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AS CAPP ay.

m e n t System Explained
Part One: The ASCAPLicense
This arlicle ix Part Oneof a series designed lo give (mr memher,~ a better umterstanding o/lhe ASCAP Payment System and the many.factors that go mlocalculating howmm~h a particular pelSumanceis worth. Wearc starting Strategic Planning and New (~] thi.~ xcrie. with a look al Media Marc Morgenstem, who ASCAP 5 licensing (/,[brts. * directs his team of professionals Futurearticles in the series will cover 5, howne track andidentil ,survcss how royaltiex ./br ." sands of customers each year. And specifically dealing with Web site and lnternet licensMarc ing is ASCAP Morgenstern Senior VP of In addition, a simplified threetiered licensing rate structure has been implemented.This provides an easier introduction to the financial obligations a site assumes when using copyrighted music. formancesis so important to our overall licensing success, which impacts all memberspotential earnings. Preparation for these negotiations requires an enormous effort in researching music use and how it is changing on the airwaves, and in providing tremendous detail about the use of the ASCAP repertory on television.

Broadcast TelevisionLicensing

ASCAP ? r pecfic tylex qf Pef HOWco,ectYou~"~ r nl(lllC(~S aredetermilled, attd


collecting international royaltic3.

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In 1998, ASCAP became the first performingright organization to collect overa half-billion dollars for its members. Of that, $371 million was collected from our customers - the users of music - for performancesin the United States alone. Negotiating licenses with customers and collecting the fees is one of ASCAPs most important functions. Yet ASCAPs licensing efforts are Vincent Candilora probably the least familiar area of our operation to our members.Under the direction of ASCAP Senior VPof Licensing, Vincent Candilora, a teamof 168 staffers is responsible for licensing tens of thou-

One-third of ASCAPs overall revenues are generated from Radio Licensing the use of musicon netFortunately, on the radio side, work, local and cable television. The ABC, negotiations have historically resulted in agreementon license CBS and NBCtelevision networks pay fees and terms without rate court litigation. As with television, ASCAPflat dollar ASCAP has dealt with members blanket license fees. of the Radio Music License License fees Committeein negotiating music for local television are the prodin the explodingdig" license fees for five-year terms. uct of both rate court litigation ital world. For commercial radio, ASCAP and negotiations between Since ASCAPs offers two types of license agreeASCAP and the Television customers are so ments- blanket and per program. different (see box below), our Music License Committee. Moststations choosethe blanket Committee members are broadlicensing effort is organizedinto agreement under which they pay specialized teamsresponsible for casters representing the broad an annual fee, billed monthly, spectrum of the television indusdealing with specific types of try. This licensee group, more and based on a percentage of the licensees. than any other, has tried vigor- stations annual revenue. Theper programagreementis chosen priWeb Site and ously to reduce the license fees marily by stations whichuse less they pay for the use of music. Internet Licensing feature copyrighted music, typiIn presenting our case, ASCAP The Internet provides a cally employing News/Talkforhas a team of negotiators comdynamicnewsource of licensing mats, or religious programming. prised of our licensing executives revenue for ASCAP and we are Under the per program agreeaggressively pursuing its oppor- along with counsel and indepen- ment, fees are principally calcudent experts on music usage. Our tunities. Withnearly 1,000 sites lated based on actual music nowlicensed, our revenues from goal, of course,is to proveto the usage. industry the ever-increasing the Internet tripled in 1998. Our For non-commercial radio, value of ASCAP music to their efforts have been greatly such as college radio and programming. That is why enhanced by the development NationalPublic Radiostations, if recruiting and retaining members and use of the ASCAP EZ Seeker with the greatest numbers of per- negotiations are unsuccessful, a (see technologyarticle, page8). rate arbitration proceeding is held

Royalties?

WHO ARE ASCAPS CUSTOMERS?


ASCAP customers include a diverse group of businesses and organizations that use music in manydifferent ways. In order to license effectively, ASCAP employs representatives who understand the business needs of each of our various types of customers: Q The major television networks ~ Public television - the Public Broadcasting System(PBS) and its affiliated stations ~ The majority of the 11,000 cable systems, the satellite delivered services and virtually all of the cable program services ~ Over 1,000 local commercial television stations J The Univision Television Network ~ About 11,500 local commercial radio stations ~ About 2,000 non-commercial radio broadcasters, including college radio stations 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 service providers ~ Tens of thousands of "general" licensees: bars, restaurants, hotels, ice and roller skating rinks, conventions, retailers, shopping malls, circuses, themeparks, sports teams and leagues, dance schools, health clubs ~xand many other businesses

under the auspices of the U.S. CopyrightOffice. Radio is our second largest source of domestic revenue and 26%of our overall revenues.

f Music Makesi

Cable Licensing
The cable television industry has undergone tremendous change and revenue growth over the past two decades. ASCAPs licensing efforts are aimed at both the program services, such as HBO, Showfime, MTV,etc. and the system operators to which households subscribe for their cable services. ASCAP has been engaged in long-standing rate court proceedings with the cable industry to determine reasonablefees as well as other matters. While we await the courts decisions, ASCAP is licensing the cable industry on an interim basis. Assuming a favorable outcome, ASCAP expects to collect substantially morein license fees coveringthe interim years as well as the future.

[Diffe~the i!

Educational and Symphonic Licensing


ASCAPhas special agreements for various types of presenters in this field. For example, we have an orchestra agreement negotiated with the American Symphony Orchestra League and a college and university agreement, which covers the wide variety of performances that take place on college campuses. An orchestras license fee is basedon a percentage of its annual box office receipts from the previous season. Colleges and universities have three license options from whichto choose. Of course, virtually all orchestras, colleges and universities that use music are known to ASCAP and are licensed. Wealso offer two forms of license agreementsfor promoters and presenters of concerts, recitals and similar events - a blanket concert license and a per concert license. Withrespect to the vast number of concerts and recitals that take place throughoutthe country in large venues and small, the licensingstaff has the initial task of identifying events to be licensed. To do so, they rely on

Licensed BeverageAssociation. the advantages and fairness of partnering with ASCAP. Licenses for different businesses are designed with their Amongthese programs is a needs and those of our members cooperative advertising campaign in mind. Most businesses know that benefits both our customers that the ASCAP license provides and ASCAP, and the introduction good value and choose to enter of a Customer Card similar to the into agreements with us. Some, ASCAP Member Card. The however, require a great deal of ASCAP Customer Benefit Card is "selling" to convince them that specifically designedfor restauthey need an ASCAP license and that music enhancestheir bottom ASCAP line. Under the ASCAPConsent CUSTOMER CARD Look for the ASCAP Customer Decree, an agreement ASCAP cu~x~ lg99 Sticked This indicates that an ~GRIILL u~ establishment pays an ASCAP entered into with the Federal Government to avoid antitrust rrs ee~ ~u~loes ~ Iulu sn~ licensing fee for the musicthey claims, if we do not reach agreeuse. menton rates in negotiation with information from publisher mem- our customers, our customers rants, bars, grills andretailers. It bers on their rental agreements. have a right to initiate a court saves themsignificant dollars on programssubmitted by our writer proceeding for determination of credit card processing, promotionmembers, and other methods, reasonablelicense fees. In a rate al merchandise, restaurant supsuch as Internet research, wordof court proceeding, ASCAP and the plies, wirelessproducts,travel and mouthand clipping services. individual customeror group pre- insurance. To date, over 28,000 sent to a federal judgetheir cases customers have requested and the fees each believes are rea- beenqualified for the card. Weve General Licensing for sonable. ASCAP bears the burden inaugurated these innovative proASCAPs general licensing cusof provingthat its proposed rates grams to minimize the negative tomers encompass a vast array of are reasonable. ASCAP and the financial impact of the unfair different businesses and account customer are then bound by the music licensing amendment and for 14% of overall revenue. courts decision. Whilemost rate makethe jobs of our licensing ASCAP collects substantially proceedings take place in New field representatives a little easier. more in general licensing than York, under a recent amendment Another successful component any of our domestic competitors. to the copyright law, certain of our customerrelations program We are proud of our proven small businessesmayinitiate rate is bringing ASCAPmembers strength in this area. Giventhe proceedings in the city where directly to our customersto speak tens of thousandsof customersin their federal appellate court sits. and perform. This reminds our this category, including bars, In order to ensure consistency, customers first-hand just how restaurants, hotels, ice androller the decisions in these cases will muchmusic enhances whatever it skating rinks, circuses, theme be reviewedby the Federal Court is they do and that the musicthey parks and more, the general in NewYork with jurisdiction love most is by the members of licensing operation is the most over ASCAPs Consent Decree. ASCAP! labor intensive. Our licensing Withoutquestion, licensing the representatives must stay on top users of musicis at the very heart Marketing of newbusinesses opening every PaymentSystem. It As our readers know,a lobby- of the ASCAP day across the country and conis a challenging job requiring vince them of the value of an ing effort led by the National skills in education, creativity, RestaurantAssociationresulted in ASCAP license. Someof these to the resourcefulness and tenacity. businesses have never heard of passage of an amendment Copyright Term Extension Act Success means continued growth ASCAP and do not understand revenues, which in that expands exemptions from in ASCAP that the Copyright Lawrequires turn means moremoney for distrithem to have permission to use music licensing fees for bars, bution to our members. restaurants and retailers. ASCAP music.It is no easy task! is committed Our general licensing team is to overturning two-tiered, with administration For more this recent and customer service located in music licensinformation, offices in Atlanta, and a field ing amendvisit the sales staff servicingall regionsof ment. In the licensing area of the country. meantime, we www.ascap, com. As with other customer Phil Crosland are aggresgroups, ASCAP tries to identify to changethe dia: As a member afASCAP 3ou have the trade associations with whichto sively working option to issue direct pet~;rmance licen.~logue with our customers through negotiate rates on behalf of simies to broacast Station5 or calIle senices several new marketing initiatives lar types of customers, such as on any terms you and they Inll.~ a~lee VP upon. However,in such a ca.~e, you must the American Hotel and Motel under the direction of ASCAP Association, the Bowling of MarketingPhil Crosland. These ml%rm ASCAP thzwugh the Member initiatives are designed to show Services Department that you have Proprietors Association of licensed your work directly becauxe )ou our customers how valuable America and the National are not entitled to be paid by ASCAP Jbr music is to their businesses and perfi~rmancesyou have licensed yourse(fi

THE ASCAP PAYMENT SYSTEM EXPLAINED


Part Two: Turning Performances Into Dollars
to makesure all members receive what they earn in the fairest way possible." IIIUIII/)UF,X ,~t hdlll ltlldclThere are billions of ASCAP ,~l~tlldin,~ (41 the . LS("I, 1 licensed performanceseach year I{lwnenl ,%,wcnl. In lhc /,z.w and ASCAP is comnfittcd to pay L~xttc, wc /,*o,~ud at It,re ing our members on a fair, atOLlA,%(AI ,~,,o(s ah(ua liccnWtt~,, rate andefficientbasis. Every performance picked up OIIF ( llSI(HHCI.V. FH.II(I( (IF/Jin ASCAPs survey generales a ths ~uill /r.z~ u! hrm ~ur certain numberof credits. Each m.k, idr.lif3, amfu~dm, p,r credit ix worlh a certain dollar ./brm.ncu.~ in di./]?rcnl .xdi.. value. Thenumberof credits for and howwc collc<t it~hrtl~teach performance depends upon several factors, mostimportanfiy: lional rmallic,~. howthe musicis used (e.g., ""~"~ ~--...~ visual v,,,eal, back f ~""~ ~ 7hL~arli,lu is Pro! 7uw./a
.~,Oli(~ tl($/~.Jl(d If) (jr, r tHtC

ber of ASCAP credits being processed for wrilers or publishers in a performance quarter into the total number of dollars a<dlahle for distribution.

quarter. For example,if a wriler earnedI0,000credits fi~r performancesof her worksin a threemonth period and tile valueof one credit wax S4.95, the writers royairy check would be 549.500 ( I 0,000X $4.951. Generally. royalties fi~r a single musical work. in any surxeyed medium,are the producl of the calculation tm the next two pates.

does ASCAP figure theme); I ~ lll~ out what a particular j where I i IYlY performance is ~/the music ix ~. worth? j used (e.g., -~,~,, radio, network TV,pay cable): and when the music is used (e.g., mornings. ASCAP is ~ afternoons, evenings). guided by a ~ "fol h)w-t h e- d tf -,t..."~ Monies to writers and pnblishlar" principle in the design of its payment system. In ers are paid out mseparate dislriother words, revenues collected fromradio stations are paid out to those memberswhose works are perfk~rmed on radio, revenuesfor network television are paid out lbr pertbrmances on network television, and so on. ASCAP Iracks inusic use on these and other mediaand live venues to determine what works are pedkmned and the appropriate writers and publishersto be paid. Todd Bmbec, ASCAP Senior Vice-President and Director of Membership, gives many seminars throughout the year to help members understand the payment Todd Brabec system. "There are many steps in the calculation from performance to royahycheck, but each step ix buttons coveringthe sameperl:ormance periods and ASCAP important to an-iviugat the filirest and mostol2}ectivc payment," says divides the dollars available for writBrabec. "1 find thai members who distribution equally between decide to deepentheir undersland- ere and publishers. Until recently, the dollar value ing of the payment system, for credit wasdeter whatever reason, endup seeing ilk of a perfi)rmance logic. Theyrealize it is designed minedby dividing the I.tal hum-

~.

Peter Boyle Effiective with the 1999 June publishers andJuly writers distributions, ASCAP nowcalculates credil vahJes on all alll/tlaJ rather than quarterly basis. This change eliminates the quarterly fluctuations in credit values based on whenrevelme is receixed during the year andthe number of credits available for distribution in a quarter. Peter Boyle, ASCAPsVice
President and Chief J:~cononliM, ix

responsible for overseeing the design of the ASCAP surxeys and payment formulas to ensure their accuracyand fairness. "To do so." sztys Boyle,"wework xery hard tit continually fine-tuning the ASCAP payment system to arrive at the relative value of these performances of our members works. Determiningcredit xalucs on an annnal rather than quarterly basis enhances the fairness of our distribution system as it eliminates these fJuct LUHiOnS and allows members mbetter predict their cltrnings? A writers or publishers royab ty chuck ix determined by muhi plying the number of credits earnedIk~r performances of his or her works during a qtlarler by the dollar value of a credit lor IJlat

There are two methods of paymentsto ASCAP writers: The Current Performance Plan and the Averaged Performance Plan, Mostwriters choose to be paid on the 100% Current Performance Plan, which meansthey receive full valueof their roya~ie~ for payments in the current distribution quarter. The Averaged Performance Plan replacedthe "Four Funds" planof distribution effective in the Julyt999writersdistribution. The Averaged Performance Plan averages the dollar value of performancesover time. It is designed to smooth out fluctuations of distributions fromquarter to quarterand to provide a steadierstream of income. The averaged Performance Plan insures that writers on this plan receive exactly the same amountas they would on the Current Performance Planonly they will receive these royalties over an extended periodof time. For each member, distribution paymentsare based on a combination of currentperformance dollars (20%), 20 quartersor five year averageddollars (60%) and 40 quarters or ten year averageddollars (20%).

TURNING

PERFORMANCES

Each type of performance is assigned a "use weight," which determines its value relative to other types of performances. Feature performances receive the highest weight at 100%. Themeweights range from 25%-60%. Underscoring is generally weighted at either 42%or 54%per 3 mira utes. Advertising music (jingles) are weighted 3%. Thereare many different use weights outlined in ASCAPs weighting for, muladesignedto assign relative values to the widest possible rangeof types of performance. For example, in the case of live symphonyand concert performances, not only the length, or duration, but also the instrumentation will affect the number of credits a particular performancewill generate (full orchestra, chamber work,etc.). Periodically, the ASCAP Board adjusts the useweights to reflect changes in the industry.

Thelicenseeor "station" weight reflects the license fee paid by a radio, television,or cable station (or groupof stations) and the number of hours in eachsurvey of performances. The licensee weight is also referred to as the "hookup" weight with respect to network television, reflecting the number of stations carrying a broadcast.

This factor ensures that the license fees that ASCAP receives from any medium are paid to writers and publishers for performances on that medium. In other words, the money received from cable is paid out for cable performances, etc. In the case of radio, ASCAP conducts separate surveysof country, Latin, jazz, urbancontemporary, religious, classical, ethnic, and For example, perforpop music stations so mances of a song on a that the total monies colstation that pays ASCAP lected from those genre $500,000 in license fees -specific stationsis paid annuallywouldreceive a to the writers and pubhigher value than the lishers of works with persameperformances on formances on those staa station that pays us tions. $15,000 annually. This "follow-the-dollar" The median station system ensures that perweight is given a value formance payments of 1, with weights for stareflect whatis actually tions paying more or being performed in each less than the median medium. license fee determined accordingly. ASCAPalso assigns "weights" based on license fees from other surveyed media, such as the Top200 live concerts, tours, symphonic and chamberconcerts, web sites, background music services,airlines, circuses andice shows.

Ontelevision, the value of a performance can vary depending on the time of day or night or whether it takesplaceon a weekday or on the weekend, or holiday. Just as the type of performance(e.g., theme, background) affects the value, the time of day during whichthe performance takes place also affects the value of a performance.For exampie, on networktelevision, a prime time performance is weighted highest at 100%. Viewership is highest during prime time and stations generate the most revenue in those hours. Theweight of a performance in the afternoonis 75%.Theperiod with the fewest number of television viewers, the overnightperiod, generates the least amount of credits. Whether a show airs on a weekday, weekend, or holiday also affects the weight.

INTO

DOLLARS
] CREDITS ] x

Fees collected from nonbroadcast, non-surveyedlicensees (bars, hotels, restaurants and the like) are applied to broadcast featureperformances on radio and all performances on television, which serve as a proxy for distributionpurposes. Performances tracked on television and radio serveas an indicator of performances that take place at restaurants, bars and other licensees. It would be impracticalto survey all general licensees of ASCAPs works. Basing the distribution of general fees on surveyed performances on radio and television provesto be the mostcost-effective wayto paytheseperformance royalties.

For radio only- Songs that reach a certainlevel of radiofeature creditsin a quarter receive additional performance credits in that quarter for their radio sucess. These additional credits translate into increased royalty payments for writers andpublishers of qualifying songs. These payments represent the increased licensing valueto the repertoryof frequently performed songs, such as current chart songs.

I s.^.E I X
~ CREDIT VALUE = I

$ROYALTY I
When all of these factors are computed, wearrive at the number of total performancecredits. After establishing the number of credits generated by a performance, the next stepis to allocatethesecredits among all of the writers andpublishers of the work basedon the share each should receive. ASCAP is advisedof the correct sharesto be paid when memberssubmit Title Registrations. For example, if twocowriters of a song share royalties equally, eachwill receive50% of the total credits. Similarly, each writers publisherwill also receive50% of the total credits.The final stepis to multiply credits by the appropriate credit valueto arrive at the royalty payment.

THE ASCAP PAYMENT SYST M XPLAIN D Part Three: Broadcast and Cable Television
7hi.~ arlic/e is Part Three q/a seric.~ designed u~ ~,ive ~mr t/hT;Jl/;etW ~l belier umier.slandi,~ qf lhe AS(AP Paw~wnt ,%,wem. ]tl Ihe /a.Wi..suc, we]ooked ~il thed(/~rent /~lctotslll(it ,koblto the cal(tt/athm of roy(dlie.L/bro .~ingh pe(/brm(lncein any surveyed medium,ht thi.s ivsuc. ~c will e.v~lain hon ~e trdck, hhnli/?; ~lllil V(dlle [)cl./iJlllttltl(f.S (UI

bt~a&a.vtdtu] cable telerixion. icense fees collected from broadcast and cable television constitute ASCAPs largest source of revenue, makingup to close to 45% of overall domesticreceipts, and a substantial portion of incoming foreign receipts. In keeping with ASCAPs "follow the dollar policy, moniesattributable to network television are paid out for performances on networktelevision, monies attributable to local television are paid out for local television performances, cable monies are paid out for cable, and the fees for public television are paid out for performances on PBS and its stations. ASCAP is paid an annual blanket license fee by most of the television and cable industry for the right to use any music in the ASCAP repertory. Somelocal television stations opt for a per program license, under which they only pay ASCAP for programs containing ASCAP music not otherwise licensed. ASCAP Vice President of Film and Television Music Nancy Knutsen talks about the Nancy Knutsen importance of

nated shows, such as news, sports, and public affairs, Becauseit is such an integral part of the total viewingexperience, we may not always notice the various uses of musicwithin a program, which include feature performances, themes, underscoring, and music in ads, logos and promos. And, of course, every genre of music is represented." ASCAP tracks all types of uses in our surveys of performances on television and cable.

Tracking PerformancesOn Television AndCable


The ASCAP survey of perlbrmancescovers more than 7.5 million hours annually. ASCAP conducts a census survey, or completecount, of most music performed on broadcast television and the majorcable services.

The ASCAP Census Survey of Television and Cableincludes: NetworkIV


J ABC, CBS and NBC networks - all performances (including music in commercial. promotional and public service announcements) _1 Fox, Paramount, WB, Univision - all programs

D American Movie Classics i_l Black Entertainment TV ~lCarloon Network TI Cinemax Cl Comedy Central L.i Country Music TV L.i Discover),Channel ~ Disney Channel LJE! Entertainment LJ Encore F..i F/X ~ Family Channel ~1FLIX LJ HBO ~ History Channel Learning Channel Lifetime Movie Channel [_1 Nashville Network Nickelodeon .J Plex ZI Sci-Fi Channel _1 Showtime STARZ! Tl NT ~1Turner Classic Movies 7j USA

Identifying Performances The Importance of CueSheets

Local TY
All syndicated programs, feature films, and movies of the week Locally produced programs for which ASCAP is paid on a per-programbasis

music to television: "Musicis a vital component of virtually all programming - feature films, movies-of-the-week, episodic series, as well as locally origi-

Cable TV
All programs on the major cable services, including: [_l A&E

Thestarting point for the various television surveys, whether they are a complete count or a sample survey, is a program schedule. The program schedule lists the stations broadcasting each TVprogram, the specific program (including episode titles for syndicatedseries), and the date and time of broadcast. ASCAPpurchases computerized program schedules from two major vendors. To identify what musical works are performed on both broadcast and cable television, ASCAP matches the program schedules to its computerized cue sheet database. Cue sheets are provided to us by the program producers, distributors, broadcasters or foreign societies. Cuesheets list the detailed information on each of the compositions included in the TV program. The cue sheet indiPBS cates how the music is used [~ All PBSprograms, syndicat(feature, theme, underscoring, ed programs and films on staetc.) and the duration of each tions with S20,000 or more performance. The sheet also annuallyin license fees indicates the composers,writers and publishers of each composiASCAP conducts a sample surtion. All of this infimnation is vey of performances on the critical to determining how smaller cable services and PBS mucheach composition will be stations, local programming on paid as well as which members local TVand PBS, and music in are entitled to be paid. commercials, promotional and ASCAP must have a cue public service announcements sheet on file to credit our memon local TV, cable and PBS. bers and make payment. The sample survey of these perAmongASCAPsmany techformances is designed to be a nological innovations was the statistically accurate reflection development of unifk)rm cue of performances taking into sheet software, accountall times of the day, all called EZQ, days of the year, all regions of which has the country and all types of become the cable services and local TVstaindustry stantions. dard. Most of the major studios and proSeth Sohman

As we all know, Americanfdms and television showsare immensely popular throughout Europe andin other parts of the worldas well. The foreign performingrights organizations with which we have agreements monitor broadcastsof our members works in their territories. Theyforwardto us the royalties due for distribution to our members. Animportant part of our role is to ensure that societies aroundthe worldhave all the informationand documentationthey need about the worksin How Performances Are Valued ASCAPs repertory to properly identify and Eachsurveyed performancegenerates a num- pay on performances. In someterritories, ber of credits basedon several factors: ASCAP also monitorscertain types of perfor21 Whetherthe performance took place on mancesto ensure proper crediting of our network TV, local TV,PBSor cable TV; membersworks. For example, in Austria, 21 Thetype of usage - feature, theme,under- Finland, France, Germany, Ireland, Italy, The score,jingle, etc.; Netherlands, Spain, Sweden, Switzerland, and 21 How much a particular station, groupof sta- the United Kingdom, whereAmericantelevitions, or service paysin license fees; sion programs and films are frequently broad21 Thetime of day of the performance - prime cast, sometimes with foreign languagerifles, time, overnight, weekend, weekday, etc. ASCAP collects its ownperformance inforEachone of these factors is designed to marion to help identify the use of ASCAP ensure that ASCAPs payments "follow the music. ASCAP is the only U.S. society to dollar" and, in a fair andobjectiveway,reflect have an International MonitoringUnit (IMU) the relative value of onetype of musicperfor- that utilizes an innovative database (EZmance vis-a-vis another. Maxx) to verify the accuracy of television The three major networks-ABC,CBSand and cinema performance statements NBC - pay the nighest license fees in televireceived fromaffiliated foreign societies. I sion and therefore performances on these networksgenerate the nighest royalties. The

gramproducersuse EZQ,whichgreatly facilitates the processof preparingcue sheets and identifying performances of our members works. Seth Saltzman, Director of Distribution, notes: "ASCAP receives over 60,000cue sheets and processes tens of millions of pieces of musicperformed on television and cable in a year. Tohandlethis volume,we have a dedicated professional staff devoted to processing cue sheets and matching them with the performance data. The development of EZQ,as well as other technological resources,has made it possible to dramatically increase the numberof performances we can processin a distribution quarter. When a cue sheet arrives at ASCAP electronically via EZQ, the data are automatically loaded into ASCAPs cue sheet database, called SHOW. SHOW stores all necessary information for distribution purposes. This information includes such detail as series, episode,movie title, year of production,original airing date, producers,actors, as well as the writers, publishers and ownership shares of all musiccues. When cue sheets are fried on paper, the information has to be keypunched manually into SHOW. Whilecue sheets are the main source of performance information for TVprograms, ASCAP also receives logs from broadcasters for programsthey produceand airing schedules for commercial,promotionaland public service announcements. In addition, weindependently make tape recordings of television programs.Thesetapes are used to supplement the cue sheets and logs. Theyallowus to conduct quality control checksandassist in identifying performances in locally produced programs and announcements. These multiple sources of performance informationallowus to make accurate distributions to our members for television performances.

number of affiliated stations that carry a networkbroadcast is also taken into account. With respect to the Fox, Paramount,and WB networks, license fees to ASCAP are paid by each individual affiliated station, in much the samewaywe license local television. The number of affiliates to carry a broadcast,and howmuch each station pays in license fees determines the "licensee weight"affecting the value. Univisionpays license fees for all performanceson the Univision network as well as all performances on the local TVstations owned by Univision. These fees are distributed for the performances in Univision programs and the local programs broadcast by the Univision affiliates. In the cable area, ASCAP has been engaged in long-standing rate court proceedings to determine reasonable fees as well as other matters. Becauseof this, we are being paid interim license fees that are significantly lowerthan those paid by network or local television, impacting the credits earnedfor cable performances. Assuminga favorable outcome withrespect to the litigation, wehopeto collect anddistribute more in license fees covering the interimyearsas well as the future. Asyou can see, there are several variables that go into the crediting of performances of musicon television and cable.

Performances Outside TheUnited States

THE
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ASCAP
our mem-

PAYMENT
maintainsan electronic listing of societies, as well as their music writer and publisher CAE num- users, often preventidentification bers for mostof the worlds per- and crediting of our members forming and mechanical right works. For this reason, ASCAP societies. This numberis very takes an aggressive approach in important because you must have monitoring performances of repertory in foreign terria valid CAE number and be a cur- ASCAP rent member of a performing right tories. Hereare some of the initiasociety in order to receive per- tives ASCAP has developed to formingroyalties fromabroad. achievemoreaccurate crediting of Among the other international our members music: tools used to help societies Television, Cableand Cinema: exchange necessary information In Austria, Finland, France, are the WWL (WorldWorks List), Germany, Ireland, Italy, The Fiche lnternationale and Cue Netherlands, Spain, Sweden, Sheets. The WWL is a computer- Switzerland and the United ized list containingactively per- Kingdom, where American televiformed or important songs con- sion programs are frequently tributed by 41 performing right broadcast, usually with foreign organizations from around the language titles, ASCAP collects world. TheWWL is issued to perits ownperformanceinformation forming and mechanical right to help identify the use of ASCAP organizationstwice a year, in May music. ASCAP is the only U.S. society to have an International and November, in microfiche, tape, cartridge and CD-ROM forMonitoringUnit (IMU)that utimats. ASCAP provides the WWL lizes an innovativedatabasetechwith details on all songs in our nology (EZ-Maxx) to verify the repertory that havesurveyedradio accuracyof television and cinema performances in the UnitedStates. performancestatements received As administrator of the WWL, fromaffiliated foreign societies. ASCAP has also developed a new ASCAP developed the EZ-Maxx database called the Works technologyspecifically for this yielding excellent results. Information Database, or WID, purpose whichcurrently runs parallel to Radio: ASCAP also reviews the WWL and will eventually various international musicpublireplace it. TheWID utilizes statecations on a weeklybasis to spot of-the-art technology that elimi- ASCAP works that appear in the nates duplication of works and charts. When ASCAPworks makesthe cataloging and sharing appear, we immediately forward of important information about the songdetails to the local socimusicalworksmoreeffective than ety to ensure that our members are ever before. credited. Wealso forward docuSome foreign societies prefer to mentation to all of our affiliated receive songdetails in the formof societies for any ASCAP work index cards, or fiche internaentering the Billboard Hot 100 tionale. Societies use the informa- chart. tion on these cards to distribute Live Concert: Concert perforroyalties for performances in all mance details (Venue,Date, City mediaexcept television and cine- & Country) provided by a U.S. basedtrade publication are loaded ma, whichuse cue sheets. Once ASCAP has disseminated into an electronic database on a documentation about our repertomonthlybasis. This database is ry, it is the obligationof ASCAPs then reviewedperiodically and a affiliated societies to ensurethat computer generated set list performances of ASCAP repertorequest is issued to any Manager ry in their territories are credited. or representative of an ASCAP In reality, however, factors suchas artist (or of an artist whichperlanguage and the cultural and forms ASCAP repertory) who are businesspractices of our affiliated on tour in a foreign territory but

tion to our members. So that our members receive their money bclwa better understanding qf the from abroad as quickly as possi.4S(~4P P~lyn;ent ~$~l,~tern. /n lhe ble, wemake four foreign distribkl.vl isxue, werplainedhowwe utions a year: in February, May, track, klenti~., andvalueper/br- August and November.Each dismanees on broadcast and cable tributionlists specificcountries as lelevisk~n. In thi~ ixxue wewill well as periods of performances provide an overviewoj the co/lee- and type of media(film, televilion ~f rrLva/ties /~Jrpet:fi~rmanees sion, radio,etc.). ~/ wor]c~ in terrimrie.soutsidethe Becauseforeign royalties are Umted States. paid based on a countrys local oyalties earnedin for- licensinganddistribution policies, members can receive royeign countries are an ASCAP alties from abroad for perfor[[ ~ important source of is not ~k..income for ASCAP mances in venues ASCAP members. Currently, foreign roy- able to license under our Consent alties constitute approximately Decree, namelymovietheaters. Most of the revenues received one fourth of ASCAPs revenues, from foreign societies amountingto approximately $137 by ASCAP are paid out to writer members million in 1999. ASCAP has agreements with foreign societies because most publisher members representingvirtually every coun- collect their shares directly via try that has laws protecting copy- foreign sub-publishers. Senior Vice right. Thesesocieties are similar President of to ASCAP and we cooperate with International them in a number of ways to Roger Greenensure that our members receive away heads royalties from performances of ASCAPs their works in foreignterritories. International Throughthese agreements, they team. A welllicense the worksof our members Rogo-Gmenaway known songin their territories andwelicense the worksof their members in the writer himself, and a former Chairman of the Board of the UnitedStates. UKs PRS, Greenaway brings When ASCAP works are performed in a foreign country, that tremendousexpertise and knowlcountrysperforming right society edge to the job. "An important collects the license fees fromthe part of ASCAPsrole," says local music users. The foreign Greenaway, "is to ensure that society then forwards the royalties societies around the world have all the information and documenearned to ASCAP for distribution to our members whose works tation they need about our members and the worksin our repertowere performed. Each foreign society tracks performances in its ry to properlyidentify andpayon performances."The first step in own territories. Royalties earned from foreign this process happens as soon as Youare assigned territories vary depending on each you join ASCAP. countrys use of American music, a nine-digit CAE(Composer, local copyrightlaws, the types of Author & Editor or Publisher) uses licensed, the fees collected number,whichis associated with numfromlocal musicusers, etc. Each your legal name. Your CAE ber will remain with you even if foreign society pays ASCAP for and join anothuse of our members music on you leave ASCAP er performing right organization. varying payment schedules Any pseudonyms you may use are dependingon their owndistribution policies. When our members also assigned CAEnumbers, music is used, the royalties are which are linked to your legal name. SUISA, the Swiss society, forwardedto ASCAP ~br distribugive

have not yet provided ASCAP with set lists. Upon receipt of the set lists ASCAP notifies the appropriate affiliated society(s) of the performances and encloses documentation for all of the performed works. Theatrical Films: A U.S. based trade publication that providesfilm boxoffice charts by territory is reviewedand cue sheets are forwarded monthly to the appropriate society for any film containing ASCAP repertory that enters the boxoffice charts. Technical Visits: ASCAP makes routine technical visits to all of its affiliated societies to ensure that our repertory receives equitable treatment as well as maximum compensation. Our distribution, documentation andlegal

experts take part in the visits so that they may bring their considerable expertise whenreviewingthe distribution, documentation,and licensing and financial practices of our affiliated societies. It is through these exchanges that ASCAP can identify areas that require special initiatives on our part to make sure our members are properly credited. Legal Assistance: ASCAP provides legal assistanceto anyaffiliated society having difficulty licensing ASCAP repertory. ASCAPs expertise in this area has helped manynew and wellestablished societies to license mediasuch as the Intemet, cinema operators,satellite TV broadcasts, live concerts and other media. This has in turn heloedto increase

distributions fromthese societies. Our revenuesfrom foreign territories havesteadily increasedas the result of our efforts and the growing prominenceof American music abroad. ASCAP is the most effective U.S. performing right organizationin collecting foreign royalties. Wehave the longest standing relationships with foreign societies and the deepest understanding of how they do business. Hereis a list of the top ten societies in terms of 1999 revenues distributed for performances of ASCAP repertory: 1. Britain (PRS) $25 million Distributed in February, May, August and November 1999. 2. Germany(GEMA) $18 million

- February, Mayand November. 3. France (SACEM) $12.6 million - February, Mayand November. 4. Italy (SIAE) $11.5 million February and August 5. Japan (JASRAC) $10.3 million February, May, August and November. 6. Canada (SOCAN) $9.2 million February, May, August and November. 7. Netherlands (BUMA) $6.7 million May, August, and November. 8. Australia (APRA) $4.6 million - Mayand November. 9. Spain (SGAE) $4.3 million Mayand November. 10. Austria (AKM) $3.6 million February and May.

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