What Is a PRO and What Do They Do for Songwriters & Publishers?
April 12, 2017
BY SUSAN FONTAINE GODWIN & JONATHAN BRYCE: Many songwriters and churches often ask me, “What is a performance rights organization, or PRO for short, and do I need to affiliate with one or get a license for our church?
It can be confusing, so let’s start with the basics. Music performance rights represent a fairly simple concept, but one that is often misunderstood. Part of the confusion may emanate from the fact that “public performance” is just one of six exclusive rights controlled by a song owner. For example, the performance right is different than the right to copy or reproduce a song on your own recording, and the required licenses for these two rights are quite different. (Read more about exclusive rights in Copyrights 101)
Let’s look at some brief definitions to help lay the groundwork for understanding performance licensing. First, the legal definition of a public performance is:
An instance of music being performed “in a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.”
A performance license grants permission to have these public performances, whether it is a live performance or playing of pre-recorded music.
Most performance licenses are controlled and managed by performing rights organizations or “PROs.” The three PROs in the United States are ASCAP, BMI, and SESAC. Most countries have just one performance rights agency. Every songwriter and publisher who wants to be paid performance royalties registers with one of these three organizations, which collectively represent more than 20 million songs. PROs collect performance license fees for a wide range of public performance, such as Internet streaming, radio and TV broadcasts, social events, coffee shops, restaurants, public buildings, stadiums and concert venues. Each PRO then distributes a percentage (about 85-90%) of the revenue they collect to the songwriters and publishers on separate quarterly statements. A songwriter can only affiliate with one of the three PROs, but a publisher can list one or more song catalogs with each PRO, depending on the songwriters they represent.
If you’re performing music live or playing music from a recording or streaming service, a performance license from song owners or their authorized PRO is required. ASCAP, BMI, and SESAC have excellent websites, where you can submit an online license application based on your type of organization or business (e.g., dance studio, church, restaurant, radio, TV station) for your specific performance uses, and make an online payment for purchase, which is usually an annual fee, unless your event is a one-time concert. You will need to go to all three PROs and get each one of the PRO’s individual licenses in order to have comprehensive music coverage.
Each PRO offers a variety of licenses, like music-on-hold, mobile and website, concert, radio, TV, general licensing for stores, restaurants, bowling alleys, and other businesses.
Good news: There is a unique and easy licensing solution for churches and non-profit religious organizations. The three major PROs have partnered with Christian Copyright Solutions (CCS) to offer a simple, one-stop license that can be obtained online and covers 20 million songs in the repertoires of ASCAP, BMI, and SESAC for your Facilities (PERFORMmusic) and Internet (WORSHIPcast). Annual fees are based on the congregation size of the church or ministry and include comprehensive general premise licensing and Internet streaming licensing. Both licenses would cover church Easter special programs that are outside of a regular worship service or that the church wants to stream through their website. The licenses are effective as soon as you sign up and pay online.
Licenses then allow you to play millions of songs however you want, including live music by a band or DJ, or recorded music played off a CD, iPod, online streaming service, or most other means. You can then report the song titles you have played or performed online at each PRO’s website, and the monies are then distributed to the songwriters, composers, and publishers, based on the type of licenses and fees. The PROs pay the songwriters directly for their portion of the songs, and music publishers are paid directly for their percent of ownership.
Even as the music industry, on the whole, remains in flux due to evolving distribution models, both ASCAP and BMI exceeded the $1 billion revenue mark in 2015, so that total music performance revenues are well over $2 billion per year in the US. Payouts to songwriters and publishers typically come after BMI and ASCAP deduct their operating expenses from revenue; operating expenses often include substantial legal costs, such as the recent fight with Pandora over digital royalty rates.
Here is an overview of the U.S. PROs.
ASCAP – American Society of Composers, Authors, and Publishers. Founded in 1914.
Type: ASCAP is a non-profit, membership-based organization.
Size: Its membership is very large (about 570,000 songwriters, composers, and publishers) and is governed by a 70-year-old antitrust consent decree from the Department of Justice (DOJ) to prevent coercive market manipulation of performance licenses. This measure has become a liability in recent years, however, as it handicaps and keeps song owners from being appropriately responsive to the free market, particularly in our new digital world.
Apps: The application process at ASCAP is open to anyone wishing to apply, provided that they own a published work being performed. There are application fees for both writer/composer and publisher applications ($50).
Pay: ASCAP pays out performance royalties based on music usage and cue sheet reports of performances by their license holders. They pay out about 85-88% of their gross revenue and retain 12-15% to recoup their operating costs
Perks: There are many industry related perks to membership with ASCAP, like travel discounts, equipment and service discounts, creative workshops and yearly expos.
BMI – Broadcast Music, Inc. Founded in 1939.
Type: BMI is a non-profit, membership-based organization.
Size: Its membership is large, and they feature 10.5 million musical works in its repertory. It is also governed by a similar antitrust consent decree from the DOJ. While the decrees for ASCAP and BMI are different, they do serve the same function and seem antiquated and impractical for modern fair market practice.
Apps: The application process at BMI is also open to anyone with ownership in music being performed. There are fees for the publisher applications ($150-$250), but applying as a writer/composer is free.
Pay: BMI also pays out performance royalties based on music usage reports and cue sheets from their license holders and recoups costs by deducting their administrative fees per performance, which averages about 13%.
Perks: There are also many industry related perks to membership with BMI, including many of the same items as ASCAP and a yearly convention.
SESAC – Society of European Stage Authors and Composers. Founded 1930.
Type: SESAC is a for-profit, clientele based company.
Size: Its clientele is significantly smaller than the membership ASCAP or BMI, but very healthy. Because of its smaller size and now defunct origin as a European society within the US, they have never been subject to an antitrust consent decree from the DOJ.
Apps: The application process at SESAC is both selective and intensive. They want to get to know their potential clients and the music they create. There is no guarantee that you will successfully affiliate with SESAC as it is “by invitation only,” but there are also no application fees.
Pay: SESAC nominally functions in the same way as ASCAP and BMI, however, royalty payments have been known to be dispersed differently. Because of the lack of a consent decree compelling the issuance of a license, SESAC may deny a license and even negotiate higher royalty rates for their clients. They pride themselves in making sure none of their writers will struggle too much to put food on the table.
Perks: In recent years, SESAC has taken steps to create a broader base with Music Rights Organization (MRO), acquiring the Harry Fox Agency and Rumblefish, representing more than just the performance rights of their clients. They do have similar industry related benefits to ASCAP and BMI.
GMR – Global Music Rights. Founded 2013.
Type: GMR is a for-profit, clientele based company.
Size: Its clientele is much smaller than that of SESAC, and serves as a brand new baby brother to the “big three” in the US.
Apps: GMR does not publicize their method of gaining clients outside of making it clear what they do and providing a contact form. The only way may be to have a co-write with one of their writers or artists.
Pay: GMR functions similarly to the other PROs when it comes to performance rights. Due to the lack of a consent decree, they have the ability to negotiate higher rates or simply deny a license. They claim to go above and beyond by making sure their clients understand explicitly where royalties are coming from.
Perks: There is not much to speak of perks, aside from what we have already mentioned. Although, GMR does give the distinct impression of interest in doing more than performance rights licensing for their clients.
I should also mention that in addition to performance rights for musical compositions, there is a separate “performance right” for transmission of digital sound recordings, primarily applicable to music streaming services and digital or satellite radio. SoundExchange is the independent nonprofit performance rights organization that collects and distributes digital performance royalties for featured artists and copyright holders of the sound recordings. SoundExchange represents recording artists – from unsigned A Cappella to Death Metal to Americana to multi-platinum stars and master rights owners including major and independent record labels. SoundExchange makes sure that these artists and copyright holders are compensated when their work is broadcast by non-interactive digital radio. And as they put it, if you have music playing on Internet radio and you are not signed up with SoundExchange, you simply cannot get paid.
Susan Fontaine Godwin is CCS’s founder/CVO, an educator and long-time member of the Christian arts community with 30 years of experience in the Christian media industry, church copyright administration and copyright management. Susan is an author and speaker and frequently writes for several Christian magazines and online publications. She serves as an adjunct professor at the University of Mobile.
About Christian Copyright Solutions: CCS’s quest is to help churches and Christian ministries “do music right.” CCS is an expert on church music copyrights and our primary focus is providing licensing and clear educational resources to churches, as well as representation, administration, and advocacy for copyright owners. Follow us on Twitter, Facebook, and YouTube. The information contained herein is for informational purposes only and is not legal advice or a substitute for legal counsel.