ASCAP Delays Writer Distributions for Weeks as Licensing Revenue Tanks

photo: Mustaches Cactus (CC 2.0)

Performance rights giant ASCAP is now delivering some bleak news to member writers and publishers.

Perhaps this was inevitable, but PRO giant ASCAP is now feeling the serious ripple-effects of a shuttered United States. In a letter sent to members earlier this week — and shared with Digital Music News — ASCAP chief executive Elizabeth Matthews bluntly warned that “every category of ASCAP collections will be negatively impacted, including television, cable, radio, airlines, hotels, bars, grills and restaurants,” while seriously delaying a scheduled artist payout date of April 6th.

Of course, closed-down stores and venues aren’t playing any music, which means there aren’t any public licenses due.  But even worse, many of these shuttered stores are now fighting for their lives, and therefore delaying their respective performance rights organization invoices — or skipping them entirely.

“During this crisis, as we see more and more of our licensees who pay us start to feel the impact of the economic downturn, this translates into less revenue for ASCAP and less money available for distributions for our members,” Matthews relayed.  “We have already been contacted by numerous licensees who are attempting to pay less, pay late or not pay at all.”

Suddenly, songwriters and publishers are feeling the hit — starting right now. “We will make key distribution funding decisions later than usual once we have knowable facts of our revenue collections each calendar month and each quarter,” Matthews wrote. “What this means for you as a writer or publisher member is that your distributions may be delayed as compared to last year. For example, the ASCAP writer distribution was previously scheduled for April 6, 2020 and now it will be paid on April 28, 2020.”

Matthews even rang the alarm on the streaming side, where subscriptions could take a hit as Americans cut back.  “While everyone is streaming music and movies at home, not everyone in this country will be able to afford a subscription to entertainment services and that shift will impact revenue,” Matthews wrote.

Here’s the complete letter.

Dear ASCAP Members:

In a parallel universe, last week would have been the week that we held our ASCAP Annual Meeting during the 2020 ASCAP Experience event in Los Angeles. We would have reported that ASCAP had historic high revenues and distributions for 2019 and celebrated all of the amazing accomplishments of our ASCAP songwriter, composer and publisher members.

Instead, we are all facing the devastating consequences of COVID-19, which has hit all of us personally. It is rare to talk to someone who does not know someone suffering with this virus. Many of us have already lost loved ones, friends and colleagues and we have all lost members of our ASCAP community. While health and safety are our first priorities, we also take seriously our duty to ensure that you continue to receive a steady flow of royalties so that you can pay your bills and feed your families.

I have received a number of inquiries about how this crisis will impact ASCAP distributions. While there are many unknowns at this time, I would like to take this opportunity to explain what we can about how the negative economic impact of this virus will impact your ASCAP distributions.

First, it is important to understand that ASCAP distributions are made on a “cash basis” (the money we collect in a quarter is paid out that same quarter, less the costs of operation) as opposed to an “accrual basis” (money collected would be held and paid out two or three quarters later). In other words, we calculate distributions based on current revenues, not past revenues. In normal times, this is a great benefit to ASCAP members as you receive your money faster. During this crisis, as we see more and more of our licensees who pay us start to feel the impact of the economic downturn, this translates into less revenue for ASCAP and less money available for distributions for our members. We have already been contacted by numerous licensees who are attempting to pay less, pay late or not pay at all.

While you will receive your distributions from ASCAP during this health and financial crisis, we can no longer provide you with a date certain in advance of each distribution. The reason for this is that our licensing revenue will become increasingly variable as businesses remain closed, and the advertising market which drives revenues from television, radio and cable continues to be negatively impacted. Every category of ASCAP collections will be negatively impacted, including television, cable, radio, airlines, hotels, bars, grills and restaurants. While everyone is streaming music and movies at home, not everyone in this country will be able to afford a subscription to entertainment services and that shift will impact revenue. Twenty five percent of ASCAP revenues comes from outside the United States and COVID-19 hit many of those territories before it hit the US, so the ASCAP revenue impact will be global.

We will make key distribution funding decisions later than usual once we have knowable facts of our revenue collections each calendar month and each quarter. What this means for you as a writer or publisher member is that your distributions may be delayed as compared to last year. For example, the ASCAP writer distribution was previously scheduled for April 6, 2020 and now it will be paid on April 28, 2020. This is because we had to go through a collection cycle of March 31/April 1 payment due dates to determine accurate cash flow before finalizing the funding pool and processing hundreds of thousands of distribution files for payment processing services. Some of the vendor services we use to process and pay the distributions have also been materially impacted by COVID-19, so there is a domino impact that we are constantly navigating in terms of ensuring business continuity. The good news is that as a result of the delay, the April 28 writer distribution will be fully funded as we had originally anticipated.

I know that much of this is not good news, and you have already been bombarded with bad news every day for weeks, but I think it is important that we are all prepared for the future and we try to limit the number of surprises.

For those of us who work at ASCAP, our duty is to ensure that ASCAP survives to serve the next generation of creators and publishers. While things are tough right now, I remind myself that ASCAP has survived two world wars and several economic crises, so we stand on the shoulders of our predecessors to successfully fight through this pandemic. ASCAP and our ASCAP members are worth fighting for, and on behalf of all ASCAP employees, I promise you that we will do whatever it takes to fight for ASCAP and fight for you.

Thank you for your loyalty and your ASCAP membership.

Best,
Elizabeth Matthews