In the United States, “performance royalties” are paid out mainly by three performance rights societies, BMI, ASCAP and SESAC. (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, ASCAP or SESAC 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, ASCAP or SESAC 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, ASCAP or SESAC 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.
For years radio airplay was the primary method for marketing almost all genres of music. Although that’s no longer strictly the case, what’s remarkable is that recording artists and record labels have never received any form of payment for this usage — not a single penny! Yes, publishers, songwriters and composers receive compensation via annual fees paid to ASCAP, BMI, and SESAC by radio stations. These fees are then apportioned to publishers based on the number of times songs are played as logged by the stations and monitored by the performing arts societies.
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, ASCAP or SESAC 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. Whereas ASCAP and BMI operate on a not-for-profit basis, SESAC retains some income as profit. While ASCAP and BMI distribute all income from performance royalties to their composer and publisher affiliates (less an administrative fee), SESAC retains an undisclosed amount of performance royalty income. All three societies pay quarterly.
BMI, ASCAP or SESAC 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. SESAC is also unique among the US performing rights organizations in that it does not offer open membership – one must be approved to join. 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.
