AS CAP P ay.m e n t System Explained Part One: The sands of cus- In addition, a simplified three- formancesis so important to our tomers each tiered licensing rate structure has overall licensing success, which ASCAPLicense year. And been implemented.This provides impacts all members’potential This arlicle ix Part Oneof a specifically an easier introduction to the earnings. series designed lo give (mr mem- dealing with financial obligations a site Preparation for these negotia- her,~ a better umterstandingo/lhe Web site and assumes when using copyrighted tions requires an enormouseffort ASCAPPayment System and the lnternet licens- music. in researching music use and how many.factorsthat go mlocalculat- it is changing on the airwaves, MorgensternMarc Senioring is VPASCAP of ing howmm~h a particular pelSu’- Broadcast and in providing tremendous manceis worth. Wearc starting Strategic Planning and New detail about the use of the (~]’ thi.~ xcrie.¥ with a look al Media Marc Morgenstem, who TelevisionLicensing ASCAPrepertory on television. ASCAP5 licensing (/,[brts. * directs his team of professionals One-third of ASCAP’soverall Futurearticles in the series will revenues are generated from Radio Licensing cover hown’e track andidentil the use of musicon net- 5, Fortunately, on the radio side, ’,,’ ascae , work, local and cable ,s’urvcs’s howroyaltiex ./br .’"’?’ ASCAP television. The ABC, negotiations have historically ’¥pec’fic°r’ tyl’exqf Pe’f CBS and NBCtelevi- resulted in agreementon license nl(lllC’(~Sare determilled,attd HOWco,ectYou~"~r sion networks pay fees and terms without rate court litigation. As with television, collecting international royal- ASCAPflat dollar Royalties? ASCAPhas dealt with members tic3’. blanket license fees. of the Radio Music License In 1998, ASCAPbecame the License fees Committeein negotiating music first performingright organiza- for local television are the prod- in the exploding dig- " license fees for five-year terms. tion to collect over a half-billion ital world. uct of both rate court litigation dollars for its members.Of that, and negotiations between For commercial radio, ASCAP Since ASCAP’s offers two types of license agree- $371 million was collected from customers are so ASCAPand the Television our customers - the users of Music License Committee. ments- blanket and per program. different (see box below), our Moststations choose the blanket music - for performances in the Committee members are broad- licensing effort is organizedinto agreement under which they pay United States alone. Negotiating casters representing the broad specialized teams responsible for an annual fee, billed monthly, licenses with customers and col- dealing with specific types of spectrumof the television indus- and based on a percentage of the lecting the licensees. try. This licensee group, more station’s annual revenue. The per fees is one of than any other, has tried vigor- programagreement is chosen pri- ASCAP’s Web Site and ously to reduce the license fees marily by stations whichuse less most impor- Internet Licensing they pay for the use of music. In presenting our case, ASCAP feature copyrighted music, typi- tant functions. The Internet provides a cally employing News/Talkfor- Yet ASCAP’s has a team of negotiators com- dynamicnew source of licensing mats, or religious programming. licensing prised of our licensing executives revenue for ASCAPand we are Under the per program agree- efforts are aggressively pursuing its oppor- along with counsel and indepen- Vincent Candilora probably the dent experts on music usage. Our ment, fees are principally calcu- tunities. Withnearly 1,000 sites lated based on actual music least familiar area of our opera- goal, of course, is to proveto the nowlicensed, our revenues from usage. tion to our members.Under the industry the ever-increasing the Internet tripled in 1998. Our For non-commercial radio, direction of ASCAPSenior VPof value of ASCAPmusic to their efforts have been greatly such as college radio and Licensing, Vincent Candilora, a enhanced by the development programming. That is why recruiting and retaining members National Public Radiostations, if teamof 168 staffers is responsi- and use of the ASCAPEZ Seeker negotiations are unsuccessful, a ble for licensing tens of thou- with the greatest numbersof per- (see technologyarticle, page 8). rate arbitration proceedingis held WHO ARE ASCAP’S CUSTOMERS? ASCAPcustomers include a diverse group of businesses and organizations that use music in manydifferent ways. In order to license effectively, ASCAPemploys 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 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 ~ 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, con- ventions, retailers, shopping malls, circuses, themeparks, sports teams and leagues, dance schools, health clubs ~xand many other businesses under the auspices of the U.S. Licensed Beverage Association. the advantages and fairness of CopyrightOffice. Licenses for different busi- partnering with ASCAP. Radio is our second largest f Music nesses are designed with their Amongthese programs is a source of domestic revenue and needs and those of our members cooperative advertising campaign 26%of our overall revenues. Makesi in mind. Most businesses know that benefits both our customers that the ASCAPlicense provides and ASCAP,and the introduction Cable Licensing good value and choose to enter of a CustomerCard similar to the The cable television industry into agreements with us. Some, ASCAP Member Card. The has undergone tremendous [Diffe~the i! however, require a great deal of ASCAPCustomer Benefit Card is "selling" to convince them that specifically designed for restau- change and revenue growth over they need an ASCAPlicense and the past two decades. ASCAP’s licensing efforts are aimed at that music enhances their bottom line. ASCAP both the program services, such Under the ASCAPConsent CUSTOMERCARD as HBO, Showfime, MTV,etc. Look for the ASCAPCustomer ~ Decree, an agreement ASCAP cu~x~ lg99 and the system operators to Sticked This indicates that an ~GRIILL u~ which households subscribe for establishment pays an ASCAP entered into with the Federal their cable services. ASCAPhas licensing fee for the musicthey Governmentto avoid antitrust rrs ee~ ~u~loes~ I’ulu sn~ claims, if we do not reach agree- been engaged in long-standing use. menton rates in negotiation with rate court proceedings with the information from publisher mem- rants, bars, grills and retailers. It cable industry to determine rea- our customers, our customers saves them significant dollars on sonablefees as well as other mat- bers on their rental agreements. have a right to initiate a court programs submitted by our writer proceeding for determination of credit card processing, promotion- ters. members, and other methods, reasonablelicense fees. In a rate al merchandise, restaurant sup- While we await the court’s decisions, ASCAPis licensing such as Internet research, wordof court proceeding, ASCAPand the plies, wirelessproducts, travel and mouthand clipping services. individual customeror group pre- the cable industry on an interim insurance. To date, over 28,000 basis. Assuminga favorable out- sent to a federal judge their cases customers have requested and come, ASCAPexpects to collect for the fees each believes are rea- been qualified for the card. We’ve General Licensing sonable. ASCAPbears the burden inaugurated these innovative pro- substantially morein license fees ASCAP’sgeneral licensing cus- grams to minimize the negative coveringthe interim years as well of proving that its proposedrates tomers encompassa vast array of are reasonable. ASCAPand the financial impact of the unfair as the future. different businesses and account customer are then bound by the music licensing amendmentand for 14% of overall revenue. court’s decision. Whilemost rate makethe jobs of our licensing Educational and ASCAPcollects substantially proceedings take place in New field representativesa little easier. more in general licensing than York, under a recent amendment Another successful component Symphonic any of our domestic competitors. to the copyright law, certain of our customerrelations program Licensing We are proud of our proven small businesses mayinitiate rate is bringing ASCAPmembers ASCAPhas special agree- strength in this area. Given the proceedings in the city where directly to our customersto speak ments for various types of pre- tens of thousandsof customersin their federal appellate court sits. and perform. This reminds our senters in this field. For example, this category, including bars, In order to ensure consistency, customers first-hand just how we have an orchestra agreement restaurants, hotels, ice and roller the decisions in these cases will muchmusic enhances whatever