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by Jeffrey & Todd Brabec
The Performance area (radio, television, cable, concert halls,
muzak, web sites, etc.) represents for most successful writers
and music publishers the greatest source of continuing royalty
income.
A top 10 worldwide hit song can easily earn one million dollars
for its songwriter and publisher with a #1 song capable of
earning 3 million dollars worldwide. A theme song to a successful
television series can top 2 million dollars in earnings for
its writer and a major worldwide concert tour can generate
well in excess of $1,000,000 in songwriter and music publisher
earnings. The great thing about this area is that the royalties
continue to flow for many years after a song's initial success.
Over 4 billion dollars in performance monies are collected
each year by organizations representing over 750,000 writers
and music publishers throughout the world. These organizations,
known as performing right organizations (PROs), negotiate
license fee agreements with the users of music (radio and
television stations, cable services, web sites, concert halls,
airlines, background music services, etc.), collect the fees;
and then distribute the monies back to their writer and publisher
members who have performances in the areas licensed.
Simply put, when you listen to a song on the radio or in
a television program or on the speaker in a supermarket or
in a large concert hall, the writers and publishers of the
songs you are hearing are making money.
The basis for these many billions of dollars in writer and
publisher royalty payments is the performance right - a property
right recognized by the U.S. Copyright Law as well as the
copyright laws of most countries of the world. This right
recognizes that a writer's creation (song, underscore to a
movie or TV series, symphony, opera, etc.) is a property right
and informs anyone that wants to use it that they must, in
practically all situations, get permission through a license
and make a payment.
Performing Right Organizations
Practically every major country in the world has a collection
society which administers the performance right. Writers and
publishers join these collection societies, almost all of
which are writer and publisher owned and controlled, in order
to receive their royalties. In the U.S., three separate organizations
do the job. They are:
ASCAP (The American Society of Composers, Authors and Publishers),
the largest performing right collection Society in the world,
is a membership association founded in 1914 and is owned by
its writer and publisher members. ASCAP's annual revenues
are in excess of 650 million dollars and it distributes all
money each year after operating costs (approximately 14-15%)
to its writers and publishers. ASCAP has a Board of Directors
of 12 writers and 12 publishers who are elected by the writer
and publisher membership.
BMI (Broadcast Music Inc.) is a broadcaster owned corporation
founded in 1939. It collects in excess of 550 million dollars
a year with operating costs in the area of 16 to 17%. BMI
has a Board of Directors of 13 representatives associated
with the broadcasting industry and one BMI employee.
SESAC started out as a family owned business and was founded
in 1930. It was bought by a group of investors in 1992 and
is now a for-profit corporation. SESAC does not release information
on revenue, operating costs or amount of profit that goes
to its owners.
REVENUES
Areas Licensed
The main areas that are licensed in the U.S. by the PROs are
the television networks (ABC, CBS, NBC, Fox, UPN and WB),
local television (over 1,000 stations), pay cable services
(HBO, Showtime, The Movie Channel, etc.), basic cable and
superstations, radio (over 11,000 stations), public broadcasting
television and radio (PBS), colleges and universities, nightclubs,
bars, concert halls, hotels, pay per view, web sites, symphony
orchestras, etc.
Of the over 1 billion dollars collected each year by ASCAP
and BMI, the breakdown of the license fees collected from
each area are as follows:
Television and Cable: 35%
Radio: 28%
General: 13% (includes clubs, concert halls,
background music services, etc.)
Foreign: 21%
Interest and Miscellaneous: 3%
Licensing
Each PRO negotiates license fees with groups or entities that
use music (radio stations, television networks, live music
venues, etc.). The amount of the license fees received are
based upon many negotiating factors with one of the main considerations
being which writers and repertory (songs, movies, television
series) are represented by that organization.
License fee deals with users of music can take many forms.
Some are based upon a percentage of the user's revenue; others
a flat fee; others on the number of subscribers; with others
based upon admission prices, seating capacity, entertainment
expenditures, number of full time enrolled students, as well
as other factors. No license can be for a period longer than
5 years.
© 2001 Jeff Brabec, Todd
Brabec.
This article is based on information contained in the new,
revised paperback edition of the book "Music, Money, And Success:
The Insider's Guide To Making Money In The Music Industry"
written by Jeffrey Brabec and Todd Brabec (Published by Schirmer
Trade Books/Music Sales/435 pages). Click
Here to buy this book.
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