Summary of ASCAP Board of Review Decision Regarding Resigned Member Payments
In December 2017, the ASCAP Board of Review issued its decision in a Protest filed by resigned ASCAP writer member Shane McAnally and his publishers. Mr. McAnally complained that ASCAP had improperly applied its distribution rules in calculating the resigned members’ royalties for performances under licenses that remained in effect after the date of the members’ resignations. The decision followed a full hearing before the Board of Review. In its written decision, the Board of Review unanimously concluded that “ASCAP made proper distributions to the protesting members in accordance with the rules and regulations duly adopted by the ASCAP Board of Directors”; and that, therefore, the protesting members were not entitled to any adjustments to their ASCAP distributions. In April 2018, the Board of Review's decision was affirmed by a panel of three arbitrators appointed by the American Arbitration Association. Set forth below is a Summary of the Board of Review’s decision, followed by a link to the decision.
Summary of the Decision
The rules at issue in the Protest and the Board of Review’s reasons for its decision on each of the issues raised by the protesting members are as follows:
- ASCAP’s phase-out of Audio Feature Premium (“AFP”) payments to the resigned members, who had opted to remove their works from ASCAP upon resignation, was in accordance with the rules and regulations adopted by the Board of Directors governing distribution of royalties to resigning members – specifically, §§ 2.8, 3.3.1(i), 3.3.2(i) and (ii) of ASCAP’s Survey and Distribution System: Rules & Policies; and § 1.11.3 of the Compendium of ASCAP Rules and Regulations, and Policies Supplemental to the Articles of Association. The Board of Review found no evidence that ASCAP failed to properly apply the phase-out rules to the AFP bonus payments to calculate the protesting members’ royalties.
- The language of § 3.1.3 of the Survey and Distribution Rules cannot be read to require resigning members who elect to remove their works from the ASCAP repertory to be paid on the same basis as members who resign and leave their works with ASCAP; thus, § 3.1.3 does not prevent ASCAP from phasing out AFP payments. The Board of Review rejected the protesting members’ argument that ASCAP’s “Licenses-In-Effect” rules effectively give ASCAP the exclusive right to continue to license works that are removed from the repertory because ASCAP obtains from its members only nonexclusive licensing rights.
- Information as to the manner in which the applicable distribution rules would be applied post the members’ resignations was available to the protesting members when they were making their decisions as to whether or not they would resign from ASCAP, and whether or not they would remove their works at the time of resignation.
- The Board of Review found no evidence that ASCAP enacted resignation rules that targeted the protesting members. The Board of Review also observed that, to the extent that the protesting members may believe that ASCAP's rules applicable to resigning members who elect to remove their works from ASCAP are "unreasonable, improper or unlawful," the Board of Review lacks jurisdiction to make such a determination, as expressly stated in Rule 1. 2 of the Board of Review’s Rules of Procedure.
- The delay in processing the protesting writer member’s distributions following his resignation was not a violation of any of ASCAP's rules; but rather, occasioned by the need to calculate the royalties manually. Also, § 2.11 of the Survey and Distribution Rules provides that distributions may be delayed, and that performances are to be valued on the basis of the distribution rules in effect at the time distributions are processed.
- An earlier BMI arbitration and resulting decision was not relevant to the Protest because, unlike the protesting members, the resigned BMI affiliates who arbitrated with BMI had opted to leave their works with BMI and were denied BMI bonus payments for performances of those works after resignation.