[House Hearing, 117 Congress]
[From the U.S. Government Publishing Office]
RESPECTING ARTISTS WITH THE AMERICAN MUSIC FAIRNESS ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON THE JUDICIARY
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
WEDNESDAY, FEBRUARY 2, 2022
__________
Serial No. 117-52
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via: http://judiciary.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
48-512 WASHINGTON : 2022
COMMITTEE ON THE JUDICIARY
JERROLD NADLER, New York, Chair
MADELEINE DEAN, Pennsylvania, Vice-Chair
ZOE LOFGREN, California JIM JORDAN, Ohio, Ranking Member
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
STEVE COHEN, Tennessee LOUIE GOHMERT, Texas
HENRY C. ``HANK'' JOHNSON, Jr., DARRELL ISSA, California
Georgia KEN BUCK, Colorado
THEODORE E. DEUTCH, Florida MATT GAETZ, Florida
KAREN BASS, California MIKE JOHNSON, Louisiana
HAKEEM S. JEFFRIES, New York ANDY BIGGS, Arizona
DAVID N. CICILLINE, Rhode Island TOM McCLINTOCK, California
ERIC SWALWELL, California W. GREG STEUBE, Florida
TED LIEU, California TOM TIFFANY, Wisconsin
JAMIE RASKIN, Maryland THOMAS MASSIE, Kentucky
PRAMILA JAYAPAL, Washington CHIP ROY, Texas
VAL BUTLER DEMINGS, Florida DAN BISHOP, North Carolina
J. LUIS CORREA, California MICHELLE FISCHBACH, Minnesota
MARY GAY SCANLON, Pennsylvania VICTORIA SPARTZ, Indiana
SYLVIA R. GARCIA, Texas SCOTT FITZGERALD, Wisconsin
JOE NEGUSE, Colorado CLIFF BENTZ, Oregon
LUCY McBATH, Georgia BURGESS OWENS, Utah
GREG STANTON, Arizona
VERONICA ESCOBAR, Texas
MONDAIRE JONES, New York
DEBORAH ROSS, North Carolina
CORI BUSH, Missouri
AMY RUTKIN, Majority Staff Director & Chief Counsel
CHRISTOPHER HIXON, Minority Staff Director
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C O N T E N T S
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Wednesday, February 2, 2022
Page
OPENING STATEMENTS
The Honorable Jerrold Nadler, Chair of the Committee on the
Judiciary from the State of New York........................... 2
The Honorable Steve Chabot, a Member of the Committee on the
Judiciary from the State of Ohio............................... 7
The Honorable Henry C. ``Hank'' Johnson, Jr., a Member of the
Committee on the Judiciary from the State of Georgia........... 23
The Honorable Darrell Issa, a Member of the Committee on the
Judiciary from the State of California......................... 23
WITNESSES
Ms. Gloria Estefan, Singer, Songwriter, Musician, and Recording
Artist and Founder, The Gloria Estefan Foundation
Oral Testimony................................................. 32
Prepared Statement............................................. 34
Mr. Barry Massarsky, Partner and Music Economics and Valuation
Services Practice Co-Leader, Citrin Cooperman Advisors LLC
Oral Testimony................................................. 40
Prepared Statement............................................. 42
Mr. Lawrence ``Boo'' Mitchell, Engineer, Producer, Musician, and
Owner, Royal Studios
Oral Testimony................................................. 53
Prepared Statement............................................. 55
Mr. Curtis LeGeyt, President and CEO, National Association of
Broadcasters
Oral Testimony................................................. 59
Prepared Statement............................................. 61
Mr. Dave Pomeroy, International Executive Officer, American
Federation of Musicians
Oral Testimony................................................. 73
Prepared Statement............................................. 75
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Materials from the Honorable Jerrold Nadler, Chair of the
Committee on the Judiciary from the State of New York, for the
record......................................................... 6
Materials submitted by the Honorable Steve Chabot, a Member of
the Committee on the Judiciary from the State of Ohio, for the
record
A Dear Colleague letter from Chair Jerrold Nadler and Ranking
Member Doug Collins of the Committee on the Judiciary........ 10
An article entitled, ``Radio Ink (Op0Ed): Will Ethnic Radio
Survive In The U.S.A.?'' RadioInk............................ 11
A letter from W. Craig Fugate, Former Administrator of FEMA.... 13
A letter from the National Association of Black Owned
Broadcasters (NOBOB)......................................... 15
A letter from representatives of all 50 state broadcast
associations, plus those forthe District of Columbia and
Puerto Rico, to support the Local Radio Freedom Act(LRFA,
H.Con.Res. 33) and oppose the American Music Fairness Act
(AMFA, H.R. 4130)............................................ 17
Materials submitted by the Honorable Darrell Issa, a Member of
the Committee on the Judiciary from the State of California,
for the record
An article entitled, ``A Performance Right is Not a Tax,
Congress should Exit the Music Business,'' Americans for Tax
Reform....................................................... 28
A letter entitled, ``CCAGW Urges House Judiciary Committee to
Support H.R. 4130,'' Tom Schatz, President of Council for
Citizens Against Government Waste............................ 30
An article entitled, ``Is Old Music Killing New Music,'' The
Atlantic, submitted by the Honorable Andy Biggs, a Member of
the Committee on the Judiciary from the State of Arizona, for
the record..................................................... 98
A letter from Peter Leathem, CEO of PP, submitted by the
Honorable Henry C. ``Hank'' Johnson, Jr., a Member of the
Committee on the Judiciary from the State of Georgia, for the
record......................................................... 130
APPENDIX
Materials submitted for the record by the Honorable Henry C.
``Hank'' Johnson, Jr., a Member of the Committee on the
Judiciary from the State of Georgia, for the record
A letter entitled, ``CCAGW Urges House Judiciary Committee to
Support H.R. 4130,'' Tom Schatz, President of Council for
Citizens Against Government Waste............................ 142
A letter from Meredith Rose, Senior Policy Counsel of Public
Knowledge.................................................... 143
A letter from the children/relatives/rights holders of deceased
legacy artists............................................... 149
A letter from the Society of Composers and Lyricists (SLC)..... 152
A statement from Michael Huppe, President and CEO of
SoundExchange................................................ 153
An article entitled, ``American Music Fairness Act Is a Step in
the Right Direction for Creating a Level Playing Field in US
Copywrite Law, Says ITIF,'' Information Technology &
Innovation Foundation........................................ 155
A letter from Grover Norquist, President of Americans for Tax
Reform....................................................... 157
A letter from CCAGW coalition of organizations................. 159
A letter from supporters of community broadcasting............. 161
A report entitled, ``Copyright Policy, Creativity, and
Innovation in the Digital Economy,'' The Department of
Commerce Internet Policy Task Force.......................... 162
A letter from Dolly Parton in support of the Performance Rights
Act legislation.............................................. 283
A statement from Harvey Mason Jr., CEO of the Recording Academy 284
A letter from Frank Sinatra to Bruce Springsteen............... 285
QUESTIONS AND ANSWERS FOR THE OFFICIAL RECORD
Question to Barry Massarsky, Partner and Music Economics and
Valuation Services Practice Co-Leader, Citrin Cooperman
Advisors LLC, submitted by the Honorable Jerrold Nadler, Chair
of the Committee on the Judiciary from the State of New York,
for the record................................................. 288
Question to Barry Massarsky, Partner and Music Economics and
Valuation Services Practice Co-Leader, Citrin Cooperman
Advisors LLC, submitted by the Honorable Steve Chabot, a Member
of the Committee on the Judiciary from the State of Ohio, for
the record..................................................... 289
Question to Curtis LeGeyt, President and CEO, National
Association of Broadcasters, submitted by the Honorable Steve
Chabot, a Member of the Committee on the Judiciary from the
State of Ohio, for the record.................................. 290
Question to Gloria Estefan, Singer, Songwriter, Musician, and
Recording Artist and Founder, The Gloria Estefan Foundation,
submitted by the Honorable Steve Chabot, a Member of the
Committee on the Judiciary from the State of Ohio, for the
record......................................................... 291
Responses to questions from Barry Massarsky, Partner and Music
Economics and Valuation Services Practice Co-Leader, Citrin
Cooperman Advisors LLC, submitted by the Honorable Jerrold
Nadler, Chair of the Committee on the Judiciary from the State
of New York, and the Honorable Steve Chabot, a Member of the
Committee on the Judiciary from the State of Ohio, for the
record......................................................... 292
Responses to questions from Curtis LeGeyt, President and CEO,
National Association of Broadcasters, submitted by the
Honorable Steve Chabot, a Member of the Committee on the
Judiciary from the State of Ohio, for the record............... 294
Responses to questions from Gloria Estefan, Singer, Songwriter,
Musician, and Recording Artist and Founder, The Gloria Estefan
Foundation, submitted by the Honorable Steve Chabot, a Member
of the Committee on the Judiciary from the State of Ohio, for
the record..................................................... 297
RESPECTING ARTISTS WITH THE AMERICAN MUSIC FAIRNESS ACT
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Wednesday, February 2, 2022
House of Representatives
Committee on the Judiciary
Washington, DC
The Committee met, pursuant to call, at 10:07 a.m., via
Zoom, Hon. Jerrold Nadler [Chair of the Committee] presiding.
Members present: Representatives Nadler, Lofgren, Jackson
Lee, Cohen, Johnson of Georgia, Deutch, Bass, Jeffries,
Cicilline, Lieu, Raskin, Jayapal, Demings, Correa, Garcia,
Neguse, McBath, Stanton, Dean, Escobar, Ross, Chabot, Issa,
Buck, Gaetz, Johnson of Louisiana, Biggs, McClintock, Steube,
Tiffany, Massie, Fischbach, Spartz, Fitzgerald, Bentz, and
Owens.
Staff present: John Doty, Senior Advisor and Deputy Staff
Director; David Greengrass, Senior Counsel; Moh Sharma,
Director of Member Services and Outreach & Policy Advisor;
Cierra Fontenot, Chief Clerk; John Williams, Parliamentarian
and Senior Counsel; Merrick Nelson, Digital Director; Kayla
Hamedi, Deputy Communications Director; James Park, Chief
Counsel for Constitution; Jamie Simpson, Chief Counsel for
Courts & IP; Atarah McCoy, Professional Staff Member/
Legislative Aide for Courts & IP; Tyler Grimm, Minority Chief
Counsel for Policy and Strategy; Ella Yates, Minority Member
Services Director; Andrea Woodard, Minority Professional Staff
Member; Kiley Bidelman, Minority Clerk; and John Lee, Minority
USPTO Detailee.
Chair Nadler. The House Committee on the Judiciary will
come to order. Without an objection, the Chair is authorized to
declare recesses of the Committee at any time. We welcome
everyone to this morning's hearing on Respecting Artists with
The American Music Fairness Act.
Before we begin, I would like to remind Members that we
have established an email address and distribution list
dedicated to circulating any exhibits, motions, or other
written materials that Members might want to offer as part of
our hearing today. If you would like to submit materials,
please send them to the email address that has previously been
distributed to your offices and we will circulate the materials
to Members and staff as quickly as possible.
I would also ask all Members to please mute your
microphones when you are not speaking. This will help prevent
feedback and other technical issues. You may unmute yourself
any time you seek recognition.
I will now recognize myself for an opening statement.
Music has the power to bring people together. Now, more
than ever, as we continue to seek means of staying connected
amid a global pandemic, people are turning to music to enjoy
and to participate in a sense of social belonging. Music has
also brought us together today to reflect on one of the most
long-standing injustices, but unfortunately has been a feature
of the music landscape for decades, the ability of AM/FM
broadcasters to play music without paying the performing
artists a royalty.
Unlike all other music platforms, terrestrial radio is
allowed to use and to profit off the creation, the intellectual
property of the artists, for absolutely free. I am aware of no
other instance in which this is allowed, and it is time for
this unfairness to end.
While granting this exemption to broadcasters has been
grossly unfair for decades, its impact is becoming increasingly
inequitable over time as the shape of the industry has changed.
Four years ago, Congress and the music community came together
to pass the bipartisan Orin Hatch-Bob Goodlatte Music
Modernization Act, a landmark piece of legislation bringing
much-needed updates to many aspects of the copyright systems
governing music. It is time to complete that project by passing
another bipartisan measure, the American Music Fairness Act,
introduced by Representatives Deutch and Issa, which would at
last require AM/FM radio stations to pay royalties for the
recordings that they broadcast.
I thank both Mr. Deutch and Mr. Issa for their leadership
on this issue and as a long-time advocate for closing this
unfair loophole that harms the artists, I am proud to join them
in this effort.
For years, broadcasters have argued that they should not
have to pay a performance royalty because their airplay holds
promotional value that leads to artists' fair compensation
through album sales, tour interests, and publicity. Although
this has always been a dubious claim, the advent of popular
digital media and streaming platforms has now made this
argument progressively less relevant.
Terrestrial satellite and digital radio all play the same
music to the same audience on the same speakers. Critically, it
is also clear that it is through these new digital platforms
that a lot of new music discovery takes place today. In other
words, these new services play just as important a role in
music promotion, yet only they are required to pay this
performance royalty. This puts the streaming services and
especially satellite and internet radio, at a competitive
disadvantage to terrestrial radio. Simply put, similar
businesses should be treated similarly under the law.
Additionally, the failure of U.S. law to establish a
performance right on terrestrial radio means that our singers
and other musicians miss out on royalties when the music is
broadcast overseas. Nearly every other developed Nation in the
world compensates performers for playing their music on
terrestrial radio, but since we do not have a similar
performance right at home, American artists do not receive
royalties when their music is played abroad. This deprives U.S.
artists of up to $200 million annually.
The lack of a performance right costs our economy millions
of dollars each year, but at bottom, this is an issue about
fairness for artists which is why I am so thankful that we will
be hearing from three accomplished artists today to help us
better understand how this issue impacts our country's enormous
and diverse body of musicians.
While every artist deserves to be paid when the music is
used by broadcasters, this royalty stream would be particularly
meaningful for the thousands of working-class artists who are a
critical part of our country's vibrant music industry. It would
also be particularly meaningful for artists who are not readily
able to tour and perform and this, unfortunately, has been the
case for all artists over the past two years during the COVID
pandemic.
It is time once and for all to create a system that is
platform neutral and that respects artists. We have an
impressive range of Witnesses here today and I look forward to
their testimony as we explore this critical issue.
Before I yield back, without objection, I will enter into
the record several statements of support we have received about
the American Music Fairness Act including from the Department
for Professional Employees of the AFL-CIO; Keith Kupferschmid,
CEO of the Copyright Alliance; Meredith Rose, Senior Policy
Counselor of Public Knowledge; Mike Huppe, President and CEO of
Sound Exchange; and six organizations representing community
broadcasters.
Without objection, I will also enter into the record
documentation from each Administration going back to President
Carter showing that all of them advised that the creation of
this performance right would be in the best interests of the
United States.
[The information follows:]
?
CHAIR NADLER FOR THE RECORD
=======================================================================
Materials from the Honorable Jerrold Nadler, Chair of the
Committee on the Judiciary from the State of New York, for the
record is available at https://www.govinfo.gov/content/pkg/
CHRG-117hhrg48512/pdf/CHRG-117hhrg48512-add1.pdf
I understand that the Ranking Member of the Full Committee,
Mr. Jordan, will be unable to participate in today's hearing
and that the gentleman from Ohio, Mr. Chabot, will serve as
Ranking Member for this hearing. Therefore, I now recognize Mr.
Chabot for his opening statement.
Mr. Chabot. Thank you, Mr. Chair, and thank you for holding
this morning's hearing and thank you to the Witnesses who will
be testifying.
This Committee handles some of the most contentious issues
facing Congress. Now, on many of those issues, abortion, gun
control, how to deal with illegal immigration, you can count on
virtually all the Democrats lining up on one side and all the
Republicans lining up on the other side. The topic of
discussion today, intellectual property rights, specifically
with respect to the music industry is different. You really do
see a lot of bipartisanships, cooperation, and even compromise.
I hope that trend continues as we consider legislation which
could forever change the way in which music is enjoyed on the
radio.
Back in 2019, Mr. Chair, you and then Ranking Member
Collins circulated a Dear Colleague letter which noted that
radio royalties need to be handled through ``consensus-based
proposals that move the American marketplace forward and market
realities should be taken into account.'' I would ask unanimous
consent to that Dear Colleague letter be entered into the
record, Mr. Chair.
Chair Nadler. Without objection.
Mr. Chabot. Thank you. Currently, the nine largest radio
stations combined have a market cap at less than $4 billion
while the three largest record companies have a market cap over
$200 billion. As this Committee and Congress considers this
issue, we need to be cautious that our actions don't further
endanger broadcasters, particularly when it is estimated that
they provide billions of dollars of promotional value to
artists like Ms. Estefan, Mr. Mitchell, and Mr. Pomeroy, who
will be testifying before the Committee this morning.
I will also note that absent from this morning's discussion
are broadcasters who represent small and minority-owned radio
stations. Amador Bustos, the President and CEO of Bustos Media,
owns many Spanish-language stations throughout the United
States. He offered to testify before the Committee to provide
that perspective this morning, but he was not given the
opportunity. In lieu of his testimony, I would ask unanimous
consent to enter his January 26th Radio, Inc. op-ed into the
record.
Chair Nadler. Without objection.
Mr. Chabot. Thank you, Mr. Chair. Additionally, unlike
other platforms, local broadcasters don't only play music. They
also serve a public interest. They serve communities across the
United States, local news, community-relevant programming,
critical life-saving emergency alerts, and are often a vital
partner with local charities and public causes.
When the power and internet stop working, radio continues
to broadcast life-saving notices and they have been especially
helpful during the on-going coronavirus pandemic. For example,
WKRC, in my congressional district back in Cincinnati,
partnered with the Hamilton County, Ohio Health Department to
focus on COVID education and vaccine awareness. WIZF, also in
my congressional district, has featured and promoted three
minority-owned businesses each week that have been struggling
during the pandemic, free of charge. In the last year alone,
one other station in my congressional district, WREW, has aired
over 2,000 public service announcements and donated over 4,000
promotional spots to local organizations and raised over
$800,000 for charitable causes. Radio stations throughout the
country have contributed in similar ways to their respective
communities.
Finally, I would like to note that in times of public
emergencies like floods or hurricanes, the Federal Emergency
Management Agency, FEMA, relies on radio as well. Because of
its reach and resiliency, radio services--they serve as the
backbone of the nation's emergency alert system. FEMA has
invested tens of millions of dollars in hardening radio backup
facilities around the country, including WLW in Cincinnati
where FEMA constructed a hardened site from which station
personnel could broadcast critical information to the public
for months on end if necessary. Some, like former FEMA
Administrator Craig Fugate, are concerned that imposing royalty
fees on radio stations could put public safety at risk by
diverting resources from emergency alert capabilities.
I would ask unanimous consent to enter into the record a
letter from former FEMA Administrator, Mr. Fugate.
Chair Nadler. Without objection.
Mr. Chabot. Thank you, Mr. Chair. Finally, I would ask
unanimous consent to enter two letters into the record, one
from the Association of Black Owned Broadcasters, and another
signed by all 50 State broadcast associations, noting their
concerns with the legislation like this particular legislation,
the American Music Fairness Act. So, I would ask that--
Chair Nadler. Without objection.
[The information follows:]
MR. CHABOT FOR THE RECORD
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Chabot. Thank you. So, with that, I look forward to
this morning's discussion and testimony from our panel of
witnesses. Thank you for holding the hearing, and I yield back.
Chair Nadler. The gentleman yields. I recognize the
gentleman from Georgia, the Chair of the Subcommittee on
Courts, Intellectual Property, and the Internet, Mr. Johnson,
for his opening statement.
Mr. Johnson of Georgia. Thank you, Mr. Chair, for holding
this hearing on this very important topic. We are in a much
different world today than we were in 1972 when Congress first
created a performance royalty. That was back when everyone
listened to the radio and bought records based on the music
they heard on their local station. This is far different than
the variety of ways that people listen to music today.
In this vibrant, complex, ecosystem, it is clear now more
than ever that we must work together to address the issue of
radio broadcast performance rights. It goes without saying that
artists should be compensated for their work and as the COVID
pandemic has made painfully clear, working-class artists need
steady royalty streams because they can't always rely on other
ways of making money from their craft such as through touring
whether due to pandemic or simply the fact of getting older.
I commend the work of my colleagues, Mr. Deutch and Mr.
Issa, on crafting the American Music Fairness Act in a way that
approaches this issue thoughtfully, with different and much
lower royalty rates for small and independent radio stations,
while ensuring artists are compensated when their songs are
played on the radio. In addressing the issue of radio broadcast
performance rights, we must also be sure that we are addressing
the concerns of the broadcasters and all those involved in
local radio. It is local radio which raises important health
and social issues, support local journalism, and provide much
needed information on emergency services during natural
disasters. Obviously, all the different parties involved in
this issue are differently situated with respect to being able
to accommodate change. I believe it is through hearings like we
are having today that we can work together to resolve this
long-standing issue and explore how to fairly compensate
creators.
I am pleased that we are joined today by such accomplished
artists and other industry professionals to help us further
consider this important issue and I look forward to their
testimony. So, thank you, Mr. Chair, and I yield back.
Chair Nadler. The gentleman yields back. I now recognize
the gentleman from California, the Ranking Member of the Courts
and Intellectual Property Subcommittee, Mr. Issa, for his
opening statement.
Mr. Issa. Mr. Chair, I would like to note that today, the
reason the Ranking Member is not here is the funeral of Budd
Brown who served in this body from 1965-1983 and hopefully, we
will remember him for two reasons, a fine legislator and a man
who came in 1965 after Frank Sinatra had already asked for some
sort of compensation and at 94 when he passed away and is being
buried on Groundhog Day, yes, we are here again and we do not
have a solution.
I say all of that not tongue-in-cheek, but because we have
been here for over half a century arguing that industries at
that time paid nothing and made billions. Now, are gone to
paying everyone we can think of except this one loophole.
My friends in the broadcast industry will always find a
freshman and tell them, please, do not support this tax. I
would ask unanimous consent that the Americans for Tax Reforms
and Citizens Against Government support--sorry, Against Tax and
Protection Reform, which supports this bill--it ain't a tax. As
a matter of fact, when we look at it, if it was a tax, then
public broadcasting would not be paying for streaming because,
of course, if it is a tax on terrestrial, it is a tax on
streaming.
So, I am here today to echo what the Chair said because he
said most of what is needed to be said, but perhaps did not
take this on in the way I am going to today. After more than 20
years of being told that you can't afford a penny, I am here
today to say this bill is a hand to effectively say all we are
asking for is a penny.
There are about 5,000 stations in the United States that
make less than $1.5 million. Whether they fell within the lower
amount or the higher amount, they would pay no more than $500.
That means that 5,000 plus stations would pay about $2 million
total, a fraction of what they probably pay in NAB Membership
every year, and certainly a fraction of what they pay in income
taxes, and most importantly, a fraction of what they pay in
streaming for the exact same material going, as the Chair said,
over the same
speaker.
So, I am looking forward to this, but I on Groundhog Day, I
would have to say we have been here before, we have debunked
the statements of why no money can be paid, and I hope that
people on the broadcast side after this hearing will come
together and simply ask the question, are you better off
telling us that the only way you will support this is if you
get a reduction from what you are already paying in streaming?
Or are we better off simply never giving fairness as your
industry more and more is paying on the streaming side and not
paying on the other side?
Today, where NAB's 5,000 smallest stations, I would reach
out and say if you pay just $500, you could be locked into
never having to pay anything more than that. Your entire cost
of music for the vast majority of small and intermediate
stations would be so small that you pay NAB more in dues than
you would, in fact, pay to have the music that allows the world
to enjoy a better life and allows you to make a living. So, I
would suggest that.
I would say that Congressman Deutch and I stand ready to
find creative compromises, but zero continues to be a number
that denies hundreds of millions of dollars to our performers
around the world and for no particular purpose because we are
talking a very small amount as streaming continues to grow.
So, Mr. Chair, I know I have gone on a little long, but I
appreciate that you are holding this hearing and you are not
giving up on something that the late Frank Sinatra and the not
late, but getting up in years, Dionne Warwick, both champion,
and I would ask that their statements both historically and
this past year be placed in the record.
Chair Nadler. Without objection.
[The information follows:]
MR. ISSA FOR THE RECORD
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Issa. Thank you, Mr. Chair. I yield back.
Chair Nadler. The gentleman yields back. Without objection,
all other opening statements will be included in the record.
I will now introduce today's Witnesses. Gloria Estefan is a
multi-Grammy Award winning singer, a singer-songwriter,
musician, and recording artist. Known as the Queen of Latin
Pop, she has sold over 100 million albums worldwide and
released 38 number one hits across the Billboard charts. In
2015, she and her husband Emilio, receive the Presidential
Medal of Freedom for their contributions to American music. In
2017, she became the first Cuban-American to be named a Kennedy
Center honoree. Today, she continues to work with the Gloria
Estefan Foundation on multiple causes including education,
health, and cultural development.
Barry Massarsky is a Partner and the Co-Leader of the Music
Economics and Valuation Services Practice at Citrin Cooperman
Advisors, LLC. Previously, he served as a Senior Economist at
ASCAP, the American Society of Composers, Authors, and
Publishers. Through his work, study, music copyright,
economics, Mr. Massarsky has worked with a wide range of
artists. He received a Bachelor of Arts degree from Boston
University and an MBA from Cornell University.
Lawrence ``Boo'' Mitchell is a Grammy Award winning
engineer, producer, composer, and the owner of Royal Studios in
Memphis, Tennessee. The son of the well-known music producer,
Willie Mitchell, Boo began his musical career at the age of 16
writing songs and playing keyboard for such artists as Al
Green. Later, he worked as manager and talent coordinator at
his family's club on Memphis' Historic Beale Street bringing in
a range of iconic performers. As the owner of Royal Studios, he
has been a producer and engineer working with a wide range of
popular and award-winning artists.
Curtis LeGeyt is the President and Chief Operating Officer
of the National Association of Broadcasters. He previously
served as Executive Vice President for Government Relations
before being named to his current role in 2020. Prior to
joining NAB, Mr. LeGeyt served as Senior Counsel to Senate
Judiciary Chair Patrick Leahy. He received his B.A. from
Providence College and his J.D. from Cornell University Law
School.
Dave Pomeroy is a bassist, writer, and producer. He is the
President of the National Musicians Association and is an
International Executive Officer of the American Federation of
Musicians. As a studio musician, Mr. Pomery has played bass on
more than 500 albums including six Grammy-winning recordings
with a diverse range of artists. He has, also, released more
than a dozen projects on his label, Earwave Records, and is a
long-time columnist and advisory board member for Bass Player
Magazine. He has served as President of the National Musicians
Association, AFM Local 257, since 2008, and serves on the
International Executive Board of the American Federation of
Musicians since 2010.
We welcome our distinguished Witnesses and we thank them
for participating today. I will begin by swearing you in. If
you would please turn on your audio and make sure I can see
your face and your raised right hand while I administer the
oath.
Do you swear or affirm under penalty of perjury that the
testimony you are about to give is true and correct to the best
of your knowledge, information, and belief so help you God?
Let the record show the Witnesses have answered in the
affirmative. Thank you.
Please note that each of your written statements will be
entered into the record in their entirety. Accordingly, I ask
that you summarize your testimony in five minutes. To help you
stay within that time, there is a timer on your screen.
Ms. Estefan, you are now recognized for five minutes.
STATEMENT OF GLORIA ESTEFAN
Ms. Estefan. Good morning, everyone. My name is Gloria
Estefan. Thank you for that wonderful introduction, but I am a
singer, songwriter, musician, recording artist for over 46
years, an actress, businesswoman, and proud member of SAG--
AFTRA. Although, I would never toot my own horn and for the
benefit of those of you that may not have a clue as to who I
am, I am also an eight time Grammy winner and recipient of the
Ellis Island Medal of Island and the Ellis Island Family
Heritage Award, the Gershwin Prize for Popular Songs from the
Library of Congress, the Presidential Medal of Freedom, and in
2018, had the incredible honor of having one of my songs added
to the National Recording Registry of the Library of Congress
as one of only 500 titles out of nearly three million of the
Library's recorded sound collection that were of cultural,
historic, and aesthetic importance to the American soundscape
and those are not my words. Those are theirs.
Thank you so much, Chair Nadler, Congressman Chabot, and
all the Members of the Judiciary Committee for allowing me to
speak here today.
Committee Members, I want you to think of a song that is
deeply meaningful to you. It doesn't have to be one of mine,
although I secretly hope it is. Maybe it was a song that played
during your first kiss, or the favorite tune of late relative,
or lyrics that helped you get through a difficult time in your
life, or maybe a song that was playing that time that someone
dragged you onto the dance floor to do the conga at some
wedding.
Music speaks to the soul. It evokes emotion. It inspires.
It brings us solace in challenging times and as the late, great
Dick Clark who was a friend, so wisely said it is the
soundtrack to our lives. Music has value. That is why I am here
today to encourage you to vote in favor of the American
Fairness Act.
Each of the songs that are precious and meaningful to you
was a labor of love for the songwriters, the artists, the
musicians, and producers that brought it to life. They poured
their own hearts and souls into its creation. When their music
is played on the radio, artists don't get paid, only the
songwriters do. The radio stations benefit from the advertising
dollars, but the artists that breathe life into a song, the
featured artist, the singers, producers, and studio musicians
are left out. This could be particularly problematic for older
artists whose songs are not in the top 40, but still get air
play. I would venture to guess that many of the songs that mean
the most to you are ones from these music legends, and I, in
fact, raised my children listening to the local oldies station
as I drove them to and from school. At that time, the '50s,
'60s, and '70s were considered oldies. Those things have
changed now.
My son and daughter loved not only hearing the beautiful
and catchy songs, but were also able to learn a deep
appreciation for the varied styles of music that American
artists have been creating through the years.
While I am the one testifying before you today, I represent
hundreds of thousands of Americans who endeavor to make a
living making music. Each of us has passion, talent, and drive.
I was blessed to be able to make a full living doing what I
love. You know these artists. They are your families, your
friends, and neighbors. They sacrifice so much to pursue their
passion for music often having to take on multiple jobs to pay
the bills.
The American Music Fairness Act is for them. For so many
American music creators, life has become dire since the start
of the pandemic. As a result of COVID, they have had to
drastically cut back on live performances or cut them out
altogether, eliminating an important and often sole source of
revenue. These hard-working, middle-class Americans cannot pay
the rent with the exposure offered to them by broadcast
companies. It simply doesn't make sense that artists are not
being paid when their music is played on one specific platform,
AM/FM radio. Why hasn't this been rectified sooner?
Traditional AM/FM radio is the only platform that does not
compensate performers for the sound recordings they use to fuel
often billion dollar businesses. This corporate radio loophole
makes broadcast radio the only industry in America that can use
another's intellectual property without permission or
compensation. Every industrialized country, except the United
States, provides a performance right. Moreover, when American-
made music is played overseas, other countries collect
royalties for American artists and producers, but never pay
those royalties because we don't reciprocate. This inequity
costs the American economy and artists more than $200 million a
year as was stated before.
I want to take a moment to point out that although we are
asking radio stations to pay their fair share, I am a very big
fan of radio and its place in music. As a child, it was the
only place--
Chair Nadler. The Witness's time has expired, so please sum
up.
Ms. Estefan. Okay. Well, I am gratified that it is going to
include exceptions for small and local broadcast stations that
are important institutions in our communities and what it will
do is ensure that all competing music platforms are treated
equally.
Thank you for having me here today. Your dedication to all
artists is so deeply appreciated. I hope you will continue your
efforts along with many champions across the Capitol, like
long-time supporters, Senators Leahy and Blackburn, to move
this bill forward to ultimate success. We are counting on you
to make this right. Though life isn't fair and we can't change
that, the payment of music royalties should be because that is
what respect is all about. Thank you for allowing me to
represent my fellow artists.
[The statement of Ms. Estefan follows:]
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Chair Nadler. We thank you.
Mr. Massarsky, you are now recognized for five minutes.
STATEMENT OF BARRY MASSARSKY
Mr. Massarsky. Thank you. Good morning to all.
I've been asked to appear before this Committee to render
my expert opinion as to the status of performance rights sound
recording exemption for terrestrial radio performances in the
United States.
First, I've spent my entire 40-year career as a music
industry economist studying the relationship between music and
commercial radio. First, I was the Senior Economist for ASCAP,
which is a music rights organization for songwriters and
publishers.
I then became an economist for one of its competitors in
Nashville with SESAC. Since 1992, I've been the consulting
economist on this issue for the Recording Industry Association
of America and continue with my work with SoundExchange
actually since its origin.
Then, finally, I continue to provide consulting on this
subject to major music publishers and have so since 2006.
My analysis of radio has determined that it relies on an
extraordinary amount of music as its core input to drive $7.6
billion of available music formatted revenue per year.
Seventy-nine percent of radio revenue is attributable to
stations whose purpose is to provide music to its listening
audience. In fact, based on that number of stations utilize
their music format as its chief programming input, I estimate
that over 714 million nonlicensed sound recordings are
performed each year on commercial radio stations.
In fact, music is so important that radio itself promotes
their use of music to attract listenership and its chief
purpose for their slogans and taglines to attract audience
attention.
Most essential to this discussion and the nexus of radio
station programming and record promotion value, which was the
reason and cause for the exemption to begin with, is now
shattered as that association between radio and promotion is
counterfactual to the new radio music economy.
I study this every day and I've done studies on what music
provides to radio and what's the inventory that radio relies on
to sell itself to its audience.
When we look at the actual airplay of what was playing on
radio, only 36 percent across all formats of radio station
spins can be classified as newly released and, therefore,
sensitive to promotion play.
In actuality, 53 percent of all spins listed as gold that's
a determination by radio itself. This is a concept that's been
growing over time, as older music is already very well known to
the music fan community and, in fact, now represents the
majority of the record industry. The recent trends show that
new music is now well discovered on other platforms, which is
social media and digital services.
Despite this pervasive need for music to provide this
revenue, only a tiny fraction of radio's operating costs are
allocated for the right to perform all this new content. On a
time-based measurement, 67 percent of a music-formatted radio
station is occupied by the playing of sound recordings--67
percent. Against that backdrop of usage, only four percent of
stations' operating costs are relatable to this amazing input.
I must [inaudible] absence of right for using sound
recordings on terrestrial radio is no longer rational on
economic terms, given the radio stations' use of music in its
programming.
I would end here by saying that there are only really two
issues at hand--just two issues.
(1) Does the loophole that radio has been provided, which is
the promotional thing, still valid? Answer? No. [inaudible]
(2) Will small stations suffer as a result of this impact of
new costs? The legislation protects those stations.
So, the two most important driving considerations that you
would have through this law they're both well understood.
So, thank you very much for your time today. I'm happy to
answer questions about my data, and I appreciate your time
today. Thank you.
[The statement of Mr. Massarsky follows:]
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Chair Nadler. The gentleman--we thank the gentleman. We
thank the gentleman.
Mr. Mitchell, you are now recognized for five minutes.
STATEMENT OF LAWRENCE ``BOO'' MITCHELL
Mr. Mitchell. Good morning.
Dear Chair Nadler, Congressman Chabot, and Members of the
Committee, my name is Lawrence ``Boo'' Mitchell. I'm a Grammy
Award-winning recording engineer, producer, composer, musician,
and the co-owner of historic Royal Studios here in Memphis,
Tennessee. I'm also a member of the Board of Governors of the
Memphis chapter of the Recording Academy. Thank you for giving
me an opportunity to testify.
In 2014, I was visited here at Royal Studios by songwriters
and producers Mark Ronson and Jeff Bhasker. After visiting the
studio, Mark told me that he wanted to record his album here,
including a track with Bruno Mars.
Over the next several weeks, some of the finest musical
talents from Memphis and around the country teamed up to record
the song ``Uptown Funk.'' It became the number-one song of the
year and, eventually, the number-one song of the decade.
In 2016, it won the Grammy Award for Record of the Year,
the first record made in Memphis to win this honor. ``Uptown
Funk'' was a huge radio hit. To this day, it's one of the 20
most played songs of all time on American radio.
No one involved in the recording of ``Uptown Funk'' has
ever been paid by radio broadcasters who profited from their
work.
Because of a loophole in the copyright law, radio
broadcasters are allowed to play records without asking for
permission and without paying compensation. They can play
records on the air for free and use our music to sell billions
of dollars' worth of advertising.
I can't think of another industry in America where you are
allowed to take someone else's property and use it without
permission or compensation.
``Uptown Funk'' was also a huge radio hit around the world.
The track reached number one in Australia, Canada, Israel, New
Zealand, and the U.K. In every one of those countries,
broadcasters pay royalties for radio play.
American musicians didn't get paid for ``Uptown Funk.''
Almost every other country in the world recognizes a
performance right for records played on the radio and they
require broadcasters to pay royalties to the artists and
musicians. Foreign countries won't pay American artists and
musicians until the U.S. fixes the law and reciprocates.
Every year American artists are losing hundreds of millions
of dollars in international royalties. Fortunately, there's a
solution to fix this injustice, the American Music Fairness
Act.
It is a bipartisan bill introduced by Representatives Ted
Deutch and Darrell Issa. Under this bill, artists, performers,
vocalists, producers, and other music makers involved in the
creation of a sound recording would receive compensation for
their music played on radio stations across the U.S.
Importantly, the bill safeguards the royalties received by
songwriters and publishers for radio play. It also contains key
protections for small broadcasters to ensure that local and
community radio stations continue to thrive.
This week is the 50th anniversary of Reverend Al Green's
legendary ``Let's Stay Together'' album, which was produced,
recorded, and mixed here at Royal Studios by my father, the
late Willie Mitchell. The title track was a number-one hit and
has been added to the National Recording Registry at the
Library of Congress.
My father, who passed away in 2010, tragically, never
received a penny from radio for his work and, shamefully,
neither have the other great Memphis musicians and vocalists
who created this work, like the Hi Rhythm Section, Rhodes,
Chalmers, and Rhodes, the Memphis Horns and Strings, James
Mitchell.
This is a gross injustice and a stain on the legacy of our
great nation. Some things have not changed from the time my dad
started at Royal Studios until today. We still produce and
record great music. Radio stations still pay no royalties to
performers.
Time is running out to fix this injustice for the artists
of my dad's generation like Reverend Al Green and Reverend
Charles Hodges of Hi Rhythm. These artists aren't looking for a
free promotion to sell records or to go on tour. They simply
want to be compensated for their work.
The pandemic continues to disrupt touring, live, and
recorded music. The lost royalties from radio could make the
difference in whether a musician can focus on their career or
has to take a second or third job to make ends meet.
Royal Studios is the fourth oldest recording studio in the
world. My sister, Ana Mitchell, and I have struggled to
maintain this place. If we had been able to collect my dad's
royalties from radio over the past 50 years, our small business
and our family would be in better shape today.
Those who create music answer to a unique calling. It takes
God-given talent and an extreme amount of hard work and
dedication to your craft to be successful in this business.
Today, I'm calling on Congress to help us keep the music
playing. America has given the world popular music. It's time
we honor our music creators the way other countries honor
theirs. Please pass the American Music Fairness Act because
musicians should not be penalized for being Americans.
Thank you.
[The statement of Mr. Mitchell follows:]
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Chair Nadler. Thank you.
Mr. LeGeyt, you are now recognized for five minutes.
STATEMENT OF CURTIS LEGEYT
Mr. LeGeyt. Good morning, Chair Nadler, Congressman Chabot,
and Members and staff of the Judiciary Committee.
My name is Curtis LeGeyt and I am proud to join these
impressive panelists and testify today on behalf of the NAB's
more than 5,200 free, local, over-the-air radio stations that
serve your communities every day.
Broadcast radio recently celebrated its 100-year
anniversary, and our 239 million weekly listeners demonstrate
that our unique appeal remains as strong today as ever.
The reason is simple. We are always on, we are local, and
we are completely free to all listeners without expensive
subscription or data charges, and in spite of decades of
technological advancement, no other platform combines these
qualities.
This enduring value has never been more apparent than in
the current pandemic where local radio is fulfilling its
mission of keeping listeners connected, safe, and entertained
in the face of its own significant challenges.
Mr. Chair, four years ago, I sat with you and several of
your Judiciary colleagues, Democrat and Republican, in this
Committee's library. At that time, in the aftermath of our work
together in support of the Music Modernization Act, you made a
straightforward request of the broadcast and music industries,
all whom were represented in that room.
You asked us to work together to develop a proposal on this
terrestrial performance royalty issue that could represent a
win-win for music creators and local broadcast listeners.
In response, NAB worked for more than 18 months and offered
numerous proposals to our industry partners behind closed doors
that aimed to achieve that goal. Our approach was tethered in
the belief that both artists and listeners could benefit from a
change in law that didn't simply create a new burdensome
royalty for broadcast stations, but instead enabled
broadcasters to innovate, incentivize them to play more music,
and benefitted artists by compensating them for that increased
airplay whether it took place over the air or through a stream.
When our concepts were rebuffed, we came back to the table
with new ideas time and time again. Unfortunately, the music
industry was unwilling to do its part in these negotiations.
Our proposals were legitimate, made in good faith, and NAB was
committed to seeing whether common ground might be possible.
Beyond lip service, at no point where we even met with a
formal counter offer from the music industry. That was
disappointing to me and other broadcasters at the time and, as
a result, we find ourselves in this hearing room today debating
a performance fee proposal that is strikingly similar to its
predecessors, one whose introduction the music industry
advocated in spite of knowing that it does not strike the
balance that you and your colleagues requested of us during
that meeting four years ago.
Mr. Chair, at a moment when local stations are doing their
best work, when in the face of a global pandemic we are
connecting communities rather than dividing them, informing
them rather than misleading them, and providing our critical
service free to all listeners when many Americans are
struggling financially, the American Music Fairness Act would
impose a new royalty on local radio that is financially
untenable for broadcasters of all sizes and unjustified as a
matter of policy.
Broadcasters thank Representatives Kathy Castor, Steve
Womack, and the 234 House and Senate co-sponsors of the Local
Radio Freedom Act, which recognizes our unique value and
opposes any new performance fee on broadcast radio.
I want to be clear. NAB remains committed to discussions
that would further our partnership with the music industry and
enhance our unique value to artists without diminishing our
ability to serve your communities.
Make no mistake, artists and their labels recognize this
value in the real world, even if not in their Washington, DC,
advocacy, through countless awards show acceptance speeches,
social media posts, and direct station outreach seeking
airplay.
We are proud of that partnership, but the American Music
Fairness Act would undermine it.
Thank you for allowing me to testify today. I look forward
to answering your questions.
[The statement of Mr. LeGeyt follows:]
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Chair Nadler. Thank you, Mr. LeGeyt.
Mr. Pomeroy, you are now recognized for five minutes.
STATEMENT OF DAVE POMEROY
Mr. Pomeroy. Thank you.
Mr. Chair, Congressman Chabot, and Members of the
Committee, I'm honored to speak to you today in support of the
American Music Fairness Act.
I'm a bassist, songwriter, and producer and a longtime
resident of Nashville, Tennessee--Music City. As President of
the Nashville Musicians Association and an International
Officer of the AFM, I've been advocating on this issue for more
than a decade.
This long-overdue legislation is critically important for
backup musicians and vocalists, the unsung heroes of the music
industry, and will end decades of unfair exploitation of their
intellectual property.
I fell in love with music at an early age and I moved to
Nashville at the age of 21 to follow my dream. I have played
bass on hundreds of albums and dozens of hit singles with
artists like Don Williams, Emmylou Harris, Elton John, Willie
Nelson, and Trisha Yearwood, including her biggest hit, ``She's
in Love with the Boy.''
Billboard Magazine recently gave Trisha an award for that
record being the most played song on radio by a female country
artist over the past 30 years. Trisha has never been paid a
penny for those millions of radio plays and neither have I or
any of the other musicians and singers who made that song into
a hit record.
How is that fair? Backup musicians and singers play a
critical role in the creation of the final product you hear on
the radio. Every situation is unique. Orchestral recording
musicians are under extreme pressure to perfectly execute a
written part in one or two takes, and rock bands may camp out
in a studio for months at a time looking for that one moment of
magic.
Some records are put together by one or two musicians, one
part at a time, using constantly evolving recording technology.
In many cases, like ``She's in Love with the Boy,'' musicians
are presented with a song in a raw form and work with the
producer and artists to create a collective musical arrangement
on the spot.
There are countless examples of an improvised musical
figure or backup vocal part that adds that special something to
a song that makes it a hit. That's what we do.
After all the work that goes into making a hit record, when
it is played on AM/FM radio, it generates revenue for the
broadcasters, but they only pay the songwriter and the
publisher.
For perspective, the only other countries on the planet
that do not pay artists, singers, and musicians for the use of
their work on terrestrial radio are Iran and North Korea. Do we
really want to be on that list?
This is a balance of trade issue, or more correctly, an
imbalance of trade issue. We create the vast majority of the
world's music, but it's almost impossible for American
musicians to get the money they are rightfully owed from
overseas radio play.
Every year $200-300 million of our money is being held by
foreign collectives, who use the poor excuse that the U.S.
doesn't pay foreign musicians for their small share of our AM/
FM air play. The money we have earned is trapped overseas until
Congress passes legislation that will unlock that ongoing
taxable revenue stream for American musicians. This will make a
huge difference in the lives of creators who are struggling to
feed their families.
Music is one of the United States' greatest exports, and
its positive impact on our economy and the everyday lives of
Americans is immeasurable.
What is measurable is the billions of dollars that U.S.
terrestrial radio makes on the backs of those who create the
content that drives their advertising revenue. In just three
months, in the third quarter of 2021, five of the biggest
broadcasters made $1.6 billion dollars in revenue, an average
increase of 20 percent from the previous year. Yet, they claim
they can't afford to pay anyone.
The changes the bipartisan AMFA proposes should have been
part of the Music Modernization Act of 2018. The broadcasters
were the only major part of our industry to refuse to
participate in this collective effort.
Satellite and digital radio, TV commercials, and film all
pay musicians when their work is used to create revenue, and it
is time for terrestrial radio to do the same.
The AMFA will not put small stations out of business or
hurt songwriters, as the NAB claims. The bill has several
provisions to ensure that small, independent, and community
radio stations will not be unduly burdened and will pay as
little as $10 a year and stations that make less than $1.5
million a year will only pay $500. We appreciate the services
that local radio provides, but this bill will not put them out
of business.
Technology has changed the music industry in ways that are
making it very difficult for musicians to earn a living wage.
The pandemic has only made this worse.
This is not about superstars and labels making a money
grab, it's about helping working-class American musicians who
deserve respect, just as Aretha Franklin, Spooner Oldham, and
all the musicians and singers who worked on that iconic record
deserve.
We urge you to pass the American Music Fairness Act. Thank
you very much.
[The statement of Mr. Pomeroy follows:]
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Chair Nadler. I thank all the Witnesses for their
testimony. We will now proceed under the five-minute rule for
questions. I'll begin by recognizing myself for five minutes.
Ms. Estefan, I understand that it takes many artists to
create the popular sound recordings you hear on the radio
today. How does the lack of a public performance right affect
the nonfeatured working-class musicians and sound engineers who
work on these songs? Do you think the failure to fully
compensate music creators hurts musical innovation?
Ms. Estefan. Absolutely. It makes it impossible to make a
living out of it. I know that I've been very fortunate because
I am a songwriter. So, in instances, for example, like the song
``Conga''--that was my idea but written by my drummer--anytime
it was played on AM/FM radio, which was the only place it was
played when it came out because this was in 1985, he was
compensated, and I'm glad for that because he's a person that's
been able to make a living from writing this song.
Neither Miami Sound Machine or I made money in that
respect. Fortunately, we have been able to tour in the best
years that music had. There were--as long as you were selling
records--actual physical copies, which no longer exist--there
was an amount and we were paid 7.7 cents per song per side, and
whether it be a vinyl record or a CD you were selling a
physical copy of that music.
Now, that is no longer the case and, thankfully, the Music
Modernization Act helped that a bit by creating some streaming
revenue, which still has a way to go.
This loophole that has been around since performers were
performing live on radio or being paid at the moment that they
perform live but there were no recordings, that loophole has
stood forever and people, like singers that don't write music,
haven't made a penny for their songs being played on this.
So, yes, it becomes difficult for them to be able to take
that up as a career when you know that you're not going to be
able to make a living at it.
Chair Nadler. Thank you.
Mr. Pomeroy, you represent the 80,000 Members of the
American Federation of Musicians. Is the promotional value of
airplay enough to compensate the musicians you represent? Why
or why not?
Mr. Pomeroy. Absolutely not. That is a trickle-down factor
that is--the promotional value for the main artist is becoming
more and more negligible, but for the backing musicians,
there's absolutely no--they get no discount at the grocery
store and exposure is not a form of commerce.
Musicians are having to take other jobs. If it weren't for
the other residual funds that are paying musicians as they
should, we would see even more people walking away from this
industry that is one of America's greatest exports.
So, yes, this has put our--not only our Members, but
musicians from one end of the country to the other under
extreme pressure to figure out a way to feed their family. It's
getting more and more difficult.
Chair Nadler. Thank you.
Mr. Massarsky, you are an expert in the economics of the
music marketplace. Based on your research and expertise, could
broadcasters afford to compensate musicians for the performance
of the intellectual property on AM/FM radio?
Mr. Massarsky. The quick answer is absolutely yes, for two
reasons.
(1) We really should be talking about the right here, not the
rate.
So, the establishment of the right is important because the
only reason it doesn't exist is because of this no longer
relevant consideration of promotion on commercial radio. When
we talk about the rate, that is, perhaps, a subject for another
discussion. This legislation takes care of the small
broadcasters and only allows for a fee of $500 for the majority
of stations to play millions and millions of songs.
(2) It is very likely trading on the small station side. It
does leverage the value of the license fee on the large station
side.
Remember, as I've said to you, two-thirds of the time--two-
thirds of an operating hour--you're hearing the sound of a
sound recording. This is the major reason why they can collect
up to $8 billion in revenue and it should be something that
should be taken care of today.
Thank you very much.
Chair Nadler. Thank you.
Mr. Chabot?
Mr. Chabot. Thank you, Mr. Chair. I want to, again, thank
the Witnesses for their testimony here today.
Mr. LeGeyt, let me begin with you. In addition to being a
Senior Member of this Committee and the Foreign Affairs
Committee, I served for six years as the lead Republican--part
of that time Chair, part of that time the Ranking Member,
depending on which party was in the majority--Chairing and
leading the House Small Business Committee, and small
businesses, most people realize really are the backbone of the
American economy.
Half of the people who work in America work for a small
business. About 70 percent of the new jobs created in the
economy are created by small businesses, and local radio
stations, for the most part, are, by definition, small
businesses, and I've already indicated in my opening statement
some of the various services that they provide.
So, let me ask you this. Some proponents of the AMFA argue
that small local radio stations really won't be burdened all
that much by imposing on them a small royalty fee.
With that in mind, could you provide some insight into the
impact that you believe this legislation would have on those
small radio broadcasters?
Mr. LeGeyt. Thank you very much for the question,
Congressman. Let me start by saying that the impact of this
legislation on our industry is being somewhat misrepresented by
its advocates.
There's a lot of focus on one or two very large station
groups, but there are close to 200 radio groups across the
country who would fall outside of any of the exemptions of this
legislation, more than 4,000 stations.
So, those are stations that every Member of this Committee
knows in their local communities that you view as small
business, they will be touched by the core of this legislation.
Your specific question in terms of the truly small
broadcasters, those with two or three employees who would fall
within the exemptions in this legislation, and we very much
appreciate the bill author's attention to them.
Five hundred dollars is a significant fee for those station
owners. That is the difference for a small business, as you
know, Congressman, between camp for your children during the
summer, between a family vacation. This is real money. It's
real money that they are already paying when they are
simulcasting their stations over a stream.
This would add real economic impact on top of that. So,
it's very, very significant and meaningful for those stations.
It is why small stations have come out and raised concerns with
this legislation, as well as some of the larger groups.
Mr. Chabot. Thank you. If this legislation were passed, how
would it affect the public, the average person, in your view?
Mr. LeGeyt. What local radio is doing in communities is so
unique, especially in today's media ecosystem. The hyper-local
focus, the fact that we are free. Now, there is a large
demographic, as you are all aware, that simply can't afford all
these new subscription services. Local radio is there for them,
it is a lifeline.
The last two years have only underscored it, right. When
you need local information, what's going on with your schools,
what's going on with local businesses, where can you get a
COVID test, communities are turning to those local stations.
Higher costs would undermine that reinvestment in that local
service.
I also think it would have a dramatic impact on music air
play. So, the value that the creative community does see in
radio, you're going to see less music air play. I don't think
that's good for anyone at this table.
Mr. Chabot. Okay, and then finally before I run out of
time, relative to our nation's emergency response
infrastructure, I mentioned in my opening statement about the
importance of broadcast radio to agencies like FEMA, for
example, the Federal Emergency Management Agency.
It's my understanding that in case of disaster, radio
stations are equipped to broadcast critical messages to the
public for months on end, if necessary. Would you describe how
the nation's public warning system could be impacted if new
royalty fees were imposed on local community radio stations?
Mr. LeGeyt. Thank you for the question. Local radio
stations are the backbone of the emergency alert system. So, as
the financial model for local stations large and small across
the country breaks down, that is going to jeopardize those
stations' ability to serve as that backbone.
I would say the impact in times of emergency goes much
broader than that. Broadcasters are core in those emergency
communications, not just because of the EAS system, but because
of our architecture.
We have a resilient, redundant system that ensures that
when cell services go out, you're dealing with a wildfire,
you're dealing with a hurricane, cell towers are down, local
radio stays on the air.
It is also a hyper-local focused message, one that you're
not getting through any local medium. So, as you undermine the
economics behind that, the investment that those stations can
make, both in that architecture as well as that localism,
you're undermining those public safety benefits.
Mr. Chabot. Thank you. My time has expired, Mr. Chair.
Chair Nadler. The gentleman yields back. Ms. Lofgren.
Ms. Lofgren. Thank you, Mr. Chair, and thanks to all the
Witnesses. This is really an important hearing, and I've
learned a lot from each of the Witnesses.
Ms. Estefan, I appreciate your explaining the origin of
this loophole. I never knew that, that it really began when you
were--when radios were recording live performances. Here we are
today, long ago. Very interesting.
I'd like to ask a question, Mr. Massarsky. In terms of--I
do think it's important, and the legislation recognizes, that
when you really have a small, locally owned radio station, we
want to make sure we're nurturing that. I think everybody
agrees.
So, my question is what factors went into the calculation
of what is that small business? I come from the State of
California, where salaries, schedules, everything is different
than in other parts of the country. Was that factored in in
terms of revenue and the like to find what is that small
business?
Mr. Massarsky. Thank you very much, Congresswoman. The
factors that went into determining a small station was simply
looking at the concentration of revenue that is organized and
controlled by the top tier of this industry. This legislation
wanted to protect the smaller broadcaster who might have a hard
time making this cost to transition.
Please keep in mind something. We're talking about a
loophole that only existed through Congress because of the
notion--
Ms. Lofgren. I'm not arguing that, but I'm just saying we
have a rough time in some parts of this industry. I'm thinking
specifically about a very tiny radio station in California that
is completely locally owned, but because they're in California,
they have to raise more money because the staff salaries are
very different than you might find in Tennessee or in
Mississippi.
So, I'm just hoping that we've incorporated that varying
price structure as we take a look at the definition of what's
small.
Mr. Massarsky. Congressman, those stations are protected
under this legislation.
Ms. Lofgren. Let me ask, Mr. Pomeroy, your testimony was
important and fascinating. One thing caught my attention, in
particular, and I'm hoping you can explain how it works. You
said that because of our current legal system here, that the
revenues that are generated abroad for our artists are stranded
there. Can you explain how that works?
Mr. Pomeroy. Yes, absolutely, I appreciate you asking. In
2012, we went to Beijing for the World Intellectual Property
Conference and helped pass a treaty with 131 countries that
contained the phrase ``No collection without distribution,''
establishing that principle.
All around the country, especially, all around the world,
especially in Europe, collectives are getting the money, as
they are allowed to do under their rules, where AM/FM
terrestrial radio does pay royalties. They're holding our
royalties on the pretense that we don't pay Bulgarian and
Czechoslovakian musicians for their work.
It's completely an imbalance of trade. We make the vast
majority of the world's music, and they're holding our money
that they've made using our music because we don't pay them for
the much smaller amount of foreign music played over here.
It would open up a floodgate of new, taxable income for
musicians so they can feed their families and see whether or
not they might be able to afford send their kids to summer
camp. Because right now, we've got musicians who can't feed
their families, and they're not worried about summer camp right
now.
Ms. Lofgren. Well, I appreciate, and that's really
outrageous. I didn't know about that until this hearing today,
and I think it's very important that we fix that. Because
that's just so terribly unfair to the artists in America.
You're right, America is the origin of most of the creative
music in the world.
I'll just mention, I think Ms. Estefan referenced this, but
I'm also a--I listen to oldies, I'm an old fogey. The idea that
this is promotional value for those oldies. People aren't going
out and buying those old recordings.
We're thinking back, we already have them, we're thinking
back. Especially the artists of yore that may not have been
able to get the revenues that are available now. How unfair to
them. So, I'm hoping that we can make progress on this.
Mr. Chair, my time has expired, but I really appreciate the
hearing, and I yield back.
Chair Nadler. The gentlelady yields back. Mr. Gohmert. Mr.
Gohmert. All right, Mr. Issa.
Mr. Issa. Thank you, Mr. Chair.
Boy, there's so much and so little time. I'm going to do a
couple of things.
First, I thought that Ms. Lofgren did a very good job of
describing our generation. Ms. Estefan, your husband and I were
born the same year. So, he too, perhaps, the time in which the
idea that a young artist needs to be recognized. As, to a
lesser extent, are you.
This is the 60th year of Mike Love and the Beach Boys
touring, 60 years. Yet, to get paid for any time AM/FM played
with them.
Normally when you do this, you call on your Witnesses. In
this case, I would like to call on our NAB witness again for a
moment. You said something that I really have to challenge.
You said that somehow $500 was going to put a station
making a million dollars of gross revenue a year out of
business because they could pay for their kids' summer camp. Is
that your statement on the record, under oath?
Mr. LeGeyt. Thank you for the question.
Mr. Issa. Just please a yes or no, is that your statement?
Mr. LeGeyt. No, that was not my statement.
Mr. Issa. Well, I heard they pay for summer camp and $500
as though $500 was going to be a problem. I want to say
something to you on the record.
I was talking to the--this is Sam and Joyce Moore. They
have a foundation that has offered to pay for any station that
could ask for relief the $500 under this bill for those
companies making less than 1.5 million. So, let's set that
aside for a moment.
I just want to get two things out that were in your
statement that I think are good to have on the record. One, you
talked about negotiating in good faith, and it was rejected.
That negotiation basically was to reduce the revenue of
streaming as part of a deal.
Isn't that always being part of the NAB's position, they
want to pay less in something that the Copyright Board has
already established these are streaming royalties? Is that
correct?
Mr. LeGeyt. No, our goal has been to grow the pie overall
and incent more streaming--
Mr. Issa. Wait a second, has that (Simultaneous
speaking.)--look, I have very limited time. Has that been part
of your negotiations? Have you ever had a deal where you said
no, we're fine paying that, and now we'd like to talk about an
incremental amount that we could pay elsewhere?
Or has it always included bringing up the fees paid under
the streaming? Just yes or no.
Mr. LeGeyt. It has always involved a holistic approach,
yes.
Mr. Issa. Okay. So, when we're discussing it today, I just
hope everyone understands that the reason that was a non-
starter is that is the revenue that Emilio and Gloria are
currently getting, okay. They're getting it because of revenue,
and I'll just give you an example, $800,000 was paid by public
broadcasting for their streaming.
Okay, it's real money, and it's growing. So, let's
understand that for some reason, and this is the Committee of
Antitrust, for some reason, you can afford in these startups,
these divisions of your companies, including iHeart, you can
afford to find a way to pay the streaming.
I'm using public broadcasting because it's a figure I could
easily get. All of your companies are paying growing revenues
for it. You can afford to do it, but somebody's child isn't
going to be able to go to summer camp if we charge even $500.
So that, I just want to make sure we have that out.
Mr. Mitchell, one more thing, and I think you're the expert
in this case, can you tell me the difference between a digital
broadcast, AM/FM, and streaming when it comes out of a typical
speaker with the recording quality that you know exists and
comes through various speakers?
Is there any real difference? Are we dealing today in the
digital world with identical sound, simply two different ways
of being delivered?
Mr. Mitchell. It's identical sound in two different
delivery methods. The same Al Green coming off Spotify sounds
the same as Al Green coming--
Mr. Issa. Lastly an economics question, very quickly, very.
Is there any reason that we would not, in our arms' length
negotiation, fairly give some benefit and reduction in
royalties for any and all the things that Mr. Chabot had named
that broadcasters do that might, in fact, affect the offset of
what the fair royalty should be? Is there any reason that--
Chair Nadler. The gentleman's time has expired, the Witness
may answer the question.
Mr.Massarsky. A proper rate receipt would take all factors
into account, and the broadcasters make that value. It would be
considered by those that were part of the rate-setting
mechanism.
Mr. Issa. Thank you. Thank you, Mr. Chair, I yield back.
Chair Nadler. The gentleman yields back. Ms. Jackson Lee.
Ms. Jackson Lee. Thank you. Good morning to everyone and
thank you so very much.
Just a ride down memory lane. I remember being part of
these battles in the introduction of this legislation in 2009,
and they were battles, and the scars are there. I think we came
out with recognizing the importance of what we're doing here
today.
I want to maintain by citing the numbers that we are also
very concerned about our radios of all levels, AM/FM, because
they are important vehicles and vessels in our community.
Likewise, the humanity of our artists are very important.
If I might put into the record, my work with Dionne
Warwick, Sam and Joyce Moore, and so many others during that
era. We were wrapped together with each other, because as I
said, the scars were deep, and the work was hard. I think we
came to some valid compromise.
Today, let me specifically cite your great work, Ms.
Estefan, and ask you the question, in your testimony you refer
to older artists who are not in the Top 40 but still have air
play. Help us understand how this impacts those artists
differently than those within the Top 40.
My time is short and I want to get other--thank you so much
for being here and your leadership and your talent and how
much--
Ms. Estefan. Thank you so much.
Ms. Jackson Lee. How much you've given to America. Thank
you.
Ms. Estefan. Thank you so much, that's lovely for you to
say. By the way, I'm also one of those older artists. So, I
can't exclude myself from that.
The thing is this, when you put your life and work into
music that is entertaining everyone else, you would at least
want to be able to pass onto your children this work that
you've done, especially if it's still being enjoyed. Like Frank
Sinatra for example.
He's having entire channels devoted to him on internet
radio, which he is going to get paid for. He still gets paid
on--he still gets played on many, many stations that harken
back, that are AM/FM that harken back to the time.
So, as an artist, he will not receive, or his heirs, any of
that music. I think it's important, the legacy that an artist
leaves behind, especially when it's something that has lasted
for decades and continues to be enjoyed by people everywhere.
They may be gone even physically from the earth, but their
children and their grandchildren certainly deserve to benefit
from the music and art they put into the world.
Ms. Jackson Lee. Thank you so very much. Sam--I'm sorry,
Barry, Mr. Massarsky, how often is it that sound recordings are
in play for which no compensation is provided?
You might also comment on the poverty that many of our
artists, I'm reminded of Jackie Wilson, who preceded, if you
will, many artists and was destined to a not-so-happy ending in
his life. Would you answer that, please.
Mr. Massarsky. Thank you very much, Congresswoman. Just in
a big picture, radio is pumping out about 12 songs per hour,
okay, constantly. It represents two-thirds of their program day
is the playing of the sound recording.
What's unfortunate for those that are just artists and not
writers is there's no compensation vehicle for all that air
play that takes place on AM/FM radio.
I just want to also say briefly that this is nly unique to
the United States, but there have been well-formed license
agreements and rates that have been agreed to by other
jurisdictions in Canada, the United Kingdom, and France and
Germany that does take into account these artists that really
relied on that type of revenue.
Guess what, the stations that accommodate the license were
able to afford it and there's compensation and it still works
with those radio markets abroad.
Ms. Jackson Lee. Thank you. Let me just put into the record
the commercial and public stations that make less than 100,000
a year will pay ten dollars. Public stations that make between
100,000 and 1.5 million a year will pay $100, and commercial
stations that 100,000 to 1.5 million a year, per year, only
500.
I just want to put into the record that there are dying
stations that are African American, in particular, and other
ethnic stations. In this legislation, we must find that
balance. I will advocate for them because they are instruments
of information, they're a family in our communities.
I think we can make this happen and work with those
beautiful artists who are American treasures and preserve
radio, in particular Black radio and Hispanic radio that are
treasures as well in our community.
I'm going to part of that. I know this bill is going
through Committee, but I want my Members to know that this is
something very important that I think we can do together and
respond to our artists, which I totally agree with.
With that, I yield back at this time, Mr. Chair. Thank you.
Chair Nadler. The gentlelady yields back. Mr. Johnson of
Louisiana.
Mr. Johnson of Louisiana. Thank you, Mr. Chair, sorry for
the delay. I thought somebody was ahead of me in the order.
I was just jotting some notes down here, collecting my
thoughts. Because I, like most of us, am benefitting from the
discussion here and all the discussions we have on this
important issue. We've got to a solution and the right balance.
There are competing interests here. There are fundamental
principles juxtaposed to one another. I'm a conservative, I
believe in the inherent value of the fundamental property
right, which is a foundational premise of our country. We want
the market to be fair to artists who produce it.
At the same, I'm genuinely concerned about the survival of
terrestrial radio and the vital importance that local
broadcasters play in our communities. So, it's not an easy one.
I don't think it's easy for many of us, but we're struggling.
I got my start in--I was a constitutional law attorney and
all that, but I was a talk radio host as well. I was a local
broadcaster, I mean a talk show host, and so I know the
struggles they have.
I know the very tight margins that they work under. I've
been in those studios; I've spent a lot of time in those
places. So, I see their argument here, so.
What's been covered I think is one of the vital points and
one of the real values I think that local broadcasters have in
our communities. I come from northwest Louisiana. We are
natural disaster prone.
We deal with hurricanes and tornadoes and all sorts of
things. Our local broadcasters are an essential component of
emergency preparedness.
The idea, the thought that they may not there one day is of
great concern to me and to many others. So, I really appreciate
my colleague, what Mr. Chabot said, bringing up the importance
of radio in emergencies and some of the comments that have been
made.
Let me just ask Mr. LeGeyt, can you elaborate a little bit
more on how passage of the American Music Fairness Act might
affect emergency radio broadcasting?
Mr. LeGeyt. Thank you, Congressman, for the question as
well as for your comments in recognition on the value of our
local stations in your district and across the country.
This legislation, which deals with one aspect of stations'
relationship with the creative community and would result in
substantial fees across our industry, will have a direct effect
of leading to less reinvestment in the service that we're
providing the communities.
So, in times of emergency, hurricanes, wildfires, that just
simply means less boots on the ground, less investment in our
infrastructure, the emergency alerting system that was alluded
to earlier. That takes real time and resources, work with the
FCC.
All of these are costs, it's less dollars to drive into
that. I think that has a real bottom line impact on the
communities that all of you serve.
Let me also say that the advocacy and the way that this
issue is being characterized I think is somewhat misleading in
the following way. The broadcast industry has grown up for 100
years around a legal framework where we are paying when we play
music over the air, as Ms. Estefan said it earlier.
When our music is played over the air, we are paying
hundreds of millions of dollars in fees to ASCAP, BMI, these
performing rights organizations. Those PROs distribute those
dollars to songwriters, those songwriters have publishers. The
publishers' partner with labels.
This is a business relationship that has enabled decades of
growth in the broadcast industry and growth in the music
industry and produced industries that are the envy of the
world. So, to just look at one fee on one aspect of this
without looking at how the dollars trickle across all this--I'm
absolutely committed to ensuring that artists have more dollars
in their pocket.
If the current system's not working to do that, let's work
on that instead of just imposing a fee that's going to
undermine those emergency services that you're asking about,
Congressman.
Mr. Johnson of Louisiana. I appreciate that. I only have a
couple seconds left. Let me just say that for those of you that
don't live in a tornado area, hurricane or whatever, there are
many, many times in my life when I've been huddled in a hallway
with my family as child, and now as a parent with my four kids
and my wife.
The power's out, we're in areas with a lot of--they don't
rural broadband that's reliable. The only thing you have, the
only connection you have in a weather emergency like that is
the voice on that radio. We all have battery-powered radios for
emergencies in Louisiana, it's an essential part of our life.
So, I'll close with that and yield back. I appreciate
everybody's time.
Chair Nadler. The gentleman yields back. Mr. Cohen.
Mr. Cohen. Thank you, Mr. Chair, I appreciate your holding
this hearing and all your work for music and fairness in this
area, and all the Witnesses who have testified here today.
The American Music Fairness Act will restore balance to the
music industry, ensure artists are properly compensated for
their labor. I'm proud to co-sponsor it.
I'm a friend of Mr. LeGeyt's, I look forward to him coming
to Memphis and touring the rural studios, getting an
appreciation of some of the grit and grime that goes into those
records.
It's not an easy thing, and a lot of the people that
perform there didn't make a lot of money when they were
recording them, and they didn't--they got old. A lot of the
older performers had to go back on tour, and that wasn't easy
for them either.
Boo, it's great to have you here. I'm proud to have a
Memphian with me and my friend Boo Mitchell, you're on my hall
here in Congress, a picture of you and me and Thomas Boggs and
Amy Levere from Memphis Magazine. So, you're on the wall out
there, along with BB and Albert and Isaac. So, we've got our
Memphis music collection out front.
You and your father, William Mitchell, did so much for
music, for artists in the industry. Hi Records and Royal
Studios, if it weren't for you, we wouldn't have love and
happiness.
The world goes around with love and happiness. President
Obama wouldn't have been able to sing Let's Stay Together. You
need to get him into the studio to do a cover of Let's Stay
Together. I think you all would have a big hit, and I think
Curtis would play it, it would all be wonderful.
Your family spent generations of music contributed to a
host of acclaimed projects, different capacities. Can you talk
about the role of producers and engineers in the creative the
process--
Chair Nadler. If the gentleman will--the will gentleman
will suspend--someone is not muted. I'm hearing music, but
someone is not muted, so please mute. Mr. Cohen, go ahead.
Mr. Cohen. I don't know how that happened. Al Green just
appears magically.
Boo, would you tell us about what producers and engineers
can contribute to the process?
Mr. Mitchell. Yes, it's a very tedious process. Producers
have to have the vision and producers--a part of that vision is
the music, choosing the musicians to play the song. In my
father's instance, he chose the Hi Rhythm Section, Charles
Hodges, Leroy Hodges, Archie Turner, Howard Grimes, and Al
Jackson, Jr.
Howard is a drummer on Love and Happiness and half of Al
Green's hit records, and he lays in a hospital bed here in
Memphis, Tennessee, still living in the same zip code because
he simply can't afford to tour. He can't afford to perform
music, but his music is being performed all over the country
via FM--AM radio.
Mr. Cohen. Well, not so much AM, AM's has gone the way of
talk radio. DA and LFMK(phonetic), they don't do a whole lot of
music these days.
The public performance license is the sound recordings that
are already used for internet and satellite performances to
terrestrial broadcast would help to fairly compensate all
artists involved in musical work. What would that additional
revenue stream mean for you and other artists at the rural
studios?
Mr. Mitchell. That additional revenue stream would mean the
world to me and all the backing artists. This isn't just about
the featured performing artist. It's about the people that--the
backbone of the people that make the music, the session
musicians that you've never heard of.
Like, I don't get a promotion. When they play Uptown Funk,
they don't mention Boo Mitchell. So, it's not just about the
featured artists, it's about the people--the blue collar that
go into making these great records.
If I was a British citizen, I would be compensated. If I
was Canadian, I would be compensated. Since I'm American, I'm
not compensated. That's just not right.
Mr. Cohen. Let me ask this question. Mr. Pomeroy may have
anticipated the question. He has his hand up. I don't know.
Whoever can answer it, how did it come to be that
screenwriters, excuse me, songwriters got paid when their songs
were on radio and performers didn't? I mean, songwriters, the
tremendous Harold Arlen and all that, but without Sinatra or
Elvis or it wouldn't be the same thing. Why was it that
songwriters got it and performers didn't?
Mr. Pomeroy. Well, without going into all the historical
details, I think essentially the artists, musicians, and
singers did not have the leverage to insert themselves in that
equation, so they got left out. They were never put back in.
Everywhere else around the world we get paid except for the
United States where the music comes from.
So, these royalties will have a huge effect on our ability
to continue to be the leader in the world's music, as opposed
to having a whole bunch of part-time musicians who have to work
down at the car wash to make a record like Car Wash.
Mr. Cohen. Well, thank you, everybody. My time is up. I
just want to say to Ms. Estefan, I don't believe you have been
performing for 46 years. You look like you were born 46 years
ago--Ms. Estefan. Thank you for that.
Chair Nadler. The gentleman's time has expired. Mr. Biggs.
Mr. Biggs. Thank you, Mr. Chair. I appreciate the hearing.
I appreciate all the Witnesses being here today. This has been
very informative.
Mr. LeGeyt, streaming services, satellite radio, and radio
stations around the world all pay performance royalties to
artists. I am just curious, how are they able to make it work
without suffering the severe negative consequences that you
have described for on-air radio broadcasts?
Mr. LeGeyt. Thank you for the question, Congressman. None
of those services do what we do, which is that we are hyper-
local, which requires real boots on the ground resources, and
we are completely free. Our competitors are charging
subscription services. Local broadcast is not based on that
model. So, I think there are fundamentally different businesses
at play here.
The role that we play in communities across the country as
a result of that local responsibility and the fact that we are,
as an audience, serving those who can't afford those other
services makes us unique. The economics are just very, very
different.
Mr. Biggs. Let me ask you this question. So, you said that
you had participated in negotiations for 18 months, and you had
offered real concrete proposals. I am curious, what, if any,
was the royalty proposed, because I wasn't part of that? I
don't know anything about that. What, if any, was the royalty
proposal for performers offered by NAB?
Mr. LeGeyt. So, our conversations were more centered around
frameworks. Frankly, to the extent we did discuss numbers, it
was done under an NDA to have a free exchange of ideas.
Our concept as an industry has been that if you incent
broadcasters to invest and innovate by taking care of what we
feel like is a very burdensome structure for streaming
simulcasts of local stations and you attach to that some
compensation for air play, that will result in more air play
overall, higher royalties overall. There are a lot of different
ways--
Mr. Biggs. Would that have included royalties for
performers?
Mr. LeGeyt. Yes.
Mr. Biggs. Okay. I would be interested in seeing what that
looks like, if you can get out of your NDA so you can share it
with Members of Congress so we could look at that. Thank you so
much.
Mr. LeGeyt. I would be very happy to have that
conversation.
Mr. Biggs. Thank you. Mr. Mitchell, I appreciate you being
here. Uptown Funk was--even I liked Uptown Funk. That was a
good song and got a lot of play. So, here's my question for you
is, did the playing of Uptown Funk on broadcast radio help lift
Uptown Funk and make it even more commercially viable and
successful?
Mr. Mitchell. Yes.
Mr. Biggs. So, I think back. I know a number of people who
live in Nashville that are artists, and they would love to get
something on broadcast radio because they think it would
actually facilitate sales of their songs, streams, and get them
more notoriety, which is what they want to do, and they feel
that that's necessary to succeed.
Is there some kind of synergism between broadcast radio and
the artist who is performing that particular piece of music? I
guess I'll ask Ms. Estefan. Can I ask you that question?
Ms. Estefan. Absolutely, radio has been instrumental in the
past decades in promoting a song. It led to more sales. Right
now, there are no sales. There is rarely--vinyl records are
made for collectors mainly. CD sales are practically non-
existent, because there is a whole new streaming and internet
way that music is getting put out.
So, what was there before to benefit from the promotion on
broadcast radio is no longer there. That is gone. So, whereas
before, getting played on radio might get you the ability to
sell more records, right now it really doesn't help in that
respect. Maybe it would help if you are touring, but now nobody
can tour. So, it has really changed very much.
Mr. Biggs. Thank you so much. Mr. Chair, I want to
introduce into the record a piece by Ted Gioia, who is a music
writer from The Atlantic from a week ago. It is called, ``Is
Old Music Killing New Music?'' If I can introduce that in the
record, and then just read--
Chair Nadler. Without objection.
[The information follows:]
MR. BIGGS FOR THE RECORD
=======================================================================
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Biggs. Thank you, Mr. Chair. He says, ``Every week I
hear from hundreds of publicists, record labels, band managers,
and other professionals who want to hype the newest new thing.
Their livelihoods depend on it. The entire business model of
the music industry is built on promoting new songs.''
Then he goes on to give the analysis that 95 percent of
streams on Spotify and other streaming services are music that
is considered old music. We are talking everything beyond 18
months old.
It is really a very dynamic--when Ms. Estefan points out
the dynamic of the streaming services vis-a-vis broadcast
radio, it is really a change that has happened over the last 10
years. I am curious to see where we are going to go with this,
Mr. Chair. I look forward to hearing from Mr. LeGeyt to show me
what he had proposed, because I am interested in seeing how
this turns out. Thank you. Time has expired.
Chair Nadler. The gentleman yields back to Mr. Johnson of
Georgia.
Mr. Johnson of Georgia. Thank you, Mr. Chair. Mr. LeGeyt,
in your written testimony, you State that this bill would upend
established business relationships under the copyright laws.
Can you explain what you mean by that?
Mr. LeGeyt. Thank you for the question. The broadcast
industry for 100 years has grown up and built businesses around
this music licensing regime. What is unique about what is being
proposed here is, in other areas of copyright, all areas of
copyright, as new technologies emerge, whether it's the piano
rolls, the VHS, the CD player, streaming, Congress has updated
copyright laws to account for those new technologies and ensure
the right incentives are in place for creators and for users.
A change in law here would disrupt a legacy industry and
its relationship with the music industry that is intertwined
across all actors here. It starts with the direct royalties to
ASCAP and BMI, the performing rights organizations, those
organizations that are songwriters, relationships with the
labels and artists, but also the value that we are providing
and promoting, not just what would have been 20 years ago a
conversation around album sales and live performances, but now
on-demand streams. There is extensive data on the way that
broadcast radio play drives on-demand streaming, especially for
the legacy artists that have been mentioned here. So, this is
all very much intertwined.
You go and disrupt that with just an additional fee on one
player in this ecosystem, and I understand the needs of the
creative community who want to see more sources of revenue, but
we need to look at this a little bit more holistically than
just jumping straight from the creator to the user, because
there are a number of different actors siphoning off dollars
from this--
Mr. Johnson of Georgia. How do you suggest that the
performers be compensated for their work that is played on
broadcast radio?
Mr. LeGeyt. So, from a broadcast radio perspective, I
believe the best way that we can provide value to artists, not
just today but going forward, is through a music licensing
system that is incentivizing us to innovate, to ensure that our
value, it continues to be provided through streams for
listeners--
Mr. Johnson of Georgia. How can that be accomplished?
Mr. LeGeyt. So, I think it can be accomplished through a
more holistic discussion around these laws. We are open to
having that, would eagerly have it. As I stated in my testimony
earlier, we would like the other side to come to the table and
have this more holistic conversation. We are being rebuffed by
the music industry, who wants to look at this as a very, very
narrow, singular issue that misrepresents it.
Mr. Johnson of Georgia. Well, let me ask you this. The
section 4 of the act that we are discussing today provides that
broadcast stations that generated less than $100,000 in
revenues in the preceding calendar year, the yearly fee would
be $10. That is not asking a whole lot. For public broadcast
stations that generated between $100,000-1.5 million in the
preceding calendar year, the yearly fee would be $100. For all
other broadcast stations that generated between $100,000-1.5
million in the preceding calendar year, the yearly fee is $500.
Can you explain how that $500 is so oppressive?
Mr. LeGeyt. Well, for a truly small business, which are the
very small radio stations, one to two employee stations, that
would fall into those exemptions, $500 is real money. It is not
just $500 in a vacuum. It is $500 piled on top of fees that
they are already paying to ASCAP, BMI, SESAC, to SoundExchange
when they are simulcasting, to the FCC for their licenses.
Again, they can't offset that by suddenly charging a
subscription. These are free services.
The bigger focus here is on the 4,000 radio stations, the
180-or-so station groups, that in your local communities. I
think you would characterize those as small- and mid-size
stations who fall outside of those exemptions. These royalties
can total hundreds of thousands of dollars if we assume they
are going to follow a template of a per-play stream the way the
CRB has set in the webcasting context. So, we are very
concerned about this.
Mr. Johnson of Georgia. Okay. Let me stop you there. Mr.
Massarsky, some argue that small broadcasters like the ones
just described by Mr. LeGeyt cannot afford to compensate
musicians for the performance of their sound recordings. In
your opinion, does the American Music Fairness Act adequately
account for that concern?
Chair Nadler. The time of the gentleman has expired. The
Witness can answer the question.
Mr. Massarsky. Those particular stations, Congressman, are
well protected by the legislation.
Chair Nadler. Thank you. Mr. McClintock.
Mr. McClintock. Thank you, Mr. Chair. To me, this is a
simple issue of property rights. Somebody owns a right to a
composition or a production, and that right can only be traded
with the consent of the owner. For example, if I compose a
song, that song belongs to me. I might choose to sell it to a
recording studio or license it to individual performers or keep
it for myself. Nobody has the right to use that composition
without my consent. That composition can be traded in any
number of ways. Let's say I sell it or license it to a
recording studio. The recording studio then hires musicians and
a performer to record their work for compensation. Now, they
have produced a recording that they own.
So, whether a broadcast helps to promote a recording to me
is irrelevant. What matters is whether the broadcaster, the
user of the rights, and the owner of the rights agree to the
terms. It may be the studio would want to pay to promote it or
at least allow the broadcaster to broadcast it for free to
promote it. That is up to the owner of the rights and the user
of the rights.
In any event, the recording should only be used according
to the conditions of compensation that have been agreed to by
both sides, whether it is done by a direct license or more
likely bundling collections of recordings under terms agreeable
to the owners of the rights. In any event, one party owns the
property, which can only be used under the terms that it has
agreed to.
To me, the government has a responsibility to protect the
property rights of its citizens, including intellectual
property. That is what copyright protection is all about. It
needs to be applied and enforced according to these simple
principles of voluntary agreements between the owner of the
right and the user of the right.
So, Mr. LeGeyt, if I recorded a talk show from a
broadcaster and then played it on my radio station without
compensation, would that broadcaster object?
Mr. LeGeyt. Yes.
Mr. McClintock. Well, isn't that what is happening with
respect to music recording? Somebody goes to the expense of
creating and producing a hit song, and then somebody else
broadcasts it without their permission.
Mr. LeGeyt. Well, Congressman, I agree that if we were
starting this conversation whole cloth from the outset, you
would have a very different music licensing regime than you
have today.
This is an issue of property rights. For broadcasters who
have been publicly performing music for 100 years, they have
been paying the right that was established in the 1919
Copyright Act, which is the copyright that is held by the
songwriter.
Mr. McClintock. To me, that is not serving the purpose of
government, which is to protect the property rights of its
citizens. Just because we have been doing it for 100 years
doesn't necessarily make it right.
I am reminded of the story that Lincoln told of going up on
the Saginaw River where they hauled eels out of the river and
skinned them alive right there on the dock. Lincoln totally
thought that was a terribly cruel thing for them to be doing.
One of the eel skinners says, now, son, just calm down. It's
all right. We have been skinning eels this way for years, and
they're used to it.
Mr. Massarsky, this still seems to be a half measure. It
provides some compensation, but not at a rate agreeable to both
the owner and the user. For example, a hit song by a well-known
artist is likely to be worth more than a new song by an unknown
artist. That unknown artist might very much want to have their
song broadcast on radio without compensation. The owner of the
hit might want to be paid for its broadcast. Why shouldn't
these arrangements be worked out between the owner and the
seller?
Mr. Massarsky. Well, they can be, Congressman. In fact, we
have a mechanism, the Copyright Royalty Board, that can take in
all these factors into consideration. I remind you that we have
figured out these considerations around the globe. Now, there
are jurisdictions in every country that the governing body have
looked at the promotion value of one side, the size and scale
and affordability of the other. They have all reconciled
successfully.
It is a companion right. It is not the rights, the right of
the sound recording, the artist and the sound recording owner.
They in every other country have worked comfortably side by
side with the rights of the music publisher and the songwriter.
All the questions that you raised, and some others have
raised have all been fairly explained and judicially determined
by these other sovereignties--
Mr. McClintock. So, as a practical matter, these rights can
be protected and can be enforced. It is simply that we choose
not to. My concern is that we are assigning an arbitrary
license fee without the consent of the owners of these
products. Why can't we just do it the right way and protect the
rights of the owners of all these productions regardless--
Chair Nadler. The time of the gentleman has expired. The
Witness can answer the question.
Mr. McClintock. Your mike is muted, Mr. Massarsky.
Mr. Massarsky. Congressman, you are absolutely right, and
we should be doing just that.
Chair Nadler. Thank you. The gentleman yields back. Mr.
Deutch.
Mr. Deutch. Thank you, Mr. Chair, for holding this hearing.
Thanks to all the witnesses, especially I want to thank Mr.
Mitchell, Mr. Pomeroy, and Ms. Estefan for the insight that you
have provided into--
Mr. Cicilline. I think we lost Mr. Deutch. Mr. Chair, you
are on mute, and you are speaking.
Chair Nadler. Yeah, we have lost Mr. Deutch. So, we will
come back to him. Ms. Bass. Mr. Cicilline, rather.
Mr. Cicilline. Thank you very much, Mr. Chair, for holding
this hearing, and really thank you to all our Witnesses for
being here today. This hearing has been very useful in really
understanding these issues.
On the one hand, of course, it is vitally important that we
protect artists' rights to be adequately compensated for their
work that they have produced. As so many have said, music plays
such an important role in our lives. It comforts us in times of
pain. It allows us to express joy in times of celebration, and
often occurs during some of the most memorable moments of our
lives. So, musicians and songwriters deserve to be paid fairly
for providing us for this.
It is also to underscore the importance of local
broadcasters, who are not only a primary source of trustworthy
news and entertainment, but also irreplaceable during public
health and safety situations and weather situations,
particularly because of emergencies. Also, broadcasters are
facing really an existential threat to their survival.
I think interestingly both the broadcasters' challenge and
the artists' challenge really are a result of the harmful
behavior of giant companies. For the broadcasters, it is the
tech monopolies. For the artists, it is the studios. So, I
think there is a larger problem here about the power of artists
to negotiate and the power of broadcasters to be treated fairly
by the big tech companies.
I think we all recognize the value of local broadcasting
and what it means and how essential it is for the providing of
trustworthy, reliable sources of information and news, which is
why I hope very soon we will mark up the Journalism Competition
and Preservation Act. That would be real relief for local
broadcasters. So, I think that this is a real challenge.
I guess I'll start with Mr. LeGeyt, who is my friend too,
because I hear what you are saying, and you are absolutely
right. I am a champion for local broadcasters. What seems
unfair to me is that, while what you are doing is really
important as a local broadcaster, and we as a community should
be responsible for making sure you survive because of all the
value of your public services, your announcements, it does seem
to me a little bit unfair to shift the burden for that to
musicians, like musicians shouldn't be responsible for funding
or subsidizing all the great work that you do.
So, my first question is, does the provision--and why am I
not wrong in thinking about it that way? Also, do the
provisions about the small broadcasters cover most of the
broadcasters? I have no sense of what group falls within that
$500 range of local broadcasters. Is that 80 percent, 20
percent? Like what is the magnitude of the problem?
Mr. LeGeyt. Thank you, Congressman, for the question and
your comments about the value of local broadcasting. Let me
take this in two parts.
First, to be very clear, there is a pot of money that is
economically tenable for local broadcasters to pay in royalties
to rights-holders. We are not hell-bent on preventing artists,
performers, for having a larger slice of that pie. This is a
larger ecosystem that has grown over decades with one set of
relationships that for broadcasters has started with the PROs,
has filtered its way through the system.
We are all for a holistic conversation. If that money needs
to be divvied up differently, let's have that larger
conversation. There is a reason that songwriters are
complaining about how they are compensated by streaming
services. They are not complaining about broadcasters. These
dollars are distributed very, very differently depending on
which platform is publicly performing the songs. Our concern is
just picking out this singular issue of a terrestrial
performance royalty and suggesting that it is economically
feasible to pile that on top of a system that is already been
in existence and that businesses have been built on, on both
sides, broadcasters and music industry, for decades.
To your question about the small radio exemptions, first,
we very much appreciate the bill authors for recognizing the
value of small radio. Those exemptions leave out a huge swath
of the industry. Hearing the music industry advocate on this,
you would think that this was an issue about one or two groups.
There are 177 radio groups that own stations that would fall
outside of these exemptions. So, this is not just about a
couple of large radio groups. This is about the vast majority,
close to half of broadcast stations across the country, more
than 4,000, that would be impacted outside of these exemptions.
Chair Nadler. The gentleman's time has expired. Mr.
Tiffany.
Mr. Tiffany. Okay. Mr. Chair, can you hear me okay?
Chair Nadler. Yes.
Mr. Tiffany. Okay. Thank you very much. First, I want to
say to the artists and the producers that are on this, that
were presenters today, thank you for your contribution to the
great American songbook. We have had so much wonderful music
that has been produced in America over the decades. Just thank
you so much for doing that.
I was a beneficiary of that with a business that I owned
called Wilderness Cruises in northern Wisconsin. I had artists
that came on our excursion boat regularly and produced music.
Sorry, they did not use Ms. Estefan's music, but I sure wish
they would have. It was terrific, though. I want to thank you
so much for the work that you have done.
Mr. LeGeyt, back to the whole issue of private property
rights, someone who has been a strong advocate of that my
entire legislative career, how do I navigate that, that we are
not protecting people's private property rights by these
artists being compensated by your radio stations?
Mr. LeGeyt. Thank you for the question, Congressman. Let me
just say, that is something that we have to navigate constantly
at NAB in the larger sense as well, which is that I represent
within my Membership substantial content owners, content users.
I think what makes this issue very, very unique is that you
are delving into a set of property rights that was established
100 years ago, has certainly been modified over time, but which
the local broadcast business and, frankly, the music industry
has grown up around. At this point, 100 years later, the AMFA
would pull the rug out from under that and impose a wholly new
cost.
So, I appreciate, to the degree that this is about core
intellectual property rights, let's have a holistic
conversation about how we get more dollars in the pocket of the
sound recording creators, the artists. There has to be a
balanced way to do it.
Mr. Tiffany. Okay. Thank you. Mr. Pomeroy, you alluded to
in your--I went through all your written testimony. You alluded
to the financial harm that was done as a result of the
shutdowns and things that have happened over the last couple
years. It seems like that has been significant for some. Is
that accurate?
Mr. Pomeroy. Absolutely. Here in Nashville, which has the
highest per capita musician population of any city in the
world, we have seen many people who just couldn't stay and had
to go back home. We have seen a huge drop in our workforce.
It's a trickle-down effect that we're not receiving anything.
I heard a remark earlier about asking for a larger slice
for artists, musicians, and singers. We don't have a slice. We
can't make nothing larger.
So, I really appreciate this chance. Musicians are under
such hardship because of the live music problems, the touring
problems. This is a crisis like we've never seen.
If we want to undermine the ability of one of our greatest
working groups that create exports that make this country the
leader in the entertainment industry, if we don't do something,
this infrastructure is going to fall apart. We will be
listening to music from overseas.
Mr. Tiffany. Yeah, thank you very much, Mr. Pomeroy. I
would just say that I am concerned about, whether you call it a
fee, a tax, whatever you want to call it, it does concern me,
even for small stations. Is that the camel with its nose under
the tent?
As someone who has always been a limited government, small
government legislator, it concerns me that we start that, and
then where does it lead eventually? Because once a tax fee--
whatever you want to call it, once it starts, it does concern
me in regard to that.
I want to make one final point in regard to this hearing
today. I am very disappointed that this Committee has went to a
virtual hearing once again. This is so unfortunate.
We get so much better communication when we are live, when
we are there in person, when there is that give and take that
is going on. Once again, this Committee like some others has
gone to virtual hearings, and that does not get us there. What
I saw in the testimony that was written here today is this
undertow of how shutting down our world over the last two years
has had enormous consequences. We are just beginning to figure
out what it is.
It is time for us to get reopened. It is time for this
Committee to go back to meeting in person. It is time to reopen
the United States of America because the collateral harm is
incredible, and you just heard about it from Mr. Pomeroy.
Let's reopen America now. We should lead in the Congress of
the United States of America. I yield back.
Chair Nadler. The gentleman yields back. Mr. Deutch.
Mr. Deutch. Thank you, Mr. Chair. We are going to try this
again. This is a piece of legislation we introduced because it
is time that we respect music.
It is time that we honor the creators of music. It is time
that we treat them fairly. The fact that something has happened
for decades that is wrong and unfair doesn't mean that this is
what we should live with. That is why this legislation is so
important.
Mr. LeGeyt, of course we recognize how important local
broadcasting is. I want to remind everyone again that our bill
exempts radio stations with revenues under 100,000 dollars and
allows them to pay 10 dollars a year for all the music in the
world. Eighty percent of radio stations would pay 500 dollars
or less to play all the music they want. Mr. LeGeyt, I think
that 500 dollars is even less than the membership fee to belong
to the National Association of Broadcasters.
So, I want to go back. I want to touch on something you
said multiple times which is that the thing we need to remember
is that radio is free. I want to explore what that means.
Is it a public service? Is there money involved? How does
the business work? When do advertisers get involved, and how
much was the total amount paid in advertising to broadcasters
over the past year?
Mr. LeGeyt. Thank you for the question, Congressman.
Advertisers are obviously the cornerstone of our business. I
should point out, to this theme about how COVID has impacted
all of this. I have extreme sympathy for the way it has
impacted the music industry.
For broadcasters who rely on local retailers, local car
dealers, local restaurants, their advertising has had a
dramatic impact. So, we are a 100 percent ad supported
business.
[Simultaneous speaking.]
Mr. Deutch. Mr. LeGeyt, do you know what the total amount
was that was paid in ads last year in advertising?
Mr. LeGeyt. I can get those dollars.
Mr. Deutch. I would appreciate that, and here is why. There
is this constant focus on small radio. What you said is you
represented that there will be less investment made in the
emergency alert system. You said there will be fewer boots on
the ground, that there won't be innovation.
I just want to make sure I understand. Are you representing
to the Judiciary Committee that companies like iHeartMedia
which earned close to 3 billion dollars is going to stop making
those investments if this bill passes, that Cumulus which
earned over 800 million dollars is going to stop investing in
their business and in their community? Is that what you are
representing?
Mr. LeGeyt. No, I am not representing that it will stop. I
am representing that this will have a real impact on that
investment--
Mr. Deutch. Right.
[Simultaneous speaking.]
Mr. Deutch. So, you said it would have a dramatic impact on
music airplay. Are you representing that these companies that
play the music, that draws people in, that draws the
advertisers in because they know there will be listeners, and
they know there will be listeners because people want to listen
to the music, when you talk about a dramatic impact, are you
saying that they are going to stop paying--they are going to
stop playing music? Is that what you are representing?
Mr. LeGeyt. I am not representing that they are going to
stop playing music.
[Simultaneous speaking.]
Mr. Deutch. Okay. So, let me just ask you. I am sorry. Let
me just ask one other thing because I don't have a lot of time.
You talked earlier. You said that you acknowledged, in
passing, that 500 dollars is significant when they are already
paying for streaming. They are paying for streaming to artists,
right? That is what you were referring to, when they pay
artists when the songs are streamed on their stations online.
Is that what you were saying?
Mr. LeGeyt. Correct.
Mr. Deutch. Right. Is it hard to understand why so many of
us would be so offended at this notion that musicians should be
paid in one context, but it is perfectly fair for them not to
be paid here at all?
I'll finish with this. You referred a couple of times
earlier to the burdensome royalties. Is it burdensome when you
pay DJs to play music, Mr. LeGeyt?
Mr. LeGeyt. It is a cost of doing business.
Mr. Deutch. Is it burdensome? Is it a burden? Is it a
burden on the industry?
Mr. LeGeyt. No, it's not.
Mr. Deutch. Is it a burden on the industry to pay talk
radio hosts who draw in listeners because they want to hear
that? I am going to answer that for you. Of course, it isn't.
Only the musicians who produce the music that make your
radio stations be able to sell advertisers, only those
musicians are not being paid. It is time for fairness in
American music. That is why this legislation is so urgently
needed, and I yield back.
Chair Nadler. The gentleman yields back. Mr. Massie.
Mr. Massie. Thank you, Mr. Chair. I want to follow up on a
line of questions that Mr. McClintock had. This hearing is in
the context of a bill, legislation. I have got a question about
the legislation. Maybe somebody could help me answer it.
Section 5 establishes that if a copyright holder directly
contracts with broadcast stations to license terrestrial
performance rights, the broadcast station must still pay 50
percent of the direct license payment to the entity
administering the royalty. If this were to become law, is it
still the case that if performers wanted their material played
for free on the radio to promote, for instance, their local
appearances--which honestly for the small performers that I
know, their appearances produce more revenue than the streaming
revenue that they are seeing.
Would it still be the case that it could be a completely
royalty free production and nothing additionally would have to
be paid over the status quo? Mr. LeGeyt, can you answer that?
Is the licensing compulsory even if the artist doesn't want it?
Mr. LeGeyt. So, thank you for the question. The licensing
is compulsory. So, for the vast majority of stations across the
country, they're paying a fee regardless of what airplay they
would be putting over their airwaves.
That having been said, it is extremely cumbersome when
you're talking about thousands of broadcast stations, thousands
of right holders. The bill, I believe, intends to allow a local
station group to go and directly negotiate a deal with a rights
holder that could potentially fall outside of that regime.
Mr. Massie. Okay. What--
Mr. LeGeyt. It is hard to say how that would work in
practice. I think it would be extremely impractical and
burdensome. I don't want to misrepresent what I think the bill
intends.
Mr. Massie. Right. Okay. So, we don't have to litigate all
of that now. I just want to make sure that we are not--if it
truly is the right of the artist, then the artist needs to
still have the right to give that away if they find that the
promotion is in their interest more so than some small royalty
that they might receive. So, I just want to make sure that's
not overlooked.
Ms. Estefan, I enjoyed your music. I was in high school in
the '80s and '90s, and it was very popular. You mentioned that
the artist and their heirs should enjoy royalties for a long
period of time. Right now, the term of copyright protection
generally begins at the time of creation and lasts for the life
of the author plus 70 years. Do you think that's an appropriate
length of time?
Ms. Estefan. Well, whether I think it's appropriate or not,
at least it's a protection for the next seven years after I die
for my kids and heirs. That is a separate conversation to have,
but there is some protection. They will be getting those
royalties from the songwriting that I did, but they will not
receive any royalties from me as a performer. For example, when
Conga or Get On Your Feet that I did, right, that I performed,
when those get on radio, they won't receive anything from that.
Mr. Massie. Then let me ask you a question. If somebody
invented an insulin pump that saved lives and he was an
inventor, how long should that inventor enjoy royalties? Should
his heirs be entitled to those royalties as well?
Ms. Estefan. Wow, you are giving me a lot of power here.
Mr. Massie. Yes.
Ms. Estefan. Is it whatever I say goes? I'll tell you what.
Benjamin Franklin gave all his inventions for free because he
thought that they were for the common good, and that's a
wonderful thing. I did music because I felt it in my soul.
Mr. Massie. Right.
Ms. Estefan. I sing since I talked. I probably would've
done it for free, although I needed a day job. Copyright law,
you have judges, and you have laws that establish reason and
lengths of time.
Mr. Massie. Thank you very much. Let me summarize. Yes, I
know inventors who would sell their blood plasma to keep
inventing, but they can't make a living doing that.
Ms. Estefan. Oh, absolutely, yeah.
Mr. Massie. I just want to make sure we don't have a double
standard here where we are trying to give patents only last 20
years. People make inventors out to be evil people because they
are trying to make a living.
Ms. Estefan. Oh, absolutely.
Mr. Massie. Here we are--yeah, and here we are with
royalties for songs which they are enjoyable, but they don't
save lives. They last the life of the author plus 70 years. So,
I want to make sure that we don't call the inventors trolls,
but we call them the backup artists--
Ms. Estefan. Absolutely.
[Simultaneous speaking.]
Ms. Estefan. Exactly. A nice analogy also for these
broadcast places, they pay both their anchors and the writers.
In essence, what's happening, it would be as if they were
paying the writers of the broadcast but not the anchors for
doing the job of anchoring the news.
[Simultaneous speaking.]
Chair Nadler. The time of the gentleman has expired.
Mr. Massie. Thank you, Ms. Estefan.
Chair Nadler. Ms. Bass.
Ms. Bass. Yes, thank you, Mr. Chair, for holding this
meeting. Mr. LeGeyt, I wanted to congratulate you again for
becoming the CEO of NAB, and it is nice to see you again. I
wanted to ask the question about overall royalty fees that
broadcasters pay. I wanted to know if you could discuss how
broadcasters, including small minority broadcasters, are
navigating the economic challenges such as fees being brought.
Mr. LeGeyt. Thank you for the question. It's extremely
challenging. Broadcasters are paying as an industry hundreds of
millions of dollars in fees to performing rights organizations,
ASCAP, BMI, and SESAC.
On top of that, you now have an emergence of these new
performance rights organizations that are taking slices away
from ASCAP, BMI, and SESAC. It doesn't seem to be a zero-sum
game for broadcasters and other users. So, that's GMR, for
example.
When broadcasters are webcasting, they are paying royalties
to SoundExchange on top of that. We pay our FCC license fees on
top of the various vendors for our technology services. So,
suffice it to say for a small broadcaster who just want to know
that they have got the permission to play the music that they
want to put out to their audiences, this has become extremely,
extremely cumbersome.
Ms. Bass. So, one other question. How is small defined? Is
it by the number of stations that an individual or a company
would own? Or is it by their value?
Mr. LeGeyt. Within this legislation, or how would I define
that?
Ms. Bass. Yes, how would you define it?
Mr. LeGeyt. I would define small in the context of
broadcasting by level of community focus. I think too often we
mistake scale as undermining small because your experience with
your local broadcasters and I think your colleague's experience
as well is that they operate very independently in local
markets. If they are doing their jobs well, they are invested
in that community.
Ms. Bass. Okay.
Mr. LeGeyt. They are small businesses within that
community. Now, scale is helping them compete with the Googles
and Facebooks of the world for advertising dollars.
Ms. Bass. Okay. Let me move on before my time runs out. Ms.
Estefan, I know that you are coming to this position--you are
coming to this issue from a different position. I wanted to
know if you could speak how the lack of a public performance
right impacts the music marketplace and the overall economy. I
heard your testimony before you talked about the individuals.
Ms. Estefan. Okay. Let's start with the fact that foreign
royalties which the American government would be taxing if the
American songwriters would receive it is something that is
being left on the plate right there. Also, taxes that those
performers would be paying based on royalties they would be
receiving is also left on the table.
Look, I'm a songwriter and a singer. I'm fortunate that I'm
a songwriter. I'm happy that I have been able to reap those
benefits.
There shouldn't be a difference for someone like a Dionne
Warwick that may not have written her biggest hits because Hal
David wrote them. She created those songs. She's the one that
created the magic that people listen to and continue to listen
to because these songs we still hear.
I don't think it's fair that whoever wrote the song be
getting compensated, but the woman that made the magic for that
song doesn't get a penny. That's the only thing we're trying to
establish here. There is a lot of money being left on the
table.
Tax dollars are being left on the table that we could be
using also to fund all kinds of things. There are a lot of
things written in that will protect the smaller radio stations.
Believe me. I love radio. We would be nowhere without radio,
particularly me in that era.
Ms. Bass. In my last few seconds, Mr. Mitchell, if you
could respond. In my district, I have an awful lot of artists
who are concerned about this as well. Mr. Mitchell, could you
respond how it impacts the individuals?
Mr. Mitchell. Yes, it impacts us very greatly. We're
talking about COVID, now. Before COVID, we experienced the
housing market crash in 2007 and 2008. With the advent of MP3s,
record sales were cut in half or more.
Having a performance royalty would just offset all of that.
This is a small business. Gloria Estefan, she's a small
business. You're talking about small businesses. That's what we
are, the music creators. We're small businesses, and we're
struggling to make ends meet because we don't have access to
this money.
Ms. Bass. Thank you.
Chair Nadler. The time of the gentlelady has expired. Mr.
Roy? Mr. Roy?
[No response.]
Chair Nadler. Well, in that case, Mr. Bentz.
Mr. Bentz. Thank you. Thank you, Mr. Chair, and thanks to
all the Witnesses. It's extraordinarily interesting, and I wish
I knew more about this space. I'm going to address just a
couple of simple questions to Mr. LeGeyt.
My understanding, limited though it may be, is that radio
is a means of competition against streaming. As I understand
it, the radio business model is selling advertising to pay for
playing music or providing entertainment is paid for on a per
plate standard. The streaming methodology, of course, is based
on subscriptions.
Radio is based on the amount of play with no regard to
income. This is a problem because the risk to the business is
squarely on the radio station. I guess the question as these
smaller stations, particularly many in my district out in
Oregon, find themselves more and more and more challenged by
all the different multitude of platforms.
I guess my question to you is, does radio--even as
challenged as the circumstance may be, providing a competitive
edge of some sort to drive down the cost of streaming to those
who are artists that are negotiating for streaming's use? Or am
I misunderstanding it completely?
Mr. LeGeyt. Well, I think where radio can stand out and
where it will still remain very, very viable in today's media
landscape is with a hyper focus on local and a service to a
demographic that simply can't afford those subscription fees
through other services. A piece of that is our relationship
with the music industry, the value that we're providing to the
music industry. That value is extending to that listenership
that I think remains very, very unique.
So, I'm not sure if I'm answering your question on point. I
believe that there's a really unique value and niche that we
fill that none of our other competitors are hitting. I believe
that the music industry benefits from that.
Mr. Bentz. Right. I am sure that your answer is difficult
because my question was poor. Let me put it a little more
clearly. Does radio provide competition for streaming? If so,
does that drive down the cost of streaming to the artist?
Mr. LeGeyt. So, yes, radio is competing for listenership
with other audio streaming services, no doubt about it. I,
also, think when you're talking about on demand streaming, the
Spotifys, the Apple Musics of the world, radio play is driving
more downloads. It's driving more on demand streaming.
So, artists are benefitting from that. That's the new form
of what would've 20 years been album purchases. So, I think
this is very much we're competing on one hand. I think what
radio does is very different than what an Apple Music or a
Google Play is doing in terms of that's the product that we're
helping to promote.
Mr. Bentz. Perhaps I said it backwards. In fact, I'm sure I
did. What I should have said is, does the competition drive up
the value to artists? That was really the proper way to put the
question.
So, I think you have answered it despite my challenge in
presenting the issue to you. Mr. Chair, a super interesting
conversation for many reasons to me. With that, I yield back.
Chair Nadler. The gentleman yields back. Mr. Jeffries.
Mr. Jeffries. Thank you so much, Mr. Chair, for convening
this very important hearing. I thank all the Witnesses,
certainly thank my good friend, Congressman Deutch, for his
leadership. Mr. Mitchell, as you testified, you worked on the
song, Uptown Funk. Is that correct?
Mr. Mitchell. Yes.
Mr. Jeffries. That is one of the 20 most played songs of
all time in terms of mainstream Top 40 radio. Would that be a
correct observation?
Mr. Mitchell. Yes, sir.
Mr. Jeffries. So, I appreciate your presence here today
because this is an issue I hadn't fully thought through. The
performer is incredibly important, and Ms. Estefan's presence
here today is an honor for all of us. As a produce and an
engineer, that's an additional dynamic that is pretty
interesting to me.
Your work on that song, I guess as I understand it, when it
gets played on the radio, doesn't [inaudible] to you in the
context of receiving any compensation. Is that right?
Mr. Mitchell. That's correct.
Mr. Jeffries. Is that fundamentally sort of one of the
glitches in the system that you think could be life changing
for producers and for engineers?
Mr. Mitchell. Absolutely. Because the simple fact that
money is being collected around the world on behalf of
Americans, but we can't receive it because there's no
reciprocity. That money would be a huge impact to me and my
family, this historic studio, and the rest of the musicians
that aren't touring. You're not hearing their names mentioned.
They're struggling every day to make a living. Yet, their music
is being consumed.
Mr. Jeffries. Appreciate your presence here today and your
testimony. I think clearly this is an issue that we have to
work through in terms of the music landscape being changed, but
also balance the interests of our broadcasters, particularly
those that do serve a niche, that do reach audiences that may
not otherwise be reached, that do have specialty areas that are
smaller broadcasters. I appreciate that dynamic as well that
Mr. LeGeyt has spoken to.
I am hopeful because many of us were involved in the effort
to pass the Music Modernization Act. That was complicated. That
was difficult. That was challenging.
We addressed it because the landscape had changed over
time. Because we realized that the way that people received
music had changed. It went from phonographs to vinyl, vinyl to
8-tracks, that didn't seem to last for a long time, 8-tracks to
cassettes, cassettes to CDs, CDs to download, download to
streaming.
It takes a while for Congress to catch up. We finally did.
We work with everyone: Musicians, creators, artists, internet
platforms, and the broadcasters.
I am thankful that the broadcasters were supportive of that
effort. I'm just hopeful that similarly we can find a way to
come together to address the changes in the landscape that have
clearly occurred that are impacting the creative community who
the constitution says to us we should support. That's why this
Committee, Judiciary, not Energy and Commerce, has the ability
and the jurisdiction over copyright and content and creativity
because this was in our constitutional fabric and DNA.
I am just hopeful with Ted's leadership, I am confident
that as we came together with the passage of the Music
Modernization Act in 2018 and did it in a bipartisan way,
Democrats, Republicans, the left, the right, Progressives,
Conservatives, all the industry stakeholders, that we can find
a way forward here to accommodate all these important issues.
So, thank you for your testimony and for your presence and look
forward to working together on this issue. I yield back.
Chair Nadler. Gentleman yields back. Ms. Jayapal.
[Simultaneous speaking.]
Ms. Jayapal. Thank you, Mr. Chair. Appreciate--
[Simultaneous speaking.]
Ms. Jayapal. Did you call on me, Mr. Chair? Just making
sure.
Chair Nadler. I did call on you.
Ms. Jayapal. Okay, great. Thank you, Mr. Chair, and thank
you to our panel today. My home district has historically been
fertile ground for some of the most influential music in
America and served as a rich foundation for jazz artists in the
1940s. It allowed new sounds like grunge and alternative rock
to emerge in the 1980s and 1990s.
Seattle is and remains a bedrock of music, its influence
cemented through local and national radio airplay. During the
COVID-19 pandemic, artists that rely on live performance for
income are suffering significant economic hardship. Meanwhile,
huge conglomerate radio stations continue to rake in millions
of dollars in cash by playing their music.
Artists attempting to earn money earned from radio's direct
competitors online streaming services received minuscule
profits. Last year, a local Seattle artist named Gabriel
Teodros had over 80,000 streams for one of his songs. He only
earned about 90 bucks from it.
Mr. Mitchell, given this knowledge, can you talk about why
it is especially important for artists to receive terrestrial
performance rights?
Mr. Mitchell. I think it's important and to note people,
when we make music, it is a performance. It's just like buying
a concert ticket. It should be treated no different. It's a
public performance captured on medium. Every time you
rebroadcast it, you're rebroadcasting a performance.
So, it'd be like not paying for a concert ticket. You don't
go to concerts for free and you're watching a performance. Our
music is a performance, and we should be compensated for it.
The impact that it would have, you know, not just to large
artists but to the backing musicians, to the session musicians,
to the producers, the background singers. The people that do
this for a living, they would be impacted greatly. This is a
business that you must have the heart to do it.
Most people successful, they work hard for years to get
where they are. It should be compensated. Music is a national
treasure. It's our number one gift to the world.
No country has influenced popular music the way that
America has. There would be no British invasion, no Beatles.
They were all listening to American music over the radio, and
they all recognize their performers and their musicians. It's
time that America does the same.
Ms. Jayapal. Thank you, Mr. Mitchell. As the mom of a
musician, I also resonate very much with what you're saying.
The Seattle-Tacoma area is the twelfth largest metro market for
radio in the country, boasting over 30 stations. These stations
of all sizes, many of them public, private, or independently
owned, play a huge role in popularizing up and coming artists.
They also have vastly different revenue streams. Mr.
Pomeroy, can you elaborate on the contrast in revenue between
big media conglomerate stations and smaller stations?
Mr. Pomeroy. Well, certainly, we're talking apples and
oranges, big conglomerates that are raking in billions and then
small stations. No one wants to disrespect the services that
local radio provides, especially during times of crisis. No one
wants to see AM/FM radio go away.
In terms of what the value of what we do represents, when
someone else makes money from what you do and doesn't share,
it's just simply not fair. So, it's an inequity that has
shifted. The fundamental aspect of it has not.
We're not asking for anything outrageous here. We're just
asking for help keeping our industry alive from people who have
been making money from our industry without paying us for
decades.
Ms. Jayapal. Thank you. In Seattle, we just had the news
that our very well-known radio station, KOMO, and two other
local stations were recently acquired by Lotus Communications
Corp., a privately owned broadcasting company that rakes in
about 24 million dollars per year.
Mr. Pomeroy, how would the American Music Fairness Act
support smaller radio stations, for instance, the impact on
their fees versus the fees of the larger conglomerate owned
stations?
[Simultaneous speaking.]
Chair Nadler. The gentlelady's time has expired. The
Witness may answer the question.
Ms. Jayapal. Thank you, Mr. Chair.
Mr. Pomeroy. Okay. Thank you. I'm sorry. Well, I just have
to say that the impact of this law would change things
drastically because there are things built in to make sure that
the small stations are not unduly burdened. As long as they
can--and even there are accommodations there for stations that
are owned by conglomerates.
There's a sliding scale that has been carefully thought out
to make sure that there's a big difference between a small
rural community station that is the lifeline in an emergency to
iHeartRadio or any huge conglomerate that owns thousands of
little, tiny pieces that they make money from. So, it's truly
apples and oranges.
Ms. Jayapal. Thank you so much. I yield back, Mr. Chair.
Chair Nadler. The gentlelady yields back. Mr. Raskin. Mr.
Raskin, you are muted.
Mr. Raskin. Thank you very much, Mr. Chair, for calling
this important hearing. Yeah, this whole thing is such a rip
off, it boggles the mind. One person I spoke to in the radio
industry said, well, music should be free. I said, groceries
should be free. Rent should be free. As long as these musicians
have to pay to live, how can we just rip off their music like
this?
Ms. Estefan, SoundExchange estimated that the failure of
terrestrial broadcast radio to pay royalties for sound
recordings costs artists and rights owners around 200 million
dollars a year in performance royalties. What would that 200
million dollars a year mean to artists, both well known,
established artists, and new artists just starting out? How
would you translate that?
Ms. Estefan. Well, obviously it depends on how many times
your song is played, because this is all going to go into a
kitty.
For example, from the question before, if this bill was
enacted there would be a Copyright Royalty Board that would
decide what is fair for the stations that make the bazillion
dollars. It protects anyone making under $100,000--and between
$100,000 and 1.5 would pay $500, I believe. So, they're
protected.
For the artist, it would boil down to how many times your
song is played. Those 200 million are just in monies outside of
the United States.
For example, in France, they take the monies collected from
American songs that are being played and they are using it to
fund a French cultural organization because they are not giving
it to the artists that created this music. So, in the meantime,
those 200 million, which are just from outside, an estimate
from outside the country, are being used by, by these countries
for whatever they would like to use it for because we don't
have reciprocal laws that protect their artists.
It's just, like, the minuscule amount that we get from
streaming is divided, depending on how many times your song is
played compared to other artists, but at least it's something.
Before, it was nothing. So, the Music Modernization Act really
came through and established at least a minimal amount of money
for artists to receive.
I think an example was Coldplay had a song that had 6
billion streams and they made $6,000 from it. Six billion
streams. This is the, really, the amount of money. So, between
COVID locking everybody down and those artists that have
established performances, that is gone, too.
So, this has been going on forever, and we feel it is only
fair that performers get their share.
Mr. Raskin. Mr. Massarsky, so, I guess I had that 200
million figure wrong. That was just from overseas, according to
Ms. Estefan.
What is the figure in America? How much money will
eventually get to the artists if we correct this gaping
loophole?
Mr. Massarsky. Thank you, Congressman.
It depends, honestly, about what the rates the Copyright
Royalty Board will decide that rate to be. I don't know that at
this moment.
I can tell you that the only reason we are even here today
is because there was a consideration that radio was a
promotional vehicle for the sales of recorded music. We now
know that is not the case anymore. The data shows us that radio
is relying much more on older music, not the stuff of
promotion.
So, we know that the rights should be reinstated.
You are asking a question about how much will the pot be,
and I would suggest to you that we have all these benchmarks
around the world about what the share of revenue is, less the
costs allowances for the station. All that data will come forth
before the Copyright Royalty Board. I'm not going to tell you
what that rate should be. I would like to prepare for that. I
do think you need to do the rate first, what the rate should be
considered finally.
Thank you.
Mr. Raskin. Okay. Mr. Mitchell, let me ask you about
artists and people in the music industry themselves. Do they
experience this as an injustice, an indignity, and exploitation
of their, of their work?
I know it is hard to organize artists because artists tend
to be free thinkers and everybody is doing their own thing, but
is there reason to think that artists and musicians are
weighing in on this to get the public's attention?
Mr. Mitchell. Yes. It is very, it became apparent to some
of my artists when we worked with musicians from overseas, and
the overseas musicians are, like, yeah, we get paid for radio
play.
All of my legacy musicians, like the Hi Rhythm section and
others, they are shocked and amazed because these people have
played on 27 gold and platinum records in a row and they can't
afford to move out of their ZIP Codes, or can't afford to feed
their families. They have knowledge that this money is being
collected for other musicians of other national origins. It is
striking and it is unfair.
People just, we want to be paid for our property the way
everybody else is.
Mr. Raskin. Thank you.
I yield back, Mr. Chair.
I think you are muted, Mr. Chair.
Chair Nadler. The gentleman yields back.
Ms. Demings.
Ms. Demings. Thank you so much, Mr. Chair. Thank you to all
our Witnesses here today.
Mr. LeGeyt, as we all know, the American Music Fairness Act
includes a carve-out for small broadcasters not owned by a
larger conglomerate. I know the time has been well spent today,
but we want to make sure that we are doing our jobs as Members
of Congress as it pertains to this critical issue.
I would just love for you to talk more about do you believe
these provisions adequately protect smaller broadcasters? If
not, why not?
Mr. LeGeyt. Thank you for the question.
I don't believe that the provisions adequately protect
small broadcasters in two ways. The first is there are more
than 4,000 stations across the country who fall outside of
those exemptions. I know there is a fixation on the music
industry's advocacy by pointing to one or two large broadcast
companies. I would also point out that even the largest
broadcasters are dwarfed in size by the three major record
labels.
The reality here is I am advocating for nearly 200 radio
groups across the country who would fall outside those
exemptions, who have stations in all your districts that you
would never characterize as large conglomerates. So, the bill
is incredibly far-reaching, even with the carve-outs.
Now, within the carve-outs you are truly talking about
small broadcasters, one- or two-employee stations where even a
$500 fee is substantial. I am not representing that a $500 fee
is putting anyone out of business. If my previous testimony was
taken that way, it should not have been. It is real money that
diverts resources from localism.
So, I believe this bill would truly undermine local service
of the broadcast industry.
Ms. Demings. You also indicate that the legislation would
jeopardize jobs, require radio stations to cut back their
involvement in local communities, and place more pressure on
radio stations already struggling to survive. I mean, that is a
pretty stark condemnation of the bill and its possible effects.
Can you be more specific about the possible effects to jobs
and communities you believe will occur if this legislation
becomes law?
Mr. LeGeyt. Absolutely. We have real concerns about the
Copyright Royalty Board and what proceeding that sets rates
under this bill would look like. Our concerns are well-founded
because we have lived in that world for the last 20 years,
setting rates for our simulcast streaming.
Those rates have proven so burdensome that they have really
hindered broadcasters' ability to innovate.
So, as we look at this--and it is, of course, hard to know
what would happen if this were implemented into law--but if
past is prologue, you are talking about potentially hundreds of
thousands of dollars in new royalty fees for local broadcasters
that are already facing significant economic challenges,
especially in this current environment where local advertising
dollars from restaurants, retailers, car dealerships has been
reduced as a result of COVID, there is just a lot of economic
pressure that we have got real concerns about it.
Ms. Demings. Thank you.
Mr. Massarsky, how do you believe the carve-outs or the
provisions in the carve-out protect smaller broadcasters?
Mr. Massarsky. Thank you, Congresswoman.
It completely protects the small stations. It gives them
coverage over a necessity. We also have to remember something,
okay, the top 20 broadcasters represent the lion's share of
this revenue. They are large, and they are using an enormous
consumption of music. In fact, 80 percent of the $9 billion a
year commercial radio industry is dedicated to playing two-
thirds of their time sound recordings.
We are talking about an enormous amount of use for no
payment whatsoever to the deserving artists and to record
company owners.
So, the only thing on the table that I understand it
currently is the value. That goes into the question of whether
there is promotional value that is compensating the artists
instead of the value of the license itself. We have breakdowns
to show you that radio is no longer the promotional vehicle it
once was. It aims to an older demographic who enjoy much more
established music, not the kind that we promote. Therefore, if
we are going to commercialize the music with a $9 billion a
year revenue, it is time to pay for that.
Ms. Demings. Again, I am out of time. Thank you to all of
you. Mr. Chair, I yield back.
Chair Nadler. The gentlelady's time has expired.
Mr. Fitzgerald.
Mr. Fitzgerald. Thank you, Mr. Chair. Thanks, everybody,
all the Witnesses for hanging in there. I know it is kind of a
long morning here.
I just have kind of question unrelated to kind of the
discussion back and forth about the royalties, but mainly the
mechanics or the logistics of it.
Ms. Estefan, I will ask you first, how reliable is it when
you are talking about some of the foreign owned, the royalties.
Do the mechanics of that work? Do you actually--are the
royalties paid timely? What has been your experience with that
part of the business?
Ms. Estefan. You mean the royalties that they are holding
that they aren't paying out to performing parties? Because I
know that, for example, I am a member of BMI. They are a
collection agency. They collect my written, the music that I
write.
Mr. Fitzgerald. Well, because you are a composer. Right,
yes.
Ms. Estefan. I am a composer. Right.
So, on the composing side I receive that. They know because
it is being held, there are two cases, like there are for AM/FM
radio, that spell out exactly what is being played, when it is
being play. So, we know the amount of play going on over there
and the rates. That is where they come up with those fees.
They are not being paid as of now because we don't have a
reciprocal way in the United States to pay for their artists.
So, they just hold the money.
Mr. Fitzgerald. It is reliable on the composer's side, and
the revenues are transferred on a regular basis?
Ms. Estefan. As a composer, yes. You always have the
right--and we do sometimes, because we have our own publishing
company, and we often audit.
Mr. Fitzgerald. Yes.
Ms. Estefan. Because, like any business, you have to be on
top of it and make sure that things are going. There are a lot
of little places where money is held outside the country, but
then you have to put out the money to audit. It is a balancing
act.
The American organizations that do collect for authors have
been very good in my experience for the last 40-some years. For
me. I can't speak for anyone else.
Mr. Fitzgerald. Right. I think because there is kind of
this idea floating around out there that they are just trying
to undermine any type of effort that, oh, this is kind of a
reliable payment system, or the logistics or the mechanics of
it doesn't always work.
Maybe, Mr. Mitchell, do you have any comments in that
regard?
Mr. Mitchell. Yes. I have a letter here from Mr. Peter
Leathem, who is the President and CEO of PPL. That is in
England. It is Phonographic Performance Limited. They are one
of the largest collectors of Terrestrial Radio rights for the
United Kingdom.
He says, ``The making of payments and matching of
recordings used to a database to identify the copyright owner
and the performance on the recording is a very manageable piece
of work. This is already conducted by Sound Exchange in the
U.S. for various digital services and shows the work can be
done.''
Also, he says, ``Given the popularity of U.S. recordings
around the world, this would result in a net inflow of money to
the U.S. music industry and economy.''
[The information follows:]
MR. JOHNSON OF GEORGIA FOR THE RECORD
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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Fitzgerald. Okay, there you go. I mean, that is kind of
what I was looking for. It sounds like there is confidence that
it could mimic if the changes were made to work kind of the way
it does now with composition. So, very good.
That is all I have, Mr. Chair. I would yield back.
Mr. Pomeroy. If I could just--
Chair Nadler. The gentleman yields.
Mr. Correa. Mr. Correa?
Mr. Fitzgerald. Mr. Chair, I didn't know if Mr. Pomeroy
sounded like he had a comment to make.
Mr. Pomeroy. Yes, if I could.
Mr. Fitzgerald. Sure.
Mr. Pomeroy. Thank you. I appreciate that.
I just want to say that, yes, the overseas collectives are
very professional. They are, frankly, to some, some degree in
disbelief that we are not playing by the same set of rules as
they are.
That is going to be a huge game changer to bring in this
money from overseas, help these people feed their families, pay
their taxes, put the money back into the U.S. economy. The
money is definitely there and will continue.
If we start paying them what we owe them, we are going to
get many times that amount in return.
Chair Nadler. Thank you.
Mr. Fitzgerald. Thank you, Mr. Chair.
Chair Nadler. The gentleman's time has expired. Ms. Garcia.
Ms. Garcia. Mr. Chair, I believe Mr. Correa is back on, on
the screen.
Chair Nadler. Mr. Correa.
Ms. Garcia. If you want to call him first.
Mr. Correa. Thank you, Ms. Garcia. Can you hear me okay,
Mr. Chair?
Chair Nadler. Yes, we can.
Mr. Correa. First, I want to thank all the Witnesses for
being here today.
I agree with a lot of the presenters today, my colleagues,
that copyright, production is so important to not only for this
industry but for this country. That is what we are known for,
we are known for being creative.
So, I am clearly disappointed that such an important piece
of legislation cannot be negotiated. We want to make sure that
our broadcasters stay in business. At the same time, I want to
make sure that when my kids start writing songs and having
proprietary things out there that they are paid for it.
I am going to ask both Mr. Pomeroy and Curtis, why can't we
just sit down and come up with a win/win situation? That, there
has got to be a solution here that we can work on.
Mr. LeGeyt. Thank you for the question. You might have
heard this in some of my previous responses.
I am supremely frustrated here. The NAB has proactively
offered time and time again, and worked for almost two years on
a variety of approaches that we hoped would bring the music
industry to the table to see if there might be a path forward.
We have been completely rebuffed in doing that.
So, I would certainly welcome the leadership of this
Committee in reinitiating that conversation because I think it
is extremely important to all the parties represented--
Mr. Correa. Mr. LeGeyt, I think when you say you are
rebuffed, it sounds like there is no meeting of minds yet. So,
I would ask the other side what is it that we need to do to
come up with a situation that is win/win for all involved?
Mr. Pomeroy. Well, in answer to your first question, I am a
bass player, I believe that the truth is always in the middle.
There is always a way to get everybody to the middle if people
are willing to participate in a functional fashion. That did
not happen with the Music Modernization Act.
I absolutely can say on behalf of the musicians that I am
representing in the AFM, yes, of course we are willing to sit
down and have a reasonable discussion. It has to be a reality-
based, reasonable discussion about how we are going to fix
this. Because if we just kick the can down the road for another
70 or 100 years, it is not an acceptable solution.
We are ready to talk. It has to be realistic. We have to be
able to actually move and not just talk about moving towards
each other. I hope that we can do that. I am certainly going to
do everything in my power.
Mr. Correa. Any other comments from the panelists? Barry?
Mr. Massarsky. I would like to take this on as well.
Something Mr. LeGeyt said earlier I just need to demystify.
He was talking about the payments that radio stations make for
the right to play songs to composers and publishers, the
publishing rights, their rights. I got the sense from his
testimony that he thought that there should be a distribution
of one side that would also include the artists and also
include the sound recording.
So, that is completely antithetical to the way the world
operates. In every other industrialized economy, we have
parallel rights and parallel institutions that recognize the
fact that these are supported rights. They are not supposed to
be able to interfere with one another.
So, the right that we are looking for is not one that is
already there. It has never been perceived by the radio
industry. I think it is high time now that we sit down and talk
about not the rights, because that should be established, but
the rates. That could be determined by a Copyrights Board that
we just spoke about.
Mr. LeGeyt. Congressman, my focus as to what I have heard
here is ensuring that dollars get in the pockets of the artists
who are asking for it.
My frustration is that there are so many elements of the
system right now that are pulling dollars out of the pie. If
you look at the first four pages of Mr. Massarsky's testimony,
you see the various ways that dollars are being spent by the
music industry away from incenting creation. I want to be at
the table helping to ensure that artists get their fair share.
Mr. Correa. If I may, in the last few seconds that I have I
would urge all parties involved to sit down and figure this
out.
For full disclosure, I have a family member, one of my
sons, that is a creator. So, I have a conflict of interest
here. I want to make sure that he is well compensated, at the
same time that some of these channels are still here.
Boo, you have something in my last four seconds. Go ahead.
Mr. Mitchell. Yes. I just want to make it clear that
previous negotiations with the NAB and the ``music industry''
was a business deal and it not involving Congress. Only
Congress can change the law.
This is about copyrights and the law. It is not about some
backdoor deal, business deal between the NAB and record
companies. Only Congress can change the law. I am an American
citizen. I believe in my Congress and I expect my Congress to
believe in me and represent my rights and interests.
Mr. Correa. I thank you very much, everybody, for your
presentations today.
Chair Nadler. The time of the gentleman has expired.
Ms. Garcia.
Ms. Garcia. Thank you, Mr. Chair. Thank you to all the
Witnesses here today. Thank you to my colleague and friend, Mr.
Deutch, for his leadership on this issue.
As you all know, or may know, I am from Texas. I am a proud
Latina. For us it is a district that is 77 percent Latino. We
may listen to Frank Sinatra, but we also listen to Trio Los
Panchos and Vikki Carr.
We do look at and we do listen to oldies but goodies and
some hits of the Beach Boys. I still think, Gloria, of the
Miami Sound Machine. I still have all the cassettes. I haven't
transitioned to any of your CDs, regretfully.
So, for us it is Tejano music, salsa, cumbias, and it is a
lot of different things. I think one that there is some concern
in my area is what will this do to Spanish radio?
What will this do to the many minorities and communities in
Houston and Harris County where we speak 145 languages, 145
languages? Thirty-one percent of us speak Spanish, but we have
a very, very diverse community.
What will this do, Gloria, what will this do to those
smaller radio stations where communities rely on so many
things, and it is part of what builds our community?
Ms. Estefan. Well, what I can tell you is this: What is in
the act now, were it to be passed, were that these small
stations--and by the way, I think we need to differentiate
between a local station because some of these conglomerates,
the big ones, are considered local stations because they happen
to be local, but they are part of a very big web of radio
stations that make a lot of money. If you make less than a
million point five a year and more than 100,000, you would only
be paying 500 for the entire year of playing any music you
want.
If you make less than $100,000, you will only pay $10 for
the entire music that you would play in the year.
So, like streaming, the amounts may be minuscule, but what
is important about passing this act is that it is establishing
the fact that the performance rights--the performers are
equally entitled to compensation, however small it is going to
be. Because let's not make a mistake here, it is not that all
of a sudden this is going to be passed and people are going to
be, money is going to come pouring in. This is going to be
little amounts.
As you said, there are a lot of local stations. We love
radio. Radio cannot go away. We don't want that to happen. That
is why the act has made sure, this American Music Fairness Act,
has made sure that these stations aren't unduly taxed or
brought under a lot of pressure.
Five hundred dollars a year for unlimited music, we
probably pay that in subscription services because the most
inexpensive one is $4.99 a month. So, and not everybody can
afford that. So, thank the Lord for radio.
Ms. Garcia. Do you think there is enough equity in the bill
to protect all the small stations?
Ms. Estefan. Absolutely. The big ones, there is nothing
established yet. This would be established by a board of judges
and royalty consultants that would hear both sides of the
issue. They would establish what the ones that make over a
million point five a year would be paying.
I would imagine, comparing to the Modernization Act, Music
Modernization Act, it is not going to be anything that is going
to break anyone's bank. It is simply going to establish the
fact that performers should share, they should share equally in
the success of a song, and not just the writers because some of
these incredible performers just didn't happen to write music.
It is two different talents. If you are fortunate enough to
have them both, then that is great. It is just as important the
performer--the writer wouldn't make any money if he didn't have
a performer that made the song a hit. So, it is important to
establish the fact that they need--
Ms. Garcia. Gloria, we asked the question because we,
obviously, see that in broadcast and radio there already is an
under representation of minorities in the ownership of many of
these--
Ms. Estefan. Absolutely. Yes.
Ms. Garcia. So, we don't want the same thing repeated. So,
you feel good that there is enough equity in the bill, not only
the radio stations, but also the songwriters. There is an old
saying that a rose is a rose is a rose. Somebody says a song is
a song is a song, and every song will get a royalty.
Ms. Estefan. Yes. Well, not just the song. The song's get a
royalty, but they go to the writer. What who doesn't get, on
AM/FM, the person that doesn't get any money is the singer.
Ms. Garcia. Right.
Ms. Estefan. If they weren't the writer or the performers
that created that track, that created it.
Ms. Garcia. It won't matter what genre? I mean, somebody
who writes a salsa will get the same as your ``Conga''?
Ms. Estefan. Yes. Absolutely. Which is the way that it was
before.
Now, whatever song gets played the most would benefit from
the amount of plays, because that is how Music Modernization
Act works. The kitty gets divided by the number of plays.
Let's say there is $100 and there are 100 songs, whichever
song got played the most gets an equitable amount. Everybody
that gets played gets something.
I think that is what is important, because up to now
performers haven't received anything from AM/FM radio. By the
way, the broadcast radio gets their bandwidth for free because
they were established for that reason. Now, people have to pay
for their space on digital, which is why a lot of these are
subscription services. They really do have to pay for that.
That won't change. I just think it is only fair that--
Chair Nadler. The time has expired. The time has expired.
Ms. Garcia. Thank you, Mr. Chair.
All our family radios always play the ``Conga,'' so you get
a lot of royalties from us. Thank you.
Ms. Estefan. Great. Thank you.
Chair Nadler. Ms. McBath.
Ms. McBath. Thank you, Mr. Chair. Thank you so much to each
of our Witnesses that are here today, and especially Ms.
Estefan.
I have to just kind of reiterate what my colleague
Representative Garcia said. I have listened to your music for
years. I am sure I have listened to music that has been played
by each and every one of you, that you have had some part in
making the music that we are listening to today. Thank you all
for taking the time to come before us.
I thank the Committee for just continuing to shine a light
today on the importance of this legislation. I am proud to be a
co-sponsor of the American Music Fairness Act, a bill which
really just kind of levels the playing field for music royalty
payments by ensuring that our recording artists, singers, and
musicians are all paid their fair share in this bipartisan
piece of legislation. It really corrects what we deem as a long
overdue inequity in the American economy, securing what is owed
to thousands of hard-working artists.
My State of Georgia, which I represent, is home to 969
artists, and growing, that would immediately benefit from the
AMFA. After two years of no touring for many performers, years
during which many of these artists lost significant portions of
their expected income, this bill really does help many
Americans get back on track, get back on their feet again.
I am pleased that this bill just really protects our small
radio stations, such as those that are in our rural regions,
and college radio stations, by establishing a carve-out which
requires those stations pay as little as $10 a year.
I urge my colleagues to please join me in co-sponsoring the
American Music Fairness Act, and just ensuring that all our
artists and American workers are paid their fair share.
Mr. Mitchell, I am going to jump to you very quickly. Can
you explain how many individuals go into making a song? I want
to really pinpoint that today, because I think it would be
helpful for the Committee to understand how many artists go
into producing the music that we hear on the radio and,
therefore, how many artists right now just aren't being paid
for the work that they are producing.
Mr. Mitchell. So, each song I produce typically has
anywhere from 15-20 people: Background singers, horn players,
string players, and the rhythm section. So, every song has at
least 15-20 people on that song. Most of those individuals they
don't tour, they play music in a studio for a living.
Ms. McBath. So, in your testimony, thank you, you also
mentioned that the ongoing pandemic continues to disrupt
touring and the live music sector, which makes it all more
important that artists are able to fully realize the value of
their recorded music in order to make a living.
Can you please speak further to the impact of the pandemic
on the artists' income?
Mr. Mitchell. The pandemic has not only encumbered artists'
income from touring, but even the session musicians. In my
studio, when the pandemic hit, we had sessions from Japan,
Canada, U.K., and Australia, that were all scheduled to come to
Royal Studios. My session musicians were all scheduled to play
on those recordings.
So, when the pandemic hit, that didn't happen. So, these
musicians that play on records, they weren't able to get paid.
It, obviously, had an impact on the touring musicians because
you couldn't do shows. So, everybody's income was adversely
affected.
My income was affected. I couldn't rent the studio. I
couldn't produce music.
We are all still struggling to recuperate from that, and we
haven't yet.
Ms. McBath. I absolutely love Bruno Marsso, how many
individuals really helped to record the hit song ``Uptown
Funk''? Have any of them received performance royalties from
the Terrestrial Radio?
Mr. Mitchell. There are at least 20 individuals on that
song. No one has received any Terrestrial Radio royalties. From
Kameron Whalum, who is a Memphian; Jeff Bhasker, who lives in
L.A., who is playing keyboard and one of the producers; just
none of the session musicians, Steve Jordan who is playing
drums on it, he's a New York native, none of these musicians
have been paid for the millions or potentially billions of
broadcasts of that song.
Chair Nadler. The time of the gentlelady has expired.
Ms. McBath. Thank you.
Chair Nadler. Mr. Stanton. Mr. Stanton?
Ms. Dean.
Ms. Dean. Thank you, Mr. Chair.
I thank you and the whole Committee for bringing together
this group of people I admire, have followed for decades, and
some of whom I didn't understand I was admiring and following.
So, it is a delight to be with you and to learn about this area
of our life. Radio is so important. Music is so important, has
been in my life, my family, and my entire life.
So, Ms. Estefan, as I was preparing last night and reading
over the testimony, I hope you will forgive me, I am a huge
fan.
Ms. Estefan. Thank you.
Ms. Dean. Admirer of your work and your commitment to art.
I think of you, whenever I think of you and your music I
certainly think of performance, but I think of instruments,
sounds, and your words, and, of course, your voice, and all
those who make that possible.
I think it would help the Committee to understand some more
things, some very tangible things.
One of the things that has been talked about is the value
of exposure that AM/FM radio provides. Can you talk to that
issue of exposure?
Obviously, you are in one position. Many of the other
performers are in different positions. Can you talk about the
issue of exposure, particularly when we are playing oldies? Is
it enough to support the background musicians and engineers who
add to your music?
Ms. Estefan. It may have been at one time where they paid
at any moment. They have never been paid. The royalty never
existed.
Absolutely, radio was crucial in my career. Absolutely,
there is no two ways about it. As a matter of fact, the first
time we played ``Conga'' on Johnny Carson, you were guaranteed
a Top 10 hit the next day because he was considered a
kingmaker. So, many people saw you on that show that you were
pretty much guaranteed a Top 10 record the next day.
What is the difference? My musicians may have made money
when we sold the record. Now, there is no more sales of records
or CDs. Vinyls, a little bit, because it has come back. It is
very popular among young kids. My grandson listens to vinyl
because he finds it very romantic to put it on the turntable
and put a needle on it.
The advent of new music has been wonderful, because now the
consumer can choose whatever they want to hear. When you listen
to radio, the advertiser is going to choose what, what you are
hearing because they are the ones that are paying for these
things.
Even in my day, a lot of the people that didn't want to
play my music at the beginning, because advertisers didn't
think that it would sell to their audience. We were convinced
that it would. So, we had a battle there.
There has never been an established fee to be paid for
performers for performance on AM/FM radio. Only the writer got
that.
Yet, by the way, writers also benefitted. Because if you
got Dionne Warwick, let's say, when Burt Bacharach did ``Walk
On By,'' when he got Dionne Warwick with that unique voice to
sing ``Walk On By,'' and he got other artists to do his music,
he was more in demand as a writer.
Ms. Dean. Yes.
Ms. Estefan. The performers never got the music--never got
the money for the air play on Terrestrial Radio.
Ms. Dean. Well, I go back long enough to remember, and
pride how I would save money to go down to the local store and
buy a 45, and how exciting it was to do that. Then, of course,
to albums and all the rest.
So, I am one of the old school. So, I am just delighted to
be a part of this conversation today.
Mr. Mitchell, you and your work and your family, you said
that more than two dozen people are credited with recording
``Uptown Funk.'' What would performance royalties from that
song alone, how would it make a difference in the life of a
musician or an artist like you or others who performed, were
part of ``Uptown Funk''? How would it make a difference?
Mr. Mitchell. For a radio hit like ``Uptown Funk'' the
impact would simply be enormous. It would probably increase all
our tax brackets if we received that income that Uptown. That
is such a huge global hit, it would mean hundreds of thousands
of dollars to the backing musicians, producers, and engineers.
Ms. Dean. It is not as though others didn't profit from the
sale and recording and playing of that song; is that correct?
Mr. Mitchell. That is correct. The songwriters profited.
Mr. Mars and Mark Ronson, the artists profited from, from
sales.
Ms. Dean. Also, the radio stations who play it?
Mr. Mitchell. Also, the radio stations who play it because
people listen to radio because of the music they play. They
don't listen to radio because of the ads they play. If they
want to hear Top 40, they go to a Top 40 station. If they want
to hear Pop, they go to a Pop station.
We are saying--Oh, I am sorry. Go ahead.
Ms. Dean. No, I see my time has expired. I also see Mr.
Pomeroy's hand is up. I know I am not able to take advantage of
that. So, maybe one of the next questioners will give you the
chance, Mr. Pomeroy, to contribute to that question.
With that, I yield back, Mr. Chair.
Chair Nadler. The gentlelady yields back.
Mr. Stanton.
Mr. Stanton. Thank you very much, Mr. Chair. To the
distinguished panel of Witnesses, thank you for taking time out
of your very busy schedules to aid this Committee to work in
its work, and to share your views on the American Music
Fairness Act. To the chair and to Chair Johnson, thank you for
holding this hearing today.
Mr. Chair, I know this is an issue that you have worked on
for many years. I am pleased that we are taking time to gather
information and to study this issue closely.
Briefly, Mr. Pomeroy, did you want to answer that last
question?
Mr. Pomeroy. Well, thank you. I just wanted to say that
when it comes to this money and what is going to happen with
it, musicians constantly have to upgrade their gear and
purchase new gear to record with. That is, this would allow us
to invest in ourselves and allow us to keep moving, moving the
music forward as opposed to going backwards.
I just want to make sure that you understand that when this
money comes in, it is going right back out to the American
economy, and helping everyone, and helping us take the music to
the next level so we can stay in front of the wave.
Mr. Stanton. Thank you, Mr. Pomeroy. Appreciate that
answer.
When I am in Washington, DC, I often listen to my local
Phoenix, Arizona, radio station. I generally use an app like
Tunein to do that. I believe that when radio stations
simulcast, they are broadcast over the internet, they are
required to pay performance rights to artists.
Mr. LeGeyt, if Congress were to move on the American Music
Fairness Act, would we be setting up radio stations to pay a
double fee?
Mr. LeGeyt. Thank you for the question. Yes, you would be.
I know there is a lot of discussion here about how much the
economics have changed for the music industry. No doubt that it
has. There are just so many financial pressures here that is a
fee that is unsustainable for the vast majority of stations if
they want to keep doing the level of local investment that they
are doing today.
Mr. Stanton. I really want to better understand how much of
a royalty, such as one proposed, would directly benefit
artists. I understand the royalties in sound recordings are
generally collected by Sound Exchange and distributed to
artists, music labels, and other rights holders.
This is a question for Mr. Pomeroy or Mr. Massarsky. Can
you explain what percentage of royalties would actually go to
artists or, alternatively, what percentage of those royalties
would go to other groups like record labels?
Mr. Pomeroy. Right. A good example, a good example would be
the American Music Fair--sorry, the AFM SAG-AFTRA Fund, which
takes the money that is generated and paid to Sound Exchange,
which is close to a billion dollars a year, when they pay out,
50 percent goes to the label and the copy, copyright owner; 45
percent goes to the artists and the producer, if the producer
has made a deal with the artists to participate; 5 percent is
what goes to backing musicians and backing vocalists.
Last year we distributed over $60 million to over 400
individuals who played on those--actually, excuse me, that
number 400 is low. But, we distributed $62 million based on the
airplay of these songs. This is a living wage when you spread
it that thin. That is the model which we would expect AM/FM
performance royalties to be based on.
Mr. Stanton. Mr. Massarsky, you will have a chance to
answer the same question.
Mr. Massarsky. Oh, it was well answered by Mr. Pomeroy.
I just want to emphasize that this is a benefit that will
be equally distributed between the artists and the labels. We
have a wonderful experience with Sound Exchange on how that
distribution does take place. We have no concern about it
because other jurisdictions have acknowledged the same 50/50
split. So has ASCAP, BMI, and SESAC.
So, the artist would get roughly half of that total. Sound
recording owners would roughly get the remaining.
Mr. Stanton. My final question is also for Mr. LeGeyt.
For broadcasters subject to the full royalty, this may be a
substantial additional expense. Based on your experience in the
industry, how do you think most broadcast stations would
compensate for those additional expenses?
Mr. LeGeyt. I think it would undermine the investment in
boots on the ground localism. One of the themes of this hearing
is talking about some of the consolidation that has gone on the
broadcast space. I would say, though, that we still remain one
of the most competitive, dispersed industries in media.
As Mr. Massarsky says in his own testimony, 20 groups
occupy 65 percent of the industry revenues. There is no
industry as diversified as that.
These economic pressures are real. I think you are going to
see more consolidation. We are competing for advertising
dollars with the Googles, Facebooks, Amazons, Apples of the
world, and there is just--this is going to take away from our
investment in your community.
Mr. Stanton. I ran out of time here. So, I yield back, Mr.
Chair. Thank you.
Chair Nadler. The time has expired.
This concludes today's hearing. We thank all our Witnesses
for participating.
Without objection, all Members will have five legislative
days to submit additional written questions for the Witnesses,
or additional materials for the record.
Without objection, the hearing is adjourned.
[Whereupon, at 1:19 p.m., the Committee was adjourned.]
APPENDIX
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