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Making Money In Music: Performance Royalties And ASCAP, BMI And SESAC

by | Music Business | 0 comments

The performance rights organizations are central to making money in music as a composer, songwriter or publisher.

In previous articles, I’ve written about sync licenses and mechanical licenses as ways to generate income from your compositions.

However, if you are a composer, songwriter or publisher it is the performance license that will generate the most money and make the most difference financially in your life.

The good news is that by joining one of the three performing rights organizations (PROs) you let them take care of granting and administering those licenses so you can just focus on making music.

ASCAP, BMI and SESAC

The three performance rights organizations in the U.S. are:

  • ASCAP
  • BMI
  • SESAC

Every serious working songwriter, composer, or publisher will be a member of one of the three performance rights organizations.

You can belong to only one as a writer member but can be a publisher member of all three.

Performance Royalty $$$

For composers, songwriters and publishers, a PRO licenses their music for a fee to music users like TV networks, radio stations, Netflix, YouTube and others.

The PRO then distributes to their members performance royalties generated by performances of their music on television, film, radio, cable, Internet, and other mediums.

Performance royalties from performances of music cues or songs in your catalog can make up the largest part of your music income.

Placements in films and TV shows can quickly result in $10,000 to $100,000+ a year in performance royalties.

A hit song can easily generate $500,000 to $1,000,000 in performance royalties.

Songs or music cues that become standards or classics (think White Christmas or the theme to Gilligan’s Island) create streams of royalties that can last decades.

In a nutshell, if you want to make serious money with your music, you must join a performance rights organization (PRO)!

International Royalties

Because so many U.S. TV shows and films are shown globally, foreign royalties can make up a substantial portion of a writer’s or publisher’s income.

The good news is that ASCAP, BMI and SESAC all have international agreements with performance rights societies outside of the U.S.

Due of these reciprocal agreements, members receive royalties from foreign performances royalties directly from their PRO, usually on a one- to a two-year delay.

How It Works – The Performance License

The PROs function is to facilitate music licensing between music creators, music publishers and music users.

For example, if Disney wants to broadcast a piece of music that is in one of their films, they need to obtain a performance rights license from the performance rights organization that has that piece of music in its repertoire.

A performance rights license is required for non-dramatic public performances of all copywritten music. This includes performances on radio, TV, clubs, restaurants, hotels, concerts, airports, etc.

(FYI, dramatic public performances are for Broadways shows, plays, operas, etc.)

The performance rights organizations represent their members by licensing their repertory to music users. If the piece of music Disney wants to license is represented by BMI, then they have to get the license from BMI.

Blanket License

Because there are millions of performances on radio, television, concert halls, amusement parks, shopping centers, etc. every single day, trying to license music on an individual basis is impossible.

The solution is that the PROs issue blanket licenses to music users like TV networks who use lots of music.

These licenses authorize music users to perform any and all of the songs in their repertory as often as they like.

This solves the huge problem of trying to contact the author of every song or music cue to obtain permission to use their compositions.

In essence, the PROs act as a clearinghouse, making it simple to give and obtain permission to perform or broadcast music publicly.

Your PRO Works For You!

By becoming a member of one of the performance rights organizations and registering your works with them, you allow the PRO to act on your behalf to obtain performance rights licenses of your works, and to pay you for performances of your works.

As a member, you would then receive performance royalties for the public performances of your works.

Where Does The Money Come From?

The PROs collect monies from their “customers” – broadcasters and music users – for the right, or license, to use music on their broadcasts.

Broadcasters must pay an annual license fee based on their ad revenue and other factors to the PROs, who distribute these fees to their songwriter, composer, and publisher members in the form of royalties.

These broadcasters must pay ASCAP, BMI, and SESAC these licenses by law.

These customers include:

  • The four major TV networks: ABC, CBS, NBC and Fox
  • PBS and its affiliated stations
  • The majority of the 11,000 cable systems and virtually all of the cable programming services
  • Local commercial TV stations, including the affiliates of Fox, Paramount (UPN), Warner Bros. (WB) and PAX.
  • The Univision and Telefutura TV networks
  • Pandora, YouTube, Amazon, Netflix, Rhapsody, and Spotify, plus thousands of websites
  • Local commercial radio stations
  • Non-commercial radio broadcasters, including college radio stations,
  • National Public Radio (NPR) and their 1,000+ local stations
  • Background music services such as Muzak
  • XM/Sirius satellite radio
  • Airlines
  • Colleges and universities
  • Concert venues
  • Symphony orchestras
  • General licensees such as bars, restaurants, hotels, ice and roller rinks, circuses, theme parks, veterans and fraternal organizations, and more.

Performance Royalties Are Big Business

Performance licenses are big business. ASCAP currently collects close to $1 billion a year, as does BMI. SESAC is smaller and is estimated to collect around $400 million.

That’s almost $2.5 billion that gets distributed to writers and publishers each year!

How Do I Register My Works?

For all three PROs, there are two ways that musical works are registered:

  • By a title registration form
  • By cue sheet (for film and TV usage)

Title Registrations

Title registrations are done online and involve filling out a form for each work with the following information:

  • Title of the composition
  • Work duration
  • Writer(s) names
  • Writer(s) PRO affiliation
  • Writer(s) percentage splits
  • Publisher(s) names
  • Publisher(s) PRO affiliation
  • Publisher(s) percentage splits
  • Recording information

Example of a title registration through ASCAP:

Once registered, your works become part of the PRO’s repertory that they license to music users.

The agreement that you sign when you join your PRO gives them the right to negotiate performance licenses on your behalf and subsequently pay you performance royalties for performances of your works.

Who Registers The Works?

Writers who also own their publishing will register their works themselves.

Otherwise, it is usually the publisher’s responsibility to register titles.

Cue Sheets

Title registrations through a cue sheet are used for film and television performances.

A cue sheets is a document that lists the necessary information on all the music compositions, writers and publishers who have music in a program. Here is an example:

You can see that the cue sheet provides much the same information as a title registration:

  • Name of program and episode #
  • Title of work
  • Work duration
  • Writer(s) names
  • Writer(s) PRO affiliation
  • Writer(s) percentage splits
  • Publisher(s) names
  • Publisher (s) PRO affiliation
  • Publisher(s) percentage splits

Cue Usage Type

A cue sheet also includes the type of usage of a music cue.  The different types of usage are:

  • background instrumental (B,I)
  • bumper (BP)
  • visual vocal (VV)
  • background vocal (BV)
  • theme (T)

Performance royalty amounts will vary based upon the types of usages.  Visual vocal usages (where the vocalist is visible on-camera) have the highest payment rate, while background instrumental pays a lesser rate.

Cue Sheet Filing

A cue sheet must be filed for members to get credited for their performances of their works.

Cue sheets are usually submitted to ASCAP, BMI, and SESAC by the producer of a film or television program.

What The PROs Don’t Do

The performance rights organizations are not unions.

They do not publish music, books, records or CDs.

They do not place or promote songs or music with a publisher, nor do they provide legal advice on contracts.

They also do not license mechanical rights from the sale of records, CDs, videos, DVDs, etc.

They also do not deal with sync rights – those rights to use music in conjunction with a visual medium (film, TV, etc.)

They also do not deal with dramatic rights, sometimes called grand rights, which reflect performances on Broadway or off-Broadway productions, plus operas, ballets, etc. These rights are negotiated directly with the producers.

Let’s now take a closer look at each of the three PROs.

ASCAP

The American Society of Composers, Authors, and Publishers, otherwise known as ASCAP, is the oldest performing rights licensing organization in America, founded in 1914.

It is the 2nd largest PRO, representing over 600,000 songwriters, composers and publishers.

ASCAP is a not-for-profit organization. It is the only U.S. performing rights organization owned and run by its writer and publishing members. Its Board of Directors is elected by and from the Membership.

They license over 10 million songs and compositions each year, and process hundreds of billions of performances each year.

ASCAP also offers some nice benefits for music professionals: health, life, and equipment insurance, a credit union, plus grants and awards for writers.

Check out the complete list of affiliate benefits.

They have offices in New York, Los Angeles, Nashville, London, Miami, Atlanta and Puerto Rico.

ASCAP Payment Overview

You can read all about ASCAP’s payment system in detail here.

ASCAP uses a “follow the dollar” principle in the design of its payment system.

  • Fees collected from television stations is paid out to members for television performances
  • Fees collected from radio stations is paid out for radio performances
  • Fees received from streaming services is paid out for streaming performances

The value of each performance is determined by:

  • The license fees collected
  • The type of performance such as visual vocal, background music, theme song, jingle, etc.
  • The economic significance of the licensee, or how much a station pays in fees

Registering Your Works With ASCAP

To be paid, members must register their works through their Title Registration System.

Writers who also own their publishing will register their works themselves. Otherwise, it is usually the publisher’s responsibility to register titles.

Once registered, your works become part of the ASCAP repertory that they license to music users.

Tracking Performances

ASCAP uses various methods of keep track of the billions of performance of their repertory each year. The will either conduct a census survey or a sample survey to count performances in any medium.

Royalty Calculations

Because the royalty process is complicated, please go to ASCAP’s Turning Performances Into Dollars Guide for a full explanation on how they calculate royalty amounts.

Royalty Payment Schedule

Performance royalty distributions go out 8 times a year. Four of these payments reflect domestic (U.S.) performances, and four reflect foreign performances.

The distribution dates are listed on ASCAP’s website here.

ASCAP members generally receive payment 9 months after a work is performed.

Payment can be by check or direct deposit to your bank account.

How Do I Join?

To join ASCAP as a writer member, you must be the writer or the co-writer of a musical composition or song that has been:

  • commercially recorded or performed
  • performed publicly in a venue licensable by ASCAP
  • performed publicly in any audio-visual or electronic medium (film, TV, cable, Internet, etc.)
  • published and available for sale or rental as sheet music, score, or folio.

You can signup as a writer or publisher on ASCAP’s website here.

There is no cost to join as a writer or publisher member.

BMI

Broadcast Music Inc. or BMI was founded in 1939 and is a non-profit organization. It was formed as a competitor to ASCAP which at the time was the only PRO in the U.S.

In recent years they have surpassed ASCAP to become the largest PRO, representing over 750,000 songwriters, composers and publishers.

BMI offers member discounts on various services and products such as FedEx, Disc Makers, Berklee Online, Blue Microphones, Masterwriter software, Sweetwater, and more.

Check out the complete list of affiliate benefits.

BMI has offices in New York, Los Angeles, Nashville, London, Miami and Atlanta.

BMI Payment Overview

BMI’s complete guide to how they track and pay royalties is available here.

Registering Your Works With BMI

To be paid, members must register each work online by using the BMI Song Registration form.

Writers who also own their publishing will register their works themselves. Otherwise, it is usually the publisher’s responsibility to register titles.

Once registered, your works become part of the BMI repertory that they license to music users.

Royalty Calculations

Because the royalty process is complicated, please check out the following pages for a full explanation on how they calculate royalty amounts.

General Royalty Information

U.S. Radio Royalties

U.S. Television Royalties

Royalty Payment Schedule

Performance royalty distributions go out 4 times a year. BMI combines domestic and international payments on each statement.

The distribution dates are listed on BMI’s website here.

BMI members generally receive payment 9 months after a work is performed.

Payment can be by check or direct deposit to your bank account.

How Do I Join?

To join BMI as a writer member, you must have written, “at least one musical composition, either by yourself or with others, and the composition is currently being performed or is likely to be performed soon.”

There is no cost to join as a writer member.

BUT, to join BMI as a publisher member, there is a one-time application fee of $150 to register a publishing company that is owned by an individual, and $250 for a publishing company that is a partnership, corporation (including sole stockholder corporations) and/or limited liability company.

To sign up as a writer member, click here.

To sign up as a publisher member, click here.

Remember, you can join BMI, ASCAP and SESAC as publisher members, but you can only be a writer member of one.

SESAC

The Society of European Stage Authors and Composers was the original name for the organization now known as SESAC. SESAC is the 2nd oldest performing rights organization in the U.S.

Because they are the smallest PRO of the three, they are, in their own words, “a technological leader among the nation’s performing rights organizations utilizing the top digital technologies to enhance its tracking of performances.”

They offer discounts on products and services such as EPKpage, Masterwriter software, Guitar Center lessons, recording studio discounts, and insurance and financial services providers.

Check out their complete list of affiliate benefits.

SESAC is based in Nashville, TN, and has offices in New York, Los Angeles, and London.

SESAC Payment Overview

Because the royalty process is complicated, please check out the following pages for a full explanation on how they calculate royalty amounts.

Film & TV Royalties

Radio Royalties

Satellite/Internet Radio & Background Music Services Royalties

Registering Your Works With SESAC

To be paid, members must register each work by using their Online Works Registration form.

To register a work, you must first log in to your account and then click on the Song Catalog / Registration tab.

Writers who also own their publishing will register their works themselves. Otherwise, it is usually the publisher’s responsibility to register titles.

Once registered, your works become part of the SESAC repertory that they license to music users.

NOTE: Works that are placed in film or TV productions and are included on a cue sheet do not have to be registered separately.

Royalty Payment Schedule

Performance royalty distributions go out 4 times a year. SESAC combines domestic and international payments on each statement.

Domestic Royalty Payment Schedule:

SESAC Domestic Royalty Distriibutions
Courtesy SESAC website

Foreign Royalty Payment Schedule:

SESAC Foreign Royalty Distriibutions
Courtesy SESAC website

SESAC members generally receive payment 6 months after a work is performed, which is about one quarter earlier than ASCAP and BMI.

Payment can be by check or direct deposit to your bank account.

How Do I Join?

SESAC has a selective process for a composer or songwriter to become a SESAC affiliate. They do not accept unsolicited member applications.

According to their website, “SESAC requires potential affiliates or their representatives to have a pre-existing relationship with a member of the Creative Services Department.”

However, as I know quite a few SESAC writers, if you are having some success with your music you should have no problem becoming a member even if you don’t know anyone there.

There is no cost to join as a writer or publisher member.

Remember, you can join SESAC, ASCAP and BMI as publisher members, but you can only be a writer member of one.

Which PRO Should I Join?

This is a question that I’m frequently asked, and there really is no easy answer.

Some people contact ASCAP and BMI and go with the one they feel most comfortable with, or if SESAC allows them to join, go with SESAC.

Others pick their PRO because they see their favorite artist is a member.

Royalty Differences?

I have been an ASCAP member for over 25 years.

I am also a publisher member of ASCAP, BMI, and SESAC.

I have co-writers from BMI and SESAC on many cues that were placed in television programs, and we have compared royalty amounts to see which paid better.

Sometimes I did a little better as an ASCAP writer, sometimes they did better with BMI or SESAC.

Overall, the amounts are about the same. That makes sense, because if the amounts weren’t overall comparable between PROs, there would be a mass defection from one to the other.

But, over the years, I’ve noticed some differences that can make a huge difference in the royalty amounts you can receive.

Here are my personal observations:

  • Songwriters tend to do better with BMI; they have various bonus tiers that benefit song performances which tend to be featured performances. Hit songwriters seem to make a lot more money with BMI than ASCAP.
  • Score and cue writers have traditionally gone to ASCAP, with BMI in a close second place. However, SESAC is slowly recruiting more and more composers in the film/TV world.
  • ASCAP does have premium credits for cues that are on highly rated shows, but generally, this only adds a small amount to the overall royalty received. BMI’s premium credits are a bit higher.
  • For infomercials placements, BMI only pays one-half the standard rate for a background instrumental cue, so if you are getting placements in infomercials you should probably switch to ASCAP. ASCAP pays the standard rate for instrumental background cues for infomercials.
  • SESAC is open to doing deals. I helped them get SESAC writers into several major TV shows, and they, in turn, helped pay me for cues that were not paid out under a direct license deal.
  • SESAC is known for helping rising writers with advances and other help.

I hope you have enjoyed this article and all the articles in this series. Please leave you questions or comments below!

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