said ad and promo music was not worth as much as other music, and that the Board was only acting in accordance with value decisions established by the Court. Attendees scoffed, reminding ASCAP that in placing a value on ad and promo music, the Judge had relied on information supplied by ASCAP which showed that little of ASCAP’s distributions were going for ad and promo music. The Court has always maintained that setting the value for different kinds of performances is the responsibility of the ASCAP Board of Directors.

Mike Dowdle from Non-Stop Music released a study which he had undertaken with Dain Blair from Groove Addicts showing that an overwhelming percentage of music on daytime and prime time television was ad and promo music. The figures ranged from 36% up to almost 90% depending on the time of day.

These figures were consistent with a chart passed out by Doug Wood which showed the percentage of ASCAP revenues derived from advertising (100%), the percentage of TV music which is ad and promo music (68.5%) and the percentage of royalties received by ad and promo composers and publishers (about 7%). The chart also showed the relative value ASCAP ascribes to feature, theme, background and jingle performances (100% down to 3%) and the same performances as weighted by the PRS (absolutely equal, paid on a durational basis only.)

ASCAP was reminded that its failure to properly pay composers and publishers of new music in the past had resulted in the local broadcasters being very successful in licensing this music directly, costing ASCAP up to $20 million every year. ASCAP was warned that if it did not change the policies on ad and promo music quickly, the pressure for this music to be licensed directly would become impossible for composers and publishers to resist, resulting in further (and permanent) erosion of ASCAP income.

Meeting attendees repeatedly and eloquently voiced their frustration with ASCAP, emphasizing that ad and promo composers and publishers were sick and tired of being treated as second class citizens of ASCAP, and that the policies which ASCAP was using to discriminate against them would not be tolerated. The meeting was adjourned at 1:00pm.

Approximately thirty attendees met later at SESAC Headquarters to hear about recent developments regarding Aris MusiCode and to discuss in general terms the relationship which ad, promo and library composers and publishers might develop with SESAC.

Composer Scott Schreer who is affiliated with Aris Technologies, showed a short video about MusiCode, and demonstrated the new technology. He answered questions about how Aris could help ad, promo and library composers and publishers. SESAC has signed up with Aris to use the system to track performances, and plans to have decoders in most of the top markets by the end of December.

SESAC co-owner Freddie Gershon and President Bill Velez emphasized that SESAC was very willing to establish a dialogue with the commercial music community, but that more information about the value of performances of ad and promo music was needed. Everyone agreed that using ASCAP’s data would be pointless, and that a priority of the industry should be to determine more accurately what the music is actually worth.

Gershon reminded the audience that SESAC was a for-profit company unencumbered by Consent Decrees, and that decisions at SESAC were made based only on practical business considerations. He said it was not necessarily SESAC’s desire to have every single composer or publisher of ad and promo music, but there was a “critical mass” of ad, promo and library copyrights which SESAC would need to be able to bargain successfully with broadcasters for payment of significant license fees.

It was decided that the same group formed to meet with the members of the ASCAP Board might also meet with SESAC to further explore the possibilities of working together.

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PCA Lobbies for ISWC

The ISWC, or International Standard Works Code, was developed as part of the Common Information System project by CISAC, the International Confederation of Societies of Authors and Composers. The ISWC allows a universal registration for all copyrighted musical works, establishes standards and guidelines for issuing the codes, and authorizes certain PROs to issue codes to others.

The adoption of the ISWC would eliminate the duplication of effort required for every local sub-publisher to re-register compositions with his local performing rights organization. It would also streamline the distribution of royalties, and cut administrative costs.

Although there is little doubt that adoption of the ISWC would greatly benefit all composers and their publishers, some PROs are exhibiting considerable resistance to change. For one thing, every PRO has its own way to handle registrations, and the adoption of the ISWC would obviously require changes. Second, it removes one of the ways in which some foreign PROs are able to camouflage their royalty-reduction activities.

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Digital Watermarking

Can you imagine actually being paid for every broadcast performance of your music anywhere in the world? It’s been the dream of composers and publishers for many years, and recently there has been a flurry of activity among companies developing the technologies to make this dream a reality. It now appears that we are closer than previously thought.

MusiCode, developed by Aris Technologies, appears to represent a breakthrough in digital watermarking technology. In very simplistic terms, MusiCode uses a modulation technology to add several channels of digital code directly on top of the analog audio signal. The code, which is applied in real time during the mastering process (or any subsequent step in production) can subsequently be detected, captured and identified using the proprietary decoder.

As with any technology which uses part of the audio spectrum to store data, there is the question of audibility. Aris acknowledges that if the code is audible or alters the audio signal perceptibly, the technology won’t be accepted by composers and producers. According to Aris, audio engineers who have conducted field tests with MusiCode have been unable to distinguish material with the code from material without.

Another watermarking technology developed by Solano uses spread-spectrum technology. This system is being used by Liquid Audio for watermarking music sent over the internet. However, according to experts, systems using spread spectrum technology have a more difficult time detecting music when there is other sound present (such as voice over or sound effects.)

The applications for digital watermarking are significant. Besides allowing performing rights organizations to drastically improve their identification of music, watermarking can be used to reduce piracy, and eventually to carry song identification which consumers could access with the next generation of radios with text.

Technologies such as MusiCode could revolutionize the way royalties for public performance are paid, increasing reliability while reducing costs. The performing rights organizations are cautiously examining the new technology, and CISAC is currently conducting a bake-off among competing technologies and developing standards for coding protocols. As the industry coalesces around standards and procedures for digital watermarking, it will be interesting to see who lines up in opposition to the new technology, and to examine their motives.

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Why you don’t always get paid by ASCAP

Under the terms of a 1960 Consent Decree (an agreement between ASCAP and the Justice Department as to how ASCAP will operate), ASCAP is required to distribute royalties based on scientifically designed surveys of performances. These surveys are either on a census basis (where every performance is counted) or on a sample basis (where selected hours from selected stations are monitored, and captured performances are counted.)

A census of performances (a complete count) is conducted for the three major television networks, the major cable channels, and in local television for all syndicated shows and movies. However, commercials, promos, station IDs and PSA’s on local television and cable are not counted on a census basis – they are sampled, as is everything on radio.

The amount of sampling and the stations and hours to be sampled is determined by an independent consultant to ASCAP, taking into account the fees paid by licensees in each medium and the cost/benefit ratio of the sampling process. To prevent contamination of the data, no one knows in advance which stations will be surveyed, or at what time. The results of the surveys determine how royalties from those stations will be distributed.

Many composers hear their music on television or radio and wait to be paid by ASCAP. However, unless performances are picked up in the Society’s survey, ASCAP cannot legally pay any royalties, even if you have proof that your music was broadcast at other times by that same station.

Of course, even if your music is broadcast and is included in the sample, you still need to be sure the music is properly registered with ASCAP, and that ASCAP gets a copy of any information you have regarding performances of the commercial (especially play schedules, ISCI codes, first lines of copy, etc.). For more information on advertising and promo music at ASCAP, call Wendy Hopkinson at (212) 621-6111.

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BMI’s Secret Guarantee System

Many BMI-affiliated composers may not be aware that paying royalties for logged performances isn’t the only way BMI compensates some of its writers and publishers. BMI’s little-known system of “guarantees” helps level the playing field for some publishers and composers when reliable performance information is not always available.

Although the guarantee system was originally designed only for publishers, it has been expanded in recent years to include some, but not all, composers. Guarantees are negotiated based on information provided by the publishers, who are required by BMI not to disclose any details of the existence or amount of any guarantees. If, during the year, the guarantee amount is exceeded by the actual royalties, the additional amount is paid. If it is not, the balance is written off and a new guarantee is negotiated.

In a letter to BMI chief Frances Preston, PCA Director Doug Wood requested that BMI makes its guarantee system public, make the payment criteria clear and fair to all its affiliates, and require that eligible composers always receive half of any guarantee. Ms. Preston has responded that BMI is always willing to meet with any writer or publisher who believes their earnings are not reflecting performance activity, but cautions that some composers work as independent contractors or create music on a “work for hire” basis which would disqualify them from participation in the BMI guarantee system. (Those who sign “work-for-hire” agreements with library publishers, take note!)

While we applaud BMI for finding innovative ways to pay for performances, we are concerned about a performing rights organization running a payment system outside of its normal distribution channels and requiring confidentiality from its affiliates. There is the obvious potential for abuse, and all BMI affiliates who are not receiving guarantee payments are paying for those who are. We hope BMI will make the guarantee system known to all, and protect the interests of all its affiliates, be they publishers or writers.

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