A Comprehensive Comparison of Performance Rights Organizations (PROs) In the US

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A Comprehensive Comparison  Performance Rights Organizations (PROs) In the US

Part I: What Is a PRO & Why Do You Need One?

The definition a ‘PRO’ is simple.  A performance rights organization, or PRO, administers royalties from the public performances songs.  It’s a critical royalty partner for songwriters, composers, publishers, recording artists, and copyright owners.

So what is a ‘public performance,’ exactly?  It’s fairly simple: a public performance occurs when a song is played in front a substantial group people.  This includes recordings songs, or live performances them, at places like malls, elevators, bowling alleys, restaurants, and sporting events.

Every time that occurs, a royalty needs to be paid to the copyright owners the song played.

A radio broadcast, either traditional or digital, also constitutes a public performance even though the listeners are geographically dispersed.  Essentially, a large crowd is listening at the same time, just not in one place.

In total, this adds up to a lot money.  In the United States alone, more than $3 billion revenue is generated by public performances alone!  That includes collections from airports to Pandora, radio stations to cafes — it’s a very long list, and all it generates revenue.

Please note that a public performance is not occurring when only one person is listening (for example, to an mp3 download through headphones or a vinyl record at home).  Similarly, a small gathering family members or acquaintances does not merit a public performance.

Streaming on Spotify does count as a public performance, for a series complex reasons (and litigations) that go beyond this comparison.  Just know that you should be getting a publishing PRO check from Spotify (and other streaming service) streams, though in general, those payouts are extremely low when compared to other mediums (like terrestrial radio and TV).

Generally, those who publicly perform music obtain permission from the owner the music or their representative.

Fun Fact: In the United States, performance royalties have been protected under US Copyright Law since 1897!

Part II: What’s the Difference Between ASCAP, BMI, SESAC, and SoundExchange?

In any song, there are two major types copyright: one for the ‘publishing,’ or the underlying composition (the notes and lyrics), and another for the sound recording that composition.  In many cases, there are different owners for each side. Both sides generate revenue for public performances, though there are lots details and exceptions.

The splits, however, are fairly straightforward.  On the composition side, royalties are typically divided 50/50 between the songwriters/composers the music, and whoever administers the use that music – also known as the “publisher.”  Splits on the recorded music side are between the performers and their label.

Publishing PROs handle royalties related to the performance the underlying compositions.  In U.S., the major PROs are ASCAP, BMI, and SESAC.  Since the advent digital radio, SoundExchange has emerged to handle the sound recording royalty for performances recordings on digital media, largely on Pandora and Sirius XM Radio.  So, if you  (a) are a writer or publisher a composition and (b) a performer or an owner a recording copyright, you should have a relationship with both a publishing PRO (ASCAP, BMI, or SESAC) and SoundExchange.

In turn, any business publicly performing music, online or f, must have a blanket license with the PRO(s) that represent the music they perform.  These businesses pay the PROs, and their payments are then divided based on plays, and funneled to members (songwriters/composers and publishers).

But why are there four different PROs?

Let’s start with the publishing side.  ASCAP and BMI handle most performance rights royalties for underlying compositions.  SESAC is more niche and hands-on, and involves an acceptance process (a fourth publishing PRO also exists: Global Music Rights, or GMR, though its focus is on a small, high-performing tier and is invite-only).

So if you’re just getting started, either ASCAP or BMI represents a good first choice, though we’ll delineate between all these options in the grid below.

On the recorded side, the choice around SoundExchange is much easier.  All artists and recording rights owners should register for free on SoundExchange, even if your music isn’t getting played on Pandora, Sirius XM, or other digital radio platforms.  You never know when something will get played on one those formats, but you can even collect back-royalties when you register.

Part III.  Other Important Notes!

Before we jump in, a few notes.  We’ve weighted every PRO on a number different criteria, though not all them will matter to you.  For example, the size a PRO is less important than the ability to properly collect and pay royalties; however, bigger size can increase the influence that a PRO has in getting venues to comply, influence legislation, or spread costs.

Aside from specific services, it makes sense for songwriters and publishers to ask around for testimonials.  In general, the best opinions will come from those that are most similarly situated to you — in terms genre, format play, size, etc.  Find a close match, and you’ll get some very valuable guidance.  In fact, it could be the most important step in your decision.

Also, it’s important to note that none these PROs cover ‘grand rights,’ or music that directly accompanies action in a musical, play, or other scripted performance.  Nor do these agencies fer ‘synchronization rights,’ or ‘synch rights,’ which refer to music that is paired (or ‘synched’) with action in an advertisement, film, or TV show.  Those licenses are negotiated directly with copyright owners (and facilitated by many other companies and platforms).

Also, as a songwriter or producer, you can only join one PRO to represent your public performances.  Publishers, however, can join multiple publishing PROs to cover their broader catalogs.  For example, if you are an ASCAP songwriter, you cannot also register a share your songs with BMI (though if you co-write a song with a BMI writer, your co-writer should register it with BMI).  A double-signing with two publishing PROs could be construed as fraud, especially if it results in double payments.

Lastly, please note that this comparison covers the United States only!  Though we’re happy to cover other regions in the future.

Part IV: Here’s the Full Comparison

(gray = publishing PRO; blue = digital recording PRO.  please see footnotes below for more details)

ASCAP BMI SESAC SoundExchange
Membership (Total Songwriters, Publishers, Lyricists, Composers, or Artists)¹ 650,000 760,000 30,000² 155,000
Total Songs Represented 11.5 million 12.0 million 400,000 22 million
Type Royalty License Collected Publishing Performance Publishing Performance Publishing Performance Digital Recording Performance
Prit/Non prit Non prit Non prit For prit Non prit
Total revenues $1.059 billion (+4.44%)³ $1.130 billion (6.6%) $400-500,000 (estimated)ª $952 million (+7.7%)
% Collections Paid to Members 88% 88% Undisclosed 93%
Number Businesses Licensed (2016) 718,000 ‘hundreds thousands’ Undisclosed 3,100 online outlets (Pandora and Sirius XM Radio among the largest)
How is the money split? 50/50 Writer/Publisher after admin costs 50/50 Writer/Publisher after admin costs 50/50 Writer/Publisher after admin costs 50% to recording copyright owners; 45% to featured performers, 5% to backing singers + backing musicians
Royalty Portal Yes: ASCAP Member Access (overview here). Yes: BMI Online Services. Yes: SESAC Affiliate Services. Yes: SoundExchange Direct.
Time to receive royalty  payment (domestic writers) Domestic writers: approx. 6.5 months after completion the quarter when song played; Domestic pubs: approx. 5.5 mos.  $100 min. accrual or $25 if last quarter the year ($2 if payable by  direct deposit)¤. Domestic writers: approx. 5.5 months after completion the quarter when song played 90 days (3 months) after completion the quarter when song played (+ option to receive monthly radio royalty payments) 45 days after payment from platform (batched into monthly payouts with $250 min. threshold + direct deposit)
Minimum Payment Amount $1 minimum if payable by direct deposit.  $100 minimum accrual if paid by check. $2min.  if payable by  direct deposit; $250 min. accrual or $25 if last quarter the year for check. $1 min for direct deposit; $50 min accrual for paper statements/checks. Monthly payouts for accruals above $250 min., quarterly for $10 min. ($100 for paper checks)
Eligibility Writers/composers: at least one song written and available to the public;  Publisher: actively engaged in music publishing business. Writers/composers: at least one song written and available to the public;  Publisher: actively engaged in music publishing business. Invite-only § Open to any legitimate sound recording rights owner, featured musician, backing musician, or backing singer.
Standard Agreement Terms 1-year standard contracts for writers and publishers; renew automatically. Writers: 2-year standard contracts; Publishers: 5-year standard contracts 3-year contracts for both writers and publishers, auto-renewing. ¥ 1 year auto-renewing agreements (renewals on January 1st)
Sign-up fees $50 one-time application fee for writers; $50 one-time application fee for publishers $0 for writers; publishers pay a one-time setup fee ($150-$250 depending on company structure) $0 $0
Recurring membership fees None None None None
Royalty Collection Method Complex calculation method posted on ascap.com; actual payouts highly dependent on specific formats and not fully disclosed. Complex calculations and format weightings that are not fully disclosed. Royalty payment
methodology for all
usage types is
listed on BMI’s
website.
Complex calculations and format weightings that are not fully disclosed;  SESAC claims more hands-on treatment in royalty collections. All digital royalty % pts. are treated equally, and allocated to all rights owners (registered or not).  More details on page 2.
Do they pay for playing your own songs live at a venue? Yes (register songs played ASCAP onStage) Yes Yes n/a
Direct Deposit? Yes Yes Yes Yes
Perks Discount on Songwriters Hall Fame membership

Membership in US Alliance Federal Credit Union

Health, dental, instrument and life insurance discounts

Discounts on music-related retail products and services

Hotel and rental car discounts

Discounts to Billboard Latin Conference, Billboard Touring Conference and Awards, Video Games Live, Songwriters Hall Fame

Discounts for NXNE, LARAS, ArtistShare, FanBridge, Musician’s Atlas, Muzlink, The Production Marketplace

Discounts on POPmarket, Sprint, Berkleemusic.com, Songtrust, Nero Multimedia Suite, Airport Parking, CMA’s Sterling Individual membership, Legacy Learning Systems, Billboard publications, The Hollywood Reporter, American Songwriter Magazine, MusicPro Insurance, Avis Rental Cars, Disc Makers, more. Various industry events, educational sessions, plus Awards Programs.

‘Working Advantage’ program fers significant discounts on movie tickets, ski passes, theme parks, Broadway shows, museums, etc.

Notable members Kendrick Lamar, Katy Perry, Kelly Clarkson, Ariana Grande, Justin Timberlake Lady Gaga, Carrie Underwood, Taylor Swift, Sam Smith Bob Dylan, Mariah Carey, Adele, Neil Diamond, Adele Most notable artists.
Member Events ‘I Create Music’ Expo in Los Angeles + awards shows, ‘song camps’, workshops, showcases and other events Various workshops and song camps, awards show and BMI-branded stages at festivals such as Lollapalooza, Austin City Limits. Smattering events: various showcases, awards, luncheons. No
Reciprocal Global Arrangements w/ Others PROs? Yes Yes Yes Yes
Where to Initiate Membership Register here. Register here. Invite-only.  Though here’s a way to bang on the door. Register here.

 

 

¹ all information is reported by the PROs themselves, typically in annual reports, unless otherwise noted.

² SESAC says they fer a far greater level service, because they have a smaller group customers.

³ Reported in 2017 for calendar 2016 (Jan-Dec).

† Fiscal 2017 (ending June 2017).

ª Billboard estimate.

¤ note that ASCAP splits your royalty statements into domestic (US) and international, with two separate statements and payments.  US-based calculations royalties are far more detailed (similar to other PROs).

§ from our experience, writers and publishers can also contact SESAC and receive an invitation, especially when recommended by an existing member.

¥ Jeffrey Brabec, Todd Brabec. Music Money and Success.

 

So who has the better payouts overall?  That’s a difficult question to answer.

Which payout is better? All services listed here are legitimate and will pay according to the terms; however: the differences in your payouts can vary greatly depending on where (which format) your music is most played. This is the source endless debate; our best ‘pressional advice’ here is to ask fellow musicians and publishers — especially those similarly situated.  

Network!