MUSIC LICENSING UNDER TITLE 17 

(PART I & II) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 10 AND JUNE 25, 2014 

Serial No. 113–105 

Printed for the use of the Committee on the Judiciary 

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Available via the World Wide Web: http://judiciary.house.gov 
MUSIC LICENSING UNDER TITLE 17 (PART I & II) 
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MUSIC LICENSING UNDER TITLE 17 

(PART I & II) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 10 AND JUNE 25, 2014 

Serial No. 113–105 

Printed for the use of the Committee on the Judiciary 

( 

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

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

HOWARD COBLE, North Carolina, Chairman 

TOM MARINO, Pennsylvania, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

TED POE, Texas 

JASON CHAFFETZ, Utah 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

[Vacant] 

JERROLD NADLER, New York 

JOHN CONYERS, JR., Michigan 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

DAVID N. CICILLINE, Rhode Island 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

JOE KEELEY, Chief Counsel 

HEATHER SAWYER, Minority Counsel 
(III) 

C O N T E N T S 

JUNE 5, 2014 

Page 

HEARINGS 

Tuesday, June 10, 2014 

Music Licensing Under Title 17 (Part I) ............................................................ 1 

Wednesday, June 25, 2014 

Music Licensing Under Title 17 (Part II) ........................................................... 231 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 1 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary, and 

Member, Subcommittee on Courts, Intellectual Property, and the Internet .. 2 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 3 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 3 

WITNESSES 

Neil Portnow, President/CEO, The Recording Academy 

Oral Testimony ..................................................................................................... 7 

Prepared Statement ............................................................................................. 10 

Lee Thomas Miller, Songwriter and President, Nashville Songwriters Association International 

Oral Testimony ..................................................................................................... 16 

Prepared Statement ............................................................................................. 18 

David M. Israelite, President and Chief Executive Officer, National Music 

Publishers’ Association 

Oral Testimony ..................................................................................................... 21 

Prepared Statement ............................................................................................. 23 

Lee Knife, Executive Director, Digital Media Association (DiMA) 

Oral Testimony ..................................................................................................... 34 

Prepared Statement ............................................................................................. 37 

Michael O’Neill, Chief Executive Officer, Broadcast Music, Inc. (BMI) 

Oral Testimony ..................................................................................................... 42 

Prepared Statement ............................................................................................. 44 

Will Hoyt, Executive Director, Television Music License Committee 

Oral Testimony ..................................................................................................... 61 

Prepared Statement ............................................................................................. 63 

Jim Griffin, Managing Director, OneHouse LLC 

Oral Testimony ..................................................................................................... 71 

Prepared Statement ............................................................................................. 73 

SUBMISSIONS FOR THE RECORD 

Material submitted for the Hearing Record .......................................................... 107 

(1) 

MUSIC LICENSING UNDER TITLE 17 (PART I) 

TUESDAY, JUNE 10, 2014 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 10 a.m., in room 

2141, Rayburn House Office Building, the Honorable Howard 

Coble, (Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Goodlatte, Marino, Smith of 

Texas, Chabot, Issa, Poe, Chaffetz, Farenthold, Holding, Collins, 

Nadler, Conyers, Chu, Deutch, Bass, DelBene, Jeffries, Cicilline, 

Lofgren, Jackson Lee, and Cohen. 

Staff Present: (Majority) Joe Keeley, Subcommittee Chief Counsel; Olivia Lee, Clerk; (Minority) Heather Sawyer, Minority Counsel; and Jason Everett, Counsel. 

Mr. COBLE. Good morning, ladies and gentlemen. Welcome to the 

first of two hearings on music licensing issues. Probably everyone 

here knows that I am an avid bluegrass fan, and country music, 

as long as it is old-time country. I am dating myself chronologically 

when I say that. I know that many of you will welcome our new 

and veteran witnesses today. 

Although every industry goes through changes over the years, I 

think everyone would agree that the music business has seen more 

than its share of changes over the past decade or two. Many of us 

grew up in a world where we looked forward to buying our favorite 

albums at the local record store. Today’s youth may not even know 

what a record store looks like, since they prefer to download from 

iTunes or stream it on Pandora. 

However, times change, and I am glad to see that the music industry continues to adapt to the preferences of its fans and making 

new music available. However, the current licensing system hasn’t 

changed. Many feel that our music licensing laws were designed for 

a world that existed decades ago and have become outdated. Music 

lovers can now access music virtually anywhere on an ever-changing variety of devices. 

I may be old—I am old—but I am also old-fashioned in my view 

our copyright laws should provide access to music and still protect 

the interest of copyright holders. This is a traditional view of compulsory licenses, and I see no reason why we cannot restore this 
2 

balance. If not, we know consumers will resort to pirate sites on 

the Internet for their respective music. 

Finally, there are some longstanding issues in the music business that I feel are important for Congress to address, how royalty 

rates are determined, who pays music royalties, and how older 

music works are treated under Federal copyright law. 

I have also been a friend of broadcasters for some time, and I 

hope that the broadcasters and the music industry can find a way 

to work together to resolve their common issues. 

In closing, I did want to thank our panel this morning for making time available for this hearing. While I would prefer to spend 

the next few hours learning about how to make bluegrass music 

more popular, I will instead spend the next few hours learning 

about how to make all music more popular. 

Again, I thank you, the panelists, and those others in the audience for your presence today. 

I yield back, and I recognize the distinguished gentleman from 

Michigan, Mr. Conyers, for his opening statement, and then I will 

get to the gentleman from New York. 

Mr. CONYERS. Well, thank you, Mr. Chairman and Ranking 

Member Nadler. This is an important hearing and it is good that 

everyone is here. I worked with Congressman Holding of North 

Carolina to introduce H.R. 4772, the RESPECT Act, which addresses a loophole that allows digital radio services to broadcast recorded music before February 15, 1972 without paying anything to 

the artists and labels that created it. This bill would assure that 

legacy artists and copyright owners of all works, whether recorded 

before or after February 15, 1972, are compensated by those who 

benefit from the Federal statutory license. 

The current failure to pay these legacy artists is shameful, and 

it is harmful to communities like mine, Detroit, which has so many 

artists who were at the forefront of the industry and should be 

compensated fairly for their groundbreaking work. Taking someone 

else’s labor and not paying is simply unfair, and this bill seeks 

basic fairness for artists who created sound recordings before 1972. 

A related issue that must be examined is whether our efforts to 

improve the music licensing scheme will be, in fact, truly fair if it 

does not include performance rights for some recordings. It is no 

secret I am a strong supporter of artists and believe that the current compensation system on terrestrial radio AM and FM isn’t fair 

to artists, musicians, or the recording labels. 

When we hear a song on the radio, the individual singing the 

lyrics or playing the melodies receives absolutely no compensation. 

Every other platform for broadcast music, including satellite radio, 

cable, Internet, web casting, pay a performance royalty. Terrestrial 

radio is the only platform that doesn’t do this. This exemption from 

paying a performance royalty to artists no longer makes any sense, 

if it ever did, and unfairly deprives artists of the compensation 

they deserve for their work. 

We have a diverse panel of experts. I join with our Committee 

in welcoming them and look forward to hearing them and to working with my colleagues to ensure that the music licensing process 

is fair and does not have unintended consequences that harm artists or producers. 
3 

Thank you for allowing me to make this statement at this time. 

Mr. COBLE. I thank the gentleman from Michigan. 

The Chair now recognizes the Chairman of the full Judiciary 

Committee, the gentleman from Virginia, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman, and good morning to 

everyone. Welcome to the Subcommittee’s first copyright review 

hearing on music licensing. 

Last Monday, the Subcommittee traveled to New York City to 

learn about the first sale doctrine. One of the issues we discussed 

was the applicability of first sale to the digital environment, including music. As we heard at that hearing, consumer expectations 

have changed substantially in the digital era. Probably in no other 

area of copyright law have consumer expectations changed more 

than in how consumers access music. 

In a world of instant and constant access to entertainment options on Internet-connected devices, laws that hinder or stunt access to legal music not only hurt consumers, but also the artists 

and the services that provide music to consumers. Unfortunately, 

consumers who want to be able to easily access their favorite songs 

anytime on all of their digital devices face a legal framework written for the world of vinyl albums and 8-track tapes. 

Problems that have emerged from this current legal framework 

include, among others: a lack of a unified, robust, and easily accessible source of ownership records upon which music delivery services can be built; uncertain dividing lines between mechanical and 

performance rights; artists being treated differently under the law 

depending upon when a work was created; artists and music delivery services being treated differently under the law depending 

upon how music is delivered; artists and music delivery services 

being treated differently under the law depending upon when a 

music service first began operation; and an overall lack of transparency in the industry regarding how revenue is accounted for. 

During today’s hearing, we will primarily focus on the rights and 

legal regime associated with musical compositions. We will hear 

from a broad spectrum of stakeholders, from songwriters to those 

who collect revenues on their behalf to those who deliver the musical works to consumers in new and innovative ways. 

Interested parties from across the spectrum have recognized a 

need for changes in how our nation’s copyright laws, as they pertain to music, are structured. Some have called for tweaks to our 

current licensing regime, while others have called for more fundamental changes, such as moving toward a more free market approach. I look forward to learning more about both the problems 

plaguing the current framework and possible solutions to these 

problems. 

And I thank you all again for making the time to be here this 

morning, and I yield back. 

Thank you, Mr. Chairman. 

Mr. COBLE. I thank the gentleman. 

The Chair now recognizes the distinguished gentleman from New 

York, Mr. Nadler, for an opening statement. 

Mr. NADLER. Thank you, Mr. Chairman, for holding this hearing 

on music licensing under Title 17 as part of the Committee’s comprehensive copyright review. 
4 

I am sorry this hearing, as well as the last, is not in New York, 

because everything is better in New York, but we have to make 

due. 

This is the first of a two-part hearing, which is fitting, as these 

sections of the Copyright Act are very much in need of scrutiny. It 

is often said that if we started from scratch, nobody would write 

the law as it stands today. Music copyright and licensing is a 

patchwork of reactions at different times to changing technologies. 

From the development of player pianos and phonograph records to 

the advent of radio and the Internet, the law has constantly been 

playing catch-up, and quite often failing. 

Today, terrestrial satellite and Internet-based radio stations deliver music to listeners in their cars, homes, and at work. Each of 

these uses of music require licenses from copyright owners for both 

the underlying musical work and the sound recording, with the 

rights to each often owned or managed by different individuals or 

entities. Over time and in an effort to help ensure equity and access in this complicated universe, Congress has created a statutory 

licensing scheme. Unfortunately, the existing landscape is marred 

by inconsistent rules that place new technologies at a disadvantage 

against their competitors and inequities that deny fair compensation to music creators. 

Under current law, for example, the rules vary from payment of 

royalties by Internet broadcasters, cable radio and satellite radio 

providers. Internet broadcasters like Pandora pay royalty rates set 

to reflect a willing buyer and willing seller model. By contrast, the 

rate for cable and satellite providers is established through factors 

set in 1998 that predated the development of Internet radio and 

that many believe results in a below-market royalty rate. 

As a result, Pandora has fairly complained that it is at a competitive disadvantage, and creators whose works are accessed 

through cable or satellite receive less than when a consumer 

streams that same work over the Internet. 

During the last Congress, I circulated draft legislation, the Interim FIRST Act, to establish parity among all digital radio services. The Songwriter Equity Act, recently introduced by Representatives Collins and Jeffries, would similarly modernize the law to 

ensure that the same willing buyer/willing seller standard governs 

songwriters’ and music publishers’ mechanical reproduction royalties. 

Other provisions of the Copyright Act prevent songwriters and 

publishers from providing evidence in Federal rate court under consent decrees governing licensing of their works that came into existence in 1941. The Songwriter Equity Act would remove that evidentiary ban, thus helping songwriters obtain a fair market value 

for their work. 

In the meantime, the DOJ, the Department of Justice, just announced a much-needed review of the consent decrees that govern 

ASCAP and BMI, two of the performance rights organizations responsible for collecting and distributing royalties. 

Meanwhile, nobody is paying artists who recorded many of our 

culture’s greatest musical classics before 1972, like Aretha Franklin or the Birds or the Temptations. The RESPECT Act, recently 

introduced by my colleagues, Representatives Holding and Conyers, 
5 

would close an existing loophole in the law that has allowed digital 

providers to argue against paying any royalties for these great legacy artists. 

Of course, one of the most glaring inconsistencies and injustices 

is that our performing artists, background musicians and other 

rights holders of sound recordings receive absolutely no compensation when their music is played over the air on terrestrial—meaning AM/FM—radio. Congress required payment when sound recordings are transmitted digitally in 1995, but we have yet to extend 

this basic protection to artists when their songs are played on FM 

or AM radio. 

This is incredibly unjust. The bottom line is that terrestrial radio 

profits from the intellectual property of recording artists for free. 

I am aware of no other instance in the United States where this 

is allowed, and it needs to be remedied. We are on a very short list 

of countries, a list that includes such wonderful models as Iran, 

North Korea, and China, that do not pay performing artists when 

their songs are played on the radio. And when American artists’ 

songs are played in Europe or any other place that does provide a 

sound recording right, these countries withhold performance royalties from American artists since we refuse to pay theirs. 

This Committee’s copyright review and the parallel proceedings 

at the Commerce Department and the Library of Congress have revealed an extraordinary and bipartisan consensus in favor of performance rights. As Registrar of Copyrights Maria Pallante testified earlier this Congress, this issue is ripe for resolution. 

Although the existing music licensing and copyright scheme can 

be difficult to understand, the solution is quite simple. If Congress 

is going to maintain compulsory licensing, then any statutory rate 

standard should attempt to replicate the free market to the greatest extent practicable, and the same rules should apply to everyone. The law should be platform neutral and all music created 

should be fairly compensated. 

It is well past time to harmonize the rules and put an end to 

Congress creating arbitrary winners and losers. There have been 

several proposals to address individual inequities in the music 

landscape, some of which I just outlined that I support. But if we 

are to rationalize the law and level the playing field, we should 

take a comprehensive approach. 

At this year’s Grammys on the Hill event, Neil Portnow, who is 

here with us today, called for the industry to coalesce behind the 

music omnibus or MusicBus. This call for unity was later echoed 

by Republican Whip Kevin McCarthy and Democratic Leader 

Nancy Pelosi, who agreed that the time has come for Congress to 

address these issues in one package. I agree, and I plan to take up 

their charge. With colleagues on both sides of the aisle, I am developing legislation to address the various problems in existing law in 

one unified bill, bringing fairness and efficiency to our music licensing system and assuring that no particular business enjoys a special advantage against new and innovative technologies. 

Consumers don’t know that the button they push on their car 

dashboard or smartphone arbitrarily determines how much artists 

and songwriters will be paid, assuming they will be paid at all. We 

can create a better system for radio competitors, for artists and 
6 

songwriters, and for fans, all of whom depend on a vital, healthy 

market for music and music services. 

We have a wide range of witnesses here today and at our second 

hearing scheduled for June 25th. I look forward to their testimony, 

and I hope that we can all come together to agree on and pass 

meaningful, comprehensive reform. 

Thank you, Mr. Chairman, and I yield back the balance of my 

time. 

Mr. COBLE. I thank the gentleman. 

All other opening statements, without objection, will be made 

part of the record. 

We have a distinguished panel today, seven in all, and I will 

begin by swearing in our witnesses prior to introducing them. 

So if you would, gentlemen, please stand, and I will submit the 

oath to you. 

[Witnesses sworn.] 

Mr. COBLE. Let the record show that all answered in the affirmative. 

I will now introduce the witnesses. 

You may be seated, gentlemen. 

Our first witness this morning is Mr. Neil Portnow, President 

and Chief Executive of the Recording Academy. Prior to joining the 

Recording Academy, Mr. Portnow served as Vice President of the 

West Coast Division of Jive Records. Mr. Portnow received his degree from George Washington University. 

Mr. Portnow, good to have you with us. 

Our second witness is Mr. Lee Thomas Miller, Songwriter and 

President of the National Songwriters Association International. 

Mr. Miller is a three-time Grammy Award nominee and has written country singles that have reached Number 1. He received his 

Bachelor’s degree in music theory and composition from Eastern 

Kentucky University. 

Good to have you, Mr. Miller. 

Our third witness is Mr. David Israelite, President and Chief Executive Officer of the National Music Publishers Association, where 

he protects and advances the interests of music publishers and 

songwriters in matters relating to domestic and global protection of 

copyrights. Mr. Israelite received his B.A. in Political Science and 

Communication from the William Jewell College, and his J.D. from 

the University of Missouri Columbia Law School. 

Our fourth witness is Mr. Michael O’Neill, Chief Executive Officer of BMI, also known as Broadcast Music, Inc. In his position, 

Mr. O’Neill oversees all of BMI’s domestic and global business operations and directs the company’s strategic growth. Mr. O’Neill received his undergraduate degree in Business Administration from 

the Mt. Claire University and his MBA from Rutgers University. 

Our fifth witness is Mr. Lee Knife, Executive Director of Digital 

Media Association, also known as DiMA. Prior to joining DiMA, 

Mr. Knife practiced entertainment law in New York for 20 years, 

representing individual songwriters, recording artists and producers. Mr. Knife earned his B.A. from St. John’s University and 

his J.D. from the Brooklyn School of Law. 

Our sixth witness is Mr. Will Hoyt, Executive Director of the TV 

and Music License Committee. Prior to joining the Television and 
7 

Music License Committee, Mr. Hoyt spent 25 years as the executive for Nationwide Communications, Inc. He was graduated from 

the Ohio and Western University and received his J.D. from Ohio 

State University School of Law. 

Our seventh and final witness is Mr. Jim Griffin, Managing Director at OneHouse LLC. Mr. Griffin consults extensively on digital 

music, media registries, and scholarly publishing. Prior to 

OneHouse, he served as President of Music Licensing at Warner 

Music Group. Mr. Griffin received his degree from the University 

of Kentucky. 

Gentlemen, we have a full roster here today. Good to have all of 

you with us. 

To assist you, there will be a timing panel on your desk reflecting certain lights. When the light goes from red to yellow—strike 

that. When the light goes from green to yellow, that is your warning that you have 1 minute remaining and the ice on which you 

are skating is becoming increasingly thin. You won’t be keel 

hauled, however, but when that yellow light appears, that gives 

you notice that 1 minute is upcoming. So if you all would comply 

with that, we would be appreciative. 

Mr. Portnow, we will now commence with you. 

And again, thank you all for being here. 

TESTIMONY OF NEIL PORTNOW, PRESIDENT/CEO, 

THE RECORDING ACADEMY 

Mr. PORTNOW. Thank you, Chairman Goodlatte, Chairman Coble, 

Ranking Members Conyers and Nadler, and Members of the Subcommittee. My name is Neil Portnow, and I am President—— 

Mr. COBLE. Mr. Portnow, you might pull that mic a little closer 

to you, if you would. 

Mr. PORTNOW. My name is Neil Portnow, and I am President and 

CEO of the Recording Academy. Known internationally for our 

Grammy Awards, the Academy is the trade association that represents music’s creators: songwriters, performers, and studio professionals. 

I thank you for the opportunity to address the Subcommittee this 

morning. And since I have the honor of being the first witness, let 

me start at the beginning, with the copyright clause of the Constitution. 

The Framers gave authors the exclusive right to their works for 

a time in order to promote the progress of science and useful arts. 

As today’s hearing is focused on music licensing, we should at the 

outset remember who the authors of music are. They are the songwriters and composers who create the very DNA of music. They are 

the featured and background performers who perform those songs 

and bring them to life. They are the producers and engineers who 

create the overall sound of the recordings that we love. 

Over the next two hearings, I urge you to keep music creators 

foremost in your mind. They are the authors our Founders expressly protected. 

Of course, the Framers intended copyright to be an incentive to 

create, but today we have a patchwork of laws that do not address 

the challenges of the digital marketplace and often create a disincentive to make music. Low streaming rates prevent creators 
8 

from making a living, performers and composers must police the 

entire Internet to take down infringing works, and traditional radio 

continues to use artists’ recordings without compensation while 

leveraging this unfair advantage as they move into the digital 

world. 

This last point is most glaring. Terrestrial radio is the only industry in America that is built on using another’s intellectual property without permission or compensation. Broadcasters in every 

other developed country in the world compensate their performers. 

The National Association of Broadcasters have spent a lot of 

money lobbying to maintain their free ride. Since they are not on 

the panel today, allow me to recount the history of their failed argument on their behalf. 

First they said the radio-artist relationship is ‘‘symbiotic,’’ but 

even their own biased study found the benefit to radio is 10 times 

any perceived promotional benefit to artists. 

Then they said they are different because radio is free, until they 

remembered that most Internet radio is free but still pays royalties. 

Then they said a royalty will put small stations out of business, 

until we offered the smallest three-fourths of all stations a flat royalty rate of as little as a few bucks a day. 

Then they said the free market would take care of the issue, 

until they opposed the Free Market Royalty Act that would have 

actually created one. 

Finally, they said it is a tax, until Grover Norquist said it is not, 

and Grover knows a tax when he sees one. 

The NAB has run out of arguments and run out of time. The 

White House, the Copyright Office, and political groups ranging 

from the AFL-CIO and the NAACP to Americans for Tax Reform 

and Tea Party Nation, they all agree with us. 

And while radio touts a nonsensical and non-binding resolution, 

Congressional leaders from both parties are working on real legislation to resolve this issue. Any copyright reform simply must include a radio performance right. 

To resolve this and other issues, we support several thoughtful 

bills. The Songwriter Equity Act would allow songwriters to be paid 

fair market value. The Protecting the Rights of Musicians Act 

would insist that if broadcasters value their own content, they 

must value the content of others. The RESPECT Act would remove 

a loophole that denies older artists royalties. 

But now it is time for a unified, holistic approach to music licensing. It is time for a music omnibus bill, or MusicBus for short. With 

copyright review under way, we need our industry and Congress to 

be visionary and create a unified approach for the future of our 

business, and the MusicBus idea is really simple: fair market pay 

for all music creators across all platforms. And a music omnibus 

bill need not wait for the entire Copyright Act to be revised. As 

Congress’ own advisor on copyrights, Registrar Maria Pallante, 

noted, ‘‘These issues are ripe for resolution.’’ 

Mr. Chairman, a legal framework that includes compulsory licenses, government rate courts, and consent decrees already diminishes the Framers’ vision of exclusive rights. If music makers must 

be subject to these restrictions, let’s at least assure them that the 
9 

result will represent what a free market would have provided. We 

are not asking for special treatment. We are simply asking for 

what is fair, fair market pay for all music creators across all platforms, a simple concept, a single bill, a just framework for music 

licensing. 

Thank you very much. 

[The prepared statement of Mr. Portnow follows:] 
10 
11 
12 
13 
14 
15 
16 

Mr. COBLE. Thank you, Mr. Portnow. 

Mr. Miller? Pull that mic closer to you, Mr. Miller. 

TESTIMONY OF LEE THOMAS MILLER, SONGWRITER AND 

PRESIDENT, NASHVILLE SONGWRITERS 

Mr. MILLER. I am a writer, not an artist. 

Good morning. My name is Lee Thomas Miller. I grew up on a 

small tobacco farm in Jessamine County, Kentucky. I started playing piano by ear when I was 11. By the time I was 15, I was writing bad songs and playing them with my even worse band. But we 

were just kids, so the people cheered, if only out of pity. 

I went to college to study Music Theory and Composition and 

graduated with a Bachelor’s degree from Eastern Kentucky University. That simply meant that I was now over-qualified to play in 

the honkytonks where I had been singing. I was formally educated 

in classical music composition while writing country songs on the 

side, and these are two very different things according to my professors. My parents were thrilled when I finished college and mortified when I saved $1,000 and immediately moved to Nashville. 

For years I wrote songs, hundreds of songs. I played in bands 

and took temporary jobs to pay the bills when needed. I studied the 

songs I heard on the radio and began meeting and learning from 

the songwriters who wrote them. On September 1st, 1996, I became a full-time songwriter, and then the real work started. Eleven 

years. From the day I moved to Nashville it took 11 years to have 

a hit song on that radio. 

Since then I have been lucky and I have been blessed. I have had 

hits, and I continue to earn a living by walking into a room where 

there is nothing and making up something out of thin air, something that is real, something that is tangible, something that creates commerce. What I make is the seed that fuels the entire music 

business. It generates thousands of jobs and shapes the very culture we live in because, let’s face it, nearly everybody loves music. 

But I am one of the remaining few. Since I started, nine out of ten 

of my colleagues don’t write songs as a profession anymore, because 

their royalties can no longer feed their families. 

This is an unjust system that must be changed. Rules established in 1909, largely to prevent one player piano roll company 

from becoming a monopoly, require me to grant a compulsory license paying 9.1 cents for the sale of a song, which I split with my 

co-writers and our music publishers, regardless of what the marketplace might say my song is worth. That is not much of a pay 

raise from the original 2 cents paid in 1909. 

Then royalties from my song performed on an Internet radio station are set under consent decrees from World War II. The judges 

who determine those rates are forbidden from considering what the 

marketplace says my song is worth. Consequently, I only receive 

thousandths of a penny for those performances. 

I appreciate the luxury of the Internet as much as you do, and 

I suppose I am as much of a slave to my smart phone as anyone. 

But the current system has devalued the musical composition to 

the point where songwriters are being crushed. It is bad enough 

that it is so easy to steal the music today, but a legal framework 
17 

that allows songs to be streamed for nearly free will destroy the 

livelihood of the American songwriter if it is allowed to continue. 

An important piece of legislation called the Songwriter Equity 

Act has been introduced that would allow my copyright’s value in 

the modern marketplace to be considered in rate-setting proceedings. I want to thank introducing sponsors Congressmen Doug 

Collins and Hakeem Jeffries and all of the co-sponsors of this legislation. 

While it is a great start, even bolder revisions to the current 

copyright law and music licensing rules are necessary to establish 

true equity for today’s songwriters and composers. It is time for 

Congress to eliminate the compulsory license. It is time for Congress to eliminate or drastically alter World War II-era consent decrees. 

Also, in the future, songwriters should be represented on the governing bodies of music licensing and collection entities and dispute 

resolution committees. Future licensing and collection agencies 

should be able to compete with those with large market shares. 

There should be true transparency throughout the entire collection 

and payment process. 

I am America’s smallest small business. I sit down and make 

stuff up. I do not succeed if my songs are not recorded, sold, and 

played; and when I do get paid, I pay self-employment income tax. 

With the money that remains, I raise babies. I buy bread, gasoline, 

anniversary flowers, cough medicine, braces, and guitar strings. 

I can make you laugh or cry. I can make you do both inside the 

same 3-minute story. That is the power of music, and it all begins 

with a song. Congress, today I ask you, on behalf of my family and 

the families of all American songwriters, to change the archaic government regulations that prohibit us from pursuing a fair market 

opportunity for the songs we create. 

Thank you, Mr. Chairman, and Members of the Committee. 

[The prepared statement of Mr. Miller follows:] 
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Mr. COBLE. Thank you, Mr. Miller. 

Mr. Israelite? 

TESTIMONY OF DAVID M. ISRAELITE, PRESIDENT AND CHIEF 

EXECUTIVE OFFICER, NATIONAL MUSIC PUBLISHERS’ ASSOCIATION 

Mr. ISRAELITE. Good morning. I would maybe rather give Lee 5 

more minutes to talk, but as the principal trade association of 

music publishers and their songwriter partners in the United 

States, NMPA thanks you for the opportunity to testify. 

The Committee is well aware that there are two different copyrights involved in music, the copyright for the underlying musical 

composition, which is the half of the music industry that I represent, and the separate and distinct copyright for any sound recording of that song. What is striking is just how different these 

two copyrights are treated under the law and through government 

regulation. 

First, copyright law contains antiquated regulations that unfairly 

distort the value of a songwriter’s work. The copyright in a song 

is a property right and should not be regulated by the government 

unless there is a compelling reason to do so. Songs should be valued in the free market just like sound recordings. 

Second, if there is to be regulation, then at a minimum songwriters deserve to be paid a fair market value. There is no intellectually honest objection to this point. 

Third, Congress should reject any attempt to expand compulsory 

licenses. Any additional regulation could have long-term harmful 

consequences for creators. 

Songwriters attempt to earn a living through three primary 

means: mechanical reproductions, public performances, and audiovisual synchronizations. Mechanical reproductions used to represent our dominant income stream but today comprise only about 

a quarter of our revenue. Section 115 of the Copyright Act imposes 

a compulsory license that dates back to 1909. As a result of this 

World War I-era law, songwriters and music publishers are denied 

the right to negotiate the value of their intellectual property in a 

free market. 

In 1909, the rate for mechanical licenses was set by Congress at 

2 cents per song. Today’s mechanical rate would be more than 50 

cents if adjusted for inflation. Remarkably, the current statutory 

rate stands at 9.1 cents, and for those who tire of hearing that statistic, imagine the fatigue of songwriters being paid something less 

than a fair market value. 

This paltry number is due to the Copyright Royalty Board using 

an antiquated, below-market standard when setting rates known 

as the 801(b) standard. It is a rate standard that is harmful to creators. As former Register of Copyrights Marybeth Peters argued so 

eloquently, ‘‘While the Section 115 statutory license may have 

served the public interest well with respect to a nascent music reproduction industry after the turn of the century, it is no longer 

necessary and unjustifiably abrogates copyright owners’ rights 

today.’’ 

Fortunately, legislation has been introduced to begin to address 

this inequity, and I thank Representatives Collins, Jeffries, and 
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other Members of the Subcommittee, including Chairman Coble, for 

supporting the Songwriters Equity Act. 

Public performance royalties represent the largest income stream 

for songwriters. The songwriter’s public performance right is inherently a free-market right. It is not regulated by law. But because 

the Department of Justice imposed consent decrees on ASCAP and 

BMI in 1941, incredibly those consent decrees are still in effect 

today. They do not sunset. 

Under these World War II-era consent decrees, songwriters and 

publishers may not negotiate the value of their intellectual property in a free market. Instead, a Federal judge in the Southern District of New York dictates how much a songwriter is paid. Last 

week, the Department of Justice announced it is undertaking a review of these consent decrees, and we hope they will act quickly to 

ensure that songwriters can receive fair market compensation. 

Synchronized music represents the third significant source of 

revenue for songwriters. This includes using music in movies, television shows, as well as newer forms of this writing, including 

music videos and YouTube. This is a free market right. It is not 

regulated by law. It is not regulated by consent decrees. Because 

the sync market is a free market, it is the useful barometer for assessing the fair market value of songs. 

Not surprisingly, given both copyrights are negotiated in a free 

market, the common industry practice is to pay both copyright 

owners under the same terms. There is an amazing amount of digital content available to consumers on the iTunes Store, Google 

Play Store, Amazon Store. Movies, books, video games, magazines, 

television shows, recorded music are all available, and all of those 

copyrights are negotiated and licensed in the free market. Only the 

content produced by songwriters is uniquely singled out and subject to heavy regulation. 

On behalf of those songwriters, I ask you to let them be paid fairly by letting them be free. Thank you. 

[The prepared statement of Mr. Israelite follows:] 
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Mr. COBLE. Thank you, Mr. Israelite. 

Mr. Knife? 

TESTIMONY OF LEE KNIFE, EXECUTIVE DIRECTOR, 

DIGITAL MEDIA ASSOCIATION (DiMA) 

Mr. KNIFE. Thank you, Chairman, Ranking Member Nadler, Vice 

Chairman Marino, and Members of the Subcommittee. I thank you 

for inviting me to testify here today. My name is Lee Knife, and 

I currently serve as the Executive Director of the Digital Media Association, or DiMA for short. 

DiMA is a nationally recognized trade association that represents 

many of the leading players in the digital music marketplace. You 

are probably familiar with many of our larger members which include companies like Amazon.com, Apple iTunes, Google, YouTube, 

Microsoft, and Rhapsody. But there are several additional companies we represent that play an equally important part in the development of the digital music ecosystem. 

In little more than a decade’s worth of time, the role our companies have grown to play within the music industry is simply amazing. With respect to consumers, our ingenuity has provided fans of 

online music with access to new services and offerings that satisfy 

almost every conceivable price point, from online music download 

stores to on-demand streaming to ad-supported Internet radio and 

more recently cloud-based offerings. 

With respect to copyright owners, our efforts have meant the creation of new revenue streams that have handsomely rewarded content creators and their agents for their creative endeavors. Sound 

Exchange, for example, recently reported a 312 percent increase in 

the total sum of royalties it paid to recording artists and labels in 

2012 versus 2008. This is thanks to monies paid by services operating under the Section 114 compulsory license, many of which we 

represent. 

With respect to songwriter incomes, ASCAP and BMI, the two 

largest performing rights organizations, recently reported record 

high revenues of $944 million each in 2013. Meanwhile, SESAC, 

the smallest of the three PROs, has witnessed its revenue grow 

from just $9 million in 1994 to $167 million last year. 

All of these accomplishments, I am pleased to report, have come 

as DiMA members increasingly have been able to successfully convert would-be pirates into regular users of legitimate royalty-paying music services. This task hasn’t been easy, and the current 

music licensing regime we are asked to navigate makes it no less 

difficult. It is safe to say that if we were writing from a blank slate 

today, no one would develop the current system we are asked to 

operate under here. 

In the remaining minutes of my time, I want to offer just a few 

thoughts on what essential elements should be included in any future music licensing reform package, followed by a quick evaluation 

of why I think two recently introduced legislative proposals in particular constitute bad public policy. 

First, a 21st century licensing regime that is properly suited to 

handle the needs of an innovative industry and a consumer base 

that is consistently demanding legal access to content when and 

where they want it has to include: one, efficiency; two, trans-
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parency; three, safeguards that adequately protect licensees from 

anti-competitive behavior; four, a level playing field among similarly situated competitors; and finally, five, it should shield licensees from excessive legal risks when those licensees are acting diligently and in good faith. 

Greater efficiency has two immediately apparent benefits. For licensees, it guarantees new products and services can be brought to 

market sooner, which helps us in our fight against online pirates. 

For creators, greater efficiency will mean less of the royalties we 

pay for the right to perform or distribute content will be used to 

cover administrative expenses. Last year alone, more than $200 

million in royalties paid by music licensees was redirected to cover 

PRO operating expenses. Greater efficiency would mean fewer middlemen and more money in the pockets of songwriters. 

The importance of transparency is obvious. If service providers 

can’t find the rightful owner of copyright-protected works, then 

they can’t license and pay for them, which means the creator 

misses out on a royalty and the general public is deprived of the 

benefit of enjoying his or her creativity. 

For creators, greater transparency provides full visibility into the 

total payments made by music services and the way those payments are administered by the agencies and affiliates that the artists rely on to administer their rights. This, in turn, will allow 

those artists to make better informed decisions about which agents 

they choose to employ to maximize the net payments they ultimately receive. 

In the area of competition, the need to protect licensees from 

anti-competitive behavior may be greater now than any time in history due to the recent consolidation in the recording and music 

publishing industries. Some, particularly in the context of licensing 

new musical works, have taken issue with this notion and even ask 

that certain requirements imposed under the Department of Justice’s consent decrees be modified. 

Before taking this considerable step, we would strongly urge policymakers to review the history of the ASCAP and BMI consent decrees, which is attached to my testimony, and also recent Federal 

court cases which have made note of continuing anti-competitive 

behavior carried out by various parties acting on behalf of the 

music publishing industry. 

Further on the subject of competition, a hallmark of a good competitive landscape requires a level playing field be established 

among similarly situated competitors. For several years now, 

webcasters have had one simple request—namely, that the same 

rate-setting standard, the 801(b) standard that is currently used to 

determine performance royalties for cable and satellite radio, be 

used to establish rates for Internet radio. Record labels have relied 

on the 801(b) standard while licensing their musical works since 

the 1970’s, while cable and satellite radio providers have relied on 

it while licensing sound recordings since the 1990’s, all without 

any—— 

Mr. COBLE. Sir, your time has about expired. 

Mr. KNIFE. Excuse me? 

Mr. COBLE. Your time has expired. 
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Mr. KNIFE. I’m sorry. I would just like to close by saying we 

should consider the collective issues that I raised when we consider 

an omnibus approach to copyright reform. Thank you. 

[The prepared statement of Mr. Knife follows:] 
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See page 108 for Supplemental Material. 
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Mr. COBLE. Thank you, Mr. Knife. I appreciate that. 

Mr. O’Neill? 

TESTIMONY OF MICHAEL O’NEILL, CHIEF EXECUTIVE 

OFFICER, BROADCAST MUSIC, INC. (BMI) 

Mr. O’NEILL. Mr. Chairman, Mr. Ranking Member, Subcommittee Members, thank you for inviting me today. I am honored to be here. I would also like to thank Congressman Collins for 

his sponsorship of the Songwriter Equity Act. It is being well received by my members. 

My name is Michael O’Neill, and I am President and CEO of 

BMI. I have been working with songwriters, composers and publishers, and with businesses, for over 20 years while at BMI. We 

were founded in 1939 as a not-for-profit company, and BMI today 

is one of the world’s leading performing rights organizations. 

Under copyright law, whenever music is played in the public, the 

creators of that music, people like Lee Thomas Miller, are entitled 

to be compensated for their work. We represent over 600,000 songwriters, composers and publishers, and license their over 8.5 million works to businesses across the country. We also work with 

rights societies all over the world, wherever American songwriters’ 

music is used, to make sure they are paid for it. 

Today, through the marriage of technology and artistic creativity, 

digital media has truly democratized the industry. It has knocked 

down barriers and created more opportunities for creators than 

ever before. And while this is promising, as these new innovations 

come out, BMI’s mission is and always has been to ensure that our 

songwriters and publishers are paid fairly for their creative labors. 

That mission, however, is being frustrated by an out-of-date regulatory framework. 

BMI, like our competitor ASCAP, is governed, as you have heard, 

under a consent decree. Almost all of those rules in that consent 

decree date back to 1966 and beyond. Essentially, we are locked 

into a model that might have been appropriate when the Beatles 

first came to America, that might have been appropriate when you 

had to get out of your chair or your sofa to turn the channel on 

your television, but it is not appropriate in today’s modern world. 

Here are four modest proposals to bring BMI and the world of 

music licensing into the 21st century. 

First, publishers currently do not have the flexibility to decide 

when they choose to utilize BMI to license their works and when 

they can license those works exclusively for themselves. BMI’s rate 

court has held that publishers must choose between giving their 

works completely to BMI for all conceivable uses or not joining 

BMI at all. So a publisher that wishes to license one digital service 

on its own without the involvement of BMI must pull out for every 

other use from BMI, thus recreating what BMI does across the 

600,000 businesses we license. 

Publishers should be allowed to decide what businesses and what 

rights they wish to convey to BMI to license, and what businesses 

and which rights they want to license themselves. This will require 

a change to our consent decree. 

Second, we need to be able to license more than just the performing right. Under copyright law, businesses often need multiple 
43 

rights, especially online. Why make them seek out multiple people 

to get those licenses? Give them the expertise and the experience 

and the relationships with both the business world and the creative 

world, the world of music. I believe BMI is positioned to be that 

one-stop shop, a single destination where businesses can secure 

every right they need, and our decree should make that clear. 

Third, the BMI and ASCAP rate courts should simply be modernized. We propose replacing the current court with an arbitration 

model. The result we are seeking would be faster, less expensive, 

and be more market responsive for all parties. 

Finally, the consent decrees should sunset when the basis for 

those decrees no longer exists. As BMI’s relative strength in the 

marketplace is reduced by many new entrants, new participants 

competing with BMI, we should be allowed to operate on behalf of 

our writers on the same terms and conditions as our competitors 

do. 

So in conclusion, BMI songwriters and publishers face a competitive landscape. In order to meet those challenges, all participants 

need to provide greater flexibility and operate more efficiently. 

When songwriters are unable to make a sustainable living, we are 

all impacted. 

The Department of Justice is undertaking a look at our decree, 

and we are very excited and look forward to working with them to 

make those changes. 

On behalf of all BMI songwriters across all 50 States, I thank 

you for your time. 

[The prepared statement of Mr. O’Neill follows:] 
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Mr. COBLE. Thank you, Mr. O’Neill. 

Mr. Hoyt? 

TESTIMONY OF WILL HOYT, EXECUTIVE DIRECTOR, 

TELEVISION MUSIC LICENSE COMMITTEE 

Mr. HOYT. Good morning, Chairmen Goodlatte and Coble, Ranking Members Conyers and Nadler, and Members of the Subcommittee. My name is Will Hoyt, and I am the Executive Director 

of the Television Music License Committee. The TMLC represents 

some 1,200 local commercial television stations concerning music 

performance rights and has, on behalf of its members, been involved in negotiations, arbitration, and litigation for decades with 

the performing rights collectives that represent composers and publishers, ASCAP, BMI, and SESAC. 

Based on TMLC’s decades of experience interacting with ASCAP 

and BMI, and more recently with SESAC, the consent decree restrictions must stay in place, and consideration should be given to 

extending these types of restrictions to any entity that aggregates 

or bundles the power rightfully vested in individual copyright ownership by Congress. 

Local television stations broadcast network, syndicated, and locally produced programs. In most syndicated programs, stations do 

not select or control the music used in these programs but are required to broadcast these programs precisely as produced and recorded by third-party producers, and then required to license the 

public performances embedded in the program. The stations license 

these performances through ASCAP, BMI, or SESAC. Because 

these organizations have separate and distinct repertoires, each 

station must take a license from each PRO. 

Historically, these PROs have only issued licenses that permit 

the use of all of the aggregated copyrights in their repertoire without regard to the number of performances actually made by local 

stations. This is the so-called blanket license. 

Decades ago, ASCAP and BMI entered into consent decrees with 

the Department of Justice in order to settle antitrust actions commenced by the Department. These consent decrees have been instrumental in providing stations the right to reasonable license 

terms in light of the extraordinary market power that ASCAP and 

BMI enjoy by virtue of their aggregation of performance rights and 

insistence on licensing those copyrights only on a collective or bundled basis. 

Independent Federal judges have ruled, for instance, that under 

the ASCAP and BMI consent decrees, a station is entitled to a limited reduction in blanket fees where some of the rights to perform 

music in the station’s programming were licensed directly from the 

copyright owner. These judicial rulings have helped facilitate more 

direct licensing within the industry, and therefore more competition. 

These alternative licensing arrangements and fee structures 

were denounced by ASCAP and BMI, fought for in litigation by stations, and would not have been possible without the consent decree 

provisions. 

As explained in my written testimony, SESAC is not subject to 

these restrictions and is the subject of a class action antitrust suit 
62 

brought by local television broadcasters with support from the 

TMLC. The licensing practices of SESAC demonstrate what any 

performance rights collective or other organizations that aggregate 

copyrights will do without the types of restrictions contained in the 

consent decrees. The Federal court recently denied SESAC’s motion 

for summary judgment in the class action antitrust case brought by 

Television. The judge observed, ‘‘It is undisputed that SESAC possesses monopoly power in the relevant market,’’ and described the 

evidence of actions taken by SESAC in recent years that are specifically banned by the ASCAP and BMI consent decrees. 

Attempts by TMLC to gain access to music performance information maintained by PROs about the music contained in television 

programs have often been denied on the grounds that such music 

information is, supposedly, proprietary. A general policy that requires collectives to publicly release usage information on which 

user fees and royalty distributions are based would help promote 

a more competitive market. 

We stand ready to cooperate with creators, collectives, and other 

users to find common grounds on legislation that would promote 

competitive market values for the right to perform musical works— 

that is, legislation that will fulfill the constitutional provision to 

enhance the public interest. 

Thank you all very much for your time. 

[The prepared statement of Mr. Hoyt follows:] 
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Mr. COBLE. Thank you, Mr. Hoyt. 

Mr. Griffin? You are our clean-up today, Mr. Griffin. 

TESTIMONY OF JIM GRIFFIN, MANAGING DIRECTOR, 

ONEHOUSE LLC 

Mr. GRIFFIN. Excellent. I think I am used to doing that. 

So, my name is Jim Griffin. I am a media technologist, which I 

think means I am the panel’s geek. That is probably appropriate. 

Twenty years ago this coming Saturday, when I was the Director 

of Technology for Geffen Records, we released the first full-length 

song online, Aerosmith’s ‘‘Head First.’’ That was on June 14, 1994. 

So it has been 20 years now. 

And there are so very many issues that are at the forefront of 

today’s hearing. I am fascinated by all of them, but I am going to 

focus on only one issue, and that is the growing need for registries, 

for databases, comprehensive databases of information related to 

creative works, and not just music. So my remarks, while they 

focus on music, really span the field of copyright. I am going to 

make just a half-dozen fundamental points. 

The first point is that our goal should be to make it fast, easy, 

and simple to pay for music, movies, books, art, other expressions 

of ideas, such that the market can work with alacrity and efficiency. If we make it fast, easy and simple to pay, more people will. 

Secondly, we need comprehensive public directors. It is unnecessarily difficult to pay your license from those difficult to identify or 

locate. We must work to record, enumerate, and update public 

databases that get creators paid and works licensed, let alone provide attribution and create an historic record of our culture’s heritage. 

Two years ago, I co-authored a scholarly paper for the Entertainment Law Journal that we entitled ‘‘Rights Unenumerated, Rights 

Disrespected.’’ The title tells the story, and that is all of the story 

you need to know. Without rights enumerated, they are very difficult to respect. 

My third key point is that we should include all creators when 

we build these databases. Performers, featured artists, background 

artists, writers, editors, translators, owners, and all associated with 

the copyrights should be included in the rights to record and remuneration copyright information because they often have remuneration. 

Mr. COBLE. Mr. Griffin, you may want to pull that mic closer to 

you. 

Mr. GRIFFIN. Yes. They often have remuneration and attribution 

rights, and they can also help us elucidate ambiguous information. 

As much as we do with land records, we should welcome any claim 

to any work. 

Well, I guess I have 2 minutes to repeat a lot of it. So I will go 

very, very quickly here for you. And just to repeat that my name 

is Jim Griffin. I am the panel’s geek, the media technologist here, 

20 years—— 

Mr. MARINO. Excuse me, sir. We heard it all. We heard it clearly. 

Mr. GRIFFIN. Gotcha, then. That is just fine by me. 

The fourth key point that I am going to make is that we need 

GUID, and that is Globally Unique Identifiers. No less than a bank 
72 

check or a credit card, we have to have a number for each song, 

each book, each thing that we are trying to track. Simply using the 

title or the artist’s name is not enough. There are so many different 

ways to spell the creator’s name or the title that it makes matching 

extremely difficult. And, yes, it is true, we do rely upon semantic 

matching absent Globally Unique Identifiers. 

Globally Unique Identifiers are easy to explain. They are just 

like the VIN number on a car. Without a VIN number, we cannot 

accurately describe it. And when we have these Globally Unique 

Identifiers, we need to have them in a public database that is accessible to anyone to read, and we do not now have appropriate 

databases for music, photos, graphics, to cite just a few examples 

where it is not done at all. 

This has many impacts. The key concern is that absent the use 

of these unique global numbers, money disappears along its path 

to its intended receiver. Where does this money go? It goes to pools 

of unattributed income divided through market share formulas at 

the organizations that collect the money and not to the specific creator for which it is intended. 

Fifthly, I will say that there is a market solution, and it does not 

require the government to step in to fix it. The government, I 

think, should provide a wholesale core database that encourages 

retail activity at the edge of the market, no different than what 

happens with Internet domain names. There is a wholesale market 

at the center, but it encourages a retail market solution at the 

edge. 

Sixthly, I will finish by saying that the problem is growing exponentially in front of us. In roughly the year 2000, we saw 50,000 

sound recording albums released a year. By today’s standards, we 

go through that in 4 days on Sound Cloud, on January 4th, and 

sometime on January 1st YouTube sees that much content ingested. We have a moving target. 

If we expect respect for rights, rights need recordation and enumeration, and this issue cuts across all concerns. Regardless of how 

you license, you need to keep track of the stuff that you are licensing. Thank you. 

[The prepared statement of Mr. Griffin follows:] 
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Mr. COBLE. Thank you, Mr. Griffin. 

As we examine you all, we try to stay within the 5-minute rule 

as well, so if you will work with us on that. 

I am told that Chairman Goodlatte has a meeting that he must 

attend, so we will let him kick it off. 

Mr. GOODLATTE. Mr. Chairman, I thank you for your forbearance. 

And to all of our witnesses, thank you. 

The clock is ticking. I have four questions for all of you, so that 

is 28 answers. They need to be really short, most of them yes or 

no. 

Number 1. We will start with you, Mr. Portnow. Would a free 

market model be a better alternative than the licensing system we 

have today? 

Mr. PORTNOW. Well, it is a fair market that we need. In other 

words, we have to pay for—— 

Mr. GOODLATTE. Mr. Miller? 

Mr. MILLER. Yes. That is exactly what we are here to ask you 

for today. 

Mr. GOODLATTE. Mr. Israelite? 

Mr. ISRAELITE. Yes. 

Mr. GOODLATTE. Mr. Knife? 

Mr. KNIFE. I think we need a fair market, as Mr. Portnow was 

saying. 

Mr. GOODLATTE. Mr. O’Neill? 

Mr. O’NEILL. Please, yes. 

Mr. GOODLATTE. Mr. Hoyt? 

Mr. HOYT. If you define ‘‘free market’’ as a competitive market, 

yes. 

Mr. GOODLATTE. Mr. Griffin? 

Mr. GRIFFIN. As much as possible, but copyright is tough because 

you start without one. 

Mr. GOODLATTE. Don’t I know. 

Number 2, former Register of Copyrights, Marybeth Peters, once 

suggested a union of music rights so that music services can more 

quickly get started. Would you support such a music rights organization model rather than the current system? 

Mr. Portnow? 

Mr. PORTNOW. A complicated question. It would depend on what 

that looks like. What I would say is that our community cannot 

subsidize the establishment of new businesses, however, off our 

backs. 

Mr. GOODLATTE. Mr. Miller? 

Mr. MILLER. We support anything that revalues the copyright. 

Mr. GOODLATTE. Mr. Israelite? 

Mr. ISRAELITE. That would happen in a free market. 

Mr. GOODLATTE. Mr. Knife? 

Mr. KNIFE. I think we wouldn’t support the addition of other layers of administration, but we do support anything that leads to efficiency in the marketplace. 

Mr. GOODLATTE. Mr. O’Neill? 

Mr. O’NEILL. Yes. 

Mr. GOODLATTE. Mr. Hoyt? 
78 

Mr. HOYT. We don’t see the necessity for a government regulated 

single unit, and we believe that the competitive market will work 

in the long run. 

Mr. GOODLATTE. Mr. Griffin? 

Mr. GRIFFIN. I favor the consolidation that you described. 

Mr. GOODLATTE. All right. Here is the tough one. You have to do 

some mental calculations quickly. 

What is the appropriate split, Mr. Portnow, between a songwriter 

and a performer for their work? And should Congress determine 

the split, or should someone else? And if so, who? 

Mr. PORTNOW. Nobody is getting rich from the new services. We 

have regulatory bodies at this point who are making that judgment. If it is done on a fair market value, then that is what is important, that each of the creators have what is fair in the marketplace. 

Mr. GOODLATTE. Mr. Miller? 

Mr. MILLER. Well, essentially it is two different things. The underlying work is the words and the notes, and then you have a 

sound recording. Mr. Israelite would have to speak to the complications of that. 

Mr. GOODLATTE. All right. Mr. Israelite? 

Mr. ISRAELITE. A free market would answer that question, and 

then the one place where there is a free market for both copyrights, 

which is the synchronization right, it is generally split 50/50. 

Mr. GOODLATTE. Mr. Knife? 

Mr. KNIFE. We are generally agnostic as to what that split would 

be, but we are inclined to move toward a system where we would 

only have to pay one person, and others would define what the 

split is amongst their rights. 

Mr. GOODLATTE. Mr. O’Neill? 

Mr. O’NEILL. I have songwriters who are artists, and I have 

songwriters that are just songwriters, and they argue that point 

often. I think the free market would ultimately determine it. 

Mr. GOODLATTE. All right. Mr. Hoyt? 

Mr. HOYT. If you can create a truly competitive market, that 

competitive market will determine the rates. 

Mr. GOODLATTE. Mr. Griffin? 

Mr. GRIFFIN. I don’t think you should compel a particular solution or percentage. I think you should allow the parties to reach 

an agreement. But if they cannot, there needs to be an alternate 

arrangement such that there is payment. 

Mr. GOODLATTE. Congratulations. We are through 21 of the 28 

questions, and we still have a green light. 

So, Mr. Portnow, this is a little broader, but be quick. What are 

the less visible issues that Congress should be aware of as we review our nation’s music licensing laws? 

Mr. PORTNOW. I think we have our hands full with the ones that 

are visible. I am happy to talk about that privately. 

Mr. GOODLATTE. All right. Mr. Miller? 

Mr. MILLER. The current state of the digital world is so debilitating to the songwriting community that, I assure you, we cannot 

see beyond the obvious. 

Mr. GOODLATTE. Okay. Mr. Israelite? 
79 

Mr. ISRAELITE. There has been quite a bit of focus on the market 

power of Lee and his fellow songwriters, as opposed to the market 

power of the people we license to. So I don’t think that Google and 

Amazon and Apple need protection in their negotiations with songwriters. 

Mr. GOODLATTE. Mr. Knife? 

Mr. KNIFE. I think some of the issues that aren’t being addressed 

are issues regarding the way money flows through the system. 

There are large amounts of royalties being paid by my member 

companies, and yet we still hear complaints from songwriters that 

they are not getting paid. 

Mr. GOODLATTE. Thank you. 

Mr. O’Neill? 

Mr. O’NEILL. With the consent decree from 1941 augmented in 

1966, there are many issues below the surface that we just don’t 

have any time for. 

Mr. GOODLATTE. Well, perhaps my opening this up will cause you 

or others to comment as we move forward. 

Mr. Hoyt and Mr. Griffin? 

Mr. HOYT. If I may, Mr. Chairman. 

In the interest of public policy, I think you have to really look 

at the balance between the benefits of aggregation and the potential elimination of price competition. 

Mr. GOODLATTE. Mr. Griffin? 

Mr. GRIFFIN. I think that it is a very difficult question to answer 

definitively, and I will simply say that we have to maintain some 

kind of monitoring in order to ensure balance. 

Mr. GOODLATTE. Going back to the point in your statement. 

Mr. Chairman, thank you for your forbearance; 28 answers in 5- 

and-a-half minutes is pretty good. 

Mr. COBLE. You almost prevailed over the illuminating red light, 

but you barely made it. 

Mr. GOODLATTE. Thank you. 

Mr. COBLE. The distinguished gentleman from New York, Mr. 

Nadler, is recognized for 5 minutes. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Portnow, you endorse a comprehensive, unified legislative 

approach to music licensing. What are the advantages to a comprehensive approach? Are there harms to doing it piecemeal? And 

what are the key elements of a meaningful comprehensive bill? 

Briefly, please, because I have a lot of questions. 

Mr. PORTNOW. Well, I think we see the results of the band-aid 

approach. Over the years we have cobbled together these various 

different rights from different generations, and when we arrive at 

where we are today, they just don’t work. To do it piecemeal at this 

point when we have a great opportunity to make a difference, you 

hear everybody on this panel clearly saying that we have to make 

some changes. I have heard most of you saying that some changes 

need to be made. We need to grab that opportunity. It is not certainly going to be easy. It is complicated. But that is really the way 

to go. 

Mr. NADLER. Are there harms to doing it piecemeal? Why do we 

need a comprehensive approach? 
80 

Mr. PORTNOW. Comprehensive is the way to go in the long run 

because the piecemeal has not served us well. 

Mr. NADLER. Okay. Thank you. 

We also sometimes hear that a royalty for performing artists 

from AM/FM radio would benefit the biggest of stars, not smaller 

artists. What is your response, and are there studies out there 

showing this? 

Mr. PORTNOW. The performance right, the way it would work is 

that it would go to the artist, and the artist, whether he is a large 

artist or a small artist, really is not relevant. The fact is that when 

somebody’s work is played on the air and they are the performer, 

they ought to be paid. There is no example in American history of 

business that profits from the works of others without paying 

them. 

Mr. NADLER. Well, actually, there is, but it is before the Civil 

War. 

Mr. Israelite, within the compulsory music licensing system, one 

goal is to mirror the free market and maximize fair market value. 

How do you envision achieving that for all music creators? And can 

we do it in a comprehensive fashion so that we don’t leave anyone 

behind? 

Mr. ISRAELITE. So about a quarter of our industry is regulated 

by a compulsory license with a bad rate standard, Section 115. Our 

first preference would be to get rid of the compulsory license. We 

don’t think the government should have any business in setting 

prices for songwriters. But the next best thing and the thing that 

perhaps is more doable is to at least give us a rate standard of willing seller-willing buyer. If that were the case, I can promise you 

that on a $1.29 download, a songwriter would make more than 9.1 

cents. So in the absence of being given a free market opportunity, 

at least let the judges that set our rates try to approximate what 

would happen in a free market. 

Mr. NADLER. What did you say that 1909 2 cents was worth 

today? 

Mr. ISRAELITE. With inflation it would be about 50 cents. 

Mr. NADLER. But it is only 9 cents. Thank you. 

Mr. ISRAELITE. It is 9.1. 

Mr. NADLER. Okay. Thank you. 

Mr. Knife, under current law there is a different rate setting 

standard that is used to establish rates for cable and satellite than 

for Internet radio. How has this impacted your members? 

Mr. KNIFE. Well, clearly the biggest issue, the biggest way it has 

affected them is that they pay considerably higher rates. The willing buyer-willing seller standard has led to higher rates than the 

801(b) standard has led to. 

Mr. NADLER. So currently some of your competitors have an advantage over you, and creating parity would at least level that 

playing field? 

Mr. KNIFE. Absolutely, sir. Yes. 

Mr. NADLER. And why should we do the 801(b) instead of the 

willing seller-willing buyer? 

Mr. KNIFE. I think there are a couple of reasons. Probably the 

first and foremost is that the willing buyer-willing seller standard 

is relatively new. In the short tenure of its application, it has re-
81 

sulted in some disastrous results that this esteemed House has 

seen fit to intervene on. Whereas the 801(b) standard has been in 

existence for a far longer period of time and hasn’t resulted in any 

difficulty. 

Mr. NADLER. I would quickly ask if Mr. Israelite and Mr. 

Portnow agree with that statement about the impact of the willing 

buyer-willing seller standard, quickly. 

Mr. ISRAELITE. The people that use songs may find it offensive 

to pay a fair market rate for them. But the fact that that would 

be a newer standard is no argument why a songwriter doesn’t deserve a fair market rate. 

Mr. NADLER. Okay. Thank you. 

Back to Mr. Knife, given potentially thousands of rights that 

must be cleared for a single song to come to production, in the free 

and fair market system you all favor, how do we make this work? 

In a free and fair market system, how do you deal with thousands 

of rights for a particular song? 

Mr. KNIFE. Right. Well, I think those issues were addressed a little bit by Mr. Hoyt and Mr. Griffin. We have to balance the interests between an efficient marketplace, which might include the collectivization of rights licensing, with fair royalty rates. So we have 

to kind of balance those issues and make sure that we are controlling those monopolized interests. 

Mr. NADLER. Thank you. 

Mr. Griffin, my last question, obviously. You said that it is unnecessarily difficult to pay your license, so we must work to create 

a comprehensive registry system. 

Mr. GRIFFIN. Yes. 

Mr. NADLER. My first question is, do you mean going forward or 

going backward? How much would such a system cost? How long 

would it take to set up? Who would pay for it? And why? 

Mr. GRIFFIN. Users should pay for it. It doesn’t cost anything because it is profitable. If you look at the Internet domain name—— 

Mr. NADLER. It wouldn’t cost anything to set up this massive system? 

Mr. GRIFFIN. Well, you already have a cost at the Copyright Office. My point is that if you make it a market-based system, you 

invite the GoDaddy’s of the world in to help you fill and populate 

that database, and they make money doing so. So if you build a 

market-based system of registration, I believe you will have the 

outreach—— 

Mr. NADLER. So it pays for itself. How long would it take to set 

that up do you think? 

Mr. GRIFFIN. I think it could be done within a year. 

Mr. NADLER. And are you talking about going forward only or 

going back? 

Mr. GRIFFIN. It needs to go forward and backwards, and that allows anyone to register any claim related to—— 

Mr. NADLER. And you think that you could register every song 

going back to the song of Miriam and the Bible quickly? 

Mr. GRIFFIN. No problem with that. I think truly it should happen that we register our heritage—— 

Mr. NADLER. Let me just ask, does anybody else want to comment on the practicality of that? 
82 

Mr. HOYT. I would just say that I think you can probably do it 

prospectively, but doing it back years I think would be extremely 

difficult. I think you have to leave the current system in place. 

Mr. NADLER. Mr. O’Neill? 

Mr. O’NEILL. There is a Global Repertoire Database that was 

contemplated to be built overseas that had cost estimates of between $30 million and $100 million, and it just fell apart after 3 

years of service. 

Mr. NADLER. Okay. Thank you very much. My time has expired. 

Mr. COBLE. I thank the gentleman. 

Mr. Israelite, is the Collins-Jeffries bill a comprehensive solution 

to your problem, or do you see it more as a first step? 

Mr. ISRAELITE. It is a very important first step. So for the 50 percent of our industry that is regulated by outdated consent decrees 

from World War II, it would at least allow the Federal judge that 

sets the prices for songwriters to consider evidence in the marketplace. That is not a solution, but it is an improvement. 

On the mechanical side, while it doesn’t set us into a free market, it at least lets the three judges that set the price for songwriters for reproductions try to approximate what would happen in 

a free market. So it is a very important first step. 

Mr. COBLE. And how does it affect over-the-air and digital broadcasters? 

Mr. ISRAELITE. Well, for digital broadcasters, the mechanical part 

of it wouldn’t really affect them at all. And for the other part of 

the bill that deals with performance, the truth of the matter is that 

all it would do is allow the parties to make arguments to the Federal judge. So we think that it is not really a very significant burden on any broadcaster to have to deal with the evidence of what 

rates would be in a free market when arguing to the judge that 

eventually is going to set the rates anyway. 

Mr. COBLE. I was going to discuss the split, but I think you all 

pretty well responded to that with the Chairman’s comment. 

Mr. Griffin, would you elaborate on the importance of fair market 

value for all music performances? I think you all pretty well did 

that close to unanimously in response to Chairman Goodlatte’s 

question. 

Mr. GRIFFIN. It was hard for me to hear the end of your point. 

Mr. COBLE. Elaborate on the importance of fair market value for 

all music performances. And do you feel that royalty standards are 

harmonized or need some massaging? 

Mr. GRIFFIN. I do think that music should receive its fair market 

value. There is no question about that. And I think it is essential 

that in order to do so, we track music and its owners such that we 

can identify them and those who participated in them so that we 

can get them the money they deserve that the market provides. 

Today that money often disappears on its way to the creator. 

Mr. COBLE. I thank you for that, sir. 

Mr. Miller, I am going to put these three questions to you that 

may or may not be applicable to today’s hearing. 

Do you know bluegrass? 

Do you know Tom T. Hall? 

Can you play the fiddle? [Laughter.] 
83 

Well, that is ironic. I do. I grew up in Kentucky playing the fiddle. I came to Nashville as a fiddle player. My first job in Nashville 

was playing fiddle for Tom T. Hall. I lasted 3 days and he fired me. 

[Laughter.] 

Mr. COBLE. So I take it that you do indeed know him. [Laughter.] 

Mr. MILLER. Very well, sir. Thank you. [Laughter.] 

Mr. COBLE. I think the Chairman pretty well touched on the 

other questions that I had. 

Thank you for your response, Mr. Miller. I will tell you, I will 

identify and divulge the identity of the person who asked that 

those questions be presented to you. 

Gentlemen, thank you again. 

I now yield to—who is next in line?—Ms. Chu for 5 minutes. 

Ms. CHU. Thank you so much. 

As co-chair of the Congressional Creative Rights Caucus, I firmly 

believe that all artists should be fairly compensated across all platforms. That is why I am a co-sponsor of both the Songwriter Equity 

Act and the RESPECT Act. To me, it is just not fair for songwriters 

to be paid, on average, 8 cents for every 1,000 streams of their 

songs on digital radio. It is not fair for legacy artists who own pre1972 sound recordings to be paid nothing for continuous streaming 

of their songs when entire digital stations are dedicated to the 

music of the ’40’s, ’50’s, and ’60’s. And let’s not forget that recording artists are paid nothing for countless plays of their songs on 

AM/FM radio. 

Last week I hosted a Music Leaders Roundtable in my district 

where I heard from local songwriters, composers and recording artists about the challenges they face trying to make a living in today’s music market. One of the most legendary songwriters there, 

Lamont Dozier, told me about the challenges that he has having 

to work at age 72 because he is paid very little for songs that he 

has written that play on digital radio despite the fact that he has 

written and produced over 54 number-one Motown hits and is also 

a number-one Billboard recording artist. 

So today’s hearing comes at a crucial time for music creators. 

These royalty disparities are in need of attention and ultimately a 

resolution so that we can continue to have a vibrant environment 

that fosters creativity and growth. 

So I would like to ask Mr. Israelite and Mr. Miller, because of 

a statutory mandate, songwriters and publishers are forced to 

grant a license to anyone who wants to use their musical work for 

reproduction and distribution in exchange for paying a royalty set 

by the government, and the rate was first set by Congress in the 

early 1900’s at 2 cents per song. Today, in 2014, it remains painfully low at 9.1 cents per song, and let’s not forget that this 9.1 

cents is split by the songwriter and publisher. 

Let’s assume the status quo prevails. What does the world look 

like in 5 years for music publishers and songwriters? And how can 

songwriters who are not also artists make a living off of the very 

low rates that accompany streaming services? 

Mr. ISRAELITE. Well, in 5 years, if I am fortunate enough to still 

represent songwriters and publishers, what I fear is that I wouldn’t 

have a Lee Miller sitting next to me, because he wouldn’t be able 

to make a living as a songwriter. It is simply inexcusable that you 
84 

can’t at least get a fair market rate for what the property value is 

in a song when someone purchases a song. 

So we are very thankful for your sponsorship of the Songwriter 

Equity Act. It is a very important step toward getting to a place 

where a songwriter can still make a living when successful. 

Ms. CHU. Mr. Miller? 

Mr. MILLER. Well, the reality is that our Songwriter’s Association 

looks at the numbers, that we have lost 80 to 90 percent of the 

songwriters over the last 12 years. Five years is a long time, so I 

don’t know. I fear what that would mean. Certainly, if we do have 

status quo and we ease more into a streaming model, it seems as 

catastrophic as we would assume that it is. 

What is interesting is my wife told me this morning that late last 

night my 11-year-old, Noah, asked what happens after today. Are 

all of Daddy’s problems solved? Which caused my wife to call and 

say I should understand more than I do, but answer that question, 

what happens after today, does it get better. And to her I have to 

say, I don’t know. It is a hard process, obviously a complicated 

process. I am not the legal guy here. I look for words to rhyme with 

‘‘love’’ every day. Until yesterday, I had never used the word ‘‘omnibus,’’ okay? [Laughter.] 

And that is the truth. But I will say this, I hope that you will 

take all of the facts into consideration and understand an American 

profession is in a lot of trouble. I mean, we are hurting. 

Mr. ISRAELITE. I will give you a shocking statistic about the low 

rates paid by one particular company, Pandora. I believe one of the 

founders has been a witness before this body. Last year, that 

founder cashed out more in his stock ownership than every songwriter in the United States combined was paid from Pandora, and 

that just speaks to how low the rates are because we don’t have 

a right to negotiate the value of them in a free market. 

Ms. CHU. And, Mr. Portnow, could you talk about the role of producers and engineers in creating music? Why is it important that 

we highlight their contributions as we review the licensing scheme? 

Mr. PORTNOW. Sure, happy to. I know a little bit about producers 

and engineers because when I was a young man in a band and 

playing music, I had the experience of having a recording contract 

and having a producer in the studio. And then I became one. I was 

a record producer on staff for RCA Records for years. 

The producer is more analogous to what we would call a director 

in the film and television business. So he or she is the person that 

puts it all together, everything from booking the studio to finding 

the songs to creating the sound and the environment of those recordings, and we wouldn’t have recordings without them. They are 

not currently covered in the statute, and that is important because 

they too need to be compensated fairly for the work that they do. 

We are in negotiations from the Recording Academy with our 

friends at Sound Exchange. We think we have some good beginning 

solutions for that, and happy to talk about that further beyond the 

hearing today. 

Ms. CHU. Thank you. 

I yield back. 

Mr. COBLE. The gentle lady’s time has expired. 

The gentleman from Texas. 
85 

I stand corrected. The gentleman from Pennsylvania, Mr. 

Marino. 

Mr. MARINO. Thank you, Chairman. 

I normally don’t do this, but I have a brief statement that I want 

to make before I ask a couple of questions. 

Although there are a number of issues to work through in this 

copyright review process, music licensing may be one of the most 

complex sub-issues. I know firsthand because I have been meeting 

with all the stakeholders involved in this in D.C., New York, Los 

Angeles, and most importantly in my district. One thing is for certain, no one is happy. 

Today, the current laws and consent decrees that stakeholders 

must operate under to negotiate their copyright licenses and royalties are simply not working. I have also found this to be an incredibly divided group of stakeholders who all seem to show some opposition to find commonalities to work toward a solution, and it is 

high time that we need to work harder to finding the middle 

ground. 

Omnibus pieces of legislation—and maybe you can use this as 

some words in your lyrics, Mr. Miller—omnibus pieces of legislation 

tend to omit all of us. You see, I put that little line in there toward 

the end. [Laughter.] 

Many of you have heard me say this, but when it comes to creating a solution, those of you in the private sector need to get more 

involved in the discussion for a solution, because if you can’t come 

up with anything, you are really not going to like what we legislate. 

I would like to see all sides of the music licensing issue come to 

the table to come up with something that works for all industries 

involved, as well as for consumers, so that we don’t have to revisit 

this time and time again, and I look forward to working with you. 

And I will say this in the beginning. If any of you—many of you 

have been coming to see me and talking about the issues, and if 

you care to continue that, my door is always open. 

Mr. Israelite, I have a question for you, please. You stated in 

your testimony that your clients’ revenues are significantly below 

what they would be in a free market. Can you elaborate on how 

you came up with your figures and why you believe in getting rid 

of Section 115 and moving to a free market would be the best solution? 

Mr. ISRAELITE. Thank you for the question, and I completely appreciate your opening comment, and I would point out that when 

a songwriter has been underpaid for over 100 years, any solution 

that involves fair market compensation is going to be opposed by 

anyone who pays for music. So it is understandable why there are 

such deep divisions. 

The reason why we believe that a fair market standard would 

lead to a significant increase in songwriter compensation is that if 

you look at the 75 percent of our industry that is regulated, for the 

50 percent that is the consent decree with performance right, we 

know that the consent decrees lead to significantly lower rates than 

what would happen in a free market. We had a recent window of 

opportunity where there were free market negotiations for very 
86 

similar radio services with Apple than happened with Pandora, and 

the result was staggering. 

On the mechanical side, the difference between a willing sellerwilling buyer standard and an 801(b) standard, the Copyright Royalty Board has spoken to that issue in the past, and they have indicated that there is a significant gap between the two standards. So 

just by allowing us to have fair market rates in that 75 percent of 

our industry, we know it would lead to higher rates. 

And if you look at the 25 percent of our industry that is unregulated, the rate structures are significantly higher. 

So I think that there is no doubt that would happen, and it is 

understandable that anyone who has been benefitting from this 

government regulation by not paying songwriters fairly would fight 

hard against any change that would lead to fair market compensation for songwriters. 

Mr. MARINO. Mr. Knife, although some stakeholders are urging 

we move to a free market system, I know others are very leery of 

this. Can you explain why in this particular industry the free market approach might be questionable? 

Mr. KNIFE. Again, I think it has to do with the idea of some of 

the principles that I announced. We are talking about a marketplace that needs transparency and efficiency. A free market system 

would necessarily not be very efficient. When Mr. Israelite talks 

about the synchronization license, he is not talking about licensing 

synchronization rights on a wholesale basis of 30 million songs or 

more at once. Synchronization licenses happen individually. A song 

gets licensed into a movie or a television program, and it is a rather slow and laborious process. 

So we have to balance the ideas of making sure we have an efficient marketplace that might include the collectivization of rights 

licensing and making sure that that collectivization isn’t used as an 

undue market power. 

Mr. MARINO. I yield back the remainder of my time. 

Mr. ISRAELITE. If I could quickly respond to that, because while 

many synchronizations are done on an individual basis, that 

premise is completely wrong. The largest music acquisition source 

on earth is YouTube. YouTube needs a synchronization license. It 

is completely licensed. It happened in a free marketplace. And the 

rates, by the way, are significantly higher than other forms of competitive services that are regulated by consent decrees and compulsory licenses. 

Mr. COBLE. The gentleman’s time has expired. 

Mr. Hoyt, did you want to respond briefly? 

Mr. HOYT. Yes, quickly. I would just say that our experience in 

television is that when you do locally produced programming in 

what we would consider a relatively free market, a competitive 

market, those rates—we think we have a lot of evidence that those 

rates are much lower than they are coming from ASCAP, BMI and 

SESAC. 

Mr. COBLE. The gentleman’s time has expired. 

The distinguished gentleman from Florida, Mr. Deutch, is recognized. 

Mr. DEUTCH. Thank you, Mr. Chairman. 
87 

Mr. Knife, you just said that a free market system would not be 

efficient. The system that we have now, it seems to me, is very efficient. It is efficient at putting an awful lot of songwriters out of 

work. That is the system that we have now. 

And just before I get into my questions, Mr. Miller, I have a 

question for you. We talk a lot about percentages; there are 90 percent fewer songwriters. How many songwriters were there 10 years 

ago, 20 years ago, versus today? How many Americans had to give 

up their profession because of the system as it has evolved? 

Mr. MILLER. We can only speak to Nashville, which is a very 

tight community, so we have the luxury of kind of knowing everybody to some degree. We certainly figure based on prior to consolidation of major publishers. You can kind of quickly look at the possibility of 3,000 or 4,000 writers making a living doing this, down 

to 300 or 400. 

Mr. DEUTCH. Which I think is a really important point for us to 

remember as we have this debate. 

The hearing is really important, and the issues are complex, and 

it is hard for us to figure out how to go forward without picking 

winners and losers. But I was intrigued, Mr. Knife, by what you 

said earlier. You said—and I think we would all agree—no one 

would develop this system if we were starting from a blank slate. 

That is absolutely right. 

You also spoke about the need for a level playing field, which 

again I think is what is really driving or what should be driving 

this whole debate, this whole process that we are engaged in. So 

if we start with that, what is a level playing field, I just would 

point out a couple of things in the status quo that I think are unfair and don’t represent a level playing field. 

Maintaining different performance rights standards for terrestrial radio and digital and its digital competitors seems unfair both 

to the innovative digital services and to the performers whose 

music is no less valuable when played over the air. That strikes me 

as not a level playing field. 

In the same vein, holding that music recorded before 1972 should 

be treated differently than more recent music is disrespectful to the 

classic artists who have contributed so much to America’s musical 

legacy. But most importantly, that makes no logical sense to defend 

differentiating the two. That is not a level playing field. 

And I would also agree with Mr. Israelite’s point that songwriters are too often given the short straw in this. I am proud to 

serve with Marsha Blackburn as co-chair of the Songwriters Caucus, and I think the Songwriter Equity Act that would allow a rate 

court to consider other royalty rates for establishing the digital rate 

and adapting a fair rate standard, those are means, again, to leveling the playing field. What we have now isn’t what we would 

have started with, but if ultimately the goal is to level the playing 

field, then let’s actually talk about how we do that. 

Mr. Portnow, you ran through some of the unfair arguments that 

have been used to defend the status quo on performance rights 

versus terrestrial radio. For me the question isn’t do we make the 

change, but can we really defend the system without making that 

change. 
88 

And again, Mr. Knife, I go to you. Is it fair to your members, who 

are mandated to pay for the music that they play, that broadcasters don’t pay for the music that they play? 

Mr. KNIFE. I think it is probably not fair as a general principle, 

but I would leave it to this body to determine who should be paying 

royalties and who shouldn’t while we are leveling the playing field. 

And, yes, we are asking for that kind of comprehensive review. 

Mr. DEUTCH. Because it certainly seems like we are saying you, 

new technology, you pay for both rights because you are just starting out, but a service that does the same thing over terrestrial air 

instead of the Internet, the status quo there is sacrosanct, so we 

shouldn’t change it. That, I think, is my problem with so much of 

this debate. There is this sense that because things are the way 

they are, that makes them so, that makes them sacrosanct, that is 

why broadcasters shouldn’t have to pay a performance right, that 

is why we continue to rely on decisions from the 1940’s and as 

amended in the 1960’s. Those are the issues we have. 

Mr. Portnow—actually, Mr. Miller, let me just go back to you, because I hate to think that you would spend a second after this 

hearing trying to rhyme anything with ‘‘omnibus.’’ [Laughter.] 

Mr. DEUTCH. And let me tell you, there is nobody who would buy 

that record, listen to that record, least of all Members of Congress. 

But let me just ask you, you talked about what this has meant 

in Nashville, and I thought the story that you told about the exchange with your wife was really powerful as well. Can you just 

give a little more of what this whole debate actually means to you 

and the thousands of Americans who can no longer earn a living 

because of this system that needs to be changed? 

Mr. MILLER. Well, the competition to write a hit song is tough 

enough. I mean, it is hard to write a song. I mean, it takes us a 

long time to learn how to do this. So we understand that we are 

competing against the best in the world, and that is fine, because 

we go in every day and we learn our craft and we slug it out. 

The problem that we are up against now where, even if we do 

have a hit song, it may not mean anything, but yet millions and 

millions and millions of people are consuming that song and acquiring that song and listening to that song and singing that song 

at the weddings and at their kids’ graduations, I am not really sure 

what we are supposed to do with that, and I am very perplexed at 

the idea that we need to help out the entrepreneur who wants to 

start a business by giving him the product. I suppose if we gave 

the general store owner, if we asked the farmer to give the corn 

and the potatoes for free, he would have more luck succeeding in 

his business, but I am not sure what that means to the farmer. 

From the way we look at it, we are running out of farmers, you 

know. So that part of it is very frustrating. 

On the other hand, all of my colleagues are right now sitting in 

a room not thinking about any of this. They are concentrating on 

how to write the best song they possibly can to get on the album 

to get on the radio. Really, first and foremost, that is what we 

think about. We don’t think about who is going to pay or who is 

going to cut it. All of our energy goes into writing the song because 

it is still art. 

Mr. DEUTCH. Thank you. 
89 

Thank you, Mr. Chairman. 

Mr. KNIFE. If I could take just a moment to respond to the point 

about songwriters. 

Mr. COBLE. Very briefly, Mr. Knife. The time is expiring, but go 

ahead, very briefly. 

Mr. KNIFE. Thank you very much, sir. I was just going to say 

that we keep hearing that there are less and less songwriters based 

on the economics of this environment, et cetera, but I think in 

BMI’s own press releases they have indicated that their membership has increased by 100 percent between 2003 and 2013. I think 

ASCAP has similar growth figures. So I am not sure where the 

idea that we are losing songwriters is coming from. 

Mr. O’NEILL. May I respond to that? 

Mr. COBLE. Go ahead. 

Mr. O’NEILL. Yes, we have grown in the number of songwriters. 

The advent of the Internet has helped us sign songwriters online 

more than ever before. The question of how many songwriters are 

still getting paid, is that number growing, and that is not growing. 

Mr. COBLE. I thank the gentleman. 

The gentleman’s time has expired. 

The gentleman from Texas, Mr. Farenthold. 

Mr. FARENTHOLD. Thank you, Mr. Chairman. 

I would like to take a minute just to say a word about our previous questioner was asking just because things are the way they 

are. Well, businesses count on things being the way that they are. 

The local radio station is counting on the things that will continue 

to be the way they are when they decide whether or not to give the 

morning D.J. a raise or go out and buy a new transmitter. So as 

we change these rules, we have to be very leery of the fact that different companies throughout the country have invested and made 

business decisions based on these rules. So we have to really make 

a clear and convincing case for that. 

Now I am going to get off my soapbox. Well, maybe not. I am 

going to ask Mr. Portnow a question. 

I am a former broadcaster, so I am pretty simple—pretty sympathetic—I am pretty simple and sympathetic to the fact that it is a 

tough struggle for broadcasters now. The same forces that your industry is struggling with in new distribution mediums and figuring 

out how to get compensation, there is no way a radio station is 

going to get compensation from Pandora. So they are facing a 

tough challenge. 

You list a litany of reasons why they are not different from some 

of these, but I do point out that there is an historic—radio is highly 

regulated, a limited resource, limited bandwidth, while you have 

basically unlimited room for expansion in new programs digitally. 

So I just wanted to point out there is a uniqueness there and a synergy that radio stations have provided in allowing new music to be 

exposed. It is different now when you can customize almost down 

to the song what you listen to on the Internet. It used to be the 

record labels and music publishers would pay folks to try to get 

radio stations to play songs. So we have to keep that history in 

mind. 

But anyway, I want to go on now to BMI. If we allow publishers 

to choose what they license to BMI, how do I know what I am buy-
90 

ing from BMI, what license I have and what I don’t have? In a recent ASCAP Pandora trial, a number of individual publishers withdrew licensing rights for Internet services in an attempt to negotiate more favorable royalties outside the consent decrees. When 

Pandora refused the higher rates proposed by two of the publishers, they asked for a list of work owned by those publishers so 

they could pull them from their playlists. 

The publishers and ASCAP—obviously your competitor—refused 

to provide a list of such works. This left Pandora with the option 

to pay the price proposed by the publisher, not pay the price and 

face infringement litigation, or stop playing all music altogether. 

How do you answer that when you are asking for some change 

there and we deal with this issue? 

Mr. O’NEILL. Thank you, Congressman. I am a former broadcaster also, and I understand where you are coming from. Maybe 

that is why I am seated between Mr. Hoyt and Mr. Knife, now on 

both sides of the equation. 

I can’t really comment on what was done by my competitor 

ASCAP. I can comment on what BMI has done. I just got done with 

testimony in our Pandora trial, and the same question was raised 

to me, and we provided the information where necessary and where 

our customers told us to provide the information. 

As far as providing the information or transparency, as we like 

to call it, the Department of Justice, their review of our consent decree, this is a big subject that they are looking at, and we are willing to explore that with them. We have spent 75 years at BMI 

building that business, that expertise, that data, and we like transparency. Our writers demand transparency. That is how we pay 

them. 

What I don’t think is appropriate is to give that same data that 

we have spent years and years gathering, to give it to our competitors to build their business, and I think we would fight against 

that. 

Mr. FARENTHOLD. And how do you feel about Mr. Griffin’s GUID 

proposal? It used to be you could go look on the label of a record 

and it would say ASCAP, BMI, it would have the artist’s name 

printed right there. A lot of times in digital stuff, this isn’t even 

available, even in the metadata. 

Mr. O’NEILL. I think it has merit. BMI and ASCAP have recently 

formed a venture called MusicMark where we are reconciling our 

two databases, along with marrying it up to our partners up north 

in SOCAN, Canada, the performing rights organization there, to 

get authoritative data. So I do think the industries are moving in 

that direction. 

Mr. FARENTHOLD. Mr. Griffin, I really do like the idea. But do 

you really think it could be done in a year? 

Mr. GRIFFIN. Sure. Here is the irony. We already have the 

GUIDs. We are not recording them. We are not putting them in a 

database. We are not making them available to the public. And 

why? What kind of market could we possibly have without the information? It would be like a stock exchange without the listings. 

Mr. FARENTHOLD. I see my time has expired, but I appreciate it. 

Mr. GRIFFIN. I also want to say Mr. Israelite said YouTube is 

completely licensed, and it is not. It is licensed as regards its mem-
91 

bers, but it is not licensed as regards small, independent, mediumsized players who YouTube can’t find to clear the content, and that 

is obvious because the content that has no ads wrapped around it 

is all unclear, because they can’t wrap ads around that which they 

haven’t cleared, so an enormous amount of their content is unlicensed precisely because they cannot find the owners. 

Mr. HOYT. Could I make a comment on Mr. O’Neill’s answer? So 

that you understand, we have been trying to get transparency from 

ASCAP, BMI and SESAC for years. We cannot get that transparency. They refuse to give information to us. It is my view that 

until that information is made public, all of the details made public, you cannot attain a competitive market. 

If you noticed, Mr. O’Neill’s answer was ASCAP, SOCAN, and 

BMI. That is not the users. We don’t get to participate in that. We 

offered to invest in a series of trying to get more QC information, 

which is what we have for television. They refused to allow us to 

participate in that whole project. 

So to the extent that there is a transparency issue, I think it is 

as much the collective’s as it is anybody else. 

Mr. COBLE. The gentleman’s time has expired. 

The distinguished lady from California, Ms. Bass, is recognized. 

Ms. BASS. Thank you, Mr. Chairman and Ranking Member. 

I would like to address the Justice Department’s announcement 

that it will review the consent decrees that govern the PROs. I 

know that some of you feel that these consent decrees are antiquated, and some think that we should get rid of them altogether. 

At the same time I also recognize, as indicated by the judge’s decision in the recent Pandora ASCAP case, that there are some who 

feel that these consent decrees are in place for good reason and 

should remain. 

Regardless, I think we have to ensure that the music marketplace is sustainable and works for creators, platforms, and consumers. So as the DOJ conducts its review, I wanted to know if the 

panel can tell me what it wants to see from the DOJ and what it 

thinks they can do to ensure that songwriters are protected, the legitimate marketplace is protected, and the system works for all 

parties. I know it is a lot to ask, but maybe we could just kind of 

briefly, in my time, go down the list. 

Would you like to begin, Mr. Griffin? 

Mr. GRIFFIN. I am going to defer because this isn’t my issue as 

much. 

Ms. BASS. Okay. 

Mr. HOYT. I think that if you look at the most recent SESAC 

antitrust class suit against SESAC brought by television broadcasters, you will see the absolute necessity of having consent decrees in place. What happens under the current practices and law, 

the collectives are allowed to aggregate copyrights, individual copyrights, and then refuse to sell them in any other way than on a 

blanket basis. 

So we have a significant problem in modifying the consent decrees because we think in the long run we will run into major antitrust problems. 

Ms. BASS. Okay, thank you. 
92 

Mr. O’NEILL. I believe that there are many things that need to 

be addressed in our consent decrees. I actually believe the consent 

decree should be sunset and done away with permanently. 

Mr. Hoyt earlier commented on a direct license in a marketplace 

that led to lower rates, but it only led to lower rates because the 

publisher or the writer still didn’t have the power to say no. They 

still weren’t able to get outside of BMI’s regulatory framework to 

see what a free market could have negotiated, would have negotiated, because that buyer, if they didn’t agree to the price, could 

have still gone back to BMI. That was the ceiling. They could have 

never gone below the ceiling or above the ceiling. 

That is the framework that we are trying to do. We are trying 

to give the marketplace, the songwriters and the publishers, the 

power to go out and make their own deals and to see what a true 

free market will hold. 

Ms. BASS. Thank you. 

Mr. Knife? 

Mr. KNIFE. It is still early. We are still evaluating what our position might be with regard to the DOJ’s announcement. But I think 

it is safe to say that when you have a marketplace that is entirely 

controlled by three players, two of them being rather significant, 

some type of control is necessary. So I think we would probably 

pursue the application of the consent decrees in some form. 

Ms. BASS. Mr. Israelite? 

Mr. ISRAELITE. These are the longest running consent decrees in 

existence. In 1979, the Justice Department adopted a policy of no 

longer having consent decrees that don’t sunset. This decree never 

sunsets and hasn’t since 1941. 

To the point of market concentration, one of the most important 

issues in this question is whether a rights holder can pull things 

out of the collective and go into a marketplace, and we are being 

told no. That is completely antithetical to the purpose of the consent decree. So they want to complain about having three powerful 

organizations, but they want to deny the ability of a rights holder 

to leave them and further take the market into a more decentralized way. 

So there are so many things that should be changed. There is no 

reason why ASCAP and BMI shouldn’t be able to license different 

types of rights. There is no reason why a rights holder shouldn’t 

be able to leave for a limited purpose if they choose so. And the 

most egregious thing is there is no reason why a licensee should 

be able to use the music by simply asking without there being even 

an interim rate set, which takes all of the incentive out of negotiating a rate. 

Ms. BASS. Okay, thank you. 

Mr. Miller? 

Mr. MILLER. Every argument and point that I have made today 

is due to unnecessary government restrictions on the songs that I 

create. I believe DOJ is decades overdue in making some of this go 

away. 

Ms. BASS. Thank you. 

Mr. Portnow? 

Mr. PORTNOW. What I think is clear is that consent decrees, as 

currently written, don’t result in fair outcomes for songwriters and 
93 

should be modified, and the Recording Academy will be filing all 

comments directly with DOJ on this issue. 

Ms. BASS. Okay. In my time left, does anyone else want to respond? 

Mr. GRIFFIN. I will add, because I deferred, that I think this is 

a situation much like that that is sports based, when John Kennedy introduced the Sports Marketing Act of 1961 that allowed 

baseball, basketball, football, hockey to work together—owners, referees, players—in order to license. We face an extraordinary time 

here when people are sharing the content in the main to get 

around licensing, and where people are sharing I think it is appropriate to allow the industry to work together to address that for licensing purposes. 

So I would lean toward more freedom as regards to those consent 

decrees. 

Ms. BASS. Thank you. 

Mr. ISRAELITE. And please don’t forget, the licensees are the ones 

that benefit the most from the collective license. So while they may 

complain about having to negotiate its value, the truth is that licensees are the ones that benefit the most from having the ability 

to have the licenses collected. 

Mr. HOYT. I think there are two different opinions on that. I will 

leave it at that. 

Ms. BASS. Okay. 

Mr. MARINO [presiding]. The Congresswoman’s time has expired. 

Thank you, Congresswoman Bass. 

The Chair now recognizes the gentleman from Georgia, Congressman Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 

Mr. MARINO. Doug. That is what I was going to call you. 

Mr. COLLINS. I answer to one of them, any of them. Thank you 

so much. 

As many in this room know, this is something that is close to my 

heart, and also the work that we are doing, and I appreciate everyone on this panel. But I do have some questions, and I want to go 

back because, in the end, before I ask any questions, my views on 

this come from one thing. 

When we talk of intellectual property, when we talk of musical 

rights, we talk about a dream, a hope, or an emotion, and those 

are all valuable property rights, and they need to be compensated, 

and they need to be compensated fairly in a place in which we can 

do that. 

The numbers in Mr. Israelite’s written testimony point to the 

fact that digital music services pay songwriters and publishers significantly less than they pay for the sound recording. 

Mr. Knife, do you think that a sound recording is 9 to 12 times 

more valuable than a musical composition? 

Mr. KNIFE. Again, I think my trade organization and most of my 

members are agnostic on the issue. We really don’t have a view as 

to whether or not the songwriter or the song is any more valuable 

than the sound recording. What we would like to see is an efficient 

marketplace that allows us to acquire both rights at a reasonable 

rate and let the parties who have interests behind that determine 

what the appropriate split is. 
94 

Mr. COLLINS. But you are, at this point, from your testimony 

today, opposed to moving to a willing buyer-willing seller standard. 

You are opposed to some of these things that actually would move 

us to there. 

Mr. KNIFE. I am opposed to a willing buyer-willing seller standard that would unfairly continue to fragment the licensing landscape. 

Mr. COLLINS. That is not agnostic. That is having a belief in one 

view. 

Mr. KNIFE. I am sorry. I thought your original question was 

whether or not I had a view as to what the split would be between 

the sound recording and the composition. 

Mr. COLLINS. The actual question was, was it more valuable or 

not, and I just followed up on what you had said. 

Mr. Israelite or Mr. O’Neill, would you like to respond to that? 

Mr. ISRAELITE. Well, sure. It is not surprising that people who 

pay for music would find it inconvenient to pay songwriters under 

a willing seller-willing buyer standard. 

I think we look at this in a two-part question. Number one, for 

a service that uses music, what should they be paying for content? 

I think we and sound recording owners are completely aligned on 

that question, that music has value and that the total amount paid 

for the content is something that a free market should decide, and 

it should be significant. 

But then you get to the second question, which is how you divide 

that revenue. The current system is so out of whack that while in 

every other country in the world radio money is generally divided 

50/50 or better for the songwriter and publisher, in this country 

you have two things. One, broadcast radio doesn’t pay anything to 

artists and record labels, which is wrong. And secondly, for digital 

radio, you are seeing split divisions that have been as high as 57 

percent to 4 percent, which is just insane, and the only reason that 

can happen is because of the different rate structures and regulation that is put on the copyrights. 

Mr. O’NEILL. Just to add to that, I agree with what Mr. Israelite 

just said. And also, to hit the willing buyer-willing seller or the free 

market concept, I believe everybody benefits from a free market— 

the songwriters, the composers, the publishers, and the businesses—because a free market breeds innovation, and a lot of the 

topics we talked about today would just have to come about because of the competitiveness of a free market. 

Mr. COLLINS. Mr. Israelite, I want to follow up on something you 

said. You talked about client revenues being significantly below 

what they would be in a free market. For the record, and for those 

who may not know this, do you have evidence that supports that 

conclusion? And I do have another question, so if you could answer 

quickly. 

Mr. ISRAELITE. Sure. I will offer two specific pieces of evidence 

that I mentioned earlier. 

With regard to mechanical rates, the difference between an 

801(b) standard and not even a free market but at least a willing 

seller-willing buyer standard, you can look to previous Copyright 

Royalty Board decisions where they have commented on the difference between the two rate standards and in one case suggested 
95 

that a willing seller-willing buyer standard was worth more than 

twice as much as an 801(b) standard, and that was from the 

SDARS1 case on satellite radio. 

And with regard to performances, several of us have talked about 

that limited window where publishers tried to withdraw their digital rights, were later told that they couldn’t, but in that window 

there was a free market negotiation with Apple Radio, and that negotiation, it was reported, presented a result that was more than 

twice the value of the consent decree result. 

So I think it is absolutely undeniable that these two types of government regulations significantly hurt the value of our copyright. 

Mr. COLLINS. Mr. Portnow, real quickly, do you think the Committee should move forward on updating our music licensing laws 

independent of a larger Copyright Act rewrite, or in conjunction 

with? 

Mr. PORTNOW. We are suffering over the fact that we haven’t upgraded and brought ourselves into the current environment. So we 

believe that the MusicBus concept is the way to go. We can get 

there in various different ways. The bottom line is the free market 

raises all boats. 

Mr. COLLINS. Well, thank you. I think the biggest thing here is 

we are dealing with something which I want this Committee and 

which I believe the leadership, the Chairman and others, are looking for. We are dealing with in the past many years. We are looking at what it will look like in 10 to 15 years. This Committee has 

to take that up. 

Mr. Chairman, I yield back. 

Mr. HOYT. Could I just make a comment on that? There have 

been several suggestions that we operate in a free market and the 

free market is the way to go. Just so everyone understands on this 

panel that we do not believe that we are operating in a free, competitive market in television. One of the things that ASCAP said 

to the Copyright Office, a seller’s ability to refuse to sell is a key 

requirement for a market transaction. On the other side of that 

issue, a buyer’s ability to refuse to buy is a key requirement for a 

market transaction. We don’t have that freedom, especially in syndicated programming. 

Mr. COBLE [presiding]. The gentleman’s time has expired. 

The distinguished gentleman from New York, Mr. Jeffries. 

Mr. JEFFRIES. Thank you, Mr. Chairman, and I thank the panelists for their presence here today and for their testimony. 

Mr. Knife, let me just begin with you. I believe in your testimony, certainly in your written submission, you indicate that the 

Songwriter Equity Act and the RESPECT Act take us in the wrong 

direction, correct? 

Mr. KNIFE. Yes. 

Mr. JEFFRIES. And you indicate that these two pieces of legislation seek to create a music licensing framework that caters to the 

unique interests of a limited group of stakeholders, correct? 

Mr. KNIFE. Correct. 

Mr. JEFFRIES. Now, the limited group of stakeholders that you 

refer to are songwriters, correct? 

Mr. KNIFE. It is songwriters and their collectives, and record labels, and performing artists and their collectives, yes. 
96 

Mr. JEFFRIES. Okay. Now, in the music ecosystem that exists, 

you have recording artists, correct? 

Mr. KNIFE. Yes. 

Mr. JEFFRIES. Publishers. True? 

Mr. KNIFE. Mmm-hmm. 

Mr. JEFFRIES. Broadcasters? 

Mr. KNIFE. Right. 

Mr. JEFFRIES. You have satellite radio, correct? 

Mr. KNIFE. Yes. 

Mr. JEFFRIES. Internet radio? 

Mr. KNIFE. Yep. 

Mr. JEFFRIES. Okay. And you also have songwriters, correct? 

Mr. KNIFE. Mmm-hmm. 

Mr. JEFFRIES. Now, aren’t songwriters fundamental to that music 

ecosystem that we just went over? 

Mr. KNIFE. Absolutely. 

Mr. JEFFRIES. Okay. So legislation designed to provide them with 

fair compensation, that is not a tangential legislative joyride, correct? That is an effort to deal with fair compensation for a group 

of individuals central to the music ecosystem. Isn’t that correct? 

Mr. KNIFE. I disagree. I think it continues down the road of what 

Mr. Portnow has complained about here, which is the kind of piecemeal approach to updating copyright, as opposed to a holistic view 

of making sure that we have all of the concerns that have been expressed here today addressed comprehensively. 

Mr. JEFFRIES. Okay. But I think we would all perhaps agree that 

a comprehensive approach—and I believe testimony has been rendered to that effect by a wide variety of people with different opinions—is the preferred way to go. But we have some inequities in 

the system, and I am trying to get an understanding as to whether 

you believe there are actual inequities in the system. 

So songwriters are central to the music ecosystem. We can agree 

with that, correct? 

Mr. KNIFE. Yes. 

Mr. JEFFRIES. Now, are they currently compensated in a fair 

fashion? 

Mr. KNIFE. Obviously, songwriters don’t think they are, but I 

think there are a lot of issues attendant to that. As I testified to 

earlier, there are inefficiencies in the system where my member 

companies pay hundreds of millions of dollars, indeed probably over 

a billion dollars a year in royalties for various uses of musical 

works, yet we still hear complaints about songwriters at the end 

of that system not being compensated appropriately. I think that 

requires us to look at the entire system and not just an individual 

approach. 

Mr. JEFFRIES. Okay. I think there is reasonable evidence on the 

record—Congressman Collins referred to some of it—to indicate 

that songwriters are not fairly compensated under the current system, and perhaps the reason that occurs is because we are not operating in a free market context. True, Mr. O’Neill? 

Mr. O’NEILL. Yes, I agree with that. 

Mr. JEFFRIES. Okay. Now, you indicated, Mr. Knife, that there 

are inefficiencies if we move to a free market context. Is that correct? 
97 

Mr. KNIFE. No, I didn’t say there were inefficiencies. What I said 

is that there is a large potential for inefficiencies, and what we 

have to do here, what this body should be trying to do is striking 

a very, very delicate balance between the efficiencies that are necessary for large-scale music licensing versus the potential for market abuse by creating collectives that allow the negotiation for 

large bodies of works. 

Mr. JEFFRIES. Who could potentially abuse the system in the context of a free market? I am struggling with understanding your position here in the context of the history of the republic, which is 

that a free market has led to innovation, creativity, prosperity, 200- 

plus years of record evidence in the United States of America that 

a free market system is not inefficient, it is efficient when properly 

regulated. Who is going to abuse the system in the context of a free 

market designed to provide songwriters with reasonable compensation? 

Mr. KNIFE. Well, I think we see that with the consent decrees. 

We have heard a lot of talk here today about how the consent decrees are decades old and they haven’t been updated, et cetera. Yet 

we have a rate court decision that was rendered within this year, 

earlier this year, that seems to indicate that a lot of the behavior 

that the consent decrees were intended to oversee and to regulate 

still occur. So I think there are opportunities for collectives to engage in anti-competitive behavior, and that is one of the things we 

have to look out for. 

Mr. HOYT. I think a perfect example of that is SESAC and its 

actions since 2008 in the television industry. If you take a close 

look at that, you will see that. I do not disagree with you, by the 

way. If there is truly a free market, that it will be efficient. 

Mr. JEFFRIES. And let me also note—I know my time has run 

out, but in the context of anti-competitive behavior, right now we 

have ASCAP, we have BMI, and we have SESAC, correct? And the 

Supreme Court or courts in this country have consistently stated 

if we have three entities engaged, three entities, you do not have 

conditions for anti-competitive behavior to exist, and that is what 

exactly exists currently in the music industry if we were able to 

move to a free market standard, and I yield back. 

Mr. ISRAELITE. And, Mr. Chairman, SESAC is not here to defend 

itself. But quickly, you have an organization that probably has significantly less than 10 percent of the market, and yet you have accusations that they somehow have such concentration that they 

need regulation. I think that is a ridiculous proposition. 

Mr. HOYT. I have to respond to that. 

Mr. COBLE. The gentleman’s time has expired. 

Mr. Hoyt, very briefly. 

Mr. HOYT. I just wanted to say that it doesn’t take very much 

in terms of copyright aggregation to be in a monopoly position. If 

you read the decision by the judge on the summary judgment motion that SESAC made, you will find that he very clearly believes 

that there is at least a potential—we haven’t proved it yet, but 

there is a potential for violation of the antitrust law. 

Mr. O’NEILL. A single copyright by its definition is a monopoly. 

Mr. COBLE. The gentleman’s time has expired. 
98 

The distinguished gentleman from California, Mr. Issa, is recognized for 5 minutes. 

Mr. ISSA. Thank you, Mr. Chairman. 

I am glad that the last words I heard were that the copyright is 

a monopoly. I am pretty sure that the restraint of trade is not the 

intention of copyright. At the time of our founding, I think it is 

pretty clear that the goal was to get authors, and songwriters obviously, but authors compensation to induce the creation of these 

useful arts. Nowhere was restraint considered to be there. So the 

idea that there is only one seller of an asset does not a monopoly 

make. 

Are any of you antitrust attorneys here? I would love to have 

one. But let’s just—— 

Mr. ISRAELITE. I dabble. 

Mr. ISSA. Okay. Mr. Israelite, I am glad you are dabbling because 

I can’t think of a song—and I have some songs I just dearly love. 

I can’t think of a song that I can’t live without in favor of millions 

of others, hundreds of thousands at least. The fact is that songs are 

in competition, and the author and the performer are simply people 

in competition to sell their wares who look at this as how they get 

their wares to market. 

Don’t strain your eyes, Mr. Hoyt. This is that sort of complex of 

if I have a musical work and I am a publisher, a songwriter, or I 

am the label and artist, how I get to what with whom—and it 

blows up on additional pages. It is a PowerPoint you don’t ever 

want to spend that much time on. [Laughter.] 

So I have been listening to everyone talking about free market, 

and the Chairman of the full Committee has absolutely said he 

wants to do comprehensive reform for a reason, which is: it needs 

it. 

Every one of you has a vested interest in some part of the status 

quo, and every one of you is railing against some part of the status 

quo. 

Mr. Israelite, I think some time ago—I am Chairing the Committee next door. I am double-tasking a little, or multi-tasking. But 

when I was here before, I pretty much think I heard you complain 

about how much money Pandora’s founder got when he cashed out. 

Mr. ISRAELITE. No. I was not complaining about how much he 

made. I was complaining about that amount compared to the total 

amount paid to songwriters. I want him to make more money, but 

I would like him to pay songwriters fairly. 

Mr. ISSA. Well, and that is a good question. If you look at the 

revenue being received from SiriusXM and the revenue from Pandora, it is not insufficient if you compare it with all of AM and FM, 

right? 

Mr. ISRAELITE. You must divide between the money paid to 

record labels and artists versus the money paid to songwriters and 

music publishers. And if you look at the totality of money paid for 

our performances, as I stated earlier, it is about half of our revenue. I believe it is significantly undervalued because of the way 

that the consent decrees work. 

Mr. ISSA. Well, let’s get back to that. In the real marketplace, 

doesn’t it start off with the identity of the true owner before sublicensing? Isn’t that the first question, who owns the rights, if you 
99 

will, to the song, and who owns the rights to the performance, and 

isn’t that pretty opaque today? 

Mr. Griffin, you seem to be chomping at the bit. Even though you 

are a technology expert, I will let you answer. 

Mr. GRIFFIN. Fair enough. We live in a time of Tarzan economics. 

We are moving from one vine to the next. The old vine was music 

the product. You had to clear the rights before you sold it in the 

stores. In the new world, it is almost like car accidents. The use 

of music has become anarchistic. Mr. Hoyt points out that sometimes his broadcasters aren’t even sure what they are broadcasting 

because it comes from third parties. New music services allow people to upload songs for which they become responsible. 

Mr. ISSA. Okay. But my question—famously, I told Eric Holder 

here he wasn’t a good witness because he didn’t seem to ever answer the question asked. You are getting there. [Laughter.] 

The question that I asked is, isn’t there an opaqueness to who 

the original owners are? 

Mr. GRIFFIN. No question. 

Mr. ISSA. Okay. So wouldn’t one of the things from a technology 

standpoint and from a reform standpoint be that there should be 

transparency as to who owns the rights and, of course, that is a 

lot of people in some cases, and it is only one person in some cases, 

and then transparency as to who has taken on that right? So the 

original owner, the access to the contract that gives a third party 

rights, shouldn’t that be transparent, and wouldn’t that be the beginning of empowering both the willing buyer and the willing seller 

to have the opportunity for the reforms that some of you are talking about? 

I see a lot of heads, so I will start with you. 

Mr. GRIFFIN. That was my only testimony today, was that we 

should build directories of these things, and we should go further 

than the owner because the performers have a downstream remuneration right. 

Mr. ISSA. Right. I was talking about all the beneficial owners. 

Mr. KNIFE. I can answer your question in one word—absolutely. 

Mr. ISSA. Mr. O’Neill, your silence is golden, but—— 

Mr. O’NEILL. No. I believe that the blanket license has served 

radio since the dawn of radio. 

Mr. ISSA. Radio doesn’t pay a cent to the performers. They have 

been served well. 

But go ahead, Mr. Knife. 

Mr. KNIFE. Yes, I was going to say that I have made a lot about 

the need for transparency and also for efficiency, and higher transparency necessarily leads to greater efficiency. If we had transparency about rights at the very primary level, that would necessarily lead to a lot more efficiency in the system. 

Mr. ISSA. Anyone else? 

Mr. ISRAELITE. The best way to get transparency is to put us in 

a free market because then you will have an incentive, if you want 

to license your copyright, for it to be known. There is an assumption in your question that somehow a copyright owner couldn’t say 

no, that they couldn’t decide that I will create a copyright and I 

will keep it to myself, and I don’t want to license it. That is a right 

that a property owner has. 
100 

Mr. ISSA. Okay. Mr. O’Neill was cut off a little unfairly. If you 

could just let him answer whatever he had, I would appreciate it, 

Chairman. I have no further questions. 

Mr. O’NEILL. Thank you, Congressman. Personally, I think we 

have a lot to lose at BMI with a free market, but we have a lot 

to gain also. We are allowing our publishers to go out to license directly, or to license exclusively, and people said shouldn’t you be 

scared of that, Mr. O’Neill? Shouldn’t you be worried about that? 

But I think we would retain them. I think we would have to be 

competitive. We would have to be innovative in a way that would 

be different tomorrow. So, that is all I wanted to say. 

Mr. COBLE. Thank you. 

Mr. ISRAELITE. And Mike deserves a lot of credit for that position. It is a very forward-thinking position. 

Mr. COBLE. The gentleman’s time has expired. Thank you. 

The distinguished lady from California, Ms. Lofgren, is recognized for 5 minutes. 

Ms. LOFGREN. Well, I thank you, Mr. Chairman. 

Actually, I think this is one of the better panels we have ever 

had on this subject, and anybody listening to this group, although 

we don’t necessarily know the answer, we certainly know what the 

questions are. So that is a big advance. 

I sometimes think if you just follow the money, it helps you understand what is going on. We are looking at Mr. Miller, who has 

a legitimate desire to be paid for his work; Mr. Portnow, who represents many, many other people in that same situation. 

Just some statistics. It is my understanding that, for example, 

BMI reported really record-high revenues last year, a 5 percent increase over 2012 revenues. And if you take a look at revenues 

going to BMI just as an example, in 2003 it was $629 million; last 

year, $944 million. That is a 50 percent increase in revenue into 

BMI. 

If you take a look at streaming Internet services, much has been 

said that maybe they are not paying enough. None of them is making a profit. If you take a look at Spotify, it just reached 10 million 

paid subscribers. It has never posted a profit. Pandora has 3.3 million subscribers. Last quarter it posted a $28.9 million loss. 

The generator research did an analysis and said this: ‘‘No current music subscription service, including marquee brands like 

Pandora, Spotify, and Rhapsody, can ever be profitable, even if 

they execute perfectly, because they are paying 60 to 70 percent of 

revenue for licensing, which is unsustainable.’’ 

So when I look at these statistics, I am wondering why Mr. Miller isn’t getting paid and how we fix this. As I have listened to you, 

Mr. Griffin, it seems to me what you are proposing basically is a 

transparent system that takes the middleman completely out of 

this scenario, potentially. Is that going to work in the Internet? 

Mr. GRIFFIN. No, I don’t think it takes the middleman out at all. 

I think they are still extraordinarily valuable for aggregation, for 

promotion, any of a number of roles that the societies play and that 

the companies play. They only grow. But it is absolutely critical 

that we record, enumerate, maintain updates of those who are involved with these works, those who own these works, those who we 

need to pay when these works are used, and we do not do that now. 
101 

So it is extraordinarily difficult to talk about a market when you 

cannot look up and find, say, all of the songwriters of the track. 

And let me tell you that there are sometimes more than 30 songwriters for a single song. And I suspect, although I am not an attorney, that if they all get divorced once, there are 60 rights holders to contact to clear that track. 

Now, that is an important role for a middleman, to bring those 

people together, but you have to be able to split that money correctly downstream and find those who you would contact to directly 

license if you wish to do so under a supposedly free market. 

Ms. LOFGREN. Well, it seems to me that as we take a look at— 

you know, nobody buys CDs anymore. Everything is going online. 

Everything is downloaded. And it is important that we have that 

digital delivery of music compensated so artists like Mr. Miller can 

be paid. So there is a delicate balance here where you need to actually make these services that are willing to pay profitable, because 

if they go away, all that is left online is pirates, and that is not 

a desirable outcome. 

Mr. Knife, do you have any suggestions on how to deal with this? 

Mr. KNIFE. That would be a very, very long answer. I guess the 

short version is that we should move very, very carefully, as one 

of the other congressmen said earlier. Businesses build their businesses based on assumptions of costs and how their business is 

going to run over the years, laying out as they establish their business plans. I think as we look at all of these issues—the comprehensive licensing, compulsory licensing, blanket licensing, et 

cetera—we need to move carefully and we need to make sure that 

whatever system we come up with adequately takes into account 

the fact that people are building their businesses based on expectations. 

Ms. LOFGREN. It seems to me as we move forward, and I am sure 

we will, everybody has to be at the table because, although people 

are situated at different parts of the scene with different financial 

interests, in the end, if we don’t have a system that works, Mr. 

Miller is not going to get paid, Mr. Portnow is not going to get paid, 

and we end up with a situation. It was 2 years ago that we dealt 

with SOPA that was not going to work, but all of us agreed that 

we ought to follow the money and make sure that we end up with 

a system that compensates rights holders, and this is a key element of that. 

Again, my time has expired, but I think this has been an excellent panel. 

Mr. HOYT. I think one of the things we should remember that 

you should take into account is the fact that businesses won’t have 

as many problems with prospective change. 

Ms. LOFGREN. Right. 

Mr. HOYT. So if you look at what is happening, I think you 

should look more at the prospective rather than going backwards. 

Mr. GRIFFIN. And allow me to add that as we move to international trade more and more for our music, the BRICS countries 

and others need to communicate with us in different languages and 

different character sets, and our lack of any kind of registry or any 

kind of unique number or respect for them makes it very difficult 

to get Mr. Miller his money when we are dealing with trade with 
102 

a Chinese organization or a Russian organization or anyone with 

a different language or character set. 

Ms. LOFGREN. My time has expired, Mr. Chairman. Thank you 

very much. 

Mr. COBLE. You will be pleased to know, Mr. Miller, mostly you 

have a pretty good cheering section here today, for any good that 

does. 

Mr. MILLER. This hasn’t been near as hard as I thought it would 

be. [Laughter.] 

Mr. COBLE. The distinguished gentleman from North Carolina, 

Mr. Holding. 

Mr. HOLDING. Thank you, Mr. Chairman. 

Earlier in my career, I worked in the other body and was legislative counsel working on tax issues. And although we always kept 

our eye on the larger picture and our desire for a major tax reform, 

tax overhaul, we were often confronted by issues where a constituent or a constituent’s business was being unfairly impacted by 

an unintended consequence of a law, rule, or regulation. We would 

work on a rifle-shot fix for that unintended consequence. 

I think that the RESPECT Act confronts an idiosyncrasy in the 

law that has resulted in some of our greatest talents, just because 

they recorded their music before 1972, aren’t getting compensated. 

The situation has also led to lawsuits in States under a patchwork 

of State copyright law. This is costly. It is complicated for everyone 

involved in this ecosystem, as it has been termed, and I think it 

is a good reason for Congress to act and provide some legal clarity 

not only for the artists impacted but for the growing digital music 

platforms. 

I want to point out that the digital music services are playing an 

important role promoting artists of all generations, and I want to 

commend them. These are new technologies, new ways to enjoy 

music, and new revenue streams. So I wouldn’t begrudge the 

founder of Pandora for making a lot of money because he has created a new revenue stream for artists to get revenue. 

So it is a discrete problem, and I think we have a rifle-shot solution, and I think it is appropriate and a good opportunity for Congress to act to fix this anomaly in the system. 

I also don’t consider the RESPECT Act to be a stalking horse for 

the larger issues that will ultimately be considered and hopefully 

resolved in an overall copyright review. But I don’t think waiting 

for overall copyright review and fix is a reason to forego fixing a 

discrete problem that is indeed an unintended consequence of the 

law. 

Now, Mr. Knife, I read your testimony, so I think I know what 

you were laboring to get out about 2 hours ago. 

Mr. KNIFE. Thank you. 

Mr. HOLDING. You believe that the RESPECT Act will create an 

anomaly. It caters to a limited group, these pre-1972 artists. But 

I think the anomaly, rather than creating an anomaly, it is fixing 

an anomaly, that copyright law has left open this loophole which 

companies can exploit. Because it is pre-1972, they are playing the 

recordings. This is pretty iconic music. The artists that are still 

with us aren’t getting any younger, and the services get to play 

this music for free. 
103 

Your members, they use the statutory license presumably because it provides a one-stop shop for all the sound recording rights 

that they need to operate a service, and it has also become clear 

that those services believe that statutory license doesn’t apply to 

the rights that are protected only by State law and rights to sound 

recordings made before 1972, but rather you get the rights in some 

other way. These services have simply decided not to pay anyone 

for the rights to play the recordings. 

So I recognize, from reading your testimony, that you may not 

believe there is a performance right implicated by the State law, 

and I think you are wrong, by the way. But I think it is clear that 

there are some reproduction rights at stake because you have to 

make a copy to your server before you can play it anyway, so that 

is one point. 

It is also clear that in a private market, directly licensed services 

don’t seem to draw a line between federally and State protected recordings in the private sector, in the private licensing that we have 

been talking about. In addition, it is incredibly complicated to identify whether a recording is, in fact, protected by State law. For example, if a pre-1972 sound recording has been sufficiently reengineered, it could be protected by Federal copyright law. Foreign recordings that are pre-1972 are protected by Federal law. It gets 

complicated. 

So the agreement that you have, it seems that it would be simpler for you to pay for all the music rather than try to draw this 

distinction for pre-1972 music just because there is a loophole there 

and you can. So laying all that out there, I am just confused as to 

why your members haven’t embraced this kind of simple, elegant, 

rifle-shot solution, which I think would be beneficial to your members. 

Mr. Chairman, may he have just a minute to answer that? 

Mr. COBLE. Granted. 

Mr. HOLDING. Thank you. 

Mr. KNIFE. Thank you very much for laying the issue out so 

clearly. The truth is that amongst my membership, some of my 

members do pay for pre-1972 sound recordings, as you pointed out, 

based on direct deals and other arrangements. 

The point that I was trying to make about it establishing an 

anomaly was not that it doesn’t attempt—that the RESPECT Act 

doesn’t attempt to address an existing anomaly, but the problem 

that we have with it is that it seems to just build another anomaly 

onto that in that it doesn’t afford full federalization of these pre1972 sound recordings. So it leaves certain people disenfranchised 

and continues, as I have complained about throughout today’s 

hearing, the fragmentation of the marketplace. 

It doesn’t allow libraries and archiving institutions to have their 

rights. It doesn’t afford the public a fair use right. It doesn’t apply 

the MCA protections. And probably most importantly, it doesn’t afford those older legacy artists the opportunity to perhaps get their 

copyrights back or negotiate for a better deal once the term of copyright would expire. 

So that is our issue. Our issue is not that it, in and of itself, is 

not a rifle shot or an attempt to rectify a situation. Our issue is 
104 

that it seems to be, once again, a very, very narrowly tailored remedy that ends up creating more anomalies within the system. 

Mr. COBLE. The gentleman’s time has expired. 

The gentle lady from Texas is recognized for 5 minutes. 

Ms. JACKSON LEE. Mr. Chairman and Ranking Member, let me 

first of all take a little bit of my time to say that this is an enormously important process. I have gone through this for maybe almost a decade, and just the idea of an omnibus approach and fixing 

it finally, or attempting to fix it finally, is a very crucial moment, 

I think, in our history for intellectual property and for all of us who 

enjoy over the years this thing called music. 

Let me apologize on the record. We were in a meeting for the reauthorization of the Voting Rights Act, so that is why I was away 

from the desk, and I think all of you who represent such a diverse 

population understand how vital that is. So we had to divide our 

time. 

I don’t know whether anyone has gone on record for the omnibus 

approach, but I believe that is the right approach. What I would 

like to do is to get some of you who are here to indicate what would 

be the most important item to be an aspect of an omnibus approach. I assume we will be listening to broadcasters at some point, 

and others who are involved in this process. 

Many of you have known that my work has included the valuing 

of the performance and the writer and the key element of putting 

together music, which I think many of the newer generation may 

not be familiar with, and all that it takes to get a final product, 

because they see it in the quickness or the twinkle of an eye. 

So, Mr. Portnow, you have been with these issues for a very long 

time and dealt with these issues of music being played, being 

heard, being written. What would be the most important element 

that Congress should look at if we were to look at an omnibus approach? 

Mr. PORTNOW. Thank you for the question, and I want to certainly take a moment to thank you for your support of the performance rights issue, which is critical to us, as I indicated in my opening remarks. 

I think it is really about fair market value. If we can get our 

heads and arms around a fair market approach to all of the constituents here, that is going to raise all boats. We all have—whether the songwriter, the artist, the producer, the engineer, those behind the scenes that are the background musicians, all of them 

have a stake here. So we have to address this in a way that each 

one of them winds up with a fair market compensation for their 

work. 

Ms. JACKSON LEE. Thank you. 

May I ask Mr. O’Neill, if you would, I heard your testimony on 

BMI and the work that you are doing. What would be the most important element in a bill that approached this from an omnibus 

perspective? 

Mr. O’NEILL. I would also agree with the fair market concept. I 

think the Songwriter Equity Act was a step in that direction, to 

allow the courts to view all rates, all rights when setting or when 

trying to approximate what a willing buyer and a willing seller 

would do. That word is still ‘‘approximate’’ because it is not a will-
105 

ing buyer and a willing seller. So I believe that the fair market aspect of an omnibus bill would be beneficial to all parties. 

Ms. JACKSON LEE. And if I pressed you a little further and indicated that there is this vast market of broadcast media that is not 

the Internet, YouTube, how would they play into an omnibus approach, so that we wouldn’t have to go back down a journey of no 

return, as we have done in times past? 

Mr. O’NEILL. I think they would be opposed to it. I think ultimately—you heard today a little bit about the performance right 

and sound recording, would radio be for it or against it. I think you 

are tied to some legacy industries that don’t want to change or 

don’t want to recognize the value of copyright going forward. 

They all own copyright themselves. They all know the value of 

their own copyright. I think it comes down to sometimes the question of what are the scales, the balance of payments for those copyrights. 

Ms. JACKSON LEE. And you don’t think a deliberative approach 

would draw in those different elements? I am going to call them 

different elements as opposed to labeling them broadcast or otherwise. Bring them to the table? Because if you construct a bill that 

just develops a fight, you haven’t advanced yourself. Do you think 

there is something that would draw more persons to the table? 

Mr. O’NEILL. I do think that a bill—yes, I do. I think it would 

be beneficial to have it all in one. Again, when we started this, I 

preferred to keep it simple, something focusing on the songwriters. 

But making it broader, you bring in many more constituencies and 

it gets a little muddier, if you will. So my initial thought was let’s 

protect what we had, but we also have to look at the broader, the 

greater good. 

Ms. JACKSON LEE. It might get muddy and come out on the other 

side in a better perspective. 

Mr. O’NEILL. And I would love that. 

Mr. HOYT. Can I just suggest—— 

Ms. JACKSON LEE. Yes. I was trying to go down the line. 

Mr. HOYT [continuing]. From a broadcaster’s standpoint? I don’t 

think there is any broadcaster in the world who doesn’t want to operate in a competitive environment. It is how you get to that competitive environment that is so difficult. 

For instance, the one thing that I think local television stations 

would benefit from would be somehow getting the copyright holder 

to have to clear the performance right at the time the production 

is made, not tying it into a what we call ‘‘in the can’’ product and 

then say, oh, you have to pay the performance rights even though 

you didn’t have a choice as to what music was used, nor can you 

control—you can’t get it out of the program. So you are kind of 

stuck with no control, and you still have to pay for it. It is a pure 

television problem. I am not suggesting it is a problem all over. But 

from a television perspective, you have to get the producer to clear 

the performance right. 

Mr. COBLE. The gentle lady’s time has expired. 

Ms. JACKSON LEE. Let me, Mr. Chairman and the Ranking Member, thank you very much and just put a comment on the record 

as I close, Mr. Chairman. My time has expired, but if I could conclude. 
106 

I do want to say that I am fascinated with Mr. Griffin’s comment. I was not able to pursue questions about the registry and 

how it would process into legislation, what would trigger it, so 

hopefully we will have an opportunity to dialogue. If Mr. Chairman 

will give me 30 seconds to hear Mr. Griffin’s answer? 

Mr. COBLE. Granted. 

Ms. JACKSON LEE. I thank you. 

Mr. GRIFFIN. I will just say, it couldn’t be more important as 

your priority because we call her the Registrar of Copyrights. That 

is her prime function, Maria Pallante, and she is great. So you 

have to, in this bill, empower her, give her the resources she needs 

to revamp that office such that they can properly record and enumerate the rights such that they can be properly licensed, properly 

paid, that there can be proper moral attribution of those who did 

these things such that the history of our culture and our heritage 

are properly recorded and enumerated. The rest can, in some ways, 

take care of itself if we do that. But we do not do that at all. 

Ms. JACKSON LEE. I thank you. 

I yield back. 

Mr. COBLE. I thank the gentle lady. 

The gentleman from Pennsylvania had one final comment to 

make. 

Mr. MARINO. Thank you, Chairman. 

We are not going to take the time for each one of you answering, 

but if you care to answer this question, would you put it in writing 

and get it to me? Tell me what your interpretation is of a fair market compared to a free market. 

Mr. COBLE. Gentlemen, this concludes today’s hearing. I will 

thank the panelists, and I thank those in the audience. This standing-room-only audience indicates to me that this issue is not an insignificant issue, and it will be visited and revisited time and 

again, I can promise you. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record. 

This hearing stands adjourned. 

[Whereupon, at 12:29 p.m., the Subcommittee was adjourned.] 
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(231) 

MUSIC LICENSING UNDER TITLE 17 

(PART II) 

(233) 

C O N T E N T S 

JUNE 25, 2014 

Page 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 235 

The Honorable Jerrold Nadler, a Representative in Congress from the State 

of New York, and Ranking Member, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 236 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 237 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary, and 

Member, Subcommittee on Courts, Intellectual Property, and the Internet .. 238 

WITNESSES 

Rosanne Cash, Singer, Songwriter, Author and Performer, on behalf of the 

Americana Music Association (AMA) 

Oral Testimony ..................................................................................................... 240 

Prepared Statement ............................................................................................. 243 

Cary Sherman, Chairman and CEO, Recording Industry Association of America (RIAA) 

Oral Testimony ..................................................................................................... 247 

Prepared Statement ............................................................................................. 249 

Charles M. Warfield, Jr., Joint Board Chair, National Association of Broadcasters (NAB), and Senior Advisor, YMF Media 

Oral Testimony ..................................................................................................... 256 

Prepared Statement ............................................................................................. 258 

Darius Van Arman, Co-Founder, Secretly Group, American Association of 

Independent Music (A2IM) 

Oral Testimony ..................................................................................................... 268 

Prepared Statement ............................................................................................. 270 

Ed Christian, Chairman, Radio Music License Committee, Inc. (RMLC) 

Oral Testimony ..................................................................................................... 294 

Prepared Statement ............................................................................................. 296 

Paul Williams, President and Chairman of the Board, American Society of 

Composers, Authors and Publishers (ASCAP) 

Oral Testimony ..................................................................................................... 303 

Prepared Statement ............................................................................................. 305 

Chris Harrison, Vice President, Business Affairs, Pandora Media Inc. 

Oral Testimony ..................................................................................................... 327 

Prepared Statement ............................................................................................. 329 

Michael Huppe, President and CEO, SoundExchange Inc. 

Oral Testimony ..................................................................................................... 344 

Prepared Statement ............................................................................................. 346 

David J. Frear, Chief Financial Officer, SiriusXM Holdings Inc. 

Oral Testimony ..................................................................................................... 362 

Prepared Statement ............................................................................................. 364 
Page

234 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Ranking Member, Committee 

on the Judiciary, and Member, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................................... 238 

Material submitted by the Honorable Steve Chabot, a Representative in Congress from the State of Ohio, and Member, Subcommittee on Courts, Intellectual Property, and the Internet ...................................................................... 378 

SUBMISSIONS FOR THE RECORD 

Material submitted for the Hearing Record .......................................................... 411 
(235) 

MUSIC LICENSING UNDER TITLE 17 (PART II) 

WEDNESDAY, JUNE 25, 2014 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:01 a.m., in room 

2141, Rayburn Office Building, the Honorable Howard Coble, 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Goodlatte, Marino, Sensenbrenner, Chabot, Issa, Poe, Chaffetz, Farenthold, Holding, Collins, 

DeSantis, Smith of Missouri, Nadler, Conyers, Chu, Deutch, Bass, 

DelBene, Jeffries, Cicilline, Lofgren, Jackson Lee, and Cohen. 

Also Present: Representative Gohmert. 

Staff Present: (Majority) Joe Keeley, Chief Counsel; Clerk, Olivia 

Lee; (Minority) Heather Sawyer, Minority Counsel; and Jason 

Everett, Counsel. 

Mr. COBLE. Good morning, ladies and gentlemen. 

The Subcommittee on Courts, Intellectual Property, and the 

Internet will come to order. Without objection the Chair is authorized to declare recesses of the Subcommittee at any time. 

We welcome all our witnesses today. 

Let me get my chair adjusted here. 

Could you give me a push here, John? 

That’s good, thank you. 

Good morning and welcome to the second of two hearings on 

music licensing issues. Two weeks ago, this Subcommittee heard 

from your fellow music industry representatives about their concerns with the state of music licensing copyright laws. Looking 

around the room, I think we can conclude that you all have more 

than a passing casual interest in this issue and we welcome all of 

you here today. 

At the earlier meeting, I mentioned my fondness for old time, 

bluegrass and country. I don’t know that that has bolstered the 

popularity across the country. It probably hadn’t, but I will continue to try to do that. And I will make my opening statement very 

brief because we have a long day ahead of us. 

Although the witnesses of this panel may not agree on everything, I believe they all agree that music enriches the world in 

which we live. Since this is part two of the music licensing hearing, 
236 

I won’t repeat all the outstanding music issues that Congress needs 

to address. I simply hope that in the effort to improve the music 

licensing system, we don’t lose sight of the fact that creators need 

to be paid for their work just like everyone else in this room. 

Although our creative industries are the envy of the world, I’m 

not sure that our music licensing system is. It may well be time 

for a change, and that will be exposed perhaps today as we go 

through this, maybe arduous journey, but maybe pleasant, productive journey. 

I yield back the balance of my time and recognize the gentlemen 

from New York, the distinguished Mr. Nadler, for his opening 

statement. 

Mr. NADLER. Thank you, Mr. Chairman. And thank you for holding this second hearing on Music Licensing under Title 17. 

At the first hearing 2 weeks ago, we heard from a diverse panel 

of witnesses representing performers, songwriters, publishers, television licensees, and digital music delivery services. Although there 

are varying points-of-view about the specific problems most in need 

of legislative solution, it was widespread agreement that the system is in need of comprehensive reform. 

As I stated at the first hearing, the current music licensing system is rife with inconsistent rules and inequities that make no rational sense. If we started from scratch, nobody would write the 

law as it stands today. Terrestrial satellite and Internet radio compete against each other under different rules for compensating 

songwriters, performers, and other rights holders, assuming those 

artists are even paid at all for their works. 

Several of the service providers have played an important role in 

the music ecosystem are with us today. Local broadcasters provide 

critical programming including news, weather and emergency 

alerts and often form strong public service partnerships with the 

communities they serve. 

We also have representatives of digital radio, such as SiriusXM 

and Pandora, who are making music available to consumers in new 

and innovative ways. Although we may have differing views about 

the best way to approach these issues, I look forward to productive 

discussion about how to come together to improve the music licensing system. 

As I noted at the first hearing, our current scheme is so haphazard because, in large part, pieces were developed at different 

times and often in response to different innovations in the music 

and technology industries. Rather than continuing to adjust the 

system in a piecemeal fashion, I believe we should take a comprehensive approach. 

I am not alone in my belief that a comprehensive approach is 

need. At this year’s GRAMMYs on the Hill event, recording Academy President and CEO, Neil Portnow, called for the industry to 

coalesce behind a single bill. His call for unity was later echoed by 

House Majority Leader, Kevin McCarthy, and Democratic Leader, 

Nancy Pelosi, who agreed that the time has come for Congress to 

address these issues in one package. 

That is why I pledged at our first hearing in music licensing to 

develop a comprehensive omnibus bill, which some people have 

dubbed ‘‘the music bus,’’ to update music copyright law. Congress 
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should get out of the business of dictating winners and losers and, 

once and for all, create a level playing field. 

The law should be platform neutral and all music created should 

receive fair market-based compensation for their work. 

There’s a growing consensus that the system is in need of reform. 

In addition to this Committee’s ongoing copyright review, the Copyright Office is conducting a music licensing study. Just this week, 

it concluded a series of roundtables held around the country in 

Nashville, Los Angeles, and New York. The Commerce Department 

issued a green paper in updating copyright including music licensing for the digital age. And the Department of Justice is conducting 

a much needed review of the consent decrees that govern ASCAP 

and BMI—two of the performance rights organizations responsible 

for collecting and distributing royalties. 

I hope the DOJ review will be completed quickly as time is of the 

essence for all the parties involved. 

Today’s hearing is another important step in this larger effort to 

review and update the music licensing system. I am interested in 

hearing from today’s witnesses about the specific issues they believe should be addressed and about how we can best enact meaningful comprehensive reform. 

I have no doubt that today’s discussion will be just as informative and useful as the discussion at our first hearing. 

I thank you and yield back the balance of my time. 

Mr. COBLE. I thank the gentleman. Is the Chairman here? 

The Chair recognizes the distinguished gentlemen from Virginia, 

the Chairman of the House Judiciary Committee, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. Thank you for holding this hearing and thank you for your diligence in the number 

of hearings and the impressive array of hearings that we have held 

on copyright issues. And I can see we have another full house. 

So good morning to you all and welcome to the Subcommittee’s 

second Music Licensing hearing. I see the size of the witness panel 

has grown with interest in this issue. 

Two weeks ago, a number of problems in the music licensing system that currently exists were highlighted. In reviewing the written testimony submitted in advance of this hearing, there does 

seem to be agreement that a more robust copyright ownership 

database is needed. There also seems to be an interest by many in 

simplifying the diverse licensing and rate-making systems. However, disagreement remains on whether all those who use music 

should pay for it and what specific rate standards should be used, 

among other issues. 

As I mentioned 2 weeks, as we consider challenges and potential 

solutions to the copyright laws relating to music, we should keep 

in mind ideas that incorporate more free market principles. We 

should also be mindful of the tremendous role that digital music 

delivery services play in the music ecosystem for consumers and 

creators alike. I have long said that the content community and the 

technology community need each other. It is my hope that we can 

identify improvements to our copyright laws that can benefit both 

groups as well as consumers by maintaining strong protections for 

copyrighted works and strong incentives for further innovation. 
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Thank you and I appreciate you all making time to be here this 

morning. And I will yield back, Mr. Chairman. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from Michigan, the Ranking Member, is recognized for his opening statement. 

Mr. CONYERS. Thank you, Chairman Coble, and good morning to 

our distinguished panel. I see faces that I have worked with before. 

And we welcome all the supporters of this subject matter that are 

here in the Judiciary Hearing Room this morning. 

Since I agree with everything that’s been said by my predecessors, the gentlemen from New York and the Chairman himself, 

I am going to just put my statement in the record. It would be 

largely repetitive. Many of you know where I stand; I have supported music as an important and vital source in our national interests. And it is in that spirit that I welcome you all to the Judiciary Committee this morning. 

I ask unanimous consent to put my statement in the record and 

yield back the balance of my time. 

[The prepared statement of Mr. Conyers follows:] 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, Ranking Member, Committee on 

the Judiciary, and Member, Subcommittee on Courts, Intellectual Property, and the Internet 

At our first hearing earlier this month we heard from a diverse range of key 

stakeholders, including songwriters, music publishers, licensing entities, and music 

service providers. The witnesses discussed the many anomalies in the copyright law 

as it applies to music licensing that need be fixed. 

I am interested in continuing to hear ideas about how to fix the inconsistencies 

in the law and what additional steps we should take to change the music licensing 

system. As we continue this discussion, I hope we can keep a few guiding principles 

in mind. 

First, I believe that all artists should be compensated fairly, and that it makes 

no sense to have arbitrary decisions on who should be paid for their work. 

While there are benefits that some of the witnesses will note about the U.S. system for free airplay for free promotion, I continue to believe that there should be 

compensation for artists whose songs are played over terrestrial radio. The existing 

legal framework must be changed and it is long overdue. 

I also believe that broadcast radio has played a valuable role in the lives of people 

all across this country. These broadcasts have educated listeners about emergencies 

and important events and have provided new music to these listeners as well. And 

we will hear today the great work that broadcasters continue to do in local communities. 

As one of the witnesses today notes, the audience for FM radio is larger than the 

listenership of satellite radio and Internet music services. This is even more reason 

to work to achieve a performance right for sound recordings. 

Every other platform for broadcast music—including satellite radio, cable radio, 

and Internet webcasters—pay a performance royalty. Terrestrial radio is the only 

platform that does not pay this royalty. 

This exemption from paying a performance royalty to artists no longer makes any 

sense, if it ever did, and unfairly deprives artists of the compensation they deserve 

for their work. 

I would also like to hear the witnesses discuss the bill I have introduced with 

Congressman Greg Holding from North Carolina—H.R. 4772, the Respecting Senior 

Performers as Essential Cultural Treasures Act (RESPECT Act). 

The RESPECT Act would address a loophole that allows digital radio services to 

broadcast music recorded before February 15, 1972 without paying anything to the 

artists and labels that created it. 

I believe that taking someone else’s labor and not paying is simply unfair. And 

I would like to hear from the witnesses their opinions about the RESPECT Act. 

Second, as I noted at the first hearing, I believe that the process for setting royalty rates should be inherently fair and competitive. 
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We will hear today that the current process is unfair and that, as a result, the 

royalty rate does not provide creators with a fair market value for their work. 

This is one possible arena for legislative change and my colleagues—Representatives Collins and Jeffries—have introduced The Songwriter Equity Act to fix this 

particular problem. I would like to hear the witnesses discuss that particular fix and 

what additional changes, if any, should be made to the current royalty system to 

address their concerns. 

Third, we should strive to adequately account for the interests of all players in 

the music ecosystem. As we consider changes to the law, we must ensure that the 

music industry can continue growing and bringing the wonder of music to the listening public, whose lives are so often transformed and enriched as a result. 

The complexity of music licensing laws means that all parties must be willing to 

come to the table to discuss the best way to address these issues. 

At the music licensing hearing earlier this month we also heard about how new 

technologies have transformed the way that people listen to music. The streaming 

of music is on the rise and people are listening to music on numerous devices. These 

changes in technology will also have a large impact on the decisions we will make 

as well. Any steps that we take must continue to encourage innovation and create 

basic fairness for everyone in the music world. 

I look forward to hearing from this panel of witnesses and want to continue to 

work with my colleagues to tackle these complex music licensing issues. 

Mr. COBLE. I thank the gentlemen and the statements from other 

Members will be made a part of the record without objection. 

Let me introduce our panel of witnesses as we proceed with this 

business at hand. Our first witness this morning is Ms. Rosanne 

Cash, singer, songwriter, author and performer. 

I can hardly see you because of the impediment here, Ms. Cash. 

Ms. Cash has released 15 albums that have earned a GRAMMY 

award and nominations for 12 more including 11 number one singles. She completed her residency at the Library of Congress in December of 2013 and was given the AFTRA Lifetime Achievement 

Award for sound recordings in 2012. Ms. Cash is testifying today 

on behalf of the American Music Association. 

And, Ms. Cash, as I mentioned to you earlier, your late dad also 

appeared before this Subcommittee and we enjoyed having him be 

here as well. It is good to have you here. 

Our second witness, Cary, I can’t see you either because of the 

impediment but I will hold you harmless for that. 

Mr. Cary Sherman is Chairman and Chief Executive Officer of 

the Recording Industry Association of America. In his position, Mr. 

Sherman represents the interests of the 7 million U.S. sound recording industry. He received his B.S. from Cornell University and 

his J.D. degree from the Harvard School of Law. 

Our third witness is Mr. Charles Warfield, Senior Advisor of 

YMF Media. Mr. Warfield is a 31-year veteran of the broadcasting 

industry and is here today on behalf of the National Association of 

Broadcasters. He received his B.S. in accounting from Hampton 

University. 

Good to have you with us, Mr. Warfield. 

Our fourth witness is Mr. Darius Van Arman, Co-Founder of the 

Secretly Group; a family of american independent recording labels 

based in Bloomington, Illinois. He is testifying today on behalf of 

the American Association of Independent Music, also known as 

A2IM. Mr. Van Arman attended the University of Virginia. 

Our fifth witness is Mr. Ed Christian, Chairman of the Radio 

Music License Committee, also known as RMLC. He teaches 

courses in media management, broadcast programming and radio 
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operations at Central University of Michigan. Central Michigan 

University. He received his B.A. in mass communications from 

Wayne State University and his M.A. in management from Central 

Michigan University. 

Our sixth witness is Mr. Paul Williams, President and Chairman 

of the Board at the American Society of Composers, Authors and 

Publishers. ASCAP represents hundreds of thousands of music creators worldwide. Mr. Williams is the Oscar, GRAMMY, and Golden 

Globe winning Hall of Fame composer and songwriter. 

Mr. Williams, you will be glad to know that your friend, Congressman Gilmore from Texas, admonished me to be easy on you 

today. So with Gilmore looking down from his seat we will be careful to adhere to that request. 

Our seventh witness, Mr. Chris Harrison, Vice President of Business Affairs and Assistant General Counsel of Pandora Media. He’s 

also an adept Adjunct Professor, teaching music law at the University Of Texas School Of Law. Mr. Harrison received his J.D. from 

the University of North Carolina, I am pleased to say, and his 

Ph.D. in political science, also from the University of North Carolina, Chapel Hill. 

Mr. Harrison, good to have a fellow Tar Heel in the room today. 

Our eighth witness is Mr. Michael Huppe, President and Chief 

Executive Officer at SoundExchange. In his position, he is responsible for establishing long-term strategic plan and vision for the organization. He received his B.A. from the University of Virginia 

and his J.D. from the Harvard School of Law. 

Our ninth and final witness is Mr. David Frear, Chief Financial 

Officer at the SiriusXM. In his position, Mr. Frear is responsible 

for overseeing finance, IT and satellite development operations. He 

received his M.B.A. from the University of Michigan at Ann Arbor. 

Gentlemen, before we begin to hear from the witnesses, I’d like 

for each of you to stand. If you will, we will swear you in. 

[Witnesses sworn.] 

Mr. COBLE. Let the record show that all responded in the affirmative. 

We will start with Ms. Cash. 

Folks, I will remind you, if you can, try to comply with the 5 

minute rule. When the timing light on your table goes from green 

to amber, that is your warning that you have a minute to go to 

reach the 5 minute pinnacle. You will not be severely punished if 

you don’t comply with that, but if you can stay with that, we try 

to comply with the 5 minute rule as well. The good news is, I don’t 

think there is going to be a vote but until after noon so that we 

will not be interrupted by floor votes. 

Ms. Cash, you are recognized for 5 minutes. 

TESTIMONY OF ROSANNE CASH, SINGER, SONGWRITER, AUTHOR AND PERFORMER, ON BEHALF OF THE AMERICANA 

MUSIC ASSOCIATION (AMA) 

Ms. CASH. Thank you. Chairman Goodlatte, Chairman Coble, 

Ranking Members Conyers and Nadler, Members of the Subcommittee, thank you for the opportunity to testify on behalf of the 

Americana Music Association. 
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I want to address a few obstacles to making a living as a songwriter and recording artist today. Everything I say is guided by one 

principle: All creative people are entitled to fair market compensation when their work is used by others regardless of the platform. 

I have been both a professional musician and songwriter for 35 

years. I grew up in the music industry, in the age of major record 

labels and brick and mortar record stores. I have been assigned a 

major label since 1978 and am currently on the esteemed Blue 

Note label. 

The climate among musicians at the moment is dispirited. We 

feel marginalized and devalued although our passion for our work 

remains unchanged. Every artist I know says, regarding their 

work, that they have no choice. We don’t create out of whimsy, narcissism, or lack of ambition for more financially dependable professions. We are fueled by an artistic sensibility that can be ruthless 

in its demand for discipline. And, in some ways, we are in a service 

industry. 

We are here to help people feel, to inspire, to reveal the secrets 

of the heart, to entertain, and provide sustenance for the soul. Creating music is a collaborative effort. In the creation of recorded 

music, cowriters, producers, fellow musicians, recording engineers, 

background singers, and various support people come together with 

the single purpose to create one work. 

I am a fan of new technology and I am excited about the potential I see in the new ways of distributing music that are being offered to music lovers. My enthusiasm is tempered, however, by the 

realization that these new services are all cast against the backdrop of crushing digital piracy and licensed under outdated and 

byzantine laws which stand in the way of creators being paid fairly 

for their work. 

Among the problems facing us are; one, the lack of a public performance right for terrestrial radio play for recording artists. The 

United States is one of a few countries, including China, North 

Korea, and Iran that lack a radio performance right for artists. The 

failure to recognize this right means that performers cannot collect 

royalties for their work even when it is broadcast in countries 

where the right exists because the treaties the U.S. has signed are 

reciprocal. 

Two, issues concerning how rates are set for licenses that songwriters offer for their work. Currently, the law prevents courts 

from considering all the evidence that might be useful in setting 

the fairest rates for licenses that performing rights organizations 

offer. And royalty rates are not set on a fair market basis. This 

makes no sense. The Songwriter Equity Act, introduced by Congressmen Collins and Jeffries, would address these issues and I 

thank them for that. 

Three, the lack of Federal copyright protection for pre-72 sound 

recordings. There is a gap in copyright protection for sound recordings created before 1972, which digital services use as an excuse 

to refuse to pay legacy artists. 

I thank Ranking Member Conyers and Congressman Holding for 

introducing the RESPECT Act to treat the work of legacy musicians fairly. For example, if my father were alive today, he would 

receive no payment for digital performances of his song ‘‘I Walk the 
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Line,’’ written and recorded in 1956. But anyone who re-recorded 

that song today would receive a royalty. 

The injustice defies description. 

These are a few of the many challenges we face as performers 

and songwriters. And I understand Ranking Member Nadler is considering legislation to comprehensively address these and additional concerns. 

Thank you, Congressmen Nadler. 

Bottom line, copyright law should not discriminate among individual music creators. Each should be fairly compensated for their 

role in the creation and delivery of music to audiences. 

I see young musicians give up their dreams every single day because they cannot make a living doing the thing they most love, 

the thing they just might be on the planet to do. They deserve our 

encouragement and respect. Musicians and artists of all kinds 

should be valued members of American society; compensated fairly 

for honest hard work. 

I believe we can find solutions so that artists and musicians can 

succeed together with both new and existing music services. And 

I thank you for this time. 

[The prepared statement of Ms. Cash follows:] 
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Mr. COBLE. I thank you, Ms. Cash. 

Mr. Sherman, let’s start with you. You are recognized for your 

statement. 

TESTIMONY OF CARY SHERMAN, CHAIRMAN AND CEO, 

RECORDING INDUSTRY ASSOCIATION OF AMERICA (RIAA) 

Mr. SHERMAN. Chairman Goodlatte and Coble, and Ranking 

Members Conyers and Nadler, and Members of the Subcommittee, 

my name is Cary Sherman. I serve as Chairman and CEO of the 

Recording Industry Association of America, representing such 

iconic labels as Columbia, Motown, Capitol, Atlantic; to name a 

few. 

Our members have worked hard over the past two decades to 

build a viable, diverse and consumer friendly digital music marketplace. Millions of music lovers can find whatever they want whenever and where ever they want it. 

Digital models already account for more than two-thirds of our 

revenue and that number is growing. But before the music marketplace can realize its full potential, there remains serious systemic 

issues to address. Records are the economic engine that drives the 

entire music industry. It’s the recording invested and marketed 

and promoted by record labels that produces real revenue for the 

songwriter, for the artist, for broadcasters, for digital music services. 

Record labels invest not just the financial capital but their 

human capital, years of experience and expertise from the likes of 

Clive Davis, Jimmy Iovine, Mo Ostin, who work with artists to 

bring out their very best, resulting in music that not only captivates fans but also drives revenues for the benefit of everyone in 

the music value chain. 

Yesterday, we released a report on the investments in music 

made by major record companies. In embracing digital distribution, 

record labels have revolutionized the business and streamlined 

their operations all while revenues have plummeted. Even in tough 

times, however, has a percentage of U.S. net sales revenue over the 

last decade major label payments for artist royalties have increased 

by 36 percent and mechanical royalties for songwriting have increased by 44 percent. 

Impediments to licensing impact the ability of record labels to 

sustain the investment that benefits the entire music ecosystem. 

Today’s antiquated, complex and time consuming licensing regime 

undermines that system. And that’s why we believe music licensing 

must be fixed, because behind the seamless experience provided to 

consumers lurks an inefficient and frankly broken system. 

We’ve got to rethink it. Here is what we suggest. First, grant a 

broadcast performance right for sound recording. It is frankly inexcusable that the U.S. still provides a special interest exemption for 

the benefit of AM/FM radio broadcasters; a subsidy which is taken 

out of the pockets of artists and their record labels. It’s time for 

that to end. 

Second, make sure artists who are recorded before 1972 are paid. 

Because sound recordings are covered by Federal law after February ’72 and State law before that date, some of our most cherished artists are not being paid by businesses who take advantage 
248 

of the compulsory licenses. We are extremely grateful to Representatives Holding and Conyers and their other cosponsors who are 

proposed to RESPECT Act to fix this anomaly. 

Third, allow rights to be bundled and administered together. 

Owners of every other type of copyrighted work are able to license 

all the copyrights necessary for all uses. A movie streaming service 

doesn’t have to go to one entity to license the performance and a 

different entity to license the making of a server copy so it should 

be a musical works. 

Fourth, create an across-the-board market-based rate standard. 

It goes without saying that every right sold, it deserves fair market 

value for their work. We should have one fair market value rate 

standard for uses of all music that remain under a compulsory license. 

Finally, consider a one-stop-shop for musical work licenses. We 

have filed with the copyright office an idea laying out one possible 

way to license musical works in this manner. It is a potential path 

toward simplifying the complicated way musical works must be licensed today. But we also understand, as we stated repeatedly in 

our submission, that no revision to the music licensing regime can 

move forward unless publishers, songwriters and all the relevant 

stakeholders in the music community, come to a solution on which 

they agree. 

The goals of any solution should be to align the economic interests and incentives of music creators; ensure that songwriters and 

publishers receive a fair portion of revenue from the licensing of 

the sound recording; avoid competition between record labels and 

music publishers for the same dollars from licensees; speed the licensing process, making it quicker and easier for consumers to 

enjoy new music services; and make royalty payments to songwriters and publishers more efficient and more transparent. We 

welcome the opportunity to engage with our music industry partners on our idea, as well as on any other ideas they may have to 

improve the status quo. 

The music business has reinvented itself but our work is not 

done. We hope by working together with music industry colleagues 

that we can find the consensus necessary to simplify music licensing and ensure that all creators are paid fairly. 

Thank you. 

[The prepared statement of Mr. Sherman follows:] 
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Mr. COBLE. Thank you, Mr. Sherman. 

Mr. Warfield? 

TESTIMONY OF CHARLES M. WARFIELD, JR., JOINT BOARD 

CHAIR, NATIONAL ASSOCIATION OF BROADCASTERS (NAB), 

AND SENIOR ADVISOR, YMF MEDIA 

Mr. WARFIELD. Thank you. Good morning, Chairman Coble, 

Ranking Member Nadler—— 

Mr. COBLE. Mr. Warfield, pull your mic closer to you, if you will. 

Mr. WARFIELD. Good morning, Chairman Coble, Ranking Member Nadler, and Members of the Subcommittee. 

My name is Charles Warfield and I am the Joint Board Chair of 

the National Association of Broadcasters. Over my 37-year career 

in and around broadcasting I have served as President in one of 

the country’s first wholly minority-owned radio station groups. I 

ran the day-to-day operation of some of America’s top radio stations 

and I’ve even worked as an executive at a record label. 

Over that time, I learned that broadcasters serve our listeners in 

many beneficial and significant ways. Radio broadcasters inform, 

educate and alert listeners to important events, topics and emergencies. We introduce them to new and old music. We entertain 

them with sports, talk and interviews. We are local, involved in our 

communities and serve the public interests. For those reasons, I 

am proud to testify today on behalf of the thousands of free, local, 

over-the-air radio stations across the United States. 

Supreme Court has repeatedly held that the core objective of 

copyright law is a public good. Not the creator’s interest, not the 

user’s interest, but the interest of the public at large. Unfortunately, in testimony before this Committee, some are arguing for 

fixes to copyright law that serve a very different goal; ensuring 

that their individual constituencies receive greater compensation at 

the expense of both music licensees and listeners. Nowhere in their 

arguments do they emphasize the need for balance, the interest of 

consumers, or enhancements to competition; any one of which 

would promote the public good. 

In contrast, stepping back from any one piecemeal legislative 

proposal before this Subcommittee, it is clear that, taken as a 

whole, the time-tested laws that govern the relationship between 

the music and broadcast industries promote the public good in 

three important ways. 

First, the existing law has enabled a locally focused radio industry that is completely free to listeners. Anyone with an AM/FM antenna can access our programming completely free of charge, especially in times of emergency when other forms of communication 

fail. Radio is unique among entertainment mediums in that there 

is no subscription, no broadcast package or expensive wireless data 

connection needed for access. 

Second, the resulting popularity of radio has significantly contributed to a U.S. recording industry that is the envy of the world, 

both in terms of size and scope. While U.S. copyright law may contain some critical differences from its international counterparts, 

those differences have fostered the largest recording industry in the 

world. One that dwarfs that of the U.K., Germany, France, and 

Italy combined. Our unique system of free airplay for free pro-
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motion has served both the broadcasting and recording industry as 

well for decades to the benefit of listeners. 

The fact is, in all 37 years of my career, I have never had a 

record executive come to my station and say, ‘‘Why are you playing 

all of my music?’’ I have never had a promotion department refuse 

to provide us with their newest record the day it comes out. They 

show up at radio where they see the value and realize that we have 

the greatest promotional tool for their artist. And we’re happy to 

provide them with that. 

Third, and most importantly, the community-based nature of 

local broadcasting has driven our industry to extraordinary levels 

of public service. For example, in the wake of Hurricane Sandy, 

New York City’s WQHT, HOT 97, put its music on hold and broadcast steadily throughout multiple power outages, providing them 

much needed connection to lifesaving news and information. Then, 

in the days following, HOT 97 ran continuous informational announcements providing critical information about disaster relief locations and assistance. Further, its Hip-Hop Has Heart Foundation 

provided blankets, clothing, HD radios and essentials to residents 

of the inflicted areas throughout the crisis. 

This is just one example of our industry’s commitment to service 

and it is the norm, not the exception. Each of you knows this as 

you see the value of the local broadcasters back in your districts 

every day. But make no mistake, the unique community focus of 

broadcast radio is only enabled by the current legal framework. 

I would urge this Committee to tread carefully and resist piecemeal changes to law that might disrupt this delicate balance that 

has enabled our industry to serve the public good for decades. 

Turning briefly to streaming, I agree with others on this panel 

that the current legal framework governing webcasting imposes obstacles on every corner of the music ecosystem that currently prevents our businesses from collectively serving the public good. 

Today, whether you are a large broadcaster or small broadcaster, 

the revenue that can be generated from streaming simply does not 

and cannot offset the costs, so many of our members simply do not 

do it. I urge this Subcommittee to focus this music licensing review 

on changes to law that will promote a sustainable webcasting industry to the benefit of artists, songwriters and consumers. 

In conclusion, NAB stands ready to work with you to ensure a 

vibrant and competitive broadcast industry, now and in the future, 

that serves the public good. 

I am pleased to answer any questions and welcome your invitation for me this morning. Thank you. 

[The prepared statement of Mr. Warfield follows:] 
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Mr. COBLE. Thank you, Mr. Warfield. 

Mr. Van Arman? 

TESTIMONY OF DARIUS VAN ARMAN, CO-FOUNDER, SECRETLY 

GROUP, AMERICAN ASSOCIATION OF INDEPENDENT MUSIC 

(A2IM) 

Mr. VAN ARMAN. Chairman Coble and Ranking Member Nadler 

and Members of the Subcommittee, thank you for inviting me to 

testify today on behalf of the small and medium-sized businesses 

that make up the American Association of Independent Music, 

A2IM. 

I am Darius Van Arman and I am an entrepreneur. I am the CoFounder and Co-Owner of Secretly Group, a group of independent 

labels headquartered in the mid-West of the United States. We currently employ 70 U.S. employees. We have multiple gold albums 

and singles, and one of our recording artists, Bon Iver from the 

State of Wisconsin, has won multiple GRAMMYs. I’m also on the 

board of A2IM, a not-for-profit trade organization representing over 

330 independent record labels of all shapes and sizes from all over 

the U.S. from Hawaii to Florida. 

Our sector now comprises 34.6 percent of the U.S. recorded music 

sales market. First and foremost, the American independent sector 

wants nothing more than a free market with a level playing field. 

However, there is one thing standing in our way: Big companies 

using their power and resources to take what is not fairly due to 

them. 

Large technology companies use our music but, because of the 

safe harbors our current copyright law provides to them, artists, 

creators, and independent labels are not being fairly or adequately 

compensated. Broadcasters are not paying anything at all to broadcast their sound recordings on AM/FM radio. This is not only unfair to us on the creator’s side, but it is also unfair to those digital 

services who do pay creators. And, within our music industry, there 

is one imbalance that is the primary threat to musical creative enterprise: Market concentration. 

Today, just three major label groups exist comprising about 65 

percent of the U.S. recorded music sales market based upon copyright ownership, the largest two of which are subsidiaries of foreign 

corporations. Congress intended the copyright would stimulate new 

creative works for the public interest for consumers. It did not intend to enable just a handful of private interests the ability to 

make huge profits unfairly on the backs of creators. 

While we like the idea of a comprehensive approach to music 

copyright legislation, this music bus must be driven by all members 

of the music creator community; not steered by just a few major 

private interests toward only their goals. 

So what do we need? We need stronger copyright protections. 

The shape of copyright law now is currently subsidizing large technology companies. 

We need a broadcast performance right. Broadcasters must fairly 

compensate all creators so the creation process can continue. A 

broadcast performance right will also give us international reciprocity and the receipt of overseas radio royalties which will improve America’s balance of trade. 
269 

We need more transparency and more efficiency in our music licensing system. Our industry can’t afford to unfairly take value 

away from artists, creators and those who invest in these creators. 

Finally, we need a stronger compulsory statutory license for noninteractive performances as it is the best friend of a level playing 

field. 

Creator pay must be based on actual music usage. The current 

music licensing system is broken. It provides incentives for the 

wrong behavior. Large companies take advantage of whatever inefficiencies exist in the marketplace to make an extra buck. 

So we need copyright law revisions that do the following: Increase the value of music; make copyright more equitable; reduce 

inefficiencies; and enable creators to create what consumer’s desire. 

Our sincere hope is that we can come to these revisions in partnership with all industry participants. 

The vast majority of small and medium enterprises that comprise 

the independent sector are American companies employing American citizens in American offices and directly supporting American 

creators. Almost every dollar that is earned by an independently 

owned copyright has a much greater impact on the U.S. economy 

than every dollar earned by a foreign-controlled major label copyright. Congress and the copyright office should keep this in mind 

when it contemplates copyright law revisions. As American copyright law should inure primarily to the benefit of American consumers, American creators and American enterprises. 

In the end, all the independent sector wants is a free market 

with a level playing field. We want to compete to provide the economic growth and job creation that our American economy needs. 

Thank you. 

[The prepared statement of Mr. Van Arman follows:] 
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Mr. COBLE. Thank you, Mr. Van Arman. 

Mr. Christian? 

TESTIMONY OF ED CHAIRMAN, RADIO MUSIC LICENSE 

COMMITTEE, INC. (RMLC) 

Mr. CHRISTIAN. Mr. Chairman, Ranking Member Nadler, and 

Members of the Subcommittee, my name is Ed Christian and I’m 

Chairman of the Radio Music License Committee, the RMLC. 

The RMLC has been in existence for well over 50 years and is 

a non-profit that represents some 10,000 local radio stations in the 

United States with respect to music licensing matters. Over the 

years, the RMLC has been involved in extensive music license negotiations with the two largest performing rights organizations, 

ASCAP and BMI. 

The mission of the Radio Music License Committee has always 

been to provide a competitive market for music licensing in which 

radio station operators pay a fair price for performance rights and 

copyright owners receive equitable compensation. The RMLC has 

historically achieved fair and reasonable licenses for the radio industry with ASCAP and BMI through our combination of industrywide negotiation and, as necessary, Federal rate court litigation. 

While recently, the RMLC has found itself involved in antitrust 

litigation involving the smallest of the performing rights organizations in the U.S., SESAC, in order to curb this company’s anti-competitive licensing practices. 

I will start by saying, unequivocally, that licensing redistribution 

concepts that rely upon the radio industry for funding are misguided. With particular reference to the recurring demand by the 

recording industry for a sound recording performance right to be 

imposed upon terrestrial radio, please understand that the radio 

industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital 

strategy that addresses a decline in its own brick and mortar income. 

Congress unambiguously intended that, in exchange for unique 

promotional support afforded record labels and artists, terrestrial 

radio should be treated differently from other transmission platforms. That premise has not changed. 

Local radio station operators are responsible for obtaining licenses for the public performance of copyrighted musical works. 

For the vast majority of operators, this equates to a blanket license 

that permits a station to air music from a particular PRO’s repertory without having to account for actual usage. Traditionally, 

the administrative benefits of a blanket license has outweighed 

antitrust aspects associated with a structure that permits PROs to 

aggregate music works in a way that has the hallmarks of a monopoly. 

Given the large scale of the radio industry, the RMLC believes 

that a retention of collective licensing in some form is efficient and 

advisable. In this regard, the independent and experienced Federal 

judges, associated with the ASCAP and BMI rate courts have been 

able to deliver appropriate rate-setting oversight. A purely free 

market approach to music licensing, coupled with the absence of 

consent decrees monitored by the Department of Justice, would in-
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vite market abuse and represent a step backward from a system 

that has served parties well for decades. Indeed, the fact that there 

are currently two antitrust cases against SESAC in Federal court 

is a testament to what has happened in the absence of government 

supervision of entities that wield the leverage of aggregated musical works combined with a club of statutory penalties for copyright 

infringement. 

Now, if Congress is dedicated to bold reform, it could lead to 

process efficiencies and enhanced royalty payment to creators. It 

might want to explore the prospect of a super licensing collective 

along the lines of what has already been proposed by other stakeholders. Outside of Brazil, it is hard to identify another country in 

the world that supports multiple licensing entities that administer 

a single right such as the public performance right in the musical 

composition. 

The fact that the U.S. continues to maintain three organizations 

for this purpose, ASCAP, BMI and SESAC, sets up an enormously 

complicated and redundant licensing system and likely guarantees 

precious royalty payments due creators are being diminished in 

their journey from the licensee to the copyright owner. Indeed, this 

example doesn’t even account for the role of other licensing agencies such as the SoundExchange and The Harry Fox Agency that 

further contribute to the music licensing morass. 

Before we simply attribute the perceived economic injustices ascribed to creators of musical works to the level of fees paid by 

music users, the radio industry, we really need to carefully scrutinize the royalty distribution process that dictates how and what 

creators are paid relative to incoming license fees. 

The RMLC brings longstanding and professional expertise to the 

table, and we stand ready to work with other stakeholders in fashioning a pragmatic music licensing regime that is fair to all and 

preferential to none. 

Thank you. 

[The prepared statement of Mr. Christian follows:] 
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Mr. COBLE. Thank you, Mr. Christian. 

Mr. Williams? 

TESTIMONY OF PAUL WILLIAMS, PRESIDENT AND CHAIRMAN 

OF THE BOARD, AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS (ASCAP) 

Mr. WILLIAMS. Good morning, Chairman Coble.—— 

Mr. COBLE. Mr. Williams, pull that mic closer to you, if you will. 

Mr. WILLIAMS. There we go. 

Good morning, Chairman Coble and Goodlatte, Ranking Member 

Nadler and Conyers, and Members of the Subcommittee and visiting members of the larger organization. My name is Paul Williams and I am a songwriter, I am an American songwriter. I also 

have the great pleasure and honor of being President and Chairman of the Board of the American Society of Composers, Authors, 

and Publishers. We are ASCAP. 

In 1914, the small but visionary group of American songwriters 

had an idea. They believed they could protect their rights as music 

creators more effectively if they joined together rather than going 

it alone. So thank God they formed ASCAP. 

Today, more than 500,000 songwriters, composers and music 

publishers trust and depend on ASCAP to negotiate licenses, monitor public performances, and distribute royalties all on a not-forprofit basis. I will repeat that: On a not-for-profit basis. 

I’m honored to appear before you today to speak on their behalf. 

We’re here today because technology is changing to the world in 

wonderful ways. We’re moving into a world where people no longer 

own the music they love, they stream it whenever and wherever 

they want. At the same time, the Federal regulations that govern 

how music is licensed and thus how songwriters, like myself, are 

compensated for our work, do not reflect the way people listen to 

music today. In fact, they are stuck in the distant past and it’s 

threatening the very future of American music. 

ASCAP is governed by a consent decree created in 1941 and last 

updated in 2001. That’s, incidentally, before the iPod ever hit a 

store. We all know the music marketplace has changed dramatically since then and sadly new music services are finding ways to 

take advantage of this outdated regulatory system. Consider the 

fact that it takes one million streams on Pandora for a songwriter 

to earn $90; nine, zero dollars. 

For some perspective, one of the most popular songs in 2011 was 

Lady Antebellum’s wonderful hit, ‘‘Need You Now.’’ For 72 million 

streams on Pandora, the four songwriters earned less than $1,500 

apiece. Meanwhile, record labels and artists often earn 12 to 14 

times more than songwriters for the exact same stream. 

Such an imbalance would not happen in a free market where 

real competition exists and songwriters have more of a say over 

how our music is licensed, how our music is licensed. But under 

the current consent decree, songwriter compensation reflects the 

true value of our work less and less even as our music is performed 

more and more. 

There is now a very real risk that major publishers will withdraw from ASCAP and BMI entirely. As a result of that, voluntary 

collective licensing could soon collapse. It would make the system 
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more complex, more inefficient, and more expensive for everyone 

including music fans, the people that love our music, unless we do 

something to fix it. 

Now I sit here surrounded by representatives of multi-billion dollar corporations that profit from our songs and I find it beyond perplexing that American songwriters, like Rosanne and myself, are 

the ones subject to the heaviest government regulation. Be that as 

it may, I believe that all of us working together to modernize the 

music licensing system will allow songwriters and composers to 

thrive alongside businesses that revolve around our music. We 

want you to be a giant success. You are delivering our songs to the 

world. 

To that end, we’re proposing several updates to our consent decree with the Department of Justice. We believe these updates can 

save voluntary collective licensing from the serious risks facing it 

to the benefit of music users, consumers, and creators alike. First, 

we need a faster, less expensive process for settling rate disputes 

with businesses that use music; one that considers independent 

agreements reached in the free market as benchmarks. 

Second, songwriters need flexibility to manage our own rights. 

We should be allowed to grant ASCAP the right to license our 

music for some uses while maintaining the right to license other 

uses directly ourselves. It’s our music. Doing so will foster greater 

competition in the marketplace. 

Finally, we can streamline the licensing process for thousands of 

music creators and users by giving ASCAP the ability to license all 

of the composition rights that business needs to operate their music 

in one transaction. Passage of the Songwriter’s Equity Act, introduced by Representatives Collins and Jeffries for which we are 

most grateful, is another crucial piece of this puzzle. It is a simple 

and reasonable fix which will enable the court to consider sound recording royalty rates as evidence when establishing songwriter royalty rates. 

Working together to make these changes, I’m confident we can 

preserve the immense benefits of voluntary collective licensing. 

This will benefit businesses that license music and listeners who 

enjoy it while ensuring that songwriters, composers, and music 

publishers are compensated for the true value, for the true value, 

of our music the true value our music brings to the marketplace. 

Thank you for the opportunity to share this with you today. 

Thank you so much. 

[The prepared statement of Mr. Williams follows:] 
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Mr. COBLE. Thank you, Mr. Williams. 

Mr. Harrison? 

TESTIMONY OF CHRIS HARRISON, VICE PRESIDENT, 

BUSINESS AFFAIRS, PANDORA MEDIA INC. 

Mr. HARRISON. Thank you, Mr. Chairman, Ranking Member 

Nadler, Chairman Goodlatte, Ranking Member Conyers and the 

other Members of the Committee. Pandora appreciates this opportunity to testify at this important hearing. 

Without question, Pandora is delivering tremendous value to listeners, artists, songwriters, and the music industry. 77 million listeners tuned into Pandora last month and listened for an average 

of 22 hours. Every month Pandora performs more than 1.5 million 

songs by more than 100,000 recording artists, 80 percent of whom 

were not played on terrestrial radio. 

Pandora contributes hundreds of millions of dollars to a new royalty stream for artists that did not exist 20 years ago. Just 9 years 

after launching, Pandora will celebrate a major milestone later this 

summer; $1 billion in total royalties paid. 

As this Committee considers opportunities to improve music licensing, Pandora hopes the Committee will appreciate the essential 

aspects of our current system of statutory blanket licenses, including the consent decrees which encourage innovation through simplified licensing procedures, protect music users from the anticompetitive behavior of big copyright owners, and ensure that artists receive their fair share of the hundreds of millions of dollars 

in royalties that services like Pandora pay each year. 

In today’s highly concentrated music industry, with fragmented 

and opaque copyright ownership, statutory blanket licensing is the 

most efficient means for digital music services to license the millions of copyrights owned by tens of thousands of copyright owners 

and are necessary to offer a compelling service to consumers. As 

the Future of Music Coalition recently stated, ‘‘The incredible 

growth of Internet radio would have been inconceivable had fledgling webcasters been compelled to negotiate with all the music publishers individually. Without an easier way to obtain permission to 

play songs, Internet radio might never have happened.’’ 

That being said, Pandora’s recent experience reflects the very 

real and continued anticompetitive behavior of major music publishers in the performing rights societies reflecting a continued 

need for government protection. 

As concluded by the Federal judge who oversaw Pandora’s rate 

proceeding with ASCAP, ‘‘The evidence at trial revealed troubling 

coordination between Sony, Universal Music Publishing, and 

ASCAP, which implicates a core antitrust concern underlying the 

ASCAP consent decree.’’ 

Statutory blanket licenses provide important transparency into 

how royalty payments are calculated and enable direct payment to 

recording artists and songwriters. Without them, the royalty payment process would be controlled by record labels or music publishers where un-recouped advances are deducted and a smaller 

percentage of the royalty, if any, is passed through to the artist. 

While Pandora believes that statutory blanket licensing should 

remain a central feature of copyright law, Congress can improve 
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the efficiency of determining the reasonable fees for such licenses. 

For example, several respondents to the Copyright Office’s recent 

notice of inquiry noted the expense and burden of the current 

Copyright Royalty Board rate-setting process, highlighting: number 

one, the need for the application of the Federal Rules of Civil Procedure in evidence; two, the establishment of the unitary proceeding with ample time for discovery and presentation of evidence; 

and three, the application of the so-called 801(b) standard. 

We would also recommend, in order to foster greater transparency, the creation of a single database of record, hosted by the 

Copyright Office in housing all relevant copyright ownership information. Participation need not be mandatory, but Congress could 

incent robust participation. For example, just as Chapter 4 of the 

Copyright Act prevents a copyright owner from seeking statutory 

damages unless the work at issue is registered, Congress could include a requirement that entitlement to statutory damages would 

be contingent on registering and keeping accurate ownership information in this database. This would help prevent copyright owners 

from holding services, such as Pandora, hostage during negotiations; something we experienced directly in 2013 when a handful 

of major publishers threatened our business with massive copyright 

infringement penalties while refusing to disclose their repertoire. 

In addition to enabling services to quickly ascertain who owns 

which rights to a work, a single database of record would also enable services to identify the owners of the songs it performs, which 

would encourage real competition among copyright owners for distribution across all platforms. 

It is important to note that while transparency would help mitigate anticompetitive behavior, it would not alleviate such abusive 

practices entirely. That’s why the protection of statutory blanket licensing and the consent decrees must be preserved. 

Thank you and I look forward to answering your questions. 

[The prepared statement of Mr. Harrison follows:] 
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Mr. COBLE. Thank you, Mr. Harrison. 

Mr. Huppe? 

TESTIMONY OF MICHAEL HUPPE, PRESIDENT AND CEO, 

SOUNDEXCHANGE INC. 

Mr. HUPPE. Mr. Chairman and Members of the Subcommittee, 

I’d like to start by telling the Committee something you probably 

don’t hear very often: Congratulations to Congress on getting it 

right. 

For over 10 years now, SoundExchange has administered the 

statutory license for sound recordings on digital radio that this 

Committee created in 1995. And that decision shines as a true legislative success story. It provides transparency and efficiency that 

makes possible the digital radio services enjoyed today by over 100 

million Americans. It has led to a critical and growing revenue 

stream for SoundExchange’s 100,000 accounts which represent featured artists, background musicians, labels and rights owners large 

and small. 

And the statutory license has provided a huge commercial benefit 

to the 2,500 services who have used it to build their businesses, 

some of America’s best known and fastest growing companies with 

household names, like Pandora and SiriusXM, providing them easy 

access to the product they needed to get off the ground. 

Congress greased the tracks, removed the barriers to entry, and 

a bourgeoning multibillion industry grew. And while you’ve heard 

many parties discuss problems elsewhere in the industry, Mr. 

Chairman, everyone, everyone connected with the SoundExchange 

world, which includes the entire recorded music side of the business, artists, labels, unions, even the digital services themselves, 

everyone, uniformly supports the fundamentals of this system. 

But as we move forward, there was one core principle that 

should guide everything we discuss and that is this: All creators 

should receive fair pay on all platforms whenever their music is 

used; period. Everyone who has a hand in the creation of music deserves fair market value for their work. And I mean everyone, Mr. 

Chairman; songwriters, publishers, studio producers, and engineers. The artists who give compositions life and record companies 

who help artists fill their creative vision. Fair pay would ensure 

justice for creators, whose contributions form the soul of these services; fair pay would level the playing field for radio services; and 

fair pay would ensure a healthy vibrant ecosystem for listeners and 

fans. 

With that guiding principle, I would like to propose a few modifications to make the good system work even better. First, Congress must address the current royalty crisis facing legacy artists 

with recordings made before 1972. The refusal of some radio services to pay royalties for this era of music makes no sense as a matter of policy and is surely not what this Committee intended when 

it created the digital radio license. It is just wrong to pay nothing 

to artists who created the most iconic era of music in American history. 

And on behalf of SoundExchange and all of the artists we represent, I extend our thanks to Congressmen Holding and Ranking 

Member Conyers and all of the Members on this Committee who 
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have joined them in supporting the RESPECT Act. I urge the Committee to act now on this critical piece, pre-1972 artists, simply 

cannot afford to wait. 

Second, Congress must ensure that all radio platforms pay all 

creators. This means eliminating the ancient and unfair loophole 

that allows the $17 billion AM/FM radio industry to pay nothing 

for the source of its lifeblood. FM radio uses music to draw the 

crowd and make its profits. Yet, it ignores the performers at the 

center of its stage. FM’s tired and stale justification for taking advantage of artists rings hollow and are unfair to other services 

seated with me here today. 

And third, Mr. Chairman, once all platforms start paying creators, they should pay according to the same fair market standard. 

It makes no sense, that similar radio platforms played by different 

rules, especially in today’s world, where those platforms may compete against one another in the same places over the same speakers to the same listeners. To quote Ranking Member Nadler’s opening statement, ‘‘The government must get out of the business of 

picking winners and losers in this industry.’’ If we want innovation, 

the law shouldn’t give favorable rates to some companies or breaks 

to older formats. Stated another way, Mr. Chairman: these businesses should compete based on their legal appeal and economic 

value not on the strength of their legal loopholes. 

So Mr. Chairman, what would success look like for music licensing going forward? It would be a system where many of the challenges we’re talking about today would fade into the background; 

where the back office would work seamlessly and invisibly; where 

we are focused on business models and consumer offerings rather 

than rate standards and inequity. Success would mean a system 

where the entire music community worked cooperatively to address 

these issues for the collective good; and, most importantly, success 

would mean a system based on the guiding principle that I set 

forth earlier, all creators receive fair pay on all platforms whenever 

their music is used. 

In closing, Mr. Chairman, the American music industry represents some of our best talent and our most cherished assets. All 

we’re asking for is something pretty simple, that those responsible 

for bringing these treasures to life be treated fairly when someone 

else profits off of their work. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Huppe follows:] 
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Mr. COBLE. Thank you, Mr. Huppe. 

Mr. Frear? 

TESTIMONY OF DAVID J. FREAR, CHIEF FINANCIAL OFFICER, 

SIRIUS XM HOLDINGS INC. 

Mr. FREAR. Chairman Goodlatte, Chairman Coble, Ranking 

Members Conyers and Nadler and Members of the Subcommittee, 

thank you for the opportunity to testify today. My name is David 

Frear. I am the Executive Vice President and Chief Financial Officers of SiriusXM. 

SiriusXM is one of the largest radio providers in the United 

States. We have over 25 million subscribers, subscribers residing in 

every congressional district in the continental U.S. and we employ 

2,100 people around the nation. 

SiriusXM is well positioned to offer testimony on these copyright issues. In 2013, we paid approximately $325 million in royalties to 

record companies, publishers, songwriters, and artists. We have 

paid over $1.8 billion in music royalties since we launched service 

11 years ago. 

I’d like you to take away four key themes from my testimony. 

First, parity. Radio is radio whether it is AM, FM, satellite or 

Internet radio. All radio companies should pay for the music they 

use on the same basis; no exceptions. Continuing to exempt the terrestrial radio companies that dominate radio listening with over 90 

percent of the market and generate over 15 billion in revenue is 

bad policy. Copyright law does not distinguish between AM and 

FM radio based on technology and it should not distinguish between AM/FM, satellite or Internet radio either, based on technology. 

Second, today’s Copyright Act creates an unfair digital disadvantage. Drawing any distinction based on the claim that some radio 

services are digital while others are not, is based upon the false 

premise and produces a distorted result. Terrestrial radio began 

broadcasting digital signals over a decade ago and they have routinely made digital copies in the ordinary course in their broadcast 

operations since the 1980’s. Similar services, regardless of the 

mechanism or medium through which they are delivered, should be 

treated similarly. With each rate-setting proceeding, the digital disadvantage between terrestrial radio and other radio services just 

gets wider. The two pending bills, the Songwriter Equity Act and 

the RESPECT Act, will only further widen this digital disadvantage. 

Third, protection from market power. The music business has 

never been more concentrated than it is today. Three companies 

control nearly 90 percent of the market for distribution of music. 

The same three companies control nearly 70 percent of the music 

publishing market. Two PROs control over 90 percent of musical 

performance rights and one collective controls the sound recording 

performance rights. 

The consent decrees are crucial to protecting against noncompetitive rate demands. The consent decrees do not interfere with competition, they prevent activities that would otherwise constitute 

clear violations of the antitrust laws. Recent attempts by copyright 

owners to partially withdraw from ASCAP or BMI, in an attempt 
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to cherry-pick entities who are relying on their PRO licenses for access to those publisher’s works, are troubling; especially in light of 

the publisher’s refusal to provide the catalogue data that would 

allow the services to remove the catalogue from the air in the event 

they couldn’t reach agreement on the fees. 

Fourth, and finally, fair rates. The willing buyer, willing seller 

standard can have meaning only where marketplace transactions 

reflect the workings of an actual free market. There is no functioning free market in music licensing because of the unprecedented concentration in the music industry and the aggregation of 

power in the PROs. Congress should, instead, adopt the 801(b) 

rate-setting standard for a broad array of music licensing purposes. 

That standard provides the Copyright Royalty Board with wide 

latitude to ensure that both copyright owners and users are treated 

fairly, including potential new users, like terrestrial radio. 

The 801(b) standard is also a matter of simple fairness. Congress 

adopted that standard in recognition that services subject to those 

standards founded their services at a time when there was no 

sound recording performance right at all. To change the standard 

now would fundamentally undercut the reliance interest of those 

services. 

So in summary, while the $15 billion AM and FM radio industry 

pays the PROs approximately $300 million per year, they do not 

pay a penny for sound recording performances. By comparison, 

radio companies, like Pandora and SiriusXM, are less than onethird the size of AM and FM in terms of revenue. Yet, we’ll pay 

more than two and a half times, nearly $800 million, in music royalties this year. It is simply bad public policy to reward the biggest 

entities in the radio field with a competitive cost advantage while 

penalizing innovation and emerging services that increase economic 

activity and create jobs. 

As you consider new legislation, it is my hope that you will recognize the unbalanced playing field for the music licensing today and 

craft an equitable and durable solution. 

I thank you for the opportunity to testify. 

[The prepared statement of Mr. Frear follows:] 
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Mr. COBLE. Thank you, Mr. Frear. I appreciate that. 

I want to thank the panelists for no one abused the 5 minute 

rule. And for that I am appreciative to you. We try to comply with 

the 5 minute rule too. So if you all could keep your responses as 

tersely as possible, we would be appreciative to you. 

Ms. Cash, let me start with you with a simple question but I 

think it may be pertinent. Do you believe that the music licensing 

system should be set up in such a way that makes it easier, or at 

least more simple, for artists to understand they are being paid 

and who is paying them? 

Ms. CASH. I do. 

I think that transparency is essential and that the lack of transparency is a huge part of the problem. For instance, there was a 

petition going around not long ago from Pandora asking musicians 

to sign. And it was very enthusiastic about how that would benefit 

us. We found that to be somewhat manipulative not transparent. 

And, in fact, they lobbied for lower rates for us. So fans are confused, which they are, they come to me all the time and say, ‘‘How 

do I buy your record? What is the decent thing to do? How can I 

support you so you keep making records?’’ 

Then, if they are confused and we are a bit confused, I think 

transparency would go a long way toward clearing some of this up. 

Mr. COBLE. Ms. Cash, you opened the transparency door, so let 

me walk through that door. And I’m going to put this question, if 

you will, if I may go to Mr. Harrison and Mr. Williams. 

Transparency is a word this Subcommittee has heard repeatedly 

quite a bit including transparency in copyright ownership, transparency in who pays what and transparency in how royalties are 

divided. How should the Congress, in your opinion, consider the 

issue of transparency as we consider potential changes to our music 

licenses laws? Is transparency just as important and vital as other 

issues? 

Start with you, Mr. Williams, then follow, Mr. Harrison. 

Mr. WILLIAMS. Mr. Chairman, I apologize my hearing is a little 

bit up but if I get the gist of what you said, and my hearing is not 

the best, but—— 

Mr. COBLE. Nor is mine so I can relate to that. [Laughter.] 

Mr. WILLIAMS. To answer your question, I think, as much as I 

could hear, was related to transparency. And ASCAP is very proud 

of our transparency. We have a database for our members. If the 

Love Boat theme that I wrote is being played in Lithuania right 

now, I can jump online and find out that it is being played. 

I have to disagree with Mr. Harrison. I think he was perhaps 

misinformed in something of what evolved in the Pandora case 

with Sony. I want to straighten that out, first of all. We are very 

proud of the fact that we are open and transparent on all cases. 

When Pandora requested information on licenses, for example, 

the 2 days before the end of their trial, we immediately gathered 

that information. And, after 2 days, when we had it all together, 

we reached out to Pandora and said, ‘‘Would you like this information?’’ We never heard back from them. I understand the communication in a multimillion dollar organization sometimes is not the 

best. Perhaps that didn’t reach the head office but we had the information that they wanted and we have it today. And have to tell 
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you, Mr. Chairman, that I believe that any licensee that we do 

business with has the right to know what they are getting for their 

money. So we have that information; it is open and available. 

We are proud of our transparency on all levels and incidentally 

there was never any finding of any improper coordination between 

ASCAP and any of the publishers. If there had been, I’m sure that 

the very capable judge would have brought it to our attention and 

would have filed on it. There was never any such filing. 

Mr. COBLE. Thank you, sir. 

Mr. Harrison? 

Mr. HARRISON. Yes. 

Transparency is a key part, as Mr. Frear indicated to any free 

and competitive market; the ability for users to understand who 

owns the content that is supposedly being licensed; and our ability 

to access that information. 

With due respect to Mr. Williams, I don’t want to get into a debate about what happened in a trial. There is a 136-page opinion 

that is very detailed by Judge Cote. And if the Chairman would 

like it, I’m happy to provide it for you. 

Mr. COBLE. Let me try one more question before the red light appears. 

Mr. Sherman, with the world going digital and the need to update our laws for the digital age, is the time to finally resolve 

music licensing issues, once and for all, before us? 

Mr. SHERMAN. Definitely. 

The opportunity has never been greater. It is when the system 

is in crisis that there is an actual opportunity to bring people together to actually try and make a difference. That time seems to 

be now. 

Mr. COBLE. Anybody else want to add very briefly to that? 

I will open the door, if you will, because my red light is about 

to illuminate. 

I recognize the distinguished gentleman from New York, Mr. 

Nadler. 

Mr. NADLER. Thank you very much. 

Let me just say, first, before I begin, some questions that we 

have heard a lot of testimony today. We have heard testimony 

about the advantage of the, what do you call it, the free air play 

for free promotion system has served the industry, has served everybody well and it is, you know, it is a good thing. 

Let me say I find that argument incredible. In a capitalist system, it may be somebody’s judgment that not paying people for 

their performances because they get compensated through promotions, et cetera. That may be a judgment, it may be correct, it 

may be equitable. But, it should be the decision of the person 

whose services are being broadcast. 

You will not go into a store and say, ‘‘I decide that the price of 

that is fairly such and such and, therefore, I am going to take it 

for that price.’’ Someone who performs cannot be told that—I don’t 

see how, in any rational or fairness system can be told that we 

have decided that for all these reason, you should be happy with 

just promotion. I don’t see how equitably or morally anybody has 

the right to make such a decision, and certainly not Congress. 
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And so, all the arguments based on that, are just simply nonstarters; as far as I am concerned. Lots of debate on everything 

else, and balancing considerations, but there is no balance for saying we are going to take your work and not pay for it. That is not 

a balance. It is not a consideration. 

Mr. Huppe, many have said that it is time for unified comprehensive approach to address the licensing problems of the music 

industry. Do you agree and, if so, what steps should Congress take 

to help bring that about? 

Mr. HUPPE. Yes, Mr. Nadler. 

First off, thank you for your comments on promotion. I could not 

agree more with your thoughts on that. The concept that the broadcasters believe they can take that right and not pay for it is as ludicrous as suggesting that a book can be made of a movie and yet 

the author of the book does not have to be compensated, or that 

the NFL can broadcast games on national TV but, yet, the NFL 

doesn’t have to be compensated. 

In terms of unification, I agree with you. We do need to streamline the system of licensing. One of the benefits of the statutory license that SoundExchange operates under is that it is a system 

that is transparent and efficient. We are the most efficient at what 

we do. Ninety percent of the royalties that come into our shop are 

out the door within 75 days, and we have the lowest admin rate. 

So having a coordinated streamline licensing system is absolutely 

urgent. 

Mr. NADLER. Thank you. 

And briefly, how has the lack of a public performance right for 

terrestrial radio impacted artists and the overall music marketplace? 

Mr. HUPPE. Artists are losing the tune hundreds of millions of 

dollars over the course of the past several years not only in the 

United States where radio makes $17 billion but compensates artists zero, but they also lose royalties overseas where—— 

Mr. NADLER. There is a lack of reciprocity. 

Mr. HUPPE. Lack of reciprocity. 

Mr. NADLER. And if they got that money, what impact would that 

have in the broadcast industry? 

Mr. HUPPE. The overseas money or the—— 

Mr. NADLER. Here. 

Mr. HUPPE. It depends on what the rate is, Mr. Nadler, but if 

they got that money, it would go a long way toward compensating 

the artists who deserve to be paid for the central feature they play 

in the services. 

Mr. NADLER. Thank you. 

Ms. Cash, will you comment on that question? 

Ms. CASH. I agree. 

The idea that I am patted on the head and said, ‘‘Well, it’s promotional, you know, it’s good for you,’’ I would rather have control 

of my copyrights and rather be paid for that. I am a songwriter, 

as well. So I live in both worlds. But, the fact that they can use 

my songs on the radio, my sound recordings, to make billions of 

dollars for themselves and basically use my work to sell ads, is not 

only ludicrous it is insulting. And artists should have control of 

their copyrights. 
376 

Mr. NADLER. Thank you. 

Mr. Frear, you said that there is no reason that satellite radio 

and Internet radio should pay sound recording performance royalties while terrestrial radio continues to enjoy and exemption from 

that obligation. Should I take it from that, that you would agree 

that everyone should get paid or that no one should get paid? 

Mr. FREAR. I actually do feel everyone should get paid. 

Mr. NADLER. Thank you. 

There are different rate-setting standards applicable to different 

uses of music. Some are established under the 801(b) standard, 

which many argue produce below market rates, while other rates 

are set under the market-based willing buyer, willing seller approach. For example, satellite radio is subject to 801(b) while 

webcasting’s rates are set according to the willing buyer, willing 

selling standards. How are these differing standards justified? I am 

not sure who I should ask that of. 

Mr. SHERMAN. They really shouldn’t be justified. Everybody 

should be paying on the same rate standard regardless of the platform on which the music is appearing. It doesn’t make sense to 

have different standards for different platforms. It is having Congress pick winners and losers, which is not what Congress ought 

to be doing. 

Mr. NADLER. Would anyone on the panel disagree with that? 

Mr. WILLIAMS. If I may, you know, the fact is there are so many 

different, it is Paul Williams down here. [Laughter.] 

You know, ASCAP licenses many, many different platforms for 

our music; radio, television, cable, satellite and, happily now, Pandora. You know, we operate one of the most efficient performing 

rights organizations in the world. We don’t operate at the percentage that you just heard SoundExchange because we have a much 

wider group of people that we are servicing with our music. The 

fact is that trying to operate under the consent decree as it exists 

right now is crippling to us. We operate at 12 percent. At 12 percent, which would come down considerably if we could be relieved 

of some of the millions and millions and millions of dollars we 

spend in—— 

Mr. NADLER. I am sorry. What do you mean you operate at 12 

percent? 12 percent of what? 

Mr. WILLIAMS. Let me ask if Pandora will be kind and help me 

on this. 

At 12 percent is our operate—88 cents of every dollar we collect 

goes to our writers. 

I am a songwriter so that 12 percent takes care of a large group 

of people trying to keep track of everything that is going on. We 

do it more efficiently than anybody probably in the world. We are 

one of the most efficient. This rigorous honesty is part of my recovery and a part of my oath today. 

But I am proud of the way we operate. But when you look at a 

system where, you know, where the recording labels and the artists 

receive 12 to 14 times more for the exact same thing we get, something is broken. 

You can do two things for us in Congress. First of all, you can 

support our efforts with the Department of Justice and you can 

pass the Songwriter’s Equity Act which will allow us to go into 
377 

court and present both sides of both copyrights and the information 

around what they are both being paid. Be huge, huge. 

You know, what Congressmen Collins and Jeffries have offered 

is not a comprehensive, it is not going to fix everything, but it is 

a beautiful in-road to putting some balance in the way we operate. 

We are so grateful for that. And I think that what we all want is 

to see, I mean, I want Pandora to, not survive, I want Pandora to 

thrive; you know? I mean, I made albums that even my family 

didn’t buy. I love the idea that he is going to out there and make 

it available for anybody if they might want it. 

Mr. NADLER. Thank you. 

My time has expired. I yield back. 

Mr. MARINO [presiding]. Thank you. 

Mr. Chabot? 

Mr. CHABOT. Thank you, Mr. Chairman. 

I would first like to ask unanimous consent to insert into the 

hearing record, House Concurrent Resolution 16, which is the Local 

Radio Freedom Act, which states in part that ‘‘Congress should not 

impose any new performance fee, tax royalty, or other charge relating to public performance of sound recordings on a local radio station for broadcasting sound recordings over-the-air.’’ 

Local radio stations provide promotion of the music they play at 

no cost to the listener. This concurrent resolution has 225 bipartisan cosponsors including myself, which is more than a majority 

in the house. And I think it is important to at least mention, I 

know we have had some kind of disparaging remarks about the recording industry from some of our panel members. I certainly understand that, but I thought that should be, at least, part of the 

record. I would also, just a couple of comments before I get to the 

question. 

Mr. Huppe, I—— 

Mr. MARINO. Without objection, those documents will be entered 

into the record. 

[The information referred to follows:] 
378 
379 
380 
381 

Mr. CHABOT. Thank you. 

Is it Huppe? 

Mr. HUPPE. Yes. Huppe. Yes, sir. 

Mr. CHABOT. Okay. I just wanted to thank you. I think we are 

at something like 7 percent approval now. And, to say Congress actually did something right, we don’t hear that much around here. 

Mr. HUPPE. Happy to oblige. 

Mr. CHABOT. Oh, thank you very much. 

And, Mr. Williams, we have had an opportunity to meet a number of times over the years you have been here. And you are a national treasure. You know, thank you for—— 

Mr. WILLIAMS. Thank you very much. Thank you. 

Mr. CHABOT [continuing]. Everything that you have done to 

make life better. You got some amazing songs. Thank you. 

Mr. WILLIAMS. Thank you. 

Mr. CHABOT. Let us see. 

Mr. Frear, being kind of an old codger, I enjoy some—I guess Sirius was in our car when we got it. We kept the service and we 

enjoy it, especially when you are kind of traveling around the country. 

Mr. FREAR. I thank you, Congressman. My daughters thank you, 

as well. 

Mr. CHABOT. Thank you. [Laughter.] 

Cousin Brucie, in particular, and Herman’s Hermits Peter 

Noone, is sort of, you know, we can kind of relate to that. It is interesting. 

And now, I guess one question I always have—this is a very 

large panel, we usually have four or something like that. We have 

got nine and a lot of interest or recognize—is there any particular 

interest that probably should have been added or that we could 

have added that didn’t? Either it got overlooked? Anybody have 

comment on that on the panel? Is there anybody else that perhaps 

we could have thought of that didn’t get in or was either overlooked 

or whatever? 

Mr. Huppe? 

Mr. HUPPE. Yes. 

I will say one thing, Mr. Congressmen. We have, obviously, a 

large panel here and we have great performing artist representatives. Obviously, with two artists to our right, one very important 

constituency of SoundExchange are actually the two leading unions 

in our industry: AFM, the American Federation of Musicians and 

also SAG-AFTRA. And the unions represent, in addition to featured artists another important group of non-featured artists, background musicians, background vocalists who also have a very important voice in this debate; I think. 

Mr. CHABOT. Okay, thank you. 

And during the copyright hearings that we have had, we have 

heard the term free market obviously used a lot from every different side of the debate. I would kind of like to hear how recording 

artists view a free market system working. Do artists believe a free 

market model to be a better alternative than the licensing system 

that we have today? With so much consolidation in the industry, 

do you believe it is even possible for music to truly become a free 

market? 
382 

Mr. Williams? 

Mr. WILLIAMS. It is exactly what we are seeking. We are seeking 

a free market because a free market will dictate, you know, what 

something is worth. And the last thing that we need is less control 

of our music. 

You know, the one area where you can really get a sense of what 

the free market is is in sync licenses. Everything else is basically 

controlled under our agreement with the consent decree with the 

Department of Justice. But if you look at sync licenses, which are 

straight ahead free market, it is about a 50/50 split. 

In a sense, you know, this is the United States of America, we 

can trust business to work things out. And incidentally, I want to 

thank Pandora right now. You are getting a classic example of the 

two of us working together when I can’t hear what you are asking 

me and he tells me. And I am actually trusting that he is telling 

me the actual question. [Laughter.] 

So, you know, the fact is the collectively—— 

Mr. HUPPE. The question is: What is the performance right? 

Mr. WILLIAMS. You know, I am kind of in a little David and Goliath moment here. You know, sitting between the giants of the industry. I left my sling at home. What I brought is the truth and 

the truth is I represent 500,000 songwriters, composers and publishers. I mean, what an honor to share this time with Rosanne. 

What we do is reach in to the center of our chest and, you know, 

try to write something that will, you know, that will affect people’s 

lives, it will comfort them in sad times. You know, all I wanted was 

to right something that would make a young lady say yes when I 

ask her to marry her. And three times, thankfully, that happened. 

[Laughter.] 

So we can all work together. I can turn to Pandora for help on 

all. I think so much for examining this system. 

The system is broken. You know, most of our money has always 

come from traditional, you know, from bars and grills, radio, wonderful radio, amazing relationship we have had with radio through 

the years. They give us their advertising money in a fair and a system that we have always been able to work out. You know, you sit 

down, roll up your sleeves and you strike a deal. It is a great way 

to work in all. 

But, the fact is, that the world is changing. People don’t want to 

own their music anymore, they want to stream it. And thanks to 

people like Pandora and Spotify, I can hear my music anywhere in 

the world. I can put in my car whenever I like. It is a wonderful 

time, it should be the golden age of music. For the music listener, 

who is the person we care most about, this is a time they should 

celebrate. The stream is a dream, it should not be the nightmare 

for the men and women who create music. 

Mr. MARINO. Thank you. 

Paul, you should have brought the infamous stack of phonebooks 

that we talked about a couple of times. 

Mr. WILLIAMS. Yes, exactly. 

Last Friday, I did. I conducted an orchestra for Dick Clark standing on a bunch of phonebooks, you know. In this room I would 

stand on the bible. [Laughter.] 

Mr. MARINO. Dr. Chu? 
383 

Ms. CHU. Thank you. 

As Co-Chair of the Creative Rights Caucus, I firmly believe that 

artists should be fairly compensated across all platforms but we 

know this is not the case in the U.S. In fact, let me tell you about 

the story of Janita who provides a contrast between Finland and 

the U.S. She is a recording artist originally from Finland who lived 

there for her first 18 years, became a profession singer at a young 

age in her home country. She was paid for her performances on the 

radio in Finland, which was about a third of her income. 

Then, she moved to New York when she was 17 to take the next 

steps in her career. She achieved success with having two Billboard 

magazine top 40 U.S. radio hits but was shocked to find out that 

the U.S. didn’t pay artists for radio airplay. She thought, perhaps, 

Finland was an exception in paying artists and that the rest of the 

world didn’t pay artists their radio royalties. But it turns out that 

it was the other way around. The U.S. was the exception in not 

paying radio royalties. Well there are two other countries: Iran and 

North Korea. 

Well, last summer, Janita proudly became a U.S. citizen but, in 

doing so, she is now a citizen of a democratic country that doesn’t 

honor AM/FM radio pay for its artists. And she suffers a loss of significant income. This is not the American dream that she envisioned. 

Her story shows that we need to fix the disparities in the current 

music licensing system to make sure that artists are fairly compensated. If we don’t, we risk losing the innovation from creators 

like Janita because they will no longer have the incentive to create 

for the public. 

And so, I would like to ask a question to Paul Williams. One area 

of agreement between you and the music licensees on the panel appears to be the importance of preserving the voluntary collective licensing model that ASCAP pioneered. You have made a compelling 

case that this is at risk of crumbling. Clearly, that would be a bad 

result for music licensees. So what would that mean for ASCAP 

songwriters and composers, particularly, your smaller, independent 

and up-and-coming members? 

Mr. WILLIAMS. Oh, it would be devastating. 

First of all, thank you, Congresswoman Chu, for your advocacy. 

You have been a great friend to music creators and we appreciate 

that. 

You know, if things don’t change, if the consent decree isn’t 

modified, our major publishers are looking to withdraw their 

rights. And if they do that, it fragments the system; it becomes 

more expensive; it becomes less sufficient. I think what we have to 

do is we have to look at a very, very quick adjustment to the system. But, essentially, it needs—the entire consent decree is, at this 

point, is—it is not like going into battle with one hand tied behind 

your back that you are going to fight with. It is one hand tied behind your back that you are going to feed your family with. 

Incidentally, as far as the performance and the sound recording, 

I absolutely believe that everybody—it is a sad, sad story to hear 

of somebody losing their loss of income when they become an American citizen. We absolutely believe that everybody that contributes, 

you know, to the performance of music, the creation of music, 
384 

should be honored. But, it is not an excuse to pay less to the people 

that create the music, though. We need to find a balance and I 

think the trick is to let the fair market decide that for us. 

Ms. CHU. Thank you for that. 

My next question is for both Chris Harrison of Pandora and 

Rosanne Cash. Last year, Pandora embarked on a campaign to 

rally artists to sign a petition to Congress in support of Internet 

radio, but it was during the time when the Internet Radio Freedom 

Act was being debated in Congress; which would have actually resulted in a cut to artist royalties. Pandora’s letter to artists stated 

that they simply wanted to have the artist’s voice heard. And yet, 

from what some artists discovered, this was not the actual intent. 

The implication for the artist signing the petition, at that particularly time, was that they were supporting cuts to themselves. 

So, Mr. Harrison, can you tell why Pandora enlisted the help of 

artists? 

And, Ms. Cash, can you tell us what you, in the creative community felt when this was happening? 

Mr. HARRISON. Part of my opening remarks I noted that Pandora 

plays 100,000 recording artists every month, and 80 percent of 

those recording artists don’t get played on terrestrial radio. There 

is, actually, a large group of independent, primarily recording artists and singer/songwriters, who do value Pandora because it is the 

only outlet, the only distribution platform available for them to find 

an audience that loves their music. 

Ms. CHU. Ms. Cash? 

Ms. CASH. That is what a lot of us are calling the exposure argument; that we are seduced into thinking if we allow these performances, without pay that we will get exposure, therefore, drive consumers to buy our records. That may or may not be true, but the 

point still remains that we don’t have control over those copyrights 

and we are not paid fair compensation. We are not paid fair market 

rates. 

As I said before, there is no transparency about this. It is somewhat manipulative. And I feel that we end up subsidizing these 

multibillion dollar companies. They use our music as something 

like a loss leader to draw people in and they make the money. 

And, to confirm what Mr. Williams said, the place that artists 

have the most control are sync licenses. I have given my songs for 

free, my choice, to college students making their first film who 

want to use my song. That is great. I want to support them. And 

then, I have negotiated a fair rate with a popular television show 

that wanted to use my song. I have control over those things and 

that is the bottom-line. That, and fair compensation. 

Ms. CHU. Thank you. 

I yield back. 

Mr. MARINO. Thank you. 

I am going to ask some questions now or, more so, make some 

statements and then, hopefully, you can respond. 

First of all, I would like to give each member of the distinguished 

panel an opportunity to respond to this question, following question, in writing; if you care to do it? Because there are too many 

and we are not going to get through my couple of minutes. If you 

would be so kind as to tell me, in your opinion, what a free market 
385 

is and what a fair market is, comparing the two. Because I hear 

those terms thrown around. Free market. Fair market. 

I asked the last panel to do this and I am asking you to do the 

same and get that to me in writing; if you care to do so. 

I have been having meetings. My staff and I have been meeting 

with people that have a dog in this fight, continually. We have 

been doing it for months. If someone has not been invited to a 

meeting, please contact my office. I am Congressman Tom Marino 

and I’m Vice-Chair of this Subcommittee. And let us know, because 

I think we have covered all the bases but there are many, many 

people involved in this. I am trying to get a consensus. I don’t want 

Congress to sit down and have to sort this out. And I will show you 

why in a minute. 

This is very complex. I have been studying this for months and 

talking to many people. And here is the reason why I do not want 

Congress to sit down if we can get a consensus among everyone 

who has skin in the game. I am going to read to you a list of those 

individuals and I probably missed one or two. These are the parties 

that we have come to the conclusion that are involved in this, excluding the public: songwriters; movie score composers; performance rights organizations, PROs, such as BMI and ASCAP; royalty 

collectors for digital music; SoundExchange; artists/performers; terrestrial radio; broadcasters; satellite radio; cable TV radio; digital 

radio; streaming; digital download; providers like iTunes; record labels, copyright owners; music promoters; consumers; listeners; 

music publishers; collective music organizations; Music Academy; 

GRAMMYs; recording engineers; copyright offices; groups that may 

hold exemptions such as libraries, universities, churches; and I am 

sure I missed someone. 

So you see the litany of names and individuals and groups and 

entities that we have involved here. Now, what I am going to show 

you, for the record and without objection, I would like this schematic that I have in front of me, it is a schematic of the music licensing marketplace and the publishers/songwriters and anyone 

else involved in the litany of names that I just read off. I have a 

beautiful colored display here on my iPad. You are not going to see 

it but I am just going to hold this up. You may be able to understand some of it. 

This is an example of the breakdown, and these are on both 

sides. So I have three documents here of the breakdown of the 

schematic just like a corporation would be set up; President, CEO, 

Vice Presidents, et cetera. This is the complication of the legislation that we have and those involved. Look at the subcategories underneath the subcategories underneath the subcategories on both 

sides of these documents. And the third one that I hold up here, 

as well. 

Then, we get into issues such as payment. Who is going to be 

paid? How are they going to be paid? What are the courts going 

to do about this? And I do not even have the court schematic here 

showing the process that one would go through if there are appeals. 

So I think I got my point across here about how complicated this 

is, how complex this is, but we are also talking about, you know, 

fairness and on just to songwriters and writers and individuals 
386 

who are not being compensated, particularly those because of the 

legislation from 1972, prior to 1972. And that has something to do 

with State law, which is an issue that I think can be dealt with 

today. 

So as trying to be an individual, that is learning as much as possible about this, hearing from everyone. Some of you are a little 

disappointed because I haven’t said, you know, which way I am 

leaning on this. As a prosecutor, I want all the information at my 

fingertips before I make a decision. But, also, I am asking everyone 

that I mentioned here today to please, please think about sitting 

down with us in a group face-to-face. It is real difficult. It is more 

difficult to sit face-to-face and look at each other eyeball-to-eyeball 

and say no as it is instead of over the phone or an e-mail. So 

maybe we can get together and you folks can get a consensus on 

this and that will resolve the issue. It is a monumental task but 

we will attempt it. My time has run out so thank you very much. 

Mr. Conyers? 

Mr. CONYERS. Thank you, Chairman Marino. 

Let me ask Paul Williams this question: Do you believe that the 

consent decree system severely limits ASCAP’s members from 

achieving competitive market rates for their works? 

Mr. WILLIAMS. Congressman Conyers, you absolutely go to the 

heart of the reason that I am here. And to address something you 

just spoke about, one of the things we’re denied because the consent decree is the right to bundle rights. You go to all these different places for all these wonderful uses of our music. 

One of the things might change in the consent decree you are 

going to give us is, which we are hoping will be given at some 

point, is the right to bundle these rights. You know, it is exhausting for people to go from one place to another to another for these 

rights. 

There are two copyrights. There is a copyright for the original 

material, there is a copyright for the recorded material. I think 

that it is incredibly complicated. What would be a great solution 

is to bring it back to us and let us, you know, let us control our 

future. Let us control our copyright. The last thing we need is to 

throw more of this into the government’s lap to deal with it for us. 

Mr. CONYERS. So the decree hasn’t accommodated the rapid and 

dramatic changes, technologically, that we are all talking about. 

And we have to end up in a rate court on top of it all and I think 

that this is the new situation that we have been in since the decree. And I am hoping that all of our Members on the Committee 

will take this into account. 

Now I want to say that broadcast radio has played an important 

role in the lives of people all across the country. Broadcasts have 

educated listeners to important events, emergencies, and a lot of 

new music including jazz, I might add. And we want to work with 

the broadcasters to continue to do this work not just down to the 

communities but all the communities. Now, if there is anybody of 

the nine witnesses here that oppose creating an AM/FM performance right; would you just raise your hand so I will know who you 

are? 

[Nonverbal response.] 

Mr. CONYERS. Okay. 
387 

We got a couple of hands raised. And now that you have been 

identified and branded appropriately, we will know how to proceed. 

But I thank you for your candor and frankness about this. 

I am going to ask one of the hand raisers, Warfield, has the lack 

of a public performance right for terrestrial radio impacted the 

overall music marketplace? 

Mr. WARFIELD. Mr. Conyers, I would say I have been in this industry for over 37 years and what has always been true during 

that period of time is the relationship that radio stations and 

record companies have had. We have supported one another consistently through that period of time to the point that we are looking at an industry here, a recording industry even with the challenges that it has, just like the radio industry has its challenges, 

it is still the strongest recording industry in the world. 

I mean, I have heard remarks about who we could be with that 

we are not proud of but we have an industry, a recording industry 

here that is larger than any industry, any recording industry 

in—— 

Mr. CONYERS. Thank you. 

Let me get one question into Ms. Cash before my time expires. 

And it is about the RESPECT Act that I introduced with our colleague, Congressman Holding. Do you think it would address the 

payment disparity and do you think it important that we fix the 

loophole in the copyright protection for sound recordings before 

1972, which refuses to pay, the older artists? 

Ms. CASH. I thank you for introducing that bill. Of course I think 

we have to fix that loophole. The example I gave you about my father, his royalties going to someone else who did a cover version 

of his song. It is hard to understand how that could be possible. 

But these legacy artists, some of them: they are growing older; they 

are ill, the ones who are still around; they have to go on the road 

when they would rather not to make up for the money they would 

have received from these royalties. It is heartbreaking. I see this 

all the time. I know these people in that generation before me who 

are still around. 

Mr. CONYERS. Thank you so much. 

Mr. Chairman, I yield back. 

Mr. COBLE [presiding]. Mr. Conyers, even though you have exposed certain panelists, I think you will be able to walk the halls 

safely. [Laughter.] 

Mr. CONYERS. I am more worried about them than me. [Laughter.] 

Mr. COBLE. I won’t go there. 

The distinguished gentleman from California, Mr. Issa. 

Mr. ISSA. Thank you, Mr. Chairman. 

Chairman Goodlatte has said he wants to do comprehensive 

copyright reform and I am going to take this opportunity today to 

challenge all of you, since you sort of represent, no kidding, the 

spectrum, the width and breath, of the problem in music both written and obviously the broadcast of the performance. 

And we will just go back, as we often do here, especially for the 

non-lawyers who were here on behalf of the constitution, to the 

clause. And I am leaving words out because I only want to have 

the part related to copyright not the part related to patent. The 
388 

constitution clearly says that we have ‘‘To promote the progress of 

useful art for a limited time on behalf of the author’s exclusive 

right to the respective writings.’’ 

Now it doesn’t actually talk about the performance, but we have 

all come to appreciate that a performance is, in fact, part of that 

structure of writing. The constitution is an interesting document to 

go back to because sometimes it is illustrative of all the mistakes 

we, on this side of the dais, and presidents have made during their 

time doing our job. 

We have totally screwed up your industry relative to the constitution. If I read the constitution very clearly, although the ‘‘promote’’ does say that, in fact, what we do in the way of granting you 

exclusive rights for a limited time is for the purpose of in fact enhancing commerce. I don’t believe that the founders ever thought 

that the ‘‘promote’’ would be to exclude a performance from being 

paid if in fact the owner of that who had the exclusive right, which 

to me is the right to exclude, didn’t want it to be played for free. 

And yet, we don’t have that right. And I have joined Mr. Conyers 

for years in trying to rectify that. 

But I think there is a bigger problem here today and I would like 

you all to comment on it from your respective positions, starting 

with Ms. Cash. If, in fact, the intent has always been exclusive 

right, and I will read that backwards, right to exclude, belongs to 

the author or to the performer or, to be honest, to the many people 

that are part of that collective process that we will just call a right, 

if that right were to be restored, wouldn’t we essentially eliminate 

all of these court decisions, all of these consent judgments, and 

most of the laws that we have helped perpetuate including the exclusions? 

Then we would be down to Congress determining that there had 

to be a fair use under free speech and so on. We would want to 

have that. Sampling but not sampling as a ringtone, necessarily. 

Those kinds of things. And wouldn’t we, then, empower all of you 

to come together, Mr. Williams, come together and decide that collectively you are going to offer your rights through pooling or individually you are going to retain your rights if you are just, say, The 

Beatles? 

Isn’t one of the fundamental things we should consider here, 

scrapping generations of legislation that now cause us to infinitely 

try to figure out whether in fact Pandora can effectively compete 

against broadcasters, effectively compete against satellite, effectively compete because I am seeing all of you wanting to get a level 

playing field but not give up the playing advantage you have, if you 

have one. And I don’t think Congress can do that. 

I will start down the end and just say: How do you see the possibility of us scrapping almost everything we have done and then 

giving the industry an opportunity to rebuild against the original 

intent of the constitution? 

Ms. CASH. Can I just say that the question, itself, gave me hope? 

So thank you. That was so well stated. 

I would hope that exactly what you just said, that restoring, although I don’t even know if restoring is the right word because it 

was never there. Performance royalty would solve so many of these 
389 

problems that you could then build from the ground up to create 

a new paradigm. I don’t know, but I hope so. 

I know that for every Mick Jagger in the world there are 10,000 

musicians who are in the trenches. 

Mr. ISSA. And they were all younger. 

Ms. CASH. They are younger, too. And they depend on those royalties that they are not getting. And, you know, the lack of performance royalty, I will just say this quickly, it is kind of a way 

of saying music should be free. If music should be free, I am willing 

to have that discussion when musicians aren’t the only ones who 

aren’t being paid. 

Mr. ISSA. And I really do want to hear from the broadcasters too 

because you have inherited your business model, you didn’t create 

it. Your company’s owners bought based on a value that we put in. 

That, when Mr. Conyers and I try to change the law, to a certain 

extent, we are taking away value you have already bought and 

paid for. And I want to be sensitive to everyone at the table has 

inherited an unfair deal in some ways. Please. 

Mr. COBLE. The red light has illuminated so we will hear from 

two witnesses, Darrell. 

Mr. ISSA. Who is most motivated to answer? 

Please. 

And, Mr. Huppe. 

Mr. VAN ARMAN. Well, let me touch on what Mr. Marino was 

talking about. A fair market is a free market with a level playing 

field that adequately compensates all creators but also serves the 

public interest. So if we scrap everything and start from scratch, 

that should be the guiding principle. How do we make sure that 

small creators, big creators and the public, all of their interest are 

well balanced? 

Mr. FREAR. Yes, thank you. 

You know, I think it is something that the Congress should consider. And, you know, as part of that consideration, please take 

into account the concentration of ownership in the music industry, 

and as you think about who is sitting across the table to negotiate 

the right; who actually is that? And in many cases, it isn’t Ms. 

Cash. It is Universal Music, it is Sony, it is Warner, and on both 

the label side as well as the publishing side. I go out every day and 

try and negotiate direct licenses, and over the last 6 years I have 

negotiated 100 direct licenses with the music industry, none of 

them with major labels. 

Mr. COBLES. Gentlemen, sorry to cut you off, Darrell, but the 

time has run out. 

Mr. ISSA. My questioning time ran out, but answering time I 

thought was unlimited, Mr. Chairman. 

I am only kidding. Thank you. [Laughter.] 

Mr. COBLE. Thank you. 

The distinguished gentleman from Florida. 

Mr. DEUTCH. Thank you, Mr. Chairman. Thanks for holding today’s hearing. 

It is really easy to decide for some that the way things work 

today is the only way that they can work in the future, or that the, 

what is by all accounts an absurdly complex system that has developed over the past 100 years deserves all the credit for the thriving 
390 

cultural treasure that is the American music legacy. Certainly, 

some aspects of the system have helped but too many have been 

obstacles that the music industry is growing stronger by simply 

working around. Too frequently, revisions over the previous decades have ended up being both reactive and, all too often, parochial; preserving one element without making enough effort to look 

at music licensing as a whole. 

And while it is tempting to point fingers, and there has been 

plenty of that today, I think it is helpful to recognize that everyone 

has the opportunity, everyone, everyone at this panel or previous 

panel, has the opportunity to benefit from new growth and markets 

if, as Mr. Marino had said earlier, we can agree on a basic framework that incentivizes and rewards creators while giving companies who profit from the music a fair transparent way to do so. 

Our goal has got to be to fix the system so that everyone has an 

opportunity to succeed together. And that new entrants have the 

chance to continue transforming the way we listen to music in the 

future. So that is, I think, how we ought to approach this. 

There are some issues that jump out at us. And, before I get into 

my question, I wanted to throw out one example of what I think 

represent the failures of a patchwork system, specifically the pre72 distinction. 

This, for the youngsters in the crowd, is an album. 

[Laugher.] 

Mr. DEUTCH. This album is Neil Young’s Harvest, which includes 

legendary songs like Old Man and Heart of Gold. It was released 

on February 14, 1972. The precise cutoff for pre-72 recordings is 

February 15, 1972. That means that any track from this album, 

this bestselling album in 1972, can be played without paying for it. 

But, if it had been recorded on February 16, released on February 

16, just a day after its release, Neil Young’s songs from this album 

would be covered with full Federal copyright protection. 

Now, Mr. Frear, you said earlier in exchange with Mr. Nadler 

that you believe that everyone should be paid. Why shouldn’t that 

include legacy artists? 

Mr. FREAR. Well, I believe it should. I think Congress has had 

two shots at this and has rendered its opinion both times. First, 

back in 1972 when it decided to distinguish, for reasons I am not 

familiar with, between recordings before that date and after it. And 

then, the second time, 20 years ago, when it granted the sound recording performance right and did not extend that right to pre-72. 

Mr. DEUTCH. So if Congress acted today, you would acknowledge 

that that is consistent with what you said earlier, that everyone 

should get paid. 

Mr. FREAR. Well, I think that—— 

Mr. DEUTCH. Are you supportive of those efforts? 

Mr. FREAR. I would be supportive of closing the loophole that Mr. 

Conyers referred to. That loophole includes terrestrial radio, as 

well as pre-72. 

Mr. DEUTCH. I appreciate that. 

So let me get to Mr. Christian who said something earlier—I appreciate it, Mr. Frear. 

Mr. Christian, you said something earlier that I think helps us 

focus a lot on what we are dealing with. You said in your testimony 
391 

that with particular reference to the recurring demand by the recording industry for sound recording performance right to be imposed on terrestrial radio ‘‘Understand, you said, that the radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital 

strategy that addresses a decline in its brick and mortar income. 

Congress unambiguously intended that, in exchange for your 

unique promotional support, terrestrial radio should be treated differently from other transmission platforms.’’ 

And you say that premise hasn’t changed. And then, you go on 

to explain that any change in our approach will be met with opposition because it would cripple a radio industry that has been financially treading water for years now. I would respectively suggest that this is what we are trying to get at today. 

Going from the claim that there shouldn’t be a performance right 

because the music guys haven’t been able to figure out their industry and we shouldn’t impose it on the radio industry, which you acknowledge is, as you put it, has been treading water financially for 

years now. That doesn’t help us solve the problem, help us address 

this position that we are in. 

As was included in this document that was referenced, I think, 

Mr. Warfield, in your testimony it says that ‘‘conventional wisdom 

is that radio airplay stimulates record sales.’’ And it quotes a study 

from a law review article in 1974. And it talks about a survey of 

rock music buyers that found that 80 percent of albums were purchased because a particular track was first heard over the radio. 

But that survey was conducted in 1972. 

I acknowledge the role the broadcast radio plays, the important 

role that it plays in our communities, but for us to go at this issue 

as if where we stand today, in 2014, is somehow unchanged from 

the industry as it existed decades ago, I don’t think is appropriate 

and I don’t think it is fair of all of the rest of us, new market entrants, musicians and the rest. 

I hope that, as we go forward in this debate, we can acknowledge 

the important role that everyone on this panel plays in furthering 

the music industry and providing unbelievable music and outlets 

for Ms. Cash’s work and for Mr. Williams’ work and for all of the 

members. But let us do it in a way that recognizes that, if we only 

take the parochial view of our industry, than we are never going 

to come up with something that works for everyone, we are probably going to fail. And that might satisfy some of you for short time 

but we are going to be right back at this again in a couple of years 

if we haven’t had a chance to take that full approach. 

And I yield back. I thank the Chairman. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from Utah is recognized. 

Mr. CHAFFETZ. I thank the Chairman. And glad to see so many 

of you having this discussion. 

I particularly have a keen interest in Internet radio. I happen to 

believe that that is a big part of our future. It is where I see my 

kids enjoying music that they probably would have never seen or 

heard otherwise. They wouldn’t have gotten it. Quite frankly, on 

terrestrial radio, they probably wouldn’t have been able to afford 

to buy the albums that we did in generations past to even have a 
392 

chance to understand or see that. I personally have been exposed 

to a whole host of artists that I now enjoy on a regular basis, but 

I would have never heard of before. 

I am also deeply concerned that the marketplace for Internet 

radio really isn’t working. We can point to one who has been highly 

successful in Pandora. I enjoy them, but it does concern me that 

it is not much more prevalent than that and that, even under their 

model, they are not making the kind of money, even though some 

people want to attack some of the ownership, and also the others 

for, you know, making money on the way. 

The reality is the Copyright Royalty Board has twice tried to set 

the royalties and twice the United States Congress needed to come 

in at the last hour and help save the deal and change it and make 

it so that it would work. And so, we don’t want to keep doing that. 

Any time we have to go to Congress to get a fix, it is probably not 

going to turn out the way anybody wants it to turn out. 

So, with that, I have deep concerns about how do we make this 

a viable business model going forward so that everybody can win 

along the way, and everybody can get paid along the way. 

We have two standards: the 801(b) and the willing buyer, willing 

seller, which I think is grossly misnamed. To suggest it is willing 

buyer, willing seller and not have all the information at your fingertips to enter in those discussions is grossly misleading. 

Let us go to Mr. Sherman, if I could. From what I have seen, in 

my limited viewpoint, you have been a little inconsistent. On the 

one hand you sort of like the 801(b) and sometimes you don’t like 

the 801(b) depending on which side of the negotiation you are on. 

Can you help clarify that for me? 

Mr. SHERMAN. We have actually said that we are fine with 

changing 801(b) to a willing buyer, willing seller standard across 

all platforms. We just want it to be part of comprehensive reform. 

We don’t want to pay on one standard and not get paid on the 

same standard. But we think that the right standard is willing 

buyer, willing seller for all creators across all platforms. 

Mr. CHAFFETZ. And would that include in the negotiation having 

all the information available for all parties? Is there anything you 

would withhold from those negotiations? 

Mr. SHERMAN. Well, certainly the CRB process has all the information available to all parties. How information can be disseminated when there are a lot of private deals with nondisclosure 

agreements and so on, becomes more complicated, obviously. 

Mr. CHAFFETZ. That is why I am asking you. What would you do? 

It seems to me that if you are going to have willing buyer, willing seller, you got to come to the table with all the information and 

not just hide parts of it, which is what has happened in the past. 

Would agree or disagree with that? 

Mr. SHERMAN. No. I don’t think that anything has been hidden 

because all the information becomes available to all of the parties 

and all of the lawyers who are litigating the cases have all the information. A lot of those settlements take place after that information has completely circulated. 

You know, one other thing I would like to comment on is you talk 

about whether Internet radio is profitable and so and so forth. But, 

if you look at a company like Amazon, which has a $75 billion prof-
393 

it, excuse me, capitalization rate, everybody would consider them 

a huge success. But their profit, last year, was 1 percent $274 million on $70 billion revenue. 

Mr. CHAFFETZ. But this is part of the concern. Some of the biggest players into this music world. On the one hand, it is a good 

thing to see Amazon and Apple get into this part of it, but when 

you saw Rolling Stone and MTV and you saw these other organizations try to get in the space whose forte is into the music industry, 

they have never been able to make it a go. And they started into 

this and then they had to let go of it. Yahoo did this. Others cannot 

make a go of this. 

My time is so short. I need to go to Mr. Harrison. I want to understand what would happen to Pandora if Congress had not 

stepped in and fixed what happened at the Copyright Royalty 

Board. 

Mr. HARRISON. Well, the CRB rates are obviously part of the 

public record. They are multiples of what the negotiated settlement 

was, the pure play rates. I guess you just have to do the math. Obviously, if we’re paying 60 to 70 percent of our revenue under the 

pure play rates. If the CRB rates are two or three times that, I am 

not very good at math, but I don’t think at 120 percent of revenue 

we can make it up in volume. 

Mr. CHAFFETZ. What do we need to do to ensure more transparency? And why don’t you have more competitors? 

Mr. HARRISON. It is an interesting question. I think you have 

touched on it a little bit. The rates certainly are an issue. The entrants we have seen recently are all engaged in other lines of business; Apple, Google, Amazon. And music is really an ancillary product that is designed to sell the primary service. We have had East 

Village Radio, which is a longstanding Internet radio service in Mr. 

Conyers, I am sorry, Mr. Nadler’s district. And that recently went 

out of business because they couldn’t afford the royalty rates. 

So certainly, if you look at the comments that came in from the 

Copyright Office’s Notice of Inquiry, from a large number of constituents including Mr. Frear, there is some process improvements 

that needs to be made in the Copyright Royalty Board that would 

improve the process and potentially improve the outcome. 

Mr. CHAFFETZ. I wish I had an opportunity hear all of your answers but, Mr. Chairman, thank you for your indulgence in the 

extra time. 

Mr. COBLE. I thank the gentleman. 

The distinguished lady from California. 

Ms. BASS. Thank you, Mr. Chair. 

My colleague, Mr. Issa, had asked a question and I am not sure 

everybody got a chance to respond. I just want ask it slightly different. I believe he said: if we were to scrap copyright and start 

over, what would you like to see changed? 

My question is is that could you briefly explain one provision 

that you would amend in the current law? And I know that several 

of you didn’t have a change to respond. So those of you that didn’t 

maybe you would like to take the opportunity now. 

Mr. Warfield? 
394 

Mr. WARFIELD. I am sorry. I know Mr. Christian and I represented radio. We haven’t had much to say here today. A lot has 

been said about us. We have not had an opportunity to say much. 

Ms. BASS. Well, take the opportunity now. 

Mr. WARFIELD. You know, I am hearing a lot of comments about 

the, you know, the industry that provides free play for free promotion and has done it for 80 years. And we are talking about 

what is driving it. Radio, itself, is driving it. I even heard comments here that radio does not drive record sales. 

Congressman Deutch left, but there is a 2013 study recently 

issued that does indicate very clearly that more than any other 

platform radio airplay does drive sales. Even in digital platform it 

drives sales. You know, we have got an industry here that has really helped put these other businesses, give them the opportunity to 

go out and create a new business model. 

Unfortunately, even on the radio side, we are not able to participate on the digital side. We pay into the system as it is now. We 

pay hundreds of million dollars to ASCAP and BMI and SESAC. 

We pay tens of millions of dollars to SoundExchange, and we do 

participate on digital side. But many broadcasters unfortunately 

cannot make a go of that as other entrants in the digital arena 

have found. With the way that the laws are written today, we cannot make money. We can spend money, we cannot make money. 

And that is not a model that is going to be a healthy one for any 

of the participants here. 

So from a NAB perspective, we would very much like to see 

changes made in the streaming rate standards so that all of the 

participants here who all have concerns there can participate more 

fully and grow a platform that will benefit artists, writers, performers, labels, all participants here. 

Ms. BASS. Other examples? Anybody else would like—— 

Mr. CHRISTIAN. I think one of the things that we would also like 

to see from Congress is if at some point in time, if you all could 

define what a performance is. Nobody has yet been able to tell us 

what a performance is. If you listen to SoundExchange, they will 

tell you that it is 3 seconds long. They won’t tell you whether it 

is beginning, middle, or the end of what it is. So we are subjected 

to royalties that we can’t even get a consensus as to what our royalty payment is for, and especially on the digital streaming part of 

it. 

On the other part, we really must ask for oversight, especially in 

the advent of new performing rights organizations that are forming 

right now. There are no barriers to entry for performing rights organization; you need a catalogue, you need composers, you need 

whatever. And unless those rights are protected for the aggregators 

or some oversight, we run the risk of finding, as we have with 

SESAC, where there are antitrust things; which is why the 801(b) 

is more homogenous than the willing buyer, willing seller. 

We really do need this oversight for an industry. We have got 

10,000 different licenses to be administered, which is why the blanket license is important that we keep it in place, which is why the 

consent decree is important. Because, otherwise, you can imagine 

the madness of trying to find a way to deal with individual radio 

stations in your home district and every district up here to give 
395 

them a license, the record keeping and everything else. One final 

thing is—— 

Ms. BASS. Thank you. And then I want to move on before my 

time runs out. 

Mr. CHRISTIAN. Okay. We do need a transparency in terms of 

identification of catalogues. We need to be able to find out, on a 

daily basis or whatever, who owns what; who the performers are 

and what it is. 

Ms. BASS. Thank you. 

Mr. Huppe, I believe—— 

Mr. HUPPE. Thank you, Congresswoman. 

Ms. BASS [continuing]. You want to respond. And then, Mr. Williams, you look like you want to respond. 

Mr. HUPPE. I would like to respond to our friends at radio. First 

of all, the concept that the sound recording Internet radio business 

is not working. I am not so sure that the proper image has been 

presented to the Committee. 

The fact of the matter is, it isn’t just Pandora who, last year 

alone, knows to non-GAAP profit. But the head of Clear Channel, 

Mr. Bob Pitman, announced just a few days ago that the 

iHeartRadio, that is terrestrial radio simulcast online, has 50 million users and has made several hundreds of millions of dollars, I 

believe, or hundreds of millions of dollars, which I assure you is 

vastly in excess of the content cost from where we sit. 

Ms. BASS. Thank you. 

Mr. HUPPE. Secondarily, we have 500 more services now using 

the statutory licenses that SoundExchange administers, 500 more 

than were there 2 years ago when I last testified before this Committee. 

Ms. BASS. Okay. 

Mr. HUPPE. You know who the majority of those are? The majority of those 500 are broadcasters like those that Mr. Warfield is 

speaking about going online. 

Ms. BASS. Mr. Williams? 

Mr. WILLIAMS. If you ask what we would change right now, it is 

thanks to Representative Collins and Jeffries, it has been offered 

to you right now, which is the Songwriters Equity Act. It fixes a 

small part of a really large problem for us; it fixes it immediately. 

I agree with what Mr. Christian says about the value of the blanket license. It is a wonderful way to come together and simplify the 

system. And for somebody like Pandora, that 70 percent of their income that is rolling out for royalty payments, I have to remind everybody that ASCAP is getting about 1 or 2 percent of that. I am 

under oath, I won’t say it is 1 percent but it is very close to that. 

It is a tiny, tiny part of that. So I wouldn’t pretend to tell you how 

to adjust your business model but there is some way to do this so 

that music creators who create the one product you have can be 

properly compensated. 

Ms. BASS. Thank you. 

Mr. COBLE. The gentle lady’s time has expired. 

Ms. BASS. Okay. 

Mr. COBLE. The distinguished gentleman from Georgia, Mr. Collins. 

Mr. COLLINS. Thank you, Mr. Chairman. 
396 

I think that, one, is sitting, you know, here today is one thing 

I have tried in this whole process and many of you on this panel, 

but many of you in the second, third, and forth rows back have 

been in our offices and we have talked many of times. And yes, the 

Songwriter Equity Act is an issue that we have brought forward. 

There has been other issues that have come before, from performance right to others also. I have tried to be very consistent that the 

one thing that I feel is that the creator in this process and the performer, there is a valuable inherent property right there. 

I think I applaud the Supreme Court this morning for inherently 

seeing that there is a creative property right. Now that does not 

mean that the broadcasters and I will always get along. Probably 

not. But that is okay. There are things in this debate that we can 

all look at. 

I was thinking about it just a few minutes ago as I listened to 

all of you. And the one thing I have tried to do in this whole process is I have interesting comments not to me, I have heard about 

it when you go to other places, so yes, it comes back, is that I want 

to take an arm from one and a leg from another and fix this all 

together. 

But what I have found in the last little bit is that what has to 

happen in this process is one bad business model 5 years ago could 

now be the bad business model today. And you don’t need Congress 

to come in and prop up either one of you. You need a process in 

which we can look at this and we fix it from a holistic approach 

that says that everybody is included; that everybody has a stake 

at the table. The pie is enlarging. Now the reason that some, and 

was interested in hearing, just a second ago from, you know, my 

friend from Pandora which I listen to, that a lot of these went out 

because they couldn’t afford the rates. 

Well, there is a lot of businesses in this country who go out of 

business because they can’t afford their cost. That is an issue we 

have to deal with on both the broadcaster side and the digital side. 

The performers and the copyright holders are in the middle. That 

is the one thing that I am looking at. 

One of the things that concerns me here, though, is that we are 

wanting many times to fix today’s problem. And I have shared this 

with you when you come in. That is not my goal. My goal is to fix 

this problem when Pandora was—wow, I used to remember when 

I used to—you still listen to that? Unless they have changed greatly and it is no offense to them? But I think the radio, and when 

my first listening to an 8-track tape, as I told Ms. Cash this morning, was to her dad listening to A Boy Named Sue live from San 

Quentin. It all develops. 

So the thing that you got to understand here is, is that when we 

come together, that you have got to remember that the bottom line 

there is a property right interest that many of you at this table 

make good money off of. And that has to be rewarded at all levels. 

And I appreciate Mr. Huppe bringing in those background musicians and others. The problem is, though, if you continue and if we 

continue in this round of saying, well, I’ve got to protect my model 

and you got to protect your model and we don’t get to that point, 

then my question is where are we at 20 years from now? When this 

panel maybe looks completely different, where are we at? So I will 
397 

open up a question to you. I don’t want your answer for today 

where broadcasters say protect our terrestrial radio, where Pandora says look at our rates. Where are we going to be so that we 

are not coming back, as my friend from Utah said, every time there 

is a problem at the rate board we run to Congress to fix it? 

I am an attorney beforehand and the last thing you wanted to 

do, and I did counseling and divorce work, the last thing you wanted was the judge to make a decision. Because, in the end when the 

judge makes the decision, both parties are unhappy. When you 

make the decision, then we go. 

So Mr. Warfield, we got a minute and ten, you got 30 seconds. 

Mr. Williams, you got 30 seconds. 

Tell me what you envision how we can work this out so we are 

not propping up bad models either way. 

Mr. WARFIELD. Well I think that there certainly needs to be a 

close look at the digital rates that are being charged. We would like 

to participate and grow there. We think that helps all of the stakeholders that are here. 

The one thing that I would ask this Committee to keep in mind 

is the consumer, the user. We talk about terrestrial radio, it is free. 

It remains free. There is no additional cost that they have to incur. 

Let us keep them in mind as we talk about with these other business, how this is going to be more efficient for them and more cost 

worthy. But the consumer needs to be considered here also. 

Mr. COLLINS. Time. 

Mr. Williams? 

Mr. WILLIAMS. We have an expression in recovery: Progress not 

perfection. Great progress is a Songwriter’s Equity Act. That is a 

great beginning. The fact is, the people we need to think about 

today are the young songwriters who are starting out trying to 

have the kind of life that I have had. 

I have a daughter who is a social worker. She got that because 

I was properly paid for the hard work that I was doing. 

What we can do is give more control back to the songwriters. 

Yes, we don’t want the judge to make all these decisions but we 

can move back to an arbitration panel which makes it a speedier 

more efficient way to deal with our problems. I think that it is a 

process that is going to take longer than any of us want it to take. 

But the fact is, if we don’t step into it and make that first little 

adjustment, people are going to wind up getting day jobs instead 

of writing songs for a living. 

Mr. COLLINS. The industry is moving forward. We are not moving 

backwards. It is not going to be automatic, as the song says. 

Mr. WILLIAMS. Exactly. 

Mr. COLLINS. So you got to move forward. You all got to come 

to the table and talk about this. And that is what we are going to 

be—— 

Mr. WILLIAMS. Thank you, Sir. 

Mr. COLLINS [continuing]. Beginning to do in the next few weeks 

and months. 

Mr. COBLE. I thank the gentleman from Georgia. 

The distinguished gentleman from Louisiana and I will say to 

Mr. Richmond, if you promise not to show up at the ballgame tonight, I will give you 10 minutes. [Laughter.] 
398 

Mr. RICHMOND. I think with 10 minutes all I can do is get in 

trouble anyway. So I will take the five, but thank you. 

Let me just pick up where my colleague, Mr. Collins, left off. And 

that is, you know, and I think Mr. Frear mentioned that Congress 

had two chances to get it right with the 1972 and the legacy royalties, and we didn’t. All I can promise you is if we solve this problem, nobody is going to like it and it is probably going to be wrong. 

Because we are not the subject matter experts on it, the technology 

moves so fast and we will probably screw it up. But I say that to 

say, you all are at the table. You all should be in the room trying 

to figure out who can give and come to some sort of solution. And 

the other thing I would tell you all, just to be honest, is that nobody has a better ballgame position. Because if we do it, we’ll probably start from scratch and nobody will like the results. 

So that would just be my recommendation. And, you know, the 

comment was made earlier that for every Mick Jagger, there is 

10,000 artists in the trenches. Well, I think they all live in New 

Orleans, by the way. And I want to make sure that they have an 

opportunity to continue to do and follow their passion and their 

dreams, but at the same time be compensated for it. And I tell people all the time when I go speak at schools, follow your dreams, do 

what you love, and if you do it well, you will make a living doing 

it. And I want to be able to look those kids in the face in our performing arts schools and all those things in New Orleans and actually mean it. And it has benefitted so many people in New Orleans 

and I would just like it to continue and to be there for the longterm. 

Mr. Warfield, let me just ask you a very direct question because 

we beat around the bush and nobody says, what impact would it 

have to your industry if you all had to pay the performance, I mean 

to pay all the rights and royalties for what you play on the radio? 

Mr. WARFIELD. I have testified to the potential financial impact 

of that to radio broadcasting. I have been in this business for 37 

years, I have been in radio stations that have been sold. I worked 

for a wholly owned minority radio company that at one point was 

the twenty-second largest broadcasting company in the country 

that no longer exists today. And we made it clear at that point that 

we could not afford to pay a performance royalty if it was imposed 

upon the industry. 

There are severe financial difficulties that many broadcasters 

would experience if that were the case. And, you know, I have been 

in this for 37 years, I have been doing it for 37 years to serve the 

communities that our stations serviced. The communities that I 

came out of, quite honestly here in Washington D.C. and Anacostia, 

continue to do that; not necessarily to serve the stakeholders that 

are here but they all benefit from what we do as terrestrial overthe-air broadcasters free. 

Mr. RICHMOND. Well let me ask you a question. The station you 

talked about that closed, closed anyway. Do you think that this 

would put, for example, Clear Channel out of business? 

Mr. WARFIELD. There are many different size broadcasters. You 

know, there are over 15,000—— 

Mr. RICHMOND. I am using Clear Channel as an example. Do you 

think it would put Clear Channel out of business? 
399 

Mr. WARFIELD. I don’t know their financial standing. They are 

contributing and participating in the digital arena. My company 

cannot afford to do that on any major way. We could not afford the 

cost of participating. I think everyone up here would like to see the 

pie grow, we would like to see the digital platform grow, but not 

at the expense of our companies. 

Mr. RICHMOND. And Mr. Frear, you mentioned that if everybody 

is contributing, that 1972 was a number that Congress picked. And 

are you saying that we decided to pick another number that went 

back further, as long as everybody had to pay it, you all are okay 

with that? 

Mr. FREAR. Quite honestly, on this issue, we have been open to 

any number of solutions for years now. I have had many discussions with major labels over the years about whether or not they 

don’t want to find a way to compromise on this issue. And I am 

happy to work with the Congress, I am happy to work with 

SoundExchange and the major labels to, you know, find some appropriate ground in the middle. 

As I said before, I don’t know why the choices were made and 

maybe there are other business reasons, good policy reasons, why 

the choices that were made were made. And we are wide open to 

the discussion. 

Mr. RICHMOND. Well I see that my time is about to expire. And 

I would just say again that I would love to have balance on this 

and make sure that everybody at the table continues to thrive. We 

don’t want to put anybody out of business and we certainly don’t 

want to send anyone to bankruptcy or influence anyone to stop following their dreams. So help us help you. And that means get in 

the room and figure out ways to come to some sort of conclusion. 

And with that, Mr. Chairman, I yield back. 

Mr. COBLE. I thank the gentleman from Louisiana. 

The distinguished gentleman from Missouri. 

Mr. SMITH OF MISSOURI. Thank you, Mr. Chairman. 

It has been interesting participating in these review hearings for 

the last year, serving on this Committee. And one common ground 

I think that I have heard from all of you and the folks that I have 

been meeting with the music industry throughout is that we all 

love music. We just got to find more common ground. And I look 

forward to working with all the stakeholders to try to get that common ground. But I do have a few questions. 

Mr. Huppe, I think it would be helpful, at least to myself, for you 

to lay out for us the standards that are used for determining royalties with respect to each copyright for a performance of a song. For 

instance, who is a willing buyer, who is 801(b), who is set by the 

rate court? Could you tell me briefly who is subject to which standard for each of the two copyrights? 

Mr. HUPPE. Sure. Thank you, Congressman. 

Obviously, it is a great question and a complicated question. I 

think the best way probably to answer that is to give you an example. And the example is this: Let us say you are driving your car 

down the road and you are listening to an excellent Rosanne Cash 

recording. And if you happen to be listening to that over your 

cellphone through an Internet radio station, chances are most of 

those are set according to the fair market standard value; willing 
400 

buyer, willing seller. And the rate that the service would pay for 

that would be set by the CRB, go to SoundExchange. It would be 

anywhere between an eighth or a quarter of a penny for that 

stream. 

Let us say you decided to stop doing that on your cellphone and 

you decide to switch, instead, to get that exact same awesome 

Rosanne Cash sound recording through satellite radio. Well that is 

set by a completely different standard, the 801(b) standard, which 

we believe is below market value. So the compensation flowing 

from that would be set according to different rules and they would 

pay about 9.5 percent of their revenue pro rata across all the 

streams. 

And then, let us say for whatever reason you got out of view of 

the satellite and you had to go with good old AM/FM. Well that 

would be easy because in that case there is no right, there is no 

rate, there is no CRB and the answer there is zero. And keep in 

mind that is the same recording coming out of the same speakers 

in your car and hitting the same ears. Each one of those three is 

set differently according to different rules. And that is just not 

right. 

Mr. SMITH OF MISSOURI. Mr. Harrison, you mentioned in your testimony that Pandora has paid $1 billion in royalties. Is that correct? 

Mr. HARRISON. Yes. This summer we will have paid, in total, $1 

billion in royalties. 

Mr. SMITH OF MISSOURI. Okay. 

Then my next question is, how is it that songwriters and artists 

claim that they are not getting paid? 

Mr. HARRISON. Well, that is an excellent question. I mean, today, 

Pandora is the highest paying form of radio. We pay a higher percentage of revenue than either terrestrial or satellite radio. We will 

pay north of $400 million in royalties this year, alone. To the extent, the copyright owners believe there is a different or better allocation of that revenue. Certainly, we would say that the copyright 

owners, themselves, are better situated to make that relative evaluation. 

Mr. SMITH OF MISSOURI. Mr. Williams, would you like to respond 

to that? 

Mr. WILLIAMS. I totally agree that the copyright owners, themselves, are the people to make these decisions and all. You know, 

I have said it again and again and I said it in my opening statement. The fact is we are a tiny percentage of that cost. So we need 

to find balance in this. 

You know, when the song of the year, the GRAMMY winning 

song of the year from 2011, is performed 72 million times on Pandora and the four writers each get less than $1,500 a piece, there 

is something terribly broken in the system. And, you know, you 

could take from my comment that, you know, that we have a 

major, major problem with Pandora. We have a major problem with 

Pandora’s balance of payment. We are not going to suggest how 

they adjust that, but fair market will tell. Give us a chance. You 

know, we don’t have the right to say no. With this case, we don’t 

want to. We want our writers and copyright owners to be properly 

compensated. 
401 

Mr. SMITH OF MISSOURI. The song of the year in 2011; was that 

Need You Now that you referred to earlier? 

Mr. WILLIAMS. I am going to turn to my contributor, excuse me. 

It was Need You Now by Lady Antebellum. 

Mr. SMITH OF MISSOURI. 72 million performance. 

Mr. WILLIAMS. 72 million performances. 

Mr. SMITH OF MISSOURI. And what was—— 

Mr. WILLIAMS. In other words, to give you the exact rate of exchange for it, we get nine cents for a thousand streams at Pandora. 

Roughly, I think it is a little less than nine cents. You know, you 

just don’t build a kingdom on those kind of dollars. 

Mr. SMITH OF MISSOURI. Ms. Cash, would you respond any differently. 

Ms. CASH. I am sorry. 

If all that money was paid out of Pandora, if it was paid in an 

aggregate, I don’t know how it was distributed. It certainly didn’t 

come to artists. 

And, notwithstanding my hard words toward them, I want them 

to succeed. I see the future. I want all of us to succeed but I just 

have to point out that all of these gentlemen on the panel would 

not be here had songs not been written. And it is in their best interest to get us paid so we are inclined to give them more songs. 

Mr. SMITH OF MISSOURI. Thank you. 

Mr. COBLE. I thank the gentlemen. 

The distinguished lady from Washington State—— 

Ms. DELBENE. Thank you, Mr. Chairman. 

Mr. COBLE [continuing]. Is recognized. 

Mr. DELBENE. And thanks to all of you for being here, for all of 

your time. 

It seems to be clear recognition across the board here that we are 

seeing a change in business model, definitely, toward digital transmission of music. And that is where the industry is headed. And 

even broadcasters are talking about the need to move, you know, 

to streaming, et cetera. 

And I wanted to ask you, Mr. Warfield, you have folks who are 

also streaming content and digitally providing content, how are you 

seeing the business model move even for terrestrial stations into 

the digital world? 

Mr. WARFIELD. Well we would certainly like to participate more. 

The rates that we pay for digital streaming is probably double 

what some other participants do pay. And as I have indicated to 

the panel here, it is not economically feasible for most broadcasters, particularly to mom and pop, locally or in broadcasters, not 

the big guys that everyone tends to focus on but which makes up 

most of the broadcast industry in this country have not been able 

to find a way in paying those kinds of rates to be profitable. So 

many broadcasters have just made a decision not to stream. 

Ms. DELBENE. So you are not seeing folks move that direction 

and seeing somewhat more of their, you know, their audience moving or accessing—— 

Mr. WARFIELD. Congresswoman, we still reach over 240 million 

people a week with radio. We still have the largest audience out 

there which is why radio is the number one driver of music sales, 

whether it be sales in a retail outlet or digital downloads. I mean, 
402 

so our audience is still loyal to what we do. We are free. There is 

no additional cost that is there for them. And we provide a lot more 

than just playing music. So our audience is still supportive of the 

business model that we have and we have been able to develop 

with the record industry. 

Ms. DELBENE. But given that we are talking about music today, 

do you see a change? Would you say there is a change? I mean we 

are talking a lot about how folks are listening to music today. 

Would you acknowledge that there is a change in where things are 

heading? 

Mr. WARFIELD. There is a change. I think all of us listen to different platforms. I have been in radio for 37 years. I have always 

listened to radio. I still buy music. So there is a change. We want 

to participate as that change occurs but there is still a basic broadcast industry here that our listeners, our audiences, our communities, still rely on and they still support. 

Ms. DELBENE. I have a question, maybe, for anyone who has an 

answer on this one which is we talked a little bit about internationally how our laws are different here versus around the world. Are 

there particular models that you have seen in other parts of the 

world that you think are good examples of where we should be 

headed? 

Mr. SHERMAN. International models pay almost in every country 

of the world with very few exceptions. We should simply follow that 

model. It is really very simple. 

Ms. DELBENE. And beyond paying specifically, are there other 

unique aspects of models in other countries that you think—— 

Mr. SHERMAN. There are some other models in which music publishing rights are paid on a percentage base instead of on a centsbased system. We could learn from that. I mean, there are definitely models that we could be looking at to try and redefine something for the United States. 

A lot of the questions have been what specific changes would you 

make? But the real answer is, we have to change everything. You 

can’t pick one piece. That is what we have done for the last decades, was pick one problem and fix one problem at a time. We do 

really need a holistic solution. 

Ms. DELBENE. Yes, Mr. Williams. 

Mr. WILLIAMS. If I may, one of the things that the Europeans 

have that we don’t have is a limited grant of rights. For us to, you 

know, as rights holders to be able to license some of our rights directly would be a great improvement. 

Ms. DELBENE. Yes, sir. 

Mr. VAN ARMAN. And then, just to echo what Cary Sherman was 

saying, it is that we don’t have a broadcast right here that is the 

big difference. We do need a broadcast right and it will also unlock 

lots of money from those international markets with reciprocity. 

Our creators here will be able to get paid for their performances 

overseas. 

Ms. DELBENE. Okay. 

Thank you very much for your time and yield back my time, Mr. 

Chair. Thank you. 

Mr. MARINO [presiding]. Thank you. 

Mr. Sensenbrenner? 
403 

Mr. SENSENBRENNER. Thank you, Mr. Chairman. 

This brings me back to what I attempted to do and succeeded in 

about 15 years ago with the Fairness in Music Licensing Act which 

was put in the copyright term extension law. And that was easy 

compared to this because the people who were for my bill were 

those that didn’t have any content over music like retailers and 

restaurateurs but ended up getting nailed with a licensing fee and 

everybody else was against it. 

And, you know, I do remember very vividly that my good friend, 

Mr. Coble, had a hearing in Nashville on that subject. And I had 

to be driven back to the national airport in the car of the United 

States Marshal who was a little bit worried about my safety. And 

he stayed with me until the wheels were up. 

Now I did have a long series of debates with our late colleague, 

Sonny Bono. And that ended when he was kind of shedding tears 

about changing the music licensing law before an audience of the 

National Restaurant Association which was very sympathetic to my 

standpoint. After he was very elegant, I got up and turned around 

and I said, ‘‘What Mr. Bono is telling you is ’I got you babe.’ ’’ 

Now, with this background, you know, here, everybody at the 

table has a different viewpoint on this issue. And I think that getting you all together and getting on one page will happen 2 days 

after the sun rises in the West. 

Now, you know, that being said, let me ask Mr. Warfield a couple 

of questions. And it basically goes as: Under the current system of 

licensing and royalty payments, have record sales gone up? And do 

you believe that the free over-the-air music that you and your 

members broadcast, have a lot of people going and actually buying 

music and paying the royalty on music that they buy? 

Mr. WARFIELD. From what has been recorded by the recording 

industry, music sales have gone down, I believe, in terms of hard 

copies. Not through the fault of anything that radio has done. We 

continue to freely promote and play this music. And our audience 

does continue to go out and buy the music. 

Within that system between radio and records, we are still driving our consumers, our listeners, to go out and buy music. There 

is no other way that they can get it. They’re not recording, what 

we do on the air, or stealing that content by recording our program 

over the air and then listening to it. There are alternatives that 

they can go to. They can certainly go to digital platforms but if they 

go there they have to pay just for the right to listen to what is 

there. There is no charge to do what we do. 

Mr. SENSENBRENNER. Okay. 

Mr. WARFIELD. So there is a digital model out there that none 

of us has really found a way to make it work. And I think we can 

all sit here and agree that there is a challenge there that we have 

as a business model which can help hopefully grow the various 

platforms, benefit all of the stakeholders, the recording industry 

also, so they are not taking anything away from radio. 

Mr. SENSENBRENNER. You know, I am kind of a simple country 

lawyer. And what you say is that the existing system is that you 

give them free advertising by putting their music on the air but 

you don’t have to pay for giving them free advertising? 

Mr. WARFIELD. Free airplay, free promotion. 
404 

Mr. SENSENBRENNER. Well promotion and advertising are kind of 

synonymous, aren’t they? 

Okay, so what I am hearing from some of the other folks is that 

they want you to pay for giving them free advertising. Is that kind 

of a simplistic way to get to the bottom of this? 

Mr. WARFIELD. I have heard that from some participants. But 

the one thing that I will say, relative to what radio has done, radio 

has helped the record industry develop to being as vibrant as it is 

today even with the financial difficulties they have. We have always supported the writers of the music. But we also help to develop the careers of the artist we are here talking about in some 

cases today. To develop careers that, in many cases today, when 

they might not be supported by record labels because of airplay 

that we are doing over the air free, continue to promote what they 

do. They can still tour. Whether they choose to tour or not, that 

is a personal decision but they have the opportunity to do that. 

And we continue to support those artists in many ways. 

Mr. SENSENBRENNER. My time has almost expired so I yield 

back. 

Mr. COBLE [presiding]. I thank the gentleman. 

The distinguished gentleman from New York, Mr. Jeffries. 

Mr. JEFFRIES. I thank the Chair and let me also thank each and 

every one of the witnesses for your presence here today and, in particular, Mr. Williams and Ms. Cash for your advocacy for the creative community and on behalf of your fellow artists and your fellow songwriters. 

Let me turn, now, to the subject of Internet and/or satellite radio. 

And let me, first, say that I believe the the success of Internet 

radio is critical for the overall music ecosystem in terms of providing a viable, meaningful alternative to the piracy that was previously taking place and was extremely rampant. And that is a 

point I believe cannot be overstated. 

But I do think that there are a few issues relative to the compensation structure and the business practices that I wanted to explore. So let me start with Pandora and Mr. Harrison. 

Now I believe that you testified earlier today that one of your 

business practices is to ensure that artists receive a fair share; is 

that correct? 

Mr. HARRISON. First of all, Congressman Jeffries, thank you for 

the kind words about our service. 

What I was speaking about is the value that statutory blanket 

licenses have, not only for services like Pandora that allow us to 

license content efficiently but that songwriters and recording artists actually participate directly in those royalty streams. 

Mr. JEFFRIES. Okay. 

Now am I correct that Pandora, however, notwithstanding what 

you just indicated, currently refuses to pay for the use of pre-1972 

recordings under either State or Federal law? 

Mr. HARRISON. We do not pay under Section 114 for the performance of pre-72 sound recording which is Federal law. 

Mr. JEFFRIES. But you are also contesting the rights of recording 

artists to receive any compensation in State court as well; correct? 
405 

Mr. HARRISON. We do have a pending litigation in the State of 

New York. And, yes, we disagree with the claims that the record 

labels make in that case. 

Mr. JEFFRIES. Okay. 

Now, pre-1972 recordings are an important part of business 

model; true? 

Mr. HARRISON. Yes, they are. 

Mr. JEFFRIES. So you have, for instance, a 60’s oldies channel; is 

that right? 

Mr. HARRISON. Yes. 

Mr. JEFFRIES. And you have got a motown channel; correct? 

Mr. HARRISON. I believe so, yes. 

Mr. JEFFRIES. 50’s rock and roll channel; true? 

Mr. HARRISON. I believe so. 

Mr. JEFFRIES. Golden oldies channel? 

Mr. HARRISON. You are aging out of my demographic, but I believe that is true. 

Mr. JEFFRIES. Okay. 

A doo-wop channel I believe; is that right? 

Mr. HARRISON. I believe so. 

Mr. JEFFRIES. A classic soul channel as well; correct? 

Mr. HARRISON. Yes. 

Mr. JEFFRIES. Now Pandora doesn’t pay anything for any of the 

sound recordings played on any of these six channels; true? 

Mr. HARRISON. If the recordings were made after 1972, that 

would be correct. 

Mr. JEFFRIES. Okay. 

Before 1972; correct? 

Mr. HARRISON. Correct. 

Mr. JEFFRIES. Okay. 

So, for instance, Respect was recorded by Aretha Franklin in 

1965. Every time Respect is played on Pandora, Aretha Franklin 

doesn’t receive a dime; correct? 

Mr. HARRISON. Well Pandora would not pay a performance royalty to the record label. She would be paid if she were a songwriter. 

Mr. JEFFRIES. Okay. 

So My Girl was recorded by the Temptations, I believe, in 1964. 

The Temptations don’t receive a dime of compensation from Pandora every time this extremely popular song is played; correct? 

Mr. HARRISON. Again, if you are talking about a payment to the 

record label, that is correct. If they are songwriters, they would get 

paid. 

Mr. JEFFRIES. Okay. 

And the same would be true for Soul Man, recorded by Sam 

Moore in 1967; A Change Is Gonna Come, recorded in 1964 by Sam 

Cooke; Stop In The Name Of Love, recorded in 1965 by the 

Supremes. I would suggest that the failure to pay recording artists 

for pre-1972 recordings is not a fair business practice. And in the 

context of this overall discussion, it is a problem that should be voluntarily resolved. But if it is not voluntarily resolved, Congress 

should act. 

Let me turn, quickly, to SiriusXM, which I believe you also 

refuse to pay recording artists for pre-1972 recordings; is that correct? 
406 

Mr. FREAR. There is no public performance right and, under the 

law, there is no amount due to them. 

Mr. JEFFRIES. Right, on the Federal law. But on the State law, 

you are also in litigation, I believe, in California trying to prevent 

compensation under California State law; correct? 

Mr. FREAR. It is clear from the litigation there is no public performance right under State law either. 

Mr. JEFFRIES. And in that California State court proceeding, I believe your company stated that ‘‘Granting a pre-1972 public performance right would produce a pure windfall to recording artists 

without any commensurate benefit to the public.’’ 

That was in your filing in that California case; correct? 

Mr. FREAR. Under the way that the policy is written under copyright law, that statement is true. 

Mr. JEFFRIES. I would just suggest a windfall is defined as an 

unexpected, unearned or a sudden gain or advantage in compensating artists for their creativity, even if it was recorded prior to 

1972, is not a windfall, it is the American way. 

I yield back. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from Rhode Island is recognized. 

Mr. CICILLINE. Thank you, Mr. Chairman. And thank you to the 

witnesses. 

I am proud to come from the State of Rhode Island, which was 

the birthplace of the creator of the National Endowment for the 

Arts and the National Endowment for the Humanities Center, Claiborne Pell, who I think reminded us that the strength of our nation 

was not simply the power of our military or our economic resources 

but our ability to honor the creative artists and the culture of this 

country and protecting the work of our artists is an important part 

of protecting our democracy. So I thank all the witnesses for this 

really important testimony. 

I want to really begin with you, Mr. Frear. You said, in fact, ‘‘I 

believe everyone should be paid.’’ And I assume you believe everyone should be paid because they have created a product and they 

are entitled to be compensated for it and that argument applies to 

creators before 1972 and after 1972, based on this notion that people are entitled to value for what they have created. 

Mr. FREAR. So I am not a copyright lawyer, I am just a history 

major. And it doesn’t make a whole lot of sense to me that the distinctions that were made in the past between pre- and post-72 artists were ever made. It doesn’t make a whole lot of sense to me—— 

Mr. CICILLINE. So you agree that we should—— 

Mr. FREAR. Let me just finish up, Congressman. 

When they granted the sound recording performance right that 

they did not give it to pre-72 artists and it makes no sense to me 

that terrestrial radio gets a free walk. 

Mr. CICILLINE. And you agree that not only should all of that 

production be compensated but that it should be done in a fair 

amount driven by the market. 

Mr. FREAR. Yes. 

I agree it has to be a working competitive market. 

Mr. CICILLINE. Okay. 
407 

And, Mr. Harrison, you spoke about the value that Pandora provides to hundreds of millions of Americans as a result of your service. But would you agree that there is some danger that, if that 

product is provided without compensation, that the very product 

you sell could be in peril? 

Mr. HARRISON. I don’t think I understand your question. 

Mr. CICILLINE. Well, you rely on a product that you, at least for 

part of your inventory, you don’t compensate the artist for. 

Mr. HARRISON. If you are referring to sound recording fixed before 1972—— 

Mr. CICILLINE. Well the example Ms. Cash used, where someone 

re-recording her father’s song would be compensated, but someone 

who is playing the original recording would not be required to compensate her. That strikes you as inconsistent, nonsensical, not good 

public policy; I take it. 

Mr. HARRISON. Well, unlike David Frear, I actually am a copyright lawyer. And copyright makes distinctions like this all the 

time. A musical work written by W.C. Handy in 1920 is part of the 

public domain and isn’t compensated. And yet, if a modern day recording artist were to record that song, that recording artist would 

receive a royalty. 

Having said all that, Pandora would be in favor of following the 

Copyright Office’s recommendation, which is fully federalizing pre72 recordings to allow both consumers to benefit from the protections, like fair use under the Copyright Act, allow recording artists 

to exercise their rights to terminate their transfers. 

So I understand the argument, sir, but if Congress makes the decision to fully federalize pre-72, we would be happy to pay. 

Mr. CICILLINE. So does anyone think that that is a bad idea? 

Does anyone think this distinction of 1972 makes any sense? Any 

of the witnesses? 

Mr. SHERMAN. We agree that the distinction ought to be erased. 

There are complications in terms of how to do it. And we have expressed a perfect willingness to figure out, with the Copyright Office and all the stakeholders, how to federalize pre-72. 

Meanwhile, this legislation, which deals with legacy artists who 

need money now, there is really no reason why action couldn’t be 

taken on that immediately while we figure out the federalization. 

Mr. CICILLINE. Mr. Christian, let me just ask you, you argue that 

this existing model ought to continue with free use of music and 

AM/FM. And it strikes me, I am new to this Committee, new to 

this issue, but it is a curious argument that I can’t think in another context where the kind of creative results of musician or artist should whole scale be appropriated, used to build up a business 

and generate revenues without any compensation. I am wondering 

why you don’t think the marketplace—you know, assuming there 

is some value to promotion which I will concede that the artist 

would have an ability to understand what the value of that is and 

negotiate a price that made sense for you as the consumer of that 

music and for the creator and artist who created it. 

Why would the marketplace not provide the kind of context for 

a fair exchange of that and why would we ever permit this practice 

continue where that asset created, that creative product created, is 
408 

just used for the revenue generation of a private enterprise at the 

expense of the people who created the products? 

Mr. CHRISTIAN. Are you speaking about the pre-1972? 

Mr. CICILLINE. Yes. 

Mr. CHRISTIAN. That really isn’t applicable to the radio industry 

as we don’t play performers that have performance rights right 

now. We do pay for composers, authors, and publishers work in 

that era. 

Mr. CICILLINE. I am talking about performers, post-72. 

Mr. CHRISTIAN. Oh, after 72. We believe that what we have right 

now and that is that the promotional value is supplied to them. 

Our product is free. For instance, we can’t charge for our product. 

Please understand that. We provide a free product to listeners 

across United States; hundreds of millions of people. And we do 

this in marketing and what’s also, was brought up on the advertising, but there is also promotion. And that is if you want—— 

Mr. CICILLINE. Oh, no. I understand that. But my question is: I 

recognize your argument that it has promotional value, but why is 

it not in the context of a free market, an exchange between the artist and you, as the broadcaster, to say this has some value for promotion so this is what I want to charge as an artist, this is the 

value it has to you because it helps to generate revenue for your 

company. Why will not the result of that be some fair price where 

the artist is compensated and you make money? 

Mr. FREAR. Well I think that—— 

Mr. COBLE. The gentleman’s time has expired. You’ll be very 

brief in your response, Mr. Christian. 

Mr. CHRISTIAN. All right. So one response will be glad to deal 

with you directly on that, if I could, at some point. 

Mr. CICILLINE. Of course. 

Thank you, Mr. Chairman. I yield back. 

Mr. COBLE. I thank the gentleman. 

The gentle lady from Texas, Ms. Sheila Jackson Lee. 

Ms. JACKSON LEE. Chairman, thank you so very much for this 

hearing and I am excited to see so many of you that I have worked 

with. I almost feel like calling the roll. 

Ms. Cash, thank you for the music I enjoy of your dad and I am 

sure of your entire family. Thank you so very much. 

It is good to see Mr. Sherman. 

It is good to see Mr. Warfield; we worked together before. Mr. 

Van Arman, Mr. Christian. 

And Mr. Paul Williams and I could be considered brother and 

sister, we have seen each other so much and appreciated your 

work. Thank you so very much for what you do for children in 

teaching children about music. 

Chris Harrison, Mr. Huppe, I believe the name is, or did I add 

a ‘‘P’’ on it that I should not have? 

Mr. HUPPE. That is perfect. 

Ms. JACKSON LEE. Thank you, sir. 

And Mr. Frear, thank you so very much. 

Let me also just put on the record that I hope that this Committee, if it is appropriate, will have a hearing on the DIRECTV/ 

AT&T merger just for the fact that content is included in that as 

well. 
409 

To the witnesses here, my delay was provoked by the fact that 

this is a year anniversary of the Shelby case, United States Supreme Court case that, in my opinion, dismantled the voting rights 

of this country. And there is a hearing going on in the United 

States Senate that is very important. And I would almost say that 

many of the artists that you represent, performers, benefitted on 

their opportunities to vote because of the Voting Rights Act. So I 

apologize for my delay in coming to the meeting. But this is no less 

an important hearing. One of the reasons why I dashed in here to 

be here. 

We have gone through this before and I think I have made clear 

that I think that we have an issue that should draw the interest 

of all in the recognition of the talent of the artists but also to understand, I have tried to take some time to understand the workings of radio and the expense that they incur. And so, I am prepared to be in this fight for a way forward. And I will pose my 

questions in that context. 

So I would ask both Mr. Warfield and the representative from 

Pandora, first of all, does the XM deal sound attractive in its construct for the pre-1972 artist, the pay structure? And I will just say 

this: In the early morning hours of coming here and listening to 

radio, I heard that Diana Ross think she has got some music pre1972, was going to be at one of our venues here in this area and 

apparently they said something about a national tour. And apparently they felt very confident that there would be standing room 

only. These artists are attractive, they are still bringing in crowds, 

we still love their music as we will do in years to come for those 

who are now. So Mr. Warfield, if you would, I would appreciate it. 

Mr. WARFIELD. As representative of the NAB, we have not taken 

a position on the pre-1972. What I would say is that our members, 

if they are participating, and I would probably argue that most of 

them are paying those fees in the digital arena, they are not looking for ways to avoid that. You know, we have some concerns of 

whether or not there may be some unintended consequences as a 

result of it. So we are sort of studying that issue, but we are not 

taking a position to oppose the bill. 

Ms. JACKSON LEE. Great. And would you continue to study it for 

me, because I think your insight is going to be very important to 

a lot of Members? 

Mr. WARFIELD. Yes, ma’am. 

Ms. JACKSON LEE. So I would encourage you to do that. 

Mr. Harrison? 

Mr. HARRISON. If Congress decides that protection for pre-72 is 

an issue that needs to be resolved, we would support the position 

of the U.S. Copyright Office which suggested a full federalization 

so that not only do consumers get the benefits of the copyright law, 

for example, the right of fair use, but artists will also potentially 

get their right to terminate their transfers under Section 3. 

Ms. JACKSON LEE. You just opened a door with respect to how 

we construct what may be most effective. So in the time that I 

have, if we approach this from a comprehensive perspective, I 

would like to have anyone who will press their button and tell us 

what do want in the comprehensive approach that will pass the 

House, pass the Senate and get signed by the President, which is 
410 

what I want to see happen and not go another decade without a 

response that I think is so very important. 

I don’t know who wants to start. I am looking at Mr. Williams. 

What would be good if we just looked at the whole picture, said we 

want to answer everyone’s concern, what would be good to have in 

that comprehensive bill? 

Mr. WILLIAMS. Well I think, first of all, we have to work together. I mean, we create a product which you all deliver and we 

are eternally grateful for that. 

Incidentally, thank you for your service. What you did this morning was incredibly important, as well. 

You know, I am 73 years old. We operate under a consent decree 

that is about a year younger than me. And while almost everything 

on this 73 year-old body works pretty good, there are parts of that 

consent decree that need to be dealt with. They just simply don’t 

work anymore. We have no right of refusal. We have no right of 

refusal so somebody can begin using our music immediately before 

they have even told us how they are going to use the music. You 

know, to prepare, you know, an appropriate bill for, you know, this 

is what your rate is going to be. We need information. 

People begin using our music before we even have that information. So the consent decree has certain elements that can be 

changed. For your support in our efforts at the DOJ are going to 

be incredibly important. We need a faster and a cheaper rate-setting process. To go to rate court costs millions and millions of our 

members money. And arbitration would be so much similar. It 

would be a huge part of that. 

You know, to allow our members, you know, right now we are 

existing under an all-in or all-out rule that has been imposed upon 

us so that the major publishers who want to be able to go directly 

and license certain rights separate and it is a right I believe they 

should have, are not allowed to have that. 

Mr. COBLE. The gentle lady’s time has expired. 

Mr. JACKSON LEE. Well let me just say, Mr. Chairman, thank 

you for your indulgence. And I am ready for all of us to come together and craft a portion of what Mr. Williams said. And I know 

others did not get a chance to answer my question. I would appreciate it if I could hear some of the comments in writing back to the 

Committee so that we could work on in the way that Mr. Williams 

has already laid out. 

I thank the gentlemen, the Chairman and the Ranking Member, 

and I yield back. 

Mr. COBLE. You are indeed welcome. 

I want to thank the panelists and those in the audience who 

have been here now for almost 3 hours. By the way, the room must 

be cleared by 2 o’clock because of a scheduled hearing but today’s 

hearing has been concluded. Thanks to all for attending. 

Without objection all Members will have 5 legislative days to 

submit additional written questions for the witnesses and all additional materials for the record. 

The hearing stands adjourned. 

[Whereupon, at 12:51 p.m., the Subcommittee was adjourned.] 
(411) 

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