AS CAP P ay.m e n tSystem Explained

Part One: TheASCAP License

This arlicle ix Part One of aseries designed lo give (mr mem-her,~ a better umterstanding o/lheASCAP Payment System and themany.factors that go mlo calculat-ing how mm~h a particular pelSu’-mance is worth. We arc starting(~]’ thi.~ xcrie.¥ with a look alASCAP 5 licensing (/,[brts. *Future articles in the series willcover how n’e track and identil5,

sands of cus-tomers eachyear. Andspecificallydealing withWeb site andlnternet licens-

Marc ing is ASCAPMorgenstern Senior VP of

Strategic Planning and NewMedia Marc Morgenstem, whodirects his team of professionals

’,,’ ascae , ASCAP,s’urvcs’s how royaltiex ./br .’"’’¥pec’fic tyl’ex qf Pe’f°r’ ?’HOWco,ectYou~"~rnl(lllC’(~S are determilled, attd

collecting international royal-tic3’.

In 1998, ASCAP became thefirst performing right organiza-tion to collect over a half-billiondollars for its members. Of that,$371 million was collected fromour customers - the users ofmusic - for performances in theUnited States alone. Negotiatinglicenses with customers and col-

lecting thefees is one ofASCAP’smost impor-tant functions.Yet ASCAP’slicensingefforts are

Vincent Candilora probably the

least familiar area of our opera-tion to our members. Under thedirection of ASCAP Senior VP ofLicensing, Vincent Candilora, ateam of 168 staffers is responsi-ble for licensing tens of thou-

Royalties?

in the exploding dig- "ital world.

Since ASCAP’scustomers are sodifferent (see box below), ourlicensing effort is organized intospecialized teams responsible fordealing with specific types oflicensees.

Web Site andInternet LicensingThe Internet provides a

dynamic new source of licensingrevenue for ASCAP and we areaggressively pursuing its oppor-tunities. With nearly 1,000 sitesnow licensed, our revenues fromthe Internet tripled in 1998. Ourefforts have been greatlyenhanced by the developmentand use of the ASCAP EZ Seeker(see technology article, page 8).

In addition, a simplified three-tiered licensing rate structure hasbeen implemented. This providesan easier introduction to thefinancial obligations a siteassumes when using copyrightedmusic.

BroadcastTelevision LicensingOne-third of ASCAP’s overallrevenues are generated from

the use of music on net-work, local and cabletelevision. The ABC,CBS and NBC televi-sion networks payASCAP flat dollar

blanket license fees.License fees

for local television are the prod-uct of both rate court litigationand negotiations betweenASCAP and the TelevisionMusic License Committee.Committee members are broad-casters representing the broadspectrum of the television indus-try. This licensee group, morethan any other, has tried vigor-ously to reduce the license feesthey pay for the use of music.

In presenting our case, ASCAPhas a team of negotiators com-prised of our licensing executivesalong with counsel and indepen-dent experts on music usage. Ourgoal, of course, is to prove to theindustry the ever-increasingvalue of ASCAP music to theirprogramming. That is whyrecruiting and retaining memberswith the greatest numbers of per-

formances is so important to ouroverall licensing success, whichimpacts all members’ potentialearnings.

Preparation for these negotia-tions requires an enormous effortin researching music use and howit is changing on the airwaves,and in providing tremendousdetail about the use of theASCAP repertory on television.

Radio LicensingFortunately, on the radio side,

negotiations have historicallyresulted in agreement on licensefees and terms without rate courtlitigation. As with television,ASCAP has dealt with membersof the Radio Music LicenseCommittee in negotiating musiclicense fees for five-year terms.

For commercial radio, ASCAPoffers two types of license agree-ments - blanket and per program.Most stations choose the blanketagreement under which they payan annual fee, billed monthly,and based on a percentage of thestation’s annual revenue. The perprogram agreement is chosen pri-marily by stations which use lessfeature copyrighted music, typi-cally employing News/Talk for-mats, or religious programming.Under the per program agree-ment, fees are principally calcu-lated based on actual musicusage.

For non-commercial radio,such as college radio andNational Public Radio stations, ifnegotiations are unsuccessful, arate arbitration proceeding is held

WHO ARE ASCAP’S CUSTOMERS?ASCAP customers include a diverse group of businesses and organizations that use music in many different ways.In order to license effectively, ASCAP employs representatives who understand the business needs of each of ourvarious types of customers:Q The major television networks ~ Public television - the Public Broadcasting System (PBS) and its affiliated sta-

tions ~ The majority of the 11,000 cable systems, the satellite delivered services and virtually all of the cable pro-gram services ~ Over 1,000 local commercial television stations ’J The Univision Television Network ~ About11,500 local commercial radio stations ~ About 2,000 non-commercial radio broadcasters, including college radiostations and National Public Radio (NPR) stations ~ Background music services ~J Colleges and universities .~About 1,000 symphony orchestras r~ More than 6,000 concert presenters Q Web sites and Internet serviceproviders ~ Tens of thousands of "general" licensees: bars, restaurants, hotels, ice and roller skating rinks, con-ventions, retailers, shopping malls, circuses, theme parks, sports teams and leagues, dance schools, health clubs

~xand many other businesses

under the auspices of the U.S.Copyright Office.

Radio is our second largestsource of domestic revenue and26% of our overall revenues.

Cable LicensingThe cable television industry

has undergone tremendouschange and revenue growth overthe past two decades. ASCAP’slicensing efforts are aimed atboth the program services, suchas HBO, Showfime, MTV, etc.and the system operators towhich households subscribe fortheir cable services. ASCAP hasbeen engaged in long-standingrate court proceedings with thecable industry to determine rea-sonable fees as well as other mat-ters.

While we await the court’sdecisions, ASCAP is licensingthe cable industry on an interimbasis. Assuming a favorable out-come, ASCAP expects to collectsubstantially more in license feescovering the interim years as wellas the future.

Educational andSymphonicLicensing

ASCAP has special agree-ments for various types of pre-senters in this field. For example,we have an orchestra agreementnegotiated with the AmericanSymphony Orchestra League anda college and university agree-ment, which covers the widevariety of performances that takeplace on college campuses. Anorchestra’s license fee is based ona percentage of its annual boxoffice receipts from the previousseason. Colleges and universitieshave three license options fromwhich to choose. Of course, vir-tually all orchestras, colleges anduniversities that use music areknown to ASCAP and arelicensed.

We also offer two forms oflicense agreements for promotersand presenters of concerts,recitals and similar events - ablanket concert license and a perconcert license.

With respect to the vast num-ber of concerts and recitals thattake place throughout the countryin large venues and small, thelicensing staff has the initial taskof identifying events to belicensed. To do so, they rely on

f MusicMakes i

[Diffe~the i!

Look for the ASCAP CustomerSticked This indicates that anestablishment pays an ASCAPlicensing fee for the music theyuse.

information from publisher mem-bers on their rental agreements.programs submitted by our writermembers, and other methods,such as Internet research, word ofmouth and clipping services.

General LicensingASCAP’s general licensing cus-tomers encompass a vast array ofdifferent businesses and accountfor 14% of overall revenue.ASCAP collects substantiallymore in general licensing thanany of our domestic competitors.We are proud of our provenstrength in this area. Given thetens of thousands of customers inthis category, including bars,restaurants, hotels, ice and rollerskating rinks, circuses, themeparks and more, the generallicensing operation is the mostlabor intensive. Our licensingrepresentatives must stay on topof new businesses opening everyday across the country and con-vince them of the value of anASCAP license. Some of thesebusinesses have never heard ofASCAP and do not understandthat the Copyright Law requiresthem to have permission to usemusic. It is no easy task!

Our general licensing team istwo-tiered, with administrationand customer service located inoffices in Atlanta, and a fieldsales staff servicing all regions ofthe country.

As with other customergroups, ASCAP tries to identifytrade associations with which tonegotiate rates on behalf of simi-lar types of customers, such asthe American Hotel and MotelAssociation, the BowlingProprietors Association ofAmerica and the National

Licensed Beverage Association.Licenses for different busi-

nesses are designed with theirneeds and those of our membersin mind. Most businesses knowthat the ASCAP license providesgood value and choose to enterinto agreements with us. Some,however, require a great deal of"selling" to convince them thatthey need an ASCAP license andthat music enhances their bottomline.

Under the ASCAP ConsentDecree, an agreement ASCAPentered into with the FederalGovernment to avoid antitrustclaims, if we do not reach agree-ment on rates in negotiation withour customers, our customershave a right to initiate a courtproceeding for determination ofreasonable license fees. In a ratecourt proceeding, ASCAP and theindividual customer or group pre-sent to a federal judge their casesfor the fees each believes are rea-sonable. ASCAP bears the burdenof proving that its proposed ratesare reasonable. ASCAP and thecustomer are then bound by thecourt’s decision. While most rateproceedings take place in NewYork, under a recent amendmentto the copyright law, certainsmall businesses may initiate rateproceedings in the city wheretheir federal appellate court sits.In order to ensure consistency,the decisions in these cases willbe reviewed by the Federal Courtin New York with jurisdictionover ASCAP’s Consent Decree.

MarketingAs our readers know, a lobby-

ing effort led by the NationalRestaurant Association resulted inpassage of an amendment to theCopyright Term Extension Actthat expands exemptions frommusic licensing fees for bars,restaurants and retailers. ASCAP

is committedto overturningthis recentmusic licens-ing amend-ment. In themeantime, we

Phil Crosland are aggres-sively working to change the dia-logue with our customers throughseveral new marketing initiativesunder the direction of ASCAP VPof Marketing Phil Crosland. Theseinitiatives are designed to showour customers how valuablemusic is to their businesses and

the advantages and fairness ofpartnering with ASCAP.

Among these programs is acooperative advertising campaignthat benefits both our customersand ASCAP, and the introductionof a Customer Card similar to theASCAP Member Card. TheASCAP Customer Benefit Card isspecifically designed for restau-

~ ASCAPCUSTOMER CARD

cu~x~ lg99~GRIILL u~

rrs ee ~ ~u~loes ~ I’ulu sn~

rants, bars, grills and retailers. Itsaves them significant dollars oncredit card processing, promotion-al merchandise, restaurant sup-plies, wireless products, travel andinsurance. To date, over 28,000customers have requested andbeen qualified for the card. We’veinaugurated these innovative pro-grams to minimize the negativefinancial impact of the unfairmusic licensing amendment andmake the jobs of our licensingfield representatives a little easier.

Another successful componentof our customer relations programis bringing ASCAP membersdirectly to our customers to speakand perform. This reminds ourcustomers first-hand just howmuch music enhances whatever itis they do and that the music theylove most is by the members ofASCAP!

Without question, licensing theusers of music is at the very heartof the ASCAP Payment System. Itis a challenging job requiringskills in education, creativity,resourcefulness and tenacity.Success means continued growthin ASCAP revenues, which inturn means more money for distri-bution to our members. ·

For moreinformation,

visit thelicensing area ofwww. ascap, com.

: As a member afASCAP 3ou have theoption to issue direct pet~;rmance licen.~-es to broacast Station5 or calIle sen’iceson any terms you and they Inll.~ a~l’ee

upon. However, in such a ca.~e, you mustml%rm ASCAP thzwugh the MemberServices Department that you havelicensed your work directly becauxe )ouare not entitled to be paid by ASCAP Jbrperfi~rmances you have licensed yourse(fi

THE ASCAP PAYMENTSYSTEM EXPLAINED

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to make sure all members receivewhat they earn in the fairest waypossible."

There are billions of ASCAPlicensed performances each yearand ASCAP is comnfittcd to paying our members on a fair, atOLl-

rate and efficient basis.Every performance picked up

in ASCAP’s survey generales acertain number of credits. Eachcredit ix worlh a certain dollarvalue. The number of credits foreach performance depends uponseveral factors, most importanfiy:

· how the music is used (e.g.,

f ~"’"’~’ ~ ""~’"~ ~--...~ visual v,,,eal, back

~. · · does ASCAP figure ’ theme);I ~ lll~ out what a particular j · whereI · · i IYlY performance is ~/the music ix~. worth? j used (e.g.,

-- ~,~,, radio, networkTV, pay cable): and · whenASCAP is ~ the music is used (e.g., mornings.

guided by a ~ afternoons, evenings)."fol h)w- t h e- d tf -,t..."~lar" principle in thedesign of its payment system. Inother words, revenues collectedfrom radio stations are paid out tothose members whose works areperfk~rmed on radio, revenues fornetwork television are paid out lbrpertbrmances on network televi-sion, and so on. ASCAP Iracksinusic use on these and othermedia and live venues to deter-mine what works are pedkmnedand the appropriate writers andpublishers to be paid.

Todd Bmbec, ASCAP SeniorVice-President and Director ofMembership, gives many semi-nars throughout the year to helpmembers understand the paymentsystem. "There are many steps inthe calculation from performanceto royahy check, but each step iximportant to an-iviug at the filirestand most ol2}ectivc payment," saysBrabec. "1 find thai members whodecide to deepen their undersland-ing of the payment system, forwhatever reason, end up seeing ilklogic. They realize it is designed

Monies to writers and pnblish-ers are paid out m separate dislri-

Todd Brabec

buttons covering the same perl:or-mance periods and ASCAPdivides the dollars available fordistribution equally between writ-ere and publishers.

Until recently, the dollar valueof a perfi)rmance credit was determined by dividing the I.tal hum-

ber of ASCAP credits beingprocessed for wrilers or publishersin a performance quarter into thetotal number of dollars a’<dlahlefor distribution.

Peter Boyle

Effiective with the 1999 Junepublishers’ and July writers’ dis-tributions, ASCAP now calculatescredil vahJes on all alll/tlaJ rather

than quarterly basis. This changeeliminates the quarterly fluctua-tions in credit values based onwhen revelme is receixed duringthe year and the number of creditsavailable for distribution in aquarter.

Peter Boyle, ASCAP’s VicePresident and Chief J:~cononliM, ix

responsible for overseeing thedesign of the ASCAP surxeys andpayment formulas to ensure theiraccuracy and fairness. "To do so."sztys Boyle, "we work xery hard titcontinually fine-tuning theASCAP payment system to arriveat the relative value of these per-formances of our members’

works. Determining credit xalucson an annnal rather than quarterlybasis enhances the fairness of ourdistribution system as it elimi-nates these fJuct LUHiOnS andallows members m better’ predicttheir cltrnings?’

A writer’s or publisher’s royabty chuck ix determined by muhiplying the number of creditsearned Ik~r performances of his orher works during a qtlarler by thedollar value of a credit lor IJlat

quarter. For example, if a wrilerearned I0,000 credits fi~r perfor-mances of her works in a three-month period and tile value of onecredit wax S4.95, the writer’s roy-airy check would be 549.500( I 0,000 X $4.951.

Generally. royalties fi~r a singlemusical work. in any surxeyedmedium, are the producl of thecalculation tm the next two pates.

There are two methods ofpayments to ASCAP writ-ers: The CurrentPerformance Plan and theAveraged PerformancePlan, Most writers chooseto be paid on the 100%Current Performance Plan,which means they receivefull value of their roya~ie~for payments in the currentdistribution quarter. TheAveraged Performance Planreplaced the "Four Funds"plan of distribution effectivein the July t999 writers’ dis-tribution. The AveragedPerformance Plan averagesthe dollar value of perfor-mances over time. It isdesigned to smooth outfluctuations of distributionsfrom quarter to quarter andto provide a steadier streamof income. The averagedPerformance Plan insuresthat writers on this planreceive exactly the sameamount as they would onthe Current PerformancePlan only they will receivethese royalties over anextended period of time. Foreach member, distributionpayments are based on acombination of current per-formance dollars (20%), 20quarters or five year aver-aged dollars (60%) and 40quarters or ten year aver-aged dollars (20%).

TURNING PERFORMANCES

Each type of perfor-mance is assigned a"use weight," whichdetermines its value rel-ative to other types ofperformances. Featureperformances receivethe highest weight at100%. Theme weightsrange from 25%-60%.Underscoring is general-ly weighted at either42% or 54% per 3 mirautes. Advertising music(jingles) are weighted3%.

There are many differentuse weights outlined inASCAP’s weighting for,mula designed to assignrelative values to thewidest possible range oftypes of performance.For example, in the caseof live symphony andconcert performances,not only the length, orduration, but also theinstrumentation willaffect the number ofcredits a particular per-formance will generate(full orchestra, chamberwork, etc.). Periodically,the ASCAP Boardadjusts the use weightsto reflect changes in theindustry.

The licensee or "station"weight reflects thelicense fee paid by aradio, television, or cablestation (or group of sta-tions) and the number ofhours in each survey ofperformances. Thelicensee weight is alsoreferred to as the "hook-up" weight with respectto network television,reflecting the number ofstations carrying abroadcast.

For example, perfor-mances of a song on astation that pays ASCAP$500,000 in license feesannually would receive ahigher value than thesame performances ona station that pays us$15,000 annually.

The median stationweight is given a valueof 1, with weights for sta-tions paying more orless than the medianlicense fee determinedaccordingly.

ASCAP also assigns"weights" based onlicense fees from othersurveyed media, suchas the Top 200 live con-certs, tours, symphonicand chamber concerts,web sites, backgroundmusic services, airlines,circuses and ice shows.

This factor ensures thatthe license fees thatASCAP receives fromany medium are paid towriters and publishersfor performances on thatmedium. In other words,the money received fromcable is paid out forcable performances, etc.In the case of radio,ASCAP conducts sepa-rate surveys of country,Latin, jazz, urban con-temporary, religious,classical, ethnic, andpop music stations sothat the total monies col-lected from those genre-specific stations is paidto the writers and pub-lishers of works with per-formances on those sta-tions.

This "follow-the-dollar"system ensures that per-formance paymentsreflect what is actuallybeing performed in eachmedium.

On television, the valueof a performance canvary depending on thetime of day or night orwhether it takes place ona weekday or on theweekend, or holiday.

Just as the type of per-formance (e.g., theme,background) affects thevalue, the time of dayduring which the perfor-mance takes place alsoaffects the value of aperformance. For exam-pie, on network televi-sion, a prime time per-formance is weightedhighest at 100%.Viewership is highestduring prime time andstations generate themost revenue in thosehours. The weight of aperformance in the after-noon is 75%. The periodwith the fewest numberof television viewers, theovernight period, gener-ates the least amount ofcredits. Whether a showairs on a weekday,weekend, or holiday alsoaffects the weight.

INTO DOLLARS

Fees collected from non-broadcast, non-sur-veyed licensees (bars,hotels, restaurants andthe like) are applied tobroadcast feature perfor-mances on radio and allperformances on televi-sion, which serve as aproxy for distribution pur-poses.

Performances trackedon television and radioserve as an indicator ofperformances that takeplace at restaurants,bars and otherlicensees. It would beimpractical to survey allgeneral licensees ofASCAP’s works. Basingthe distribution of gener-al fees on surveyed per-formances on radio andtelevision proves to bethe most cost-effectiveway to pay these perfor-mance royalties.

For radio only- Songsthat reach a certain levelof radio feature credits ina quarter receive addi-tional performance cred-its in that quarter fortheir radio sucess.These additional creditstranslate into increasedroyalty payments forwriters and publishers ofqualifying songs. Thesepayments represent theincreased licensingvalue to the repertory offrequently performedsongs, such as currentchart songs.

] CREDITS ]x

I s.^.E IX

~CREDIT VALUE = I

$ROYALTYI

When all of these factors are com-puted, we arrive at the number oftotal performance credits. Afterestablishing the number of creditsgenerated by a performance, thenext step is to allocate these creditsamong all of the writers and publish-ers of the work based on the shareeach should receive. ASCAP isadvised of the correct shares to bepaid when members submit TitleRegistrations. For example, if two co-writers of a song share royaltiesequally, each will receive 50% of thetotal credits. Similarly, each writer’spublisher will also receive 50% of thetotal credits.The final step is to multi-ply credits by the appropriate creditvalue to arrive at the royalty payment.

THE ASCAP PAYMENTSYST M XPLAIN DPart Three: Broadcast and Cable Television

7hi.~ arlic/e is Part Three q/aseric.~ designed u~ ~,ive ~mrt/hT;Jl/;’etW ~l belier umier.slandi,~qf lhe AS(’AP Paw~wnt ,%,wem.]tl Ihe /a.W i.¥.suc, we ]ooked ~ilthe d(/~’rent /~lctot’s lll(it ,k’o bltothe cal(’tt/athm of roy(dlie.L/br o.~ingh’ pe(/brm(lnce in any sur-veyed medium, ht thi.s ivsuc. ~cwill e.v~lain hon ~e trdck, hh’n-li/?; ~lllil V(dlle [)c’l.’/iJl’llttltl(’f’.S (UI

bt~a&a.vt dtu] cable telerixion.

L icense fees collectedfrom broadcast and cabletelevision constitute

ASCAP’s largest source of rev-enue, making up to close to 45%of overall domestic receipts, anda substantial portion of incom-ing foreign receipts. In keepingwith ASCAP’s "follow the dol-lar’’ policy, monies attributableto network television are paidout for performances on net-work television, monies attribut-able to local television are paidout for local television perfor-mances, cable monies are paidout for cable, and the fees forpublic television are paid out forperformances on PBS and itsstations. ASCAP is paid anannual blanket license fee bymost of the television and cableindustry for the right to use anymusic in the ASCAP repertory.Some local television stationsopt for a per program license,under which they only payASCAP for programs contain-ing ASCAP music not otherwiselicensed.

ASCAPVice Presidentof Film andTelevisionMusic NancyKnutsen talksabout the

Nancy Knutsen importance of

music to television: "Music is avital component of virtually allprogramming - feature films,movies-of-the-week, episodicseries, as well as locally origi-

nated shows, such as news, D American Movie Classicssports, and public affairs, i_l Black Entertainment TVBecause it is such an integral ~lCarloon Networkpart of the total viewing experi- TI Cinemaxence, we may not always notice Cl Comedy Centralthe various uses of music within L.i Country Music TVa program, which include fea-ture performances, themes, L.i Discover), Channel

underscoring, and music in ads, ~ Disney’ Channel

logos and promos. And, of LJE! Entertainmentcourse, every genre of music is LJ Encorerepresented." ASCAP tracks all F..i F/Xtypes of uses in our surveys of ~ Family Channelperformances on television and ~1FLIXcable. LJ HBO

Tracking ~ History Channel

Performances OnTelevision And CableThe ASCAP survey of perlbr-mances covers more than 7.5million hours annually.ASCAP conducts a census sur-vey, or complete count, of mostmusic performed on broadcasttelevision and the major cableservices.

The ASCAP CensusSurvey of Televisionand Cable includes:

Network ’IVJ ABC, CBS and NBC net-works - all performances(including music in commercial.promotional and public serviceannouncements)_1 Fox, Paramount, WB,Univision - all programs

Local TYAll syndicated programs, fea-

ture films, and movies of theweek

Locally produced programsfor which ASCAP is paid on aper-program basis

Cable TVAll programs on the major

cable services, including:[_l A&E

Learning ChannelLifetimeMovie Channel

[_1Nashville NetworkNickelodeon

.J PlexZI Sci-Fi Channel_1Showtime

STARZ!Tl NT~1Turner Classic Movies7j USA

PBS[~ All PBS programs, syndicat-ed programs and films on sta-tions with S20,000 or moreannually in license fees

ASCAP conducts a sample sur-vey of performances on thesmaller cable services and PBSstations, local programming onlocal TV and PBS, and music incommercials, promotional andpublic service announcementson local TV, cable and PBS.The sample survey of these per-formances is designed to be astatistically accurate reflectionof performances taking intoaccount all times of the day, alldays of the year, all regions ofthe country and all types ofcable services and local TV sta-tions.

IdentifyingPerformances -The Importanceof Cue Sheets

The starting point for the var-ious television surveys, whetherthey are a complete count or asample survey, is a programschedule. The program schedulelists the stations broadcastingeach TV program, the specificprogram (including episodetitles for syndicated series), andthe date and time of broadcast.ASCAP purchases computer-ized program schedules fromtwo major vendors.

To identify what musicalworks are performed on bothbroadcast and cable television,ASCAP matches the programschedules to its computerizedcue sheet database. Cue sheetsare provided to us by the pro-gram producers, distributors,broadcasters or foreign soci-eties. Cue sheets list the detailedinformation on each of the com-positions included in the TVprogram. The cue sheet indi-cates how the music is used(feature, theme, underscoring,etc.) and the duration of eachperformance. The sheet alsoindicates the composers, writersand publishers of each composi-tion. All of this infimnation iscritical to determining howmuch each composition will bepaid as well as which membersare entitled to be paid.

ASCAP must have a cuesheet on file to credit our mem-bers and make payment.

Among ASCAP’s many tech-nological innovations was thedevelopment of unifk)rm cue

sheet software,called EZQ,which hasbecome theindustry stan-dard. Most ofthe major stu-dios and pro-

Seth Soh£man

gram producers use EZQ, which greatly facil-itates the process of preparing cue sheets andidentifying performances of our members’works. Seth Saltzman, Director ofDistribution, notes: "ASCAP receives over60,000 cue sheets and processes tens of mil-lions of pieces of music performed on televi-sion and cable in a year. To handle this vol-ume, we have a dedicated professional staffdevoted to processing cue sheets and match-ing them with the performance data. Thedevelopment of EZQ, as well as other techno-logical resources, has made it possible to dra-matically increase the number of perfor-mances we can process in a distribution quar-ter.’’

When a cue sheet arrives at ASCAP elec-tronically via EZQ, the data are automaticallyloaded into ASCAP’s cue sheet database,called SHOW. SHOW stores all necessaryinformation for distribution purposes. Thisinformation includes such detail as series,episode, movie title, year of production, orig-inal airing date, producers, actors, as well asthe writers, publishers and ownership sharesof all music cues. When cue sheets are fried onpaper, the information has to be keypunchedmanually into SHOW.

While cue sheets are the main source ofperformance information for TV programs,ASCAP also receives logs from broadcastersfor programs they produce and airing sched-ules for commercial, promotional and publicservice announcements. In addition, we inde-pendently make tape recordings of televisionprograms. These tapes are used to supplementthe cue sheets and logs. They allow us to con-duct quality control checks and assist in iden-tifying performances in locally produced pro-grams and announcements.

These multiple sources of performanceinformation allow us to make accurate distrib-utions to our members for television perfor-mances.

How Performances Are ValuedEach surveyed performance generates a num-ber of credits based on several factors:21 Whether the performance took place onnetwork TV, local TV, PBS or cable TV;21 The type of usage - feature, theme, under-score, jingle, etc.;21 How much a particular station, group of sta-tions, or service pays in license fees;21 The time of day of the performance - primetime, overnight, weekend, weekday, etc.

Each one of these factors is designed toensure that ASCAP’s payments "follow thedollar" and, in a fair and objective way, reflectthe relative value of one type of music perfor-mance vis-a-vis another.

The three major networks-ABC, CBS andNBC - pay the nighest license fees in televi-sion and therefore performances on these net-works generate the nighest royalties. The

number of affiliated stations that carry a net-work broadcast is also taken into account.

With respect to the Fox, Paramount, andWB networks, license fees to ASCAP are paidby each individual affiliated station, in muchthe same way we license local television. Thenumber of affiliates to carry a broadcast, andhow much each station pays in license feesdetermines the "licensee weight" affecting thevalue.

Univision pays license fees for all perfor-mances on the Univision network as well asall performances on the local TV stationsowned by Univision. These fees are distrib-uted for the performances in Univision pro-grams and the local programs broadcast by theUnivision affiliates.

In the cable area, ASCAP has been engagedin long-standing rate court proceedings todetermine reasonable fees as well as othermatters. Because of this, we are being paidinterim license fees that are significantlylower than those paid by network or local tele-vision, impacting the credits earned for cableperformances. Assuming a favorable out-come with respect to the litigation, we hope tocollect and distribute more in license fees cov-ering the interim years as well as the future.

As you can see, there are several variablesthat go into the crediting of performances ofmusic on television and cable.

Performances OutsideThe United StatesAs we all know, American fdms and televi-sion shows are immensely popular throughoutEurope and in other parts of the world as well.The foreign performing rights organizationswith which we have agreements monitorbroadcasts of our members’ works in their ter-ritories. They forward to us the royalties duefor distribution to our members. An importantpart of our role is to ensure that societiesaround the world have all the information anddocumentation they need about the works inASCAP’s repertory to properly identify andpay on performances. In some territories,ASCAP also monitors certain types of perfor-mances to ensure proper crediting of ourmember’s works. For example, in Austria,Finland, France, Germany, Ireland, Italy, TheNetherlands, Spain, Sweden, Switzerland, andthe United Kingdom, where American televi-sion programs and films are frequently broad-cast, sometimes with foreign language rifles,ASCAP collects its own performance infor-marion to help identify the use of ASCAPmusic. ASCAP is the only U.S. society tohave an International Monitoring Unit (IMU)that utilizes an innovative database (EZ-Maxx) to verify the accuracy of televisionand cinema performance statementsreceived from affiliated foreign societies. I

THE ASCAP PAYMENT

This article is Parl Four of aSe~4i~’S ~~~’~rig~]~~ tO give our mem-

bclw a better understanding qf the.4S(~4P P~lyn;ent ~$~l,~’tern. /n lhekl.vl isxue, we ¢¢rplained how wetrack, klenti~.’,’ and value per/br-manees on broadcast and cable

lelevisk~n. In thi~’ ixxue we willprovide an overview oj the co/lee-lion ~f rrLva/ties /~Jr pet:fi~rmanees~/’ wor]c~ in terrimrie.s outside theUmted States.

D oyalties earned in for-eign countries are an

[[ ~ important source of~k..income for ASCAP

members. Currently, foreign roy-alties constitute approximatelyone fourth of ASCAP’s revenues,amounting to approximately $137million in 1999. ASCAP hasagreements with foreign societiesrepresenting virtually every coun-try that has laws protecting copy-right. These societies are similarto ASCAP and we cooperate withthem in a number of ways toensure that our members receiveroyalties from performances oftheir works in foreign territories.Through these agreements, theylicense the works of our membersin their territories and we licensethe works of their members in theUnited States.

When ASCAP works are per-formed in a foreign country, thatcountry’s performing right societycollects the license fees from thelocal music users. The foreignsociety then forwards the royaltiesearned to ASCAP for distributionto our members whose workswere performed. Each foreignsociety tracks performances in itsown territories.

Royalties earned from foreignterritories vary depending on eachcountry’s use of American music,local copyright laws, the types ofuses licensed, the fees collectedfrom local music users, etc. Eachforeign society pays ASCAP foruse of our members’ music onvarying payment schedulesdepending on their own distribu-tion policies. When our members’music is used, the royalties areforwarded to ASCAP ~br distribu-

tion to our members. So that ourmembers receive their moneyfrom abroad as quickly as possi-ble, we make four foreign distrib-utions a year: in February, May,August and November. Each dis-tribution lists specific countries aswell as periods of performancesand type of media (film, televi-sion, radio, etc.).

Because foreign royalties arepaid based on a country’s locallicensing and distribution policies,ASCAP members can receive roy-alties from abroad for perfor-mances in venues ASCAP is notable to license under our ConsentDecree, namely movie theaters.

Most of the revenues receivedby ASCAP from foreign societiesare paid out to writer membersbecause most publisher memberscollect their shares directly viaforeign sub-publishers.

Senior VicePresident ofInternationalRoger Green-away headsASCAP’sInternationalteam. A well-

Rogo-Gmenaway known song-writer himself, and a formerChairman of the Board of theUK’s PRS, Greenaway bringstremendous expertise andknowl-edge to the job. "An importantpart of ASCAP’s role," saysGreenaway, "is to ensure thatsocieties around the world haveall the information and documen-tation they need about our mem-bers and the works in our reperto-ry to properly identify’ and pay onperformances." The first step inthis process happens as soon asyou join ASCAP. You are assigneda nine-digit CAE (Composer,Author & Editor or Publisher)number, which is associated withyour legal name. Your CAE num-ber will remain with you even ifyou leave ASCAP and join anoth-er performing right organization.Any pseudonyms you may use arealso assigned CAE numbers,which are linked to your legalname. SUISA, the Swiss society,

maintains an electronic listing ofwriter and publisher CAE num-bers for most of the world’s per-forming and mechanical rightsocieties. This number is veryimportant because you must havea valid CAE number and be a cur-rent member of a performing rightsociety in order to receive per-forming royalties from abroad.

Among the other internationaltools used to help societiesexchange necessary informationare the WWL (World Works List),Fiche lnternationale and CueSheets. The WWL is a computer-ized list containing actively per-formed or important songs con-tributed by 41 performing rightorganizations from around theworld. The WWL is issued to per-forming and mechanical rightorganizations twice a year, in Mayand November, in microfiche,tape, cartridge and CD-ROM for-mats. ASCAP provides the WWLwith details on all songs in ourrepertory that have surveyed radioperformances in the United States.As administrator of the WWL,ASCAP has also developed a newdatabase called the WorksInformation Database, or WID,which currently runs parallel tothe WWL and will eventuallyreplace it. The WID utilizes state-of-the-art technology that elimi-nates duplication of works andmakes the cataloging and sharingof important information aboutmusical works more effective thanever before.

Some foreign societies prefer toreceive song details in the form ofindex cards, or fiche interna-tionale. Societies use the informa-tion on these cards to distributeroyalties for performances in allmedia except television and cine-ma, which use cue sheets.

Once ASCAP has disseminateddocumentation about our reperto-ry, it is the obligation of ASCAP’saffiliated societies to ensure thatperformances of ASCAP reperto-ry in their territories are credited.In reality, however, factors such aslanguage and the cultural andbusiness practices of our affiliated

societies, as well as their musicusers, often prevent identificationand crediting of our members’works. For this reason, ASCAPtakes an aggressive approach inmonitoring performances ofASCAP repertory in foreign terri-tories. Here are some of the initia-tives ASCAP has developed toachieve more accurate crediting ofour members’ music:

Television, Cable and Cinema:In Austria, Finland, France,Germany, Ireland, Italy, TheNetherlands, Spain, Sweden,Switzerland and the UnitedKingdom, where American televi-sion programs are frequentlybroadcast, usually with foreignlanguage titles, ASCAP collectsits own performance informationto help identify the use of ASCAPmusic. ASCAP is the only U.S.society to have an InternationalMonitoring Unit (IMU) that uti-lizes an innovative database tech-nology (EZ-Maxx) to verify theaccuracy of television and cinemaperformance statements receivedfrom affiliated foreign societies.ASCAP developed the EZ-Maxxtechnology specifically for thispurpose yielding excellent results.

Radio: ASCAP also reviewsvarious international music publi-cations on a weekly basis to spotASCAP works that appear in thecharts. When ASCAP worksappear, we immediately forwardthe song details to the local soci-ety to ensure that our members arecredited. We also forward docu-mentation to all of our affiliatedsocieties for any ASCAP workentering the Billboard Hot 100chart.

Live Concert: Concert perfor-mance details (Venue, Date, City& Country) provided by a U.S.based trade publication are loadedinto an electronic database on amonthly basis. This database isthen reviewed periodically and acomputer generated set listrequest is issued to any Manageror representative of an ASCAPartist (or of an artist which per-forms ASCAP repertory) who areon tour in a foreign territory but

have not yet provided ASCAPwith set lists. Upon receipt of theset lists ASCAP notifies theappropriate affiliated society(s) ofthe performances and enclosesdocumentation for all of the per-formed works.

Theatrical Films: A U.S.based trade publication that pro-vides film box office charts by ter-ritory is reviewed and cue sheetsare forwarded monthly to theappropriate society for any filmcontaining ASCAP repertory thatenters the box office charts.

Technical Visits: ASCAPmakes routine technical visits toall of its affiliated societies toensure that our repertory receivesequitable treatment as well asmaximum compensation. Our dis-tribution, documentation and legal

experts take part in the visits sothat they may bring their consider-able expertise when reviewing thedistribution, documentation, andlicensing and financial practicesof our affiliated societies. It isthrough these exchanges thatASCAP can identify areas thatrequire special initiatives on ourpart to make sure our members areproperly credited.

Legal Assistance: ASCAP pro-vides legal assistance to any affil-iated society having difficultylicensing ASCAP repertory.ASCAP’s expertise in this areahas helped many new and well-established societies to licensemedia such as the Intemet, cinemaoperators, satellite TV broadcasts,live concerts and other media.This has in turn heloed to increase

distributions from these societies.Our revenues from foreign ter-

ritories have steadily increased asthe result of our efforts and thegrowing prominence of Americanmusic abroad. ASCAP is the mosteffective U.S. performing rightorganization in collecting foreignroyalties. We have the longeststanding relationships with for-eign societies and the deepestunderstanding of how they dobusiness.

Here is a list of the top ten soci-eties in terms of 1999 revenuesdistributed for performances ofASCAP repertory:

1. Britain (PRS) $25 million -Distributed in February, May,August and November 1999.2. Germany (GEMA) $18 million

- February, May and November.3. France (SACEM) $12.6 million- February, May and November.4. Italy (SIAE) $11.5 million -February and August5. Japan (JASRAC) $10.3 million

February, May, August andNovember.6. Canada (SOCAN) $9.2 million

February, May, August andNovember.7. Netherlands (BUMA) $6.7 mil-lion May, August, andNovember.8. Australia (APRA) $4.6 million- May and November.9. Spain (SGAE) $4.3 million -May and November.10. Austria (AKM) $3.6 million -February and May.