FAQ About ASCAP Distributions and Impact of the COVID-19 Crisis
May 9, 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.
The good news is that the April 28 writer distribution was fully funded at the same level we planned, pre-COVID-19. In fact, our March and April 2020 distributions to you were higher than last year's, and among our highest ever.
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: When is ASCAP making its next distribution?
A: We will make our upcoming International distribution on Monday, May 11, 2020.
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.
ASCAP is doing everything we can to reduce expenses and to work with licensees to get payments. 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 from 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: 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. Many territories outside the United States felt the impact months and weeks before we did. At this time, we cannot provide a clear estimate of the extent of the impact on international royalties, but members should anticipate international royalty declines until the global economy recovers.
Q: Why was there not more advance notice given about these changes?
A: The simple truth is we are living through an unprecedented global emergency, and we have had to quickly adapt to a new reality.
Our internal target date for the writer distribution was always April. Prior to the COVID-19 crisis, we had hoped to get it out earlier in the month (April 6). But once we realized the true extent of the crisis, and saw delays in licensee payments, we had to take a more cautious approach. Since ASCAP makes distributions on a cash basis, we needed to get through one collection cycle (ending April 1) to make sure we had an accurate sense of how licensees would respond, and that we had cash on hand.
The good news is, because we were cautious and slowed things down, ASCAP’s April writer distribution will be fully funded as planned before the COVID-19 crisis. In fact, our two most recent distributions combined (March publisher and April writer, both processed remotely for the first time in ASCAP history) represent an increase from the same cycle last year and are among our highest distributions ever.
Q: What is the new schedule for future ASCAP distributions?
A: Due to anticipated disruptions to collections caused by the ongoing coronavirus crisis, ASCAP has adopted a more flexible distribution schedule for the remainder of 2020 and 2021. Our focus remains on paying our members as much as possible and as quickly as possible. This modified distribution schedule – target month vs. actual date certain – will allow us to optimize the amount of the overall distribution based on collections. You can find the updated calendar here: www.ascap.com/distributionschedule
Q: How will the COVID-19 crisis affect my ASCAP distributions?
A: This crisis has affected nearly every ASCAP licensee across every sector, with their business shut down, unexpectedly disrupted or dramatically scaled back. Given the extended length and global nature of this crisis, we expect ASCAP revenues from license fees to decline during this time. While it is too early to provide exact figures, ASCAP has already cut a number of operational expenses to prepare for the forecasted decline in revenues so that we can focus on member distributions.
We will keep everyone updated as events unfold and numbers change. But again, our April writer distribution will be fully funded at the level that was budgeted prior to the COVID-19 crisis.
Q: Should I be worried about not getting paid by ASCAP?
A: Let’s be very clear: you can count on ASCAP to pay you. ASCAP has been in existence for over 100 years, and we have navigated through many global crises – from the Great Depression to two World Wars to 9/11 – and we have always fought for our members, made a full recovery and gone on to thrive on behalf of our members. As a member-owned and governed organization, we will get through this crisis together.
The entire ASCAP team is working hard to process distributions as quickly as possible in this unprecedented emergency situation, and our remote capabilities are very strong. In the current environment, we simply have to be more flexible and adaptive, working with our licensee partners in order to ensure you get the fullest value possible for your hard work during each distribution cycle.
Q: Why does ASCAP seem to be affected by the COVID-19 crisis sooner than others?
A: ASCAP operates on a cash basis, meaning we pay out the money we collect in a quarter in that same quarter (less the cost of operation). 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 operate on an accrual basis (paying with revenues collected two or three quarters prior and held for later distribution); 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.
ASCAP wants 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 reductions in affiliate revenues and in national and local advertising revenues. 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 programs, 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: 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 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. We also contributed to the industry-wide resource guide at MusicCovidRelief.com.
ASCAP has contributed to a special fund, as part of the MusiCares® COVID-19 Relief Fund, to support our music creators who are affected by the coronavirus pandemic. Our contribution will be focused on helping the ASCAP family of songwriters, composers and lyricists who are most in need of emergency financial relief and assistance. Members are encouraged to apply for a grant through the COVID-19 relief fund via www.musicares.org.
ASCAP and MusiCares® recently 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.
We worked 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. We are also fighting for our members by advocating to ensure that royalties are included as income for our members who are applying for unemployment insurance as part of the governmental relief programs. We put together a comprehensive FAQ about how the government relief package will affect our members here: www.ascap.com/covid19relieffaq
Our Global Member Services team is always available to assist members with more specific questions. Reach them at 1-800-95-ASCAP.