Free Workshop

ASCAP VS BMI - Distrokid Is Not Enough to Collect Your Performance Royalties

how does the music industry work

If you’re hoping to make millions by just streaming your music on sources like Spotify, Apple Music, or Google Play, we’ve got some bad news: you won’t. Yes, it’s the blunt truth, but only because we want you to know the many other sources of revenue out there that can pay you much, much more than streaming. One of those avenues is through non-profit, public performance organizations like BMI and ASCAP.

What are ASCAP and BMI?

BMI and ASCAP are what are known as Public Rights Organizations or PRO’s for short. Their purpose is to ensure that any public performance of an artist’s song is rightfully paid for, and this includes any public performance. Whether it’s performing live on stage, cafe music or radio playtime, BMI and ASCAP collect the royalties and distribute it among artists. They’re also organized under US law and the US Copyright Act, so you can trust they won’t run away with your money. 

Historically, BMI is more centered around broadcast plays, such as radio, while ASCAP when it first started out was better for sheet music publishers. But today, ASCAP and BMI do the exact same thing: collect all your performance royalties, and send that money to your bank. Distrokid and other similar services are only for distribution and collect mechanical royalties for digital streams and sales. So, when you only take advantage of one piece of the pie, you’re essentially leaving other revenue sources on the table. 

How Do BMI and ASCAP Pay?

Both BMI and ASCAP split royalties of a song between the Songwriter and Publisher, and artists have the choice of what percentage of royalties they’ll earn from each category during a process called song registration.

To watch how to register a song on BMI check out this step by step guide: 

Don't get overwhelmed if you are confused by music publishing. Since you're an independent artist with no record label or signed contracts, you'll most likely put 100% into Songwriting and 0% into publishing. This way you won’t lose any royalties!

For BMI, since their percentage system is on a 200% scale, independent artists with no publishing company or record deals will put 200% into the songwriting section and 0% in the publishing. The money works out the same between BMI and ASCAP, just the percentages they use are different.

Throughout the year, companies report song usage to BMI and ASCAP, this is important to note because PROs don't actively monitor usage.  At the same time, they collect funds from all the businesses and entities through something called a banket license so that they can use copyrighted music for their businesses, such as restaurants, on the radio, or in a shopping mall. A blanket license is, as the name suggests, a license that gives coverage for nearly any song that a business or broadcast wants to play. They pay a flat fee for the use. 

When each quarter ends, BMI and ASCAP divide the money from those banket licenses and payout artists based on the percentage of usage they got in the entire music industry. This is a very important difference between the PROs and streaming distributors like Distrokid: while Distrokid distributes royalties based on the number of plays, BMI and ASCAP calculate their royalties based on the percentage of plays you got compared to everyone else. In these cases, being a popular artist with the hottest new song is an advantage. Since not everyone reports usage properly, especially smaller companies, royalties are paid based on an estimation, instead of by the nitty-gritty numbers that distributors calculate.

So, What Should You Do Now?

By all means, we’re not telling you to drop Distrokid or other streaming distributors in favor of only PRO’s. We just want to make sure you understand that they are completely different entities and that you need both to get every cent you’re owed from your performances.

To learn more about how music royalties work, check out this comprehensive guide right here: Music Royalties Explained: The Ultimate Guide