Songwriters, Publishers: Where are your ROYALTIES going?

AN OBSERVATION ON THE PROs (BMI, ASCAP, AND SESAC) RADIO LOGGING METHODOLOGY

This is an opinion based on research which is periodically updated

Last update: 06.07.17

Many sources of this research are found at the bottom of this page.

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As an Independent songwriter or publisher, have you ever wondered why you don't get paid for airplay? As a small or medium market radio station, have you ever wondered why the license fees you pay to the PROs do not go to the creators of the music you play on your station? Have you ever wondered why the blanket license fees seem to favor the major players affiliated with the BIG 3? Do those license fees subsidize the major players via major market logging?  Read on and perhaps you will learn a little more, and while reading, please keep in mind that numbers are constantly changing, but the scenario does not.

Since the first commercial radio broadcast almost 100 years ago, Terrestrial Radio has been, and continues to be, the major medium to expose new music.  On average, using current stats from the PROs, the average single spin on terrestrial radio is worth about 1.7 cents (when logged), or approximately $1,700.00 for 100,000 spins, while 100,000 streams on today's popular streaming services will earn approximately $45.00 (including mechanical and performance licenses).  You wonder why CD and download sales are down? Consumers are listening to free music (or free and/or cheap paid subscriptions), on streaming services rather than paying .99 for a track or 12.99 for an album, while the world's bandwagon is overloaded with more music than there is a demand for. Basically the music has been greatly cheapened because even a moron can now create noise on their computer and upload it to Youtube. When anyone can do this, soon all the music becomes monetarily worthless!  Now that can't be a much clearer picture of where we are headed. (Of course, payola and scams are still alive and well in the streaming circles.)

Radio airplay and venue performances are still the among the most efficient and profitable means of revenue for legit songwriters and publishers, but only if the PROs update their methodology and use today's technology.  For the instance in this article we will focus on terrestrial airplay scenarios.  Until the logging methodology is updated to include the available technology, an unethical and unfair system will continue in place for the independent songwriters and publishers, especially in the Country Music genre. Currently the system is designed to benefit the major label spins from the major markets.  Now, today's streaming services play a major role in label and publisher revenue. Thus, Welcome to ‘playlist payola,’ the modern-day equivalent to old school payoffs of radio station deejays.  And just like the old days, there are still specific prices for spins from playlists.  Anywhere from $2,000 up to to “$10,000 for favored playlists. This is just more proof how the majors and the PROs have always been in "cahoots" to maintain the revenue flow to the major players. Check the actual radio data and statistics further down this page. 

Even before the 21st Century, there was never a fair way of calculating license fees and collecting royalties and the system for reporting airplay, as we know it today, continues to be unfair for the independent writers and publishers.  Until the early 90s, airplay logs were manually written and submitted, (major market stations more frequently than others), and royalties to copyright holders reported on a quarterly basis.  Then, around 1990, along came BDS (the Billboard system for gathering data for airplay in major markets, now the Neilson BDS).  It forever changed the way data was gathered for the PROs, and soon became a "gravy train" for the major publishers and before long the major labels and major publishers began consolidating and creating an even bigger threat to the indies. Thus, today, we now have the "BIG 3", and yes, somewhere in that mix lies the PROs.

Out of approximately 11,400 AM and FM commercial stations in the U.S., over 850 belong to iHeartMedia (formerly Clear Channel), based in Texas. Over 450 belong to Cumulus Media, based in Georgia. Over 300 belong to Townsquare Media, based in Connecticut. Over 130 belong to CBS Media, based in New York, and over 130 belong to Entercom, based in Pennsylvania.  Recently Alpha Media (Portland, Oregon) has purchased 116 stations from Digity (W. Palm Beach, Fl.), making a total of 251 stations in 54 markets (mostly small and medium markets). That is 2111 local U.S. stations owned by six companies.  Of course by the time you read this there may have been more mergers and acquisitions and these numbers could be a little skewed.  This consolidation allows companies to promote similar playlists and artists across the format-aligned stations in their networks. Now, keep in mind which stations are preferred when reporting playlist logs to the PROs. Does it not "strike a chord" when out of 11,400 stations, six companies and 2111 stations are basically dictating royalty payments. Do headlines such as "Clear Channel (now iHeart Radio)-Warner Music Deal Rewrites the Rules on Royalties" Ring a bell?  And, to add insult to injury, the "Fair Play Fair Pay" Act has been introduced to Congress mandating that terrestrial radio pay performance fees to artists and labels. This will absolutely kill most indie artists and labels as well as many terrestrial radio stations who play independent music. "Hello, anybody in there?? McFly!!!" 

(portions of this section from http://www.billboard.com/articles/business/6480591/local-radio-fairness-act-debate-congress) 

The most recent research regarding monitoring by the PROs goes something like this:

ASCAP, founded in 1914 by publishers and songwriters, uses MediaGuide and RadioWave for monitoring.  Mediaguide tracks approximately 2500 radio stations in major markets, and Radiowave monitors approximately 5000 internet  broadcasts, while Media Monitors monitor radio, tv, and cable commercials.

SESAC, formed in 1930 primarily as a gospel licensing agency, uses BDS for its monitoring of roughly 1600 radio stations as of the  most recent information gathered, (once again, only monitored in major markets). Being a private company, SESAC does not have to  publicly disclose it's royalty collections.

BMI, a non-profit organization founded in 1939 by the broadcasting industry, began using EMR (Electronic Music Reporting) in 2000, and collected approximately 500,000 hours of logged airplay. Today Landmark Digital Services is used for major/large markets.  More information on Landmark Digital at:  http://www.americansongwriter.com/2010/09/next-big-nashville-spotlight-landmark-digital-services/ 

For the instances below, we will basically key on BMI for examples.

The following 2 paragrahs are taken from the BMI website. (italics are personal comments)

BMI uses performance-monitoring data, continuously collected on a large percentage (define large percentage) of all licensed commercial radio stations, to determine payable performances.  This census information is factored to create a statistically reliable and highly accurate representation of feature performances on all commercial music format radio stations throughout the country.  (note: Keep in mind that even if data is collected, it may or may not be used)  

Royalties for performances of works in the BMI repertoire that occur on United States commercial radio stations will be paid according to the following rules:

*Royalty payments will be based upon the license fees that BMI collected from each individual station that performed a work. As a result, royalty payment rates will vary from quarter to quarter depending upon the amount of the license fees collected from stations that aired each work during that quarter. 

*In addition, the rates may fluctuate from quarter to quarter depending upon the total dollar amount available for each quarter’s commercial radio distribution.

ASCAP and SESAC are similar.  BASICALLY, all three PROs are using the Small and Medium market radio stations to help subsidize the major players in the music industry. The entire system is very top-heavy and greatly favors the few who get heavy airplay from the major markets.  Further down this page are examples of statistics recently gathered.   

ONLINE Radio stations (webcasts) must furnish quarterly logs for all play to all 3 PROs and SoundExchange.  There are many broadcasting automation and programming systems such as SAM, SPINITRON, RADIOHOST, NEXTCAST, STATIONPLAYLIST, and many others..  These systems are automated and  reports to all the PROs and SoundExchange can be sent with a simple command. However, even as terrestrial radio, internet webcast license fees are not necessarily being distributed to the creators of the music which is played on that particular webcast, but rather being paid to the "top tier" publishers and writers based on algorithms which benefit the major players/creators. (Oh, the PROs may throw you a bone just as a "gesture".) The technology is available everywhere now, and along with the BMI EMR logging system, reports can be easily filed over the internet. With few exceptions, most terrestrial stations are using some sort of automation system today, which can handle just about any type of logging and reporting. So, why the delay in proper accounting and payments for songs actually played on radio?  Three guesses???

Today's technology is available to capture logs from every single spin, from every single broadcast (24-7-365), sort, and give detailed statements and reporting. Every spin can be accounted for either from digitally monitored stations, or logs from the automated broadcast systems. If this technology was utilized it would be a complete and fair system.  Points, of course, would still be used based on licensing fees paid, in determining the actually worth of spins in given markets. Come on people!! If we could put a man on the moon in 1969 without a MAC or PC, just think what the capabilities are today for music reporting, with today's technology. But it seems that the major players in the system are just fine with the "status-quo".

Logging Stats overview:

Now, why is only about 5% of total radio airtime being logged??  And 86% of that logging is coming from the major markets, which actually represents 26% of the total airtime or stations, where basically, only major label music is being played, featuring major publishers and writers. Also, take into consideration the ranking, share, etc. of major market stations. Next, take into consideration the other 74% of airtime, of which only 1% is being logged.  At Best! So, are the license fees of the approx 8700 small and medium market stations subsidizing the majors?  If  small and medium market radio stations licensing fees are not compensating the creators of the songs which they air, then where does all that licensing money go?  In 2014, the total fees paid to BMI, ASCAP, and SESAC was approximately 473 million dollars.  Yes, 473 million dollars! The majority of small and medium market spins aren't counted because the PROs only partially log the 8700 stations (from which the majority of paid license fees come from) as an exception and, even at that, may not use those logs.  Oh KRAP! With today's technology??  So, are licensing fees actually just  "protection payments" for small and medium market radio? Extortion come to mind?  We will "drill down" a little further down with a more detailed focus on the Country Radio markets.  

The BIG 3, Universal, Sony, and Warner all are parent companies of the major record labels and publishing companies, which, for decades, have controled a majority of the world's music sales. Starting to get the picture? 

Amid declining sales of CDs and downloaded music, the BIG 3's problems illustrate how everyone in the music industry is striving to maintain revenue via airplay and streaming. With a drop in music sales from 26 billion dollars in 1999, to under 15 billion dollars in 2014, no wonder the BIG 3 are creatively investing what few assets they have left by investing in streaming services such as Sound Cloud, Spotify, and others while cutting royalty deals with the streaming services they are investing in. With sales dropping, streaming has taken over the revenue source for the BIG 3! The Majors have even managed to negotiate Minimum Revenue Guarantees (MRG) with the major streaming services (Spotify, Pandora, Apple Music, etc.) of which those guarantees are actually in excess of approximately 25% of the actual royalties due.  These MRGs actually help to inflate the actual record industry revenue from streaming, and that streaming business model cannot survive by paying more royalties than are actually due.  Seems like self-cannibalization doesn't it?  To add more injury, the songwriters and publishers are getting the shaft when it comes to their royalties.  Yes, the music business is just as, if not more so, corrupt as our Federal Government! Okay, so much for streaming, now back to radio. Read on.

With the small and medium market radio stations and independent songwriters and publishers subsidizing the BIG 3, someone has to pay for subsidies, and in the end, it seems to be the Independently owned radio stations and the Indie artists.  If this keeps up the entire industry will implode. But, in the mean time, the spin reporting logs will continue to trend "major friendly" as the subsidies continue. 

And, so it is, the PROs and the BIG 3 have been realizing the bandwagon is overloaded, sales revenue is falling, and the supply and demand has gotten upside down.  Thus, the Indie publishers and writers continue to suffer the consequences while the small and medium market radio stations are at the mercy of the PROs and continue to subsidize the BIG 3 via blanket license payments.  Basically it is, "Shut up and pay the license or quit broadcasting!" Until "THE SYSTEM" is changed to include the available technology to include every reported spin, the system will remain one-sided, top-heavy, and yes, corrupt. (Capone would have done well in the music biz.)  Anyone who is trying to break into the current system will fall prey and those already in the system will not "buck it". Thank God we had those to "buck the system" during the Revolutionary War!! Are there any of those left?

Small/Medium Market Radio Scenario:

Radio station KRAP pays the blanket license fee to all three PROS's.  Broken down like this:  a) BMI approx 8,500,000 songs, b) ASCAP approx 7,000,000 songs, and c) SESAC approx 500,000 songs. By the way, a very small percentage of the songs in the PROs' repertoires have ever actually seen airplay.  Oh, You would think SESAC would take a significant cut in license fees for its 2% share of the pie, but that's another subject. Now back to KRAP.  

KRAP pays the license fees, (a minimum fee vs. a percentage of their gross income), plays music by the Majors plus by Indies such as Johnny Ray Doe, Elmo Floggett, and Ima Hogg, and many others.  What? the PROs don't take the KRAP playlist logs?  Oh. Maybe three days per year at best, as a good will gesture, but even then there is no guarantee that their logs will be used. Some stations haven't reported in years. Is it a random choice or selective choice?  But just make sure KRAP keeps paying those license fees, because KRAP wants to keep the radio station open and the "BIG 3" need the subsidies. Get it? More and more its starts sounding just like the Big E word! On another upside down note, for most broadcasters, falling advertising revenue and rising license fees could badly jeopardize the broadcast and music industry as a whole. 

Another interesting article can be found below regarding the reporting systems: Music's Data Problem May Be Depriving Artists of Significant Revenue. 

http://www.hypebot.com/hypebot/2012/04/musical-big-data-problem-could-be-depriving-artists-of-significant-revenue.html 

BMI Electronic Music Use Reporting (taken from the BMI website)

BMI’s Electronic Music Use Reporting System provides BMI’s radio station customers with the ability to file playlist information through the website. Radio Station customers will need to enter personally identifiable information about themselves, and additional information about their station and about the music they play. All information provided to BMI through the Electronic Music Use Reporting System is stored on an internal BMI computer which is not accessible to the public. Any personally identifiable information can be modified at your request by forwarding an e-mail to playlists@bmi.com or calling the Logging Department at 615-401-2000.

BMI will use this information to distribute royalties to BMI-affiliated writers and publishers. In addition, BMI may use the information for internal market share analysis, for external negotiations, and for other purposes. BMI may also use aggregated information for marketing and promotional purposes.  

BMI does not presently share any personally identifiable information provided through the Electronic Music Use Reporting system with third parties without first obtaining your permission.  

http://www.bmi.com/forms/licensing/radio/EMR_prnt%28lo%29.pdf

Below is a breakdown, basically using BMI as the scapegoat, but keep in mind all 3 PROs work basically the same from the top down. For an example we are using the major markets as digitally logged, and the remainder as manually logged or automated by the local radio station broadcast software. Not knowing the exact number of hours that are actually monitored (research shows anywhere from 500,000 logged hours, to 4,000,000 total monitored hrs), we will use the larger number for all formats just to be generous.

APPROX 472  RADIO STATIONS That play Country and the Texas / Red-Dirt format 

            APPROX YEARLY AIR TIME: 3,700,000 HRS

            BMI LOGGING: APPROX 3 DAYS PER YR PER @ APPROX 33,800 HRS

  APPROX AVERAGE DAILY AIR TIME PER STATION: 22 HRS  

  APPROX 30,000,000 YEARLY TOTAL SPINS

  APPROX 1% OF TOTAL AIRPLAY TIME IS POSSIBLY LOGGED  (with exception of the BDS markets)

QUARTERLY BREAKDOWN FOR STATIONS PLAYING THE TEXAS COUNTRY / RED-DIRT MUSIC.

Representing quarterly statements for songwriters and publishers based on stations logging 3 days per year and/or 18 hrs per quarter for Texas Country and Red-Dirt music, approximately 1% of the playlists are actually logged with BMI, ASCAP, and SESAC, which means your song has a 1% chance of being reported to the PROs. (Approximately 105 terrestrial reporters and 15 internet reporters to the panels that report to the Texas Regional Radio Report and the Texas Music Chart.)

ESTIMATES TEXAS REGIONAL MARKET RADIO STATIONS THAT PLAY TEXAS, COUNTRY, RED-DIRT:  472  

The below list represents approximately 472 radio stations who's license fees do not go to the creators of music which they play.  (Approximately 47 million total spins not accounted for by BMI, ASCAP, and SESAC.)

       TEXAS COUNTRY STATIONS:              180

       OKLAHOMA COUNTRY STATIONS:      99

       ARKANSAS COUNTRY STATIONS:       70

       LOUISIANA COUNTRY STATIONS:       44

       KANSAS COUNTRY STATIONS:            43

       NEW MEXICO COUNTRY STATIONS:   36  

TO SUM IT UP:  THE REPORTING SYSTEM IS COMPLETELY UPSIDE DOWN!  EVERY SPIN ON EVERY RADIO STATION, EVERY WEBCAST, EVERY SATELLITE PLAY, CAN BE ACCOUNTED FOR! THE STREAMING SERVICES ALREADY HAVE TO DO THIS. THE TECHNOLOGY IS HERE, BUT WHO IS STOPPING IT?   

Estimated Breakdown of PRO (BMI) License Collections

*The Below is based on recent approximate BMI figures and license fees collected.  

Maj/Lg mkt = pop of 300,000 plus

  Sm/Med mkt = pop under 300,000

REVENUE PERCENTAGES

Cable, Satellite, TV, etc = approx 26%

YouTube, Spotify, Pandora, Internet, etc = approx 10%

International Sources = approx 30%

Clubs, Venues, Restaurants, etc= approx 14%

US Radio = approx 20%

Market size defined as:

June 2014-June 2015 BMI Collections - approx $1,000,000,000

Total Commercial Radio Stations = approx 11,000

Total Country Radio Stations = approx 2100

Total approx Maj/Lg mkt Country Radio stations = 200

Total approx Sm/Med mkt Country Radio stations = 1900

Approx % of Country Radio license collections= 20%

Approx Total Collections from US Radio = $200,000,000

Approx Country Radio Share of License Fees collected = $40,000,000

REVENUE FROM MAJOR MEDIA SOURCES

Iheart Media 2015 Revenue = approx $3.2 billion @850 stations

Cumulus Radio 2014 Revenue  = approx $1 billion @ 450 stations

Townsquare Media 2014 Revenue = approx $500 million @ 300 stations

(Being generous, we will use 200 Maj/Lg mkt Country Radio for the calculations below.)

Approx $4.7 billion Major mkt radio revenue @ 1.7% license fee from 200 maj mkt Country Radio stations= $10,000,000

Approximately $50,000 per sta (taking into consideration that ½ of the corporate owned Country Radio format stations are in Maj-Lg mkts as defined above)

MAJOR / LARGE MARKET PER SPIN BREAKDOWN

Approx $ fees collected from approx 200 Maj mkt Country Radio radio stations = $10,000,000

Average annual license fee from Maj/Lg market Country Radio stations = $50,000.00 (based on 1.7% gross revenue)

Average spins per year from Country Radio stations broadcasting 24/7 = 100,000/@50% BMI= 50,000

Average cost per spin – $1.00

Less 15% PRO admin fees = 85 cents per song total per song for writers and publishers

*(Maj/Lg market Country Radio stations logged 24/7/365/potentially, via BDS, MediaGuide, Landmark Digital, PPM, etc.)

REVENUE FROM SMALL/MEDIUM MEDIA SOURCES

Approx $ fees collected from approx 1900 Sm/Med mkt Country Radio radio stations = $30,000,000

Average annual license fee from Sm/Med market Country Radio stations = $15,700.00 (based on 1.7% gross revenue/under 300,000 population)

*(Sm/Med market Country Radio stations are logged an average of approximately 72 hrs per year.)

SMALL / MEDIUM MARKET PER SPIN BREAKDOWN

Average annual license fee from Sm/Med Country Radio market stations = $15,700.00

(these fees range from a minimum license fee vs 1.7% of the station’s gross revenue)

Average spins per year from Country Radio stations broadcasting 24/7 = 100,000/ @50% BMI= 50,000

Average cost per spin – 31 cents

Less 15% PRO admin fees = 26 cents per song total per song for writers and publishers

Small and Medium market Country Radio pays approximately 75% of the total license fees collected by the PROs, however the money for the songs played by the majority of the radio stations are not reaching their rightful creators and owners. (Approximately 190 million total spins not accounted for by BMI, ASCAP, and SESAC.)

EVEN IF THE ABOVE FIGURES WERE OFF BY AS MUCH AS 50%, THE INDIE WRITERS AND PUBLISHERS ARE STILL GETTING THE SHAFT AND SMALL AND MED MARKET RADIO ARE STILL BEING EXTORTED!

SUMMARY

Based on a report from the 2006 ACCOUNTING FOR THE BMI-RMLC AGREEMENT, BMI collected $208 million from approximately 11,000 radio stations that year alone.  If one were to figure the total amount of approximate spins of BMI affiliated songs, 

(550 million spins) that would equal approximately .32 per spin payable to songwriters and publishers (all genres) after deducting a 15% admin fee for the PRO. Now, in 2016 one would think the collections from BMI would even be much more.  Again, the mass majority of radio stations spins are not being logged, thus the rightful owners and creators of the music not being compensated! And...someone is getting the shaft. Lets drill down further.

74% of license fees collected from Country Radio are collected from 1900 Small/Medium market radio, however these fees are used to subsidize the payout for the Major publishers and songwriters, by utilizing the Maj/Lg Mkt logs, thereby keeping the BIG 3 and their affiliated publishers afloat.  This is called, “follow the money” by the PROs, however they are not following the money when the bulk is paid by the Small/Med market stations. Will the PROs account for payments made and to whom?  NO, of course not!

So, are the PROs really in bed with the BIG 3?  Is it any wonder that Indie writers and publishers are not receiving royalties for airplay in the Small and Medium markets?  Is further proof needed that the PROs are upside down in their logging?

Let’s see.  If BMI claims to have approximately 50% of the repertoire of country songs, that would mean that BMI’s share of the average number of spins per year per station would be approximately 50,000 spins. Based on an average of 100,000 spins per station per year @ 2100 country stations, @ BMI repertoire share of approx 50%, that would be approximately 32 cents per spin, combined for writer and publisher. (16 cents ea), doing away with the so-called algorithms (which favor logged songs in "drive time" versus "overnight" airplay, thereby greatly manipulating the payout from the actual revenue). In actuality, even the major writers and publishers would possibly see bigger royalty checks.  Just a thought! Or…what if a system was put into place whereby the total license fees paid by all country radio stations, less a 15% administrative fee, was paid to the songwriters and publishers whose songs were played, based on an updated logging system, of which the technology is actually now available. 

Imagine a writer has a song played 500 times a year on 100 Sm/Med mkt stations at an average of .04 per play.  That is $2,000.00 for one year’s airplay from one song.  Wonder why the writer isn’t getting it?  Hmmmmm, and that rate could even possibly be as high as .08, or $4,000.00 for one song for one year, IF LOGS WERE COLLECTED AND USED FROM ALL THE SMALL AND MEDIUM MARKET STATIONS. YES, THE TECHNOLOGY IS THERE AND THE INDIE WRITER AND PUBLISHERS HAVE ALREADY PAID FOR IT!

I am basing most of the research on the Country Music format simply because the format is the most listened to format of music in the U.S., of which the majority of listeners are in small and medium markets of under 300,000 population. (of which approximately 80% of those listeners are in markets of under 50,000 people.) Pop, Urban, Jazz, Rock, etc., etc., are probably much closer to being correct in that the majority of listeners are in the major-large markets, however the creators of all music are being short-changed and the radio stations paying the license fees are being extorted, basically paying more than what is actually being paid the music creators. Seems to be a BIG BLACK HOLE out there somewhere and it all leads to the relationship between the PROs and the major players.