Why ASCAP Beats BMI, Should Hate Apple, Love Pandora

NEW YORK ( TheStreet) -- Earlier this week in Should BMI's Good Old Boys' Network Make Rules for the Digital Age? I intentionally left out several key points in my takedown of the organization's board of directors' composition.

It was important to initially establish the type of board BMI has sleepwalked through the last couple decades with. Who are these people? What have they done? Do their experiences bear relevance, in any way, to the issues songwriters, publishers and composers face in the digital age?

Anybody in their right mind, including the people at BMI, would have to answer a resounding "no" to the last question or variations of it. Do you really think people at BMI, including the people on the board, can look in the mirror or into the eyes of the musicians they represent and honestly argue that this is the absolute best crew available for the job?

Even if they're figureheads, why go with them? Pick people who actually hold sway symbolically.

In any event, from there, we go beyond the obvious. That group, as a whole, has no business fighting fights, making rules or serving as a symbol in the digital age, but not only because they're, by and large, failed broadcasters, up there in age and/or out of touch with technology and such.

There's nothing wrong with being a traditional broadcaster. Plenty of excellent and innovative ones still exist (e.g., Hubbard Broadcasting). There's nothing wrong with being old. Age ain't nothing but a number. Some of the greatest minds in music are, technically, old.

BMI might need to change its name. Broadcast Music is outdated. Even if BMI loaded its board with the most successful broadcast professionals of the modern day, there would be a problem. These people have interests not necessarily in line with the artists BMI represents. In theory -- and for good reason -- they want lower rates for radio, cable and such. That goes a long way towards explaining BMI's negative stance toward Pandora ( P).

But, even setting that aside, ASCAP, the other major group representing creators, keeps two separate boards -- a "writer board" and a "publisher board" -- stacked entirely with actual writers and publishers. I linked to the list ASCAP provides, complete with (unlike BMI) links to rich (and impressive) biographies of each person.

At the top of that list is Paul Williams, President/Chairman of the ASCAP board. Williams is a heavy hitter. He's in the Songwriters' Hall of Fame. To call him a legend would not be a stretch.

I have correspondence in to ASCAP requesting time with Williams. It would not only be a honor to receive a few minutes, but it would help inform my work on the whole Pandora versus the world Internet radio royalty dustup.

Publicly, Williams doesn't care much for Pandora:
Pandora is trying every trick in the book to brazenly and unconscionably underpay and take advantage of the creative labor that produces the core offering of their business - music written by individual songwriters and composers. ASCAP has an ethical obligation to serve and protect the hundreds of thousands of small and independent songwriters, composers and music publishers we represent to ensure that they receive fair compensation when their songs are performed on any technology platforms.

While I do not agree with what Williams says there, I respect it. I believe he -- and ASCAP -- is 100% genuine. I would even take it a step further to say that, defenses down, Williams loves Pandora. As I argue, more love-hate relationships exist between people such as Williams and Pandora. And I bet Pandora prefers ASCAP to BMI.

BMI's recent lawsuit against Pandora reflects a wholesale misunderstanding of the music industry's place -- and massive opportunity -- in the digital age. ASCAP's rhetoric against Pandora comes off more level-headed, like an organization doing what it needs to do to get the best deal for its membership.

But, at the end of the day, ASCAP's not stupid. It realizes that, without Pandora, those dwindling music download numbers we're seeing at Apple's ( AAPL) iTunes Store would be ever lower.

Asymco's Horace Dediu does the math across iTunes offerings:
We have more information about number of users (575 million), what they spend on media and software and services ($20 billion/yr.) and, increasingly what they spend on each media type (about $9/yr on Software, $2/yr on books, $16/yr on apps $12/yr on music and $4/yr on video.)

Five years ago, the picture looked a heck of a light brighter for the music industry. Fewer iTunes accounts, yes, but $42 per spent on music. Clearly, a massive number of credit cards means a lot more to Apple's data collection efforts than it does to ASCAP and the larger music industry's efforts.

This begs the question I asked a couple weeks ago: Is Apple Screwing the Music Industry?

Of course it is! They have no intention of promoting music for righteous purposes, particularly independent music. Apple has collected years of data from the music and, now, with its Pandora copycat, will generate even more. It will couple it with all sorts of information it gleans from Apple IDs to sell advertising across its mobile network, yet musicians will only get a cut of the portion produced by iTunes Radio. Apple doesn't want music per se; it wants the rich data music provides to achieve more lucrative goals.

Bad deal.

Just imagine how much lower those iTunes music download numbers would be if Pandora wasn't around. Remember, according to NPD Group, people who stream music on services such as Pandora are "much more likely than the average consumer to buy music downloads."

We need the major players to come together, go on a retreat and sit down at the table. I'll moderate, but no other members of the peanut gallery need be present. Williams. Westergren. Label heads. Representatives of a few bands. Songwriters, publishers and composers. No more than a couple to a few dozen bodies in the room. Kill the current system. Hash out a reasonable two-pronged royalty payment system that treats everybody equally and gives them the same type of access to content, but only if they're willing to partner, in a meaningful way, with the entire music industry to ensure success in the digital age.

That's far-fetched. I realize this. I'm hoping for a meeting in the middle. Stop the lawsuits. Halt the testimony in Congress. Cease the propaganda. Come together, make a deal and harness the power of listening data and consumer behavior to do more than put icing on Apple's already massive revenue figures.

-- Written by Rocco Pendola in Santa Monica, Calif.


Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.

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