Special Feature: ASCAP Celebrates a Century - Navigating New Technologies

CEO John LoFrumento on ASCAP's Past -- And Future

Now in his 17th year as CEO of ASCAP, John LoFrumento has helped guide the performance rights organization (PRO) through some of its most progressive and dramatic changes in its 100-year history, as it continues to deal with the challenges created by new technologies.

As ASCAP heads into its second century, he's confident that the organization can navigate its latest challenge, presented by streaming music services, and emerge with another win-win result for its songwriters, composers, publishers and partners.

 

What are the key challenges facing ASCAP as it celebrates its 100th ­anniversary?

Our primary challenge today is the fact that the business environment is changing so rapidly that the regulatory framework that governs PRO licensing needs to be brought up to date. The rules governing music licensing need to reflect the realities of the music marketplace and consumer behavior. Right now, they don't. So we are talking to all of the stakeholders around this issue because we want to build consensus and create a winning environment for all, including music fans.

What are some of the innovations you've made to adapt to the new ­challenges?

The proliferation of new digital platforms for the access of music has increased our need to track performances. We've developed technology to allow us to do that. Last year we tracked and processed something in the neighborhood of 250 billion performances with our new systems, and our systems are scalable. We can handle more than that. We're probably unique in that position, to be able to do that kind of processing, while at the same time maintaining efficiency and transparency in our distribution function.

How would you define ASCAP's current membership?

It's vast and varied. We work with people from the newest member to the member who has been with us for 50 or 60 years. Our membership is full of great standards and great songwriters of the past, like Irving Berlin, Ira & George Gershwin, Johnny Mercer, Hal David, Sammy Cahn. And we have the great songwriters of today like Jay Z, Beyoncé, Katy Perry; in the Latin field [writers including] Marco Antonio Solís; in film and television we have [composers including] Michael Giacchino. We have a varied and deep membership roster.

How has that membership evolved through the years?

We have close to 500,000 members right now. On average, we add about 30,000 new members a year. Two-thirds of our members are made up of songwriters and composers. The other third is publishers. They represent every genre imaginable. Every new genre and subgenre of music becomes part of the fabric of our membership. Because writers often join very early in their careers, they grow up as part of the ASCAP family. We see them in their formative stages and when they are at the top of their game. And nothing gives us more pleasure than giving them an award for achievement.

A driving force that has changed our membership over the years is the Internet. ASCAP's rules remain the same in that to be a member you need to have a performance in an environment that was licensed by ASCAP. Well, ASCAP licensed the Internet, [and] so for many young, talented songwriters and composers, their first performance is on the Internet. Thus, they are eligible to be members of ASCAP. We've had an explosion in the number of members we have because of that.

What's exciting is these new members connecting with more established members and creating new music. It's wonderful to see this community grow, and wonderful to see that ASCAP serves as a creative home throughout our members' careers.

How does having a board made up of writers and publishers benefit ASCAP?

The sole purpose of ASCAP's existence is to provide support to writers and publishers as they pursue their craft. Having writers and publishers sitting on our board brings into sharp focus the realities and challenges of being a songwriter, a composer or a music publisher. Because every decision we make is informed by the knowledge, experience and insight of our board members-those board members who are songwriters, composers and music publishers -- ultimately, they're talking to us about what's necessary in their career. And ultimately, we ought to be able to serve their needs in the best way possible. In ASCAP we are proud to say we made a change because songwriters or composers or publishers have asked for that change, because they reflect what's in the marketplace.

When we sit down at the negotiating table with licensees we have a particular focus. We represent no other interests but those of our music creators, and that means we have credibility with our licensees.

ASCAP's board also cares very deeply about our membership as a whole and especially the next generation of music creators. They have a great sense of responsibility and we're always thinking about those young writers and composers coming up and how ASCAP can best provide opportunities for them to thrive as other music creators have done throughout our history. It's a handoff from one generation of songwriters, composers and publishers to another.

What makes ASCAP uniquely positioned to serve the needs of musicians and licensees in the digital future?

ASCAP's ability to identify enormous numbers of performances has allowed us to develop a credibility with our licensees in regard to market share. Our data has integrity, and that is something music businesses desire and are willing to pay for.

In our model, the ASCAP model, everybody wins. Songwriters, composers and music publishers win because they are paid for their creative works; businesses, on the other hand, win because they are able to license our incredible repertory simply and efficiently; and consumers win because they have greater choice and access to the music that they love.

I would add that, as proud as I am of our technological abilities, what also matters to our members is that we put a human face to all of this technology. We connect with them in a very personal way, and that is most valuable in today's digital environment. We have people there to answer their questions, solve their problems and help them understand what's happening in the world of performance rights.

How has ASCAP's history in negotiating deals with radio, TV, cable and satellite platforms prepared it for the current situation with digital streaming services?

We have to start with the fact that ASCAP loves new technology. ASCAP [members] want their work performed, they want their work heard, and ASCAP embraces new technologies, so when we started out, the only music performances were live. We would then have the opportunity with the advent of radio, then television, cable and satellite. Each one was a challenge. Each one had a different business model. And each business model had to be negotiated from a license point of view and the business model informs the way we license it.

We've learned that our flexibility in dealing with these different types of licensees has been critical in achieving a reasonable rate and fair compensation.

As we look at streaming, we have all of that history behind us. This experience has given us a perspective of the bigger picture. One thing we know: We have been through all of these technological changes throughout history and we've struck deals with our licensees. We've already done that with many digital services and we feel that the same will hold true with streaming and with whatever other media emerges in the future.

In 1999 you said that "too much time has been spent in the past on confrontation rather than partnership." Is that still the case? How has that changed through the years?

Generally speaking, we have developed good relationships with our licensees. It is not confrontational. We try to make it win-win. Every once in a while we find a licensee who doesn't want to get involved in a win-win scenario, such as Pandora, but I'm happy to say that much of the confrontation we've had in the past just doesn't exist anymore. We've established win-win negotiations with radio, with television, with our other major users, and we feel comfortable that we're now in a partnership rather than a confrontation.

Which methods does ASCAP use to ensure its members receive proper payment?

First of all, ASCAP has rules and regulations that are stated in our distribution process, and we follow those rules to make sure all members are receiving proper and fair payments.

The process that we utilize is critical to the transparency and effectiveness of our distribution. We can only do this with advanced technology. When I came to ASCAP 30 years ago, we were listening to music on the radio and we were watching performances on television, but in today's world that's not possible nor is it desirable, so it's the technology that we use that allows us to [do] the surveys and the census, because without those we could not do those manually.

In 1999, ASCAP's operating costs were 16%, so for every dollar taken in, 84 cents was paid out. What's the current operating cost rate?

Right now it's 12.4%. It's one of the lowest in the world.

What factors led to that change?

We'll start off with the technology. We use technology which allows us, at a minimum cost, to do a lot of work. No. 2 is, our revenues have grown steadily over the years. That has helped. No. 3 is, all-over costs we've kept control of. Since we represent composers, publishers and songwriters, it's important for us to recognize that the money that we're spending is their money.

What are ASCAP's key areas of growth in 2014?

A continuation in the growth in cable [TV]. Cable has been a strong area of growth for us for a number of years. We can always look for growth in our general licensing -- bars, grills, restaurants, hotels -- and we're also seeing growth in the new-media area. We're also looking for potential growth in our foreign area from foreign affiliates.

What partnerships and alliances are you making to help ASCAP move forward in the future?

We are constantly working closely with our sister societies around the world to develop opportunities and efficiencies to help us confront the challenges from an ever-changing business dynamic in the digital environment.

We also have a robust suite of member benefits, most notably MusicPro insurance, which is a partnership with Sterling & Sterling. MusicPro provides insurance to meet the needs of working music professionals. More recently, Sterling Healthworks provided our members with a service to help navigate the new Affordable Care Act.

As you celebrate this centennial milestone, what else is a source of pride for ASCAP?

Our advocacy programs. ASCAP is keenly interested in protecting the rights of our members in the legislative area. ASCAP president and chairman Paul Williams and our board of directors have a very strong voice in [Washington] D.C., and we're constantly visiting and speaking with legislators to make sure they understand that the songwriter, the composer and the publisher are a very important part of American culture and need to be nurtured.

For about 100 years now, ASCAP has made it possible for music to touch the lives of millions of people around the world while enabling businesses that use music to thrive, and songwriters, composers and publishers to earn a living from their work.

We're really excited to continue that mission in the future. I like to tell people that this is not ASCAP's 100th year, but rather this is the first year of the rest of its business. This is the beginning of a new century.