The Bank of ASCAP: Interest-Free Loans, But Not Just for the Rich
In this economy, every composer and songwriter is watching their dollars. Royalty income is more important than ever, and this places an even greater level of responsibility and accountability on those who collect and distribute our royalty earnings. Given today’s economic realities, I believe it’s time that ASCAP open up their secret “advance” program that has historically provided interest-free loans to wealthier, more successful composers and songwriters with catalogs the society decides are “important”, and make this program available to all members with current royalty income.
After all, since these interest-free loans are financed by all ASCAP members, why should only the most successful composers and songwriters have the right to access and benefit from this financial program, especially in today’s economic environment?
This program, which ASCAP refuses to talk about publicly, provides substantial royalty advances in the form of interest-free loans to members whose catalogs ASCAP staff determine are important to ASCAP. There are no published rules for this program, and no disclosure or information for members about this program on the ASCAP website. In the composer world, composer agents typically negotiate these advances on behalf of their clients, and can collect 10% commission for doing so. According to industry sources, the amounts involved are well into six-figures, and in a few rare cases, over $1 million.
Regular ASCAP members who are in financial need and search the ASCAP website for royalty loans will only find mention of ASCAP’s deal with USAlliance bank where members can apply for consumer loans and the bank will “consider” their royalty income. ASCAP also has been known to make “hardship” advances in cases of extreme financial trouble, but the program I’m referring to here provides substantial cash advances to wealthy composers and songwriters whose situation is anything but a hardship.
I’m not denying the need for ASCAP to remain competitive with BMI and SESAC, and if ASCAP wants to take a chunk of our royalty income and offer it to a major composer or songwriter as an interest-free loan to entice them to join ASCAP (or remain as members, since members cannot resign if they have outstanding advances), fine. But if member-owned ASCAP is going to be in the business of making interest-free loans to selected members, let’s open up that program, establish some published guidelines as to who is and isn’t eligible, and introduce some accountability and transparency to this program. Secret programs that arbitrarily distribute money earned by others with no published guidelines are simply too prone to abuse, and are inappropriate for a member-owned organization that distributes three quarters of a billion dollars of member’s money every year, dwarfing many commercial banks.
Some positive steps ASCAP can take in this regard include:
* Establishing and publishing guidelines on qualifying for these interest-free loans and how members can apply for and receive these loans.
* Making the eligibility requirements not dependent in any way on personal relationships with ASCAP staff or Board members, therefore removing any possibility of favoritism from the loan approval process.
* Creating appropriate confidentiality procedures to protect any personal financial information provided by loan applicants.
* Disclosing to members the total amount outstanding in these interest-free loans, since it is the entire membership who is financing these loans.
The last item is particularly important – disclosing how much of our money has been used to finance interest-free loans to other members. If we as ASCAP members are going to finance loans to other members, we have a right to know how much of our money is going to these members, just as taxpayers have a right to know how much of their money is being spent to provide loans to troubled banks, etc. I’m not saying we should be told names and amounts of loan recipients, but we do have a right to know overall how much money has been deducted from the royalty distribution pool in order to finance these loans to selected members.
Given the worsening economic climate and increasing financial pressure we all face in a world where the availability of regular bank loans is shrinking fast, it’s time for the ASCAP Board to move quickly to open up this program to the membership and establish a fair and even playing field regarding who is given these interest-free loans. If ASCAP is going to be in the business of giving out interest-free loans to members, it’s only fair that all members, not just the rich and most successful, should have the opportunity to qualify for this important member benefit since all members are financing these loans. And if it’s competition with BMI that ASCAP is concerned about, I cannot think of a more attractive financial benefit to offer members and potential members given today’s economy.