What Do ASCAP and BMI Do?

As we have talked about before, a song contains two distinct legal elements that implicate different rights, different royalties and different revenue streams: 1) the underlying song or composition; and 2) the recorded performance of the song.        The composition is embodied by the notes on a page of written music but exists in a more metaphysical sense as the thing created by the songwriter.  There can be many recordings of a song, but only one composition.  ASCAP and BMI are only concerned with the composition, and the rights, royalties and revenue generated by use (performance) of the composition. 

ASCAP (American Society of Composers Arrangers and Producers) and BMI (Broadcast Music, Inc.) are private, independent organizations that are owned by their member songwriters and publishers.  Congress has granted ASCAP and BMI the right to administer royalties for use of compositions.  Almost every time a composition is performed – live, on the radio, television, internet or other media, the songwriter is entitled to a royalty for the use of the song, which is usually called a performance royalty or publishing royalty.  (17 USC 106)  So how does that work:

Songwriters usually sign with a music publisher (or can be their own music publisher), giving the music publisher the right to administer some or all of the songwriters compositions.  Music publishing deals are historically 50/50 between the songwriter and music publisher, but there are many different types of deals. 

The music publisher then associates with ASCAP or BMI and tells ASCAP or BMI what songs the music publisher controls and who the songwriters are.  ASCAP and BMI issue a blanket license to the venues, bars, restaurants, radio, television, internet broadcasters for the use of the compositions in ASCAP and BMI’s respective catalog.  (A download is treated like a sale and does not generate a performance royalty.  An internet stream is a performance and generates a royalty.)  The blanket license fees are set by ASCAP and BMI, who consider the size of the audience, among other things, in setting the fees. 

ASCAP and BMI then survey the number of performances of each composition.  The songwriter gets paid for performance no matter who the recording artist is – Lennon/McCartney get paid a performance royalty when the Beatles recording of Help is performed and when the Deep Purple, Dolly Parton and Tina Turner recording of Help is performed.  A fraction of a penny is paid for each performance of a composition.  But with the huge number of venues, bars, restaurants, radio, television, internet broadcasters playing a popular song, the composition can generate a large amount of performance royalties.   ASCAP and BMI then pay the music publisher who controls the composition.  The music publisher then calculates the royalties owed among the compositions’ songwriters (if more than one), and pays the songwriters their share.  (Music publishers do other things also.)

Next time:  How does a recording artist get paid when their recording gets played?