Donny, I'll take a shot at trying to answer your question:
First, some background stuff that probably you and most people know already:
When a writer writes a song, he/she automatically has a copyright in that song. He/she can register the song at the copyright office, but they don't have to. The main thing registering at the copyright office will do is allow you to get statutory damages/royalties etc.
Same deal with a sound recording copyright. Whoever records a song (regardless of whether they wrote it) automatically has a copyright in that recording. The recording artist can register at the copyright office or choose not to.
An artist can do anything they want with their copyright -- they can sell it outright, license it, sit on it, etc. etc. If the artist sells their copyright, then that artist is no longer entitled to any royalties from that song -- instead, the new owner of the copyright is the one who gets the royalties.
If the artist chooses to hold on to their copyright, they can either choose to enforce the copyright on their own, or they can hire an agent to do it for them. Most choose the latter. ASCAP and BMI are agents who enforce copyrights for owners.
I don't know what the fee structure is for the services such agents provide, but they make their money by charging the copyright owners a fee to enforce their copyrights.
Now to the questions:
1. first question: where does it go? The money collected in enforcement of a copyright goes to the copyright owner -- whoever that may be. It may be the original artist, or it may be some publishing company that bought the copyright. You really never know who owns what copyright unless you look it up at the copyright office.
2. second question: how do they decide who gets more? In a situation like the one you've outlined, the amount each copyright owner gets is stipulated by law in the applicable United States Code (I think it's title 17, but I can't remember). Alternatively, the law provides for copyright owners and those who want to use their music to negotiate and agree to whatever rates they want. But, in a case like this where somebody simply plays the music and the royalties are collected later, it's almost definitely done in accorance with the statutory rates.
3. third question: will any proceeds ever trickle down to the lesser-known writers? That depends on what the lesser-known writer did with his/her copyright. If that lesser-known writer happened to be starving or living on the street at the time they wrote that hit song, then most likely they've long since sold any interst they had in the copyright for some cold, hard cash -- in which case they don't get NUTTIN'!! Instead, the big, fat cat who bought the copyright is now rolling in dough because he was in the right place at the right time.
On the other hand, if that lesser-known writer held on to the copyright and hired some agent (like ASCAP) to enforce the copyright, then that lesser-known writer is getting just as much for his/her copyright as the fat cat is getting for his copyright under the statutory rates (all else being equal).
4. fourth question: how much do writers actually lose when a small band performs a song at a free concert? (Do they really lose anything at all, since it might instigate someone actually buying a CD containing that song in the future?) [I'm assuming that you're referring to cases in which the small band doesn't pay the royalty fee]
in my humble opinion, the answer is that the writer(assuming the writer is the copyright owner) doesn't really lose anything -- but the writer also doesn't make anything. The way I think most copyright owners and agents look at the situation is: if they don't enforce the copyrights at all, they won't make a red cent -- nuttin'!!!! But if they choose to enforce their copyrights, they do it equally across the board. In other words, they don't just go after the big time operators, they enforce the copyright equally without regard to any extraneous factors like whether it's a big town, a small town, a barber shop or whatever. This means that any public performance of the song, regardless of venue, location, by whom, etc. etc., is subject to the statutory fee or whatever fee they may have negotiated with someone.
Also, it's my opinion that if the small town or small band, or whomever, decides they don't want to perform a given song or songs because they don't want to pay the royalty fee will not have a noticable affect on how many CD's of the music is sold. Most likely, if the song is popular enough that the band or town considered playing it in the first place, the CD will sell regardless.
Maybe what you're asking is that if a little known song is played publicly, that may generate interest in the song which may result in CD sales. That's possible, but I think most copyright owners and agents don't look at it that way because things get too complicated -- like how do you decide when to enforce the copyright and when not to? And, how do you really figure out if such public performance really does result in increased CD sales?
I think the copyright owners and agents approach the situation with the mentality of "just enforce the copyright and don't worry about unknowns."
--edit-- regarding the question of whether this type of vigorous enforcement is new: I can't say for sure, but I don't think this type of thing is new. At least from what I've heard, this type of thing has been going on since the beginning.
Regarding the question of whether it's morally right or wrong to make someone pay for listening to music: I think the realy question is, "is it right to benefit from the use of someone elses property without paying for it?" I know this is all pretty much a grey area, but artists should be entitled to get paid for their work and creativity. This is what the copyright laws are for.
<FONT SIZE=1 COLOR="#8e236b"><p align=CENTER>[This message was edited by Tom Olson on 09 September 2003 at 08:05 PM.]</p></FONT>
