Earlier this week an uproar arose from the normally placid realm of performing-rights organizations — i.e. ASCAP, BMI, SESAC and Global Music Rights, which in the U.S. collect and distribute money earned by songwriters and publishers for the public performance of their works on the radio, in restaurants and venues, etc. Hit country songwriter and two-time Grammy winner Shane McAnally, who has written and/or produced hits for Kenny Chesney, Sam Hunt, Kacey Musgraves, Reba McEntire, Luke Bryan, Lady Antebellum, Keith Urban, Thomas Rhett, Miranda Lambert and many others, is taking ASCAP into arbitration for more than $1 million he claims the organization owes him.
The money in question is an “Audio Feature Premium” payment — essentially a bonus — that PROs pay for their highest-earning songs each quarter. McAnally resigned from ASCAP in 2013 and officially left it for GMR — which was founded that year by veteran artist manager Irving Azoff; its CEO/partner is former ASCAP EVP Randy Grimmett — on Jan. 1, 2015, taking his catalog with him, although ASCAP’s radio license for his catalog continued for two and a half years after his departure.
PROs use such payments as an incentive to keep their high-performing writers with the organization. ASCAP has a “phase-out” program for resigning members whereby their royalties and premium payments decline by 25 percent per quarter for a year after the member leaves.
The matter went before an ASCAP review board, a group elected by the organization’s membership and including writers/composers John Bettis, James DiPasquale and Arthur Hamilton, publishers Helene Blue, Stephen Culbertson, Bob Doyle and Keith Mardak. They reviewed 65 elements of evidence and eight hours of live testimony and ruled in ASCAP’s favor. McAnally is now taking the matter to an independent arbitration panel. (Disclosure: This writer was a full-time employee at ASCAP from 1996 until 2000.)
Of course, there’s more to it than that. McAnally and his team maintain that ASCAP’s rules governing AFPs were changed after — and in part because of — his and several other unspecified writers’ departures from the organization in an effort to deprive money from former members. Specifically, they point to a procedure that sees AFPs gained from radio, streaming and satellite radio pulled from a money pool accrued not from those sources but from non-surveyed general licensees such as restaurants, bars, etc. (a decision that was made by ASCAP’s board in 1994).
In an aggressively worded press release issued Wednesday morning, McAnally claims that ASCAP made an “arbitrary decision to change their distribution methodology” after his departure and accuses it of “discriminatory and retaliatory behavior.” He also said the organization “retaliate[ed] with an inexplicable delay in rendering statements to him – withholding accountings and payments for over nine months.”
In a 27-page decision, ASCAP’s review board found the organization’s handling of his payments to be above board and found “no evidence that ASCAP orchestrated a ‘windfall’ for its own gain,” noting that McAnally’s “resigning member distributions were appropriately calculated.” (For his part, McAnally called the review board a “self-serving forum that has ruled against writers in favor of ASCAP 40 out of 42 times since 1960”; ASCAP countered that it is a member-owned and –governed organization and the board is elected by its membership.)
ASCAP — which like BMI is a not-for-profit organization; SESAC and GMR are for-profit — says it did not change any of the rules in question and that they have been in effect since 1994, pointing to pages 7-9 of its Survey and Distribution System and that McAnally and his representatives may not have completely understood the organization’s rules before his departure. It also says that McAnally informed the organization of his decision to leave after it was final (the ruling indicates some differences of recollection from the two sides about what was discussed during a meeting about McAnally’s departure). The ruling also says that neither McAnally nor his representatives “inquired about what effect his resignation would have on his distribution” after he left.
A rep for McAnally counters that not all of the rules governing AFPs are spelled out in the ASCAP membership agreement and that he should not be penalized for failing to ask details about rules he wasn’t aware of before his departure. ASCAP executives concede in the review board’s decision that not all of the details about such rules are published: “Funding decisions, as well as other aspects of the rules’ implementation, are not published for competitive reasons because they are proprietary,” the report reads. In it, ASCAP COO Brian Roberts added, “Principally, it deals with the highly competitive nature of the market that ASCAP operates within… ASCAP has principal main competitors, and oftentimes, as people have testified, writers are trying to move. So that’s an element of our distribution that is proprietary in nature.” As for how such matters are normally resolved, ASCAP chief economist Peter Boyle said, according to the ruling, “in my experience, when you had a question about where things are being funded from, you picked up the phone and you called ASCAP to make sure you understood.”
In the ruling, Michael Baum, president of McAnally’s publishing company SmackSongs, is quoted as testifying that it was “‘reasonable for ASCAP to assume that Mr. McAnally’s representatives [had] done their due diligence’ to understand the rules and to ask questions if necessary.” The ruling adds, “Before resigning, Mr. Baum did not ask ASCAP about the effect of the applicable distribution rules on Mr. McAnally’s post-resignation distributions because he thought the rules were clear and that he understood them.”
In the ruling, the review board also said that “The Board lacks jurisdiction to hear claims that ASCAP’s rules and regulations are unreasonable, improper, or unlawful, or that notice of changes in the rules and regulations was improper, insufficient, or unlawful.” An ASCAP rep noted to Variety that such larger issues are for the organization’s board of directors to decide upon and that review boards are assembled for specific matters.
McAnally’s attorney Jason Turner tells Variety, “This is about Shane but he’s looking out for every songwriter who may be with ASCAP. He’s in a fortunate position because he has the means to fight this self-serving and baseless decision.”
In a statement, ASCAP president Paul Williams said in part, “ASCAP is of, by and for creators, and as creators, our member-elected board cares deeply for all of our songwriters and we act for the greatest good of all concerned. Shane was paid all of the money he was owed after he left ASCAP and went to GMR according to rules that are available to any member. He had the opportunity to make his case in front of the independent Board of Review, which is made of his songwriter and publisher peers that are elected by our membership. He will again have the chance to make his case through outside arbitration. I hate to see any songwriter disappointed, but in this case, Shane has been treated and compensated fairly. It would be unethical and unfair to all ASCAP members to disregard our good faith rules for the benefit of one songwriter, when they were meant to protect all.”
The arbitration hearing is expected to convene in the coming weeks.