Nashville Hit Songwriter, Shane McAnally, Has $1.3M Dispute Over ASCAP Royalties (The Tennessean) (Billboard)
Shane McAnally is a songwriting megastar. You have likely heard his contributions in the songs of Kacey Musgraves, Miranda Lambert, Lady Antebellum, Keith Urban, Dierks Bentley, Darius Rucker and Maren Morris (just to name a few).
The news of his public dispute with ASCAP over royalty payments is shedding light on some complicated issues within the space of U.S. public performance royalties. To understand McAnally’s specific dispute, it’s important to mention some background:
First, the U.S. has four performing rights organizations (PRO’s). The biggest two (ASCAP & BMI) are regulated by the Department of Justice. The smaller two (SESAC & GMR) are private corporations backed by private investments and not regulated by the DoJ.
Since 2013, GMR (Global Music Rights) has been the big disruptor in the market. Music industry mogul, Irving Azoff, started the new performing rights organization out of growing frustration over how ASCAP and BMI were licensing performance rights and DoJ regulation. Azoff, touting his power and successful negotiating tactics, promised big artists and writers that they would get higher and more transparent performance royalties at GMR. The pitch worked. Some of the biggest writers, artists and catalogs have been leaving ASCAP, BMI and SESAC for GMR.
The process to leave these organizations takes time, handled in accordance with ASCAP, BMI and SESAC policies and at the discretion of their boards. Generally, the PROs require royalty collection on a writer’s catalog until their radio licenses expire. This means that after McAnally chose to leave ASCAP for GMR, he was represented by both organizations until ASCAP’s radio licenses expired. Therefore, ASCAP still owed royalties for that collection period after his departure.
But those royalties aren’t all that straightforward, especially when it comes to ‘premium payments.’ This ‘bonus’ system, which all PROs employ, rewards hit songs and songwriters as incentive to continue their current affiliation. Whenever a song gets massive airplay and commercial exposure, each PRO pays bonus royalties (according to its own formula) on top of standard royalty payments.
However when a writer decides to leave, the PRO’s ‘phase out’ these bonus payments, reducing or cutting them altogether. This is where McAnally’s million dollar argument hinges.
The songwriter has accused ASCAP of changing up the rules in order to avoid these premium payments. He argues that he wasn’t made aware of this phase out when he notified ASCAP of his departure. Of course, if most of us saw an estimated $1.3 million shortfall in royalties, we’d likely start asking questions too. It’s important to note that members are not permitted to conduct financial audits with the PROs.
ASCAP has maintained that it followed all of the normal policy procedures for McAnally as they would for all departing songwriter members. Their position remains that when songwriters sign with them, they agree to have read and understood all of ASCAP’s policies, including those pertaining to payments for departing members.
The crux of the issue is what McAnally’s signed ASCAP member agreement (or any amendments thereto) state.
If that signed agreement clearly explains the policies ASCAP claims, the arbitration McAnally seeks may be tricky. On the other hand, if it has broad language and doesn’t address payment specifics for a departing member, McAnally may find favor with the outside arbitrator.
One important fact remains in all of this:
The public performance royalty is probably the best long term source of music publishing income. It is vital for the survival of songwriters, music publishing companies, and of course, all four of the U.S. performing rights organizations. With that in mind, this dispute over how bonus payments are decided and administered will likely not be the last. More to come...
And now for this week’s other headlines:
- SoundExchange Saw Dip in Royalty Distributions in 2017, Citing Pandora Label Deals (Billboard)
- Miley Cyrus Hit With $300 Million Lawsuit Alleging Copyright Infringement (Variety)
- Official: Spotify Will Go Public on April 3 (Music Business Worldwide)
- The Music Fund Wants To Use A.I. To Generate More Royalties For Musicians (Venture Beat)
Benom Plumb, Assistant Professor of Music Industry Studies at the University of Colorado Denver, reviews the biggest stories of the week affecting music royalties. He is a music industry professional, not an attorney. For more info about Benom, visit his website at www.professorplumbmusic.com.
