[Fmpro] 1:1 finer points

[Mark Northam]

> -----Original Message-----
> From: Pete [mailto:musical411 at yahoo.com]
> Sent: Wednesday, June 25, 2008 3:58 PM
> To: Mark Northam
> Subject: RE: [Fmpro] 1:1 finer points
> 
> When you go to the gas station, do you decide how much the guy pumping the
gas
> gets paid, how much the guy at the cash register gets, how much the gas
station
> owner gets, how much the oil company gets, how much the guy with the oil
well in
> Iraq gets? Do you care? No, you want gas, you pay for gas, you get gas.
The rest
> isn't up to you.
> 
> Pete

Hi Pete -

I don't believe your analogy is applicable since it doesn't reflect
competing suppliers, only one supplier and those up the supply chain from
him where the value of each person's work in the supply chain can be
independently valued based on the money paid to them. Economically, it's a
vertical situation (one supplier and those above him in his supply chain)
versus a horizontal situation (competing suppliers). 

At ASCAP, we have competing suppliers who are paid with no regard to the
price originally paid to them for their work (ie, Hans Zimmer is paid by
ASCAP the same rate for his one minute of music as Joe Composer). No
independent valuation is allowed or attempted, only decrees by a board who
meets in secret and never justifies their financial valuation with
independent facts and figures, only decrees. And all the while hiding from
those it represents (ASCAP members) the actual terms and dollar amounts of
the deals made on their behalf with those paying for the services, and the
amount of money it decides, in secret, to remove from the deal. Similarly,
it hides from those it represents the original amounts of money paid from
foreign PROs to its members, instead listing on statements only the amount
AFTER any deductions, and prohibits members from confirming the original
amount paid to ASCAP on their behalf by cutting off communications with all
foreign PROs for members who are represented by ASCAP, resulting in a
completely non-transparent transaction. Any first year accounting student
can spot the red flags for potential abuse in that particular arrangement.
There is no possible legitimate reason for this much obscuring and hiding of
financial data, in my opinion, and the potentials for abuse are massive as a
result of all the obscuring and non-transparency.

Perhaps a better analogy might be this, since you've brought up the
automotive world: Three guys who are car washers get together and hire a
sales guy to go deal with the customers who need their car washed. They do
this because they want to leverage their collective marketshare and the
value of their work, and they'd rather spend time working and washing cars
rather than negotiating with customers. All three washer guys work the same
amount washing a car, but one washer guy who the sales guy has decided has
more "value" is given a lot more money for the same amount of work than the
other two washer guys. This, even though they did the same amount of work.
Furthermore, the sales guy they hired now refuses to tell the washer guys
how much he actually received for the deal, and only tells the washer guys
what he has decided to pay the different washer guys. And to top it all off,
the sales guy deducts an undisclosed sum from the proceeds of the deal for
his own use.

Just like ASCAP, the middleman is using his position in the deal to both
obscure from those who hired him the actual details of the deals, while
assigning whatever value he wants to to the different washer guys' work and
deducting an unknown amount of money from the deal for his own use. No
appeal is possible, and in this example world there are only 3 washer sales
guys (like we have 3 PROs) who occupy 100% of the market with a huge cost of
entry for any new sales guys.

Does the customer care? Nope, as long as the car is being washed
satisfactorily. But that doesn't mean the system of distribution to those
who actually did the work is fair, just or appropriate. 

Best,

Mark Northam