[Senate Hearing 111-237]
[From the U.S. Government Publishing Office]
S. Hrg. 111-237
THE PERFORMANCE RIGHTS ACT AND PARITY AMONG MUSIC DELIVERY PLATFORMS
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HEARING
before the
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
AUGUST 4, 2009
__________
Serial No. J-111-41
__________
Printed for the use of the Committee on the Judiciary
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COMMITTEE ON THE JUDICIARY
PATRICK J. LEAHY, Vermont, Chairman
HERB KOHL, Wisconsin JEFF SESSIONS, Alabama
DIANNE FEINSTEIN, California ORRIN G. HATCH, Utah
RUSSELL D. FEINGOLD, Wisconsin CHARLES E. GRASSLEY, Iowa
CHARLES E. SCHUMER, New York JON KYL, Arizona
RICHARD J. DURBIN, Illinois LINDSEY GRAHAM, South Carolina
BENJAMIN L. CARDIN, Maryland JOHN CORNYN, Texas
SHELDON WHITEHOUSE, Rhode Island TOM COBURN, Oklahoma
AMY KLOBUCHAR, Minnesota
EDWARD E. KAUFMAN, Delaware
ARLEN SPECTER, Pennsylvania
AL FRANKEN, Minnesota
Bruce A. Cohen, Chief Counsel and Staff Director
Matt Miner, Republican Chief Counsel
C O N T E N T S
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STATEMENTS OF COMMITTEE MEMBERS
Page
Feinstein, Hon. Dianne, a U.S. Senator from the State of
California..................................................... 1
prepred statement............................................ 39
Franken, Al, a U.S. Senator from the State of Minnesota, prepared
statement...................................................... 41
Leahy, Hon. Patrick, a U. S. Senator from the State of Vermont... 3
prepared statement........................................... 56
WITNESSES
Escovedo, Sheila, Grammy Award-Winning Artist, on behalf of the
MusicFIRST Coalition, Sherman Oaks, California................. 4
Kimball, Robert, Executive Vice President, RealNetworks, Inc.,
Seattle, Washington............................................ 7
Leighton-Levy, Marian, Owner, Rounder Records, Burlington,
Massachusetts.................................................. 9
Newberry, Steve, Joint Board Chairman, National Association of
Broadcasters, and President and Chief Executive Officer,
Commonwealth Broadcasting Corporation, Glasgow, Kentucky....... 11
Oman, Ralph, Adjunct Professor, George Washington University Law
School, Washington, D.C........................................ 13
Winston, James L., Executive Director and General Counsel,
National Association of Black Owned Broadcasters, Inc.,
Washington, D.C................................................ 15
QUESTIONS AND ANSWERS
Responses of Ralph Oman to questions submitted by Senator
Feinstein...................................................... 31
SUBMISSIONS FOR THE RECORD
Digital Media Association, Washington, D.C., August 11, 2009,
letter......................................................... 32
Escovedo, Sheila, Grammy Award-Winning Artist, on behalf of the
MusicFIRST Coalition, Sherman Oaks, California, statement...... 36
Kimball, Robert, Executive Vice President, RealNetworks, Inc.,
Seattle, Washington, statement................................. 45
Leighton-Levy, Marian, Owner, Rounder Records, Burlington,
Massachusetts, statement....................................... 58
Moore, Joyce, Scottsdale, Arizona, August 10, 2009, letter....... 64
Roger Friedman of Cox Radio, August 2, 2007, letter.......... 69
Sam Moore testimony before House Judiciary Committee, July
31, 2007................................................... 72
Newberry, Steve, Joint Board Chairman, National Association of
Broadcasters, and President and Chief Executive Officer,
Commonwealth Broadcasting Corporation, Glasgow, Kentucky,
statement...................................................... 78
Oman, Ralph, Adjunct Professor, George Washington University Law
School, Washington, D.C., statement............................ 108
Pandora Media, Inc., Oakland California, August 4, 2009, letter.. 116
Peters, Marybeth, United States Copyright Office, Washington,
D.C., statement................................................ 117
Songwriters Guild of America, New York, New York, August 11,
2009, letter................................................... 119
Winston, James L., Executive Director and General Counsel,
National Association of Black Owned Broadcasters, Inc.,
Washington, D.C., statement.................................... 120
THE PERFORMANCE RIGHTS ACT AND PARITY AMONG MUSIC DELIVERY PLATFORMS
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TUESDAY, AUGUST 4, 2009
United States Senate,
Committee on the Judiciary,
Washington, D.C.
The Committee met, pursuant to notice, at 2:34 p.m., in
room SD09226, Dirksen Senate Office Building, Hon. Dianne
Feinstein, presiding.
Present: Senators Leahy, Feinstein, Durbin, Klobuchar,
Specter, Franken, and Cornyn.
OPENING STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. SENATOR
FROM THE STATE OF CALIFORNIA
Senator Feinstein. This hearing will come to order.
Today's hearing represents the continuation of work that
Senator Leahy and I have been engaged in for some time aimed to
protect and promote the work of musical performers, while at
the same time resolving inequities that are currently created
under copyright law.
Copyright protection, as I think everybody in this room
knows, has its foundation in our Constitution, and our
copyright industries--music, movies, books, software--are a
major contributor to our economy.
A report released 2 weeks ago found some interesting
things. One of them was that core copyright industries
contributed over 22 percent of the United States economy's
growth; and, secondly, copyright industries grew at twice the
rate of the United States economy as a whole. I think that
indicates how important these intellectual property areas are.
But as the technology for delivering creative works has grown
and evolved, especially so in the case of music, copyright law
has become more and more complex.
Music was once only available live at concerts or in small
gatherings. Then, with the dawn of recordings and transmission,
radios were born. But a radio used to be as large as a piece of
furniture. Now music radio programs are provided in our autos,
on MP3 players that are barely larger than a postage stamp, and
we can access radio programming over the Internet, from cable,
and from satellites.
The availability of music in clear digital formats has
grown from compact discs, to the Internet, and now to broadcast
radio transmissions. As the availability and technical quality
of music has increased, however, so has the ease of freely
recording, copying, and sharing this music, without
compensating the artist whose genius created the music to begin
with. In fact, the United States is the only industrialized
nation that does not provide performers a full performance
right.
Let me say that again. We are the only industrialized
nation on Earth that does not provide performers with a full
performance right.
At the same time, the incremental evolution of music
delivery technologies has led to a hodgepodge of different
copyright royalty schemes and rates. Playing the same piece of
music to the same listener and even in the same place, such as
their home, workplace, or car, can lead to significantly
different royalty payments, or none at all, depending upon
whether the listener receives the music via a satellite
transmission, via a high-definition digital radio broadcast, or
via the Internet, which itself can be accessed by copper wire,
by satellite transmission, or by fiberoptic cable.
Thus, innovative new businesses, which often have the
benefit of exposing consumers to a broader array of artists,
benefiting both the listener and the artist, compete at a
disadvantage with other music delivery services. So the
challenge facing us as lawmakers is how to encourage
innovation, growth, and competition while at the same time
protecting artists, musicians, and authors.
Last Congress, I introduced bipartisan legislation, The
PERFORM Act, that tried to accomplish these goals, and chaired
a hearing on the bill and the surrounding issues that I have
just discussed.
We have just been joined by the Chairman of the Committee,
the distinguished Senator from Vermont, Pat Leahy, who asked me
if I would chair this hearing, and I am very pleased to do so.
But following the earlier hearing, my staff have been
working with the interested parties in an effort to bring them
together and to clarify the differences that still exist.
It appears that some significant progress has been made
during that period of time. Building upon the work begun by the
staff here in the Senate, the House Judiciary Committee has
reported out counterpart legislation that appears to represent
a significant step forward.
For example, I understand that the recording industry and
the webcasting industry actually are in agreement on a new rate
standard. This is terrific and mildly surprising. I look
forward to discussing this with their representatives who are
here today.
The House Judiciary Committee also made a number of
accommodations to broadcasters to address criticisms and
concerns that they have raised. I also look forward to hearing
the views of the witnesses today on those accommodations.
As our Committee takes up this legislation, further changes
or additions will be necessary, but today's hearing I hope will
be a catalyst for clarifying and resolving what changes there
may be.
Music, I think, is an invaluable part of all our lives. New
technologies and changing music platforms provide exciting new
options for all consumers. As the industry continues to march
forward into new frontiers, we have to ensure that our laws can
stand the test of time and be fair to all.
So I look forward to working with the Chairman and working
with my colleagues to pass legislation and to hear the
witnesses' thoughts on these issues.
Now I am just delighted to recognize the distinguished
Chairman of this Committee, Senator Leahy.
STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM THE
STATE OF VERMONT
Chairman Leahy. Well, I want to first thank Senator
Feinstein both for chairing this hearing today--she is also the
chair of one of the most critical committees in the Senate, the
Senate Select Committee on Intelligence, which takes a great
deal of her time--and I want to thank her for her leadership on
content protection issues. There is no way I could have done
this hearing today. We have a significant Judiciary nomination
on the floor--that New England understatement--and I am going
to be heading for that very soon.
But I think the issue is very simple, even if the solution
can be complicated. Broadcast radio stations use the work of
recording artists, and they profit from it. But, unlike
webcasters, broadcast stations do not compensate the artists.
Maybe the broadcasters might not like this, but it appears that
they are using somebody else's property without compensation.
That may be okay in other countries, but it is not consistent
with American property laws. It means that American artists do
not receive millions of dollars each year that are collected in
European allies' countries and other countries to pay for the
use of their music on their broadcast radio stations. They can
do it. I do not know why we cannot do it.
We are hearing from hard-working musicians across the
country. The president of the Vermont Musicians Association
recently wrote in the Burlington Free Press: ``I am one of many
hundreds of Vermonters employed in the music community. We are
not celebrities; we are regular folks who work hard to help
provide a decent living for our families, and we simply seek to
be fairly compensated for our work.''
I have also heard from radio stations in Vermont concerned
about the impact of giving performing artists the same rights
on broadcast radio that they have on the Internet. I would add
that, unlike a State like Senator Feinstein's, one of the most
magnificent States in this country, Vermont is a very small
State. I actually know most of the performers, and I know most
of the radio station owners. And so I am making sure that the
Performance Rights Act protects smaller broadcasters while
providing fair compensation to artists and musicians.
The House Judiciary Committee approved companion
legislation with an amendment that would permit small stations
to use sound recordings for a flat rate of $500 a year. That is
less than they have to pay in dues for lobbyists to lobby
against this bill. We are going to need to consider similar
amendments to address the legitimate concerns of smaller
broadcasters when the Committee turns to the Performance Rights
Act.
I say this not to beat up on the National Association of
Broadcasters, an organization that has done a great deal of
good in this country. But I think they have got to finally sit
down and work with us. We have invited them to work with us and
work with those on the performer side to see if there is a way
we can address the needs of both smaller broadcasters and
performers. To date, that has not been done.
This is legislation that is going to move. The time to sit
down and talk is now. We have to ensure that songwriters remain
protected. Songwriters are properly compensated by radio
stations through private licensing agreements with ASCAP, BMI,
and SESAC. A performance rights for recording artists should
not come at the expense of songwriters, and we should establish
parity across all music delivery platforms.
I will put my whole statement in the record, but I think
that it is time for the parties to sit down and talk because
this is going to be legislation that will move. I appreciate
that the Register of Copyrights submitted testimony today in
support of ending the current inequity, but I cannot praise
Senator Feinstein enough, who has talked to me considerably
when we are not in the Committee about the importance of this,
and I appreciate you holding this hearing.
Senator Feinstein. Thank you very much. Thank you very
much, Mr. Chairman, and I very much agree with your comments,
and I do agree that the time is now and that we need to know
what the concerns are, and we need, more importantly, to have
people who are willing to reconcile those concerns so that we
can move forward.
So, with that, I will enter into the record the statement
of Mary Beth Peters, the Register of Copyrights, and the
statement of Pandora Media as well, without objection.
[The statements appear as a submission for the record.]
Senator Feinstein. The way I would like to proceed, ladies
and gentlemen, is to ask each witness to confine your opening
statement to 5 minutes, just state your point as clearly--you
do not have to be fancy about it--and succinctly as you can,
and that will provide more chance for us to answer questions.
And I will go down the line and, beginning with Sheila,
introduce each person prior to their 5 minutes.
Let me begin with Sheila E. She hails from the San
Francisco Bay Area. She is an award-winning singer, songwriter,
and performing artist. She has recorded several top singles and
has performed with some of the biggest names in music. She is
also the president of Heaven Productions Music and a co-founder
of the Elevate Hope Foundation, which is a charitable
foundation that assists the needs of abused and abandoned
children through music therapy. Sheila E has received the
Imaging Foundation's Humanitarian Award, the Angels Across
America Award, and the Prism Lifetime Achievement Award for her
charitable and humanitarian work.
Welcome, Sheila, and we will begin with you.
STATEMENT OF SHEILA ESCOVEDO, GRAMMY AWARD-WINNING ARTIST, ON
BEHALF OF THE MUSICFIRST COALITION, SHERMAN OAKS, CALIFORNIA
Ms. Escovedo. Thank you, Chairman Leahy and Senator
Feinstein. I am really, really honored to be here to today to
represent the hundreds of thousands of working musicians who
seek one simple right--that is, to be compensated for their
labor.
My name is Sheila E., and I am here today on behalf of the
MusicFIRST Coalition. I am also a member of AFTRA and AFM, as
well as a board member of the Los Angeles Chapter of The
Recording Academy, which represents thousands of music creators
across the State of California.
I want to talk about music and radio but, first, let's talk
about music.
I was born into a musical family, the daughter of the
legendary band leader Pete Escovedo, so music is truly my
destiny. I started playing an instrument at age 3, and once I
made my concert debut--a seasoned 5-year-old--I knew I wanted
to be a musician.
As I matured as a musician, I had many wonderful musical
experiences, from earning multi Grammy nominations for my solo
work, to performing with such artists as Lionel Richie, Gloria
Estefan, Beyonce, Ringo Starr, and, of course, Prince. And
speaking of Prince, the other Senators from Minnesota who are
not here right now, I am sure that they know that the
``Minneapolis Sound'' is still very influential today.
During that time, I began to discover much about the music
business itself, and I was always at a loss to explain why one
industry--traditional broadcast radio--is allowed to profit
from the artists' work without compensation to those artists.
As I toured around the globe and I saw that broadcasters in
every other developed nation in the world compensate their
artists, the lack of payment in America became more puzzling to
me. As Internet radio developed and recognized their obligation
to pay artists, the lack of terrestrial radio's payment became
unacceptable.
For all of the complex legal and legislative discussions
that have taken place around this topic over the decades, the
issue for musicians is really quite simple. We believe that
being paid for one's work is a basic American right. Whether
your workplace is an office, a classroom, a factory, or a
recording studio, every American worker deserves to be
compensated for his or her labor. And any business that profits
from another's work should share some of that profit.
All right. So let's talk about radio. Artists love for
their records to be played on the radio. That is a given, but
that is not the point.
Artists love to get bookings for live gigs, but we get paid
for those live gigs. Artists love to get songs placed in movies
and TV shows, and we get paid for those uses. Artists love to
sell records, and we get paid for those sales. Radio is the
only part of the music business where our work is used without
permission or compensation. So when the National Association of
Broadcasters tells us that they are a true friend of artists,
we respond by saying, ``Friends don't let friends work without
compensation.''
Radio's argument that a ``promotional effect'' exempts them
from payment is a tired argument that will not hold water in
any other context. Imagine the radio industry withholding
payment from popular talk radio hosts claiming that they
promote their book sales and TV ratings. Imagine the radio
industry withholding payment from sports teams because airing
the games promotes ticket sales. The talk show hosts and the
sports teams will simply say, ``No broadcasting without fair
payment.'' But until the Performance Rights Act is passed,
artists have no such right.
Radio's other arguments are just as worn out. The House
version of the bill addresses the concerns of broadcasters, and
we support the adoption of these provisions in the Senate bill.
``Worried about small broadcasters? '' The bill lets them play
all the music they want for as little as $1.37 a day. ``Not the
right time in the economy? '' The bill defers payment for up to
3 years. ``Concerned about public service announcements? '' To
use public airwaves for free, the stations must air them and
that won't change.
One new argument I have heard has caused me particular
disappointment: that the Performance Rights Act will hurt
minority broadcasters. As a Latin artist, I want minority
stations and minority artists to be able to thrive in this
business. Many minority-owned stations are small and would
rightly receive a special accommodation for the lower payments
in the bill. And at the same time, the bill would allow
Hispanic and African American artists their due payment for
their important contributions to our American music mosaic. It
is a sad irony that artists living throughout Latin America
benefit from a radio performance right while their counterparts
in the U.S.--the leader in intellectual property--do not. It is
time to bring the U.S. in step with the rest of the developed
world.
So we have talked about music. We have talked about radio.
Let me close by talking a little bit about the past and the
future.
First, the past. Last month my father, Pete Escovedo,
turned a youthful, handsome 74. In addition to his own
legendary band Azteca, he was a member of the group Santana and
performed on a number of their records as well as other artists
still heard on radio today. One of the most gratifying aspects
of this legislation is that it will compensate so many great
artists of my father's generation and those who have
contributed so much to our musical heritage. Every single
participant--featured artists, background singers, session
musicians, and producers alike--will all benefit from this
bill.
But this bill is just as much about the future.
One of the great honors in my life was to co-found a
charity called Elevate Hope Foundation, and we provide abused
and abandoned children an alternative method of therapy through
music and the arts. The magnitude of music becomes such a
inspiring force in the lives of these children that I have seen
firsthand--and I get emotional because I see what music does
for these kids. And they say that I cannot get emotional up
here, but I will, because music is my life. And it is not fair.
It is not fair what is happening.
We must encourage our youth through music and the arts.
Through music, they learn how to respect themselves, and I
teach them that they deserve respect as individuals and as
budding music creators. What I ask of you today, distinguished
Senators, is to ensure that the next generation of musicians
will enjoy the respect that they deserve by simply being
compensated by the businesses that use their creations for
profit. Through the passage of the Performance Rights Act,
musicians and broadcasters will enjoy a relationship of mutual
respect that will allow both to flourish.
Thank you.
[The prepared statement of Ms. Escovedo appears as a
submission for the record.]
Senator Feinstein. Thank you very much, Sheila.
Our next speaker is Bob Kimball, and he is the Executive
Vice President for Corporate Development, the General Counsel,
and Corporate Secretary of RealNetworks, Inc. Mr. Kimball
currently serves on the boards of directors of the Digital
Media Association and the European Committee for Interoperable
Software. Prior to joining RealNetworks, Mr. Kimball was a
senior attorney and manager of business relations for IBM
Global Services and an attorney with the law firm of Sidley and
Austin in Senator Durbin's country, Chicago, Illinois. And we
welcome Senator Durbin to these hearings.
Mr. Kimball, would you proceed? Five minutes, please.
STATEMENT OF ROBERT KIMBALL, EXECUTIVE VICE PRESIDENT,
REALNETWORKS, INC., SEATTLE, WASHINGTON
Mr. Kimball. Thank you. Chairman Leahy, Senator Feinstein,
Senator Durbin, thank you for the opportunity to speak today. I
am Bob Kimball, and I currently serve as Executive Vice
President at RealNetworks.
As the creator of the streaming technology that made
Internet radio possible and as the operator of one of the
largest Internet music services, RealNetworks is deeply
interested in sound recording performance rights and royalty
parity.
First, I want to thank you, Chairman Leahy and Senator
Feinstein, for championing royalty parity and fair competition,
both of which will foster innovation and provide greater
benefits to music fans and recording artists alike. Parity
would mean that royalties for cable, satellite, Internet, and
even broadcast radio would be established for the first time by
using a single, uniform standard. Parity would establish
royalties that do not discriminate against or favor competing
technologies or business models. Parity would also have
Congress provide small webcasters similar discounted royalty
caps that the Performance Rights Act provides small
broadcasters.
As part of establishing a uniform standard, there should be
one consolidated rate proceeding that includes all radio
services. This would create substantial efficiencies and ensure
fair application of the standard.
Mr. Chairman, today a single device like the radio I have
here--not quite the size of a piece of furniture but, still, it
weighs a ton--this can play the same music program on FM radio,
satellite radio, and Internet radio. How this works is
invisible to the user. I simply push a button, and the radio
plays.
But, inexplicably, the current system imposes dramatically
different sound recording royalties, or none at all, based
solely on which button I happen to push on the device or what
technology delivers the song. This makes no sense. The
Copyright Act should not decide technology winners and losers.
The most difficult question you face, I think, is deciding
what uniform standard will ensure royalties that fairly balance
the interests of copyright owners, licensees, and the general
public. For two reasons, I suggest using the royalty
arbitration standard in Section 801(b)(1) of the Copyright Act,
which was carefully calibrated by Congress when it was enacted
in 1976.
Most importantly, the four objectives outlined in Section
801(b)(1) equally balance the interests of copyright owners,
licensees, and the general public. As a result, the royalty
determinations that applied this standard have been fair and
have avoided above-market pricing that characterizes the
current Internet radio standard.
I think the Committee will agree that the benefits of a
statutory license almost disappear if the rate-setting standard
actually drives companies out of the market rather than
empowering the rate setter to protect against that very harm by
balancing all interests.
Second, 801(b)(1) is the right standard because on each
occasion that Congress has introduced a new standard, such as
the willing buyer/willing seller or fair market value standards
that have applied to webcasters and satellite television
services, the resulting royalties have threatened or actually
forced companies out of business, requiring remedial
congressional action.
My final point concerns Section 5 of the Performance Rights
Act, which is intended to protect songwriters from harms that
could result from the imposition of sound recording royalties.
Section 114(i) of the Copyright Act already establishes a
complete evidentiary bar against the use of sound recording
royalty information to set rates for musical works. This bar
applies equally to composition licensors and licensees, meaning
songwriters cannot use this information to argue for high rates
and radio services cannot use this information to argue for low
rates.
Unfortunately, Section 5 may convert this evenhanded
evidentiary shield into a unilateral litigation weapon for
music licensors. One interpretation of Section 5 would allow
the use of sound recording royalties to argue for increasing
musical works royalty, but forbidding consideration of the same
information to argue for lower royalties. Turning this balanced
shield into a one-way sword is fundamentally unfair and certain
to lead to irrational royalty results.
A related issue is the Webcasters Settlement Act's
provisions allowing SoundExchange to cherrypick licenses that
can be used as evidence before the Copyright Royalty Board.
When SoundExchange negotiates a deal it likes, it shows the
deal to the CRB. When the deal is less favorable, SoundExchange
makes the deal confidential, and the board cannot consider it.
Congress should no longer condone this practice and should
require the copyright royalty judges to consider all relevant
deals when setting royalties.
In closing, I am sincerely grateful for the invitation to
participate today, and I am encouraged that a level playing
field might be in sight for Internet radio. I would be happy to
answer any questions you may have. Thank you.
[The prepared statement of Mr. Kimball appears as a
submission for the record.]
Senator Feinstein. Thank you very much, Mr. Kimball. And I
assume when you refer to Section 5, the section you are
referring to is Section 5(b).
Mr. Kimball. Yes. I believe that is correct.
Senator Feinstein. Thank you.
The next person is Marian Leighton-Levy. Marian Leighton-
Levy is the co-founder and co-owner of Rounder Records in
Burlington, Massachusetts. Her areas of specialty include
publicity, promotion, and artist relations. She has served on
the board of the Blues Foundation, the Advisory Board of the
Rhythm and Blues Foundation, and is presently on the board of
the International Bluegrass Music Museum in Owensboro,
Kentucky. She is a graduate of Clark University in Worcester,
Massachusetts, and we welcome you today.
STATEMENT OF MARIAN LEIGHTON-LEVY, OWNER, ROUNDER RECORDS,
BURLINGTON, MASSACHUSETTS
Ms. Leighton-Levy. Thank you. Senator Feinstein, Chairman
Leahy, and other distinguished members of the Committee, I am
pleased to be here today to speak on behalf of so many talented
and hard-working people in the music industry, and to voice the
support of thousands of us who have waited so long for the fair
treatment embodied in the Performance Rights Act. My name is
Marian Leighton-Levy, and 39 years ago, two college friends and
I founded Rounder Records, one of America's largest independent
labels.
We at Rounder are extremely proud of the breadth and depth
of our catalog because so much of it embodies our country's
cultural and musical heritage, from Alan Lomax's seminal field
recordings from the 1930s, to the complete recorded work of
Jelly Roll Morton, from the Library of Congress, to the Woody
Guthrie set coming out next month comprised of newly discovered
old masters. Many of our most critically acclaimed releases
will never sit at the top of the Billboard charts, or chart at
all, for that matter. But they are, nonetheless, important
recordings. Some will also receive significant airplay on radio
stations both here but even more, in some cases, in other
countries which revere and enjoy American music and culture.
Perhaps Rounder's approach gives us a unique perspective
and view. Many of our artists are largely middle-class, hard-
working singers and musicians, as Chairman Leahy referred to
earlier from his home State, trying to make a living doing what
they love. That is why the Performance Rights Act has
tremendous support from labor groups across the country. This
is not just about superstars and big-name acts.
This legislation will provide significant revenue to many
of the working artists and musicians we have recorded for the
last 39 years. Many have already seen significant checks from
satellite, cable, and Internet radio play. If the PRA is
passed, they will also benefit for the first time from overseas
broadcast royalties, as well as royalties generated by
specialty shows in the U.S. and from public and non-commercial
radio play, too.
You have undoubtedly heard the broadcasters' primary
rationale for not paying: that they promote our music. While
this excuse may have had more significance 80 years ago when it
was first used, it is much less meaningful today. Now, radio is
just one way--admittedly an important way, but just one way--
music is promoted. There are dozens of new platforms and
businesses that reach consumers which also promote music, but
with one significant difference: that they do pay a performance
royalty.
Only broadcast radio gets this free pass from decades ago.
Even using their own numbers, the value proposition offered by
the broadcasters does not add up. Mr. Newberry has testified in
the past that they provide as much as $2.5 billion in
promotional value to performers. Meanwhile, they generated $14
billion from the use of our music last year. Does that sound
like equal value to you?
Anyway, the truth of the matter is, as an independent label
focused on Americana, bluegrass, folk, blue, and similar niche
musics, we may get less airplay here in the U.S. than others
who release more mainstream recordings. But our music fills the
airwaves overseas, so this performance royalty is as important
to us for these reasons as for American radio. American music
accounts for 30 to 50 percent of all music broadcast on foreign
stations. Yet, given our current law, because our stations do
not pay a performance right, those foreign stations do not have
to pay us either. Each year, there are tens of millions of
dollars being left on the table--millions of dollars for
compensation and for further investment that will flow to
artists, musicians, and recording company owners when the
Performance Rights Act finally becomes law. Denying American
creators and copyright holders money they deserve from overseas
so that broadcasters can receive a subsidy in the form of our
property is fundamentally unfair.
A striking example of this inequity can be found in the
case of the recent Robert Plant and Alison Krauss record
``Raising Sand,'' which we released last year. It won five
Grammy Awards, including Album of the Year and Song of the
Year. Since Robert Plant is a U.K. native, he will be able to
receive payment for his work on the recording when it is played
around the world, but Alison Krauss will not be paid because
she is a U.S. citizen.
As I have become more involved in the fight for a
performance right, I am continuously amazed at the
broadcasters' misinformation campaign on the Performance Rights
Act. They state that this legislation is the evil brainchild of
foreign-owned record companies when, in fact, the fight for a
performance right was started by performers with the National
Association of Performing Artists way back in 1936. They say
that we are just looking for a bailout from our failed business
model in the digital age when they have fought this right for
more than seven decades, through up and down cycles, before
anyone knew what the word ``digital'' was. They warn that more
than half of the royalties are directed to record labels when
neither the word ``record'' nor ``label'' appears anywhere in
the bill. In reality, the legislation directs royalties to be
split down the middle: 50 percent directly to artists and
musicians, and 50 percent to the copyright holder. And since
many artists own their own master recordings, artists and
musicians will actually get more than 50 percent of the
payments. There are currently 1,200 artist-owned independent
labels signed up with SoundExchange, which collects and
distributes the royalties already from digital and Internet
radio.
So, in closing, this is not an easy business, now more than
ever. Imagine working in such a challenging industry. Imagine
investing, as we do, in a volatile and unpredictable market.
Now imagine someone taking your product without consent and
using it to profit his or her own business without so much as a
penny in return. ``Unfair'' is not the word. It is
``unconscionable.''
But that is the scenario of our current law, and that is
the reality for all of us in the recording industry--labels,
producers, managers, performers, and musicians. Today we stand
united in seeking a right that should have been afforded to us
decades ago.
In the end, harming broadcasters is the last thing we want
to do. They should be our partners in the music business. All
we are asking for is fair compensation for use of our work. The
Performance Rights Act provides us with the framework to secure
that compensation and sets in place the proper balance of
interests between creators and broadcasters.
We sincerely look forward to working with broadcasters in
the future--as lovers of music, as supporters of musicians, and
as true partners in commerce and in art.
[The prepared statement of Ms. Leighton-Levy appears as a
submission for the record.]
Senator Feinstein. Thank you very much.
And now we will move to Steve Newberry. He is the president
and chief executive officer of Commonwealth Broadcasting
Corporation, based in Glasgow, Kentucky. He is also currently
serving as the Joint Board Chair for the National Association
of Broadcasters. Mr. Newberry entered radio ownership at the
age of 21 and has done just about every job around a radio
station that one can do. He is a graduate of the University of
Kentucky, and he resides in Hyattsville, Kentucky, with his
family.
Please go ahead, Mr. Newberry.
STATEMENT OF STEVE NEWBERRY, JOINT BOARD CHAIRMAN, NATIONAL
ASSOCIATION OF BROADCASTERS, AND PRESIDENT AND CHIEF EXECUTIVE
OFFICER, COMMONWEALTH BROADCASTING CORPORATION, GLASGOW,
KENTUCKY
Mr. Newberry. Thank you very much. Good afternoon,
Chairwoman Feinstein, Chairman Leahy, and other members of this
very distinguished Committee. My name is Steve Newberry. I am
the owner and operator of Commonwealth Broadcasting, which does
operate 23 small-market radio stations, based in Glasgow,
Kentucky. I am testifying today, however, on behalf of the
6,800 members of the National Association of Broadcasters, of
which I do have the privilege of serving as joint board chair.
I am sure it comes as no surprise to anyone in this room
when I say that these stations across the country oppose the
performance fee legislation that we are considering here today.
I believe this legislation will up-end local radio
broadcasting as you have known it. I have been a part of the
radio industry for over 30 years, and I can honestly tell you
that I have never seen the economic pain the radio industry is
currently experiencing. And as challenging as radio's current
economic landscape is, it will deteriorate even further if a
performance fee were to be enacted. Already this year, publicly
traded companies are reporting revenues down 24 percent, down
20 percent, down 24 percent, down 25 percent, and the numbers
continue.
But beyond radio's economic landscape, we strongly believe
that local radio stations do indeed provide compensation to the
record labels and artists today. The artist is paid with free
advertising and free exposure every time a station plays their
music. Local free radio is a unique developer, exposer,
promoter, and the great populizer of new and old music to
multiple new and old generations of listeners. There is a value
to radio's promotional--to the promotion of radio that we
provide to the labels and the artist. But how do we qualify it?
How do we quantify it?
Economist James Dertouzos has determined that radio airplay
is directly responsible for $2.4 billion a year in music sales.
By the way, that figure does not include the additional
billions that are earned in concerts, merchandise sales from
radio promotions, artist interviews, CD and concert ticket
giveaways.
Additionally, every day radio stations are flooded with
calls, with e-mails, texts, and visits from record label
promoters trying to get a song on the radio or to increase the
number of spins or plays that a station will give a particular
song. One station in Salt Lake City actually kept track of the
number of calls and e-mails received from record labels.
Between August 1st of 2008 and July 14th of this year, one
radio station received 9,597 e-mails from the labels, 755
calls--that is a total of 10,352 contacts in the course of a
year. That is an average of 28 contacts per day 7 days a week.
And that is one radio station in Salt Lake City, Utah.
Free airplay is important enough for record labels to send
gold and platinum albums, just as the one that I have here.
This plaque was presented to radio station WIHT: ``To
commemorate RIAA's certified multiplatinum sales of more than 9
million copies of `Confessions,' '' Usher's 2004 release.
Finally, getting artists airplay on local radio is
apparently valuable enough that record labels continue to spend
thousands of dollars inviting radio program directors to hear
private showcase concerts by recording artists. I would ask
that this stack of e-mails demonstrating that practice be
entered into the record.
Senator Feinstein. So ordered. It will be. Thank you.
[The information appears as a submission for the record.]
Mr. Newberry. Thank you, ma'am.
These private concerts offer a real glimpse into how much
record labels need radio airplay.
Chairman Leahy. Excuse me. Could we just have--what was it
you wanted entered in the record? You mean that whole stack or
just the----
Mr. Newberry. No. This stack.
Chairman Leahy. Okay. Thank you.
Mr. Newberry. At a later point in the hearing, yes, sir.
Chairman Leahy. At a later point in the hearing, if that
request is made, what we will do is keep the stack available in
the Committee room for anybody who wants to read it. The whole
stack will not be part of the record.
Mr. Newberry. This is for a different topic later in the
hearing, Mr. Chairman.
Chairman Leahy. All right.
Mr. Newberry. This is the reference that I was making in my
oral argument.
It is true: Radio competes with other listening platforms.
But this competition has not diminished the extraordinary value
of radio. Satellite radio has 18.6 million subscribers.
Satellite radio and Internet radio are certainly a growing
media. Internet radio has approximately 42 million listeners,
many of those paying for their services. But these numbers are
dwarfed by the fact that 235 million listeners receive free,
over-the-air radio every week. Radio is the number one way to
expose, promote, and get music into the lives of listeners who
fund the recording industry through the sales of music, concert
tickets, and merchandise.
At the end of the day, no one has been able to prove that
the value of music is always worth more than the value of
radio's promotion. None of the witnesses here today can tell
you that. And before this Committee passes legislation that
will have a devastating impact on the radio industry, it seems
to me we should know the answer to that question.
Competing resolutions opposed a new performance fee in the
House and the Senate have garnered significant congressional
support. S. Con Res. 14, introduced by Senators Lincoln and
Barrasso, has collected 23 bipartisan cosponsors, and H. Con.
Res. 49 in the House has 246 cosponsors, well over a majority
of the House.
Thank you for inviting local radio to tell our story. We
are part of the engine that drives our economy. We are free, we
are local, we are community based, and we are fighting to stay
afloat in this very tough economy.
Thank you, and I will be happy to answer any questions that
you may have.
[The prepared statement of Mr. Newberry appears as a
submission for the record.]
Senator Feinstein. Thank you very much, Mr. Newberry.
I would like to acknowledge that we have been joined by
Senator Klobuchar and Senator Franken. I would acknowledge
Senator Durbin and Senator Cornyn, so we are delighted to have
you here.
We will now move on to Mr. Oman. Ralph Oman is the Pravel
Professor of Intellectual Property Law at George Washington
University Law School, and he is a senior fellow at the
Creative and Innovative Economy Center. From 1985 to 1993, he
served as the Register of Copyrights for the United States. He
has experience working for this Committee, having served as
chief counsel on the Subcommittee on Patents, Copyrights, and
Trademarks from 1983 to 1985, and chief counsel of the
Subcommittee on Criminal Law from 1981 to 1983.
Welcome back, Mr. Oman.
STATEMENT OF RALPH OMAN, ADJUNCT PROFESSOR, GEORGE WASHINGTON
UNIVERSITY LAW SCHOOL, WASHINGTON, D.C.
Mr. Oman. Thank you very much, Senator Feinstein. It is a
pleasure to be here, and members of the Judiciary Committee.
For me, today's hearing is deja-vu all over again. I have been
involved in this issue since 1975 when my old boss, Hugh Scott
of Pennsylvania, the Senate Minority Leader, scheduled and
chaired a lively hearing before the Subcommittee on Patents,
Trademarks, and Copyrights that featured sultry Julie London
singing the Mickey Mouse Club theme song as a steamy love
ballad.
[Laughter.]
Mr. Oman. It demonstrated the importance of the performer's
contribution to the success of music. It was a great success.
Chairman Leahy. I came to the Senate too late.
[Laughter.]
Mr. Oman. In fact, the issue reaches far beyond my brief
tenure in the Senate Judiciary Committee, all the way back to
the 1920s, when radio was in its infancy. The first performance
rights legislation for sound recordings was introduced in 1926.
Since that time, dozens of bills have been introduced, several
of them by Hugh Scott of Pennsylvania, trying to create the
right for the performers and labels, but none of them has been
able to finally get across the finish line. There has been
strong support in the bar. The American Bar Association adopted
its first resolution--the first of many--urging adoption of a
public performance right for sound recordings in 1938.
It comes down to this, in my opinion. As a matter of
property rights, men and women who create and own a copyrighted
work should have the right to get paid for it by the people who
use their works. That is the basic premise of copyright
protection.
Nowhere else in copyright law--and nowhere in American
jurisprudence generally--can one business take another's
private property without permission or without payment because
the user concludes unilaterally that long term it would be in
the interest, the long-term interest, of the property owner's
business, even if the owner does not agree, does not think it
would be so. In our case, some broadcasters think that they are
doing the performers and the labels a favor by creating
promotional value. Who, I ask, is the best judge of this quid
pro quo--the broadcasters or the creators?
Over the years, Cabinet Secretaries, Trade Representatives,
many Members of Congress, and many Registers of Copyrights have
argued that we have no legal or economic justification for this
anomaly in our law.
The bipartisan performance rights legislation introduced in
this Congress in both the House and the Senate really bends
over backwards to provide unprecedented accommodations to the
broadcasters. The bill sets low flat fees for most
broadcasters, some as low as one-half of 1 percent of a
broadcaster's revenue. There is a delay in the implementation
of the legislation to allow broadcasters relief during these
hard economic times, and there is a long phase-in period that
gives them the chance to ease slowly into their new partnership
with performers.
Promotional value cannot justify free use. Instead, it
should be a factor in determining the appropriate royalty. We
use that factor in market negotiations for other content that
radio stations use, and we use it setting the rate for
statutory licenses for other platforms, such as Internet radio.
True parity requires equal footing when it comes to
figuring out how we should set the rates for these different
platforms. It also is important in the ongoing negotiations in
the private sector. Today, because of the patchwork or, as you
said, Madam Chairwoman, the hodgepodge of provisions in the
Section 114 license, we have a confusing system of rate
standards among the various radio platforms. This is
unnecessary and unfair. Of course, different platforms reflect
different business models and may wind up paying different
rates ultimately, but the standard used to derive those rates
should be uniform or standardized and reflect the fair market
value for the use of these works.
The statutory license was never intended to provide music
at below-market rates. The best rate standard for all radio
platforms is fair market value, as you proposed, Madam
Chairwoman, in the Perform Act. Copyright owners and performers
deserve nothing less for their works--especially when they have
no choice but to allow their use. Because of the statutory
license, what some call a ``compulsory license,'' they cannot
just say no. They cannot walk away from the bargaining table.
That makes the negotiation one-sided right from the outset.
As you mentioned, Senator Feinstein, you and Senator Graham
asked the stakeholders to get together and formulate a new rate
standard. That effort led to a compromise provision adopted by
the House Judiciary Committee in H.R. 848. That standard is a
modification of the standard used today for satellite and cable
radio proceedings. While I would prefer the language of your
bill, Madam Chairwoman, I find the compromise language
reasonable, and I would urge its adoption by the Committee?
One last point, if I may. As you mentioned, Madam Chairman,
this lack of a public performance right for sound recordings is
a huge international embarrassment. The United States loses
millions of dollars a year to foreign markets. I urge you to
consult with the U.S. Trade Representative and get his take on
the many advantages that would flow to the United States if we
joined the almost unanimous international consensus in granting
a public performance right for performers and sound recordings.
Thank you very much for the opportunity to testify. I would
be pleased to answer any questions.
[The prepared statement of Mr. Oman appears as a submission
for the record.]
Senator Feinstein. Thank you very much, Mr. Oman, and thank
you for your service to this Committee. It is very much
appreciated. I want you to know that.
And, finally, we have Mr. Winston. James Winston is the
Executive Director and General Counsel of the National
Association of Black Owned Broadcasters, a position he has held
since 1982. He is also a partner in the firm of Rubin, Winston,
Diercks, Harris, and Cooke. From 1978 to 1980, Mr. Winston
served as legal assistant to Commissioner Robert E. Lee at the
Federal Communications Commission.
Thank you and welcome, Mr. Winston.
STATEMENT OF JAMES L. WINSTON, EXECUTIVE DIRECTOR AND GENERAL
COUNSEL, NATIONAL ASSOCIATION OF BLACK OWNED BROADCASTERS,
INC., WASHINGTON, D.C.
Mr. Winston. Good afternoon, Senator Feinstein. I wanted to
note at the outset that my light does not work for the time, so
if I go over, it is only ignorance of the actual time. But I
thank you again, Senator Feinstein, Chairman Leahy, members of
the Committee. Thank you for inviting me to testify this
afternoon.
You have invited me today to discuss imposing additional
copyright royalty obligations upon radio broadcasters. In the
discussion of additional copyright fees, the broadcasting
industry has consistently been portrayed as one in which all of
its participants make fat profits. Therefore, imposing
additional copyright royalty payments on the industry merely
skims a little off of those fat profits.
For minority broadcasters, there are no fat profits to
skim. In fact, most minority broadcasters today are struggling
to survive. Therefore, I come before the Committee today to
describe the current state of minority broadcasters and the
issues that threaten to further erode minority broadcast
station ownership. As a result of these threats, as I shall
explain below, NABOB requests that the Committee consider
investigations of the principal lenders to the broadcast
industry and of the Arbitron ratings company which has a
monopoly over radio ratings. It is my hope that once you
understand the current plight of minority broadcasters, you
will understand why it is impossible for us to agree to pay
additional copyright royalties.
Broadcast station advertising revenues have fallen
drastically this year, and many minority broadcast companies
find themselves unable to maintain these minimum cash position
required by their bank loan agreements. This situation has been
made worse because of a new breed of lender in the broadcast
industry today: hedge funds. Therefore, I am here today to
request that this Committee investigate the practices of the
leading lenders to the broadcast industry, lenders such as
Goldman Sachs, GE Credit, the combined Wells Fargo-Wachovia
Bank, JP Morgan, and Bank of America. These banks have allowed
hedge funds, such as Guggenheim, Fortress, Silver Point, and DB
Zwirn into their consortia. Now they are acting at the behest
of the hedge funds in refusing to enter into workout
arrangements that will provide minority broadcasters an
opportunity to keep their companies intact and restructure
their loans for a brief period until the economy turns around.
The reasonableness of this request is underscored by the
fact that the banks listed above are all beneficiaries of
Government relief through billions of dollars of Troubled Asset
Relief Program--TARP--funds. Alternatively, NABOB requests that
the company help NABOB seek assistance from the Treasury
Department or Federal Reserve under one of their programs, such
as the Term Asset-Backed Securities Loan Fund or the Commercial
Paper Funding Facility.
Minority broadcasters face an additional threat that is
equally important for us to bring to your attention. This
second threat is posed by Arbitron, Inc., an audience
measurement company that maintains a monopoly in the
measurement of radio audiences. Recently, developed the
Portable People Meter, an electronic tracking device which
records signals from the radio stations to which the wearer is
exposed. Initial results from the PPM measurements have shown
such huge rating declines for stations serving Black and
Hispanic audiences that the financial survival of these
stations is at stake. The damages to minority broadcasters that
I am referring to are not theoretical. They are real,
quantifiable, and devastating.
Since PPM became operational in New York City in October
2008, Spanish Broadcasting System has been forced to reduce
staff by 37 percent. Inner City Broadcasting Corporation
reports that in New York revenues are down 58 percent. And
Inner City's San Francisco station has been forced to lay off
13 percent of its staff and cut salaries by 10 percent.
In Los Angeles, the situation is just as grim. KJLH, owned
by Stevie Wonder, has seen its revenue fall over 48 percent,
and it has been forced to lay off 13 percent of its staff.
Arbitron has been sued over PPM by three Attorneys General,
investigated by a fourth, and is currently being investigated
by the FCC. In addition, this new PPM product has been denied
accreditation by the Media Rating Council, the MRC. The MRC was
created at the urging of Congress to prevent the kind of
situation we are faced with today. NABOB, therefore, requests
that the Committee investigate the PPM methodology and obtain
information on the PPM accreditation process from Arbitron and
the MRC.
In conclusion, these two problems--the refusal of lenders
to restructure broadcast loans to allow these otherwise healthy
businesses to weather the current recession, and Arbitron's
abuse of its monopoly position in the radio ratings industry--
are more than an antitrust issue for this Committee. They are
more than a business crisis for African American and Hispanic
station owners. They are a civil rights crisis for all of
America. Without minority communities with strong, vibrant,
independent voices, America loses an important part of what
makes our democracy great--a Government in which all of its
people participate and are heard.
I thank you for the opportunity to appear here today.
[The prepared statement of Mr. Winston appears as a
submission for the record.]
Senator Feinstein. Thank you very much, Mr. Winston.
Before going to questions, I would like to recognize a
distinguished artist in the audience. She is Gloria Gaynor. She
gave birth to the era of disco, moving into the mainstream
dance scene, when her song ``Never Can Say Goodbye'' debuted at
number one on the charts in 1973 and became the first dance
song to reach number one status in dance music. Today, she is a
very important part of music and has come to Washington to
commemorate the 30th anniversary of her hit ``I Will Survive.''
If you would stand, we would like to give you a round of
applause.
[Applause.]
Senator Feinstein. Welcome. We are delighted to have you
here. Thank you. Thank you.
Let me begin the questions. I am really perplexed. Let me
tell you the kind of communication I have from the Southern
California radio broadcasters: ``I know you like to think you
are protecting intellectual property, but in your attempt to
protect the performers, you are trampling on the intellectual
property rights of thousands of radio station brands, and
actually in the long run, you will be hurting the performers,
too.''
And so I am reading Mr. Kimball's testimony, and I come
upon a chart, and the chart is on page 6 of his testimony. It
is ``2008 Radio Revenues and Royalties,'' and at the right it
says ``Broadcast Radio (Music) 2008 Revenue, $16.5 Billion.''
At the bottom is ``Songwriter Royalties,'' and as you go over
to that same ``Broadcast Radio (Music),'' 3 percent of revenue.
Let me ask this question: Do you believe these are fair and
accurate figures, Mr. Kimball?
Mr. Kimball. Yes, I do believe they are fair and accurate
figures to the extent they can be compiled from public sources,
which is not always the easiest thing to do. But to the best of
our ability, using the sources available, I believe these are
certainly roughly accurate figures that give you a perspective
of the size of the economics involved and the amounts actually
being paid.
Senator Feinstein. Thank you.
Mr. Newberry, I do not know specifically about the problems
Mr. Winston was elucidating, so let us put them over here for a
moment. Take a look at the figure that was just $16.5 billion
in profit----
Mr. Newberry. That would be gross revenue, not profit.
Senator Feinstein. All right, whatever it is. Gross
revenues to songwriters, 3 percent. And you made an eloquent
argument, I think, as to why we should protect the status quo.
I come from California. We are a big intellectual property
State, and I have found over many decades that protecting
copyright and patent interests is really important because it
encourages the development of the industries that these
copyrights and patents relate to.
Mr. Newberry. Yes, ma'am.
Senator Feinstein. You are saying that is not necessarily
so. You are saying it is okay for us to take the content. You
are saying it is okay for us to play them without recompense to
the songwriter.
I have a hard time understanding this. Can you explain why?
Mr. Newberry. Certainly. With all due respect, that is not
what I was intending to say, and I do not believe that is what
my testimony says.
Senator Feinstein. Okay. Fair enough. Explain it.
Mr. Newberry. We are saying that there is a difference in
the way we compensate the composers of the music and the way we
compensate the performers. We compensate the composers through
ASCAP, BMI, and SESAC, and that is what equated historically to
3 to 4 percent of the gross revenues of our industry, which is
obviously a much higher percentage of our profit. We compensate
the composers because they are not known. They do not have
generally the benefit of celebrity. I can tell you that Jeffrey
Steele is a songwriter in Nashville, Tennessee. Many of you may
not know that name. But if I told you that he wrote the song
``What Hurts the Most'' for Rascal Flatts, you would certainly
recognize that song. But you associate it with Rascal Flatts.
We compensate the songwriters so that they have the ability
to earn a living, their intellectual property, to create those
great songs that America has.
Senator Feinstein. But not the performer.
Mr. Newberry. The performers are compensated through this
partnership that we have had that has lasted for over 80 years,
that has been one that while the record industry wants to
change it now, they have spent millions of dollars to get their
songs aired on the radio because they know that creates money
for them. It creates the sale of music. It creates the sale of
concert tickets. It creates the sale of T-shirts. And that is
how they have been compensated historically.
Senator Feinstein. Well, let me ask you this: Why are we
the only industrialized country that does this?
Mr. Newberry. Well, we have an entirely different
structure. In many----
Senator Feinstein. How so? I mean, why are we separate from
Europe or any other nation?
Mr. Newberry. First of all, I think without argument people
would argue that the U.S. music industry is the most vibrant in
the world. But there are also different copyright protections
that occur here. Songs here are protected for copyright for 95
years. In many countries, it is 50. And if you were to apply
that same standard, many of Elvis Presley's, the original rock
songs that came out in the 1950s would now be public domain.
Soon, within the next 10 years, all the Beatles songs, all of
the Motown songs, all those songs would become public domain if
we had the 50-year structure that a lot of European countries
do.
We protect those copyrights for 95 years so they are not
public domain and they can still be monetized by the artist.
Senator Feinstein. Okay. I just must tell you--all right.
Let me ask you another one. The National Association of
Broadcasters is running ads across the country referring to
this legislation as a tax. However, we all know taxes go to a
government. Doesn't the performance right royalty this
legislation would establish go to the recording artists and
their contractual partners, the record labels, and not to
Government?
Mr. Newberry. Yes, ma'am, it does.
Senator Feinstein. Okay. Thus, isn't it misleading to call
this a new tax?
Mr. Newberry. You can call it a tax. You can call it a fee.
You can call it whatever you want it to be called. There is no
question that it is a movement of money from one industry to
another, without a--if it is being done by the Government,
without it being a fair market transaction.
Senator Feinstein. Do you consider the copyright royalties
you collect from cable companies to be taxes?
Mr. Newberry. I do not collect any royalties from the cable
companies, ma'am.
Senator Feinstein. You do not?
Mr. Newberry. No, ma'am.
Senator Feinstein. Okay. Then my information is wrong.
Senator Cornyn, would you like to go next? And then we will
go to Senator Leahy.
Senator Cornyn. Thank you, Madam Chairman, and thanks to
each of you witnesses for being here today.
Mr. Oman, based on your testimony, it sounds like this
fight has been going on a long, long time, and I do not know if
we are any closer to resolution than we were when it started,
but let me just suggest an idea. I think it was Ralph Waldo
Emerson that said, ``To the person whose only tool is a hammer,
that person tends to regard every problem as a nail.'' And I
would like to suggest maybe the possibility of a different tool
to address your concerns and see from the various witnesses
whether there is any interest in this, any viability, because
it strikes me that both parties to the debate are arguing that
they confer value on the other, and to me it seems pretty
obvious, that there is value being conferred both ways. The
recording industry argues that music drives advertising
revenues for radio stations. The broadcast industry contends
that radio airplay drives sales of songs, albums, and concert
tickets.
One of the main complaints I have heard from the recording
industry is that record companies and artists do not have any
choice as to whether their music is played on the radio. I
think, Mr. Oman, you mentioned that this is the taking of
intellectual property. And I understand the frustration of
artists having no say in whether their music is being played.
But I wonder if one way, maybe another way of restoring
choice to the performers who own their intellectual property
without imposing a compulsory license, one possible way of
accomplishing that would be a ``Do Not Play'' list under which
artists could opt out of allowing their catalog to be played on
terrestrial radio. This would give artists full control over
their work. If an artists believed that the promotional value
of being on the radio was not enough to make the radio play
worthwhile, then the artist could take his or her songs out of
circulation. So instead of the radio station having a
unilateral option to play music, the radio station and artists
would have to agree that free airplay is in their mutual
interest.
Would there be any, do you see any--well, let me just ask:
What do you think about that kind of proposal? Mr. Winston,
would you care to offer an opinion on that?
Mr. Winston. I have heard that proposed, and I would have
to see the structure that you are proposing. But I think if you
make it a situation where the artist can opt out per station,
what you are going to do is drive all small stations out of
music because the artists will only do business with the big
stations. So I think that, you know, if they are going to do a
``Do Not Play'' list, it has got to be nationwide, that they
are going to say we do not want to be on the radio nationwide.
Otherwise, they are only going to do business with the big
stations.
Senator Cornyn. That is an interesting perspective. That
would not have occurred to me.
Mr. Oman, would that address some of your concerns about
taking of the intellectual property of the performers without
compensation?
Mr. Oman. The copyright law has traditionally protected the
small and the powerless against the powerful and the rich. By
suggesting that we create a playlist, you would be in some ways
forcing the unknown, the powerless new performers to give their
rights up in exchange for this chance of exposure, this chance
of air time that is so valuable to develop their careers. So I
think that would be contrary to the approach of copyright, and
it would also not serve the public interest.
I think it is well established that the listening public
generally has a preference for established performers,
established repertoire, and if this system encouraged the radio
stations to take only the new and hungry performers, it would
not serve the public interest.
Senator Cornyn. Well, if I am the relatively new artist
trying to get my music promoted by a radio station, I may well
decide that it is in my personal financial interest to do so.
But if I am perhaps a more accomplished artist that you do not
need that kind of promotional airplay in order to--I am talking
about something I do not know much about--to promote your
music, then you could choose to do that.
What do you think, Mr. Newberry? Would that work?
Mr. Newberry. Senator, I had not heard this concept until
today. I think that it certainly draws a line and says if
performers or record labels feel that there is not adequate
value in the promotional level, then they would be saying,
``Sure, do not play our songs,'' and they would have to take
the chances.
I agree with Mr. Winston that if it is negotiated
individually with each radio station, I think you would really
do terrible harm to small independent radio stations, and you
would probably have effects that you would not want. But if it
is a blanket prohibition on radio, I can certainly see that
that would force an artist or a label to say, ``Is there value
to radio or not? ''
It is an interesting concept. I would want to think about
the ramifications of it before I said whether it would be
something I could support or not. But it certainly does draw
the line in the sand and say, ``Is there value to what radio
does or not? '' And if an artist wants to take that chance,
certainly it would put their money where their mouth is.
Senator Cornyn. Thank you. My time has expired.
Senator Feinstein. Thank you very much, Senator Cornyn.
Senator Leahy.
Chairman Leahy. I just want to make sure I fully
understand. Mr. Newberry, you said if they were to negotiate
with each single radio station, radio station by radio station.
Another way could be for them to simply say any radio station
that wants to play our music is going to have to negotiate with
us. What do you think of that?
Mr. Newberry. Well, I think what----
Chairman Leahy. I mean, are you saying the radio station,
if we were to pass something, would be free to use any
recording unless the artist has specifically called that radio
station and said, ``I do not want you using mine'' ?
Mr. Newberry. No, I am not saying that because it is a
proposal I heard just moments ago. But the concern that I have
in that is, as a small-market broadcaster, a recording label or
artist may say, ``It is not important to us whether our songs
are played on stations in markets 100-plus; we just want to
have our music played in the top 50 markets or the top 100
markets.'' So I think that harms rural America's exposure to
the arts.
The second thing that I would say is problematic to this is
that----
Chairman Leahy. What if they said they will play it only in
those top stations unless they paid for it in the other
stations at a rate, say, based on the size?
Mr. Newberry. I think when you move to where those artists
and those labels with the most money get their songs played
most, you are setting up a very bad precedent for the way the
music industry works and for new and evolving artists.
Chairman Leahy. Yes, but what I hear in the letters that
your organization asks people to send to me, and several--and
before you suggest they are all spontaneous, I have called
several of these people, and they say they have gotten the form
letter from you.
Mr. Newberry. I was not going to suggest that, Senator.
Chairman Leahy. All right. I was just trying to keep you
from making a bad mistake here. But I hear that they say,
``Well, of course, the music, the radio stations are doing the
artists a service by playing their music.'' You are not
suggesting, I am sure, that people otherwise would be turning
on the radio station in the interest of hearing the
commercials.
Mr. Newberry. I am saying that our radio stations are much
more than simply the songs we play, absolutely, sir. I think
that there are local personalities. I think our commitment to
our community----
Chairman Leahy. I will grant you that. I will grant you
that. And we have two or three radio stations or several radio
stations in our State where I have complimented them over and
over again because they actually care about the local area. One
is just 5 or 6 miles from where I live in Vermont. It is the
only way you can actually find out if there has been a flood or
if a bridge is out or a road during bad weather, and I have
complimented them on that. I have even helped them on different
things. But they do have radio personalities.
We also have other radio stations where it is kind of a
format, click in, one, two, three, four, speak, speak, speak,
ad, ad, ad, one, two, three, four, speak, speak--I mean, you
know those. And I think that music is a very significant part
of their success.
Mr. Newberry. Yes, sir.
Chairman Leahy. But radio play, whether satellite radio,
Internet radio, broadcast radio, does promote sound recording.
But if you have the promotional value of that, if that is
considered, why are you concerned that the royalty rates would
be too high?
Mr. Newberry. Well, as a small-market broadcaster, I can
tell you that I do not think the average small-market station
in the country is going to see income from the record labels.
And I realize that in the House there was a proposal for a flat
fee for smaller amounts. I think as with any fee that I have
ever seen, it grows over a period of time.
Chairman Leahy. Do you have a problem with the fee as it is
now, the $500 fee?
Mr. Newberry. Yes, sir. In principle, I have a problem with
that. Five hundred dollars for a station----
Chairman Leahy. In principle or amount?
Mr. Newberry. Sir?
Chairman Leahy. What would that same station pay in dues to
your organization?
Mr. Newberry. $500, $600, $60 a month.
Chairman Leahy. Okay. Over the last several years, the NAB
argued that XM and Sirius should not be permitted to merge
because radio stations compete with satellite radio and XM and
Sirius would have an unfair advantage in the marketplace. So
broadcast radio competes with satellite radio, and I presume
Internet radio. Why is it fair for competition that broadcast
radio is the only media that does not pay for the sound
recordings it uses to compete? XM and Sirius have to pay for
it. You speak of them as being--you have argued against their
merger because they are competition. But if they are paying for
that, why shouldn't you pay for it and you are competing with
them?
Mr. Newberry. Well, there are two reasons that I would
address particularly. Number one, they are competing for ears.
They are competing for listeners.
Chairman Leahy. They are competing for what?
Mr. Newberry. Ears. They are competing for an audience. But
their business model is one that is based on subscription. They
get to charge their listeners for their product. I am very
proud to be a broadcaster that has community service
obligations. I am proud to serve my community. I am proud to
have the restrictions on it that we do. But it is an entirely
different model.
When my fellow panelist here talked about you turn on the
radio and the listener cannot differentiate between XM or
Sirius or AM or FM or Internet, the listener may not
differentiate. But when you press the button and you come to
one of America's licensed broadcasters, we have obscenity
regulations, which I certainly am not advocating are removed;
we have political requirements----
Chairman Leahy. Because you would not get a very eager
audience up here.
Mr. Newberry. But, sir, I would not get my audience in
Glasgow, Kentucky. I am not pandering to this distinguished
panel. I am saying----
Chairman Leahy. I understand. No, I understand. We both
agree on that.
Mr. Newberry. But we have a totally separate set of
regulations, expectations, and obligations that over-the-air
broadcasters have. So when we talk parity, we are not really
talking parity. We are talking parity on the fee, but we are
not talking parity in terms of operating requirements.
Chairman Leahy. Thank you. Thank you, Senator Feinstein,
and I will work with you and Senator Cornyn on this, but I
would urge your association to sit down and negotiate with the
artists and talk with us, because legislation will move. I
would rather have legislation move that reflects your interests
as well as their interests. But that is only going to happen if
you are sitting there at the table. Thank you. And thank you
for answering my questions.
Mr. Newberry. Thank you, sir.
Senator Feinstein. Thank you very much, Senator Leahy.
Senator Durbin, you are next up.
Senator Durbin. Thank you, Madam Chairman.
Madam Chair, in my callow, reckless youth, I owned a
restaurant/night club with live music. I learned more about
music copyright law in one phone call than I ever learned at
Georgetown Law School. A fellow called me and said, ``I was at
your club on Saturday night. It was really great. Nice crowd.
Loved the music. And, incidentally, you played 22 ASCAP-
licensed music selections, and so we are going to send you a
bill.''
[Laughter.]
Senator Durbin. And I said, ``Wait a minute. I paid the
performers.'' He said, ``No. The law is written that you have
got to pay us now, too. It is not just enough to pay the
performers. You have got to pay the owners of the music that
was played in your establishment. After all, you sold a lot of
beer because of that music, right? ''
Well, I learned a little bit about copyright law there. But
I learned that it just was not enough to be satisfied with the
obvious, and that is why I cannot quite grasp this particular
issue from the viewpoint of radio stations. If you do not want
to pay the performers, do not play their music. I mean, these
folks have put their life into it, and they have created this
music.
Mr. Newberry, you referred to a partnership. A partnership
suggests an agreement. You do not have an agreement with these
performers not to pay them. You happen to have the protection
of the law, which does not seem fundamentally just to me, that
your radio station can make whatever profit it makes, in good
and bad times, at the expense of performers and not compensate
them.
Mr. Cornyn's suggestion--I am sorry he has left, but I
think there is one element that raises doubt in my mind--you
would have to have both the composer and the performer say ``Do
not play,'' because they both have a property interest in the
performance. The composer is being paid for it. And if the
performer simply said, ``Do not play,'' the composer is going
to say, ``Wait a minute. I want them to play it because I get
paid for it.'' So it seems that there is some problem there in
terms of what he is suggesting.
Mr. Newberry, how do you come up with this partnership if,
in fact, it is imposed on performers by law? Was there a sit-
down agreement with performers?
Mr. Newberry. I was not here for that meeting, and so I
cannot say there was. But I would say that it has been a
partnership because for many years the record labels and radio
stations worked very closely in breaking new artists, worked
very closely in establishing those great catalogs that are
there.
So is there a formal agreement, to your point? No, sir. But
there has been a demonstrated partnership.
But you raise a point that I have a question with that I
can understand. You talked about your night club where you paid
the performers. But in restaurants, in ballparks, we have
performances that occur every day, but yet this bill does not
want to address that. It just wants to address radio stations.
Senator Durbin. That is a separate fight. I will say it.
Mr. Newberry. I understand, but for us it is difficult for
us to understand why if it is about the principle of this
argument, why is this not a comprehensive----
Senator Durbin. We may be forced to visit that, as painful
as it will be. And I have been in on this conversation. But,
really, I do struggle with this notion that the radio stations
can pick anybody's performance and use it to their benefit and
not compensate them.
Mr. Newberry. As can a restaurant, as can a ballpark.
Senator Durbin. But this is your business, the selling of
music, and advertising to go with it.
Mr. Oman, let me ask you this: I think you make a
compelling argument in your statement here in just a few
sentences, and I do not have enough time to repeat all of them.
But you say: ``It comes down to this. . . . As a matter of
property rights, men and women who create and own a copyrighted
work should have the right to get paid . . . by the people who
use their work. . . . Who is the best judge of the quid pro
quo--the broadcasters or the creators? ''
So can you--I mean, since you have witnessed this debate
for decades, can you rationalize how we have come to the point
that Internet, satellite, and cable radio stations have to pay
for their songs and terrestrial radio stations do not? What is
the logic behind that?
Mr. Oman. The new technologies were addressed by Congress
in a comprehensive way, and liability was imposed where it
should have been. The history of the public performance right
vis-a-vis the broadcasters goes back into the mists of time,
and there have always been efforts to impose a royalty on them.
But for a variety of reasons--one of which was the political
power of the broadcasters, another was originally the
opposition of the songwriters--that confused the issue and
encouraged Congress to continually put the issue off to another
day.
But I think we have reached the point where postponement is
no longer the solution. The market has changed so dramatically.
The public performance right looms so large in the eyes of the
performers and the record companies, the reproduction right
having diminished over the years, that now is the time to
finally impose liability on the broadcasters and have them pay
for the music they use.
Senator Durbin. Thank you.
Let me close, Madam Chair, by just thanking Ms. Gaynor for
being here. You have survived well. There are many disco fans
among Senators.
[Laughter.]
Senator Durbin. And we are glad you are here. Thank you.
Senator Feinstein. Thank you very much, Senator Durbin.
Let us see. Senator Klobuchar was next, then Senator
Franken.
Senator Franken. Thank you, Madam Chair.
I am in an interesting position because I have been in
radio, working for a radio network that has had some problems
surviving.
[Laughter.]
Senator Franken. And I also am someone who is keenly
interested in intellectual property. I do not know if I am
intellectual, but I have created some intellectual property.
It seems to me Professor Oman, who has been in this a long
time, makes some very powerful arguments, and, on the other
hand, we have these stations that are--there are stations that
are struggling to survive. So I have a question for Sheila E.
The House version of this, as the professor referred to,
contains provisions that allow broadcasters who make less than
$100,000 or $500,000 in revenue to pay a lesser amount in
performance royalties. It also contains a 1- to 3-year grace
period for some broadcasters.
As a representative of a coalition of performers and record
labels, would you support these kind of measures in the Senate
bill?
Ms. Escovedo. Yes, I think that it is fair. I think that we
are at a place that changes need to happen, and I do not think
that it is fair that radio uses the music that I have played
on, performed on, and not pay me for that. I do not think it is
fair to all the other musicians that have performed on millions
and millions of songs.
I think it is fair for some of the smaller radio stations
to pay a small fee, and $500, if it may be, or $1.37 a day, if
that is what it may be, $500 for a year, you got to be kidding.
I do not understand the logic behind saying that is too much
money to pay us, a small fee. We are just asking to be fair.
So I think it is disrespectful for the radio to not want to
sit down with us and have a conversation about--we are
partners. I depend on radio. I really do. And I want to sit
down and talk with them. I just think that it is wrong that
they do not want to talk, and I do not think there is a
partnership right now. There is not.
I think that one of the issues brought up about having the
artist make a decision whether or not we would want radio to
play our music I think is not a good thing, because that would
absolutely shut music down, because I think the majority of--I
am also not just a musician, but I am also a songwriter, and I
own a lot of my masters as well. So I would choose not for
radio to play my music because they are not paying me, and let
my fans go to the other radio stations, digital, and I would
get paid for that, and that would move the whole fan base. That
would move everybody away from radio.
So that is not a really good plan, but I still think----
Senator Franken. I do not think that plan is really----
Ms. Escovedo. No, it does work.
Senator Franken.--going to happen.
Ms. Escovedo. But also--yes. I just think that there needs
to be a partnership. Right.
Senator Franken. As Mr. Newberry said, I think we all heard
it for the first time today, and it was a nice try.
Ms. Escovedo. Yes, a nice try.
Senator Franken. But I do not think that is probably going
to happen.
Ms. Escovedo. No, not a good----
Senator Franken. You know--sorry to interrupt you, but
actually radio stations already do have no-play lists. I know
that. The radio stations already have those.
How will this affect new artists? Because Mr. Newberry is
making the argument that new artists want radio play, and is
this going to make it harder for them? I mean, I do not buy Mr.
Newberry's argument on, say, Roy Orbison. Maybe you would make
the argument you would pay Roy Orbison because his estate would
get money, but you are certainly not promoting Roy Orbison
concerts, right?
Mr. Newberry. No, sir.
[Laughter.]
Senator Franken. So that part of the argument goes once the
artist is not performing anymore, shall we say.
Mr. Newberry. May I make a statement to that, Senator?
Senator Franken. Sure.
[Laughter.]
Mr. Newberry. Certainly in cases--Mr. Orbison, I do not
know his particular case, but there are estates, there are ways
that those monies can still be monetized. It is not a concert,
but there are items based on the familiarity and the play that
do get purchased even after the artist has----
Senator Franken. Okay. Fair enough, fair enough.
Let me go back, I am sorry, to Sheila E. Will this have an
effect on new artists?
Ms. Escovedo. I think right now in the position that we are
in, it is going to affect everyone, like it has been for the
last 80 years, that we need to make a change. Of course, there
are tons of radio stations that play old music, you know,
1970s--well, 1960s, 1970s, 1980s. I am in that category. But it
is affecting not just the past but the future as well. So we do
need to change this now and make a change so that we all get
paid for past and future. You know, it is--I think the industry
right now for the kids, the youth, they are looking at it, and
they have said to us, you know, ``Wow, you must make millions
of dollars performing on all these songs. Radio plays you all
the time.'' No, I do not. I make the money as a songwriter but
not as a performer.
Senator Franken. Thank you.
Ms. Escovedo. You are welcome.
Senator Franken. Thank you, Madam Chairman.
Senator Feinstein. Thank you very much, Senator Franken.
Mr. Oman, something that you said piqued my interest. You
know, I am concerned that we are the only nation in the
industrialized world that does not provide these performance
rights. And you mentioned, you know, we might want to talk to
USTR about this. What exactly were you referring to?
Mr. Oman. Under the international regime of copyright,
American artists are not entitled to collect royalties in
foreign countries unless we provide reciprocal protection for
the foreign artists.
Senator Feinstein. So they lose foreign royalties as well.
Mr. Oman. They lose foreign royalties, and that amounts to
millions and millions of dollars every year.
Senator Feinstein. Thank you. I did not realize that. That
is, I think, a very important point in all of this.
Supposing they record in a foreign country, what happens
then to their performance rights?
Mr. Oman. They would be entitled to payments by the
broadcasters from that particular country, but not from the
rest of the world. If they recorded their music in Great
Britain, they could get royalties from the broadcasters for the
use of that music in Great Britain, but they would not get that
throughout Europe or in Japan or the other major markets in the
world.
Senator Feinstein. Well, wouldn't this encourage some of
them to record in other countries? Which is not too difficult
today to do.
Mr. Oman. I am not aware of that being done myself, but it
certainly would be a temptation. American authors in the 19th
century moved to Great Britain to get copyright protection for
their works in Great Britain. It would be a shame if our
copyright laws encouraged American artists to go overseas to
record their works.
Senator Feinstein. It certainly would. Thank you.
Ms. Leighton-Levy, you know both the House and Senate bills
provide discounts for small broadcasters, those with annual
revenues of $1.25 million or less, and offer them an option of
a very low fixed annual royalty of $5,000--or even lower for
smaller broadcasters, and that is the House bill.
In contrast, the license offered by SoundExchange to small
webcasters with the same threshold of $1.25 million in annual
revenues is 12 percent of revenues; thus, a small broadcaster
at the threshold would pay $5,000 in annual royalty, while a
small webcaster at that same threshold would pay an annual
royalty of $150,000. Now, that is a big discrepancy, 30 times
more.
How is this fair? Doesn't equity and a level playing field
require that small webcasters receive the same discount
structure that small broadcasters do?
Ms. Leighton-Levy. There may be others here on this panel
who would be better qualified to address this, to answer this
than I, but I will say that off the top of my head it does seem
to me that it is--I mean, that there is a rationale for having
there be at least some disparity between the two because, of
course, there are different responsibilities and obligations
for the small broadcaster in a small market, and----
Senator Feinstein. As opposed to the webcaster?
Ms. Leighton-Levy. Exactly, yes.
Senator Feinstein. Okay. Anybody else have a view on that?
Mr. Newberry.
Mr. Newberry. I would just point out that one significant
difference, the small-market broadcasters are obligated to,
among many other things, FCC regulations, FCC reporting, equal
opportunity outreach, annual fees that are charged by the
Federal Communications Commission, so there is an entirely
different cost structure for a broadcaster versus a webcaster.
So we are a fixed-cost business. I am certain that many in
our industry would argue that if we could rid ourselves of all
of the regulations and requirements, they would be glad to take
a higher percentage on a fee. But it is apples and oranges. You
cannot make the correlation between the two because we have an
entirely different business structure.
Mr. Kimball. Well, I very fundamentally disagree that you
cannot make a correlation between the two. You can make a
correlation between the two. These small broadcasters are all
reaching out to niche audiences, exposing new artists that
could not be exposed through big radio, through big
commercially programmed radio. They are actually trying to
achieve many of the same functions. And although their cost
structures may be somewhat different, they are nowhere close to
30 times different. That is fundamentally unfair.
Senator Feinstein. Let me call for Solomon here. Dr. Oman,
do you have a point of view on this?
[Laughter.]
Mr. Oman. I hesitate to get between the two titans at the
table, but the conclusion I draw from the exchange is that
there seems to be no recognition by the broadcasters that they
are getting a tremendous public subsidy in terms of free
spectrum, that they do not have many of the other expenses that
are borne by their competitors, and that they have a public
obligation. And I think at the top of that list of public
obligations is paying for the materials that they use fairly,
and they are not doing that now.
Senator Feinstein. Mr. Newberry, 30 seconds.
Mr. Newberry. Yes, ma'am. I will make it very quick. I said
in my opening comments that I absolutely support, embrace the
responsibilities and obligations that I have as a broadcaster
that comes with my license. Mr. Oman--I do not know where he
picked up that we were not acknowledging that. We have a public
trust with our listeners, with our communities. I am very proud
to be a local broadcaster, and we pay every day the opportunity
to be----
Senator Feinstein. I do not believe he was in any way
impugning you. What he was saying----
Mr. Newberry. I just want to be of record.
Senator Feinstein.--is that you have the airwaves, which
technically do not belong to anybody.
Mr. Newberry. They belong to the public.
Senator Feinstein. That is correct.
Mr. Newberry. Yes, ma'am.
Senator Feinstein. And that is a big deal.
Mr. Newberry. Absolutely, and we embrace that, and I am
proud of the record of service that the Nation's broadcasters
have provided as trustees of those airwaves.
Senator Feinstein. Okay, fine.
Let me ask, Dr. Oman, webcasters argue that the songwriter
protection provisions in both the Senate and the House bills
would tilt the playing field in royalty rate proceedings
between songwriters and webcasters, allowing the songwriters to
introduce evidence of the rate for performance right royalties,
which to date have been significantly higher than the
songwriters' rates, and to argue that songwriters' rates should
be increased but would not allow webcasters to use that same
evidence to argue that they could not afford to pay more to
songwriters because they are already paying so much of their
revenues to performers. That is the argument. What do you think
the validity of this argument is?
Mr. Oman. The parties are actually engaged in an ongoing
discussion of that particular point right now, and I think the
misunderstandings and the suspicions on both sides are about to
be allayed, and I would not be surprised if we did not have an
agreement on that point in the very near future.
Senator Feinstein. Good.
Mr. Oman. I think the fact that there is good faith on both
sides is going to help reach the solution. It is a very
complicated issue, and I would hope that, Madam Chairwoman, you
would give me the opportunity to provide a more formal written
answer after the hearing to supplement my oral commentary.
Senator Feinstein. If you would, it would be very much
appreciated. I think your views are very much respected, so we
would like to have them.
Senator Franken, do you have other questions?
Senator Franken. No, I do not. I want to thank you,
everyone, and, Solomon, thank you.
[Laughter.]
Senator Feinstein. First of all, let me thank everybody who
is not on the dais here, but who is working to try to bring the
industries together and come to some conclusions about what is
fair. It is very much appreciated. I would like to echo what
Senator Leahy said. I believe we will have a bill. So I think
the degree to which you can sit down and solve the problems is
very much appreciated. Then we will not have to. But if you do
not, we certainly will try. And I want to thank our witnesses
today. We very much appreciate their testimony.
We will leave the record open for 1 week, and we appreciate
your written comments. Thank you very much. The hearing is
adjourned.
[Whereupon, at 4:06 p.m., the Committee was adjourned.]
[Questions and answers and submissions follow.]
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