The American Society of Composers, Authors and Publishers (ASCAP) History
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Sales: $508.3 million (1998)
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ASCAP is its members--creative people who write the music and lyrics that enrich lives in every corner of the world. The members of ASCAP are where music begins. ASCAP is home to the greatest names in American music, past and present--from Duke Ellington to Beck, from George Gershwin to Stevie Wonder, from Leonard Bernstein to Madonna, from Garth Brooks to Tito Puente, from Henry Mancini to James Horner&mdash well as thousands of writers in the earlier stages of their careers. ASCAP represents every kind of music. ASCAP's repertory includes pop, rock, alternative, country, R&B, rap, hip hop, film and television music, folk and roots, jazz, gospel, contemporary Christian, Latin, new age, theater and cabaret, symphonic and concert--the entire musical spectrum.
The American Society of Composers, Authors and Publishers (ASCAP) collects songwriting royalties for its 80,000 members. ASCAP's constituency encompasses music publishers and songwriters including some of the best-known names in the business: Bruce Springsteen, Stevie Wonder, Garth Brooks, Madonna, Wynton Marsalis. More obscure writers and classical composers, lyricists, and publishers are also represented by the group. John Philip Sousa, Irving Berlin, and George M. Cohan were among the charter members. Besides distributing about 84 percent of its revenues to members, ASCAP also provides access to various types of insurance and benefits.
Tin-Pan Alley Origins
By the end of the 19th century, urbanization in the United States had brought entertainment out of the home and into nightclubs and cabarets. Performance had become more the domain of professional musicians, which dampened sheet music sales, the traditional income stream for music publishers. Meanwhile, some clubs were earning staggering profits on these performances while paying the publishers only the cost of the printed musical scores.
The U.S. copyright law of 1909 provided the basis for ASCAP's existence. This law gave artists rights to how their work was used just as patents protected inventors of more tangible creations. The 1909 law applied to public performance of musical works as well.
A nostalgic version of ASCAP's birth recounts composer Victor Herbert hearing one of his songs being slaughtered in a New York cabaret and thereby becoming inspired to stop illegal infringements. Herbert was apparently one of a group of nine who met in a New York restaurant in October 1913 to create a performing rights organization. Nathan Burkan, an entertainment lawyer, and Englishman George Maxwell were also in attendance. ASCAP's first official meeting was held on February 13, 1914, whereupon Maxwell was named its first president. The group started out with about 100 members.
ASCAP's mission was essentially to enforce the 1909 copyright law by compiling member works into a catalog and hiring personnel to monitor their public performance. ASCAP licensed its entire catalog as a whole, not individual pieces.
Since restaurants and clubs had been accustomed to using this music for free, ASCAP met resistance from the beginning. The venues threatened to stop musical performances altogether, which panicked the local musicians' union, which also believed it would have to pay licensing fees.
ASCAP won a few critical court victories that ensured its position, however. The U.S. Supreme Court ruled that performances need not be ticketed to count as for-profit, and therefore subject to copyright law. At the end of its first year, 85 hotels were paying the Society $8.23 per week to license its catalog.
ASCAP did not try to license vaudeville performers; rather it used their personnel as collection agents while pressuring publishers to join for fear of losing out on the supreme promotional avenue that vaudeville presented.
The Golden Age of Cinema: 1920s
In December 1920, the Society rearranged its compensation and representation structures to reflect the growing importance of popular music publishers. Rather than receive a third of royalties, lyricists and composers together had to split half while the publishers now received the other half. The composition of the board was restructured in similar proportions.
Motion picture exhibitors were more organized in their resistance to ASCAP's demands. The Motion Picture Exhibitors League of America (MPELA) began a nationwide boycott of ASCAP in 1917 and also lobbied Congress for amended regulations. At the same time, ASCAP won significant lawsuits against various theaters.
However, these victories were so expensive they prompted ASCAP to consider doubling its rates in order to cover legal expenses, which amounted to more than $40,000 in 1921--22. ASCAP billed about $380,000 in 1922; two-thirds came from movie theaters.
The Motion Picture Theater Owners Association (MPTOA) attempted to set up a rival organization in 1922. However, it failed to win the support of either producers or publishers. Although the MPTOA resistance soon died down, its confrontation aroused the interest of the Justice Department, prompting a lengthy investigation.
ASCAP was working to license sound motion pictures by the time The Jazz Singer proved the commercial viability of the medium in 1927. In spite of some consolidation among the music publishers that supplied the motion picture industry, ASCAP held on to this market as well.
Meanwhile, yet another medium was competing for the public's attention: radio. This one would not be so conveniently managed for ASCAP. Radio interests resisted in the courts and through the National Association of Broadcasters (NAB), which sought to supply a royalty-free source of music. A 1924 FCC ruling and several court cases legitimized ASCAP's operation, however, and ASCAP also found public sympathy lay with its artists. Unsuccessful legislation had simultaneously attempted to exempt radio broadcasts from the 1909 copyright law.
The Great Depression and World Domination
While writers, publishers, and users more or less reached a détente with the Society, the austerity of the Depression would strain their relationships. A round of anti-ASCAP legislation circulated and became law in seven states. Montana even issued arrest warrants charging ASCAP officers with extortion, costing president Gene Buck six hours in an Arizona jail.
In 1931 ASCAP received fees of $960,000 from the radio industry. The next year, ASCAP required radio users take out blanket licenses exclusively. Fees were set based on percentages of each station's income. Interestingly, newspaper-owned radio stations were given generous fee breaks, for obvious PR purposes, according to one author.
ASCAP also required stations to log all compositions played during one quarter of the year, while only providing the stations lists of ASCAP members, not ASCAP-controlled songs. Commercial establishments such as restaurants playing the ASCAP tunes on their radios also had to pay licensing fees.
Not only had ASCAP brought radio in line, according to the Justice Department, its board of directors had "absolute control of the entire music industry." Everybody needed ASCAP to survive. The department's lengthy investigation culminated in a trial in 1935 and the signing of a consent decree in 1945.
ASCAP also encountered some criticism for its exclusive policies that kept popular and lesser-known jazz and country singers out of the fold, and compensated them less once finally admitted. In addition, prospective members needed to establish themselves commercially in order to become eligible, creating something of a Catch-22 situation. Since blanket licenses removed any incentive for users to play music from non-members, that group found itself increasingly redundant.
Birth of BMI: 1939
In the late 1930s, NAB was still casting about for alternate sources of music. While preparing to enter yet another round of negotiations with ASCAP in 1939, Broadcast Music International (BMI) was incorporated in New York. BMI soon acquired the catalog of one major publisher--E.B. Marks--and was ready to challenge ASCAP.
Besides favoring the interests of broadcasters, BMI also became the champion of newer genres such as rhythm and blues and rock 'n' roll. Its search for new material led it to thousands of songs composed by Argentinean, Mexican, Jewish, Italian, and Native American writers.
In 1940 ASCAP collected $7.3 million, $4 million from radio. A new ASCAP contract proposed to effectively double radio's rates, largely at the expense of the networks such as NBC and CBS--two that had together bought a 40 percent interest in BMI. This resulted in a boycott of ASCAP by most radio stations--in January 1941, BMI radio subscribers outnumbered its competitors by three to one.
By the time ASCAP had come to terms with the stations in 1941, it had lost a considerable amount of money during the boycott, and bargaining power as well. The new contract with radio was actually less lucrative than the old one. ASCAP had overplayed its hand and lost its monopoly.
The federal case against ASCAP resulted in the Society signing a consent decree which allowed members to share nonexclusive rights to license their works. ASCAP also agreed to license music on a program-by-program basis. Other provisions curtailed ASCAP's control. In addition, the self-perpetuating board system was ended, revenues distributed more evenly, and membership criteria relaxed. The Society and its officers paid $35,250 in fines.
Continued Resistance: 1970s--90s
After Wyoming passed one restrictive law in the 1970s, ASCAP withdrew from the state entirely. Music users there in principle then had to license music directly from the individual copyright holders. The law was eventually repealed. The U.S. copyright law of 1976 included a "Homestyle Exemption" allowing establishments to operate small radios and TVs free of licensing fees.
In the late 1980s both ASCAP and BMI targeted professional associations which used music at their conventions. In 1990 both charged a maximum per-event fee of $4,000. ASCAP's live music fees for groups of 250 or less started at $25 per day.
The American Society of Association Executives accused ASCAP and BMI of harassment and intimidation in implementing these licenses. They also protested ambiguous wording in the agreements, failure to disclose their repertory, and "double dipping" in the case of meetings held at hotels, which were also required to be licensed. In addition, an association had to sign a multiyear agreement before it could play even one bar of music at a single event.
ASCAP reached a settlement with TV broadcasters over a decade-old fee dispute in 1993. The new lower per-program fees could be applied retroactively. ASCAP collected $390 million in 1992.
Advancements in entertainment technology brought big-screen TVs and satellite dishes to restaurants around the same time, spawning sports bars and similar concepts. Restaurateurs became the subject of increased music licensor attention. In an article in Restaurant Business, they compared ASCAP representatives to Biblical tax collectors and to the "Syndicate." They were furious at being forced to take out licenses in order to display television broadcasts of football games and the like, and being forced to pay for music broadcast during commercials. They also accused ASCAP of devious collection practices.
Food-service businesses pushed for legislation to curb the music licensors and contemplated class-action lawsuits. They complained about ASCAP's bewildering form, which contained 594 license categories (compared to 98 for BMI). They also complained of tactics of intimidation. At the time, ASCAP and BMI were filing up to nearly 1,000 lawsuits per year.
The Fairness in Musical Licensing Act of 1995 circulated through Congress on behalf of the associations. The act sought to have the licensors disclose their repertory and to exempt incidental music. At the same time, Governor Christine Todd Whitman vetoed a similar New Jersey bill. Legislation was also pending in 20 other states, however. Most of these at least passed code-of-conduct laws for performing rights organization's agents.
Oscar-winning (Barbra Streisand's "The Way We Were") songwriter Marilyn Bergman became ASCAP's first female chair in 1995. She contended that although royalties only amounted to one percent of a restaurant's expenses, that provided nearly a third of an artist's income. ASCAP had 70,000 members at the time.
In 1996 ASCAP proposed dramatically lower per-program rates for news, talk, and religious television stations. These broadcasters had complained that their program fees were in some cases more expensive than other stations' blanket licenses.
In 1997 bills proposing to reform music licensing circulated through Congress for the third year in a row. One finally passed in 1998, and it exempted small restaurants from fees for televisions and radios. Eleven other circuit courts around the country became able to hear complaints; this had been the exclusive province of the Southern District Court of New York. The principle of vicarious liability for trade show operators was preserved, although in 1994 a U.S. District Court ruled that associations were not responsible for policing the music used by individual exhibitors.
Coping in the Digital Age
In the late 1990s, ASCAP worked on coping with the licensing issues that new Internet technologies presented. MP3 was the best-known format for downloading digital audio, and bootleg MP3 web sites threatened to become a major worry. ASCAP teamed with European licensors MCPS/PRS (UK) and BUMA/STEMRA (Holland) in the International Music Joint Venture created to process licensing requests.
The Internet provided ASCAP a new way to serve. Besides posting a listing of its repertoire on the web, in 1998 ASCAP launched Rate Calc, an interactive tool for calculating fees. The company's EZ-Seeker program searched web sites for sound files, identified with electronic "watermarks." ASCAP licensed almost 1,000 web sites, and made royalty payments to writers based on Internet performances.
In 1998 ASCAP distributed nearly $425 million of its $508 million gross to writers; both were records. However, the Fairness in Music Act was expected to impact future earnings. ASCAP had reciprocal agreements with 55 similar organizations in foreign countries; foreign performances accounted for over $130 million.
- Besen, Stanley M., et al., "An Economic Analysis of Copyright Collectives," Virginia Law Review 78, February 1992, pp. 383--419.
- Breuhaus, Brian, "Dinner Music," Restaurant Business, November 1, 1998.
- Brooks, Steve, "All Keyed Up," Restaurant Business, October 10, 1993.
- ----, "ASCAP and BMI Are Turning Up the Volume," Restaurant Business, July 1, 1995.
- Conlin, Joseph, "Paying the Piper," Successful Meetings, October 1992, p. 26.
- Foisie, Geoffrey, "Music Accord Is Upbeat for TV Profit," Broadcasting and Cable, November 8, 1993.
- Jensen, Melinda, "Congress Could Turn Table on Music Licensers," Successful Meetings, April 1995.
- Petrozzello, Donna, "ASCAP Restructuring Rates," Broadcasting and Cable, August 12, 1996.
- Ryan, John, The Production of Culture in the Music Industry: The ASCAP-BMI Controversy, Lanham, Md.; London: University Press of America, 1985.
- Taylor, R. William, "ASAE Interim Report on Music Licensing," Association Management, March 1992.
Source: International Directory of Company Histories, Vol. 29. St. James Press, 1999.