FAQ About ASCAP Distributions and Impact of the COVID-19 Crisis
June 18, 2020
The whole music industry is feeling the effects of the COVID-19 pandemic and preparing for an uncertain future. We know our members have important questions about how all of this will affect your ASCAP royalties. So, we wanted to explain more about ASCAP distributions and answer your most frequently asked questions.
We've already seen more and more of our licensees start to feel the negative impact of the crisis on their business. This translates into less revenue for ASCAP, and less money available for distributions to our members, until the global economy recovers. But please understand that every industry will be affected by COVID-19. Not every organization will be impacted at the same time (we explain that in the FAQ).
That's not what anyone wants to hear, but ASCAP is member-owned and member-governed, and we owe it to our members to be transparent and truthful. We know that you use your ASCAP royalties to pay the rent and put food on the table, and we take our responsibility to you very seriously.
ASCAP is working every day to collect and distribute as much of your hard-earned money as possible and help you find the resources you need to navigate this crisis. If you have additional questions, please contact our Global Member Services team at 1-800-95-ASCAP.
You can find our updated distribution calendar here.
Q: Generally, how does the ASCAP payment system work?
A: ASCAP pays its members based on performances of their works by the music users we license and that pay us license fees. We use sophisticated technologies to monitor, track, match and process trillions of data points to pay our members based on their performances fairly, accurately and efficiently.
ASCAP operates on a not-for-profit basis and distributes every dollar we collect, less operating expenses, back to our members as royalties. ASCAP is always striving to maximize our efficiency so we can deliver more money to our members.
ASCAP pays on a “follow the dollar” basis. The money we receive from radio stations is paid out for radio performances, the money we receive from TV networks is paid out for TV network performances, etc. Performances on stations that pay the highest license fees will earn more royalties than performances on stations that pay lower license fees.
ASCAP operates on a cash basis. The money we collect in a quarter is paid out to our members in that same quarter, less operating expenses. We use current money to pay our members based on prior performances.
ASCAP makes 12 distributions a year. Writers are paid first in each calendar year, in January, April, July and October. Our international distributions are in February, May, August and November. Publishers (including writers with their own publishing) are paid in March, June, September and December. As a result, writers with consistent performances actually benefit from 12 ASCAP distributions annually, one per month.
Q: How will the COVID-19 crisis affect my ASCAP distributions?
A: Businesses across every sector that pay license fees to ASCAP are taking a hit as the crisis continues, and this has resulted in less revenue for ASCAP overall, and less money available for distributions to our members, until the global economy recovers. Every PRO is going to experience this – just on a slightly different timeline.
While numerous businesses have been shut down by COVID-19, ASCAP is working with our licensee customers to collect payments on time. Fortunately, ASCAP closed a record number of important multi-year licensing deals in 2019, which will help ensure a steady stream of royalties for our members as we navigate the economic impacts of the COVID-19 crisis. ASCAP also instituted immediate operational changes and expense cuts in early March 2020 to prepare for the anticipated economic downturn.
As a result of these efforts, while collection efforts are increasingly challenging, our first quarter 2020 royalty distributions were among our highest ever.
The impact on each member’s royalties will depend upon their own performances. For example, a member whose royalties come primarily from audio streaming services may be impacted differently than a member whose primary earnings are from cable or live venues.
We are all going to feel the effects of this crisis beginning in our upcoming distributions and until the economy begins to recover – but ASCAP is prepared to help our members weather the storm.
Q: What changes will ASCAP make to its distribution system in response to the COVID-19 economic crisis?
A: The principles and methodology of the ASCAP distribution system will not change; however, we will make adjustments to the financial management of the cash flow in order to stabilize future distributions for our members as we navigate an increasingly volatile global economic landscape. For example, for many years, ASCAP has calculated the credit value for each ASCAP survey year on an annual basis (read more about credit values here). That is because in a stable and healthy economy, we have been able to reliably predict annual revenues months in advance. However, in this unprecedented time of macro-economic challenges and less predictable revenue collections, we will once again calculate our credit value on a quarterly basis, closer to the time of each quarterly distribution. That means that we will have the opportunity to adjust and adapt credit values, if necessary, to reflect the revenues available for each distribution. As always, the credit values will appear on members’ quarterly statements.
We also are committed to doing everything we can to ensure as consistent a distribution process as possible with our vendors and licensees. To this end, with approval from the ASCAP Board of Directors, we have put in place a royalty protection plan which allows for a portion of distributable revenues to be used on a revolving basis as protection against potential future disruptions to distributions. This will help ensure timely payments in this very unstable economy for our members.
Q: How will my international royalties be impacted?
A: As we all know, this is a global crisis and most performing rights societies around the world are experiencing the same revenue declines from lockdowns in their own countries as the United States. CISAC – the International Confederation of Societies of Authors and Composers – has reported ranges of performing rights revenue declines globally from 20-40%. ASCAP members should anticipate international royalty declines until the global economy recovers.
Q: Why would the crisis impact distribution payments now, when they are based on performances that happened months ago?
A: First, it’s important to understand how ASCAP collects licensing fees. When your music is performed ASCAP does not get paid by the licensee for that performance right away. Large licensees typically pay the PROs between 30-45 days after each quarter.
Second, ASCAP distributions are made on a “current cash basis,” which means the money we collect in a quarter is paid out that same quarter, less operating expenses. So, while you are being paid for performances that happened two or three quarters ago, you are being paid with current cash on hand. ASCAP has operated this way since our beginnings (you can find more detailed information about the ASCAP payment system here).
In normal times, ASCAP’s “cash basis” payment system is a benefit to ASCAP members. You get the money we collect faster. And since revenues typically grow from quarter to quarter, performances are usually valued higher.
During this crisis, however, as we see more and more of the licensees who pay us start to feel the impact of the economic downturn, it translates into less revenue for ASCAP and less money available for distributions for our members. In fact, we have already been contacted by numerous licensees who are attempting to pay less, pay late or not pay at all. Nonetheless, we are working as hard as possible to pay you as quickly as possible and to optimize your distributions based on collections.
Q: Why does ASCAP seem to be affected by the COVID-19 crisis sooner than some other PROs?
A: ASCAP operates on a cash basis, meaning we pay out the money we collect in a quarter in that same quarter (less operating expenses). Some societies hold onto the money they collect in a quarter and pay it out for later distributions. In normal times, the benefit of the cash-based system is that ASCAP members get their money faster, and because revenues tend to grow over time, performances are valued higher.
In a very volatile time like the present when collections take a hit, it also means ASCAP will see a decrease in distributions earlier than other societies that hold onto the money they collect to pay out in later distributions; however, this also means we expect to bounce back sooner. This crisis will eventually be felt by every PRO, just like every other business in the broader entertainment industry.
Some PROs have also built up cash reserves by keeping a portion of the license fees they have collected over and above operating expenses, rather than distributing those license fees to their writers and publishers.
We want to be as upfront and transparent as possible about how we are managing this crisis and what we expect the long-term impact to be, so that you can plan accordingly, and we can help you find any additional services you may need during this time.
Q: Why would my royalties be affected if the businesses that use my music have not been shut down?
A: The global public health and economic crisis stemming from the COVID-19 pandemic has had a material impact on the business of nearly every ASCAP licensee across every sector (bars, restaurants, hotels, live music venues, airlines, theaters, radio stations, television, cable, etc.). No sector or industry is exempt from the current economic uncertainty.
While television, cable and even radio are broadcasting as always, they are seeing significant reductions in their advertising revenues and in the fees paid by local channels to the networks for network programs. Local advertising is declining since local businesses are closed or suffering. Many of the most lucrative national broadcast and cable events from an ad sales perspective – such as sports, live events, new shows, etc. – have been canceled. And many companies that do advertise are holding back on product launches and advertising campaigns until the crisis is over. We do not know the full impact of these factors on ASCAP revenues, but we want to be transparent with our members about the economic trends that are emerging from this pandemic.
Q: Will ASCAP be making up for any decrease in royalties, once the economy bounces back?
A: As always, ASCAP will pay out all the license fees we collect to our members in the quarter we collect them. Because we do not hold back your royalties, you will be paid on a current cash basis according to each distribution. When the economy is weak, and we see a decline in revenues, you will see a decline in overall payments, depending on your performances. When the economy is strong and revenues increase, you will benefit from the revenue increase in your payments.
Q: Composers and publishers in the symphonic, concert and jazz fields who depend on live performances will be hit especially hard by the pandemic for quite some time. Will additional support be available to them?
A: ASCAP distributes royalties from Symphonic, Recital and Educational (SRE) surveys annually in the March publisher and April writer distributions for the prior survey year. Fortunately, the 2020 distribution was ASCAP’s highest ever SRE distribution pool, which we hope will help our composer and publisher members in the difficult months ahead. In addition, through the ASCAP Plus Awards, we reward writers of children's music, symphonic & concert music, jazz and musical theatre with a value beyond the scope of performance surveys. All award decisions, including the cash amounts, are made by distinguished members of the music community who are neither members nor employees of ASCAP. ASCAP is the only performing rights organization with an awards program of this kind. There is a July 1, 2020 Application Deadline for ASCAP Plus Awards for activity during calendar year 2019. You can find more information here.
See below for other resources.
Q: What is ASCAP doing to help members affected by this crisis?
A: We are doing everything we can to support our members and help them find the resources they need to weather this crisis. We contributed to the industry-wide resource guide at MusicCovidRelief.com. We are regularly updating our Music Unites Us website, which has a wealth of information on how music creators can get financial assistance, keep their royalties flowing, maintain their health and well-being, stay connected to their audiences and continue advancing their careers during the pandemic.
ASCAP has been working vigorously in DC with our industry partners to petition Congress to include financial relief and protections for songwriters and composers as part of the massive government relief package (the CARES Act) and advocating to ensure that royalties are included as income for our members who are applying for unemployment insurance. We also sent a joint letter to leaders of Congress, highlighting the ways the implementation of the CARES Act has fallen short in assisting workers in need in the entertainment community, and requesting that these flaws be remedied in a new relief package. We put together a comprehensive FAQ about how the government relief package will affect our members here: www.ascap.com/covid19relieffaq
ASCAP provided significant support for MusiCares®’s special coronavirus relief fund for songwriters and composers (www.musicares.org). Additionally, ASCAP and MusiCares® have launched a series of free cyber support groups for music creators, meeting three times a week on Tuesday and Thursdays. Visit the Wellness section of our Music Unites Us site for details. This is an extension of our ASCAP Member Wellness Program, a unique set of benefits including access to innovative services that support mental health, mindfulness, exercise and nutrition. Learn more at www.ascap.com/wellness.
Our Global Member Services team is always available to assist members with more specific questions. Reach them at 1-800-95-ASCAP.