2011 ANNUAL REPORT - ascap

Your Strongest Advocate ASCAPto give away someone else’s property; it was theright to express your own original views withoutfear of repression — political or otherwise.Freedom of expression is a precious and importantright and should not be trivialized.TELL YOUR STORYThere is no excuse for cyber bullying. When anothersongwriter speaks out, and gets attacked,have their back. Come to their defense. Post yourown comments on the blogs and news articlesthat cover our issues.Tell your story as a songwriter and correctthe misinformation that is perpetuated. If wedon’t stand up for our rights, our moral and legalrights as protected by copyright, no one else will.Our struggles and the cultural and individualinjustice will be forgotten in a heartbeat.Remember, “The axe forgets. The tree remembers.”ASCAP as an organization is your strongestadvocate for protecting your rights and makingsure you get compensated fairly for your music.But we all need to get involved to help our professionthrive, not just for each of us as individuals,but for all of us collectively.You need to be vigilant in protecting yourrights. In most cases, this means being smartabout your own career, value your music, standup for your rights and speak out when given thechance. If we all do this, I believe we can make apowerful impact.ASCAP’S VISIONARY FOUNDERSMusic creators coming together to speak withone voice to protect the value of music is exactlyhow ASCAP was founded in 1914. ASCAP’s visionaryfounders, a small group of gifted songwritersand composers led by composer Victor Herbert,committed to work together to ensure that allmembers of their community would receive faircompensation for their work.Just look at what their efforts achieved; theformation of ASCAP has ensured that music creatorshave been able to earn revenue from performancesof their music across all mediums foralmost 100 years.And with the introduction of each technologicalwonder – from radio to TV to Internet towireless, ASCAP has been there to ensure thatas these new industries grew and profited usingthe creative work of ASCAP members, then thehard-working and talented people who createdthat work could also grow and profit and thriveas well. We are at another pivotal moment in ourhistory where music and technology must workthings out.Technology is a wonderful thing. Every week,some new tool gets introduced that we can use inour work as creators. More music is being playedmore often on more splendid devices than everPictured at the ASCAP Foundation’s “We Write the Songs” event in Washington, DC are(l-r) Marjorie Billington, Lyle Lovett, Rep. Nancy Pelosi (D-CA), ASCAP President PaulWilliams and the Library of Congress’s Dr. James H. Billington.before in the history of recorded music. But technology is not a substitute fortalent, or inspiration, or originality, or mastery, or craft, or emotion. That’s thespecial sauce that you, as songwriters, bring to the mix and we must never letanyone undervalue what you do.It isn’t the ones and zeros, it isn’t data or devices. You reach into people’shearts and minds and make a difference in the beauty and the meaning of theirlives. If you can do that, you deserve to be valued for your work. If someoneelse is going to try and make money from music, the songwriters should sharein the success. That’s what I mean when I say “economic justice” for songwriters.It’s that simple.If you look through that lens when you consider the kinds of decisions youmake about your music on a daily basis, the kind of discipline you show tradingsleepless nights for a second verse that works or a bridge that doesn’t feel likeit’s from another song, you will start to see the depth of your commitment toyour art as an investment - an investment that deserves primary and substantialrecognition and compensation in the economic value chain for music.Is the conversion to zeros and ones a value extraction that reduces thatvalue? I don’t think so. Fair payment for songwriters is compromised by piracy,by public policy trends, and by a pervasive and anti-creator climate.Not only do we depend on strong copyright laws internationally, but increasingly,we need tools to enforce compliance and fight piracy so legitimatebusiness models can thrive. The growth of legitimate business models for musicwill be good for creators, for the tech sector and for consumers.Songwriters and composers, like all other stakeholders, must have truebargaining power in negotiations. We solidify our bargaining power by our collectiveeffort as a group. ASCAP has more than 435,000 members and more than8 million songs in our repertory. That’s powerful stuff with which to negotiate alicensing deal. That is why building a united ASCAP is important for our collectivefuture success. And each and every member is instrumental in that success.I thank all members for being part of this great organization.Paul WilliamsPresident and Chairman of the BoardANNUAL REPORT 3

ASCAP Annual ReportA STABLE FUTUREI AM PLEASED TO REPORT THAT ASCAP REPORTED STRONGREVENUES OF $982.8 MILLION FOR 2011, the second highestrevenues in our history, and an increase of 5.5% over 2010.ASCAP’s distributions totaled $821.9 million, making 2011 thefourth year in a row that ASCAP was the only U.S. PRO to distributeover $800.0 million in royalties annually to our members.That amounts to over $3.3 billion dollars in our members’pockets over the past four years.There is no other organization out there that deliversthese kinds of financial results for songwriters andcomposers.ASCAP was also able to lower our operating expenseratio by 2.2 percentage points — to 12.1%, keepingus among the most efficiently run and effective PROs inthe world. This increase in revenues was due primarilyto collections from foreign countries, which totaled$347.1 million, $49.7 million more than in 2010. Receiptsfrom our domestic licensees held steady at about $635.7million – up $1.3 million over last year.CHALLENGES TO THE BLANKET LICENSEI’d like to put this good news in perspective, however,and offer some context for understanding our challenges. Our domestic revenuesare being impacted by two rate court proceedings – one with radio, the other withthe background music service, DMX. The radio industry has been hard hit by theeconomy, suffering about a 26.0% drop in ad revenues from 2008 to 2009. Whenour last radio agreement expired at the end of 2009, we ended up inrate court with the Radio Music License Committee, which representsover 10,000 commercial radio stations.Based on radio’s drop in revenues, the court set an interimfee that averaged out the fees from the years 2005 to 2009. Ourrevenues from background music services went down almost $17.9million as a result of an unfavorable decision in the DMX rate courtproceeding.Here’s the history on that case. Under ASCAP’s blanket license,the background music service DMX had been paying ASCAP about$40.0 per business subscriber that used their service to pipe musicthrough their store location or business.That gave the business the right to play any of the millions ofsongs in the ASCAP repertory – all day, all year. DMX decided theywanted a strategy to reduce the amount they were paying songwritersand composers for their music – the lifeblood of their business.The beauty of the blanket license is that any songwriter – nomatter how famous or successful – gets treated and paid the samewhen their music is used.Their strategy was to try to undermine the power of collectivebargaining that songwriters and composers have through theirPROs. So, they went out and signed direct licenses with some publishers.Then, they went to rate court and asked for what is called a “carve out” license,asking to deduct from the blanket license fees the amounts they paid forthe direct licenses.Here is what’s wrong with that approach. The blanket license is calculatedto give them the right to access any of the music in our repertory, and we in turn,make sure the writers of the music that is actually performed get paid their fairshare.By “carving out” the amount they pay for direct licenses, they overvalue theThe beauty of theblanket license is thatany songwriter – nomatter how famous orsuccessful – gets treatedand paid the same whentheir music is used.direct licenses at the expense of everyone else coveredthrough the blanket license. What happens isthe value of each performance is reduced considerably.The beauty of the blanket license is that anysongwriter – no matter how famous or successful– gets treated and paid the same when their musicis used.Unfortunately, the rate court judge acceptedthe premise of a “carve out” license, and set the persubscriber rate at $13.0 vs the $40.0 we were gettingunder the blanket deal.CABLE, SATELLITE AND NEW MEDIAREVENUE UPIn 2011, we did see important revenue growth insome areas, which helped to offset the overall impactof the declines in radio and background musicservices.The cable television industry is healthy andgrowing. That is reflected in the payments we receivedfrom cable, which were up $14.9 million toover $170.2 million total. That makes cable now thenumber one source of domestic performance royaltiesfor our members.Revenues from satellite radio and new medialicensees were up $13.1 million resulting in a total of$58.2 million in receipts from these sources.The way people access music is changing andnew business models are evolving. Atthe same time, the economy remainsa challenge for many of our licensees,which impacts the royalties we collecton behalf of our members.The new agreement also expandsthe scope of ASCAP’s licenseto accommodate the radio industry’sevolving distribution platformsincluding websites, smart phonesand other wireless devices and HD/Multicasting radio channels.MULTI-YEAR DEALS WITHMAJOR CUSTOMERSWhat’s clear is that the demand forour members’ music just keeps growing,both here and abroad. In thisunsettled time, our goal is to ensurea stable future for our members.Toward that end, we have concludedmulti-year deals with major users that guaranteeincome from performance royalties as the marketplaceevolves and the economy improves. Thoselicensees include: XM/Sirius Radio, HBO, Viacomand the radio industry.The new ASCAP-Radio Music LicensingCommittee (RMLC) Agreement covers the periodJanuary 1, 2010-December 31, 2016 and ends costlyFederal Rate Court litigation. It provides for a returnto a revenue-based fee structure at 1.7%, which4 ANNUAL REPORT

A Stable Future ASCAPis higher than in the past, and limits the amount ofdeductions stations can take off of their gross revenues.So the more revenue a radio station makes,the more it pays to ASCAP members.The new agreement also expands the scopeof ASCAP’s license to accommodate the radio industry’sevolving distribution platforms includingwebsites, smart phones and other wireless devicesand HD/Multicasting radio channels.In the immediate future, ASCAP will see areduction in radio royalties as terrestrial radio adrevenues continue to be hard hit by the currenteconomy.That is to be expected, but our members withsignificant radio airplay will see up-tick in other areas,such as satellite and new media. However, thisnegotiated amount was far more advantageous toour members than a rate court mandate would havebeen, so we are pleased with the outcome.FORECAST – GREATER REVENUES IN 2013ASCAP sees music being distributed more widelyand creatively everyday. We know that the radioindustry has been positioning itself to play a moredominant role in distribution, so we entered intothis new agreement with the expectation that asthe radio industry grows - our members will proportionallyshare in that growth. 2012 is a year ofadjusting to new rates, and we look forward togrowth in revenues in 2013 and beyond.New media is obviously an area of great importanceas online and wireless are becoming thedominant platforms for many to discover and listento music.We all know that new media services havebeen a challenge to license and that there is a widegap between what we feel are fair rates and whatmany new media companies are willing to pay – ifthey recognize their obligation to pay at all.We have been in rate court with several of thebig players with mixed results. In some cases, likewith YouTube, we ultimately were able to reachagreement without going to a full trial. In othercases, such as MobiTV, a service which suppliescontent to wireless carriers, we have a rate courtdecision on appeal.NEW MEDIA LICENSING GAINSI am very happy to report that we have been makingsome gains in licensing new media, establishinglicenses that will allow royalties to grow as therevenues for these platforms grow.In 2011, Netflix, Hulu and Spotify, were amongthe major digital services that signed ASCAP blanketlicense agreements, and we also signed a newdeal with Rhapsody.For digital services with billions of performances,an ASCAP blanket is a smart way to dobusiness, offering a simple solution to legally performmusic and respect creators’ rights to be fairlypaid. These deals are similar in scope to the radiodeal so that as these services start taking off andbecoming more profitable, so will our members.To provide some perspective, when we firstbegan licensing cable, it wasa fledgling industry. Just likenew media, it sometimes tooklengthy court battles and ratecourt proceedings to establishrates. Now, as cable hasbecome one of the most successfulmedia models, eclipsingbroadcast television, ithas also become our numberone revenue source.One of our most importantinitiatives is to continueto lead in licensing new media.We have already successfullylicensed tens of thousandsof services, from startupsto the biggest Internet and mobile networks.Pictured at the 2011 ASCAP Film & TV Music Awards (l-r) areASCAP Henry Mancini Award honoree Angelo Badalamenti,ASCAP Golden Note Award honoree Alf Clausen and ASCAPCEO John LoFrumentoRight now, we aren’t seeing the kind of growth in revenues from these serviceswe’d all expect, given their popularity. But we do think that will change asthey evolve to become more profitable. And when they do, that’s more money inour members’ pockets.INTERNATIONAL – A MAJOR DRIVER OF REVENUE GROWTHAnother area we are focused on is international. A major driver of our revenuegrowth in 2011 was the popularity of ASCAP music abroad, bolstered by a veryadvantageous foreign exchange rate. We can’t control the foreign exchange rateor the strength of the U.S. dollar, which impact foreign revenues. But we can keepimproving our ability to track performances and monitor payments coming in toour members, and we are doing so.We have a major initiative in the foreign area to closely examine performancesabroad and ensuring that the royalties attached to those performances are beingpaid out accurately and on time.THE BEST MEMBER SERVICES AVAILABLEWe made some internal changes at ASCAP in 2011 geared to improving our operationalefficiency, strengthening our licensing and innovating the best memberservices available. We consolidated several operational areas and expanded themembership, licensing and international departments.Roger Greenaway was promoted to Executive VP of International. Basedin London, Roger oversees international operations, including relationships withforeign societies and collections of foreign revenues – a very important area to us.Vincent Candilora was promoted to Executive VP of Licensing and we havestrengthened our licensing by consolidating broadcast, cable, online, wireless andgeneral licensing along with infringements into one department.In Membership, Executive Vice President Randy Grimmett, was promoted totake leadership of an expanded department bringing together all areas that touchmembers – member services, creative services, business affairs, estates and claims,and communications and media.By integrating these areas, ASCAP can best serve our members’ career needsand provide them with the strongest advocacy as creators.WE VALUE OUR MEMBERS’ TRUSTOur members have placed their trust in ASCAP and we value that more thananything. I’m optimistic and confident that we have the right team in place toovercome the challenges to our members’ rights and their ability to earn more fortheir music. I am fortunate to work with a dedicated ASCAP Board of Directorswho provide experienced guidance and vision, as well as a senior managementteam and their staff with the drive, skills and innovative thinking to lead us intothe future.John A. LoFrumentoChief Executive OfficerANNUAL REPORT 5

ASCAP Annual ReportASCAP’S BOARD OF DIRECTORSTHE ASCAP BOARD OF DIRECTORS, made up of 12 writers and 12 publishers, electedfrom and by the membership every two years, combines experience and foresight to bestguide the Society into the future. ASCAP is the only performing rights organization in theU.S. owned by composers, lyricists and music publishers. Writer members elect 12 writers tosit on the Board, and publisher members elect 12 publishers. ASCAP Board members knowthe needs of the members first-hand and they represent no other outside interest group, i.e.broadcasters or other profit-driven third parties. The Board has a clear agenda – to providethe fairest and highest level of payments, the best service and the best copyright protectionfor the membership. It does this by meeting regularly to set policy and by creating variousBoard committees which provide oversight and direction to a professional management teamin all areas of ASCAP’s operation.Songwriter Paul WilliamsASCAP President and ChairmanSongwriter Jimmy WebbASCAP Vice PresidentComposer George DukeLichelle Music’s Dean KayLeeds Music’s Leeds LevyMPL Communications’John L. EastmanComposer Doug WoodUniversal Music’s Zach Horowitz6 ANNUAL REPORT

ASCAP’s Board of Directors ASCAPSongwriter Valerie SimpsonBMG Rights Management’sLaurent HubertSONGS Music Publishing’sMatt PincusComposer Richard BellisComposer Stephen SchwartzSony/ATV Music Publishing’sMartin BandierCarlin America’s Caroline BienstockComposer Dan FoliartSongwriter Marilyn BergmanComposer Stephen Paulus Songwriter Wayland Holyfield Composer Bruce BroughtonCromwell Music’s Irwin Z. RobinsonSchott Music’s James M. KendrickTen Ten Music Group’sBarry CoburnWarner/Chappell Music’sCameron StrangANNUAL REPORT 7

ASCAP Annual ReportOUR MEMBERS’ SUCCESSKaty Perry made history in 2011 with five #1 singles from the same album (left). Trey Parker and Matt Stone won nine Tonys for The Book of Mormon (topright). Bret McKenzie won the Best Original Song Oscar for “Man or Muppet” from The Muppets (bottom right).ASCAP MEMBERS FINISHED AT THE TOP OF THE CHARTS in the 2011 Billboardyear-end reports, and took home top honors during the industry’s award season.THE GRAMMYSAt the 54th Annual Grammy Awards (honoring the bestmusic of 2011), Paul Epworth and the Foo Fighters ledthe ASCAP winners with four each, including the covetedProducer of the Year award for Epworth. ASCAPmember and dubstep dilettante Skrillex made an outstandingGrammy debut, taking home three awards inthe dance/electronic music categories. ASCAP writersprevailed once again in the Best New Artist categoryas Bon Iver claimed the prize and his first Grammy.MusiCares chose an ASCAP member as its Person of theYear for the second year in a row as they honored SirPaul McCartney.THE TONYSASCAP members dominated the 2011 Tony Awards, whereTrey Parker and Matt Stone took home a whopping nineawards for their smash hit, The Book of Mormon. The duo’shonors included Best Musical, Best Book of a Musical, andBest Original Score among others.THE OSCARSAt the 84th Annual Academy Awards, ASCAP writersdominated the Best Original Song category, but it wasASCAP member Bret McKenzie that came out on top,winning the award for his dramatic power ballad, “Manor Muppet,” featured in The Muppets.THE EMMYSThe 63rd Annual Primetime Emmy recognized threeASCAP composers and writers for their work in televisionscores. Carter Burwell and Garth Neustadter each wonfor their original compositions to Mildred Pierce and JohnMuir In the New World, and Trevor Morris took home theEmmy for Outstanding Original Main Title Theme Musicfor his work on The Borgias.8 ANNUAL REPORT

Our Members’ Success ASCAPASCAP HONORSAt our own annual awards ceremonies in 2011, ASCAP celebrated theachievements of our members in the Jazz, Latin, Country, Rhythm andSoul, Film and TV, Pop, Christian and Concert genres. Songwriter ofthe Year honors were given to Lukasz “Dr. Luke” Gottwald, MaxMartin, Ludacris, Matthew “Boi-1da” Samuels, Noah “40” Shebib,Ben Hayslip, Tito “El Bambino” and Dan Muckala. Pat Monahanreceived Song of the Year honors at the 2011 Pop Music Awards forTrain’s “Hey Soul Sister,” and at the 2011 Rhythm and Soul Awards,Kerry “Krucial” Brothers, Alicia Keys and Noah “40” Shebib wonTop R&B/Hip-Hop Song for Keys’ “Un-Thinkable (I’m Ready).” At the2011 Concert Music Awards, ASCAP further honored composer ZhouLong for his Pulitzer Prize for Music for his first opera, Madame WhiteSnake. ASCAP added five of its members to its Jazz Wall of Fame in 2011,with living legends Jimmy Heath and George Avakian, as well as pastASCAP BY THE NUMBERS1stPRO in the United States3.3BillionDOLLARS DISTRIBUTEDto ASCAP membersover last 4 years12.1%ASCAP’S OPERATING EXPENSERATIO – the lowest amongPROs in the world8.5MillionWORKS IN THE ASCAPREPERTORY,all cleared for legal use underASCAP’s blanket license435,000+MEMBERS who belongto ASCAP250BillionPERFORMANCES PROCESSEDby ASCAP annuallypioneers Oscar Peterson,Mel Powell, and NinaSimone. For their contributionsand impact in developingmusical genres,The Civil Wars, Bandof Horses, Plan B andThird Day received theVanguard Award, and forreaching extraordinarymilestones in their careers,Lindsey Buckingham,Alf Clausen, Mary Mary,Trent Reznor and DonWilliams were giventhe Golden Note Award.ASCAP composer AngeloBadalamenti was recognizedfor his achievementand contributions to filmand television music withthe Henry Mancini Awardand Alejandro Sanz receivedthe Latin HeritageAward. The prestigiousFounders Award was givento Rod Stewart and Sean“Diddy” Combs in 2011for their inspiring and pioneeringcontributions tomusic that will continue toinfluence music creators inthe future.Sean “Diddy” Combs washonored with the ASCAPFounders Award (top).Trent Reznor received theASCAP Golden Note Award(center). Zhou Long won thePulitzer Prize for Music for hisfirst opera (bottom).ANNUAL REPORT 9

ASCAP Annual ReportAFINANCIAL OVERVIEW$860.4$846.3ASCAP’S FINANCIAL RESULTS were discussed atthe general membership meeting in Los Angeles. Inaddition, our independent public accountants, Ernst& Young LLP, presented our audited financial statementsfor the years ended December 31, 2011 and 2010at the June board meeting. Pages 11 through 17 includeselected portions of the audited financial statements.ASCAP’s total distributions were $821.9 million in2011 compared to $846.3 million in 2010, a decreaseof $24.4 million or 2.9%. Distributions to membersand foreign societies for domestic performanceswere $519.5 million, a decrease of $35.5 million or6.4%. Distributions for foreign performances were$302.4 million up $11.1 million or 3.8%. The TotalDistributions chart highlights the trend of distributionsover the past three years.Total receipts were $982.8 million in 2011, up $51.0million or 5.5%. Domestic receipts were $635.7 millionup $1.4 million. Fees from Cable were up $14.9million or 9.6% mainly due to industry growth andthe timing of contractual payments at year end. NewMedia fees increased $6.9 million primarily due tovarious one-time settlement payments received,partially offset by refunds paid. Fees from GeneralLicensees decreased $17.9 million or 15.1% mainly dueto an unfavorable court ruling in Background music.Radio fees were down $3.3 million primarily due tolower interim fees from the industry. Foreign receiptswere $347.1 million, up $49.7 million or 16.7% primarilydue to higher actual performances and one-timesettlement payments.20092009Total $990.8TOTAL DISTRIBUTIONSDollars in Millions$301.7$689.12010ANNUAL RECEIPTSDollars in Millions$297.4$634.42010Total $931.8FOREIGN RECEIPTSDOMESTIC RECEIPTS$821.92011$347.1$635.72011Total $982.8OPERATING EXPENSE RATIOOperating expenses were $119.4 million, down $13.9million or 10.4% from 2010. This decrease is primarilydue to restructuring efforts, system enhancementsand rent savings in 2011. These cost containment effortscoupled with higher revenue resulted in a reductionof ASCAP’s operating ratio to 12.1%. The AnnualReceipts and Operating Expense Ratio charts providea three-year trend of related information. We continueour commitment to control overhead expenseswhile strengthening operations to enhance service toour members and our licensees.13.2%200914.3%12.1%2010 201110 ANNUAL REPORT

Auditor’s Report ASCAPREPORT OFINDEPENDENT AUDITORSTo the Board of Directors of the American Society of Composers, Authors and Publishers:We have audited the accompanying consolidated statements of receipts, expenses and changesin net assets of the American Society of Composers, Authors and Publishers and ConsolidatedSubsidiaries (the “Society”) as of December 31, 2011 and 2010. The consolidated statements ofreceipts, expenses and changes in net assets are the responsibility of the Society’s management.Our responsibility is to express an opinion on these financial statements based on our audits.We conducted our audits in accordance with auditing standards generally accepted in theUnited States. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement. We werenot engaged to perform an audit of the Society’s internal control over financial reporting.Our audits included consideration of internal control over financial reporting as a basis fordesigning audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the Society’s internal control over financialreporting. Accordingly, we express no such opinion. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements, assessingthe accounting principles used and significant estimates made by management, and evaluatingthe overall financial statement presentation. We believe that our audits provide a reasonablebasis for our opinion.As described in Note 2, these consolidated financial statements of receipts, expenses andchanges in net assets have been prepared on the modified cash basis of accounting, which is acomprehensive basis of accounting other than U.S. generally accepted accounting principles.In our opinion, the consolidated statements of receipts, expenses and changes in net assetsreferred to above present fairly, in all material respects, the receipts, expenses and changes innet assets of the American Society of Composers, Authors and Publishers and ConsolidatedSubsidiaries at December 31, 2011 and 2010 on the basis of accounting described in Note 2.May 7, 2012ANNUAL REPORT 11

ASCAP Annual ReportAMERICAN SOCIETY OF COMPOSERS, AUTHORSAND PUBLISHERS AND CONSOLIDATED SUBSIDIARIESCONSOLIDATED STATEMENTS OF RECEIPTS AND EXPENSESAND CHANGES IN NET ASSETS (MODIFIED CASH BASIS)YEAR ENDED DECEMBER 31DOMESTIC RECEIPTS: (In Thousands) 2011 2010License fees:Television $105, 876 $106,104Cable 170,203 155, 321Radio 227, 581 230,881General 100,528 118, 420New media 23,929 17,073Symphonic and concert 5,897 5,453Membership Application Fees 991 1,094Interest and other income 719 24Total domestic receipts 635,724 634,370ROYALTIES FROM FOREIGN SOCIETIES: 347,061 297,400Total receipts 982,785 931,770EXPENSES:Performing Rights 66,863 74,883Membership Services 10,656 11,780Headquarters 26,525 27,058Legal 14,362 17,059Total Operating Expenses 118,406 130,780Loss on Investment in Mediaguide 999 2,550Total expenses, including losson investment in Mediaguide 119,405 133,330Excess of receipts over expenses 863, 380 798,440DISTRIBUTIONS:Members:Domestic distributions 465,325 496,741Foreign distributions 302,420 291,331Foreign societies 54,185 58,273Total distributions to members 821,930 846,345Increase in net assets 41,450 (47,905)NET ASSETS, beginning of year 193,187 241,092NET ASSETS, end of year $234,637 $193,187See accompanying notes.12 ANNUAL REPORT

Auditor’s Report ASCAPNOTES TO CONSOLIDATED FINANCIAL STATEMENTSDecember 31, 20111. ORGANIZATION AND NATUREOF BUSINESSThe American Society of Composers, Authors and Publishers andits Consolidated Subsidiaries (the “Society” or “ASCAP”) is anunincorporated membership society of composers, songwriters,lyricists and music publishers. As a performing rights society,ASCAP represents its members by licensing copyrighted musicand distributing royalties for the nondramatic performances oftheir copyrighted works. These royalties are paid to membersbased on surveys of performances of the works in ASCAP’s repertorythat they wrote or published. Founded in New York in1914, ASCAP is the oldest performing rights licensing society inthe United States.2. SUMMARY OF SIGNIFICANTACCOUNTING POLICIESBasis of AccountingThe Society maintains its financial statements on a modifiedcash basis of accounting, which is a comprehensive basis of accountingother than U.S. generally accepted accounting principles,and is detailed as follows:Basis of PresentationThe consolidated financial statements contain the financial informationof the American Society of Composers, Authors andPublishers, and its 100% owned subsidiaries, ASCAP JointVenture LLC and ASCAP Enterprises LLC (“Enterprises”). Allintercompany transactions have been eliminated in consolidation.ASCAP accounts for its investment in Mediaguide Inc.(“Mediaguide”) using the equity method of accounting as ASCAPdoes not have voting control. ASCAP’s share of net income orlosses of equity investments is included in “Loss on investmentin Mediaguide” in the accompanying Consolidated Statements ofReceipts, Expenses and Changes in Net Assets. ASCAP periodicallyreviews its investment in Mediaguide for impairment and adjustsits investment to net realizable value when a decline in marketvalue is determined to be permanent. Any difference between thecarrying value of the Society’s equity investment in Mediaguide andits equity in the net assets of Mediaguide that resulted from thepurchase of additional economic interests are amortized over theremaining useful life of Mediaguide intangible assets.Revenue RecognitionRevenue, consisting of license fees, membership applicationfees, and interest income, is recorded at the time that cash isreceived. Revenues due to ASCAP, but not received, such asamounts due from licensees and foreign societies, are not accrued,rather, they are recognized only when received. Royaltydistributions and other payables related to such revenues, whichare significant, are recognized when distributed. Amounts dueto members for distributions for members who cannot be locatedor distributions held pending legal resolution are accrued.Income TaxesThe Society does not account for income taxes in accordancewith the Financial Accounting Standards Board (“FASB”)ASC 740, Income Taxes. Under this guidance, the liabilitymethod is used to account for income taxes. The Society recognizesincome tax expense or benefit as payments are made orreceived from the appropriate taxing authorities and does notrecognize related tax liabilities, deferred tax assets, or deferredtax liabilities as may be required by the income tax accountingguidance.Net income taxes paid and expensed amounted to approximately$20,000 and $82,000 for the years ended December 31,2011 and 2010, respectively. The tax expense is reflected in theHeadquarters line item in the accompanying ConsolidatedStatements of Receipts, Expenses and Changes in Net Assets.Defined Benefit Pension PlansThe Society does not account for its defined benefit pensionplans in accordance with FASB ASC 715, Compensation –Retirement Benefits. Under this guidance, accrual accounting isapplied to defined benefit pension plans sponsored by an employerand, to the extent that an employer has an underfundedor overfunded pension obligation, a liability or an asset wouldbe recognized. In addition, an employer is required to recognizechanges in the funded status in the year in which the change occursthrough net assets. The Society recognizes pension expenseas the plan is funded, and does not recognize pension assets orliabilities as may be required by the defined benefit plan accountingguidance. The Society does not recognize the changes in thefunded status during the year through net assets as may be requiredby the defined benefit plan guidance.ANNUAL REPORT 13

ASCAP Annual ReportFixed AssetsFixed assets, including leasehold improvements, are capitalizedat cost. Depreciation of fixed assets is calculated using thestraight-line method based on estimated useful lives as follows:AutomobilesBuilding and building improvementsEquipmentFurniture and fixturesSoftware Development (hardware)Software Development (software)3 years40 years3-5 years10 years3-5 years10-15 yearsLeasehold improvements are amortized on a straight-linebasis over the shorter of the useful life of the assets or the termsof the related leases. Building improvements are amortized ona straight-line basis over the remainder of 40 years since thepurchase of the building in 1992. Repair and maintenance costsare expensed as paid.Costs incurred for the development of software for internaluse have been capitalized in accordance with ASC 350-40,Internal-Use Software.Use of EstimatesThe preparation of these consolidated financial statements requiresthe use of certain estimates and assumptions by managementin determining the Society’s assets and liabilities, as wellas disclosure of benefit plan obligations and contingencies atthe date of the consolidated financial statements. Actual resultscould differ from those estimates.3. JOINT VENTURES AND OTHERINVESTMENTSASCAP Enterprises LLCDuring 1999, Enterprises, a New York limited liability company,was formed whose sole member is ASCAP.In October 2002, Enterprises and YES (formally knownas ConneXus Corporation) formed a 50/50 joint venture,Mediaguide, a Delaware corporation, for the purpose of commerciallyexploiting a proven technology for monitoring, identifying,and reporting all information contained in broadcasts ortransmissions and to produce information products and servicesspecifically designed to meet certain obligations under licenseagreements with ASCAP and YES.An amended and restated stockholders’ agreement wasentered into among Mediaguide and ASCAP, YES and a thirdshareholder, Marketing Architects, Inc. (the “Agreement”)during 2007. As part of the Agreement, Marketing Architects,Inc. made an investment in Mediaguide. As result of theAgreement, ASCAP held a 49.2% economic and voting interestin Mediaguide. In addition, each of the investors received warrantsto purchase 76,121 shares of Class A common stock at $9.85per share. The warrants expire on the earlier of certain eventsor August 31, 2012. As of December 31, 2011 and 2010, none ofthe warrants have been exercised. Subsequent to the Agreement,ASCAP purchased additional economic interests in Mediaguidewhich increased its overall economic interest in Mediaguide to56.3% as of December 31, 2011, but did not change any of theinvestors’ voting interests.For the years ended December 31, 2011 and 2010, the Societyrecorded its share of net losses in Mediaguide of approximately$1.0 million and $2.6 million, respectively. These losses includeamortization expense related to the basis difference betweenASCAP’s investment and the underlying equity in Mediaguide.4. BENEFIT PLANSThe Society has a defined benefit pension plan (the “Pension Plan”)and a defined contribution savings plan (the “Savings Plan”). Theseplans cover all employees who meet the eligibility requirements asdefined by each plan.Under the Society’s Pension Plan, benefits are based on yearsof service and an employee’s highest three consecutive year compensationaverage from the last ten years of employment. TheSociety’s policy is to fund amounts as necessary on an actuarialbasis to provide assets sufficient to meet the benefits to be paid toplan members in accordance with the requirements specified bythe Employee Retirement Income Security Act of 1974 (“ERISA”).The Society’s expense for contributions to the Pension Plan wasapproximately $5.1 million and $2.2 million during 2011 and 2010,respectively, and is reflected in the Headquarters line item in theaccompanying Consolidated Statements of Receipts, Expenses andChanges in Net Assets.In September 2005, the Board of Directors passed a resolutionelecting to freeze all future participation in the Pension Plan to newparticipants as of January 1, 2006. All eligible employees hired priorto January 1, 2006 are grandfathered in the Pension Plan and willcontinue to accrue benefits.The following table sets forth the Pension Plan’s funded status:December 312011 2010(in thousands)Actuarial present value of:Vested benefit obligation $75,187 $63,411Nonvested benefit obligation 802 3,464Accumulated benefit obligation $75,989 $66,875Actuarial present value ofprojected benefit obligation $89,236 $75,696Plan assets at fair value $38,363 $38,112Unfunded status of the Plan ($50,873) ($37,584)14 ANNUAL REPORT

Auditor’s Report ASCAPThe weighted-average discount rate in determining the actuarialpresent value of the projected benefit obligation was 4.50%and 5.25% in 2011 and 2010, respectively. The rate of increasein future compensation levels used in determining the actuarialpresent value of the projected benefit obligation was 3.00% and5.13% in 2011 and 2010, respectively. The expected long-term rateof return on Plan assets was 8.25% for both 2011 and 2010. Theweighted-average expected long-term rate of return on Plan assetsis based upon historical financial market relationships thathave existed over time with the presumption that this trend willgenerally remain constant in the future.The Society’s pension plan assets, by asset category, are asfollows:2011 2010Equity Securities 58% 66%Debt Securities 42 34Total 100% 100%The target investment allocations for the plan assets are 60%equity securities and 40% debt securities. Asset allocations arerebalanced on a regular basis throughout the year to bring assetsto within a range of target levels. Target allocations take into accountanalyses performed by the Society’s pension consultant tooptimize long-term risk/return relationships. All assets are liquidand may be readily adjusted to provide liquidity for current benefitpayment requirements.The following table provides the fair value hierarchy (asdescribed in Note 2 – Fair Value Measurements section) of thefunded Pension Plan’s financial assets as of December 31, 2011and 2010:December 31, 2011Investment Type Level 1 Level 2 Level 3 TotalMutual funds $29,582 $ – $ – $ 29,582Money market funds $ 506 $ – $ – $ 506Commingled trust fund – $ 8,275 $ – $ 8,275Total $ 30,088 $ 8,275 $ – $38,363December 31, 2010Investment Type Level 1 Level 2 Level 3 TotalMutual funds $27,775 $ – $ – $ 27,775Money market funds $ 626 $ – $ – $ 626Commingled trust fund – $ 9,711 $ – $ 9,711Total $ 28,401 $ 9,711 $ – $38,112Mutual fund shares are valued daily, with the NAV per fundshare published at the close of each business day, consisted ofregistered mutual fund investments whose diversified holdingsprimarily include common stock securities issued by U.S. andnon-U.S. corporations, corporate bonds and mortgage backedsecurities. Money market funds are valued at quoted marketvalues on the last business day of the year. Commingled trustfund is valued at the quoted redemption values on the last businessday of the plan year.ASCAP also has a nonqualified retirement equalization benefitplan that provides certain employees with defined pensionbenefits in excess of limits imposed by federal tax law, and anon-qualified supplemental executive retirement plan (the“SERP”) which is offered to certain members of managementto provide additional benefits at retirement.The following table sets forth the SERP’s funded status:December 312011 2010(in thousands)Actuarial present value of:Vested benefit obligation $15,770 $11,352Nonvested benefit obligation 85 592Accumulated benefit obligation $15,855 $11,944Actuarial present value ofprojected benefit obligation $18,071 $12,6124Plan assets at fair value $7,481 $7,282Funded status of the SERP ($10,590) ($5,330)Plan assets related to the SERP consisted of equities and mutualfunds measured at Level 1 as of December 31, 2011 and 2010.The Society has contributed $5.1 million to its Pension Planand SERP in 2011, and has budgeted to contribute approximately$7.6 million in 2012.Estimated future pension benefit payments for the PensionPlan and SERP, which reflect expected future service, are as follows(in thousands):2012 $ 10,0132013 1,3262014 3,0982015 21,7432016 5,7372017-2021 40,425Under the Society’s Savings Plan, effective November 1, 2005,new employees are automatically enrolled in the Savings Planafter 60 days of service at a contribution rate of 3% of their salary,pretax, unless they opt out of the Savings Plan. All employeesmay then elect to contribute from 1% through 25% of theirsalary, pretax, as limited by the Internal Revenue Service. TheSociety’s matching contribution, which is discretionary, wasequal to 100% of the first 2% and 25% of each additional percentup to 6% contributed by the employee during the currentANNUAL REPORT 15

ASCAP Annual Reportyear, resulting in a maximum contribution by the Society of 3%of the employee’s allowable salary. Employees’ contributionsare immediately vested, and the Society’s matching contributionsare vested after the first year of service. During 2011, themaximum annual employee contribution of pretax dollars waslimited by Internal Revenue Service regulations to $16,500, andASCAP’s matching contribution was limited to $7,350 per employee.The amounts contributed by ASCAP to the Savings Planfor 2011 and 2010 were approximately $1.3 million and $1.4 million,respectively.ASCAP has a nonqualified deferred compensation plan,whereby eligible employees may elect to defer a portion oftheir compensation each year. Compensation expense, equal toamounts deferred by employees, is recorded currently.5. DISTRIBUTIONS TO MEMBERSReceipts of the Society, less expenses of operations and amountspayable to foreign societies, are distributed to members in accordancewith the Society’s survey and distribution system, originallymandated by the 1960 amendments to the ASCAP ConsentDecree and now embodied in the Society’s rules and regulations.The Society includes taxes withheld by affiliated foreign societiesas receipts. These taxes withheld are reflected in Royaltiesfrom foreign societies in the accompanying ConsolidatedStatements of Receipts, Expenses and Changes in Net Assets.The Society also includes foreign taxes withheld in the summaryof distributions reported to members at year-end, therebyenabling members to report them appropriately on their tax returns.These taxes are reflected in foreign distributions in theaccompanying Consolidated Statements of Receipts, Expensesand Changes in Net Assets.At December 31, 2011 and 2010, approximately $6.2 millionand $5.3 million, respectively, represented the foreign taxeswithheld on receipts that will be reported in the year when therelated distributions are paid.6. COMMITMENTS AND CONTINGENCIESLitigationThe Society is involved on an on-going basis in court proceedingswith its licensees to determine license fees to be paid tothe Society for the performance of musical works in the ASCAPrepertory. Over the past year, ASCAP concluded such court proceedingswith several major Internet services, the major wirelessservice providers, and commercial radio stations. Currently,ASCAP is involved in such a proceeding with commercial televisionstations that is scheduled to be tried early in 2013. Thetelevision stations are paying interim license fees at rates thatare subject to retroactive adjustment when final fees are arrivedat by agreement or court determination. The settlement withthe commercial radio stations will result in reduced license feesbeing paid by the stations during 2012 – 2016 under the stations’new licenses.In May 2010, a decision was issued in one of the rate courtproceedings concerning a mobile platform that, through agreementswith various wireless carriers, delivers audiovisual andaudio content to wireless consumers. ASCAP appealed that decisionand is currently awaiting a ruling by the appellate court.If the district court’s decision is reversed, it may result in upwardadjustment of the amount of fees this service is paying toASCAP. However, ASCAP cannot predict the outcome of the appeal.As a result of the district court’s decision, ASCAP settled itsrate court litigation with the wireless carriers.The Society is also awaiting the decision on its appeal ofthe district court’s December 2010 decision involving one ofthe leading background/foreground music services, which willhave a material effect on the revenues ASCAP collects frombackground/foreground music services, at least for 2012. ASCAPcannot predict the extent of the full impact of the district court’sdecision on the future revenue at this time.Lease CommitmentsEquipment rental and office lease expense, including escalationsand utilities, aggregated approximately $5.6 million and$10.3 million for the years ended December 31, 2011 and 2010,respectively, and is recognized as an expense when paid in theaccompanying Consolidated Statements of Receipts, Expensesand Changes in Net Assets based on the amount of cash paid.The minimum rental commitments under existing non-cancellableoffice and equipment leases at December 31, 2011 are asfollows (in thousands):2012 $ 4,3702013 4,0372014 4,4452015 4,4612016 4,419Thereafter 10,239Total minimum lease payments $31,971Member GuaranteesThe Society has provided guarantees of payment to financial institutionsfor personal loans provided to certain of its members.Royalty earnings attributable to each of these members are beingdistributed directly to the financial institutions as part of theloan repayment terms. To the extent that the cash flows of thefuture royalty earnings are not sufficient to the financial institutions,payment of each respective member loan may be acceler-16 ANNUAL REPORT

Auditor’s Report ASCAPated by the financial institutions and payment would be guaranteedby the Society. The Society would collect any amounts paidas a result of the guarantee through future royalty earnings ofthe respective member. As of December 31, 2011, the Society authorizedup to $25.0 million in guarantees to be made, of whichapproximately $24.2 million is outstanding. The fair value of theguarantees is not considered to be material.7. RELATED PARTY BY TRANSACTIONThe ASCAP Foundation (the “Foundation”), a not-for-profitorganization, was incorporated in 1975 to promote and supportcharitable/educational programs in the field of music.Contributions, bequests, and grants from members of ASCAP,other foundations, and the general public provide support to theFoundation. The Foundation is a related party to ASCAP.The Foundation is located in the offices of ASCAP and receivesthe use of ASCAP’s office space at no charge. In addition,ASCAP personnel assisted in the administration of theFoundation’s activities as needed. The value of these servicesand support provided to the Foundation was approximately$156,000 and $222,000 in 2011 and 2010, respectively.The Foundation has approximately $30,000 in 2011 and $24,000in 2010 due to ASCAP for payroll related expense reimbursement.The Foundation receives royalty contributions throughASCAP from ASCAP members who have allocated a portionof their ASCAP royalties to the Foundation. This is done completelyand solely at the request of the ASCAP member or as abequest by the ASCAP member or their heirs to the Foundation.The Foundation recognized income based on cash received fromASCAP related to contributions of approximately $480,000 in2011 and $559,000 in 2010.8. SUBSEQUENT EVENTSSubsequent events were evaluated through May 7, 2012, the datethese consolidated financial statements were available to be issued.ANNUAL REPORT 17

ASCAP OFFICESwww.ascap.comNEW YORKASCAP HeadquartersOne Lincoln PlazaNew York, NY 10023(212) 621-6000Fax: (212) 724-9064LOS ANGELES7920 West Sunset Blvd.3rd FloorLos Angeles, CA 90046(323) 883-1000Fax: (323) 883-1049NASHVILLETwo Music Square WestNashville, TN 37203(615) 742-5000Fax: (615) 742-5020ATLANTA950 Joseph E. Lowery Blvd.Suite 23Atlanta, GA 30318(404) 685-8699Fax: (404) 685-8701LONDON8 Cork StreetLondon W1S3LJEngland011-44-207-439-0909Fax: 011-44-207-434-0073MIAMI420 Lincoln Rd, Suite 385Miami Beach, FL 33139(305) 673-3446Fax: (305) 673-2446PUERTO RICOAve. Martinez Nadalc/o Hill Side 623San Juan, PR 00920(787) 707-0782Fax: (787) 707-078318 ANNUAL REPORT