the morning your honors may please the court then which for appellant sound exchange the copyright judge's decision in this case rests on their answer to and i'm quoting from their determination the legal issue of whether effective competition a required element of the statutory rate they held incorrectly that they must hypothesize and effectively competitive market in which to set rates that may differ and here they five did differ from the actual marketplace and it's that legal holding in particular is why the copyright judges took the steered rates from the pandora merlin agreement and the i heart warner agreement and use those as the entire basis for the most important rate in the proceeding which was the seventeen hundredths rate that was set for the non subscription webcasting and if there were any doubt that this was a legal determination obviously they refer to it as such several times in their decision  and it's not a factual one the court should actually look at how the copyright judges deployed that legal determination in refusing to entertain key evidence that we'd as the artists and record companies  offered them about what would actually happen if the parties were negotiating in the marketplace and this this occurs at a joint appendix a seven forty six is where the the discussion comes to ground this is in the second volume although the material i'm referring to here is not not sealed but the one seven forty six this is the culmination of a discussion where the web caster said said well look look we have these steering deals they have lower rates in them that are are steering and then and we as the copyright owner said well but it's mathematically impossible to to steer in favor of everyone you can't play everyone's records  trying to figure out analysis the web pastors have said look we have the steering wheel they have lower rates we as the cop rivers that well you can't incorporate it into an industry wide statutory license something that promises to play everyone's records above average rates and they can't and then the response to that but on the other side was well we think we as the web casters would threaten you with steering we go into the negotiating room with a record company and we would say well we're going to steer against you and so you better cave and give us lower rates that's the way you know to avoid us with this threat of steering and then we came back as and explains that the record companies in particular the major record companies that make up most of the market would respond with these things that judge rogers you just referred to they would say well look no we're not going to cave to that threat we won't give you our repertoire or we will want out a most favored nation clause so that we're on parity with everyone and you won't be able to do that or or if you look at seven forty eight we would we would offer upfront we've asked for upfront royalty payments so you wouldn't be able to threaten to steer against us and the judges did not reject  factual matter in this section they say and i would start back on seven forty six toward the bottom above the footnote they would say well that's fine but it would be antithetical to the effect competition requirement inherent in one fourteen f two b and then the similar effect if you flip over to seven forty nine right above heading h where they kind of finish off this section about can the majors in the effectively competitive marketplace and so they're rejecting our evidence as a legal matter and we of course have explained in our proofs in some way why that's an incorrect legal that interpretation of the copyright act and the government seriously defends most of the legal analysis that the c r jayson gaged if you go back to seven forty eight that's the beginning of a i was about ten pages or something of legal analysis from the copyright judges the government has very little to say in defense of that legal analysis and i think that's rightly so is the copyright act doesn't say anything about effective competition it says let's just say hypothetically and just indulge my my assumptions on this i know you can score some of it but let's say that i did i agree with you that there's a legal determination work here and let's also say that based on just read of the statute that i don't buy your argument as to wait a statute the way the statute has to be read to to deny this effective competition rationale believe by the notion that the statute has to be read to compel the effect of competition rational y so i just think that it's something that could be done it does not compile by the way and then what we're left with is a decision under your view and agreeing with your assumption for these purposes that the decision does on the legal conclusion that their effect of computation is the ultimate goal and then we have an order that adopts that logic we have a house is a judge who doesn't think that it's compelled one way or the other and then we have a government  determination that rests on it but a government brief defending the determination that doesn't invoke chevron yes what what are we supposed to do well i guess i would say two things first of all the the court has held in prior cases that  more a supplemental brief on that if that would be helpful but i would want to and then what happens so that then well i guess what i would say is this is that is that at a minimum it has to be the agency was the agency did not say the ambiguity is in what willing buyer willing seller means the agency located the ambiguity in the meaning of competitive information and that's that's clear  if you if you look at all you that's j six fifty one is where they said that's that that's the ambiguity of five the problem with identifying that ambiguity is that that ambiguity is in fact contrary to law and let me explain why have to get on if i knew something i just want to make sure that no i'm actually not i'm not i have well i may be fighting your assumption but in a somewhat perhaps surprising way which is this which is that the copyright judges are bound in the statute bound by the statute to abide by the registers determinations of law the determinations of law made by the register of copyright so they have to act in accordance with those the register and we've explained this in our brief on pages forty five and forty six the register had previously confronted the question whether of that sort of a phrase competitive information was ambiguous in a way that would influence the ultimate statutory standard of a fair market value willing buyer willing seller construct the register did that in the context of a of a section one nineteen satellite retransmission proceedings but the the section to influence the meaning of what of what the fair market value standard how that gets applied and then in turn the the the register had told the proper role to judges predecessor's the car in the context nineteen analysis for guidance in how to interpret one fourteen f to be so the register has already told this body that competitive information is not a source of ambiguity in applying don't know that's a convoluted that's what i saw there even your brief explanation but i think it's really important because that then leaves them back with the agency's view the coverage is otherwise just have a view that the statute requires us to do this and so they don't believe it's ambiguous if i could though could i i would actually like to fight the premises about ambiguity or at least are at least like to urge the court that effective competition is not a permissible threw a clean line between legacy services and new services and judge rogers and judge griffith i i know your honour's are familiar with this from the sound exchange against muzak appeal which was l ago in which the court explained that the the purpose there was to move the industry to market rates and to get and congress wanted to get out of the business of having any sort of policy driven rate setting proceeding of the sort that is they did grandfather in for those legacy services but said henceforth we want this to be on market rates the problem with what the copyright judges have done in this case is that this is what we're not actually going to look at what these parties would have done if they were free to negotiate in the marketplace which is of course what the statute says instead the cockroach i just said we're going to look at what we sort of wish they would have done ideally if this weren't effectively competitive market and the problem with that is that that's that's just back into the policymaking fight again about well how should this market look the copyright world the judges are not in this proceeding a central planner who decides what the right level of competition or output or anything in this market is supposed to be they do retain a role that's something like that for those legacy services when they're applying  the copyright judges can take in terms of looking at evidence and and making judgments about what those ultimate rates are the destination that they have to get to is still rates that would have been negotiated in the marketplace and that that regime sort of indicates that they didn't just want to replicate what would have happened in the absence of meat no i don't think so and this is this is explained in the courts this court's all right double a decision from two thousand and ten which is cited in the briefs which is that congress had made congress had made kind of an independent policy choice that at the time of the m c a we saw that there would be this potential for internet radio and that people would be out there who would want to stream these we wanted to give them we congress want to give them comfort that they will be able to get a license so we're going to promise them that there will be a license offered to them and then has the court explain having said we're going to give you a license congress that has to set up some mechanism to operate as a fallback if the parties can't agree among themselves so the reason the proceeding exists is not because congress is trying to achieve any particular policy objective it's completely clear that it's trying to avoid the prior regime of policy objectives when it had the d m c a amendments carve out the carve out these new proceedings from those prior policy objectives congress was simply think you know being ready to step into the gap if the parties could and agree on a rate but what it said was market rates and that then parallels the market rates that would obviously a do obviously obtain in say the space for interactive transmissions a sound recording so these are only non interactive or you don't have the you as the user you don't have an on demand functionality to pick what you want in the space where you do have that ability to pick what you want  market rates operate because there is no statutory license but congress is overall design of the d m c a is that all of these new services whether they're interactive or non interactive so the option or not they are all to be a in a they're all to be on market rates because we want to get out of the policymaking business here of it if i see my red light is on but if i might say a few words about press the segmentation yeah issue i think the three that i'd like to make just three points on that briefly that the first one and i'm speaking here about the decision to set separate rates for subscription and non subscription webcasting the first is a basic point that just because us just because somebody is selling their service for free doesn't mean that they're paying anything less to their suppliers who are giving them the inputs they need in order to sell that that service we can think about the the f example of network television and you and i can all tune in to network television for free but i assure you the people who are breaking the shows are getting paid for that and and so the basic intuition that oh well let's just look at what people are  paying is not going to reliably tell you what happens upstream in terms of the content creation the second point is that that's it is that that's not just a point about kind of basic rationality of the decision making it's actually grounded in the statute because the statute talks about the rates that would be negotiated between willing buyers who are the web casters and willing sellers who are the copyright owners it doesn't talk about the listeners and so the idea that you would look at the listeners and say well i've satisfied a statute that talks about two other parties that doesn't seem to respect the statutory standard and then the third thing i would say is that at a bare minimum there's a procedural problem here which is that the the copyright judges have a have a really good framework for thinking about these questions about segmentation they come up every time and they have sometimes segmented separate services and sometimes they don't in this proceeding itself they went through that sort of analysis that analysis looks at a number of factors certainly some of the things that the government and the interveners point to as points in their favor are probably relevant to some of those factors and explain to you why we're not doing it we're just going to say we see listeners who don't want to pay and so we think we can set a different rate i think that does not we think that that does not suffice and i'd have to answer questions that the court might have about the what we've described as the the shadow issue and i would want to give the court some comfort that we are certainly not suggesting as the folks on the other side have said that this is somehow hopeless to use benchmarks it's just that sometimes when the statutory rate is low the remans that you would get in the marketplace that might be useful benchmarks are going to come few and far between and you'll have to look at them hard and be very careful with the inference you draw from them here as i think we noted in the brief you've got a potential of eight big bilateral deals that could have been reached between one of the four copyright owner interests and one of the two big webcasting interests and six of those deals just don't even exist so there's clearly something going on where everyone is not everyone but most deals are just proceeding under the statutory framework and so in that setting it may be more difficult to use the benchmarks but it's not that the whole concept of using benchmarks would be would be hopeless and then certainly as we've explained in the material that's the seal that i would be difficult somewhat difficult to talk about is is that a particular way that the rates were then taken out of the the alone two deals that are somewhat unusual that are in the record the way those rates addition to my own interests in theory i represent the interest of every individual american singer artist musician and one fourteenth sound recording copyright creator who like i are all subject to the relative new compulsory license for digital sound recordings first introduced in the one nine sour corning's an underlying works keep singer songwriters artist producer studio musicians and investors locked in two point zero cents per stream of no profit or control i believe that's the heart of the problem if i could wave a magic wand you know i would ask a lawyer to clear the d m c a and one fourteen policy licenses nolen void and unconstitutional but i don't think we can do that but it would solve these problems as let licensees negotiate an actual open market  of is that if we are granted a rear rehearing none of my proposals will be accepted and any changes won't be point zero zero zero one in nature if at all singers and sally quinn creators will still be getting point zero cents for stream which is not a reasonable rate for the in addition any proposed changes to terms like free offline listening without a sale are limited downloads under section three hundred five subparts b and c will still remain legal and to me as a violation of an author's exclusive rights and by giving away his sale we hope the court review whether the judges ignore the practical commercial reality that in arbitrarily setting the world to rate for the license are so low that is not feasible for them to make a living from the creations the public ultimately will be deprived of the benefit of their creations if a singer songwriter studio musician or sam record producer cannot make a living from his or her relations then they cannot be expected to composer quarter say more songs and in ignoring or discounting that factor as it appears they have done the judges acted i also argue that the application by the judges of the statute to these facts and costs is deprive me and other copyright creator subject to the license properly recognized rights in the in the copyright act and article one section  unless the copyright owners are fairly compensated for the use of their property all their wars associate with ownership of copyright benefit only benefit the licensees throughout the hearing of use legal and industry term substitutes for an cannibalization meaning th streaming audio did misuse sales of tangible content why would consumers buy a cd or download resulting in a world to the owner when the consumer can stream the same content for free resulting in no cracked world due to the owner of the copyright and the judge is either disregarded records or otherwise affect the owner's streams of revenue and this is precisely what has happened over the past fifteen twenty years and it has been devastating to us copyright is about a private incentive and private motivation is  as prior declared about private motivation i think in response to twenty centuries twentieth century fox versus akin when technological changes rendered literal terms ambiguous the copyright act must be construed in light of this purpose and so that begs the question that point zero sense is that an incentive to create of course not and can we look at the basic word term exclusive right which i think has been  the demonstrates that copyright is a natural right and not a right given to us by the government like other rights free speach mr amman's quote is perfectly describes to me the legal mess we copyright owners kind of find ourselves  will respect the exclusive right of copyright that we rely on and you know consider that the resulting rates that the judges determined were conscious to tory zero cents without morning sun you carson for the government we've had some discussion about effective competition and chevron and so i'd like to start there unless the court has a and make two points first to explain why this argument rests on a mistaken premise and then second to take it on sound exchanges terms so the judges here in saying effective competition are assigning a label to the idea that has pervaded all of their prior weight making decisions and the decisions of this court which is that the non interactive services market has a level of competition that is neither perfect nor reflective of novelistic or all of apple istic price practices here the market that judges that congress instructed the judges to consider was one in which a willing buyer and willing seller would negotiate to an agreement for a market where copyright owners simply don't have the same bargaining leverage as they enjoy in the one interactive services market and then saying all this the judges are not filling a gap they're not doing anything that would require chevron deference but to take that argument on its own terms both the judges and the government in its brief explains that the judge's interpretation was reasonable  and the determination seems to assume that's that that it is an issue as that's trying to overtake and has a lengthy section devoted to explaining why effective competition is the right way to interpret the statute didn't the  judges think that they were that they were engaging in basically a chevron exercise my point your honor is that the copyright royalty judges didn't understand themselves to be filling in the gap all they understood themselves to be doing was carrying forward the same when you say they didn't understand that they were filling a gap i'm not sure exactly what that means does that mean that you don't think that they were engaging in something as to which chevron deference even on the matter conceptual as a matter of concept ap taking that argument on its own terms to the extent that chevron is arguably implicated here the judges and the government in its prefix claims that the judge's interpretation was reasonable on page eighteen of our brief in the standard of review we cited this court's decision in i b i said five seventy four heard seven fifty seven where this court explained but in reviewing the judge's decision it was quote applying lessons of chevron so to the extent that this court wants to think about what the copyright royalty judges did in chevron terms it's perfectly fine with us to see it that way and we certainly have not waived that argument my point is simply that the judges here are not imposing a normative vision of what the not interactive services market should look like they are merely explaining that the bargaining power the copyright owners enjoy in that market is materially different from the power that they enjoy in the interactive services market in a way that makes evidence from that other market not analogous and i don't take so  to see it that way no i know i know but you seem to be fighting us on that i'm not sure why so forgive me let me take a step back i don't mean to fight the court fight all wrong we're just saying you're not encouraging us that's right and the as the judges explained at length copyright owners in the interactive services market are not similarly situated to copyright owners in the non interactive services market because of course an interactive  d volume seven twenty nine to seven forty nine that the fact that none interactive web casters can steer they can prefer music that carries a lower copyright royalty rate without alienating their subscribers show that copyright owners simply cannot get away with some of the terms that they would insist on be able to insist on in the interactive services market and that makes sound exchanges model which i don't think it's really defending here not analogous at least on its face to the market that the judges are instructed to so i guess it's hard to disagree with anything that you're saying in terms of what's grounded what's in the determination it seems to me that everything that the government outlined i would be the way you would or you the arbitrary capricious point what i did what i still don't understand conceptually is why there is not a chevron or an odd and i don't mean to suggest that that there definitely as i'm not quite following what the argument is as to why the brief didn't begin the way the briefs normally would when you're responding to a point about statutory interpretation and an argument  underlying determination usually the brief would start with this to september and the now familiar two step chevron framework and it does the same song and dance and that's the familiar territory that we operate in all the time and i'm not quite following why why does the government think that that's not germane here when just my assumption is that it would be the obvious thing you would turn to first but i could be wrong so your honor to do two points first of all i don't at all mean to suggest that the government disavows the question whether the judge writers aptly put it and he ended you agree that might be latent in the term willing or any other provision of the statute was not part of the decision below before the judges in could not be part of the evidence shows and what their copyright board says is we think that the steered component of these agreements capture price competition in the marketplace and so if we're trying to get to a place that involves actual price competition as opposed to the interactive services market where there isn't that's what the coverage of this thing then we're looking to the steward rights and that gets us but then that doesn't necessarily mean that that also gets you to effective competition whatever that means because it could be that copyright judges would then say well you know we have this facet of the marketplace that's in the evidence and we're going to rely on that but we have to do even more to get to what we're concerned considering to be effective competition and the way that the legal analysis set up and the determination it seemed like that's where the judges were were going and then what they concluded was that actually got into effect of competition and so it was ok but that's the good that seems like us to gap between arbitrary and capricious review the chevron question but i may not be understanding it so you and i think you and i just disagree about what the judges believe effective competition meant and so let's return to the part of the determination where they lay out what they titled the legal analysis they explain for example and here i'm citing a six fifty four that they were we would decline to include based on their analysis of the benchmarks complementary oligarch only value because they cannot they cannot quote simply apply the competitive dynamics of the interactive market they must instead pay attention to quote the competitive status of the hypothetical market in which the statutory rate is established these are not normative judgments or a thus the judges conclude that they are bound to follow the prior directives that instruct them to make certain that the point that they set are those that would be set in a hypothetical effectively competitive market which makes it sound like that's the  objective and your honor and forgive me it's possible that i just felt good to make myself clear i think it's fair to read the judge's determination when they say effective competition and then especially later on when they apply it for example in seven or seven and seven forty nine what they are doing is labeling and idea that their prior decisions and this court's decisions and the statute captures and the idea is no more complex than the non interactive services market is qualitatively different and more competitive than the interactive services market this is the same concept that was referred in prior webcasting decisions as and in the web two decision that this court reviewed as competitive the judges are not doing anything new here they're capturing an idea that is drawn from their prior decisions this court's decisions and the statute and explaining that it means that the interactive services market which has material competitive differences in the not interactive services market cannot necessarily provide an accurate analogy that would support rates for the non interactive services market where copyright owners do not enjoy the same bargaining power i think the idea is no more complex than that and it would be odd to read it that way when as your honor pointed out as you go on into the determination you see that the judge just say we think that these steered rates in the agreements between the same parties bargaining over the same rights in the same market reflect and effectively competitive market and they don't go further so they don't say it seems a little i guess i  of the copyright judge's decision it turns out that that is an interesting analysis but it just didn't have to be there at all because what they in fact did was just got to a point of price competition and non interactive services and then they labeled that defective competition as a conclusion but it wasn't a statutory objective that they felt like they were compelled to reach it's just a way that they were able to conclude that they do your honor i don't think it's necessary to read that part i think you and i just disagree about how that part of the judge's determination should be read i understand them to be explaining to the parties who have briefed extensively before them the issue of effective competition whether it's required and what analogy analogies are appropriate i simply understand them to be explaining that the search that they will undertake is for evidence that shows a market that has competitive dynamics that are reasonably analogous to the market for which they are setting a rate and if it was in excess of diligence or concern for responding to arguments that the parties had made before them then that should not be a reason to find their determination to be irrational but again i think that their application of the effect of what they deemed short effective competition which is baked in to the willing buyer willing seller see under the commerce congress established that their application of it underscores that they did not mean anything more in saying that pages six fifty one pages sixty one than they actually did in its application which was and again i point the court in particular to seven forty seven and seven forty nine and seven forty seven in the first paragraph at the top of the page the judges explain that they're searching for evidence that would satisfy the standard that the d c circuit the librarian of congress and cockerill to judges have declared to be an essential element they explain page seven forty nine that they are treating the evidence through that lens because they're required to consider rates including evidence that is about competitive information on page seven thirty three earlier in the determination where they talk about steering in the relationship between steering and ineffectively competitive marketplace they quote their web two decision and explain the what they're trying to do is figure out whether the benchmark agreements require any adjustments to make them analogous to close the  gap between any differences that exist as comparing the benchmark and the target hypothetical market which in this case is a non interactive services market and not the interactive services market on which sound exchange based it's evidence and which again i don't think it's really disputed here that these markets have material differences sound exchange raises the segmentation of the market between subscription and ad supported rates i'd like to turn to that issue unless the court has other questions on the fact of competition willingness to pay is zero recall of the the ad supported interactive services market as compared to the subscription interactive services market produces as the judges explain excuse me page pages six thirty seven through six forty four of their determination the ad supported market is simply less lucrative for webcasting services and they were justified in believing that i point the court in particular to j nine eighty ten twenty and ten twenty one as to whether or not the judges failed to apply what sound exchange calls a standard test for to touch deciding whether or not there exists material differences between the subscriptions and subscription services market i don't think even sound exchange argues that the judges have ever previously committed to taking into account a prescribed set of factors but in any event to the extent that they have been looked at listener thank your honour's scott i'm sure for the services after the webcasting three decision there was a major technological webcasting services were able to make decisions about what songs to play within the broad jo that their listeners chose to listen to based in part on price and the response to that was that one of the major labels warner and a collective of independent labels marlon voluntarily said we will take more of your service play our songs more and we will take less money for that and what the judges found based on extensive evidence is that vet as in any marketplace is price competition just like car companies selling to hertz will offer lower prices to get hertz to buy more of them this was the first step in a multi step game of price competition that was made possible by new technology and the judges moreover found in this is a page six seventy seven hard and persuasive evidence that that competition not only existed in the actual marketplace but would exist in the hypothetical one and then again at twelve eighty two found that sound exchanges arguments on rehearing fail because they ignored that hard persuasive evidence that actual competition would occur in the hypothetical market and were they noted and i'd say this at a high level to avoid revealing contents of ration that to the extent other labels had not entered into deals where they had matched price and reduced price to get more volume that was because they had an eye on the proceedings they weren't making business decisions they were making regulatory based decisions and there's a reason for this we caught in this proceeding the labels own internal documents and again my colleague of the for the government pointed buying c d s they stop downloading from i tunes what kind of rate would it take to make the labels whole and it's right there on the page can't say it's right there on the page an urge to look at it ten twenty one a different label looking at what's the best thing for our overall business today webcasting the notion that the and this is why when the judges turn to sound issues argument well in the hypothetical marketplace if there wasn't a statutory license could the label a cartel and stop this kind of price competition could they punish deviation could they prevent anybody from gauging it these kind of documents that show you why we are not a leech on the labels revenues the labels recognize that webcasting is an addition to them it benefits them by turning people who have no interest in paying out of pocket for music into royalty generating listeners it exposes their music to new fans who then go to concerts and buy merchandise and otherwise contribute to the revenues of the labels and their artists that's what these internal documents show and that's why what the judges found in this is at seven forty six to seven forty nine is that the ways the sound exchange suggested that in a sash free license free marketplace price competition would disappear would be through demands that people not deviate from a natural market share which the judges recognize  class example of any competitive conduct and the steering clauses that would be right for judicial invalidation and the use of up front lump sum payments which sound sheaves own expert had described as a means of securing an n t competitive lessening of competition so we have factual findings that there would be price competition in the hypothetical marketplace and that's what the statute directs the judges to look at we have the judges finding that the only methods of stopping it would be forming a price cartel while the judges talk short of saying that that would result in antitrust scrutiny and invalidation they only stop very short of that and so the suggestion which is what sound exchange makes is that when setting rates in this hypothetical marketplace the judges have to assume that the actual competition we saw and we see in markets everywhere wouldn't  occur because a cartel would be successful that that's what the statute required them to do is so far at odds from congress's purpose in setting up this structure that it's no wonder the judges rejected this is not a case where there was evidence that the hypothetical marketplace would be different from the effectively competitive marketplace the judges assume they made rigorous factual findings that that's exactly what happened we asked the decision be a thank you well i guess i would start with a question about what the basis for the government's defense of the decision is here i think under cherry they have they have to decide first what the decision says and then this court can decide whether to uphold it or not on that basis but i don't see how this this decision from the c r days can exist like a schrodinger's cat where maybe it was because of something didn't or chevron maybe it was factual the government isn't going to tell the court but it would like to win either way i think it needs to to pick a choice on that i'm happy to engage with the government on that either way we certainly saw that their brief not referring to chevron was talking about this as a factual matter as a factual point of think i just don't see what the difference between the interactive market and non interactive market would have to do with the judge's decision about drawing rates out of the and i heart warner benchmarks that's where they that's the agreements that they drew they drew on to set the seven thousand eight hundred eight both of those agreements were reached in the not interactive market if there were known if there were no interactive market at all they would have been still looking at those same two agreements so the government's point about how we have to adjust because of the interactive market doesn't is totally irrelevant to the question of how you should handle the numbers that are in the pando marilyn and i heart warner agreements and what the government and what the what the copyright judges did there is they said we're going to use the steered rates from the pandora ruling group now that agreement also has the court knows has has headline rates also which are the this or the un steered rates if you will ok well just as a just as a very basic matter if you were trying to draw it from the non interactive market you would use the headline rates not the secured rates because you can't actually the steering to everyone that mean that operate judges conceded that that that that they can't give steering the everyone so why did they use the steered rates it has to be because of where i started in the opening argument which is that they they thought has and as my my my friend represent the intervenor suggested well there would be this this multi step game of price competition where there would be steering and that would be a threat and people would cut their rates but then i'm sorry we're back on seven forty six where the government says well there might be a multi the c r j say there might be a multi step game we're not going to listen to how you on the copyright owner side would be gauche because sorry we're not we're not going to listen to it because it's inconsistent with this effective competition mandate that that's a legal determination that's not a factual resolution of the question of what would happen in that market and mr anschutz offers some his version of what would happen we've offered we offered ours and to to that but to that point of course there seven forty six about how that negotiation would play out i also point out on seven forty six the copyright judges contrary to my friend suggestion about antitrust violations and cartels judges emphasize i'm quoting that their  the text is not intended to suggest any anti trust violations by any actor in the interactive or non interactive market this is not an antitrust problem it is it is true that that sellers with valuable repertoire may drive a hard bargain but that that is that is their right in a free market to do that this is not a question about illegal behavior that the judges refused to consider they did that the behavior the copyright judges refused to consider is they said here in this footnote is perfectly lawful it's just they wouldn't consider it because of the statute the then i guess i would say on the the op if we're if we're in the chevron land and we're asking is this a permissible construction of the statute we've talked about why it doesn't isn't touched to support it is and support is a matter of the d m c a structure the only other reason that i've heard the government give throughout this for interpret ing that for suggesting that the statute could be interpreted that way is this idea that will maybe you would be you would sort of be under some sort of compulsion if there was market power or something like that the the problem there is that in other areas of the law in the tax for eminent domain we use fair market value we look at market transactions and we don't say oh well you know what we really should have papa size the rate at which that transaction would have occurred if the market had been hypothetically competitive because otherwise that really wouldn't be a willing buyer willing seller standard and so that that idea a fair market value being the actual price that is reached in actual transactions in the market between the actual participants is so imbedded in the law that i don't think there's there's room for a permissible construction that says it's fair market value but it's fair market value in some parallel universe where people behave differently than they do in the real world so i think it would be farther reaching consequences the court would have to accept would have to confront if it were to to to allow that as a permissible construction i mean i hear your arguments yeah when i look at what was before the  well the board the judges refused to consider this site of a footnote on seven seventy nine when i read them i thought well that's not why i went before so i didn't judgment calls of that nature and we have i think tried to take great care not to challenge those because we do respect that standard but this but i think this discussion at seven forty six is emblematic of the judges saying we're not making a judgment call about the facts we're saying that the behavior you're talking about would undermine the effect of competition standard i'm quoting from seven forty seven for example would undermine the effect of competition standard that they have understood as a a legal constraint on the evidence they can consider and and it's similarly these would be inconsistent with a statutory direction i don't think that they're making a judgment call about about facts in evidence in this particular context here and they  are saying the law requires us essentially to say the web casters can engage in their new technological mean fred of searing but the statute requires us to treat the copyright owners as powerless to negotiate and fight back against that and that's a that's a legal rubric and a legal way of filtering the evidence that is not it not what the statute in visions when it says market raids that's why i check your record cites when you said they refuse to consider something and i don't find those records cite or to your argument that i thought well i mean i understand or decided for one reason or another it wasn't well i would encourage your honor to to read seven forty six to seven forty nine and you will not find there an answer to the question that's posed in the heading the question posed in the headings can the majors avoid steering in the hypothetical market there's not a factual answer to that the answer is i don't know but it would be inconsistent with the statute for them to do so so we won't consider it did you understand the legal part of the determination whe it's treating with if i could competitions so there's the first part of it that says that were compelled to freedom to fight a competition of the statute and then there's a fall back part that says even if it were not compelled then it's still a reasonable construction the on the fallback part of it is that which what's your argument as to why that is a person so so do you think that there are in fact engaging and a different analysis and saying we're no longer compelled but we're reaching this conclusion anyway as a matter of our discretion or do you i do find it a little odd for an agency to exist in that sort of limbo between the two i they do say that we to the extend it to the extent competitive that information is ambiguous we would interpret it in a way that requires us to set this effectively competitive right now for the colloquy we had earlier that is contrary to what the register is told them so i don't think that's a permissible move for this body to make i mean i suppose in theory the register could have confronted this again you know we've decided to change position given reasons for that and so far we don't have anything like that of course so so that's one problem and then then there are the larger problems that the text and the structure and the established meaning of a fair market value standard mean that any standard under which you're going to assess fair market value in again this parallel universe where where the market actors behave differently i think is an impermissible construction of the statue because you the competitive behavior in the market is a function of who's in the market what they're buying and what they're selling and if you're going to start supposing that they behave differently you're supposing actors who are not the record companies it's not the web casters anymore it's just sort of a policy judgment about what the r