BMI Launches a Bonus Payment System

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BMI has just implemented a bonus payment system for the most-played songs at some digital services, which will complement premiums the performance rights organization pays out to the top songs at radio and television.

Beginning with payments from Spotify and Rhapsody in the first quarter of 2015, BMI will apply the bonus to the top 20 percent most-played songs on each service. BMI says it will spread the bonus to other services in future distributions. ASCAP, the other leading PRO in the U.S., took similar action earlier this year.

BMI CEO and president Mike O’Neill says that the bonus will amount to a 25 percent rate increase for top-performing tracks.

The break down the numbers: If a service pays BMI a performance royalty of 2.5 percent of revenue, then instead of receiving the pro-rata per-play share of 2.5 percent of revenue (that 80 percent of the songs played will get), the top 20 percent of songs will receive a pro-rata per-play rate of 3.125 percent of revenue.

“This is great news for songwriters and music publishers,” National Music Publishers Association (NMPA) CEO David Israelite says. “Streaming is not only the future, it is the present. It is visionary for Mike O’Neill and BMI to make this change.”

According to O’Neil, because digital services play “a vast amount of music, these bonuses allow us to recognize a deeper pool” of songs. For example, 627 songs are in the top 20 percent of plays that will receive the bonus, versus the 377 songs that make up 20 percent of plays at radio. O’Neill points out that only 182 songs overlap both lists.

The funding for the bonus payments will come out of royalties generated from general licensing — where often the bars, hotels, clubs and others fail to supply any information on what they are playing.

“The data available from the streaming sources allow us to do so much more than other services in the past” that BMI has dealt with, O’Neill said. He added that BMI’s senior vp of distribution Alison Smith oversaw the implementation and design of the bonus structure. “It took us about six months to model it properly, and we implemented it after a lot of quality assurance.”

The move into paying bonuses on digital streaming is “a first for BMI and the industry, and highlights BMI’s commitment to valuing its affiliates’ music in a way that reflects the current marketplace,” the organization says in a statement. “This is why I came to BMI,” says O’Neill. “We have always been about valuing music and feel like we are doing it again.”

O’Neill says the move accommodates requests the organization has received from its publisher affiliates and songwriter members.

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