Why You Should Think Twice Before Joining ASCAP, BMI or SESAC Part I
It’s one of the top 10 questions I’m asked: ASCAP, BMI or SESAC? Which one should I Join? Here’s a rock ‘n’ roll answer: How about none of them. At least not right away.
All of these competing Performing Rights Organizations (PROs) spend a great deal of their members’ money selling “belonging” as if there is an immediate benefit to membership, like collecting money that they have been holding for you. But experience indicates that you’d be better off waiting to sign with any of them. Wonder why? Here’s the truth about PRO’s in this three part series taken from Moses Avalon’s latest book, 100 Answers to 50 Questions on the Music Business.
ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music, Inc.) often called the “Coke and Pepsi” of performing rights organizations, will both tell you it is irrational not to join one of their organizations. They collect the bulk of all the performance royalties in the US, and will assure you that you cannot get your share unless you are a member.
In their pitch they will make it sound as if your music is already out there earning money and the PRO is just holding it for you, like a bank, waiting for your application. But the truth is that unless you write a hit song, or a soundtrack for a TV show like The Simpsons you are unlikely to see any significant royalties, even if you are a member.
That said, the real question is not whether to join, or which one to join, but rather when is the right time to join either ASCAP or BMI (SESAC is by invitation and so the pros and cons outlined here are not really applicable.)
Many people who are new to the industry think they should sign with one or the other as soon as they can. The lavish events that both ASCAP and BMI host make one think that joining means there is an immediate chance to collect money. This is not true. Even if you are a member, you only get paid if:
1. There is money to collect for your musical works and, more importantly…
2. That you meet their requirements to receive money after you join.
Yes, signing a deal with a PRO, like so many other deals in the music business, is a guarantee of nothing.
In fact, it’s entirely possible that after you commit to a PRO, your song(s) could be earning money for them, but the PRO is paying you nothing in return. (See Part III about the pooling system for more on that.) Sounds crazy right? It is sad, but true. So, unless one of the PRO’s offers you a financial incentive to join, you should wait until you have written music that fills at least one of the following criteria:
- It was recorded by a significant artist and the album or single is to be released in the next few months.
- It was placed in a movie soundtrack that is about to be broadcast on a major TV network in the next few months.
- It was used as a theme for a series that is about to be broadcast on a significant TV network– in the next few months.
- It is currently getting a lot of play on a commercial radio station or podcast, or it has been tracked by a reliable service as being downloaded (legally) many thousands of times– now.
Notice that all four criteria listed above are either happening currently or scheduled to happen in the near future. Both ASCAP and BMI have payout systems that tend to respect events that are either happening in the immediate present, or around the corner. If you had a hit five years ago and are just thinking about joining now or you’ve just been signed to a major label but have yet to record even your first album, don’t expect to have any real negotiating leverage. Also notice which additional situations are NOT on my list above — writing the music for:
- A TV commercial.
- A soundtrack for a movie that has only seen theatrical or direct-to-video distribution in the US.
- Independent films that show at festivals only.
- A hot regional artist’s indie release.
For reasons that are too lengthy to go into here (but are discussed in detail in two of my books, Confessions of a Record Producer and 100 Answers to 50 Questions on the Music Business, these circumstances tend to not track on either ASCAP’s or BMI’s systems. However, any of these additional situations could someday metamorphose into one of the top four criteria if, for example, the festival film gets bought by a major studio and they air it on TV, or the local indie acts gets signed and marketed by a major label.
In those situations, which PRO you join could make a radical difference in your income. Since joining a particular PRO is the only bargaining chip you have for carving out better terms, like foreign rights, bigger advances, etc, it is in your best interest to wait till you have established leverage before you join.
Which direction your career takes prior to signing will also affect this decision. Are you a songwriter or have you become a soundtrack composer or are you both?
Each PRO has an accounting system that favors different types of public performances. (See Part III for which pays more for what.)
Both ASCAP and BMI will tell you that they pay the same, because to admit otherwise would get them into a bit of trouble with the law. (Google: “consent decree ASCAP” for more on this.) But this “we pay the same” pitch is a very transparent lie to catch them in. If you ask a representative of ASCAP how much BMI pays, they will tell you that they don’t know. And vice versa. How can they tell you that they pay the same as the competing PRO if they don’t know how much each other pays?
In addition, There are many cases of songwriter teams who are on competing PROs who receive wildly varying royalty checks for the EXACT same song performed in the EXACT same way. It is clear that they do not pay the same. (in my books I give detailed analysis on how each of their formulas work.)
To my knowledge the only critical analysis of the difference between the Coke and Pepsi of PROs is in the latest edition of my first book, Confessions of a Record Producer. If this is still a burning question after the explanation above, then I urge you to read chapter 20 in that book. Unfortunately, You’ll not find this information about the differences in each of their payment formulas anywhere else.
Another great book on this is Music, Money and Success, by the Brabec twins.
In Part II of this series on the truth about PROs, we’ll dive into the “non-profit” stasis that PROs like ASCAP and BMI claim to have. What if this turned out to be one of the biggest lies in he music space? Sign up for the free mailing list above or follow me on Twitter to be kept in the loop. @mosesavalon.