Performing rights organizations like ASCAP and BMI are on constant lookout for ways to generate royalties for their songwriters and rights holders, but one publishing exec (and former ASCAP vp) argues they need to look harder — maybe even break a sweat — when dealing with your favorite fitness center.
In an op-ed for Medium, Downtown Publishing vp of business affairs Andrew Sparkler said PROs are dropping the proverbial medicine ball by classifying certain gyms under “general” licenses — the same umbrella as restaurants, bars and concert/sports venues — when music has become such an ubiquitous and personalized part of the workout experience.
To make his point, Sparkler cites the popular SoulCycle chain of spin classes, who in a recent SEC filing for an IPO called their product a “carefully curated ‘cardio party’ [that] is fueled by the personalities of our instructors, their uniquely crafted musical playlists and the energy of the room.”
In its SEC filing, SoulCycle projects 2015 revenue to be around $140 million and said it hopes to expand to 250 locations (up from 36 in 2014) in the near future.
Sparkler figures each SoulCycle is currently bringing in about $3.1 million apiece for the company, but is only paying a tiny fraction of that to PROs under the “general” licenses for the music it plays. BMI, for example, charges fitness clubs a maximum of $2,123 per year per location — which would amount to .01 percent of what Sparkler estimates each SoulCycle makes. ASCAP also has a flat fee per location, but it slides depending on inflation.
According to his calculations, fitness center revenue increased over 104 percent in the U.S. between 2000 and 2014, and SoulCycle jumped 108 percent from 2012 to 2013 alone.
Procedures in place to calculate “general” licensing revenues do not track every song played during spin class, instead the money is pooled together and “distributed using a number of inaccurate proxies… that overwhelmingly favors ‘Top 40’ hits,” Sparkler said. He points out that there are now numerous tech companies that can easily identify songs.
“Continuing to distribute these license fees by following a homogenized pop radio chart defies logic and underserves the vast majority of PRO affiliate songwriters and publishers,” he said.
While noting that SoulCycle is doing nothing wrong — they’re simply paying the bills sent by PROs — it’s those rights groups that should tap into “this cultural phenomenon and increase their rates accordingly.”
He closes by stating the obvious: collecting a bigger chunk of money from your spin class is not going to save the music business, “but they do represent actionable items that would make a very meaningful difference to songwriters. Thankfully, the new leadership of both ASCAP and BMI have publicly stated their intent to innovate. But in order for them to thrive in this fiercely competitive environment, perhaps both organizations can clip in and start peddling along a bit faster.”