[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
ENSURING ARTISTS FAIR COMPENSATION: UPDATING THE PERFORMANCE RIGHT AND 
                  PLATFORM PARITY FOR THE 21ST CENTURY

=======================================================================


                                HEARING

                               BEFORE THE

                 SUBCOMMITTEE ON COURTS, THE INTERNET,
                       AND INTELLECTUAL PROPERTY

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 31, 2007

                               __________

                           Serial No. 110-49

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov



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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. SCOTT, Virginia            HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
MAXINE WATERS, California            DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
ROBERT WEXLER, Florida               RIC KELLER, Florida
LINDA T. SANCHEZ, California         DARRELL ISSA, California
STEVE COHEN, Tennessee               MIKE PENCE, Indiana
HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio                   STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
BRAD SHERMAN, California             TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota

            Perry Apelbaum, Staff Director and Chief Counsel
                 Joseph Gibson, Minority Chief Counsel
                                 ------                                

    Subcommittee on Courts, the Internet, and Intellectual Property

                 HOWARD L. BERMAN, California, Chairman

JOHN CONYERS, Jr., Michigan          HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia               TOM FEENEY, Florida
ROBERT WEXLER, Florida               LAMAR SMITH, Texas
MELVIN L. WATT, North Carolina       F. JAMES SENSENBRENNER, Jr., 
SHEILA JACKSON LEE, Texas            Wisconsin
STEVE COHEN, Tennessee               ELTON GALLEGLY, California
HANK JOHNSON, Georgia                BOB GOODLATTE, Virginia
BRAD SHERMAN, California             STEVE CHABOT, Ohio
ANTHONY D. WEINER, New York          CHRIS CANNON, Utah
ADAM B. SCHIFF, California           RIC KELLER, Florida
ZOE LOFGREN, California              DARRELL ISSA, California
BETTY SUTTON, Ohio                   MIKE PENCE, Indiana


                     Shanna Winters, Chief Counsel

                    Blaine Merritt, Minority Counsel


                            C O N T E N T S

                              ----------                              

                             JULY 31, 2007

                                                                   Page

                           OPENING STATEMENT

The Honorable Howard L. Berman, a Representative in Congress from 
  the State of California, and Chairman, Subcommittee on Courts, 
  the Internet, and Intellectual Property........................     1
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, Chairman, Committee on the 
  Judiciary, and Member, Subcommittee on Courts, the Internet, 
  and Intellectual Property......................................     3
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     4
The Honorable Howard Coble, a Representative in Congress from the 
  State of North Carolina, and Ranking Member, Subcommittee on 
  Courts, the Internet, and Intellectual Property................     5
The Honorable Darrell Issa, a Representative in Congress from the 
  State of California, and Member, Subcommittee on Courts, the 
  Internet, and Intellectual Property............................     7
The Honorable Steve Cohen, a Representative in Congress from the 
  State of Tennessee, and Member, Subcommittee on Courts, the 
  Internet, and Intellectual Property............................     8
The Honorable Zoe Lofgren, a Representative in Congress from the 
  State of California, and Member, Subcommittee on Courts, the 
  Internet, and Intellectual Property............................     9
The Honorable Adam B. Schiff, a Representative in Congress from 
  the State of California, and Member, Subcommittee on Courts, 
  the Internet, and Intellectual Property........................    10

                               WITNESSES

The Honorable Paul Hodes, a Representative in Congress from the 
  State of New Hampshire
  Oral Testimony.................................................    11
  Prepared Statement.............................................    13
Ms. Marybeth Peters, Register of Copyrights, U.S. Copyright 
  Office, Washington, DC
  Oral Testimony.................................................    13
  Prepared Statement.............................................    16
Ms. Judy Collins, Recording Artist
  Oral Testimony.................................................    31
  Prepared Statement.............................................    34
Mr. Charles M. Warfield, Jr., President and Chief Operating 
  Officer, ICBC Broadcast Holding, Inc., New York, NY
  Oral Testimony.................................................    39
  Prepared Statement.............................................    41
Mr. Sam Moore, Recording Artist
  Oral Testimony.................................................    91
  Prepared Statement.............................................    93

ENSURING ARTISTS FAIR COMPENSATION: UPDATING THE PERFORMANCE RIGHT AND 
                  PLATFORM PARITY FOR THE 21ST CENTURY

                              ----------                              


                         TUESDAY, JULY 31, 2007

              House of Representatives,    
      Subcommittee on Courts, the Internet,
                         and Intellectual Property,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:08 a.m., in 
Room 2141, Rayburn House Office Building, the Honorable Howard 
Berman (Chairman of the Subcommittee) presiding.
    Present: Representatives Berman, Conyers, Watt, Jackson 
Lee, Cohen, Johnson, Schiff, Lofgren, Coble, Feeney, Smith, 
Goodlatte, Cannon, Chabot, Keller, Issa, and Pence.
    Mr. Berman. The hearing of the Subcommittee on Courts, the 
Internet, and Intellectual Property will come to order.
    And I would like to begin by welcoming everyone to this 
hearing, which is entitled, ``Ensuring Artists Fair 
Compensation: Updating the Performance Right and Platform 
Parity for the 21st Century.''
    I would like to welcome our distinguished panel of 
witnesses who each have a personal story and a unique 
perspective about the performance rights issue. In addition, I 
would like to welcome back Marybeth Peters, who remains a 
tremendously valuable resource to this Subcommittee.
    I have wanted to hold this hearing for a very long time, 
not only because of my constituents, but because as a policy 
matter it is time for Congress to re-evaluate the limitations 
of the current performance right for sound recordings.
    I have supported the expansion of the performance right for 
over 20 years, with two caveats. One is that, by extending this 
right, it does not diminish the rights and revenues of the 
creators of musical works. And secondly, that terrestrial 
broadcasters large and small remain a viable source of music.
    Over time, the Copyright Act has provided protection for 
various types of works in a piecemeal fashion. As early as 
1909, Congress recognized the right in the musical composition. 
Over 70 years later, Congress provided limited protection for 
sound recordings.
    The copyright system is complex for it applies to multiple 
types of works, each entitled to multiple but separate rights. 
Moreover, each work can be utilized on multiple platforms, each 
of which has a different set of rules.
    Some rights are exclusive and provide the copyright owner 
the ability to negotiate freely in the marketplace. Some are 
constrained by a compulsory license, which entitles users to 
access the work without permission, providing that they pay the 
set rates and adhere to specific conditions. Some rights are 
even further limited by providing users an exemption from 
getting permission or providing payment for use of the work. 
This is the last category which is most troublesome from the 
perspective of a copyright holder.
    If Congress were writing the statute from scratch, it would 
probably not look the way it does. As time passes, it is 
incumbent on Congress to re-evaluate the various provisions of 
the licensing structure to see how markets or businesses have 
changed, and whether it is time to reform the law.
    Currently, section 114 provides a compulsory license to 
publicly perform a sound recording where there is a digital 
audio transmission. Terrestrial broadcasters, however, aren't 
required to pay a royalty for their transmissions. They enjoy 
an exemption from the digital performance right.
    Historically, the broadcasters have argued that the 
exemption is appropriate because of the symbiotic relationship 
that exists between the over-the-air airplay on radio and the 
promotion of the music leading to future sales. To a certain 
extent, the existence of payola was evidence of this idea.
    Furthermore, the broadcasters suggest that to incur a 
further requirement of compensation for sound recordings to 
artists and musicians, that is tantamount to a performance tax.
    Finally, there is concern as to how smaller broadcasters 
will survive if required to pay it.
    I am sure we will hear cogent arguments from our witnesses 
today about the history of the exemption for broadcasters and 
the effect of providing a performance right. However, I would 
like to initially engage on a number of these arguments and the 
primary question: Is there justification today for this 
exemption given the number of outlets for music and how 
consumers acquire it?
    First, Rights parity: Regardless of whether there remains a 
symbiotic relationship and whether, in fact, airplay 
constitutes promotion or substitution, there is an equity 
argument that has been consistently ignored. Performers and 
musicians as creators should be entitled to control use and at 
least receive revenue for their works. That Patsy Cline's 
estate is not compensated for the over-the-air performance of 
her rendition of ``Crazy'' seems crazy.
    In addition, my notion is that removal of a Government 
compulsion for labels, artists, and musicians to provide 
something for free--that repeal to the exemption removal--
removal of that compulsion is not a tax. In fact, if anything, 
the Government's provision of free spectrum to radio stations 
is a tax to benefit broadcasters imposed on U.S. taxpayers, who 
pay for it.
    Platform parity: Nowhere in the past has there been more 
engaging technological platforms which offer music to consumers 
at almost any time in any format. Especially with the rollout 
of high-definition radio, which will provide more choice, as it 
becomes harder to justify an exemption for any one platform. 
Satellite, Internet and cable all provide and promote music to 
their listeners, yet all pay fair compensation to artists and 
musicians.
    Then there is international parity. Because America does 
not have an adequate performance right, we disadvantage our own 
creators because they can't receive foreign royalties. In many 
countries, between 20 and 50 percent of the music played abroad 
is American made. And because of lack of reciprocity, we are 
denying our creators millions of dollars in revenue.
    As we work toward crafting a bill, I take note of at least 
two considerations.
    One is that we need to ensure that songwriters are not 
adversely affected by the elimination of the broadcast 
exemption. I would note, however, in countries where there is a 
performance right for sound recordings, as well as a 
performance right for musical compositions, there has been no 
decrease in the royalties to owners of musical composition. In 
fact, the royalties have grown over time, as have royalties for 
performers and sound recording owners.
    Furthermore, I am open to a special consideration for small 
broadcasters.
    Just one last note. Because I have heard from business 
establishments and others, let me start out today's hearing by 
saying that this Subcommittee's examination of the performance 
right is limited to re-evaluating the current exemption and the 
compulsory license for terrestrial broadcast radio. We are not 
considering the extension of a full performance right for sound 
recordings like the one afforded musical works.
    Thus, restaurants, bars, establishments, venues and others 
who pay performance royalties to songwriters and music 
publishers would not be affected. Rather, because there is a 
special exemption in the current compulsory license for radio 
services that benefits only terrestrial radio over other types 
of radio, the question is whether circumstances have changed so 
that it is now time to reconsider that particular exemption.
    I now have the great pleasure of introducing my friend and 
Ranking Member. But before I do that, I am going to introduce, 
if he doesn't mind, because the Chairman of the Committee has 
to go to the floor, our distinguished Chair. All right, what we 
are doing is we are going to recognize the Chair, and then the 
Ranking Member of the full Committee and then the Ranking 
Member of the Subcommittee.
    If I had known this before I started talking, I might have 
done it before I went ahead.
    But, Mr. Conyers, you are recognized. [Laughter.]
    Chairman Conyers. Thank you, my good friend.
    I am delighted to have heard you because now that we have 
heard everything on the subject, we can just welcome our 
witnesses. And that is all I want to do today.
    And I have to stay here from the floor, we have a lobbying 
bill up. We have been working on this package. And my good 
friend Howard Coble and I are both due on the floor. Lamar 
Smith is due on the floor, as well.
    All I wanted to do is say hello to Sam Moore. And let him 
know that I will be seeing Aretha Franklin in Detroit when the 
session ends, and I will be giving her your good regards.
    And, Judy Collins, one of our favorite artists, we are so 
happy to see you today, my dear.
    It is great for you all to be here.
    Let me just say that it is very important that we realize 
how unfair the system is to artists and other music platforms 
as artists, under the current law. They are not compensated 
when their songs are played on broadcast radio. And, you know, 
that is my big thing to examine here today.
    Satellite pays. The Internet pays. Broadcast still hasn't 
come around.
    Now, there was a time when just being played on the radio 
would do it. That would make you. But those days, as everybody 
here knows, are not the same anymore.
    We have so many different venues. And it is in this sense 
that songwriters who receive compensation regardless of which 
platform performs their songs, artists are only paid when their 
songs are played over the Internet, on satellite radio, or 
cable.
    I just want to conclude--and I will put in the record my 
remarks--is that I think we can work out some kind of 
compensation package, Chairman Berman, without harming the 
songwriters. And they have had to come through a long period of 
time for them to be compensated.
    So, over the years, it has been debated whether Congress 
should amend current law to eliminate the specific exemption 
for broadcasters from the duty of paying the performance 
royalty. And we should all be mindful of the potential impact 
this right would have on songwriters who currently are paid 
every time their songs are played on radio.
    And so, I am going to review this testimony carefully.
    I am so glad that all of you are here today. It is great to 
see all those who have worked so hard.
    And as I look all over the audience, I see a lot of people 
connected to this entertainment industry here today, not 
excluding people who have worked on the Hill for so many years. 
[Laughter.]
    And so, maybe there is a connection between what I am going 
to do on the floor and what is going on here. Who knows? 
[Laughter.]
    Thank you for this opportunity, Mr. Chairman.
    Mr. Berman. If, when you come back, half the audience is 
gone, we will know you---- [Laughter.]
    I am now pleased to recognize the Ranking Member of the 
full Committee, who also has to go to the floor on the same 
piece of legislation. The gentleman from Texas, our Ranking 
Member, Lamar Smith?
    Mr. Smith. Thank you, Mr. Chairman.
    I also want to thank Mr. Coble for deferring to me and 
yielding me the time to go ahead of him in making an opening 
statement.
    And, has already been mentioned, let me apologize to our 
witnesses today that, unfortunately, I do need to go to the 
floor, along with the Chairman, to manage a certain lobbying 
reform bill. So I will not be able to stay as I would like to.
    Clearly, though, it is obvious that there is a lot of 
interest in the subject today and deservedly so.
    Mr. Chairman, thank you for convening today's oversight 
hearing on music licensing and the proposal to expand the 
performance royalty to cover over-the-air radio broadcast of 
sound recordings.
    With the Subcommittee's high-profile emphasis on advancing 
patent reform in this Congress, a casual observer could easily 
presume that copyright issues in general, and music issues in 
particular, have not received much attention so far. That 
conclusion would be wrong.
    This oversight hearing marks the third copyright-focused 
hearing in the IP Subcommittee this year to focus on the 
protection and promotion of the music industry and the rights 
of recording artists and composers.
    Mr. Chairman, you and I have spent a great deal of time, 
both personal time and public time, over the past several 
Congresses working together in a bipartisan effort to 
streamline, modernize and improve the music licensing process, 
with the shared goal of adapting the compulsory license process 
to the digital age. Over this time, we have made tremendous 
progress in identifying and narrowing many of the process-
related issues.
    But the goal of enacting a public law and actually 
implementing some of our agreed reforms remains. I continue to 
believe this task can be achieved in this Congress.
    Unlike our effort to reform the process for clearing the 
legal rights to use copyrighted musical works and sound 
recordings and adjudicating the royalties to be paid to 
recording artists and copyright owners, the subject of today's 
hearing is one that affects the substantive rights of these 
parties, as well as the settled expectations of those in the 
traditional radio broadcasting industry.
    The goal of enacting a full statutory performance right for 
sound recordings is one that has been sought by performing 
artists and the recording industry for many years. It has only 
been 12 years since Congress first provided a limited public 
performance right in sound recordings with the enactment of the 
Digital Performance Right in Sound Recordings Act, a law that 
made available a compulsory license for sound recordings to 
non-interactive cable and satellite services.
    But in that span of a dozen years, recording artists, along 
with the music and broadcasting industries, have confronted 
many unanticipated challenges and experienced seismic changes.
    Competition and technological advances have generated both 
positive and negative aspects for all. The transition to high-
definition radio holds great promise for broadcasters. In 
contrast, the trend among young consumers to download the music 
they want--sometimes legally, but all too often illegally--
rather than purchase CDs or other physical media, holds great 
peril for recording artists and record labels.
    I consider this subject to be one whose significance should 
not be underestimated, and I hope we will address it this year.
    Mr. Chairman, I will yield back the balance of my time.
    Mr. Berman. Thank you very much, Mr. Smith.
    And now, the Ranking Member of the Subcommittee, who, when 
he was Chairman, we were delving into this issue as well, Mr. 
Howard Coble of North Carolina.
    Mr. Coble. Thank you, Mr. Chairman.
    And I want to repeat what the others have said. It is good 
to have this distinguished panel before us.
    And I would be remiss if I did not recognize, especially, 
our distinguished Register. Good to have you back, Marybeth.
    Mr. Chairman, the stated purpose of today's hearing is to 
begin an examination of concerns that relate to proposals to 
remove the exemption for terrestrial radio broadcast in the 
copyright compulsory license for public performances. What that 
means in layman's terms is the Subcommittee intends to consider 
whether the copyright law should be amended to require over-
the-air broadcasters to pay compensation directly to recording 
artists when their songs are played over the radio.
    If the testimony of the two recording artists who are with 
us today represents the views of other musicians and 
performers, then it seems there is a fairly strong consensus in 
that community that the law should be so amended.
    Indeed, the Copyright Office and the record labels also 
share that perspective, asserting that a principled and 
consistent application of the copyright law requires that audio 
transmissions of sound recordings ought to benefit from the 
same performance right that has been extended to music 
publishers and composers for nearly a century.
    It is not surprising that the broadcasters who would be 
statutorily obliged to pay such a royalty, and who are 
represented by the National Association of Broadcasters, 
considers such an amendment to be an anathema. Their view is 
that Congress should leave well enough alone; that is, unless 
the Congress wishes to amend the compulsory copyright license 
to enable broadcasters to stream their signals over the 
Internet without paying a performance royalty to performers, or 
to lighten the regulatory and reporting requirements required 
when a broadcaster chooses to simulcast its signals over the 
Web.
    Proponents, Mr. Chairman, appear to rely upon three main 
arguments in asserting that the over-the-air broadcast 
exemption should be jettisoned.
    One, the exemption was never justified as a matter of 
copyright law, but today serves as an anachronism and a glaring 
inequity.
    Two, the copyright law requires cable, satellite and 
Internet radio services to pay performance royalties to both 
composers and recording artists. Therefore, nondiscrimination 
and platform parity demand that traditional radio broadcasters 
should also pay a proportionate share.
    And finally, the United States is alone among free market 
economic powers in denying a performance right in terrestrial 
radio broadcasts to artists and performers.
    Among other things, the broadcasters conversely respond 
they already pay $450 million a year in performance royalties 
to composers and music publishers.
    They contend over-the-air radio has a symbiotic 
relationship with recording artists who benefit from free 
promotional airplay, which in turn, spurs demand for product 
sales, touring promotions and souvenir revenue.
    Traditional radio formats, which do not include multi-
channel offerings of various music formats, do not pose a 
serious threat to the distribution of sound recordings, they 
contend.
    Broadcasters are subject to numerous Commerce Committee and 
FCC-imposed statutory and regulatory obligations that justify 
exemption from the ordinary application of the copyright law.
    And finally, the United States recording and broadcasting 
industries are unique, and policies implemented elsewhere are 
not appropriate for United States conditions.
    Believe it or not, this summary barely touches the surface 
of the strongly held views that will soon be articulated by the 
parties involved in this debate.
    As the Subcommittee embarks on this examination, Mr. 
Chairman, I am mindful of other interests not directly 
represented here today. For instance, the public benefits 
enormously when Congress exercises, in an appropriate manner, 
the authority granted in article I, section 8 of the 
Constitution, which calls upon us to promote creativity and 
expression by securing for limited times to authors the 
exclusive right to their writings.
    In addition, I think it is important to bear in mind the 
interests of other copyright owners, which should not be 
diminished by any prospective changes in the law.
    Mr. Chairman, in closing, I will simply note that I look 
forward to learning more about the intricacies of this debate, 
and by observing that I have friends on both sides of this 
issue. All of you I embrace very warmly.
    I recall, Mr. Chairman, I think one of the first hearings I 
attended as a freshman Member of Congress, I heard a Member in 
this very hearing room conclude his remarks with these words. 
He said: I have friends on both issues of this subject, and I 
want to make it perfectly clear I am with my friends. 
[Laughter.]
    If it were only that easy, Mr. Chairman. I hope, at the 
day's end, that no one will feel rejected, that all will feel 
embraced, and that we can get something with which everyone can 
live.
    And, finally, Mr. Chairman, I have a Coast Guard hearing 
that I may have to attend, with your permission, later on. And 
I don't want my abrupt departure to be indicating that I am not 
interested in this very, very important issue.
    And I yield back, Mr. Chairman.
    Mr. Berman. Well, thank you very much.
    Hopefully, you will get to the panel as soon as possible, 
but given that I don't really have clean hands, having spent at 
least 7 or so minutes with an opening statement, are there any 
other Members who want to make comments at this time?
    Mr. Issa?
    Mr. Issa. Mr. Chairman, there wouldn't be any possibility, 
any possibility that it wouldn't be appropriate to make just a 
few comments here today, because I think what you are doing 
here is so monumental.
    In my 7 years in Congress, this is the first time that, in 
a no-ifs-ands-or-buts way, it has been made clear that the 
status quo will no longer be acceptable. Although this is a 
hearing and not a markup, I think we all understand here today 
that the broadcasters are on notice that we intend to look at a 
reorganization of this.
    I certainly hope that we have additional follow-up 
hearings. I certainly would like to see a panel that was all 
made up of broadcasters and broadcaster-related people, giving 
us sort of their view, in addition to what we are going to hear 
today, of how they are going to deal in a more balanced way.
    Certainly, as Mr. Coble said, it is very clear that finding 
a common platform where broadcast and simulcast can be dealt 
with fairly should be on the table.
    I believe that, in fact, the broadcasters should embrace 
this as an opportunity to create transparency between what they 
presently do on a terrestrial basis and the other ventures that 
these companies are now expanding into.
    I think the fact that high-definition and digital is about 
to go to high-power, high-definition digital, it is very clear 
that we are going to need to make this move in a timely 
fashion, because what has been coming out in the satellite 
industry for a number of years is clearly going to be coming 
out of our radios in our cars as we drive.
    Additionally, digital recording devices are going to be 
undoubtedly made by the consumer electronics industry to record 
on-air broadcasts as it has never been recorded before: in 
digital format, in a sound quality that very much will be, for 
most people's ears, the equivalent of CDs.
    I certainly also think that we in Congress have long ago 
lost our clean hands on the concept that broadcasters are 
promoting.
    It is very clear that perhaps Judy Collins or Sam Moore, a 
few years ago, in the earlier part of your careers, might well 
have signed away for 3, 5 or 10 years the rights to receive any 
royalties from their performance, in return for a guarantee 
that they would be promoted when their songs were not so--or 
their music--was not so well-regarded.
    It is also clear that artists who are deceased--their 
estates today cannot say we are going to perform. We are not 
going to go on the road.
    Actually, Mr. Moore was here previously talking about when 
you are no longer on the road but somebody else is saying they 
are you. And we have already dealt with some of those.
    It is very, very clear, though, that we need to create a 
recognition that the performing artist has a right. The 
broadcaster must show any offset to that right.
    That is why, not only am I thrilled that you are holding 
this hearing today, but I am encouraging that we thoughtfully 
go through listening to all parties, because I think the change 
we make is a change that we make for the rest of the world who 
today provide a revenue stream for performing artists, while we 
don't. If we are going to make a change, let us make a change 
we are all proud of.
    And with that, I yield back.
    Mr. Berman. I thank the gentleman.
    And the gentleman from Tennessee.
    Mr. Cohen. Thank you. Thank you very much, Mr. Chairman.
    ``The gentleman from Tennessee.'' I feel like Johnny Cash 
or something like that. [Laughter.]
    But I just wanted to----
    Mr. Berman. Another guy with a predisposition, huh? 
[Laughter.]
    Mr. Cohen. Well, I just wanted to testify what your voices 
have meant to me.
    What, I guess, the system is now, if you are the 
songwriter, which is a great talent--composer--you get paid, 
but if you sing and perform, you don't.
    And our performers we have out here--Ms. Collins, I have 
listened to a lot of your music over the years, and it has 
meant a lot to me. The writers were brilliant, but without your 
voice, I wouldn't have been listening to it.
    And the idea that you are getting promoted, and that they 
are doing you some favor as a by-product, I mean, it should be 
B-U-Y product.
    With that logic, they would never pay Muhammad Ali--or 
wouldn't have paid him--to show his fights, because they were 
promoting him so more people would want to go out to the 
stadium to see him fight or whatever. And they could just show 
it for free on free TV. ``Oh, we are promoting you.''
    And the same thing for baseball and football and 
basketball: We shouldn't have to pay for showing the Lakers and 
Kobe. We are giving everybody the chance to see Kobe, and then 
they will go to the arena and see Kobe.
    That is absurd. And they have just kind of gotten a free 
ride over the years.
    As great as all the songwriters were, if it weren't for 
Frank Sinatra, people would not have listened to those songs. 
And Frank Sinatra should have been compensated as the 
performers are, just like the songwriters.
    So, as the gentleman from Tennessee--and from Memphis, in 
particular--I am here with the performers and the songwriters 
and artistic artists being paid for what they do to make our 
lives better. And I thank each of you.
    Mr. Berman. I thank the gentleman.
    And now the gentlelady from California is recognized.
    Ms. Lofgren. Thank you, Mr. Chairman. I will be very brief.
    I think this is a very useful hearing, and I thank the 
Chairman for scheduling it. I think the concept of how we level 
the playing field in the marketplace is important, as well as 
the need to make sure that artists get compensated.
    And so I am thrilled that we have two artists who I greatly 
admire that we can listen to. I know that we will not touch on 
it today, but as we look at this issue of equity among the 
platforms, I think we need to look at not just who gets paid, 
but how much.
    We know that in the Internet radio environment right now--
and the Chairman, I know, is well-aware of this--there are 
small Internet radios that are going to be charged 300 percent 
of their revenue. That is not going to work for them. I mean, 
they are niche stations--Beethoven all the time, and the like--
so at some point, as we look at making sure artists get paid as 
they should, we need to figure out how we have equity across 
all platforms in all ways. And I look forward to being a part 
of that debate.
    And I thank the Chairman for his leadership on this issue 
and for this hearing today. And I yield back.
    Mr. Berman. I thank the gentlelady.
    And Mr. Schiff from California?
    Mr. Schiff. Thank you, Mr. Chairman. I am going to be very 
brief, as well.
    It is an honor to have you with us here today. And, as you 
can tell, we are all fans, and we are just delighted to be in 
your presence.
    I appreciate the Chairman calling this Committee hearing 
and, not only on this fairly specific issue, but on the broader 
issue of reform in this area.
    This is one of those areas of law, I think, of which there 
are many in national security and a whole variety of other 
issues where if we were starting today drafting the rules of 
the road, we would never draft a system that looked anything 
like this. But we are where we are, and we have to try to 
either improve it or junk it.
    And I just appreciate our Chairman's tenacity in this 
wildly complex area.
    And it is nice, actually, today to have a very discrete, 
very manageable, very understandable issue. And I am very much 
looking forward to hearing your testimony.
    Thank you, Mr. Chairman.
    Mr. Berman. Thank you.
    And now we will go to the panel unless--we will do that.
    Our first witness, our only colleague who sought to testify 
and someone who based on his unique background belongs at the 
panel table, is Congressman Paul Hodes, who represents New 
Hampshire's 2nd Congressional District. He is president of the 
freshman congressional class of 2006.
    Prior to entering Congress, Congressman Hodes was a partner 
at Shaheen & Gordon. He is well-known for his musical talents 
on the guitar. He and his wife, Peggo Hodes, have recorded 
several albums together that have received critical acclaim 
from the Parents' Choice Awards. The duo were invited to 
perform at the White House in 1996, and they continue to 
perform at many charity fundraising events, not to mention our 
caucus.
    Good to have you here, Paul.
    Marybeth Peters--she has been referenced before. She is the 
United States register of copyrights, and with almost 40 years 
of experience at the U.S. Copyright Office, she is one of the 
nation's leading experts on copyright law. A graduate of George 
Washington University's School of Law, Ms. Peters has lectured 
on copyright law at Catholic University's Columbus School of 
Law, as well as Georgetown University Law Center. She has 
received numerous awards recognizing her distinguished career, 
and also served as a consultant on copyright law to the World 
Intellectual Property Organization in Geneva, Switzerland.
    Like many of my colleagues, I am a great fan of our next 
witness. Judy Collins has inspired millions across the globe 
with her music. Her rendition of ``Send in the Clowns'' won the 
Grammy Award for song of the year, and her version of ``Both 
Sides Now'' is part of the Grammy's Hall of Fame. Judy Collins 
continues to enthrall audiences with her voice, her passion, 
and her grace.
    Charles Warfield Jr.: president and chief operating officer 
of ICBC Broadcast. He oversees nearly 20 radio stations. Mr. 
Warfield's career in the broadcasting industry spans over 30 
years, including serving as vice president and general manager 
of WRKS-FM New York, which was named the most listened to radio 
station in America. In addition to his work in broadcasting, 
Mr. Warfield is active with the American Red Cross, the United 
Negro College Fund, and a Partnership for a Drug-Free Greater 
New York, among other organizations.
    Mr. Warfield, it is good to have you here today.
    And, finally, Sam Moore, who has been called the greatest 
living soul singer and is perhaps best known for his 
performance of ``Soul Man'' and ``Hold On I'm Comin''' as part 
of the soul and R&B duo Sam and Dave. Most recently, in 2006, 
Sam Moore released the critically acclaimed solo album entitled 
``Overnight Sensational,'' which received a Grammy nomination 
for the song, ``You Are So Beautiful.'' His music continues to 
thrill audiences worldwide, and he has been an inspiration to a 
generation of artists.
    All of your written statements will be made part of the 
record. I would ask you to summarize your testimony in 5 
minutes or less.
    There will be a timing light at your table, and when 1 
minute remains, that light will switch from green to yellow and 
then red when the 5 minutes are up. And we would appreciate you 
summing up at that point. And then we will have time to talk to 
you further through questions and dialogue.
    We welcome you all.
    And, Congressman Hodes, why don't you begin?

  TESTIMONY OF THE HONORABLE PAUL HODES, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF NEW HAMPSHIRE

    Mr. Hodes. Thank you, Mr. Chairman and Ranking Member 
Coble, Members of the Subcommittee. I really appreciate the 
opportunity to testify at this hearing on updating the 
performance right and platform parity in the 21st century. I am 
honored beyond description to be on a panel with the 
distinguished artists who are sitting with me, as well as the 
members of the industry and the register of copyrights for the 
United States.
    You know, I was taught as a musician that it all begins 
with the song. And I have written numbers of songs, which I 
have published at a small publishing company. I am a member of 
ASCAP. And I have also performed other people's songs and 
recorded other people's songs.
    And what we are really dealing here today with is something 
very fundamental. While it all begins with the song, the song 
does not come alive without the performance. Without the 
performance on a recording of a song, that song might as well 
be dust. It might as well sit on a piece of paper in terms of 
listening to that song.
    Mr. Coble talked about the argument that the exemption is 
an anachronism. And I think about the way the music business 
has changed just in my lifetime.
    I first recorded in the mid-1980's in a studio--I was lucky 
enough to go into a great studio--and when I was done with that 
recording, it came out on a big, round record. It was vinyl.
    There was no Internet radio. There was no satellite. There 
was no cable. And I was desperate to try to get some radio play 
for that vinyl record.
    And over the years, there has been a revolution in the way 
we record and distribute music.
    Today, by contrast, I have a studio in my home with digital 
equipment. It goes out over the Internet. It is transmitted 
digitally by cable, by satellite.
    I am pleased to say that I got a check the other day from 
SoundExchange for $19.58. [Laughter.]
    I am a member of the American Federation of Musicians. I am 
proud to be part of that union.
    I belong to the National Music Publishers Association.
    I am a former member of the New Hampshire State Council on 
the Arts. As a councilor, I have been chairman of an art 
center, former minority shareholder in a small radio station.
    And I have really pursued music out of love, more than out 
of money.
    So in some sense, given that my wife and I have recorded 
six records, I have produced numbers of others, I think I speak 
for many of the thousands of small, independent businesses. 
Because that is what musicians are: they are small businesses 
who are looking for fairness and justice, and looking for ways 
to make a living through many, many different streams of 
income. Many, because, like all small businesses, they are 
struggling with all the issues that affect us today. They are 
on tight budgets. They have to manage their income carefully.
    I have now come to Congress, and I serve on the Oversight 
and Government Reform Committee. And I have been pleased to 
have the opportunity to investigate numerous areas of Federal 
policy that need changing.
    This area of Federal policy is one that has needed change 
for a very, very long time. I believe that what we are talking 
about today is rectifying a situation which has needed 
correction for more years than I have been alive.
    It is time for terrestrial radio to pay a performance right 
to performing musicians whose indispensable contribution to 
bringing the music alive needs to be recognized.
    I have worked as an entertainment lawyer, and I will just 
end with one story.
    I represented a great artist, an African-American who was 
born in Louisiana, who at a young age was taken by a manager to 
Florida to record a record. And when I asked him what his deal 
was--because it was somebody else's song that rose very high in 
the charts at a time when there was only radio, no Internet, no 
satellite, no cable--there was only radio--I asked him what his 
deal was. And he said, ``I don't remember.'' I said, ``Well, 
was there a contract?'' He said, ``Not that I know about.'' And 
I said, ``Have you ever seen any money from that fabulous song 
which charted really well?'' He said, ``Well, they paid me $50 
and gave me a bottle of scotch.'' [Laughter.]
    And I went and I tried to track down the deal and the 
contract. And we reached lots of dead ends.
    He had a tough life and now lives in New Hampshire and is 
making a good life for himself. On his behalf, I am here to say 
it is time to correct the injustice that was done to him for 
many years, when his life should have been easier, for a fair 
and balanced performance royalty, because his song was played a 
lot on the radio.
    So, on his behalf, I say it is time for fairness and 
justice. And I thank you for the opportunity to testify here 
today.
    [The prepared statement of Mr. Hodes follows:]
  Prepared Statement of the Honorable Paul Hodes, a Representative in 
                Congress from the State of New Hampshire
    Mr. Chairman and Members of the Subcommittee, thank you for 
inviting me to testify today at this hearing on Updating the 
Performance Right and Platform Parity in the 21st Century. I look 
forward to sharing my experience as an entertainment lawyer, proprietor 
of a small independent record label, a performer, producer, songwriter, 
publisher, member of the American Federation of Musicians, National 
Music Publishers Association, and American Society of Composer, Authors 
and Publishers, and former member of the New Hampshire State Council on 
the Arts.
    Most recording artists are much like the other small business 
owners that drive our nation's economy. They have tight budgets and 
have to manage their income carefully to stay afloat. Unlike almost any 
other profession, artists must take advantage of every source of income 
available in order to stay in business. In addition to selling albums 
and performing at live concerts, this means collecting royalty payments 
when their songs are played on internet, cable, and satellite radio, 
and directed by current law. Because they don't receive any royalty 
payment when their songs are played on air radio, these small 
businessmen and women are missing out on a large source of capital that 
they deserve.
    In my first term in Congress and as a Member of the House Committee 
of Oversight and Government Reform, I have had the opportunity to 
investigate a wide variety of sectors of federal policy that are 
outdated and in need of reform. I believe this sector is an area that 
needs new policy to meet the changing way people listen to music. In 
the last 15 years new platforms have emerged that helped small scale 
and independent artists reach new audiences in ways that were never 
before imagined. As these new formats grew, royalty rates were set that 
compensated the artists for the hard work and creativity they put into 
their work. However, terrestrial radio, a format which nearly half of 
all listeners still choose for their music, still pays no royalty to 
musicians.
    Not only does this market structure give an unfair advantage to AM 
and FM radio over their competitors, it also discourages aspiring 
musicians from contributing to the creative economy that is a vital 
part of our society. Royalty payments are an issue of fairness for 
thousands of American performers. I look forward to discussing these 
issues with the members of the Subcommittee today.

    Mr. Berman. Thank you very much, Paul.
    Ms. Peters?

  TESTIMONY OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, U.S. 
                COPYRIGHT OFFICE, WASHINGTON, DC

    Ms. Peters. Okay. Thank you.
    Mr. Chairman, Mr. Coble, Members of the Subcommittee, thank 
you for the opportunity to testify on removing the existing 
exemption for the public performance of sound recordings by 
terrestrial radio broadcasts.
    Sound recordings became subject to Federal copyright 
protection on February 15, 1972. In the 1960's and 1970's, the 
main issue was unauthorized duplication of recordings, tape 
piracy. And the protection given was the right to control the 
reproduction and distribution of recorded performances. Thus, 
protection was limited to that which was required to address 
the then-existing problem.
    Although there was a major push to include a performance 
right in the 1976 Copyright Act, it was not included. Instead, 
the register of copyrights was charged with studying the 
problem and delivering a report to Congress by January 3, 1978.
    In her 1978 report, the register recommended a performing 
right for sound recordings, saying: A performance right would 
bring sound recordings into parity with other categories of 
copyrightable subject matter. No legislation was enacted in 
response to the register's plea.
    Congressional action was spurred by technologies of the 
early 1990's which made it possible to transmit sound 
recordings digitally throughout the world and allowed 
individuals to make copies of these transmissions, thereby 
diminishing the sale of copies--physical copies and mp3 files.
    In 1995, when Congress first established a public 
performance right, it created a very narrow right. In section 
106(6) and section 114, it was limited only to digital 
transmissions by interactive and subscription services. All 
other digital transmissions, including over-the-air broadcasts, 
were exempted.
    In 1998, the statutory license was broadened to 
specifically include non-subscription webcasts, but not over-
the-air broadcasts.
    Today's reality, as you said, is that satellite and cable 
radio pay, as well as webcasters. Broadcasters do not.
    The question before you is one of parity: parity among the 
users of sound recordings, parity among copyright owners, 
parity with respect to technology. The goal is leveling the 
playing field, but it is a matter of basic equity and fairness. 
It is also a matter of the position of the United States in the 
area of protection of intellectual property.
    To achieve equity and parity, the public performance right 
for sound recordings needs to be broadened to include all 
commercial transmissions, but especially broadcasts.
    Today, the careful balance that Congress struck in 1995 and 
1998 has been undermined by technology, new business models, as 
well as the changed relationship that we have heard about 
between radio broadcasters and performers of sound recordings.
    Broadcasters, however, continue to assert that there is a 
mutually-beneficial economic relationship with record 
companies, citing the promotional value of the performance of 
sound recordings. Whether there is such a relationship or not--
and I tend to think there is not--as a matter of principle and 
equity, broadcasters should pay royalties for sound recordings 
they broadcast, just as others do.
    Historically, the record industry has been a very 
profitable industry, making its money in the United States from 
distribution of copies. That, coupled with the political clout 
of broadcasters--basically a clout that they have always 
enjoyed--has led to today's situation.
    Today, however, the recording industry is hemorrhaging 
because of the reproduction and distribution rights which can 
no longer generate the revenues to support the industry. In 
part that is due to the epidemic of online piracy that we have 
yet to come to grips with and that we will never be able to 
control completely. In part it is due to technological advances 
that allow people to get copies for free.
    So broadcasting is clearly a threat, as well as a benefit.
    In this new environment, we can no longer afford the 
anomalous treatment that has been accorded to sound recordings. 
As works that are primarily enjoyed by means of performance, 
they should be subject to public performance rights that 
provide, at a minimum, compensation from those who financially 
benefit from their public performances.
    One other point: I am extremely disappointed and troubled 
by the persistent characterization of compensation for 
performers as a tax. This is especially true when broadcasters 
for the last 8 years have been seeking international protection 
in the form of exclusive right for their signals, which, 
according to their logic, should really be a broadcast tax. Of 
course, they have never used the word tax with respect to the 
protection they are seeking.
    I won't go into it, because it has been covered, but there 
is also the international issue.
    In conclusion, equity and fairness require the law to be 
changed to create parity and compensation. Commercial entities 
who use sound recordings as part of their businesses should pay 
performers, producers of those recordings. Performers and 
producers need to be paid for their performances to ensure that 
the creativity and variety of recordings that we all enjoy 
continue. It is time to end this anomaly.
    I agree with you, Mr. Berman, that in doing this, we must 
ensure that songwriters and music publishers are not negatively 
affected. And we must ensure that small broadcasters survive. 
But we can do that through carefully structured legislation 
that does achieve the appropriate balance.
    I appreciate the opportunity to express the Copyright 
Office's views on this subject. And I look forward to working 
with you and Mr. Coble and your staffs on correcting this long-
standing imbalance in our law.
    Thank you.
    [The prepared statement of Ms. Peters follows:]
                 Prepared Statement of Marybeth Peters






























    Mr. Berman. Well, thank you very much, Ms. Peters.
    And now, Judy Collins?

          TESTIMONY OF JUDY COLLINS, RECORDING ARTIST

    Ms. Collins. Thank you so much Mr. Chairman, Ranking Member 
Coble, Members of the Subcommittee, thank you for the 
opportunity to testify today.
    I am pleased to be here on behalf of musicFIRST Coalition 
and my more than 150 fellow founding artists and the thousands 
of working musicians and singers around the country who care 
deeply about this issue, which I do consider a glaring 
inequity.
    Songs have always told my story and, I hope, given me a 
voice to tell others.
    I learned the love of song from my own father, who was a 
fine singer and a sometime writer of songs. He knew the secret 
of hunting for the right song for his voice and taught me that 
the search for those jewels was the discipline of a singer's 
life. He was in radio for 30 years, sang his heart out, was 
never paid a cent for his voice.
    I believe that musicians and artists, as well as 
songwriters, should be rewarded and awarded and paid properly 
for their talent and artistry in making the music, and 
deserving the right to be paid for their creations, whether 
they are performed or written and, much the way creators of 
literary and dramatic works are paid, to have the disparity in 
the equity of payment changed for the better.
    You know, I have had dozens of platinum-and gold-selling 
albums. It is nearly 50 years. I know I don't look it, but I 
took Social Security---- [Laughter.]
    I wanted to tell you, I took Social Security this year 
before it runs out. [Laughter.]
    Mr. Berman. Well, don't open up that one. [Laughter.]
    Ms. Collins. Well, as I said, for the most part artists are 
treated equally. There is one glaring exception in today's 
music marketplace where musicians, artists and sound recording 
copyright owners are left behind: Terrestrial radio stations do 
not compensate artists for our performances when they play our 
music over the air, which you have heard this morning.
    For example, you remember a little song that Stephen 
Sondheim wrote. I recorded ``Send in the Clowns'' in 1975, and 
shortly after the record's release, it became a top hit. 
Unfortunately, I did not earn a cent from radio when that song 
was played time and time again.
    In fact, I just came across a letter the other day when we 
were meeting about this conference, and I would like to read it 
to you, if I might. It says Stephen Sondheim on the top. It 
says March 2, 1976. ``Dear Judy: And thank you for giving me my 
first hit song. Gratefully, Stephen Sondheim.''
    Songwriters enjoy a performance right and deservedly so. 
Stephen Sondheim deserves every penny he makes on every song. 
Their creativity and talent should be, and is, rewarded when 
their musical composition is played on the radio.
    I have recorded songs of many, many artists--Joni Mitchell, 
Ian & Sylvia, Stephen Sondheim--and never been paid a cent. It 
is a privilege to have helped them make a living. I would like 
to do the same for myself with your help.
    It is only fair that the artists, background singers, and 
musicians who breathe that life in the song should also be 
compensated.
    I want to tell you, just sitting here with Sam, you know, I 
am thinking, ``God, this is a disgrace that he has not been 
paid for playing, for his singing on the radio.''
    You know, the other countries who do this? China, Rwanda, 
Sudan, Iran.
    Don't get me wrong. I love the radio. My father had his own 
radio program, as I said, and that is how I grew up, listening 
to radio, singing on the radio. I just don't believe it is 
fair, nor has it ever been, that musicians and recording 
artists don't get paid when our music is played on the radio. 
Patsy Cline's heirs deserve to have that.
    Paid for play. Every other music platform, like satellite, 
cable and Internet radio, reward artists and musicians for our 
performances, and it is time radio did, too.
    As I said at the outset, I and Sam both have been very 
fortunate in our careers. We work like mad, harder than ever, 
as far as I know.
    There are lots of great artists and musicians who are still 
struggling to just earn a living doing what they do and get 
over that first hump of public recognition. When their music is 
played on the radio, they deserve to get paid.
    Many of my musical compatriots, like me, are on the road 
touring.
    I tour more than I ever did. I do 50 to 80 shows a year. 
And I have never taken a year off.
    I mean, as I said, I am 68 years old, which I was not going 
to read into this record---- [Laughter.]
    I was advised, don't say that. I am proud of it.
    I have been able to make my living in a career of my 
choice. I should be paid. And not being paid is like a lawyer 
going to a party every day and having people say, ``You want to 
practice a little law,'' 365 days a year. [Laughter.]
    There are artists just starting out their careers. My 
record label, Wildflower Records, has many wonderful young 
artists on it. I want to see them paid for their performances 
on radio.
    Kenny White, for example, one of my artists on the label, 
is now on KFOG in San Francisco. He is not earning radio 
royalties. I was on KFOG years ago. I didn't earn radio 
royalties either.
    Yet, when his music is played on XM satellite station the 
Loft, he earns performance royalties.
    Mr. Chairman, royalties that were held by broadcasters 
should have been my annuity, my pension. I should have been 
able to retire from top hits like ``Amazing Grace,'' ``Both 
Sides Now,'' ``Someday Soon, ``Chelsea Morning,'' ``Who Knows 
Where the Time Goes,'' and ``Send in the Clowns.''
    It is music that people love. It is not commercials. Our 
music sells those commercials, if you have noticed, on the 
radio.
    We simply believe that broadcasters should share the profit 
they earn at the expense of artists.
    Mr. Chairman, thank you for holding this hearing today.
    Songs have value. Singers have value. Musicians have value. 
We are asking for recognition of that value and urging you to 
change the law to right this long overdue injustice.
    And thank you so much.
    [The prepared statement of Ms. Collins follows:]
                   Prepared Statement of Judy Collins










    Mr. Berman. Well, thank you very much.
    And now we will turn to Charles Warfield.

  TESTIMONY OF CHARLES M. WARFIELD, JR., PRESIDENT AND CHIEF 
 OPERATING OFFICER, ICBC BROADCAST HOLDING, INC., NEW YORK, NY

    Mr. Warfield. Good morning, Chairman Berman, Ranking Member 
Coble and Members of the Subcommittee. And thank you for 
inviting me here today to offer the broadcaster perspective on 
the issue of performance rights for sound recordings.
    My name is Charles Warfield, and I am president and COO of 
ICBC Broadcast Holdings, serving primarily African-American 
communities in New York City; San Francisco; Columbia, South 
Carolina; and Jackson, Mississippi. And I am also testifying on 
behalf of the over 6,800 local radio members of the National 
Association of Broadcasters.
    With regard to the issue of creating a new performance 
royalty for sound recordings, which we do consider a 
performance tax on local broadcasters, NAB strongly opposes any 
such proposal. We oppose a performance tax because compensation 
to the record labels and artists is provided under the current 
system. And the effort to upset the careful balance envisioned 
by Congress and beneficial to all parties for the last 80 years 
is misguided.
    The existing model works for one very significant reason: 
The promotional value that the record labels and artists 
receive from free airplay on local radio stations drives 
consumers to purchase music.
    A survey done by Critical Mass Media shows far and away FM 
radio is the dominant medium for listening to music. In fact, 
85 percent of listeners identify FM radio as the place they 
first heard music they purchased.
    With an audience of 232 million listeners a week, there is 
no better way to expose and promote talent, or as Tom Biery, 
senior vice president for promotions for Warner Brothers 
Records said: It is clearly the number one way that we are 
getting our music exposed. Nothing else affects retail sales 
the way terrestrial radio does.
    Beyond just playing music, consider that stations give away 
free concert tickets, conduct on-air interviews with bands 
releasing a new CD, or hype a newly-discovered artist. Local 
radio is without question the engine that drives music sales. 
Any suggestion that radio play does not boost sales or actually 
diminishes sales runs counter to simple common sense.
    While it is true that the recording industry has seen its 
profits dip in this new digital world, in no way can that 
decline be attributed to radio; just the opposite. Local radio 
is free advertising for record labels and artists and provides 
the best and most direct way to reach consumers.
    In 1995, when Congress last examined this issue, lawmakers 
rightly considered what new digital mediums were a threat to 
the sale of music. Satellite and Internet radio, which were 
covered by the 1995 law, are services often available by 
subscription and both offer consumers true interactivity to 
download songs.
    Local radio, however, is free. There is no subscription. It 
is not interactive. And between disc jockey lead-ins and 
commercials, people are not stealing music from over-the-air 
radio.
    Congress came to this same conclusion. That local radio 
airplay does not threaten music sales, as satellite and 
Internet radio does, but rather, directly and positively 
promotes the sale of music.
    I came to this debate from experience on both sides of this 
issue, from my many years in broadcasting and some years as a 
record label executive. What I have failed to understand after 
30 years in the industry is why the recording industry is 
willing to essentially bite the hand that feeds it.
    The free airplay for free promotion concept has established 
a natural symbiotic relationship between local radio and the 
recording industry. Both grow and flourish together. A 
performance tax, however, will financially hamstring 
broadcasters.
    The effect of such a dramatic increase in radio station 
costs will not go unnoticed.
    Broadcasting is an industry that is funded entirely through 
advertising revenue. We do not have the option of raising our 
subscription rates. The funding to pay for this new fee has to 
come from somewhere.
    So do we cut the $10.3 billion that broadcasters donated in 
2005 to public service announcements and community service for 
charities and other worthy causes?
    Do we run more advertisements, which will have the effect 
of playing less music, which will ultimately harm the recording 
industry?
    Or what about small urban and rural radio stations that 
serve niche communities, such as minority groups? There is a 
reason that the National Association of Black Owned 
Broadcasters, or NABOB, also opposes the imposition of this 
tax.
    Finally, how will such a tax degrade the ability for 
stations to offer programming for their local community, such 
as community affairs, traffic, and essential news and weather 
in times of emergency?
    The answers are not simple and the consequences of this 
debate will hit both industries in unanticipated ways. The 
bottom line is that there is no justification for changing a 
system that has worked for the music industry as a whole for so 
many years.
    The United States has the most prolific and successful 
music industry that is the envy of the world. Upsetting the 
careful balance that Congress struck by imposing a performance 
tax on local radio broadcasters would be a shift of seismic 
proportions. For over 80 years, Congress has not seen fit to 
alter this mutually-beneficial policy, and there is no reason 
to do so now.
    I thank you for inviting me here this morning.
    [The prepared statement of Mr. Warfield follows:]
             Prepared Statement of Charles M. Warfield, Jr.








































                              ATTACHMENT 1




                              ATTACHMENT 2
























































    Mr. Berman. Well, thank you very much, Mr. Warfield.
    And now, finally, is our concluding witness, Sam Moore.

            TESTIMONY OF SAM MOORE, RECORDING ARTIST

    Mr. Moore. Thank you. Good morning, Mr. Chairman and 
Ranking Member Coble. My performance here this morning may be 
the most important gig of my career.
    I am grateful to the Subcommittee for holding a hearing on 
this vital issue that faces us American recording artists.
    I am proud to be here as a founding member of the 
musicFIRST Coalition, and a member of AFTRA, SAG, RAC and the 
Recording Academy.
    I will tell you a little bit about my career, and I promise 
to be brief, no matter how long it takes. [Laughter.]
    40 years ago, I formed a duo that made it big in the mid-
1960's. Our famous Sam and Dave recording became a series of 
top hits as in ``Hold On I'm Comin','' ``I Thank You,'' and, of 
course, a little, small hit called, ``Soul Man.'' You can hear 
those songs today on radio across the country and all over the 
world. That is pretty amazing.
    My most recent album, ``Overnight Sensational,'' was 
nominated for a Grammy last year, 40 years after my first 
nomination. But at 71, I am still forced to go out on the road 
to support my family and myself.
    To shed light on this issue of broadcast performance 
royalties for artists, let me share something I hear all the 
time, even from some of you members of this great body, just 
learning of this issue who mistakenly believe I get paid when 
my recordings are played on the radio.
    You would be amazed at how shocked people are when they 
learn, whenever I say, I am not getting nothing. No royalties 
whatsoever from the broadcasters for my performance that has 
been enjoyed by the audience and used by them to draw that 
audience support and to support their families.
    I just heard that the radio industry thinks they are going 
to do me some kind of favor by playing my recordings. They 
think they are promoting me through my music so I can sell 
records and concert tickets----
    I say, in no uncertain terms, radio does absolutely nothing 
to promote me or sales of my recording unless I have a current 
product and a huge promotional budget. People hear the bulk of 
my recordings so frequently on oldies stations that they don't 
have to buy my records at all.
    As for radio allowing me to, and helping me to, sell 
tickets, well, thank you very much. But at almost 72, I would 
rather be at home spending time with my grandchildren and 
running a golf ball thinking I am Tiger Woods.
    If broadcast shared any of the money they earned from 
playing my records, I would not have to continue to spend so 
much of my life running up and down the road. I don't have the 
private jets and the extravagant tour buses with staff to make 
my life comfortable. And my posse? My wife, Joyce, the bag 
schlep.
    So while my record continues to bring joy to music lovers 
worldwide and continues to help the radio business become a $20 
billion industry, I struggle to even make a living, even if I 
look successful.
    Broadcasters also claim they are serving the community. 
Well, what about the artists? Aren't we part of the community? 
And haven't we been struggling independently, small 
businessmen, before some of us got the right to vote?
    Those recordings are my legacy. They, and I, the artist, 
deserve to be protected with a full performance right. In every 
other developed country in the world, artists have such a 
right.
    Adding insult to injury, when my recordings are played on 
stations overseas, I cannot claim any of the funds paid for my 
songs there, simply because the U.S. does not require payments 
here.
    I learned the other day coming here that a friend of mine, 
Mr. Howard Veegal, told me about Little Jimmy Scott who is in 
the hospital that hurt his good hip. He was out working. Now, 
he is almost going to be tossed out of the hospital because his 
nursing home, at 85, said he can't pay. He is frail, and he 
can't work.
    We are also talking about the Mary Wells, the Ruth Browns, 
the Junior Walkers--all worked until they died because they had 
to because of charity cases. Why?
    Mr. Chairman, this is the only thing about--this whole 
thing is about fairness and equity. American broadcasters 
literally earn billions by playing our records. All we are 
asking is to receive what artists in every country around the 
world, when their recordings are broadcast, is fair 
compensation for the performance of our work.
    Our legacy is our music. Please help us fix this historic 
injustice. We have sought the rights to help for more than 50 
years. Let us just play fair. That is what it is all about.
    Personally, I pray I live to see this important legislation 
pass in my lifetime, and I remind you, I am looking hard at 72.
    I am grateful for your invitation to share my views with 
you today. Thank you.
    [The prepared statement of Mr. Moore follows:]
                    Prepared Statement of Sam Moore










    Mr. Berman. Well, thank you all very, very much.
    And the Chair is now going to recognize the Ranking Member, 
Mr. Coble, for 5 minutes for questions.
    Mr. Coble. Thank you, Mr. Chair, for this courtesy. Mr. 
Chairman, an outstanding panel and a superb, productive hearing 
I believe.
    Madam Register, if the performance royalty exemption for 
broadcasters is eliminated, would it create a sizable impact, 
either negative or positive, for songwriters, performers, and 
the music industry as a whole?
    Ms. Peters. Hopefully not.
    One of the things that already is in section 114, when the 
very first performance right--limited as it was--performance 
right was created was that that was in no way to affect rights 
that are basically guaranteed--the public performance rights 
for composers and for music publishers. That is also an 
international treaty obligation: that you cannot derogate from 
those rights.
    So that has to be a commitment, both a national and 
international commitment, so I would say----
    Mr. Coble. Thank you for that.
    Mr. Warfield, I am going to give you a simplistic question. 
I think most people--strike that--maybe not most. Many people 
respond to this issue in this way: More people are listening to 
music more and more each day, I am told, because of Internet 
and satellite broadcasting. Why should not terrestrial 
broadcasters, many people ask, pay the same performance 
royalties that Internet and satellite broadcasters pay?
    And let me put a second question to you, Mr. Warfield, if I 
may. Toward the conclusion of your statement, you noted that 
the United States commercial radio broadcasting industry was, 
for the most part, built by private commercial entrepreneurs--
and I am in agreement with that--but who did not and do not 
receive one cent from the Government or its listeners.
    Now, Mr. Warfield, I am thinking now about the spectrum. 
What would be your estimate of costs to the industry to replace 
the spectrum, if you were forced to pay a commercial rate for 
it?
    If you would respond to those two questions?
    Mr. Warfield. Well, Mr. Coble, I can't answer the last 
question there in terms of what would the costs be for the 
spectrum.
    I do know, though, as a licensed broadcaster by the FCC, 
there are responsibilities that we all have to our communities. 
There is a public affairs program in that we provide public 
interest obligations that we meet, public service announcements 
that we provide to the community. There is local news and 
weather information that we provide, that we are obligated to 
provide, and we are happy to do that. We also provide essential 
information in the event of emergencies.
    So there are certainly obligations that we, as 
broadcasters, have with the spectrum that we have the right to 
broadcast on.
    So, you know, I could not put a dollar value on that. I do 
know that we did provide over $10 billion worth of these types 
of public services in 2005, the last year that those numbers 
are available. So we are being responsible in that regard.
    In terms of the new platforms and the listening of music, I 
still go back to indicate that, you know, radio still reaches 
over 232 million listeners a week. Many of those listeners are 
listening to music radio. And it is still evidence that radio 
is still the primary means in which most of these individuals 
learn about new artists and new music, which they may then go 
to other platforms. They may decide to purchase some of that 
music.
    But there is still the awareness factor and the exposure 
factor that still is there as a result of the free broadcasting 
that we do in radio.
    Mr. Coble. I thank you, sir.
    And I thank you all again for being with us today.
    Mr. Chairman, I am going to the Coast Guard hearing, and I 
am going to try to come back. But, in conclusion, Mr. Chairman, 
I want to repeat what I said earlier.
    I am high on broadcasters. Do you hear me, Mr. Warfield? I 
am high on broadcasters. I am also high on performers.
    And I am hoping we can strike some sort of balance, Mr. 
Chairman, that will result in a not-too-burdensome conclusion.
    And I yield back.
    Mr. Berman. I think there is a song there. [Laughter.]
    Thank you very much, Mr. Coble.
    Mr. Coble. Do I get paid for it, Mr. Chairman? [Laughter.]
    Ms. Collins. Would you perform it?
    Mr. Berman. The gentleman from North Carolina, Mr. Watt?
    Mr. Watt. I think if I wasn't going to get paid for it, I 
am not planning to sing it. [Laughter.]
    Let me first thank the witnesses for being here and thank 
the Chairman for convening the hearing.
    I feel kind of like the new guy on the block, as I have 
since I got on this Subcommittee. And I was reluctant to give 
any kind of opening statement because I am in a learning mode 
and listening mode more than a talking mode. And I suspected 
that there had to be multiple sides to this issue. And Mr. 
Warfield certainly helped us paint that picture.
    I feel like I am blessed, obviously, to be in the presence 
of all these artists. And I am embarrassed that I have really 
kind of assumed that music would be available in my life.
    I get mad at the radio for running commercials. I get 
disappointed when I can't hear exactly what I want to hear.
    And so I come to this with--kind of as a blank slate 
without any background in it. And I suspect the same thing will 
happen that has happened on the patent reform bill: that blank 
slate, and the recognition that I am a blank slate, will leave 
open the door for various people to come in and paint what that 
slate should consist of.
    So I suspect, Mr. Chairman, you are opening yet another one 
of those doors for the various interests to come and visit and 
try to educate me. And I look forward to that.
    Ms. Peters, I am just wondering how one might approach 
structuring a compensation system that would both be fair to 
the performing artists, the writers, and not burdensome or 
detrimental, at least, to terrestrial radio. How would you go 
about--has anybody done any studies on that issue? How would 
you----
    Ms. Peters. Well, remember that almost all countries in the 
world already have a structure in place.
    Mr. Watt. Okay. Maybe I am asking the question----
    Ms. Peters. And Canada actually has----
    Mr. Watt [continuing]. How are other countries doing it?
    Ms. Peters. You can look at Canada. They make a difference 
between the size of the broadcast station, how many hours in 
which music is being played.
    We are not talking about an exclusive right, where you go 
and negotiate with everybody. We are talking about a statutory 
license which guarantees equitable remuneration for the 
performer and the record producer. So that is what we already 
have in our law with regard to webcasts.
    The criteria could take into consideration the size of the 
station. The basic principle that you try to put in place, but 
make it as painless as possible, is what a willing buyer and a 
willing seller would do under the circumstances. So a small 
broadcaster would pay a lot less than a large broadcaster. You 
know, a huge broadcaster who has music 24 hours a day, 7 days a 
week, would pay a lot more than someone who only had music 
several hours a day.
    So I think it really isn't that difficult to achieve the 
correct balance.
    Mr. Watt. Let me get one more question in to----
    Ms. Peters. Yes.
    Mr. Watt [continuing]. Mr. Warfield.
    Are you associated with radio stations in other countries? 
And how do you differentiate the way terrestrial radio is 
treated in the U.S. vis-a-vis those other countries?
    Mr. Warfield. As a broadcaster, our company does not own 
any radio stations outside of the continental United States.
    But as I look at our industry here--I have not really been 
involved with international radio as a broadcaster in my 
career. However, as I look at the U.S. radio system, as I 
indicated in my testimony, we, as broadcasters, support the 
most lucrative and successful recording industry in the world. 
And under a system that we have with no performance tax, the 
U.S. record industry is larger than the industry for the U.K., 
France, Germany, Canada, Australia, Italy, Spain, Mexico 
combined.
    So I think when we talk about the relationship that has 
existed and the success of the recording industry and, through 
that success, the success of artists, through this 80-year 
history, makes me as a broadcaster say, ``Why would the system 
really need to be changed?''
    Mr. Watt. Thank you, Mr. Chairman. I appreciate you getting 
me in this bind again.
    Mr. Berman. Well, it may be a blank slate, but it has a 
great deal of adhesiveness.
    Mr. Goodlatte?
    Mr. Goodlatte. Thank you, Mr. Chairman. And thank you for 
holding this hearing.
    I want to thank all the witnesses. This has been a very, 
very interesting hearing. And I would be willing to hum along 
with Mr. Coble if he does the song that finds the cure to this. 
[Laughter.]
    Let me start with Mr. Warfield.
    One of the rationales for exempting terrestrial 
broadcasters from the requirement to pay royalties for the 
public performance of sound recordings was that terrestrial 
radio gave performers and owners of sound recordings 
substantial promotional value in that more consumers were 
likely to purchase these songs when they heard them on the 
radio.
    I wonder if you might comment on how the rollout of 
satellite radio, iPods, Internet radio, and other new 
technologies have weakened that argument that terrestrial radio 
alone provides a substantial enough promotional value over 
these other technologies to justify keeping the exemption.
    Mr. Warfield. You know, we all--the record industry, the 
radio industry--we are all competing against these new 
platforms that are emerging today. Still, terrestrial radio 
still reaches, as I indicated, over 230 million people per week 
across this country. The symbiotic partnership that still 
exists between radio and the recording industry has helped 
these companies become the envy of the world, as I had 
indicated.
    But now what we are looking at and the challenges that the 
record industry, unfortunately, has not necessarily kept up 
with these changing times, and then coming here as part of a 
coalition seeking taxes from local broadcasters to subsidize 
their challenged business model.
    There is no question that the industry is challenged today 
in selling music with these new alternatives that are out here, 
but in no way would we indicate is there any evidence that the 
work that local broadcasters do and the free promotion that we 
provide is responsible for any of that. As I indicated, we are 
not----
    Mr. Goodlatte. I don't think they are responsible for it, 
but they are suggesting that if some of these other platforms 
are paying performance royalties, that they are also providing 
a means by which songs are promoted and there is a disparity 
there that somehow we need to find a way to bridge the gap.
    Ms. Peters, would you care to comment on that?
    Ms. Peters. That is exactly the point. That all of these 
people are paying, and that the principle is that this is a 
copyright and this is a right that is being exercised and it 
forms the basic business model of radio stations. And that, in 
fairness, they should pay also. You can talk about under what 
terms and what conditions, but they should pay.
    Mr. Goodlatte. Ms. Peters, let me follow up with that.
    What are foreign nations doing? Are they currently 
withholding royalty payments to U.S. performers and sound 
recording owners--their nations are not compensated when their 
songs are performed over U.S. terrestrial broadcast signals?
    Ms. Peters. It depends on the country.
    Mr. Berman. I think we need a sound engineer.
    Ms. Peters. Yes, right.
    It depends on the country, but in many countries they 
collect for all sound recordings, including U.S., and don't 
pay. In others, they don't collect. But under either scenario, 
their performers are getting paid and our performers are not, 
even though the performances of both are taking place in that 
particular country.
    Mr. Goodlatte. Thank you.
    Ms. Collins, would you care to comment on this 
relationship?
    Ms. Collins. Yes. I think you, you know, it is interesting. 
I am sitting here wondering about class actions suits.
    You know, all of the artists, excluding the issue of 
whether or not we should be paid as artists in this country--
and I think I have settled that in my own mind, we certainly 
should--and it should be a sliding scale for those who can 
afford more, for those who can afford less.
    But the fact that my records across the world have not been 
paid for means that many, many thousands, millions, perhaps, of 
artists over a period of what is it, 80 years? Is that the--it 
is 80 years. Eighty years and all of these musicians who are 
not being paid in countries which have laws which protect the 
artist, where is that money? It is not in my pocket.
    And in the case of ``Amazing Grace,'' which played around 
the world and which most of you know, amazing grace, you know, 
how sweet the sound---- [Laughter.]
    How sweet the free sound, it turns out. [Laughter.]
    I am curious about that idea, because with this coalition 
of artists, that might be a subject that we might want to bring 
up.
    We are certainly not talking about a retroactive situation, 
although legally we might, but the idea of the money that is 
sitting internationally and why we don't respect other artists 
in this country who are not receiving payments for their 
performances either. It is a complicated question, but once we 
solve this one, then we will look at that.
    Mr. Goodlatte. Thank you, Mr. Chairman.
    Mr. Berman. Thank you.
    The bells have gone off. The situation is we have about 15 
more minutes and then 3 votes, and then we will come back. But 
I do believe we have time for one more witness before we 
recess.
    So the gentlelady from Texas, Ms. Sheila Jackson Lee?
    Ms. Jackson Lee. Chairman, thank you.
    Let me add my affirmation that you managed to find the 
armadillo in the middle of the road when it comes to questions 
that I think are enormously important.
    Let me quickly go to the esteemed Sam and Dave, but Mr. 
Moore, thank you, all of you, for your testimony.
    Would you just give me the list of names--I happen to 
represent, I believe, the last remaining member of The Ink 
Spots. He is close to 100-plus years old, and he is living in a 
nursing home. I would imagine what he would be able to find a 
way to live if we had some altering of this process.
    Would you just give me the names of those who have 
suffered? Jackie Wilson, I know, had a terrible time. But you 
mentioned Billy Preston. Are there any others? Would you just 
mention some of those names for us that really have suffered in 
the later years of their lives?
    Mr. Moore. Well, let us see. You said Jackie Wilson, yes.
    How about Bo Diddley? That was in Iowa not long ago, about 
2 or 3 weeks ago, working on stage and had a stroke.
    Now, you must understand that, before the stroke, he was an 
amputee on his left foot. Now, you know, if he was getting 
performance pay, he could have that $3,000, $4,000, $5,000 a 
month to pay and not worry about taking care of his bills or 
his family or anything else. He could not worry about anything 
other than taking care of his health. So that is----
    Ms. Jackson Lee. Those are glaring examples. Thank you very 
much.
    Ms. Peters, can you give me any legal--legally speaking, is 
there any way to justify the sole exemption of sound recordings 
from a performance right? And do you know how such exemption 
came about? And because bells are ringing, I am asking for 
quick songs at this point.
    Ms. Peters. The answer is no. I don't know of a 
justification. I have been advocating this for almost 25-plus 
years, and before that, my predecessors have.
    I will argue--and I think I sort of suggested it--that it 
is the effectiveness of the broadcast lobby.
    Ms. Jackson Lee. In the 1998--the register, which--was that 
you in 1998?
    Ms. Peters. No. It was Barbara Ringer.
    Ms. Jackson Lee. Went on record affirmatively for that----
    Ms. Peters. And I have gone on record----
    Ms. Jackson Lee [continuing]. For that position of those 
payments.
    Ms. Peters [continuing]. Absolutely, yes.
    Ms. Jackson Lee. Would you understand the value of--as we 
try to forge--which I think my good friend Howard Coble 
suggested, a reasoned place in the middle--the exemption of 
certain small radio stations which would probably suffer 
greatly and close if they were to come under such a 
requirement?
    Ms. Peters. I believe that when you craft a solution you 
craft it so that it is equitable. Yes, the basic principle is 
paying, but, yes, you can have special provisions and even 
exemptions for small broadcasters.
    Ms. Jackson Lee. Thank you.
    Mr. Warfield, broadcasters have labeled the payment to 
artists a performance tax. Is that how you are viewing payments 
to songwriters for radio play or do you view them as royalty 
payments? Why wouldn't payments to performers be royalty 
payments?
    Mr. Warfield. The performance tax that we are discussing 
today would go to what is referred to as artists and record 
companies who, in the existing system, benefit greatly from the 
free on-air airplay of their product. Record sales result from 
that, which benefits the artists, as well as the record label 
at this point. Whereas the composers of the music--the writers 
of the music--do not receive that type of a benefit, which is 
why there are payments being made to them and have been 
statutorily required throughout our broadcast industry.
    Ms. Jackson Lee. I think the industry has changed so much, 
Mr. Warfield. And I want to thank you for your leadership, but 
that probably is not accurate. I can't really agree that there 
is such an enormous benefit to performers that we would 
classify one as a tax and one as a royalty. But I hope we can 
find common ground.
    I don't want to leave my good friend, Congressman Hodes, 
out of--for the fact that people should know that he sings very 
well, even as a congressperson, and we have enjoyed very much 
his singing.
    But, Congressman, is there a way to balance this?
    And I might conclude quickly by asking Ms. Collins, should 
we not have a balance on the royalty payments on these Internet 
radio royalties where Clear Channel, Yahoo, and Microsoft pay 
so much, should we not have royalty rates for that lower level 
that will create music diversity?
    So I am going to go to the congressman and then, since I 
got in before the light, if you would be able to answer that.
    Congressman?
    Mr. Hodes. Thank you for your question.
    Very quickly, there are models that are already in place 
that point the way to the kind of balanced and fair system that 
this Committee, with its expertise, is well-capable of 
crafting.
    Ms. Peters has talked about sliding scales. There are 
potential exemptions. There are lots of ways to make this work, 
and we already have some models in what has happened in the 
digital realm.
    Ms. Jackson Lee. Ms. Collins, I----
    Ms. Collins. Thank you.
    Ms. Jackson Lee [continuing]. Would hear ``Amazing Grace'' 
forever, but the Chairman is going to gavel me down.
    Just to balance out the Internet rates, should they be?
    Ms. Collins. I believe that the equitable distribution of 
royalties, not taxes, should be worked on and a fair and 
equitable decision made about this.
    But I want to just remind us of why we are really here. We, 
in this country, do not recognize the value of our artists as 
we do in other countries. That is really what this is about. We 
have devalued the contribution of great, great, great artists, 
and that needs to be remedied.
    Ms. Jackson Lee. Thank you.
    Thank you, Mr. Chairman.
    Mr. Berman. We will now recess. We hope very much that all 
of you can stay because, if you do, we will come back. 
[Laughter.]
    [Recess.]
    Mr. Berman. The Subcommittee hearing will resume.
    And I am pleased to recognize the gentleman from Florida, 
Mr. Keller, for 5 minutes.
    Mr. Keller. Well, thank you, Mr. Chairman. I very much 
appreciate that.
    I want to thank all the witnesses for your testimony.
    This is an issue that I certainly approach with an open 
mind. And so I am going to ask some easy and tough questions, 
hopefully of both sides, because I genuinely want to learn a 
few things.
    Let me begin with Mr. Warfield to make sure that I have got 
this scenario correct.
    For free radio, also called terrestrial radio, the 
songwriter would get paid a royalty but not the performer? Is 
that correct?
    Mr. Warfield. That is correct.
    Mr. Keller. And on satellite radio, the performer would get 
paid a royalty. Is that right?
    Mr. Warfield. That is correct.
    Mr. Keller. Now, if a law, such as the topic that we are 
talking about today, is implemented requiring terrestrial radio 
to pay a royalty for performers, how would radio adjust to this 
new law? Would you have to raise advertising revenue by 
increasing advertising prices, or what would you do?
    Mr. Warfield. I am sure some broadcasters would attempt to 
do that, but in the current environment, that would be very 
difficult to do.
    Unfortunately, I believe some broadcasters would, if not 
change format and get away from a music format--some 
broadcasters, unfortunately, would probably be forced to sell 
their radio stations and get out of the business. And our 
concern is that many of the smaller market medium-size 
broadcasters that would be a very real option that they would 
have to consider.
    Mr. Keller. So your three options: You are going to have to 
change your format to go to talk radio, where you don't have to 
pay these royalties, or you are going to have to layoff some 
people for overhead, or you are going to have to increase the 
advertising revenue rate.
    Mr. Warfield. Make an effort to do that.
    Mr. Keller. So when I buy my ads on radio for my next 
political campaign, I may have to pay more money to make sure 
the Dixie Chicks have higher profits? There is your trouble 
with that particular scenario.
    Now, you have said that this is a tax. Let me ask you, do 
you consider the current system of paying the songwriters to be 
a tax?
    Mr. Warfield. No, we consider that to be a royalty. It is 
part of our operation that we understand, since they do not 
benefit in the same manner that the record labels and the 
artists do under the existing system that has been in place for 
80 years.
    Mr. Keller. Well, if this were implemented, the Treasury 
would get no money from this new royalty to performers. Is that 
correct?
    Mr. Warfield. I don't know what form it would ultimately 
take.
    Mr. Keller. Does the Treasury get any money today by paying 
the songwriters a royalty fee?
    Mr. Warfield. Not to my knowledge, no.
    Mr. Keller. Okay. So I would just point out some folks 
wouldn't consider that to be a tax.
    Let me just say this. Listening to you all, it seems to 
me--and again, I am open-minded--that the radio stations are a 
bit underappreciated here.
    You have made the argument, Mr. Warfield, that there is a 
symbiotic beneficial relationship and that by putting an 
artist's songs into the regular rotation and getting them 
substantial airplay that that helps the record sales and helps 
promote concerts. Is that correct?
    Mr. Warfield. That is correct, as further evidenced by this 
morning's USA Today that has music charts in it based upon 
radio airplay.
    Mr. Keller. Okay.
    Mr. Warfield. That is correct.
    Mr. Keller. And I have heard Ms. Marybeth Peters and Mr. 
Sam Moore take a different view that--I believe she said that 
she is not inclined to think there is a mutually beneficial 
relationship.
    I just have to say, on this issue I think the radio 
stations are a bit underappreciated on it. Because, during the 
break, while I am voting, I just picked up the phone and called 
the head of music programming for my local radio station, the 
main one in Orlando. And he tells me that the record companies 
and their publicists call him nearly every day begging for 
their songs to be put into the regular play list rotation.
    And if there is no benefit to the record companies or the 
artists from getting regular airplay, I wonder why in the world 
they keep begging the radio stations to put their music on the 
air.
    Mr. Warfield. I agree with that. It is a situation that in 
the industry--and I have been in the industry for 30 years and 
a couple of those years in the record industry--quite a bit of 
their time, quite a bit of our staff's time is spent in 
conversation and dialogue with the record industry every week.
    Mr. Keller. Now, Mr. Sam Moore, let me just thank you so 
much for being here today. And if you never did nothing in your 
life, you have already changed our culture with your great 
performances with ``Soul Man.''
    Is the gist of your argument that it is very unfair to you 
that you are paid a royalty when your music appears on 
satellite radio and other venues but not on regular radio? Is 
that the gist of it?
    Mr. Moore. I think my only argument is this: If I don't 
know anything else, I only know this. We just want to even the 
field, be fair, you know.
    The writers are getting what they are getting. I don't know 
nothing about the figures. I am not a CPA and all that stuff.
    But I do have a question, if I may.
    Mr. Keller. Sure.
    Mr. Moore. Wouldn't it take a full credit to reduce your 
tax burden of what you pay? I would ask Charles that.
    Mr. Warfield. Was the question--I am sorry to misunderstand 
the question, but would it be a cost of operation and therefore 
be a taxable operating expense? Depending upon how that is 
structured, most likely, sure.
    Mr. Keller. Well, I have more questions. I want to get some 
hard questions to the other side, too, in fairness. But I have 
to tell you, I ran out of time.
    So, Mr. Chairman, I will yield back the balance of my time.
    Mr. Berman. Thank you, Mr. Keller.
    Ms. Collins. May I address that question with a little 
comment here?
    Mr. Berman. Does the gentleman from Tennessee wish to allow 
the----
    Mr. Cohen. I would gladly yield my time to the lady from 
California. Had a feeling---- [Laughter.]
    Ms. Collins. Thank you.
    As a business owner myself--and I am a small business, and 
I am the product--I pay taxes. They are always very high.
    And I understand--I have had to come to this, because it 
has taken me a long time to learn about how any business 
operates. I am a slow learner. However, I know when I have a 
business expense, my taxes go down. And I think that is one 
question we could address.
    Also, I don't want to underestimate the value of radio 
either. I love radio. Radio has been fantastic to me. There is 
no reason why I shouldn't be paid for my presence on radio, but 
I value, I value the institution tremendously.
    So I don't want anybody to get the idea that we don't 
appreciate what it does. We just want to get paid for our work.
    Mr. Berman. On the tax issue, have you thought about 
starting a hedge fund? [Laughter.]
    Never mind.
    Ms. Collins. I run my own mutual fund. [Laughter.]
    Mr. Cohen. Thank you, Mr. Chairman.
    First, this is just on my mind. Mr. Moore said he didn't 
know anything about math. And I will ask Congressman Hodes 
because he can probably answer this question. I was trying to--
what are the words to that. It is I don't know algebra, don't 
know anything about, just know that I----
    Ms. Collins. Oh, yes.
    Mr. Cohen. What is the song called?
    Ms. Collins. Don't know much about history----
    Mr. Hodes. Don't know much about----
    Mr. Moore. ``What a Wonderful World,'' Sam Cooke.
    Mr. Cohen. Thank you, sir. Name that tune. [Laughter.]
    Mr. Moore. Right.
    Mr. Cohen. Mr. Moore, last time I saw you I think was 
Governor Sundquist's inauguration or Tennessee 2000 or 
something like that. But you were doing a nice event in 
Nashville, and I appreciate your coming back and doing that 
whenever you are in Memphis.
    ``Soul Man,'' you don't get paid when it gets on the radio 
but the songwriters get paid for that, right?
    Mr. Moore. Yes.
    Mr. Cohen. Is that David Porter?
    Mr. Moore. David Porter and Isaac Hayes.
    Mr. Cohen. And they are both friends of mine. Would you 
like me to negotiate for you? [Laughter.]
    Mr. Moore. Would you mind? [Laughter.]
    Mr. Cohen. I think Mr. Bainwall's friend, Mr. Moore, could 
do that better than I, but.
    You know, they wrote it, but I don't know that--of course, 
they are a different situation. I was kind of thinking about 
Elvis. Elvis never wrote anything.
    Mr. Moore. Right.
    Mr. Cohen. Except maybe a check.
    Mr. Moore. Right.
    Mr. Cohen. But Elvis doing the song, that was the song.
    Mr. Moore. Right.
    Mr. Cohen. And the writers got paid and Elvis didn't.
    Mr. Moore. Right.
    Mr. Cohen. And without Elvis, there wasn't a song.
    Mr. Moore. That is right.
    Mr. Cohen. Without a song----
    Mr. Moore. Without a song.
    Mr. Cohen [continuing]. Et cetera, et cetera.
    Mr. Moore. The world would never end.
    Mr. Cohen. Keep going. Don't let me----
    Mr. Moore. No, no, no. [Laughter.]
    I will have to charge you then. [Laughter.]
    Mr. Cohen. Let me ask Mr. Warfield.
    I understand your position, obviously. And I have, like Mr. 
Coble, friends in broadcasting, as well. But how can you 
distinguish the system in America from the system in Europe, as 
far as its appreciation of or paying of songwriters? Do the--I 
mean, singers. Do the singers in Europe not get the benefit and 
get to perform and get more people to come to their concerts 
and buy their records?
    Mr. Warfield. I think just the sheer magnitude of the 
industry here, both the recording industry, the size of the 
recording industry, the profitability of the recording industry 
and the revenues that are generated through the support of over 
6,800 local radio stations, significantly dwarfs what is 
available to many of these artists in foreign countries versus 
the United States.
    And I think that size issue and the fact that the 
broadcasting industry for 80 years has been providing this type 
of free exposure to artists and labels is what has helped this 
industry grow to the size that it has been and spawned so many 
very successful artists over the last 70-plus years.
    Mr. Cohen. Even if, you know, size is important, but 
nevertheless, in Europe, where they have got a different 
market, they still have to get paid, the singers. And they do 
get paid in Europe. You don't see that there is some equity 
there?
    Mr. Warfield. I think that the reality of a lot of these 
artists that are international are looking for that type of 
support here in the United States, support that is provided by 
radio airplay, would indicate that they are sort of willing to 
work with the system that is in place here in the United 
States. They see the rewards and the benefits that have accrued 
to many labels and many artists over a long period of time.
    And I think that many of them--they don't--they are not 
sitting here today. Would they trade that? I am not sure. But 
it is certainly a benefit that they would consider.
    Mr. Cohen. Do you have a proposal that would make some kind 
of equitable solution? Do you have something you want to put on 
the table?
    Mr. Warfield. I would like to leave the system the exact 
way it is today----
    Mr. Cohen. I know. But if you couldn't leave it the way it 
is, what would be your suggestion, other than a de minimis 
amount of money?
    Mr. Warfield. I could not agree to do anything more than 
the system as it exists today, Mr. Cohen?
    Mr. Cohen. Okay. Well--and I guess it is. I---- [Laughter.]
    You know, if you had Mr. Hodes singing ``Suspicious 
Minds,'' instead of Mr. Presley, you wouldn't have as many 
people listening to your station, I suspect. [Laughter.]
    And so Mr. Presley's estate should be paid for that. 
[Laughter.]
    Mr. Berman. Is that a compliment? I don't think so. 
[Laughter.]
    Mr. Warfield. And I was going to leave that one alone. I 
wasn't going there. [Laughter.]
    Mr. Cohen. Thank you, Mr. Chairman.
    Mr. Berman. The gentleman from Georgia.
    Mr. Johnson. Yes, thank you, Mr. Chairman. I certainly want 
to commend you for holding this hearing. It is a matter of 
equity and fairness.
    And I might first begin by saying that, you know, when you 
rub a cat the wrong way, the cat gets kind of agitated. And I 
feel like a cat that has--my hairs have been rubbed the wrong 
way when I hear the term performance tax.
    And what I wanted you to answer for me, sir, is, I mean, a 
tax is generally paid to the State. A tax is always paid to a 
governmental entity. But you would not be paying--broadcasters 
would not be paying revenues to a governmental entity. It would 
just be simply paying to a performer on a sound recording.
    Why is it that you persist in using the term performance 
tax?
    Mr. Warfield. Well, this is a payment that broadcasters 
both large and small would have to pay. You know, some people 
look at this as a wealth transfer that is going to very 
successful record companies who would benefit from this in 
addition to the artists. Radio stations----
    Mr. Johnson. How would record companies benefit from paying 
royalties to performers, especially when the record companies 
are already receiving income from their publishing rights?
    Mr. Warfield. As I understand the coalition that is----
    Mr. Johnson. Sometimes they have even taken the writer's 
share.
    Ms. Collins. Absolutely.
    Mr. Warfield. The record labels?
    I would only indicate there, and it is, you know, it is 
sort of along the lines of earlier comments about the artists 
who have not been treated fairly. I would put that back as a 
responsibility of the record labels.
    Why have the record labels allowed that to happen with 
artists that have helped make them as successful as they are 
today? And it is not the responsibility of the broadcasters to 
cover, I would say in some cases, the misdeeds of the record 
labels.
    Mr. Johnson. Well, the fact is, though, that terrestrial 
broadcasters make a lot of money on those sound recordings 
themselves.
    Mr. Warfield. I wouldn't say we make money on the 
recordings.
    Mr. Johnson. Well, if----
    Mr. Warfield. The free broadcasting of those records that 
are provided to us by the record labels is what allows them to 
expose that music to the consumer, which will then turn around 
and purchase those records, which benefits both the label and 
the artist at that point.
    Mr. Johnson. And having those sound recordings broadcast 
causes you to be able to reap----
    Ms. Collins. Exactly.
    Mr. Johnson [continuing]. The benefits of advertising 
revenues that are derived from that exploitation.
    Mr. Warfield. I wouldn't use exploitation, but there are 
certainly some broadcasters that do well with that. There are 
some that do not.
    And the imposition of this additional tax on many of these 
broadcasters in small and medium markets could be the 
difference between whether they remain in business or not, 
whether they continue to service the communities that they are 
licensed to serve. And, unfortunately, as a minority 
broadcaster, a lot of small and medium broadcasters that target 
these audiences are people that I am very much aware of that 
don't have the means, unfortunately, to pay additional costs.
    Mr. Johnson. Well, I tell you now, I am looking at Clear 
Channel--I am looking at a report here where Clear Channel 
Communications reported revenues of $1.8 billion in the second 
quarter of 2007, an increase of 5 percent from the $1.7 billion 
reported for the second quarter of 2006. And then the net 
income increased 19 percent to $236 million in the second 
quarter of 2007.
    There is a lot of money in terrestrial broadcasting. Part 
of that money comes from Web broadcasters who pay royalties to 
the terrestrial broadcasters for running their transmissions 
over the Web, isn't that correct?
    Mr. Warfield. Mr. Johnson, I would respectfully indicate 
that our industry--and I believe I saw a press release 
yesterday that the broadcast industry has grown from $15 
billion to a $20 billion industry from 1998 through 2006.
    Mr. Johnson. My question----
    Mr. Warfield. But what I would indicate with that is that 
all of that growth occurred between 1998 and 2000. There has 
been absolutely no growth in our industry----
    Mr. Johnson. Okay.
    Mr. Warfield. Respectfully, what Clear Channel has done, 
that is wonderful for Clear Channel. But that certainly does 
not translate to many broadcasters in this country today.
    Mr. Johnson. Well, my question is this: Webcasters pay a 
fee to broadcast terrestrial radio over the Web, correct?
    Mr. Warfield. In some cases, that may be true.
    Mr. Johnson. Well, I mean, no respectable broadcast radio 
transmitter would allow their signal to be broadcast over the 
Web without getting paid for it.
    Mr. Warfield. We broadcast ourselves. We stream two of our 
radio stations. Of the group that we have, we stream two radio 
stations on the Web only.
    Mr. Johnson. And if anybody wanted to broadcast your 
programming over the Web, you would want them to pay you for 
that.
    Mr. Warfield. If you know anyone that would like to do 
that, I would love to speak with them. I have not had that 
opportunity in our company.
    Mr. Johnson. Well, there are a lot of folks out there who 
are broadcasting over the Web and paying money for it. And if 
you look at that in terms of that Web broadcast being like a 
sound recording, it is paying the performer, in other words, to 
broadcast. And so I don't see why terrestrial broadcasters 
should be exempt from having to pay for the----
    Mr. Berman. The time of the gentleman has expired.
    Mr. Johnson. Thank you, Mr. Chairman.
    Mr. Berman. I will recognize myself for 5 minutes.
    If it is any consolation, Mr. Keller, my guess is that the 
radio stations you will be advertising on are probably 
boycotting the Dixie Chicks. [Laughter.]
    Mr. Keller. I hope so. [Laughter.]
    Mr. Berman. Mr. Warfield, continuing to beat on you. 
[Laughter.]
    I grew up and live in Los Angeles. There is a wonderful 
baseball announcer there named Vin Scully who broadcasts a 
pretty magical game in a very magical way. And no one can tell 
me that Vin Scully's broadcasts of Los Angeles Dodgers games 
doesn't attract fans to go to those baseball games.
    In other words, I really don't have serious doubts that 
your promotion of records gets people interested in that music. 
But I think no one in the world would suggest that, because the 
station that broadcasts Los Angeles Dodgers games is helping 
the Dodgers increase its fan base and its purchase of uniforms 
and caps and other things for which they have ownership rights, 
that the Dodgers are somehow obligated to allow that station to 
broadcast the Dodger games for free.
    Analytically, what is different about this situation than 
that?
    Mr. Warfield. Mr. Chairman, I was, you know, born and 
raised here in Washington, D.C. It was----
    Mr. Berman. Well, that is a different problem. [Laughter.]
    Mr. Warfield. I was a Senators fan, by the way, you know, 
living in Anacostia.
    And I grew up here in Washington, D.C., sitting on my porch 
listening to a--trying to pick up a small AM radio station in 
Baltimore, WEBB, to hear music that ultimately I would actually 
go out and buy. More years ago than I might want to say, it is 
almost 50 years ago that I did that. But that relationship with 
music radio stations and record companies and artists continues 
today.
    I had such an extensive collection simply because of what I 
heard, and I went out and bought. And I would argue that today, 
that practice is still in effect. I spoke to my nephew 
yesterday afternoon----
    Mr. Berman. Yes. I don't contest it. I am not challenging 
the mutually beneficial nature of the relationship.
    I am just trying to understand why, in this area, the 
recognition of that relationship makes one conclude that 
therefore one party to that relationship shouldn't pay for what 
they are playing.
    Mr. Warfield. I am sure that was a negotiation that existed 
between that broadcaster and that baseball team at that point. 
In terms of driving people to the seats, it is sort of whether 
they are winning or losing.
    Mr. Berman. Fair--that is a--so maybe the thing isn't to 
pass a statutory license to compel record labels and recording 
artists and bands to provide their music at a certain price. 
Maybe it is to just let the free market play and let a radio 
station have to negotiate for every record it wants to use with 
the owner and the----
    Ms. Collins. Right.
    Mr. Berman [continuing]. Recording artists and all the 
people who have interest in that sound recording. But that is 
not a good system. Is it?
    Mr. Warfield. I think the system that is in place now has 
worked very well for the recording industry and the radio 
industry----
    Mr. Berman. Right. All right.
    Mr. Warfield [continuing]. And for the artists, as a matter 
of fact.
    Mr. Berman. Well, but part of it is because it is a 
mutually beneficial system, right?
    Mr. Warfield. Mutually between the radio stations, the 
record labels, and the artists----
    Mr. Berman. Yes.
    Mr. Warfield [continuing]. Absolutely.
    Mr. Berman. When one party to a relationship that the other 
party thinks is mutually beneficial thinks it aint that 
beneficial, in America we let the parties sort of decide----
    Ms. Collins. Right.
    Mr. Berman [continuing]. Whether that relationship is 
mutually beneficial, don't we?
    Mr. Warfield. Well, when those individuals--I know, again, 
we have music day in our radio stations in all of our markets 
at least once a week. And we have no shortage of individuals 
from the record labels, nor artists, that want to come to the 
radio station and work to get airplay or work to have 
interviews.
    I think that at that point I see a relationship that is 
certainly mutually beneficial for all parties. It is helpful to 
the radio station. It is helpful for the record labels, and 
certainly provides exceptional exposure for that artist, 
whether it be a new artist or an established artist that has 
new releases.
    So I think it is absolutely beneficial to all parties.
    Mr. Berman. All right. Well, my time has expired. But I 
am--oh, good. [Laughter.]
    Mr. Issa. I am there for you, Chairman. [Laughter.]
    Mr. Berman. The gentleman from California, Mr. Issa?
    Mr. Issa. Thank you, Mr. Chairman.
    And I rushed back because this is so important.
    Ms. Collins, if you had the right to withhold from those 
who do not pay you a fee for your performance, today would you 
exercise it?
    Ms. Collins. I am sorry. Could you repeat the question?
    Mr. Issa. It is a tough one.
    The gentleman sitting next to you is happy to promote your 
music. He is doing you a favor. If you had the right to tell 
him that you did not want him to do the favor at his station 
anymore, if you had the right to do that, would you likely do 
that or consider it? Or, this is assuming he is paying you 
nothing.
    Ms. Collins. Oh, I am getting an education here after being 
in the dark for so many years. And, of course, I would say, 
yes. Let us negotiate a price.
    I mean, that is a free market enterprise. That is what free 
markets are about. We have other systems of Government which 
preclude this kind of negotiation. We at least say that we 
don't--that we are not those societies. We are an open, free 
market society.
    Yes, I would negotiate.
    By the way, even if there is promotional value--and of 
course there is on the radio--but that must be paid for. That 
is a service, and there is a profit being made.
    As I said before, we are selling, with our music, plenty of 
advertising. And we are making, in most cases--now, there are 
exceptions and, you know, we were talking about the--
distinguishing between those stations which can afford to pay X 
and those who can afford to pay Y--I think pay for play is the 
question here and respecting the artists in a society that says 
it respects artists.
    Mr. Issa. I am going to ask you a question I should know as 
a fan of yours, but I am unfortunately a fan of your music not 
currently being written.
    Have you done anything in the last few years that you would 
like to get play on? Are you doing any kind of music anymore?
    Ms. Collins. I am always touring. As I said, I do----
    Mr. Issa. No. But I am asking a question----
    Ms. Collins [continuing]. I make records. They are on the 
market----
    Mr. Issa. But I am asking a question for a reason, and bear 
with me.
    I told you I have spent a little bit more time with Carole 
King because she has been around here on other issues. And one 
time she did a concert, and she played songs I had never heard, 
some of which I liked and some of which I wasn't interested in. 
And I asked about them. And they basically don't get any play 
because the oldies, if you will, in fact, are what the stations 
play.
    And I asked about it. She said: Well, this isn't what I am 
known for but this is a lot of what I am doing, and I am 
continuing to create.
    If you had the ability to negotiate and were in Carole's 
position, for example, I am assuming that you would include in 
for playing my best known songs, the ones that are played 
habitually on the radio, that you would also want those 
promoted, something that is not happening today on any of these 
radio stations. Is that something that you feel you are being 
denied because, in fact, there is an absolute right to play 
your winners and no obligation to play those?
    Ms. Collins. No. No, I don't feel that is true. I think 
that the market will dictate and the audience for the song will 
dictate--you know, I would love to have some of my lesser known 
songs played a lot on the radio.
    When I do a concert, I design the concert. I include new 
things, old things, classic things, brand-new songs. My job as 
an artist is to bring all of those things together and to 
create a balance. And the radio has helped me do that.
    Mr. Issa. Right.
    Ms. Collins. It still means that I have to be--must be paid 
for my performing.
    Mr. Issa. Mr. Moore, in your case, has a station ever been 
willing to promote your pieces, or do they prefer to play the 
best-known pieces----
    Mr. Moore. No, no.
    Mr. Issa [continuing]. As they like?
    Mr. Moore. No, no.
    I just--well, last year, I have been promoting a new album. 
And you would be surprised, if you don't have the album, with 
some of the people I have had on there.
    But, no, radio--and I am pretty sure that my dear colleague 
next to me--they didn't give--I don't think they gave--I have 
to believe, until I am straightened out, that they didn't give 
me the airplay.
    Mr. Issa. Okay. So the real bottom line is that they play 
what sells for them. They don't play what you would like to 
have promoted.
    Mr. Moore. Oh, no. No, no, no, no. No, that is true.
    Mr. Issa. As a general rule.
    Mr. Moore. That is true.
    Mr. Issa. Well, that has been my finding.
    Now, of course, part of the problem is I want to listen to 
oldies stations. The music that I like is the music that they 
are not making anymore for the most part. And that would be one 
of my questions for Mr. Warfield.
    How in the world do you justify the promotional value of an 
oldies station if, in fact, you say you are promoting, but 
these are songs that are well-established and that is 
exclusively what is being played on lots and lots of AM and FM 
stations?
    Mr. Warfield. Within our company, we don't have any oldies 
stations.
    But I will say to Mr. Moore--we had a brief conversation 
before this session started this morning--we do have a radio 
station in New York City, WBLS, that is a contemporary music 
station. But we have an air personality on on Sunday mornings, 
Mr. Hal Jackson, who has been a broadcaster for nearly 70 years 
who--I do have a copy of Mr. Moore's album because that is 
something that--his new material, as well as his better-known 
material, was played on that program. And we did give the 
audience an opportunity to hear that. So----
    Mr. Issa. Okay.
    Mr. Chairman, could I ask one follow-up question if there 
is time? Thank you for your indulgence.
    Because I think it is clear that we are going to deal with 
the disparity that exists between different forms of 
communication of people's performances, hypothetically, Mr. 
Warfield, if, in fact, you had the right that you presently 
have for your stations for the first 12 months of a new album, 
of a brand-new song, and you could play that for free, would 
that be a congressional way and an industry way of encouraging 
you to play the new--even if it is re-mastered--but, in fact, 
clearly promote what I think Mr. Moore and perhaps Ms. Collins 
would like to have promoted?
    Mr. Warfield. The decision of what gets played on the 
various radio stations in our company is made on a market-by-
market basis----
    Mr. Issa. No, no. I was only asking a very narrow question.
    Mr. Warfield. I, I----
    Mr. Issa. Would you tend to play free versus pay because 
there would be a financial benefit to your promoting new?
    Mr. Warfield. I think that becomes a matter, again, for 
each individual market. It can----
    Mr. Issa. No. I am only asking you.
    Mr. Warfield. I would say I would leave that decision to 
the local programmers. I don't get involved in programming 
decisions in music.
    Mr. Issa. Thank you, Mr. Chairman.
    I guess I am not going to be entitled to an answer of 
whether free sells better than cost. [Laughter.]
    But I think we have established that in other hearings.
    Ms. Collins. Free.
    Mr. Berman. It is a willing buyer, willing seller 
situation.
    Ms. Collins. Yes, yes, yes.
    Mr. Keller. Mr. Chairman?
    Mr. Berman. I was going to let anyone else who, until the 
last one drops. [Laughter.]
    Mr. Keller, the gentleman from Florida.
    Mr. Keller. Thank you.
    Mr. Hodes, if you had made it big during your days as a 
performer and songwriter, would you be stuck with the low-end 
Government job that you are stuck with right now? [Laughter.]
    Mr. Hodes. Well, I did make it big. Here I am.
    Mr. Keller. All right. [Laughter.]
    We are happy you are here, at least that side is, I am 
sure, but---- [Laughter.]
    Mr. Hodes. That is okay with me.
    Mr. Keller. Just teasing. I am just teasing.
    Mr. Berman. Us and the country.
    Mr. Keller. And the country. Fair enough.
    Ms. Peters, you have talked about making sure the 
performers are paid royalties. Do you think those royalties 
should be paid in cases where their music is played in 
restaurants, bars, retail shops, shopping centers, and sporting 
venues?
    Ms. Peters. Ultimately, yes. But the focus today is on 
radio over the terrestrial broadcasts. But I have always 
supported a broad performance right.
    Mr. Keller. And should they be paid when their music is 
played in small-and medium-sized radio stations?
    Ms. Peters. I think it is the marketplace. The issue is we 
are really talking about equitable remuneration. And equitable 
means under the circumstances; willing buyer, willing seller, 
and the circumstances that both find themselves.
    Mr. Keller. Right.
    But what I am getting at is you have heard from Mr. Berman 
earlier today, who is an acknowledged leader and well-respected 
on this issue, that when it comes to making sure performers are 
paid royalties, he is not going to be going after restaurants, 
bars, retail stores, sports venues, shopping centers, and small 
radio stations. And I just want to know if there is any sound 
basis in the copyright law for making that distinction.
    Ms. Peters. I would suggest to you that every step forward 
in expanding the performance right is a positive step. And it 
is up to Congress to decide the scope of the step it is willing 
to take at any particular time.
    Mr. Keller. Well, thank you. You sound like the politician 
here. [Laughter.]
    Let me go to Ms. Collins.
    You have heard from Mr. Warfield that if they have to pay 
performers these royalty fees, then maybe they will just switch 
to other formats like talk radio----
    Ms. Collins. Well, they would have to pay the talkers.
    Mr. Keller. Do you think that is realistic that a top-
rated, top-40 station is going to switch and try to compete 
with Rush Limbaugh?
    Ms. Collins. Well, I don't think that is the question.
    I think people want to hear music. And I think if the 
stations are going to broadcast music, then they need to pay 
the performer.
    So I don't--I think, again, it is a market-driven question. 
It is a question of what advertisers want. It is what happens 
between the buyer and the seller. And we don't want to be left 
out in the cold.
    Mr. Keller. And I don't want to cut you off, but I only 
have 5 minutes here.
    And I agree. I think a marginal-rated station may do that, 
but you are not going to have the number one-rated top-40 
station switch and try to do talk radio, especially when the 
market is flooded as it is.
    Mr. Warfield, in your testimony, you talked about 
broadcasters paying songwriters $450 million a year in direct 
performance royalty, yet they are paying the performers zero. 
They get, instead, indirect promotional benefit by playing 
their records, you suggest.
    Can you please explain why, in the broadcasters' rationale, 
it is okay to pay the songwriters for their copyrighted works 
but not okay to pay the performers?
    Mr. Warfield. The songwriters are not benefiting actually 
from the sale of the records that is generated by the airplay. 
The same way that the artist is benefiting, the record label is 
benefiting through the sale of the product----
    Mr. Keller. I get it.
    Mr. Warfield [continuing]. The composer----
    Mr. Keller. Well, the songwriter benefits from the record 
sales, too. He gets a certain amount for each record sold.
    Let me go to my next question. Can you explain the 
distinction, Mr. Warfield, as why it is okay to pay the 
performer in terms of satellite radio, but not with respect to 
terrestrial radio? What is the distinction that makes it okay 
for you guys not to pay the performer?
    Mr. Warfield. I think that there are three distinctions: 
one, digital; secondly, the interactivity of the new streams 
that are out there; and the fact that they are also 
subscription. I think there are three distinctions that 
separate these new platforms from terrestrial broadcasting.
    Mr. Keller. I thought you were going to say it is because 
we do things like public interest programming and public 
service announcements and that sort of thing. That is not your 
argument for why you shouldn't be treated differently from 
satellite radio?
    Mr. Warfield. Well, we still do that. We are required to do 
that. And we are happy to do that. And we will continue to do 
that.
    Mr. Keller. Okay.
    Ms. Collins, you are a songwriter, as well as a performer?
    Ms. Collins. I am.
    Mr. Keller. Do you benefit from increased record sales?
    Ms. Collins. By the play on the radio?
    Mr. Keller. Yes, ma'am.
    Ms. Collins. I think it is a large subject. I think 
everything interacts. But if one of my income streams has been 
cut completely off for 50 years, you can see where my business 
and my personal life and my health care as I grow older is 
suffering.
    Mr. Keller. Thank you.
    My time has expired, Mr. Chairman.
    Mr. Berman. I thank the gentleman.
    And, just at some point after Mr. Cohen questions, I do 
want to come back to the register of copyrights on the issue of 
when a record is sold, you know, retail, what the compensation 
stream and whom it goes to, just to clarify it for the record.
    The gentleman from Tennessee, Mr. Cohen?
    Mr. Cohen. Thank you, sir.
    Mr. Keller asked one of the questions I was going to ask 
and it was of Mr. Warfield. And I still don't think we got the 
answer. But the belief in why songwriters should get paid and a 
singer shouldn't when you play that song.
    Mr. Warfield. The system has been in place for the last 80 
years. Certainly, it is designed to support the creator of the 
music.
    You know, the copyright is certainly designed to promote 
the progress of science and useful arts.
    And, you know, absent a performance tax to date, there is 
certainly no lack of sound recordings being produced. 
Certainly, as I have indicated in this industry----
    Mr. Cohen. I know that, but what is the difference? Why 
should Mr. Porter get money when you play ``Soul Man'' and Mr. 
Hayes get money, and not Mr. Moore?
    Mr. Warfield. Well, the benefit to Mr. Moore and to the 
record label accrued to them upon the airplay, which then 
generated the record sales, which then benefited the label----
    Mr. Cohen. But that is a by-product. Why should Mr. Porter 
and Mr. Hayes get paid also when they buy that record? The 
songwriters get paid every time.
    Ms. Collins. Every time.
    Mr. Cohen. They always get paid.
    Ms. Collins. Always.
    Mr. Cohen. It is only the singer. And there are more 
singers that, to be honest with you, sir, that are minorities 
who I represent than there are songwriters----
    Mr. Warfield. It is----
    Mr. Cohen. The songwriters oftentimes are Caucasian, more 
often than not, and a lot of the performers are African-
American. They are minorities. And they are really, because of 
your system, they are getting shortchanged.
    Mr. Warfield. I wouldn't say because of our system. I think 
what we need to also acknowledge here is that there is a long 
history of African-American and minority performers that have 
been mistreated by the record labels and not necessarily due to 
any fault----
    Mr. Cohen. So that is wrong--because that is wrong----
    Mr. Warfield. And that argument--you are absolutely right, 
but that is really an issue with the record labels and their 
artists that have helped them generate significant revenues 
over the years----
    Mr. Cohen. No, sir.
    Mr. Warfield [continuing]. Rather than----
    Mr. Cohen. Excuse me, if I can?
    It is the fact that when you play the song on the radio the 
minority guys don't get paid. It is the Stoller and Lieber, or 
whatever their names are. They get paid, the songwriters.
    Ms. Collins. Always.
    Mr. Cohen. But the guys in Rocky Joes don't get paid, or 
Smokey Joes, or whatever it is.
    Ms. Collins. That is right.
    Mr. Cohen. They don't get paid when they sing it. It is the 
guy that writes it, the Tin Pan Alley guy. And you and I should 
be on the same team.
    Mr. Warfield. I am on the side of the team that has built a 
very successful business for the last 80 years and don't find--
I think that, on your argument, there certainly needs to be 
something addressed with the record labels themselves. That is 
not a responsibility that should be laid at the feet of the 
radio broadcasters.
    Mr. Cohen. Ms. Collins, let me ask you. You have listened 
to Mr. Warfield here today. Can you see both sides now? 
[Laughter.]
    Ms. Collins. You mean, rows and flows of angel hair? We 
need a little music here.
    Mr. Cohen. I have got more time. Keep going. [Laughter.]
    Ms. Collins. You know, the issue of the performer as a 
misused and abused section of the entertainment population is a 
very important one. It is true. All writers get paid all the 
time.
    Mr. Cohen. Right.
    Ms. Collins. They get paid when the song goes on the radio. 
They get paid when I do a concert including my songs or other 
people's. They get paid when the record sells.
    So they are getting the double dip--that is where the 
double dipping is happening in a way. That is equitable. I 
agree with that. I approve of that.
    But the performer, the artist, is treated badly.
    I was saying before, you know, it is sort of like, you 
know, we still, all of us performers, for the most part, go in 
the back door, through the kitchen. And I think of this as a 
kitchen route. You know, through the funny little entrances 
which you can't find to do the show. This is one of those 
situations.
    I don't know why it has happened. I think the lobby is very 
strong.
    Yes, it is very profitable not to pay the artists. Not for 
the artists, but it is very profitable. In 80 years, it has got 
to be extremely profitable.
    Mr. Cohen. You know, Leonard Cohen is a great songwriter, 
and he was blessed with a great voice, too. But, nevertheless, 
when Jennifer Warnes sings his songs, they are better. And 
shouldn't Jennifer Warnes get paid for that?
    Ms. Collins. She certainly should. And he should and does.
    Mr. Cohen. Mr. Warfield, you said you like the system like 
it is today. What if we passed a bill that said the songwriters 
don't get paid when they get their songs played----
    Ms. Collins. Yes, let us change places.
    Mr. Cohen. Yes. Would you like that better?
    Mr. Warfield. I sort of like it the way it is right now. 
[Laughter.]
    I am not for advocating any changes, as I said here today. 
Thank you.
    Mr. Cohen. Thank you, sir.
    And thank all the panelists.
    And I want to thank--I haven't thanked the Chairman. And 
this is like the Academy Awards when you are up here. You have 
to thank all the members of the Academy and my father---- 
[Laughter.]
    Mr. Berman. And don't forget your family.
    Mr. Cohen. Yes. My father thanks you, my mother thanks you, 
my brother thanks you, and I thank you.
    Mr. Berman. Just to, I guess, to recognize myself, and 
then--first, Mr. Warfield, I am old enough to remember a time 
when the broadcasters did want to change the way the 
songwriters got paid for their music. They wanted to reduce it. 
They wanted to change the nature of the license. It was a major 
struggle here in the late 1980's.
    So you may think it is just fine now, but there was a time 
when the industry didn't think it was so fine.
    I would just like to ask the register to clarify one, this 
issue of who gets paid and when in, you know, short, simple 
terms. I think it has been said but it is--these things get 
complicated, and it is good to repeat it.
    And also, Mr. Coble had a question prepared, but he had to 
go to his hearing. If there was a performance right, if we got 
rid of that exemption for terrestrial radio, why doesn't the 
money just go to the labels? What is the mechanism by which 
that money would be distributed?
    So if you could just deal with those two issues.
    Ms. Peters. Okay. Let us start with the first one, who gets 
paid. And actually, your colleague knows the answer as well as 
I do.
    Composers, lyricists, musical composition copyright holders 
have a full panoply of rights. And, certainly, the reproduction 
and distribution right is implicated in the making and sale of 
a phono record.
    And they, actually, by statute, get paid subject to a 
compulsory license. It is called a mechanical compulsory 
license, section 115. It can be voluntarily negotiated, but 
because the mechanical license has a rate, it is bargained 
down.
    But there is a payment to every composer and every music 
publisher for every recording that is sold in the marketplace. 
And just as there is for every, you know, for most 
performances.
    The beauty of section 114 that deals with performance 
rights for sound recordings is that there is direct payment to 
performers. The income does not funnel through the record 
companies.
    There are representatives here of SoundExchange. The money 
goes to SoundExchange, and it is distributed to the record 
producers and to the performers. So it is not, as is typical 
with record sales, funneled through the record companies.
    Mr. Berman. Mr. Issa?
    Mr. Issa. Thank you.
    You know, I spent a couple years in business. And I 
finished up my last few minutes debating the relative merits of 
free versus pay. And I was kind of confounded that the 
broadcasters wouldn't have a fairly simple, you know, decision 
on which they prefer, because the youth of America certainly 
do.
    And I would like to touch on that for a moment.
    It is very clear over the last decade, the 12 years, 
actually, since the 1995 act, that free trumps pay. It is 
clearly why we have had to deal with the copyright issues. It 
is clearly why those evil record labels that pay the artists 
nothing have seen their ability to pay them that nothing go 
down pretty precipitously. [Laughter.]
    You know, there is no more lose lose than there is no money 
coming in, there is no money going out. Record sales have been 
dropping. And they have been dropping not because people listen 
to less music but because music is ripped and then ripped off.
    When your industry improves from analog to digital, you are 
going to be able to deliver far better broadcasts, while you 
still have a little loop in the system and one that we are very 
aware of, which is that I can record your terrestrial 
broadcast. I can record that all I want.
    There is no legal prohibition on my taking the analog. 
There is no legal prohibition on my taking the metadata, the 
digital information that is going to tell me that it is Mr. 
Moore's or Ms. Collins's music. It is going to tell me 
everything I need to know. It will probably give me the words 
so I can sing along because you will be broadcasting the 
information for karaoke machines.
    All of that is going to be, under the current statutes--and 
correct me if I am wrong; that is why we have the Copyright 
Office here--it is going to be all free for me to download 
digitally because today terrestrial broadcast has essentially a 
free license for me to buy a piece of equipment to record that 
all I want.
    Have I missed anything from the standpoint of current 
copyright?
    I mean, that is correct. I see you are shaking your head 
so----
    Mr. Warfield. Oh, for me?
    Right now, with HD-radio, which is in its infancy in our 
industry, there are no pieces of hardware at this point that 
allows that type of recording, as a matter of fact----
    Mr. Issa. Well, I can tell you that the consumer 
electronics industry is well-represented here for a reason, 
because clearly that is a nanosecond away.
    I have recused myself from the antitrust hearings on XM and 
Sirius because a company that I founded is now a hardware 
supplier in that industry, even though I don't own any stock. 
So I am acutely aware that what is happening in Sirius and XM 
is not a technological--as a matter of fact, it is easier to do 
on your music, which is not encrypted and encoded and requiring 
a separate chip.
    In fact, there is no reason it couldn't be done today. And 
there is no reason that it actually--that the equipment doesn't 
exist other than, to be honest, you are not broadcasting enough 
stations in high enough, you know, supply, if you will. But it 
is only a matter of 6 months, 1 year, 2 years. It is an 
inevitability.
    And I am the former chairman of the Consumer Electronics 
Association. I am definitely here to tell you we will see those 
at CES, if not this January, then next January.
    And I am proud of the industry I came from. I think it is a 
very innovative industry. However, the songwriters and the 
musicians are a very innovative group.
    And, in fact, you are sitting here today saying to me your 
industry cannot afford or doesn't owe anything for the huge 
amount of content that you play every day and that, under 
existing laws, if this body, this literal Committee, doesn't 
take action, will be broadcast in high-definition, very nice 
sound quality with digital data so you know what song it is to 
the listeners that will be recorded within a year or two and, 
as a result, CD sales that you claim to be promoting will 
plummet probably to zero.
    And you are here today saying you can't afford to do 
anything about either problem, is that correct?
    Mr. Warfield. That is not a problem that we are facing 
right now. It is just not available in our industry----
    Mr. Issa. It is not your problem today.
    Mr. Warfield. It is not an issue within our industry at 
this point because they are not----
    Mr. Issa. When that recording device is on the market in a 
January Consumer Electronics Show this year, next year January, 
will it be your problem? And what will you do about it?
    Mr. Warfield. I think that would be an industry concern at 
that point. I don't know what we would do.
    Mr. Issa. Okay. So, you know, look, I am a friend of the 
broadcaster, maybe a little more, little less than Mr. Coble. 
But I have to ask, if we don't act, will we destroy an industry 
that you claim you want to promote if we don't deal with both 
of those problems and do it in a timely fashion?
    And I know my time is expired. And, Mr. Chairman, thank you 
for your indulgence.
    I want us to continue working on this because I think you 
are here today. I hope that we have individual broadcasters 
back here so they can answer those two questions of what 
happens when all of their high-quality music is recordable with 
metadata and, in fact, the record industry goes from a shadow 
of what it once is to nothing, then who--won't the songwriters 
also be losing?
    Thank you, Mr. Chairman. I yield back.
    Mr. Berman. I think we are about to close. I am first going 
to yield half a minute to the gentleman from Florida, Mr. 
Keller.
    Mr. Keller. Thank you, Mr. Chairman.
    I want to thank all of our witnesses for being here. I am 
still confused, but on a much higher plane, having been through 
this. [Laughter.]
    Mr. Warfield, you have been there, the only one out of five 
espousing your position, the broadcasting position, so you have 
appropriately earned your last name today. [Laughter.]
    And I want to thank you especially. [Laughter.]
    I thank all of the witnesses. I tried to be fair with all 
of you, to get your all sides, and I think we brought those 
out. And it means a lot that you took time out of your busy 
schedule to be here, and especially my esteemed congressman, 
Mr. Hodes. And I wish I had your creative background, as well 
as your political skills. I want to thank you for being here.
    And I will yield back the balance of my time.
    Mr. Berman. I thank the gentleman.
    I might point out that we did try to get another witness 
who was opposed to this concept of compensating for the 
performance right, but Mr. Warfield you were a good warrior. 
[Laughter.]
    And other than anything else the panel wishes to say to us 
or each other, I am prepared to--is there any----
    Mr. Issa. Can they make a deal here today? [Laughter.]
    Mr. Hodes. Mr. Chairman?
    Ms. Collins. I----
    Mr. Berman. Ms. Collins?
    Ms. Collins [continuing]. Respectfully just want to say 
that I am very grateful to be here. That you have all made 
yourselves available to this issue, put in so much time on 
thinking about it, and I know the future of music is going to 
benefit from this meeting today. Thank you.
    Mr. Berman. Paul?
    Mr. Hodes. We have a tradition in this country of change. 
And sometimes change is a four-letter word. But the broadcast 
industry has enjoyed a tremendous benefit for 80 years, and I 
believe the change is coming.
    If it is any consolation to Mr. Warfield, when the 
broadcast industry pays a fair and equitable performance 
royalty, the richness of our music in this country will be 
enhanced. Performers will do better. By doing better, they will 
make more and better music, and ultimately, that will inure to 
the benefit of the broadcasters.
    So I am hoping that the broadcasters can look at the bright 
side because there is one, even though change is tough.
    Mr. Berman. Did I get a sighting from my right here?
    Mr. Cohen. Yes. Without conjuring up images that they shoot 
horses, don't they, I would like to ask one last thing.
    Mr. Warfield, if we pass something to give songwriters 
money, that would cause the broadcasters----
    Mr. Hodes. Performers.
    Mr. Cohen [continuing]. Performers--excuse me, I am sorry--
performers money, that would cost you some of your additional 
costs, right?
    Mr. Warfield. Correct.
    Mr. Cohen. And then would you just reduce your costs--your 
profits, or would you charge the advertisers a little bit more 
money?
    Mr. Warfield. In some cases, broadcasters will not have the 
opportunity to increase their revenue generation from 
advertising. And, unfortunately, there is this perception that 
all broadcasters are, you know, making a lot of money. And, 
unfortunately, some broadcasters, quite honestly, would 
possibly have to go out of business or to sell their radio 
stations.
    Mr. Cohen. You don't think you could charge a little more 
advertising? It is not a lot of money. You could charge just a 
little more and then the public would pay for it when they buy 
goods, and the public, you know, that is where it ends up 
being?
    Mr. Warfield. We have an industry that from 2001 through 
2006, as evidenced in many trade articles, is absolutely flat 
with no revenue growth whatsoever. So to counter that, to 
believe that we would be able to generate additional revenue 
through higher rates, is not supported by the performance of 
the industry over the last 6 years.
    Mr. Cohen. Okay. Thank you, sir.
    Mr. Berman. The hearing of the Subcommittee is adjourned. 
Thank you all very much.
    [Whereupon, at 1:16 p.m., the Subcommittee was adjourned.]

                                 
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