American Society Composers and Publishers (ASCAP)
The the conflict  between America Society of Composers and Publishers and the record companies was a battle between one long time influential group (ASCAP) and another (BMI) that was instituting technological changes that were reshaping popular music.
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1909 saw the the passage of a copyright law that mandated performers, songwriters, and publishers be compensated for public performances of their music -- whether it was a radio recording or another musician playing someone’s work at a concert -- so performance rights organizations like ASCAP collected monies on behalf of the songwriters, musicians, and publishers they represent

ASCAP was founded on February 8, 1914 by a group of nine composers and publishers among them Raymond Hubbell, Victor Herbert, publishing representative George Maxwell,  copyright attorney Nathan Burkan banding together with several others to formalize procedures for licensing for public performance of music. Its purpose was to be for the issuing of licenses and collecting due royalties. It was to be as a performance rights organization that sold licenses and collected royalties from users of music for which its members held copyrights. George  Maxwell was elected its first president and stated that ASCAP would prevent the playing of all copyrighted music at public function unless a royalty was paid.

ASCAP based its system on the European method of licensing, donation and distribution. All ASCAP members would be required to pay a fee for the right to perform published music. The fee was based on a percentage of annual advertising revenues radio stations earned and a statistical sampling of actual broadcasts multiplied by a preset formula to estimate total national performances. After deducting an operating fee, ASCAP would distribute collected royalties directly to ASCAP publishers and composers.

They devised a method of collection based on the three methods of income related to the music business. The first was from performance of songs (sale of records). The second from the sale of original music to publishers for an agreed upon price and subsequent performance royalties from sheets, piano rolls and records. The third was from the money paid to publishers for their share of sales and performance. Usually, publishers split 50-50 with composers on all performance money.

ASCAP presented itself as the ultimate decider of musical taste in America. This allowed its members promote a consensus about the superior value of their collected works, leading to rising fees for their licenses. Control of copyrights was the surest way to make money in the music business and  why ASCAP came about on that part because composers and publishers laws rarely enforced. This was especially true after copyright laws were expanded in 1897 to include royalties for performance of songs along with the sale of sheet music. The new law said that consent must be given from the copyright holder before it could be  used in a public performance. Not to do so would open up the user to damages. In 1909 an amendment reaffirmed this provision with a performance for profit provision. It wasn't until after 1910 when nightclubs and cabarets became more prevalent this became a big problem. Few of the copyright holders had the resources to track the uses and demand payment.

A lawsuit was filed against Shanleys's Orchestra that had used a Herbert written composition in its show without permission. It would eventually make its way to the Supreme Court in 1917.  In an unanimous decision the Supreme Court validated ASCAP's right to collect performance royalties and issue membership licenses (Victor Herbert vs. Shanley's Restaurant). ASCAP's first royalty checks to publishers and composers were issued in 1921.

In the 1930s, radio was coming to prominence as a source of musical entertainment that threatened to weaken record sales and opportunities for "live" acts. The Great Depression was already draining artist revenues from recordings and live performances. ASCAP, the pre-eminent royalty/licensing agency for more than two decades, required radio stations to subscribe to "blanket" licenses granting ASCAP a fixed percentage of each station's revenue, regardless of how much music the station played from ASCII's repertoire.

In 1932 the broadcasters successfully lobby seven states to outlaw ASCAP on the basis of illegal racketeering practices and extortion.

ASCAP survived an antitrust case in 1937. ASCAP’s share of radio revenue increased from $750,000 to $4.3 million from 1932 to 1939. During this time ASCAP's fees had gone from 3% to 5%, but in the late 30s it tried to double them to 10% of total revenue it charged to play its copyrighted works. Radio stations balked; after all, they had hosted bands to play on the air at no charge just years earlier, since it was seen as good publicity and marketing for the performers.

More successful suits followed affirming ASCAP's power and influence. By 1939, ASCAP controlled eighty-five to ninety percent of popular music copyrights including fifty to seventy-five percent of the standards. With control over the use of the majority of America’s popular music catalogue, it exercised considerable power in the shaping of public taste. ASCAP was now receiving income on a regular basis from their work. ASCAP’s share of radio revenue increased from $750,000 to $4.3 million from 1932 to1939. What alarmed ASCAP was the use of their membership's work on stage, taverns, record movies and radio which they weren't being paid on. The result was ASCAP instituted series of legal and public relation battles creating tension and mistrust In 1940 when they doubled the fees it charged to play its copyrighted works.

A major issue between ASCAP and National Association of Broadcasters was how much was to be paid. For the previous ten years broadcasters paid a percentage of their income to play ASCAP controlled music. In 1934 it was 3% of the revenue, but by 1939 it had increased to 5%. During these years besides regular radio programs, there was an increase of live remotes of popular bands from hotels, theaters and musical segments in the middle of popular comedies. Virtually all this music came from ASCAP sources.

Broadcaster's disputed ASCAP's calculation of what a fair price for its material. ASCAP sold a blanket license for a yearly fee which granted access to all the songs. in their catalog. The broadcasters complained they were being forced to pay for a bunch of unused songs in order to play hits. Though ASCAP based its fees on station's annual revenue it didn't factor in the non-revenue producing news and sports.

The broadcasters failed in court to have radio exempted from provisions of copyright law in 1934. They then charged ASCAP violated anti-trust laws, that the society was a monopoly operating in restraint of free trade and that the relationship between ASCAP and broadcasters was one of forced exclusivity. That once a license was obtained there was no incentive to play music not controlled ASCAP because ASCAP controlled all the best known and popular music.

With the rapid spread of radio and decline sheet music, ASCAP began looking at radio as a rival in determining public's musical taste.

ASCAP’s economic and cultural heft overwhelmingly benefited older musicians, incumbent musical styles, and the music produced by its mainly white artists. This was done by ranking members in a tier system that rewarded composers based not on actual buys but, by their status within the group. Newer writers might have more hits than older members but, would receive less money. This was reflective of ASCAP's outdated belief in the long term sheet music sales. The society’s voting rights were also skewed toward older performers, and it unabashedly excluded musicians -- especially those of color -- making blues and country music considered unsophisticated. As a result of this was blues, country, gospel, and folk performers eventually would became a big part of BMI.

Terms of membership favored old timers too. A composer was eligible for membership only if they had  been in business at least a year,  regularly engaged writing music or had not less than five of their works regularly published. Meeting these requirements did not guarantee membership. One had to be sponsored by an existing member to be approved by the membership committee. Few aspiring songwriters had outlets for their work since most theaters and broadcasters already had contracts with ASCAP. The ranking system favored old timers in its the division of licensing fees too.

Blacks were often discriminated against and as of 1939, only six of its one-hundred-seventy members were black. Jelly Roll Morton was denied membership for years. Duke Ellington gained admission only because his white manager Irving Mills took co-writer credits for much of his work. Perry Bradford who wrote Crazy Blues was denied membership even though his compositions earned profits for the song's white publishers, who were members. Very few blacks were members and those that were tended to be well established Tin Pan Alley or Broadway figures.

If it was possible, country artists were even less welcome:

" I tried to get into ASCAP as far back as 1930, and I could not. Later I had many numbers, big hits, but I still never could get into ASCAP."
Gene Autry

Jimmie Rodgers got in two years after death. Bob Wills in 1957, twenty years after composing and writing hits. Important and influential songwriters like A.P. Carter, Ernest Tubb, and Roy Acuff never got in.

Because ASCAP contracts were long term, income was fixed income for years. Adding new members and more music would mean income would be divided into more shares. This meant insiders and favorites would be receiving smaller incomes then what they anticipated when the agreement was made.

Broadcasters Music, Inc (BMI)

In 1939, anticipating a fight the broadcasters formed their own publishing and  licensing organization Broadcast Music Inc. Shares were sold to NAB members who hired Sidney Kaye as special counsel in charge of creating an alternative supply of music. By October 1940, there were over three hundred members representing two-thirds of all radio business.  In 1939 had invested  $1,200,000 had been invested into BMI.   This money was used to recruit new writers, buy out existing publishers' catalogs and commission updated arrangements of songs in the public domain.

Competing against the strongly established ASCAP, BMI sought out artists that ASCAP tended to overlook or ignore and also purchased the rights to numerous catalogs held by independent publishers or whose ASCAP contracts were about to expire. BMI offered royalty payments based on both live and recorded performances played on the air, ASCAP only paid on live performances. To attract newer writers, BMI proposed to compensate songwriters and publishers on the basis of a fixed fee per performance, as opposed to ASCAP's two-tier system which discriminated against lesser established songwriters.. BMI also purchased the rights to numerous catalogs held by independent publishers or whose ASCAP contracts were about to expire.

Thus, despite its original motivation regarding radio station royalties and its focus on radio station revenues verses artist revenues, BMI became the first performing rights organization in the United States to represent songwriters of blues, jazz, rhythm and blues, gospel (black genres, performers, and writers that ASCAP did not want to represent), country, folk, Latin, and ultimately rock and roll. During the 1940s and 1950s, BMI was the primary licensing organization for Country and R&B artists, while ASCAP centered on more established Pop artists.

ASCAP tried to destroy the solidarity between networks, their affiliates and independent stations by placing the greatest financial burden on the networks and offering reduced rates.

CBS told it affiliates that any increase in their fees would ultimately come from the network, ASCAP songs would never become hits, making independent signed ASCAP licenses virtually worthless several independents did sign with ASCAP , but they were few.

ASCAP's radio contracts were set to expire at the end of 1940. As early as mid-1939 the broadcasters tried to discuss renewal with ASCAP. ASCAP stalled until the following spring and then issued a non-negotiable offer. In it ASCAP demanded a huge increase that the broadcasters saw as extortion. Also that the fees were to be based on a sliding scale with ASCAP seeking higher percentages of earnings from the larger networks that previously only paid for the stations they owned not every station its network. What ASCAP was demanding was about a 70% percent royalty increase with practically all of it coming from networks.

The vast majority of U.S. radio stations and all three radio networks refused to renew their ASCAP licenses for 1941, choosing to forgo playing ASCAP music entirely and relying on the BMI catalog of songs.

BMI officially began on October 14, 1939. Based in New York it offered capital stock and raised a half- million dollars to begin building its playlist. ASCAP considered BMI nothing more than a strike breaking tactic.

ASCAP on December 31, 1940 announced it would press charges against any station that broadcast ASCAP-licensed music. Overnight radio stations revised their libraries to only include BMI songs.

BMI seeking to increase its inventory paid more than a million dollars in advance for Edward B. Marks Publishing Company's catalogs. Mark's switch from ASCAP to BMI was an important one as it was a founding ASCAP member. It seems Marks had become had become unhappy by all of ASCAP's internal house politics.

BMI was now able to offer a guarantee on average of $20,00 advance for the right composer's music.  It also offered more equitable contracts to newcomers as opposed to ASCAP's which favored payments based on frequency of play and length of membership. By the end of 1940 the two sides still couldn't agree on terms so ASCAP  songs were taken off the air. The boycott was to last for almost a year.

In the summer of 1940 the Justice Department under the Sherman anti-trust act file suit charging ASCAP with restraint of trade, monopolistic practices and discrimination against nonmembers. The twenty-six years of battle with station owners had depleted ASCAP's   finances and shattered its morale. in November 1941 ASCAP settled for two and three-fourths percent of stations' advertising revenues far below the seven and half percent demanded. some saw it as a victory since ASCAP had never been paid any broadcast royalties by the broadcasters. others saw it as a pyrrhic victory as ASCAP's hard-line demand brought about the existence of BMI.

The U.S. Department of Justice filed criminal suits against ASCAP, BMI and the networks on behalf of the American public. Assistant Attorney General Thurman Arnold declared that both sides were engaged in a "mutual boycott" that would "hamper and obstruct" the rendition of copyright music over the radio and deprive the public of the privilege of hearing that music except on the terms of the victor of the contest." In February, 1941, consent degree was signed by the parties that required certain changes to BMI's business model, including giving licensees the option of paying only for the music they actually use instead of buying a blanket license establishing guidelines for future relations.The U.S. District Court in Milwaukee was chosen by the Justice Department to supervise the order for both ASCAP and BMI. The big loser was ASCAP as its new radio contracts called for roughly half the fees collected pre-ban and it was forced to accept regulations that opened it up to other musicians and set blanket rates for licensing deemed fair by third parties.This resulted in a shake-up at ASCAP where many leaders including president Gene Buck were fired.

The long term consequences were more than financial. The important one was the realization by broadcasters that  that musical tastes weren't so narrow and monolithic as presumed.

By mid-1942 the new competition between the two sparked a small boom in country music pushed on by the success of Al Dexter's "Pistol Packin' Mama. Also fueled s the rise of rhythm and blues, almost all whose music was licensed by BMI, which became a force in popular music and expanded black visibility into the mainstream. The net effect of the dispute was twofold. It established economics over aesthetic or social values in deciding what would be offered to the public. It  also revealed that such commercial priorities not limit opportunities for more democratic participation in both production and consumption of music.

Plenty of other economic forces spurred the national adoption of blues, country, and folk. Migration, especially between the North and South, helped spread local music, and the development of African-American communities into a larger economic force also contributed to the music industry’s interest in black musicians. On
the other side, during World War II, a shortage of shellac, the material needed to make records, was so short that people had to return a record to buy a new one, which led the music industry to focus on pop music to the detriment of blues, gospel, and other genres. Advances in recording equipment, including technology taken from Nazi Germany after the war, also democratized music publishing and facilitated the rise of independent record companies that fueled the rise of rock ‘n’ roll.

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