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47–922 PDF 2009

PERFORMANCE RIGHTS ACT 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

ON

H.R. 848 

MARCH 10, 2009 

Serial No. 111–8 

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 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

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 ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

(III) 

C O N T E N T S 

MARCH 10, 2009 

Page 

THE BILL 

H.R. 848, the ‘‘Performance Rights Act’’ ................................................................ 2 

OPENING STATEMENTS 

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

State of Michigan, and Chairman, Committee on the Judiciary ..................... 1 

The Honorable Lamar Smith, a Representative in Congress from the State 

of Texas, and Ranking Member, Committee on the Judiciary ......................... 18 

The Honorable Howard L. Berman, a Representative in Congress from the 

State of California, and Member, Committee on the Judiciary ....................... 19 

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

of Virginia, and Member, Committee on the Judiciary .................................... 20 

The Honorable Pedro Pierluisi, a Representative in Congress from Puerto 

Rico, and Member, Committee on the Judiciary ............................................... 21 

The Honorable Darrell Issa, a Representative in Congress from the State 

of California, and Member, Committee on the Judiciary ................................. 22 

The Honorable Zoe Lofgren, a Representative in Congress from the State 

of California, and Member, Committee on the Judiciary ................................. 22 

The Honorable Ted Poe, a Representative in Congress from the State of 

Texas, and Member, Committee on the Judiciary ............................................. 23 

The Honorable Maxine Waters, a Representative in Congress from the State 

of California, and Member, Committee on the Judiciary ................................. 24 

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

of North Carolina, and Member, Committee on the Judiciary ......................... 25 

The Honorable Steve Cohen, a Representative in Congress from the State 

of Tennessee, and Member, Committee on the Judiciary ................................. 25 

The Honorable F. James Sensenbrenner, Jr., a Representative in Congress 

from the State of Wisconsin, and Member, Committee on the Judiciary ........ 26 

The Honorable Brad Sherman, a Representative in Congress from the State 

of California, and Member, Committee on the Judiciary ................................. 27 

The Honorable Daniel E. Lungren, a Representative in Congress from the 

State of California, and Member, Committee on the Judiciary ....................... 27 

WITNESSES 

Mr. Billy Corgan, Vocalist and Lead Guitarist, The Smashing Pumpkins 

Oral Testimony ..................................................................................................... 28 

Prepared Statement ............................................................................................. 30 

Mr. Paul Almeida, President, Department for Professional Employees, AFLCIO 

Oral Testimony ..................................................................................................... 31 

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

Mr. W. Lawrence Patrick, President, Patrick Communications 

Oral Testimony ..................................................................................................... 39 

Prepared Statement ............................................................................................. 41 

Mr. Stan Liebowitz, Ph.D., Ashbel Smith Professor of Managerial Economics, 

University of Texas at Dallas 

Oral Testimony ..................................................................................................... 51 

Prepared Statement ............................................................................................. 53 

Page

IV 

Mr. Steven Newberry, Commonwealth Broadcasting Corporation, on behalf 

of the National Association of Broadcasters (NAB) 

Oral Testimony ..................................................................................................... 142 

Prepared Statement ............................................................................................. 144 

Mr. Mitch Bainwol, Chairman and CEO, Recording Industry Association of 

America (RIAA) 

Oral Testimony ..................................................................................................... 190 

Prepared Statement ............................................................................................. 194 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of the Honorable John Conyers, Jr., a Representative 

in Congress from the State of Michigan, and Chairman, Committee on 

the Judiciary ......................................................................................................... 14 

Prepared Statement of the Honorable Zoe Lofgren, a Representative in Congress from the State of California, and Member, Committee on the Judiciary ......................................................................................................................... 23

(1) 

PERFORMANCE RIGHTS ACT 

TUESDAY, MARCH 10, 2009 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:08 a.m., in room 

2141, Rayburn House Office Building, the Honorable John Conyers, 

Jr. (Chairman of the Committee) presiding. 

Present: Representatives Conyers, Berman, Nadler, Scott, Watt, 

Lofgren, Jackson Lee, Cohen, Pierluisi, Sherman, Gonzalez, 

Weiner, Sa ́nchez, Wasserman Schultz, Maffei, Smith, Sensenbrenner, Coble, Goodlatte, Lungren, Issa, Forbes, King, Franks, 

Gohmert, Jordan, Poe, Chaffetz, Rooney, and Harper. 

Staff Present: Stacey Dansky, Majority Counsel; Benjamin Staub, 

Majority Professional Staff Member; and David Whitney, Minority 

Counsel. 

Mr. CONYERS. Good morning, everyone. The Committee will come 

to order. I would like to welcome all here in connection with the 

Performance Rights Act, H.R. 848. 

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Mr. CONYERS. I think H.R. 848 is an important piece of legislation and I think that it is fair to say that the current situation involving recording artists is not one that we can be very proud of. 

We hear a song on the radio and someone is singing or playing 

melodies, who receives absolutely no compensation. But it’s okay, 

I am told; someone will go out and buy their records, so you folks 

should be glad you’re on the radio. 

And speaking candidly, I’ve heard about some performers that 

are a little reluctant to speak publicly in support of the bill because 

of the threatening tone that they have been told about why they 

shouldn’t do something like that. And even in the Congress, amazingly, some of my colleagues have expressed hesitation to cross 

their local broadcaster, even though they say privately, Sure, we 

support the bill on its merits. 

Now, I have a prediction that sooner or later this measure is 

going to become law. And so the sooner that everybody in this room 

recognizes this and comes to the table in a spirit of negotiation, the 

better it is going to be and the sooner we’ll get this subject off the 

table. 

Can you believe that there are only four countries, developed 

countries, on the planet that don’t pay performance rights? The 

other three are Iran, North Korea and China. 

And so what we want to do today is to try to fairly examine this. 

Some would have us believe that the artists are being done a great 

favor by getting played at all. But every other platform for broadcast music, including satellite radio, cable, Internet, Web casters 

pay a performance royalty; terrestrial radio is the only platform 

that doesn’t. And this exemption from paying a performance royalty to artists doesn’t make much sense; and many of them—I don’t 

know about my colleagues on the Committee, but I have been to 

so many charity events for musicians that were down on their 

luck—they’ve got big health care bills or they don’t get work. I 

mean, everybody rises and falls. 

So I’m here to begin this discussion. I’ll put the rest of my statement in the record and yield to my friend, the minority Ranking 

Member, Lamar Smith of Texas. 

[The prepared statement of Mr. Conyers follows:] 

14 

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MICHIGAN, AND CHAIRMAN, COMMITTEE ON THE

JUDICIARY


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Mr. SMITH. Thank you, Mr. Chairman. 

The purpose of copyright law is to promote the public interest by 

encouraging the creation of new works of authorship. To accomplish this, the law seeks to balance the interest of creators in receiving compensation for their work with a public benefit that is 

derived from encouraging greater access to such works. 

The fundamental question presented by H.R. 848, the Performance Rights Act, is to what extent the copyright law should give 

rise to a royalty payment each time a sound recording is performed 

publicly. Requiring a full statutory performance right for sound recordings is a change that has been sought by performing artists in 

the record industry for years. 

H.R. 848 amends Section 106 and 114 of the copyright act to 

eliminate the exemption that AM and FM radio stations have enjoyed since the development of broadcast radio. The exemption permits these stations to broadcast sound recordings to the public 

without having to compensate performing artists. Proponents of 

current law assert that performing artists, particularly those with 

an active recording contract, benefit financially from having their 

songs performed extensively over free radio. They have asked why, 

if radio does not promote music sales, do artists and record labels 

send free CDs to radio stations and encourage programming managers to have their tracks spun as often as possible. 

On the other hand, copyright owners note they should be entitled 

to exercise their rights to license the use and distribution of their 

works. They assert that when the law restricts them from doing so, 

they should at the very least be compensated for the commercial 

use of such works. 

The economic downturn has resulted in a double hit for radio 

stations. It affects the ability of radio stations to generate revenue 

through advertising sales, which have decreased over 20 percent in 

the last 2 years. It also affects their ability to raise capital and secure financing to continue operations. 

While the economic future of radio stations, recording artists and 

record labels is uncertain, my own view is that they are likely to 

need each other for some time to come. The sooner the parties recognize and accept this fact, the better for all concerned. Frankly, 

though, negotiation on the subject of performance rates is unlikely 

in the near future. So in the short term, what I propose is that the 

parties agree to have a third party entity conduct an objective 

study of the economic impact of royalty payments on performing 

artists and radio stations. 

Stakeholders would offer issues to be evaluated, and at least 

there will be some quantitative analysis to help mold legislation. 

Such a study would need to be conducted by a party that is clearly 

not aligned with either side of the debate. This entity would evaluate the likely impact of a range of royalty rates in a variety of economic circumstances. 

During my time for questions, I will ask our witnesses if they 

will agree to this proposal. Before Congress chooses to act or withhold action on any matter, we have an obligation to ensure all legitimate concerns are fairly reviewed and addressed. 

Mr. Chairman, thank you for having this hearing today. And I’ll 

yield back the balance of my time. 

19 

Mr. CONYERS. Howard Berman has long been our intellectual 

property leader on Judiciary, and though he is Chairman of Foreign Affairs, his interest in this subject still continues. We are glad 

that he is with us this morning. 

Mr. BERMAN. Thank you, Mr. Chairman. It was your reference 

to North Korea, China and Iran that brought me here—no. 

First, I would like to particularly thank the Chairman for his 

commitment and his dedication to getting this bill passed. Fairness 

to the artists and parity between the platforms are all reasons to 

support this bill. The equities for repealing the broadcaster exemption are clearly in favor of paying artists and musicians for songs 

that are played on terrestrial radio. What I’d like to do is raise a 

couple of questions for my amiable adversary, Mr. Newberry, and 

Mr. Patrick regarding their justifications for opposing the bill. 

Mr. Newberry’s argument goes like this. This is testimony from 

the March 10th—from today’s hearing. I quote: 

‘‘As Congress has repeatedly recognized, the radio industry provides tremendous practical and other benefits, both to performing 

artists and to record companies. The recording industry invests 

money promoting songs in order to garner radio airplay and receives revenues when audiences like and purchase the music they 

hear. 

‘‘Artists consistently recognize the fact that radio airplay is invaluable. Simply put, when audiences hear music they like on their 

radio, they are likely to purchase that music.’’ 

A couple of responses to that argument: 

Specifically built into this bill is a way to take into account the 

value that Mr. Newberry talks about of promotion. Section 

114(f)(2)(b) directs in this legislation, Title 17—directs that when 

the copyright royalty judges establish reasonable rates in terms of 

royalty payments for public performances of sound recordings, 

when those performances are played on radio stations, they shall 

base their decision on economic, competitive and programming information presented to the parties, including subsection (i), whether use of the service may substitute for or may promote the sales 

of records of that performance. 

Now, if you don’t like that standard, let us know. But the idea 

that the bill doesn’t take into account promotional value isn’t true. 

And if the promotional value outweighs the value of the music to 

the station, the determination on rates will reflect that. 

Secondly, while it is possible that the station provides such great 

promotion that it obviates the need to pay the artists, I ask you 

to consider the comparable situation, where the station in fact will 

pay, as they do now, handsomely to broadcast sports games. There 

is clearly promotion there, but there is also payment. 

The same with talk radio programs. 

Mr. Newberry also argues that in this economy radio can’t afford 

the royalty fees prescribed by this bill. But as is clear in the bill, 

the royalty fees are assessed only on stations that make over $1.25 

million in revenue. That is why the bill allows small broadcasters 

to pay a small flat annual fee, to ensure the viability of radio. If 

it’s too high for some, let’s hear alternatives. 

For other stations who reconsider a percentage of revenue royalty rate, that way during hard economic times you could pay less; 

20 

during good times, you pay more. But let’s not forget that this not 

a debate about economic impact. We can accommodate that in the 

structure. 

This is about a right of a creator to be able to negotiate and get 

paid for what they create. 

So I’d like to make it clear that I’m hopeful that we can work 

with the NBA to try and resolve any legitimate concerns it has 

with the bill. Continually saying ‘‘no,’’ as the Chairman mentioned 

in the beginning, is not a productive way to accommodate real 

issues. 

And I ask my fellow Committee Members, even those who oppose 

the current iteration of the bill, to call on the NAB to sit with the 

invested parties, to identify their issues and try to hammer out a 

mutual resolution. Without that, I believe the Committee may have 

no choice but to move forward without NAB’s valuable input. 

Thank you, Mr. Chairman. 

Mr. CONYERS. From Virginia, a senior Member of Judiciary, Bob 

Goodlatte. 

Mr. GOODLATTE. Mr. Chairman, thank you. And I also want to 

thank Ranking Member Smith. We really appreciate your holding 

this hearing on the Performance Rights Act. 

Because the United States has been the pioneer for strong intellectual property protections, it is no surprise that the copyright industries are so successful and are so crucial to our national economy. The U.S. copyright industries have created millions of highskilled, high-paying U.S. jobs and have contributed billions to our 

economy. 

Today we are examining whether an exemption that has existed 

for years which allows terrestrial broadcasters to play copyrighted 

works without paying performance rights royalties is still justified 

in the Digital Age. Broadcasters argue that recording artists receive great benefits from the airplay their songs get, which result 

in higher sales for the artists. 

While this is likely true, I believe that digital music technologies 

have come to fruition over the past 5 to 10 years and that consumers do not rely solely on terrestrial broadcast stations for their 

music anymore. Other media, like satellite radio and on-line broadcasters, also deliver promotional value to the recording artists, and 

they pay performance rights royalties. This way’s in favor of lifting 

the exemption. 

On the other hand, I’m very concerned about maintaining local 

radio programming. Local radio programming is one of the best and 

least expensive ways that citizens can access news and emergency 

information in their communities. At a time when consolidation 

seems to be the norm, I believe it is important to do what we can 

to encourage radio stations to continue to provide local news and 

information, which often is done at cost or at a loss to the radio 

station. 

As such, I’m pleased that H.R. 848 contains provisions to grant 

relief to small radio operators who fall underneath the revenue 

threshold in the bill. However, I’m still concerned that the exemption does not strike the right balance and that some radio stations 

that provide excellent local programming and that may make 

enough money to just clear the revenue threshold in the bill will 

21 

be on the fringe. It would be a shame if this legislation were the 

last straw that caused stations like these to make the decision to 

close their shops or sell out. 

Last year, during the Subcommittee markup of this legislation, 

I offered an amendment as an attempt to solve this problem. It is 

my hope that the Chairman will work with me to come up with 

language that addresses this local broadcasting concern. 

In addition, it seems that one of the same arguments that support a requirement that broadcasters pay a performance royalty, 

the argument that other technologies now compete with terrestrial 

radio and also provide promotional value, also weighs in favor of 

all these various music delivery technologies being subject to the 

same standard for determining what the royalties should be. 

I’m not commenting now on what that standard should be, just 

that perhaps the time is right for these rules to be uniform. I’m interested to hear what the witnesses today think about these ideas. 

And I thank you, Mr. Chairman, for holding this important hearing. 

Mr. CONYERS. The former attorney general of Puerto Rico, Pedro 

Pierluisi. 

Mr. PIERLUISI. Thank you, Mr. Chairman. I commend you for 

holding this hearing on your bill, H.R. 848, which would remove 

the exemption for paying performance royalties that over-the-radio 

broadcasters but not other radio platforms have long been granted 

under Federal law. I know this issue is of vital importance to 

broadcasters, record labels and artists. 

I believe there are good arguments on both sides. And I have not 

yet made up my mind whether to support H.R. 848 or the competing resolution, H.Con.Res. 49, introduced by Mr. Green, which 

expresses support for the status quo. I’m hopeful, though, that today’s distinguished panel will help crystallize the issues for this 

Committee. 

I would note that I have received letters from several broadcasters in Puerto Rico urging me to cosponsor Mr. Green’s resolution. Along with other members of the congressional Hispanic Caucus, I have also received a letter from the Spanish Radio Association, a coalition representing several of Hispanic radio’s top players. This association claims that H.R. 848 would deal a financial 

blow to Hispanic radio from which it can’t recover. 

Mr. Chairman, I do not believe for a moment that this is your 

intention. To the contrary, I believe your bill tries in good faith to 

strike a balance between competing interests. I also know you will 

not seek to move H.R. 848 until we understand the financial impact that this legislation might have on the broadcast industry. I 

know this hearing marks one step in an ongoing effort to craft a 

bill that addresses the legitimate concerns of all parties involved. 

In general, I subscribe to the view that artists should be compensated for their hard work. Puerto Rico, like so many of the districts represented on this Committee, has a rich and vibrant musical culture. Besides shortstops, rum and coffee, the island’s musical 

talent may be its most renowned export, from Tito Puente to Luis 

Fonsi to Ricky Martin, and from Gilberto Santa Rosa to Don Omar. 

I tell you, although I expect this point to be vigorously disputed 

by other Members of this Committee, my extremely biased view is 

22 

that Puerto Rico may produce as much good music per capita as 

any other U.S. Jurisdiction. 

So I believe—not Memphis. I’m correct. 

So I believe that any bill should treat artists in a fair and appropriate manner while acknowledging the fact that radio clearly provides artists with promotional value. 

I thank the Chairman and I look forward to listening to the panelists’ testimony. 

Mr. CONYERS. The distinguished gentleman from California, Darrell Issa. 

Mr. ISSA. Thank you, Mr. Chairman. And thank you for holding 

the next in this series. And I certainly join with the gentleman 

from Puerto Rico in saying that not all great music comes from 

California, nor are all the artists in Memphis indigenous to Memphis. 

Having said that, Mr. Chairman, I think we are beginning to go 

down a road that is in the right direction, which is uncommon in 

Congress, and that is one where although many of us are on one 

bill or another and have a stake in them, we are beginning to realize that the balance between performance and the value of the 

copyright is, in fact, inherently unfair and that we must act, although we are not sure in which direction. 

In my case, I’m committed to see that the producers of intellectual property not always receive the exact same compensation for 

their work on terrestrial radio which currently is zero. But at the 

same time, I join with the Ranking Member, Mr. Smith, in saying 

that a study—and I would go one step further, a GAO study, 

should in fact be commissioned in order to move us in the direction 

of a neutral third-party, neither the broadcasters who seem to believe that it is always a privilege not to be charged for promoting 

your song by paying it nor, to be honest, my friends in the content 

community who cannot really decide which model, but they would 

like to have a model similar to terrestrial radio or satellite, the two 

of which are not consistent and neither one of which is necessarily 

the one that would be chosen if we were to come back again for 

broadcasters. 

So for that reason, Mr. Chairman, I will put the rest of my opening statement in the record. I certainly support what we are going 

to hear today. Hopefully, Mr. Chairman, what we’re going to hear 

today, in addition to what we’ve heard in the past, is support for 

a high-level, independent study to get it right once and for all as 

to perhaps not just terrestrial, but perhaps also to our friends on 

the Internet and satellite radio who are currently paying because 

somehow their promotion value appears to be less. 

With that, I yield back. 

Mr. CONYERS. A senior Member of the Committee, Zoe Lofgren 

from California. 

Ms. LOFGREN. Thank you, Mr. Chairman. I appreciate this hearing today and wanted to just note that I have remained neutral on 

this legislation, in part, because I think while there is merit to the 

arguments made on both sides of the question, the arguments in 

favor of the artists really overlook the newest platform, which is 

Web radio. And I think if we are going to have a discussion of parity or fairness under our copyright law—and I think it is absolutely 

23 

fair that we do so—we’ll err if we do not also discuss the underlying platform inequality that exists with respect to Internet radio. 

I would just note that, to me, it makes little sense that while 

cable and satellite radio providers are paying 6 to 8 percent of their 

total revenues in royalties under the 801(b) standard, some Internet radio stations are paying 60 to 80 percent of their total revenues under the Copyright Royalty Board’s decision. 

I don’t understand why a terrestrial broadcaster with gross revenues of under $1.25 million has to pay $5,000 under this legislation, whereas an Internet radio broadcaster making the same 

amount would be forced to pay a sum just shy of $150,000. 

In short, it seems that in every possible way the smallest, newest 

and most innovative entities are the ones most disadvantaged by 

our current copyright laws. And I would hope that as we attempt 

to establish parity, as this legislation does, that we would not overlook the Internet providers as well. This is the opportunity to provide parity across all platforms, and I’m hopeful that as we move 

forward on this, that we can accomplish that as well. 

With that, Mr. Chairman, I thank you for recognizing me, and 

I will put the remainder of my statement in the record. 

[The prepared statement of Ms. Lofgren follows:] 

PREPARED STATEMENT OF THE HONORABLE ZOE LOFGREN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF CALIFORNIA, AND MEMBER, COMMITTEE ON THE JUDICIARY

Thank you Chairman. 

I have remained neutral on this legislation in part because there is merit to the 

arguments made on both sides of this question. 

The broadcasters contend that an obligation to pay royalties overlooks the promotional benefits of free air play and will decimate local radio. 

For their part, the record labels feel that, particularly at a time when sales of 

physical CDs and vinyl are declining rapidly, the exemption enjoyed by terrestrial 

broadcasters is unsupportable. 

Another argument marshaled by the recording industry is that fairness and parity 

require this change in our copyright law. 

However, I think any discussion of parity or fairness under our copyright law is 

incomplete until we address the underlying platform inequality that exists with respect to internet radio. 

It makes little sense than while cable and satellite radio providers are paying 6 

to 8 percent of their total revenues in royalties under the 801(b) standard, some 

internet radio stations must pay 40 to 80 percent of total revenues under the Copyright Royalty Board’s decision. 

Similarly, I don’t understand why a terrestrial broadcaster with gross revenues 

of under $1.25 million has to pay $5,000 under this legislation whereas an internet 

radio broadcaster making the same amount could be forced to pay a sum just shy 

of $150,000. 

In short, it seems that in every possible way, the smallest, newest, and most innovative entities are the ones most disadvantaged by our current copyright laws. 

I would hope that any good faith attempt to establish parity in our copyright laws 

would address this inequity. 

Mr. CONYERS. Our country and western expert, Ted Poe of Texas. 

Mr. POE. Thank you, Mr. Chairman. I promise not to sing. 

I think, of course, in the long term, the best solution is for the 

parties to get involved and solve the problem rather than having 

the government swoop in and make decisions that usually—in 

many cases, I will say—both sides are disappointed with. I do see 

some concerns that might not have been addressed at this time, 

and I just want to mention those. 

24 

Local radio stations has seen their revenues drop anywhere between 10 and 40 percent because of the current economic crisis. I’m 

also concerned about the new performance fee spreading well beyond the local radio stations. I understand that new artists trying 

to break into the music business and listeners, they rely on the 

radio to get their music out initially, and that may make it difficult 

for them to ever break into the group of country music singers or 

Puerto Rican singers or whoever. 

But—the one thing that hasn’t been mentioned is that this is not 

really an issue between just the broadcasters and the artists, but 

you have the big record labels, label companies involved in this, 

too. If I understand this bill, 50 percent of the performance fee goes 

to the record labels, and I think we ought to have a discussion on 

whether that is a good idea or not. 

And many of those record companies, they are based all over the 

world; I don’t know that they are based in Texas, but they are 

based all over the world. And I think that we should have that discussion as well. 

Of course, this has been before Congress, I think, three times, 

and each time Congress has rejected changing the system. So I look 

for some insight into the comments that I just made about how it 

will affect the industry overall in this downturn, how it will affect 

new performers coming in, whether they will be able to have their 

songs played. And why is 50 percent of the fee going to the big 

record companies who, I think, are getting quite a share of this 

new tax or fee? 

So, with that, I will submit the rest of it in the record, Mr. Chairman. I yield back. Thank you. 

Mr. CONYERS. Our human rights expert on the Committee, Maxine Waters of California. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Today’s hearing on the Performance Rights Act of 2009, H.R. 

848, is an important first step in finally addressing an issue that 

has remained unsolved for a number of years. Technological advancements that have brought us to a new digital age that has 

highlighted the fact that our copyright laws must be updated to reflect the reality on the ground and in cyberspace. 

Over the years, my congressional district in Los Angeles—in my 

congressional district, I’ve spoken with many performers, artists 

and broadcasters about their concerns regarding the need to find 

a fair way to compensate everyone for their work. There is no 

doubt that the Committee must step up to the plate and update the 

copyright laws to reflect the fact that musical performances are 

shared today in ways that were never envisioned when the copyright laws were last updated. 

But in modernizing the statutes, I’m determined that we do not 

do so in a way that diminishes the voice of minority broadcasters. 

Corporate mergers have had a bad enough impact on small- to medium-sized minority broadcasters. I don’t want to make that problem worse with a new law, but I believe we can come up with a 

solution that doesn’t hurt small or minority broadcasters, including 

religious broadcasters. 

Mr. Chairman, I commend you and my colleagues, Mr. Berman 

and Mr. Issa and others, for your efforts to bring this bipartisan 

25 

proposal before the Committee today. No bill is a perfect bill and 

rarely is a bill enacted exactly as it is introduced. But H.R. 848 

provides us with a good starting point, and I’m looking forward to 

working with you and my colleagues to improve this bill in a way 

that will provide fair payments to performance and impose the 

least burden on broadcasters. 

Mr. Chairman, as I understand it—and I have to take a look at 

this bill in detail—there is some discussion about promotions and 

the value of promotions and whether or not there can be some kind 

of reconciling of the value of promotions and the cost to the performance. So I’m very much interested in that. 

I come from a district—part of my district is Inglewood, California, where I have Stevie Wonder, who owns one of our most 

prominent African American radio stations, and of course, he is one 

of the most prominent and well-known performers. So he has got 

a little bit on both sides of this. 

And, of course, I work very closely with Ms. Cathy Hughes, who 

has done so much to give us a voice where we don’t have a voice. 

We don’t have—African American legislators don’t have access oftentimes to all of the Sunday TV stations and the big radio stations; our voices are mostly heard through these minority broadcasters. So we have to be concerned about them, and of course, the 

fairness to the performers. People must be paid for their work. 

So we’ve got a challenge to resolve here, and I’m up to the task 

of working to help resolve that difficult task. 

Mr. CONYERS. I know Stevie Wonder. 

Howard Coble has long been a leader in the intellectual property 

issues from North Carolina, and he is still very concerned about 

this issue. 

Mr. COBLE. Mr. Chairman, I thank you and Mr. Smith for having 

called this hearing. 

Mr. Chairman, you conferred the expert title on the distinguished gentleman from Texas. If you will pardon my immodesty, 

I’m fairly well versed on bluegrass and old time country; so may 

I share that title, Mr. Chairman? 

Not unlike many Members on this panel, I have friends on each 

side—broadcasters on the one hand, performers on the other. And 

when you have friends on each side and ultimately cast a vote, we 

can’t in good conscious say, I’m former friends, because one group 

is going to be feel jilted. 

I would like to associate with the expert from Texas, when he 

said the best of all worlds would be for these folks at the table to 

come together. If you could hammer out some sort of resolution, 

that would, I think, benefit all of us favorably. 

I spoke to a Member, Mr. Chairman, who sits on this Committee, 

10 minutes ago; and I said, Are you with the broadcasters or the 

performers? He replied, Yes. So I think that says it. 

But I look forward to the testimony today, Mr. Chairman, And 

again I thank you for calling the hearing. I yield back. 

Mr. CONYERS. Steve Cohen from Nashville, Tennessee. 

Mr. COHEN. It’s a big district. Thank you, Mr. Chairman. Thank 

you, Mr. Chairman. 

I have spent time on this Committee with this issue and indeed 

I understand where the broadcasters come from. For when I was 

26 

young, in the 1950’s, in Memphis, Tennessee, Dewey Phillips, a 

disc jockey on WHBQ radio, played Elvis Presley. And if it weren’t 

for Dewey Phillips, the world would not have known Elvis. 

So no question about the fact that the broadcasters gave Elvis 

the opportunity to be heard and to be known; and it was Dewey 

Phillips’ stepping out that did that. 

But today it is different. People would have learned about Elvis 

over the Internet. They would have learned about Elvis in the new 

technologies that come out where people really learn about new 

artists. So I think that as we look at what has happened over the 

years, the argument that the performers benefit as they did from 

the play on the radio and that that’s their compensation has 

changed, and that technology has come about—this is an anachronism that needs to be corrected; if we were starting with this type 

of system today, we would not have this type of system and the 

performers would be paid. 

When I was young, I sang, ‘‘Don’t Be Cruel.’’ Elvis sang, ‘‘Don’t 

Be Cruel.’’ Elvis did a lot better than me. The song writer was the 

same; the performer does make a difference, and it should be recognized and compensated. How you emote a song has a lot to do with 

how a song is perceived. 

The difference in what American artists receive in Europe and 

European artists is from something to nothing, and that’s because 

of what we’ve done here. And we’ve heard our artists being compensated in Europe because of our system. So I think we need to 

recognize the performer’s contribution. 

And while this meeting indeed is about and should be about performers’ rights, Howard Berman brought up sports and sports is 

one of my favorite subjects, other than music. And it is interesting, 

in the discussion today, the Memphis Tigers started their season 

in Puerto Rico, and now they’re on the way to Detroit, the Chairman’s hometown. Last year we were on the way to the Ranking 

Member’s hometown, San Antonio. 

And, Mr. Chairman, we’ll see you in Detroit. Thank you. 

Mr. CONYERS. And Marcia Blackburn from Nashville is coming 

over right away to correct the Chairman. 

Mr. COHEN. She also claims she is from Memphis and Knoxville 

and Kingsport. 

Mr. CONYERS. Chairman Emeritus Jim Sensenbrenner. 

Mr. SENSENBRENNER. Thank you very much, Mr. Chairman. 

I hadn’t planned to make an opening statement, but since everybody else is, you know, let me disclaim the fact that country music 

got turned off in my house when I heard a ditty called, I Want My 

Woman to Be More Like My Dog; my wife turned off the radio or 

the TV player and that was the end of that. 

When I was Chairman of the Committee, we dealt with a lot of 

vexatious intellectual property issues. And one thing that came out 

and rose to the top is, to be successful in any amendment to the 

intellectual property law, you had to get all of the players at the 

table and at least all of the players not being opposed to the product of negotiation, which is not the same as all the players being 

in favor of the product of the negotiation. 

Now, it’s my understanding that the broadcasters haven’t wanted 

to come to the table. I may be wrong on that, but I think that most 

27 

of the Members of the Committee have that impression, and I’m 

going to aim my cannon right between your eyes, Mr. Newberry. 

I hope you and your organization get to the table and get to the 

table ASAP. If you don’t want to get to the table, can you please 

tell us why during your testimony? And if there is something that 

has to be done to get you to the table, like the Chair calling for 

a markup on this bill, then I will be happy to prod you along that 

way. 

So I want to make my message a lot more sharp, I want to make 

my message a lot more plain. And a lot of my other colleagues 

have. There is a problem with this law. You can either be a part 

of fixing the problem or you can be on the outside. And I think this 

Committee will be very happy to fix it for you. 

So I yield back the balance of my time. 

Mr. CONYERS. Brad Sherman, California. 

Mr. SHERMAN. Thank you, Mr. Chairman. It is—I think everything I needed to know I learned in kindergarten; or I’ve been trying to understand the lessons of kindergarten, and you learn there 

what happens to a society when you don’t pay the piper. 

I think that those who provide us with music are entitled to be 

paid for it. I look forward to the artists getting a performance right 

just as they do in most of the developed world, and I think it is 

particularly hard for anyone who benefits from intellectual property protections to argue against it. I can’t imagine the broadcasters saying, Well, we produce all these programs and we don’t 

want them stolen, but we don’t want to pay a performance right 

to the musician. 

The intellectual property industry is what keeps Los Angeles 

afloat and functioning, and those who support intellectual property 

rights ought to be in favor of intellectual property rights for performers. 

And with that, I yield back. 

Mr. CONYERS. Our last Member, Dan Lungren of California. 

Mr. LUNGREN. Thank you, Mr. Chairman. Even before we get to 

hear our panel, I’m learning things here. I knew Dewey Phillips 

was important, but I thought Ed Sullivan had something to do with 

Elvis Presley—and Steve Allen. I remember him being blacked out 

from the waist down, which just made him more intriguing as far 

as I was concerned. 

Mr. Chairman, this is an interesting hearing we are having, an 

interesting subject. The first time around in Congress I represented 

southern California, so I probably would have leaned toward the 

recording industry. Now I represent an area of northern California 

that has a number of small radio stations, so you might think I’d 

lean toward the radio stations. The problem is I don’t think I have 

enough information, even with the testimony that has been presented here as to what the fair thing to do is. 

We are embarking upon a question as to whether or not we are 

going to make a fairly significant change in a law that dates back 

to 1909. And I just wonder if we would benefit, as Mr. Issa suggested, from an outside study. Maybe GAO could give us a study 

of the economic implications. 

Maybe I’m old fashioned. I mean, I’m attracted to buying what 

we used to call records and so forth, buy what I hear on the radio. 

28 

That’s where I am introduced to it and that’s what attracts me to 

buy something or not buy something frankly. Or occasionally I 

might see it on television, but mostly it is when I’m in my car listening to the radio. And so I can see that argument very, very 

strongly, the promotional feature. 

On the other hand, we have the testimony of the artists who say 

it is unfair that we’re not being compensated as we would be in 

other venues and the way the rest of the world is. But, Mr. Chairman, I don’t know frankly what the true economic facts are. I don’t 

know what the state of the small stations are, but I hear their 

pleas. I don’t know what the proper cut would be if we were going 

to make a distinction between large, medium and small. 

I do know that, at least in my district, it appears that the radio 

stations are in some difficulty. They are not where they were 5 

year, ago, 10 years ago, 15 years ago, 20 years ago. And if, in fact, 

what we did inadvertently had the impact of destroying the nature 

of some of the small, local radio stations, I think that is something 

we ought to keep in mind as we, at the same time, consider legitimate interests on the part of the recorders and the performers for 

their intellectual property. 

So I would just second what Mr. Issa suggested, which was, perhaps we could have some sort of neutral body like the GAO do a 

study that might assist us in terms of some of the economic questions here. That would be of great benefit to me in making a determination on this. 

And I thank the Chairman for allowing me this time. 

Mr. CONYERS. Well, now that the witnesses have listened to all 

of us, it is time that we listen to you. We welcome Mitch Bainwol, 

Dr. Liebowitz, Steve Newberry, Lawrence Patrick, Paul Almeida. 

And we begin with Billy Corgan, who is not only a poet—and the 

Smashing Pumpkins have been reunited; they’ve come off a world 

tour. 

And we are delighted to have you begin your testimony. All witnesses’ testimony will be entered fully into the record. And we welcome you here and thank you for your patience. 

TESTIMONY OF BILLY CORGAN, VOCALIST AND 

LEAD GUITARIST, THE SMASHING PUMPKINS 

Mr. CORGAN. Thank you. I would like to thank you, Chairman 

Conyers, and the Committee for this opportunity to appear before 

you today about the Performance Rights Act. I’m here as a representative of the musicFIRST coalition, to give voice to fellow artists and musicians who join together to assert their right to be 

compensated for the airing of their musical performances on terrestrial radio. 

Because of my experiences in the music business for over 20 

years, I have a particular sensitivity when it comes to artists’ 

rights and who controls the distribution and, therefore, the worth 

of those rights. Like many of my peers, I come from a working-class 

background, beginning my musical journey playing in dingy bars 

and college lunchrooms. Being a performer requires countless hours 

of dedication to your craft. It is not an easy business to undertake, 

and for every success story there are many that have not had the 

opportunities that I have had. 

29 

I was able to find an audience in no small measure because of 

the long support of my music by terrestrial radio. I’m a big fan of 

radio and am very interested in its continued health and wellbeing. Terrestrial radio has helped me discover many of the artists 

that became influential to my life and artistic pursuits. I, by no 

means, see them as the bad guy. 

The change to the law we are here to discuss only redresses an 

outmoded, unfair practice that favors one participant’s needs over 

another. This legislation is simply a form of restoration to artists 

long overdue. 

The rights of any artist are often rife with vague distinctions and 

contradictions, as the worth of a creative endeavor cannot be calculated by any science. Works of art are judged subjectively, and 

if deemed good enough, plugged into a vast system that attempts 

to establish their mettle and eventually capitalize on that value. 

The debate over what any piece of art should command in an 

open market is as old as time itself. As it stands currently, if you’ve 

written a song you have the good fortune of being played on terrestrial radio, then you, as the author, are entitled to a fixed form of 

compensation as established by Congress. This compensation, of 

course, recognizes the unique contribution the author has made to 

the creation of the song. Conversely, if you also happen to be a performer on that very same song, by law, terrestrial radio owes you 

no form of compensation at all. 

The decision behind this long-held inequity stems back to 1909 

when radio was in its infancy. And since sound recordings had only 

recently come onto the market, they were not included. The oldfashioned radio business has held on to this exemption for over 80 

years, a law made in a bygone era for a set of reasons long past. 

This landmark exemption, however, stripped performers of their 

right to a free market evaluation of the value of their recorded 

works. 

From my perspective, this issue is one of fundamental fairness. 

If the performance of a song has value to a particular terrestrial 

radio station in its airing, I believe it is only right to compensate 

those performers who created the work. Simply put, if a station 

plays a song, both the author and the performer should be paid. 

These particular performances must have value to the stations or 

they wouldn’t be playing them. 

Not every performer on a hit song is a big name, and they might 

not see the same windfall that a star might. One can’t assume they 

participate in the merchandise or touring income that is linked to 

commercial radio success. Not everyone who hears a song on terrestrial radio buys a ticket or a T-shirt. Some listeners just listen, 

thereby rewarding only the station and their advertisers, and not 

the performers themselves. 

All areas in the modern music business are currently feeling the 

shifting tides as new models emerge and old ones are broken up. 

Ours is a business that always begins with the brilliance of the artists. Contrary to long-held myths, it does take money to create new 

music. As the traditional revenue streams have dried up, most notably in the overall decline of records sales, it has placed stress on 

who continues to benefit from the old models. The future demands 

new partnerships and a rethinking of long-held practices about how 

30 

artists should be compensated for their music. The hallmark of any 

great entertainment career is sustainability. Recognizing both the 

significance of the author and performer in the music making process helps to create those future opportunities. 

In closing and with all due respect to those that oppose the passage of the Performance Rights Act, to classify this measure as a 

‘‘tax’’ is an interesting choice of words, for who has been taxed 

more than the artists themselves? Artists have paid their dues, so 

to speak, to establish terrestrial radio as a great and dynamic medium. We must consider that for many artists, the difference between receiving these resources is the difference between a life in 

music and a life out of music. Few could deny that when a classic 

performance is captured, forever frozen as a musical snapshot in 

time, generation after generation returns to these moments, each 

finding something a little different. Whether we are talking about 

Motown, Stax, Elvis or Howling Wolf, when the public decides that 

a specific performance is worthy of their attention, then it seems 

only fitting that this little bit of magic as documented be recognized in the form of direct compensation for the artists and organizations that helped to create it. 

Thank you for your time. 

[The prepared statement of Mr. Corgan follows:] 

PREPARED STATEMENT OF BILLY CORGAN

I’d like to thank Chairman Conyers and the Committee for this opportunity to appear before you today about the Performance Rights Act. I’m here as a representative of the musicFIRST coalition, to give voice to fellow artists and musicians who 

have joined together to assert their right to be compensated for the airing of their 

musical performances on terrestrial radio. 

Because of my experiences in the music business for over 20 years, I have a particular sensitivity when it comes to artists’ rights, and who controls the distribution, 

and therefore, the worth of those rights. Like many of my peers, I come from a 

working-class background, beginning my musical journey playing in dingy bars and 

college lunchrooms. Being a performer requires countless hours of dedication to your 

craft. It is not an easy business to undertake, and for every success story, there are 

many who have not had the opportunities that I’ve had. 

I was able to find an audience, in no small measure, because of the long support 

of my music by terrestrial radio. I am a big fan of radio, and am very interested 

in its continued health and well-being. Terrestrial radio has helped me to discover 

many of the artists that became influential to my life and artistic pursuits. I by no 

means see them as the bad guy. 

The change to the law we are here to discuss only redresses an outmoded, unfair 

practice that favors one participant’s needs over another. This legislation is simply 

a form of restoration to artists long overdue. 

The rights of any artist are often rife with vague distinctions and contradictions, 

as the worth of a creative endeavor cannot be calculated by any science. Works of 

art are judged subjectively, and if deemed good enough, plugged into a vast system 

that attempts to establish their mettle and eventually capitalize on that value. The 

debate over what any piece of art should command on an open market is as old as 

time itself. 

As it stands currently, if you have written a song and you have the good fortune 

of being played on terrestrial radio, then you, as the author, are entitled to a fixed 

form of compensation as established by Congress. This compensation, of course, recognizes the unique contribution that the author has made to the creation of the 

song. Conversely, if you also happen to be a performer on that very same song, by 

law, terrestrial radio owes you no form of compensation at all. The decision behind 

this long-held inequity stems back to 1909 when radio was in its infancy, and since 

sound recordings had only recently come onto the market, they were not included. 

The old-fashioned radio business has held onto this exemption for over 80 years— 

a law made in a bygone era for a set of reasons long past. 

This landmark exemption however stripped performers of their right to a free 

market evaluation of the value of their recorded works. From my perspective, this 

31 

issue is one of fundamental fairness. If the performance of a song has value to a 

particular terrestrial radio station in its airing, I believe it is only right to compensate those performers who have created this work. Simply put, if a station plays 

a song, both the author and the performer should be paid. These particular performances must have value to the stations or they wouldn’t be playing them. 

Not every performer on a hit song is a big name, and they might not see the same 

windfall that a star might. One can’t assume they participate in the merchandise 

or touring income that is linked to commercial radio success. Not everyone who 

hears a song on terrestrial radio buys a ticket or a t-shirt. Some listeners just listen, 

thereby rewarding only the station and their advertisers, and not performers themselves. 

All areas of the modern music business are currently feeling the shifting tides as 

new models emerge and old ones are broken up. Ours is a business that always begins with the brilliance of the artists. Contrary to long-held myths, it does take 

money to create new music. As the traditional revenue streams have dried up, most 

notably in the overall decline of record sales, it has placed stress on who continues 

to benefit from the old models. The future demands new partnerships and a rethinking of long-held practices about how artists should be compensated for their music. 

The hallmark of any great entertainment career is sustainability. Recognizing both 

the significance of the author and performer in the music making process helps to 

create those future opportunities. 

In closing, and with all due respect to those that oppose the passage of the Performance Rights Act, to classify this measure as a ‘‘tax’’ is an interesting choice of 

words. For who has been taxed more than the artists themselves? Artists have paid 

their dues, so to speak, to establish terrestrial radio as a great and dynamic medium. We must consider that, for many artists, the difference between receiving 

these resources is the difference between a life in music and a life out of music. Few 

could deny that when a classic performance is captured, forever frozen as a musical 

snapshot in time, generation after generation returns to these moments, each finding something a little different. Whether we are talking about Motown, Stax, Elvis, 

or Howling Wolf, when the public decides that a specific performance is worthy of 

their attention, then it seems only fitting that this little bit of magic as documented 

be recognized in the form of direct compensation for the artists and organizations 

that helped to create it. 

I thank you for your time. 

Mr. CONYERS. Paul Almeida is the President of the AFL-CIO’s 

Department For Professional Employees. They represent their 4 

million professional and technical workers. He is an engineer himself and was, for 7 years, president of the International Federation 

of Professional and Technical Engineers. 

Welcome to the hearing. 

TESTIMONY OF PAUL ALMEIDA, PRESIDENT, 

DEPARTMENT FOR PROFESSIONAL EMPLOYEES, AFL-CIO 

Mr. ALMEIDA. Thank you, Chairman. 

Good morning, Chairman Conyers, Ranking Member Smith and 

distinguished Members of the Committee. My name is Paul 

Almeida, and I’m the President of the Department For Professional 

Employees of the AFL-CIO, a coalition of 24 national unions representing some 4 million white-collar workers. I’m here today to 

support the hundreds of thousands of recording artists, singers and 

musicians who seek to secure a performance right so that they may 

finally be able to receive the fair compensation they deserve for the 

work they create. 

I am especially pleased to be able to deliver a letter to the Committee which has been signed by the presidents of the American 

Federation of Teachers, the Communication Workers of America, 

the United Steel Workers, the International Association of Firefighters, the American Federation of State, County and Municipal 

32 

Employees and the Service Employees International Union in solidarity with the brothers and sisters in the music industry. 

I would ask that the letter be made part of the hearing record. 

Mr. CONYERS. We’ll accept it into the record. 

[The information referred to follows:] 

33 


A-1.eps
34 


A-2.eps
35 


A-3.eps
36 

Mr. ALMEIDA. Thank you. 

Like all professionals, singers and musicians spend years developing their musical talents and abilities and invest substantial resources in their careers. While a relatively small number of performers are able to attain, but not necessarily sustain, fame and 

fortune, the vast majority of recording artists, singers and musicians must work hard to patch together modest earnings from various sources in order to support their families. 

The most successful ones are able to build a middle-class career 

in music. Most performers, even those who appear to the outside 

world to be successful, have to work day jobs to pay the bills. In 

what other profession would you be required to give your work 

away for free? In all my years representing professionals, I have 

never encountered such a situation. 

Labor ardently supports the efforts of our brothers and sisters in 

the music profession to be fairly compensated for the music they 

have created and is played on the radio. Commercial radio stations 

earned over $16 billion in advertising revenue last year, yet they 

paid nothing to the performers whose music they played. AM/FM 

radio depends for its success on recordings created by great performers like the Four Tops, The Supremes, Miles Davis, Patsy 

Cline and so many other great artists and their equally talented 

session musicians and singers. What does it pay those artists? Not 

a penny. 

As union members, we believe that this is an issue of fairness. 

We believe in the principle that a fair day’s work deserves a fair 

day’s pay. 

The current system creates an unfair competitive advantage for 

AM/FM radio broadcasters over the new-medium radio platforms. 

All radio platforms, except AM/FM radio, including satellite, Internet and cable radio, pay for the music they play. Under current 

law, only the songwriters are entitled to compensation. While it is 

absolutely right that songwriters be paid for the broadcast of their 

songs, it follows their performers should also be paid for the broadcast of their recordings. 

We all know that that the musicians and singers play a crucial 

role in creating masterpieces we hum throughout the day, whether 

it is the National Symphony’s version of Mozart or the Temptations 

singing My Girl written by Smokey Robinson and Ronald White. 

Performers, too, are creators who deserve and need to be paid. 

In this worsening economic crisis, we are also leaving $70 to 

$100 million on the table each year because we do not have a performance right for artists here in the United States. Talented artists are denied the ability to recover what they erode from airplay 

of their music overseas. Does it really make sense for the U.S. to 

continue to allow millions of dollars to go no the French cultural 

fund every year instead of coming home to the U.S., where it can 

help performers make ends meet and help local economies? 

Under the—unless Congress enacts the Performance Rights Act, 

our artists in the U.S. will continue to be precluded from collecting 

these royalties from overseas. 

It is long past time that our brothers and sisters who belong to 

the affiliated unions, the American Federation of Musicians and 

the American Federation of Television and Radio Artists, are paid 

37 

for the work that they create. We all benefit greatly from their 

wonderful music. We listen to it in our cars on our way to and from 

work, on the job or at home. And like many others, for many years 

I assumed they were being paid a little bit for each time I heard 

the grateful dead play Touch of Grey or Jefferson Airplane play 

White Rabbit. 

Now, I know that the broadcasters have prevented this for over 

80 years. I know it has been a long-fought battle from Glenn Miller 

to Frank Sinatra to those like Sam Moore, Martha Reeves, Herbie 

Hancock and others who are leading the charge now. It is time. It 

is only fair that the talented artists be fairly compensated for what 

they create. 

Thank you for asking me to be part of the hearing today, and I 

will be happy to answer any questions. 

[The prepared statement of Mr. Almeida follows:] 

PREPARED STATEMENT OF PAUL ALMEIDA

Good morning, Chairman Conyers, Ranking Member Smith, and distinguished 

Members of the Committee. My name is Paul Almeida. I am the President of the 

Department for Professional Employees (DPE), a coalition of 24 national unions affiliated with the AFL-CIO. I am honored to speak today on behalf of the more than 

four million professionals represented by our union affiliates, including the American Federation of Television and Radio Artists, the American Federation of Musicians, the Federation of Professional Athletes, the United American Nurses, the 

American Federation of Government Employees, and all of our other affiliates. I am 

here today to stand in support of the hundreds of thousands of recording artists, 

singers, and musicians who seek to secure a performance right so that they may 

finally be able to receive the fair compensation they deserve for the work they create. 

I am especially pleased to be able to deliver a letter today to the Committee which 

is signed by the Presidents of the Service Employee International Union, the American Federation of Teachers, the United Steelworkers, the International Association 

of Fire Fighters, the American Federation of State, County and Municipal Employees, and the Communications Workers of America, in solidarity with our brothers 

and sisters in the music industry. I would ask that this letter be made part of today’s hearing record. We are joining this critical campaign as a united labor movement and we deeply appreciate the leadership of Chairman Conyers, Representatives Berman and Issa, and the other Members of this Committee who support this 

legislation. 

Like all professionals, singers and musicians spend years developing their musical 

talents and abilities and invest substantial resources in their careers. Just like 

other professionals, they make considerable sacrifices in an effort to succeed in their 

chosen field. And just like other professionals, recording artists, musicians and 

background singers deserve to be paid fairly for the work they do. In what other 

profession would you be required to give your work away for free without your permission? In all of my years representing professionals, I have never encountered 

such a situation. And while a relatively small number of performers are able to attain (but not necessarily sustain) fame and fortune, the vast majority of recording 

artists, singers and musicians must work hard to patch together modest earnings 

from various sources in order to support their families. The most successful ones are 

able to build middle-class careers in music. Most performers, even those who appear 

to the outside world to be successful, have to work ‘‘day jobs’’ to pay the bills. Labor 

ardently supports the efforts of our brothers and sisters in the music profession to 

be fairly compensated when the music they have created is played on the radio. 

The labor community is also concerned about the many, many hardworking singers and musicians who are now growing older and can no longer easily tour. Yet, 

their jazz hits, country tunes, and R & B melodies continue to be played over and 

over again on commercial radio stations. While these stations earned over $16 billion in advertising revenues last year, they paid nothing to the performers whose 

music they played. AM/FM radio depends for its success on the recordings created 

by great performers like the Four Tops, the Supremes, Miles Davis, Patsy Cline and 

so many other great artists and their equally talented session musicians and singVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00041 Fmt 6633 Sfmt 6621 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
38 

ers. What does it pay those artists? Not one penny. The radio stations have had a 

good gig for decades now, but it is time they start paying for the music they play. 

As union members, we believe that this is an issue of fairness. We believe in the 

principle that a fair day’s work deserves a fair day’s pay. Music broadcasters have 

fought hard over the years to avoid paying anything for the foundation of their business model—the music that they play 24 hours a day on a myriad of stations. Let’s 

not kid ourselves—no one tunes into the local hard rock or oldies’ station to listen 

to the commercials. We tune in for the music—to be entertained or energized or to 

reminisce. 

These same broadcasters pay their on air ‘‘personalities’’ and shock jocks millions 

each year to entertain their listening audience. And they pay millions more in licensing fees to broadcast baseball, football and basketball games. Yet, they refuse 

to pay anything at all to the artists and musicians who bring music to life. This 

is simply not fair. 

And, the current system creates an unfair competitive advantage for AM/FM radio 

broadcasters over the ‘‘new media’’ radio platforms. All radio platforms except AM/ 

FM radio, including satellite, Internet, and cable radio, pay for the music they 

play—yet the AM/FM radio broadcasters continue to block artists’ efforts to be paid 

when the same music is played over terrestrial radio. That is just not right! 

We believe that both songwriters and performers should be compensated when the 

music they have jointly created is played on the radio. Unfortunately, under current 

law, only songwriters are entitled to compensation. While it is absolutely right that 

songwriters be paid for the broadcast of their songs, it follows that performers also 

should be paid for the broadcast of their recordings. We all know that the musicians 

and singers play a crucial role in creating the masterpieces we hum throughout the 

day—whether it is the National Symphony Orchestra’s version of a Mozart classic, 

or The Temptations singing ‘‘My Girl’’ written by Smokey Robinson and Ronald 

White. Performers, too, are creators who deserve and need to be paid. 

In this worsening economic crisis, we are leaving 70 to 100 million dollars on the 

table each year because we do not have a performance right for artists here in the 

United States. Talented artists are denied the ability to recover what they are owed 

from the airplay of their music overseas. Does it really make sense for the U.S. to 

continue to allow millions of dollars to go into a French cultural fund every year, 

instead of coming home to the U.S. where it can help performers make ends meet, 

and help our local economies? Unless Congress enacts this Performance Rights Act, 

artists in the U.S. will continue to be precluded from collecting these royalties from 

overseas. That too is unfair. The United States is the only developed country in the 

world that does not have a performance right in sound recordings. In our failure 

to provide a performance right we stand in the company of such countries as China, 

North Korea, Rwanda, and Iran. In so many other areas, we fight to ensure that 

the United States is a leader—clearly we have fallen down on the job here. 

It is long past time that our brothers and sisters who belong to our affiliated 

unions, AFM and AFTRA, are paid for the work that they create. We all benefit 

greatly from their wonderful music—we listen to it in the car to and from work, on 

the job, and at home while relaxing with family and friends. And like many others, 

for many years I assumed that they were paid a little bit each time I heard The 

Grateful Dead play ‘‘Touch of Grey’’ or Jefferson Airplane perform ‘‘White Rabbit.’’ 

Now I know that the broadcasters have prevented that—for over 80 years. 

I know this has been a long fought battle—from Glen Miller to Frank Sinatra to 

those like Sam Moore, Martha Reeves, Herbie Hancock and others who are leading 

the charge now—It is time. It is only fair that these talented artists be fairly compensated for what they create and the joy they bring into our lives. 

Thank you for asking me to be a part of this hearing today. I, and thousands of 

my union colleagues, are eager to help our brothers and sisters in the music industry earn a decent living from the craft that they have chosen—music. 

I would be happy to answer any questions you may have. 

Mr. CONYERS. Lawrence Patrick is a veteran in this business. He 

graduated from Georgetown Law School, Ph.D. From Ohio University. He heads Patrick Communications, owns a number of small 

market radio stations, has been head of Gilmore Broadcasting, senior vice president of National Association of Broadcasters and 

chairman of Ion Media Networks. 

And we are glad to have you here today. We welcome you to the 

Committee. 

39 

TESTIMONY OF W. LAWRENCE PATRICK, PRESIDENT, 

PATRICK COMMUNICATIONS 

Mr. PATRICK. Thank you very much. Good morning, Chairman 

Conyers, Ranking Member Smith and Members of the Committee. 

My name is Larry Patrick and I’m managing partner of Patrick 

Communications. We are a media brokerage firm based in 

Elkridge, Maryland. 

I am also a radio broadcaster. My company, Legend Communications, owns 14 small-market radio stations in Wyoming. 

In my capacity as managing partner of Patrick Communications, 

I have extensive media brokerage experience. My firm has negotiated or consulted on over 500 radio and 150 television transactions in the past 15 years. I work with both publicly and privately held communication companies ranging from the largest 

group owners to many hundreds of mom-and-pop stations. 

I have been part of the radio industry for 40 years. I can tell you 

that over the course of my career, I have never seen what the radio 

industry is currently experiencing. The economic downturn is having a significant and devastating effect on local radio. But as bad 

as the current local radio landscape is, it will deteriorate even further and much more dramatically if H.R. 848 were to be enacted. 

Let me share with all of you where the radio industry is and 

what I believe a new performance fee will mean to the local radio 

stations. 

In 2008, radio revenues finished the year down 9 percent. 2009 

doesn’t look much better. A recent Wells Fargo analyst’s forecast 

said there would be a 13 percent drop in revenues for the industry 

in 2009, and she warned that the forecast may be far too optimistic. She painted a picture of an industry that is now in free fall 

with no chance of a turnaround until the economy recovers or credit markets improve. I personally know of radio stations that are 

seeing a 35 to as much as a 50 percent revenue decline all across 

the country. 

Of course, radio, like virtually every other industry, is suffering 

the effects of the financial meltdown and the paralysis in the credit 

markets, which makes it difficult, if not impossible, to finance acquisitions. I know dozens of radio station owners—many of them 

in their 60’s and even 70’s—who want to sell their stations and retire, cannot find any buyer capable of financing a purchase in today’s market. Almost every publicly traded radio company is in default with their lenders today, and many are facing delisting of 

their stock from the national exchanges. 

Right now, I’m advising lenders and investors on nearly a dozen 

workouts of radio companies involving over 300 radio stations. 

Salem Communications, based in California, the largest religious 

radio group; Saga Communications, based in your hometown of Detroit, Mr. Conyers; Radio One, the largest African American radio 

company; and others including Citadel, Cumulus, Entercom, 

Beasley, Emmis, Fisher—dozens of others—have all had to lay off 

employees and reduce companywide compensation from 5 to 10 percent in the last few months. 

The radio industry is tightening its belt and moving forward into 

a world of financial uncertainty that none of us have ever experiVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
40 

enced. We are facing an economic downturn that is sharper and 

steeper than anything I have ever witnessed. 

What I’ve described is the economic realities that the radio industry is facing right now. And having watched the industry for 40 

years, I can sit here and tell you that the new fees that will be levied under H.R. 848 will do significant, long-term damage to the 

local radio stations across the country. Any further station costs 

will push even more stations into tripping their loan covenants 

with their banks and more workouts. Station owners will further 

reduce staffing and services, which will only hurt their local listeners while enriching the big music labels. 

The labels suggest that the provision for small market operators 

of an annual flat fee of $5,000 would not harm the small market 

operators. Well, I am a small market radio operator also and I 

know how much this will hurt. And I know hundreds of small market radio owners who barely make $25,000 a year from their stations. To pay this fee, even a $5,000 fee, stations could have to 

eliminate covering high school sports, give up more local origination and would reduce their staffing even further. 

Any additional fees also threaten their ability to provide emergency services that are so critical to the thousands of small towns 

across this country. 

The recording industry has also argued in the past that if a new 

performance fee were adapted, stations could simply raise their advertising rates to pay for that new fee. Nothing could be further 

from the truth. If radio broadcasters could actually get more money 

for their advertising spots, why wouldn’t they be doing that already? The truth is that ad rates are dropping sharply; they are 

not increasing. 

At this time, stations are laying off employees, reducing wages 

by 5 to 10 percent; and a number of radio companies are literally 

teetering on the verge of bankruptcy. 

If this bill is enacted, it will put at risk an industry that employs 

nearly 106,000 people across America. I am not overstating the situation when I say that such extraordinary fees imposed on local 

radio stations, in light of the current economic plight of local radio, 

could be absolutely devastating. The recording industry is living in 

a fantasy world that is divorced from the critical, depressed financial position in which almost every radio station finds itself today. 

I strongly urge the Committee Members to oppose H.R. 848. 

Thank you very much, Mr. Chairman. And I look forward to answering any questions that you and the Committee Members may 

have. 

[The prepared statement of Mr. Patrick follows:] 

41 

PREPARED STATEMENT OF W. LAWRENCE PATRICK


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Mr. CONYERS. Dr. Stanley Liebowitz, economist, University of 

Texas at Dallas, trained at UCLA and Johns Hopkins. We welcome 

you. 

TESTIMONY OF STAN LIEBOWITZ, Ph.D., ASHBEL SMITH PROFESSOR OF MANAGERIAL ECONOMICS, UNIVERSITY OF 

TEXAS AT DALLAS 

Mr. LIEBOWITZ. Thank you. 

Thank you, ladies and gentlemen and Members of the Committee, for inviting me to express my views. I am an academic 

economist, and I have performed research on topics related to today’s issue. 

My research has tended to focus on the impacts of new technologies, the creation of intellectual products. I have been involved 

with these topics since the Canadian Government asked me to investigate the impact of photocopying on publishers, which was a 

long time ago, as most of you know. 

I have written two academic papers that examined one of the key 

topics at issue today—whether or not radio play benefits the owners of sound recordings. The approaches that I used in these two 

papers are very different from one another. One is an historical examination of old events and the other is an econometric examination using recent data. My historical examination looked at two different episodes. First, I took a look at sound recording sales in the 

United States after the introduction of radio; second, I examined 

the introduction of youth-oriented radio in Britain in the 1970’s. 

In the U.S., what I discovered was that record sales were more 

mature than most people realized when radio was introduced and 

that record sales dropped dramatically after radio was introduced. 

In Britain, the BBC was in charge of all the radio; they had a state 

monopoly. They did not play rock-and-roll music. Most of you may 

remember that there were pirate radio stations that Texans, 

among others, put off the coast of Britain in the 1960’s. Those were 

shut down. 

The BBC agreed to start playing more rock-and-roll, and they 

started to allow private stations in Britain. After that occurred, 

record sales did not go up. 

So, from those two, I found no evidence to support a view that 

radio playing increases record sales. 

My econometric examination compared record sales in 99 U.S. 

cities, and it looked at how the cities differed in terms of radio 

listenership. What I found was that the cities that had the largest 

increase in radio listening had the biggest decreases in record 

sales. So, again, no evidence that radio increased sales and, in fact, 

the opposite; the evidence is that radio decreased it. 

My papers are attached to my written statement, and people can 

look at them if they are interested. 

Now, you should note that I am looking at the overall sales of 

sound recordings, not the impact of radio broadcasts on the sales 

of the individual records that are actually broadcast. This is an important point that I want to spend a few moments on. 

I fully agree with the claims made by the radio industry that 

radio airplay increases the sales of individual records, particularly 

when they are heavily played by the stations, but that in no way 

52 

means that radio broadcasting increases the overall sales of sound 

recordings. The time that individuals spend listening to the radio 

is time that they could have spent listening to sound recordings; 

and they spend much more time listening to the radio than they 

do listening to sound recordings, according to the U.S. statistical 

abstract. 

Now let me give you a simple example. Imagine you are in your 

car. On average, people are supposed to spend an hour a day listening to radio in their cars. Let us assume for the moment that radio 

does not exist, okay? What will happen? Well, you can either listen 

to the sound of your car’s tires on the pavement or you can put in 

a tape, a CD or an iPod. What is it you are going to do? We all 

know most people are going to wind up listening to prerecorded 

music in that circumstance, most of the people who had previously 

been listening to radio. Since people spend an hour a day in the 

car, this switch would triple the amount of time that people would 

spend listening to prerecorded music according to the statistics. 

If people were to spend that much more time listening to 

prerecorded music, it would almost certainly increase the sales of 

sound recordings. That is the way in which you need to think about 

what the real impact of radio is on sound recordings, not the fact 

that radio has an important influence on which sound recordings 

people actually buy. 

Now, it is also sometimes suggested that payola proves that radio 

is beneficial to record sales, but this is again an incorrect inference. 

By looking at a small sample of the data, that doesn’t give you a 

complete picture. In the current legal regime, all we can see is a 

distorted view of the market; that is because the record companies 

cannot demand payment for the broadcast of the records because 

they do not own the rights of the broadcast of the records. 

By way of analogy, there are many people who publish their own 

books in this country. If that fact alone were the only fact that you 

saw when you took a look at book publishing, you might come to 

the conclusion that publishers do not need to pay authors, because 

there is a whole set of authors who are perfectly happy not to get 

paid, but we know that that is an incorrect inference because we 

look and see the entire publishing industry, because the authors 

actually have the right to get paid; and in that case, we know that 

successful authors get paid a very high amount. 

Now, I do not view it as my role here to argue for the proposed 

law or against the proposed law. I cannot say whether the proposal 

would be superior to just requiring radio stations to be required to 

acquire the rights to the broadcast sound recordings. But I can say 

that it seems far more logical, given what I know of the economic 

factors involved, to have a system where radio stations are required to pay for their usage of sound recordings as opposed to the 

current system where radio stations can take their primary economic input for free without the permission of the owners of that 

input. 

Thank you. 

[The prepared statement of Mr. Liebowitz follows:] 

53 

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Mr. CONYERS. Mr. Steve Newberry has been here before. He is 

the president and CEO of Commonwealth Broadcasting, vice chairman of NAB’s board of directors, and he has been in this business 

quite a while. 

We welcome you to the Committee. 

TESTIMONY OF STEVEN NEWBERRY, COMMONWEALTH 

BROADCASTING CORPORATION, ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS (NAB) 

Mr. NEWBERRY. Thank you, Mr. Chairman, Ranking Member 

Smith and Members of the Committee. 

My name is Steve Newberry. I am president and CEO of Commonwealth Broadcasting Corporation. We operate 23 stations in 

the State of Kentucky, but today I am testifying on behalf of the 

over 6,800 local radio members of the National Association of 

Broadcasters. 

Now, I am sure it comes as no surprise to any of you that I am 

here to express my opposition to H.R. 848, but I can tell you that 

since the last time I had the privilege to testify before this Committee, this sharp economic downturn has intensified my concerns 

about this bill and the impact that it will have on local radio stations across America. 

At its heart, this bill attempts to create a conflict between artists 

and radio stations where no conflict exists. In reality, local radio 

stations have been supporting the music industry for decades, 

which is why it boggles my mind that a bill that is supposed to be 

about benefiting artists takes 50 percent of the performance fee 

and puts it into the pockets of the big record labels, predominantly 

the big four record labels, most of which are not even American 

companies. The record labels actually walk away with more money 

under this bill than do the featured artists. 

Let me be clear about that: The record labels walk away with 

more money in this bill than do the featured artists. The real problem, which this bill does not address, is between the artist and the 

mega record labels. Artists often find themselves in such difficult 

financial straits because of unfair, one-sided contracts they sign 

with their record labels. Toni Braxton, for example, received less 

than 35 cents per album of the $188 million in CDs that she sold. 

If these artists had had fair contracts with the labels that included fair royalty clauses, they would have benefited from the promotional value that radio airplay has brought to them and that 

they have enjoyed. Free radio airplay is the best friend of artists 

and of record labels. 

Herbie Hancock said it best just 2 weeks ago during his visit to 

Capitol Hill: ‘‘Just as radio promotes music, music promotes radio.’’ 

I could not agree more. That is why the system has worked so 

well, to the benefit of all parties for the last 80 years. But let me 

put this in the most stark of terms. 

Under H.R. 848, your local radio stations will be forced to cut 

services or employees. They may be forced to move from a music 

format to a talk format or may be facing bankruptcy, but the damage resulting from H.R. 848 will run far beyond local radio stations. Who else will be hurt? 

143 

Composers: This bill creates a financial disincentive to play 

music. If there is less music played on the radio, composer royalties 

will decrease. 

New artists: This bill makes a steep mountain even steeper for 

emerging young artists. H.R. 848 forces a radio station to turn 

playing music into a return-on-investment proposition. Why take a 

risk on a new, untested artist when you can play the known and 

recognized performer? Now, every time you play a song, it becomes 

a decision that potentially affects your bottom line. 

Music diversity: This bill will decrease the diversity of music on 

the radio. I can tell you that many niche stations that offer Latino 

and hip hop are already on shaky ground. For many, even what is 

called a ‘‘small’’ $5,000 fee will take them from barely getting by 

to unprofitable. 

Minority ownership: NAB has long worked with Congress to support minority tax certificates, to help women and minorities realize 

the dream of station ownership. What help will the minority tax 

certificate be if you can afford to buy the radio station, but you cannot afford to run it? 

Finally, radio listeners will be hurt: Stations that listen to and 

serve their local communities may, indeed, disappear. In many of 

these cases, the radio stations in peril, possibly going off the air, 

are serving very rural communities where they may be the only 

stations serving their local town. 

What I am saying is that H.R. 848 has significant unintended 

consequences that I do not believe this Committee has fully investigated. The funding for this new performance fee has to come from 

somewhere. 

So what are my options? Do I reduce the community affairs programming, including essential news and weather service in times 

of emergency, because I cannot reduce my electric bill? Am I forced 

to lay off staff or cut the employee benefits at my station because 

I cannot reduce my FCC regulatory fees? Do I move to a nonmusic 

format which will have the effect of playing less music, which will 

ultimately harm the performers? That is the reason the National 

Religious Broadcasters, the National Association of Black Owned 

Broadcasters, the National Association of Farm Broadcasters, and 

the Spanish Broadcasters Association all oppose the imposition of 

any new performance fees. 

The answers are not simple, and the consequences of this debate 

will hit both industries in unanticipated ways. I strongly encourage 

and urge the Committee to carefully consider these very real consequences of H.R. 848. 

Thank you, Mr. Chairman. I look forward to answering your 

questions today. 

[The prepared statement of Mr. Newberry follows:] 

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PREPARED STATEMENT OF STEVEN NEWBERRY


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Mr. CONYERS. The chairman of the RIAA, Mitch Bainwol, has replaced Hilary Rosen—now, a number of years ago—and he serves 

on the board of several boards including leadership music in Nashville, is a graduate of Rice University, and of Georgetown University as well. 

TESTIMONY OF MITCH BAINWOL, CHAIRMAN AND CEO, 

RECORDING INDUSTRY ASSOCIATION OF AMERICA (RIAA) 

Mr. BAINWOL. My name is Mitch Bainwol. I am the CEO of the 

RIAA. Today, I am here as a member of the MusicFIRST coalition, 

which represents labels big and small, managers, musicians, and 

producers, all together, in supporting the performance right. 

This issue unites the creative community, property rights advocates and labor. I am pleased to be sitting here today with the incomparable Billy Corgan—my 10-year-old son is a huge fan, Billy— 

and Paul Almeida from the AFL-CIO. I am delighted to submit for 

the record a letter from the Property Rights Alliance in support of 

this bill. 

[The information referred to follows:] 

191 


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Mr. BAINWOL. I would like to focus your attention on five key 

points. The first point: The issue is not as complicated as the 

broadcasters suggest. On the contrary, this year, radio will spin almost a billion songs in the United States, making billions of dollars 

in advertising from our music. The payment to artists and labels 

for those recordings will not amount to even a penny, not a penny. 

As George Carlin famously said, ‘‘What a ratio.’’ 

I am not aware of any business elsewhere in the American economy where the primary input is not compensated. The broadcasters 

brandish diversionary rhetoric. We have heard it today; they call 

this a tax. You know better than I that a tax is what government 

collects, not a payment between private parties for private property. 

No, what is going on here is entirely different. It is a taking. 

When broadcasters use our music to build their business for investors, but performers and musicians don’t get paid when our music 

is played and we cannot tell radio not to use our music, that’s a 

taking. 

The second point: The U.S. in the case of terrestrial radio is 

unique. We’re the only Nation in the OECD that does not provide 

the creator compensation for radio play; and ironically, the most 

economically secure platform that broadcasts music, over-the-air 

radio, dominated by big corporations, is the only platform in the 

United States that does not pay. 

Satellite does. Internet companies do. Cable does. Terrestrial 

radio is an anomaly. The competitive landscape, thus, is biased in 

favor of the old establishment players against new start-ups and 

innovative technologies. 

Third point: While this has always been a taking, the so-called 

logic behind the taking has totally collapsed. You hear broadcasters 

talk about promotions and the symbiotic relationship that exists 

between our industries. 

Here are the facts: More than half of what big radio plays on the 

air are oldies. I love oldies, and I know you guys do, too. Older artists do not tour, and they should not have to. 

The promotional value for playing oldies is hollow. We are no 

longer in a world in which listeners turn on the radio, hear a song 

and run down to Tower Records to buy that song. We are increasingly moving to a world where consumers get their music through 

the performance of it—through standard radio, through niche programming or on-demand access. We are not saying there is no promotional value. There is, but it has diminished. 

Sales have fallen from almost $15 billion to $9 billion since 1999, 

including digital, and hits are not what they once were. In 2000, 

the Top 10 song albums in the country sold 60 million units. Last 

year, the Top 10 song albums sold about 19 million units. 

Grammy-award-winning artist Herbie Hancock said it best, and 

you are right, ‘‘While there is no question that radio promotes 

music, it is also clear that music promotes radio.’’ The fact is that 

whatever value promotion represents should be made a factor for 

determining the appropriate rate. That’s what this bill does. 

Fourth point: This bill focuses on big corporate radio, and we are 

anxious to roll up our sleeves to work with smaller stations, like 

those of Mr. Newberry’s, to find responsible ways to address their 

193 

concerns. As it is, almost 80 percent of the stations in the country 

are accommodated. Stations under $1.25 million in revenue enjoy 

a flat fee amounting to about $400 a month. Public stations pay 

less than $100 a month. Talk radio will not pay for music; neither 

will religious services. 

We are prepared to work with the smaller stations to build 

phase-in ramps, given the economic downturn. We just can’t find 

anyone to sit down with. Despite the call last year from Members 

from this Committee for us to sit down and negotiate, Mr. Rehr, 

who runs the NAB, said he would rather slit his throat than talk. 

I have got to tell you that it makes it hard to negotiate with that 

kind of player. 

But to be clear, the issue in the end is not about small station 

owners; it is about whether big, consolidated radio can continue to 

flex its muscle to perpetuate this taking. As for Administrations of 

both parties, the Bush administration and the Clinton administration before it, Administrations of both parties stipulated there is no 

legal or policy rationale for the sweetheart deal that broadcasters 

enjoy. 

The fifth and final point: This issue is not merely about transferring revenue from one company to another, far from it. Half of the 

payments will go directly to the performers, by statute—radio stations, to Sound Exchange, to the artists, period. Many of the recipients are artists and musicians who are struggling. 

Additionally, due to international reciprocity, the law will return 

millions of dollars each and every year, dollars that are locked up 

now overseas. Broadcasters receive a government handout, corporate welfare in the form of free broadcast spectrum and a rigged 

economic advantage over every other radio platform. 

It is no mystery why they are fighting so hard to maintain the 

special exemption. What business would not love to avoid paying 

for their key input? Imagine Morton’s not paying for beef or car 

manufacturers alleging economic hardship to suggest they should 

get free steel. Preposterous. 

Once again, we thank you for your attention to this matter. We 

look forward to working with you to get this right. 

[The prepared statement of Mr. Bainwol follows:] 

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PREPARED STATEMENT OF MITCH BAINWOL


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Mr. CONYERS. The Committee is pleased to welcome Marsha 

Blackburn of Tennessee to our Committee hearings. We think she 

is from Nashville, but some think that there are other parts of Tennessee she might be from. 

Mrs. BLACKBURN. Thank you, Mr. Chairman. I appreciate the opportunity to step in. I have a little bit of Memphis and a little bit 

of Nashville. I go all the way to the Kentucky border. 

Mr. WATT. Mr. Chairman, I ask unanimous consent to allow the 

gentlelady to make an opening statement. 

Mr. CONYERS. Without objection. 

Mr. SMITH. Mr. Chairman, I am afraid I have to object. 

Mr. CONYERS. All right. 

Mr. SMITH. If the Chairman would yield or maybe the gentleman 

from North Carolina, I will be happy to explain why to my good 

friend and colleague. 

Mr. WATT. Are you reserving the right to object or are you objecting? 

Mr. SMITH. I am objecting. 

Mr. WATT. Well, if you are objecting, then that is the end of the 

conversation. 

Mr. SMITH. Well, in that case, I will reserve the right to object. 

Mr. WATT. All right. In that case, I will listen to you. If you have 

already objected, I do not know why we are having the discussion, 

but go ahead. 

Mr. CONYERS. Why are you so controversial, Mrs. Blackburn? 

Mrs. BLACKBURN. I will just say thank you, Mr. Chairman. I appreciate the opportunity to sit in. I did not want to make a statement, but I appreciate the opportunity to clarify all of the good people that I do represent in my little bit country/little bit rock-androll district. 

Mr. SMITH. Mr. Chairman, I would like to explain, just so that 

our colleagues and so, perhaps, those in the audience understand 

why I objected. 

It has been a longstanding policy on this Committee—that I 

thought the gentleman from North Carolina was aware of, and that 

I know the Chairman is aware of—that we do not have Members 

who are not Members of the Judiciary Committee make opening 

statements. 

If we were to set that precedent, as much as I might like to do 

so today, we might be inundated with dozens of Members who 

would appear at every hearing and who would have reason to make 

opening statements. 

Mr. WATT. Will the gentleman yield? 

Mr. SMITH. Just a minute. 

So, at least in this Congress and in the last Congress, the Chairman and I have had an agreement that we would not have opening 

statements by other Members. 

I will be happy to yield. 

Mr. WATT. I thought I was being bipartisan in making this motion, and I thought I was the appropriate person to make it, since 

I was one of only two people who did not make an opening statement myself. But if the gentleman does not want his colleague to 

make an opening statement, that is fine with me. 

Mr. SMITH. I yield back, Mr. Chairman. 

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Mr. CONYERS. I would like to ask any of the distinguished witnesses if they have any opening remarks that they would like to 

exchange about anything that they have heard from the other witnesses before we begin. 

Oh, yes, Mr. Almeida. 

Mr. ALMEIDA. I understand the difficult times the small radio 

stations are in and the burden it would be on them. However, even 

more so are the musicians and the background singers who are further, if you want to call it, ‘‘down the food chain.’’ 

So they should be further penalized? I think it is a major injustice to those workers who do their work. 

I think that we have this common misconception of performers. 

We kind of hold them on a plateau in what we take for our personal enjoyment. I think we often do not connect that they are 

working people, trying to put bread on the table. So I think we 

take advantage of that often by the position that we put them in 

in society. 

Mr. PATRICK. Mr. Chairman, we understand where they are—the 

musicians, the background singers, all of those types of people. I 

want to make sure the Committee understands. We are not just 

talking about the small market stations. 

I was just recently in your home State 2 weekends ago, trying 

to help a family who owns an AM/FM radio station up in central 

Michigan. At the end of last year, the total money that they had 

made off that station was $33,000, and there is no doubt, at $5,000 

a clip, they lost a third of their income almost. This is a husband 

and wife who work 50 to 60 hours a week. 

When I go through Intercom and Citadel and all of the big companies, and Radio One, that have been delisted from the exchanges, this is not just a small market radio problem; this is a 

radio problem. While $16 billion sounds like a lot, there are 13,000 

radio stations, and the reality is, we have been down $5 billion in 

the last 2 or 3 years. 

So it is everywhere in radio, and we are hurting, and we are 

going to the same stations, working hard, and doing all of the 

things that we have to do to try to survive, and it is very tough. 

I will tell you that I am helping a couple of African American 

companies right now, and I am helping a Spanish company in 

Texas right now. If this bill were to pass, that Spanish radio operator, who is already losing money on an operational basis, would 

pay about a $1.8 million to $2 million more. They are already in 

trouble; that will absolutely push them into bankruptcy. 

Mr. CONYERS. Yes, Mr. Bainwol. 

Mr. BAINWOL. If I could, I think it is important to separate the 

conversation between the question of a right and the question of a 

rate, and that really is the core question here. 

We are not going to be in a down economy forever. Parenthetically, nobody has a monopoly on pain. We were both $15 billion industries about 10 years ago. They have gone up and we have gone 

down, but that is not the point. 

The question here really is, should there be a right? Is it acceptable for a taking to occur in this country with this one platform 

when it does not exist as a taking in any other industrialized nation in the world or in any other platform in the U.S.? 

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There ought to be some compensation. There ought to be a right. 

Then the question is: Okay, if you say there is a right, then what 

should the rate be? We hear a lot of scare chat about how damaging this would be. 

Again, we are not going to be in a down economy forever. The 

question is, maybe this is done as a percentage of revenue. Right 

now, the composition side is about 3 percent. The typical ratio between the composition side and the sound recording side is that 

there is some plus-up. Whatever that might be, would the broadcasters at the table be comfortable with 6 percent or 7 percent? 

We are not talking about something that would be, you know, as 

draconian as the suggestions that you all have made to fight this 

back. We are talking about something modest and that represents 

a very modest payment for the cost of goods, in your case, sold. You 

know, Ford and General Motors, they pay 90 percent in cost of 

goods sold. Your cost of goods sold for music is 3 percent right now. 

Mr. CONYERS. Howard Berman. 

Mr. NEWBERRY. Mr. Chairman, may I ask for an opportunity to 

respond to that? 

Mr. CONYERS. Of course you can. 

Mr. NEWBERRY. There are two things that I would like to address. The first one is the word ‘‘taking.’’ These are not robber barons who show up in the middle of the night with a gun and take 

the music. We have one station in Salt Lake City that received 

3,800 phone calls from record labels asking that their songs be 

played in a 6-month period. 

I have with me a trade magazine that is filled with ads of record 

labels, saying, ‘‘Thank you for playing our songs. Thank you for 

making this happen for us.’’ So this is not a transaction where the 

record labels and the artists are saying, ‘‘Please do not take our 

music. Please do not play it.’’ 

The second thing I want to do is draw a delineation. Radio does 

not equal music. Music is part of the radio industry, but we have 

talk stations; we have sports stations; we have many, many stations that contribute to that $15 billion industry. So for us to say 

that we are talking about an industry as a whole, when we are 

talking about a segment of the industry, I think it is a little bit 

contradictory. 

I want to make sure. I will be glad to answer questions from the 

Committee, but I wanted to make sure and draw the line there. 

Mr. BAINWOL. The music is about 80 percent of radio revenue, 

isn’t it? 

Mr. CONYERS. Howard Berman. 

Mr. BERMAN. Thank you, Mr. Chairman. 

I hear that you actually pay the sports teams for the right to 

broadcast the sports radio, and I hear that you pay the talk radio 

hosts for the talk radio show, but—that was rhetorical, not to be 

answered. 

There are a couple of points that I would like to make, and then 

I would like to ask Mr. Newberry a question. 

Again, we have the issue of the right, which this bill seeks, to 

remove the exception for, and accord in this country that right 

which is recognized almost everywhere else in the world. Then we 

have the structure. 

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My guess is, when radio stations have lost $5 billion, the payment for the musical compositions that go to the songwriters and 

composers goes down by a proportional number because there is a 

percentage of revenues. The system can adapt to the good times 

and to the bad times. 

When we talk about a GAO study in terms of the impact, I am 

fine with that, but that should not be the condition precedent to 

moving a bill ahead which establishes the right. We can get the 

GAO study; we can get into discussions about appropriate rates. 

And that leads me to my question, if I can just find it. 

Here it is: Again, Mr. Newberry, I would love to go to your testimony. You said for a small market operator of an AM station or 

a small FM station that may be dealing with less than $100,000 

a year, with a profit margin of 10 percent or less—and a profit 

margin, in most of these cases, defines what the owner takes home. 

This is not after they have been paid; it is their take-home pay. So 

$5,000 is a significant amount. 

If you take a small broadcast operation that has an AM/FM combination in a small community like Princeton, Kentucky, or somewhere in rural North Carolina—Mr. Coble was asking the question—now you have $10,000 of obligations to pay. I think the 

amount is something that would be an economic burden on those 

who find it most difficult to find probability in our industry. 

That was an exchange from last year’s hearings, and I have been 

giving that exchange a lot of thought. 

What if we graduated the fee for the smaller stations? What if 

we said that, for those who make $100,000, instead of $5,000, they 

pay $500? Less than $100,000 could pay $250. There are so many 

different ways to deal with the accommodations for people within 

the small broadcaster situation. 

Would you support a provision which took care of that situation 

which you laid out in response to Mr. Coble’s question? 

Mr. NEWBERRY. I will make the same delineation Mr. Bainwol 

did. We are discussing the right, then we are discussing the rate. 

I think your question addresses the rate. 

Let me say two things very quickly. 

Mr. BERMAN. Does that concede the right? 

Mr. NEWBERRY. No, sir. It addresses it; it does not concede it. 

There are two issues that I would make from that very quickly. 

The broadcasters understand the concept of intellectual property. 

We get that. For it to be said that we have provided no value, that 

we have provided no remuneration, that we have provided no equity for the performances that we have had, it gets to the rate 

issue. 

I think that we have to understand that our industry has been 

built—we talk about the streaming; we talk about the satellite 

radio. Certainly, satellite radio and cable and several of the Web 

casters are fee based. It is an entirely different business model. So, 

when we do start talking about potential rates, whether it be for 

a small market or the largest market, I will tell you that the 

amount of promotional value that is provided by the larger stations 

is proportional; and I have grave concerns with the argument of 

principle before you get into the rate. 

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Now, going back to the suggestion of the GAO study, we have a 

saying in Kentucky, ‘‘Measure twice, cut once.’’ I think that we are 

desperately lacking in information on this, and I think for you to 

move legislation before you have an opportunity to fully study it— 

it could cause irreparable damage to our industry. And we would 

certainly be comfortable with that independent, third-party study. 

Mr. BERMAN. How about two things at the same time, where we 

start the GAO study, and you start negotiating rather than slitting 

throats? 

Mr. NEWBERRY. Yes, sir. 

Mr. BERMAN. Okay. 

Mr. CONYERS. Did he agree? 

Mr. NEWBERRY. No, sir. If I might say, I took that as another 

rhetorical statement. 

Mr. CONYERS. Lamar Smith. 

Mr. SMITH. Thank you, Mr. Chairman. 

Mr. WATT. Mr. Chairman, I think the record should show that 

he at least did not slit his throat. 

Mr. SMITH. Thank you, Mr. Chairman. 

I did propose in my opening statement something that Mr. 

Newberry has just anticipated and that maybe Mr. Berman has 

just followed up on. That is the idea of the independent, third-party 

study that would be conducted to evaluate the economic impact of 

royalty payments on both the artists and the radio stations themselves. 

Let me say, while I consider the idea as being specific in talking 

about a GAO study, most GAO studies that I am aware of take 

more than a year to complete. If that were the case, I do not know 

that that would be that helpful to us in this Congress, so that is 

why I specifically kept that question open as to the outside entity. 

Mr. Newberry, I am glad you agree with that. 

Mr. Bainwol, what do you think of the idea of an outside entity’s 

conducting that kind of study, that might well be the first step to 

the next step, which is wider negotiations? 

Specifically, I think it would be helpful myself, obviously. What 

do you think? 

Mr. BAINWOL. Our preference would be to dual-track this, per 

suggestion by Mr. Berman. I think studying the issue has got great 

value. 

We are in favor of an informed process. I will note that in 1976, 

when we punted on this back then, we did a study as well. 

That said, if the study is done in the context of moving a right 

to make sure that the right is appropriately framed and structured, 

then we are absolutely for it. We think the concept of a quick shot 

clock is a good addition. 

Mr. SMITH. Great. I am glad to hear that. I think it represents 

real progress. 

I might also add that I would expect all parties to have input as 

to what that study evaluated, so you all would be able to contribute 

the issues of the subject matter to be studied. So I would hope that 

that would be achievable in the next few months. 

Perhaps, if I can suggest it, why don’t you all work with the 

Chairman and me to try to accomplish that in the next couple of 

weeks as far as designating the outside entity and coming up with 

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issues that we would like that outside entity to study? Is that 

agreeable to you all? 

Mr. BAINWOL. Yes, sir. 

Mr. SMITH. Great. 

I do not mean to put you on the spot, but I do at the same time. 

This is a question for both Mr. Newberry and Mr. Bainwol. 

Would you all support an amendment to this bill that would designate that all royalty payments go to the recording artists? Mr. 

Newberry? Mr. Bainwol? 

Mr. BAINWOL. The simple answer is no. Under Federal law now, 

in the context of the digital performance rights that we do enjoy, 

there is a 50-50 split. And there is a reason for the 50-50 split; it 

is 50 percent to the copyright holder—which is typically, but not 

always, a label—and 50 percent to the performer and the musician. 

We believe—we, my association and American philosophy—when 

it comes to the economy, that it is a good thing to do to invest. In 

order to make an investment, you have to have a return. Our return in today’s world is primarily from sales. 

Our return in the evolving economy will be based on income related to performance and income related to access. So to take out 

the income related to performance would simply dry up the ability 

of investors to support emerging new artists. We spend probably anywhere between $1 billion and $4 billion 

a year supporting artists, breaking acts—a couple hundred new 

acts a year—and that is predicated on the ability to earn a return, 

so taking that return out, I think, would be penny wise and pound 

foolish. 

Mr. SMITH. Thank you, Mr. Bainwol. 

Mr. Newberry, I realize this question is a little bit theoretical 

since you do not support the concept necessarily of the royalty payments, but what do you think of the idea? 

Mr. NEWBERRY. First, I would like to echo what Mr. Bainwol 

said. An investment without a return is not much of an investment, and that is what the entire broadcast industry is struggling 

with now. That is evident by what is happening to us. 

Moody’s came out with a report yesterday that, of the sectors of 

the economy that are most damaged by the downturn of the economy, radio and television are two of the top five in the country. So 

we are struggling very much with the same economic investment 

and return concerns that cause them to want the money, that 

cause us to say, ‘‘Wait a second. Why are you taking the money?’’ 

I think the bill, with all due respect, Mr. Chairman, is not the 

appropriate time, and I do not agree with the legislation, obviously. 

But certainly I am very proud of the broadcasters I do business 

with. I would not support an amendment to the bill because I am 

not thrilled with the bill, but certainly taking the record companies 

out seems to be much more on target with what the Members 

want. 

Mr. SMITH. Thank you, Mr. Newberry. 

Mr. Chairman, let me end on a positive note. 

Thank you both for agreeing to the outside study and for getting 

that initiated in the next couple of weeks. 

Mr. CONYERS. Subcommittee Chairman Bobby Scott. 

Mr. SCOTT. Thank you, Mr. Chairman. 

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This is complicated. Let me just get some understanding here. 

Mr. Bainwol, do radio stations pay somebody for the use of their 

intellectual property when they play a song? 

Mr. BAINWOL. The radio stations pay, through SESAC, ASCAP 

and BMI, the songwriter, but they do not pay for the sound recording. 

Mr. SCOTT. And they do not pay for the recording. They pay the 

writers? 

Mr. BAINWOL. They pay the writers, correct. 

Mr. SCOTT. How did that come about? 

Mr. BAINWOL. This goes back 100 years. 

Mr. SCOTT. To congressional action? 

Mr. BAINWOL. The writer has a copyright. When we got our copyright in 1972, an exemption was put into place that we would not 

have a performance right. 

Mr. SCOTT. Does the owner of the intellectual property have a 

choice on whether the radio can play their property or not? 

Mr. BAINWOL. No, we do not. That is why we phrase it as a ‘‘taking.’’ They build their businesses on the backs of our sound recordings, and we cannot say ‘‘no.’’ 

Mr. SCOTT. Now, does the performer have an opportunity to negotiate anywhere to get rights for what is played on the radio? 

Mr. BAINWOL. No. 

Mr. SCOTT. Terrestrial radio is unique. How do the performers 

get rights in the other platforms? 

Mr. BAINWOL. By congressional passage in the mid-1990’s. 

Mr. SCOTT. Do any other countries have performance rights? 

Mr. BAINWOL. Virtually all industrialized nations in the world 

do. 

Mr. SCOTT. So, if you are a British performer on a British radio, 

you get performance rights/royalties? 

Mr. BAINWOL. Correct. 

Mr. SCOTT. Do United States performers get any royalties from 

the foreign radio stations? 

Mr. BAINWOL. No. There is a lack of reciprocity because we do 

not have the right. 

Mr. SCOTT. If they could get performance rights or royalties, 

would any performers negotiate and sell their revenue stream for 

the future? This is, pay me twice as much now, and the publisher 

could have the royalties? 

Mr. BAINWOL. You know, I am not an attorney, but I presume 

that that is a basket of rights that they could sell. 

Mr. SCOTT. Thank you, Mr. Chairman. 

Mr. CONYERS. Howard Coble, North Carolina. 

Mr. COBLE. Thank you, Mr. Chairman. 

It is good to have you all with us, I say to the panelists. 

Mr. Newberry, as you know, section 3 of H.R. 848 provides special treatment for small, noncommercial, education, and religious 

stations. I am interested in knowing what stations in my district 

would be covered by that. Could you have someone from NAB provide that for me? 

Mr. NEWBERRY. Certainly. 

Mr. COBLE. I would appreciate that. 

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Mr. NEWBERRY. Let me qualify that, sir. As much as people are 

willing to share their personal and private information, but we will 

make every effort to do that for you. 

Mr. COBLE. I understand that. 

That said, Mr. Newberry, there inevitably will be some stations 

that will not be covered. 

How will H.R. 848 financially impact those stations? 

Mr. NEWBERRY. You are asking about the stations that are above 

the 1.25 threshold? 

Mr. COBLE. Yes. 

Mr. NEWBERRY. I think one of the real issues that people may 

not understand about the broadcasting business is that we are a 

fixed-cost business. Our business does not have input. We are not 

a hardware store. If we do not sell a hammer today, it remains on 

the shelf tomorrow like at a hardware store. 

We sell time. It costs basically the same amount for us to 

produce an hour of programming whether we have sold commercials in that or whether we have not sold commercials in that. As 

a result of that, it is critical that broadcasters try to maintain their 

cost. If you do not maintain that cost, you can lose money very 

quickly, very rapidly. 

So one would think that a station that was billing more than $1.25 million might have adequate funds, but when you factor in 

the royalty rates that you are paying to the composers at this point 

in time, when you factor in the cost of talent and the employees 

that you have, the rising cost of health care, the lease that you 

have to pay, all those fixed costs, I cannot answer that question directly. 

Mr. COBLE. Okay. I thank you, sir. 

Mr. Almeida, in your testimony, you mentioned that millions of 

dollars go into a French culture fund every year instead of coming 

to the United States because of the lack of reciprocity in the law. 

What assurances are there, if the Congress amends the law as 

proposed here, that the French would, in fact, be compelled to direct those funds to you as performers? 

Mr. ALMEIDA. I am not sure, exactly. Right now, there is reciprocity, and we assume that they would send the funds according 

to how it works in the other platforms. 

Mr. COBLE. Well, that would be my conclusion, too, but I do not 

know that it is cast in iron. 

Nonetheless, thank you for that. 

Mr. Corgan, I am concerned, as are my colleagues, about the decline in the music industry’s revenues. A, what is your belief as to 

what has caused that? B, how will H.R. 848 help the industry as 

a whole? 

Mr. CORGAN. To answer the first part of your question, it is a 

very complex answer. 

The main reason that most people point to is the rise of the 

Internet culture and what is commonly known as ‘‘free 

downloading’’ or people transferring files. The record business kind 

of dug in their heels and tried to slow the whole thing down, and 

it actually kind of ended up working in reverse and creating a 

whole culture of, especially young people, who do not see music as 

something that they buy. 

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Then, of course, you have got all of these different platforms now 

where people can listen to music, so you do not have that same sort 

of causal effect of ‘‘I am going to go to the store and buy it because 

I want to listen to it.’’ They have access to it. They can have it on 

their computer. 

It is complicated, and you could talk to 50 people and get 50 different answers on that. 

Mr. COBLE. I thank you, sir. 

Mr. Patrick, let me alter my track here. A, do radio stations currently broadcast over the Internet? B, do they pay a performance 

royalty for those broadcasts? 

Mr. PATRICK. Some do stream, and they do, in fact, pay for some 

streaming. It is a different situation than over the air. 

I also think that the Committee needs to understand—I mean, 

there are 235 million people a week who listen to over-the-air 

radio. When we start talking about satellite Internet as if they are 

all equal, we are talking about toy soldiers versus big armies. 

There are very few people. I mean, you can look at Sirius XM; their 

total audience in the morning on any one of their channels does not 

equal one station in New York City or in Los Angeles. 

So the answer is, these are not equal platforms, and because 

some came into the world with the idea that they would have to 

pay, we do. 

I can just tell you, sir, that I have run radio stations in Miami 

and Dallas and in lots of other middle-sized markets. Not a day 

goes by that the record companies and the promoters are not begging stations to play. I think Mr. Newberry has an example from 

Salt Lake City, but the reality is, radio play still drives record 

sales, concerts, tickets, merchandise, and all sorts of other things. 

There is a Tuzo study that was produced, I think, last year that 

indicates that 61 percent of all people who hear about new music 

hear about it on radio. Radio is still viable, and it’s huge. That is 

why we think there is a value proposition there. 

The reality is, yes, we do pay for streaming. Mr. Newberry was 

on the Committee that just negotiated that. Perhaps he can answer 

it in more detail. 

Mr. COBLE. Well, Mr. Chairman, I see that intimidating red 

light. 

Mr. Newberry, do you want to weigh in on it? 

Mr. NEWBERRY. The broadcasters and the recording industry 

have entered into an agreement as a result of the laws that were 

passed by Congress. Certainly, we understand that the value of 

promotion that is provided by our Web stream is nowhere near 

what it is on the over-the-air, and there was a compensation made 

there and reached by both parties. 

Mr. COBLE. I thank you, Mr. Chairman. I yield back. 

Mr. CONYERS. Mr. Corgan, did you want to add to that comment? 

Mr. CORGAN. I cannot speak for every artist, but I can speak for 

a lot of artists. The inability for the artists to have any leverage 

in this situation makes it very difficult in the changing markets to 

create our business models to make great music. At the end of the 

day, while everybody over here is talking about the turf wars between who gets what in the pie, if you do not have great music, 

you are not going to be able to have great radio. 

208 

I think—my personal opinion is the reason that musical accomplishment has diminished over the last 15 years partially is due to 

the changing in the revenue streams, but you also have sort of a 

narrowing of the business models, and the artists are not able to 

invest in their careers in the same way, so this puts stresses on 

these things. 

No one is arguing that radio does not promote. Radio is a great 

tool for promotion, and nobody in the music business wants to see 

terrestrial radio go down. We are talking about the ability to negotiate and to find the right water level for everybody involved. 

In my particular case, I am a songwriter, I am a performer, and 

I am also a copyright owner, so in this particular instance, I have 

no leverage. I cannot go to anybody and say anything; it had been 

taken away long before I entered the music business. 

Mr. CONYERS. Professor Liebowitz. 

Mr. LIEBOWITZ. Yes, I just wanted to make this point again that 

everyone is talking about promotion. 

The nature of radio promotion is deciding which song gets the 

biggest piece of the pie. The question as to whether or not radio 

is beneficial to record sales overall is whether radio is making the 

pie bigger or not. The evidence on that is that it is not, even 

though it is clear that it determines which individual songs get the 

biggest piece of the pie. 

But if people are listening to radio as opposed to listening to 

prerecorded music, radio could very well be making the total pie 

smaller even when it is increasing the size of the pie for individual 

songs. I will give you a simple example with movies and television. 

Movie companies still advertise the movies on TV, and the big 

stars go around when the premieres come out, and they go on all 

of the late-night talk shows, and they do it virtually for free. If you 

were to look at that, you would say, Wow, television really helps 

promote movies, and it does, but if you take a look at the history 

of television and movies, television killed the movie industry. Back 

before TV came along, people went to see the movies 30 times a 

year, every other week. Now they see it 5 times, and it is exactly 

in the 1950’s, when television started, that movies dropped like 

crazy. 

So, yes, television helps decide which movies get biggest, and 

that is why they are willing to advertise them and send their stars, 

but it had a terrible negative effect overall on the total size of the 

market. 

Mr. CONYERS. The distinguished gentleman from North Carolina, 

Mel Watt. 

Mr. WATT. Thank you, Mr. Chairman. 

I have been trying to figure out one of the economic factors here. 

Maybe I am missing something because one of the arguments I 

have heard consistently is, if we ran a performance right—and I 

think a couple of you may have made this point—it is going to 

make stations not play music, but go more to talk formats. 

The last thing I want to do—because I hate talk radio, and I actually do not listen to it, so it is fine with me. When you have talk 

radio, it seems to me you have got somebody on the station, talking, who has to be paid. Even if I assume that that person who is 

doing the talking is getting paid the minimum wage over a month’s 

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period, that would be more than you would pay for the small station, the $5,000-a-year thing. 

So somebody explain to me why I am missing something. Maybe 

I am missing something here, and you all are anxious to explain 

it, so maybe there is an explanation. 

Mr. Patrick, and then Mr. Newberry. 

Mr. PATRICK. Well, I think if you look at talk radio, you will understand that much of talk radio is satellite delivered. 

Mr. WATT. But you are paying somebody. 

Mr. PATRICK. We are not necessarily paying those people. I 

mean, I can get talk radio right now for no money a month for a 

particular talent. 

Mr. WATT. Why don’t you just go to that format instead? 

Mr. NEWBERRY. We have in many cases. 

Mr. PATRICK. We have in many cases. 

Mr. WATT. So what is the big deal? I do not understand how that 

militates against the performance right. I mean, I think you have 

got the option to do whatever you want to on your stations. You 

can talk and not pay somebody if you can find somebody who will 

work for free, although there are minimum wage standards in this 

country. 

I just do not understand what that has to do with the notion that 

you can just take somebody’s commercial property and use it. I do 

not understand that. 

Mr. Newberry, maybe you can shed some light on this. 

Mr. NEWBERRY. Sure. 

For instance, at many of our stations, we carry ESPN programming. So we have sports talk that is on 24 hours a day, 7 days a 

week. It is provided at no cost to us. 

Mr. WATT. But does somebody pay Rush Limbaugh? 

Mr. NEWBERRY. I do not carry Rush Limbaugh on any of my stations. 

Mr. WATT. But somebody is carrying him as an option, and they 

have decided that there is some value there. 

Mr. NEWBERRY. They are getting an exclusive right for that product in that market. 

Mr. WATT. I am not against your negotiating. 

Let me back up and approach this a different way. What if we 

just recognized on this Committee the right, and left it to individuals to enforce that right without a framework? I mean, you know, 

you all are into how much you get paid, how much is this fee format. If you then use my music and I am the artist, then I have 

got the right to come and find you and make you account for it. 

Does anybody think that is a terrible idea? I mean, that is the 

way our legal system is set up, isn’t it? 

Mr. PATRICK. This is not just the artists who are coming. This 

goes back to Mr. Smith’s question. This is not just the artists who 

are coming and asking. This is the record label saying, We want 

half of the money. 

Mr. WATT. Don’t they own something, too? Don’t they own something? If you played the music, then wouldn’t they have the right 

to come and enforce that just like the performer over here did? 

Mr. CORGAN. I am not the biggest fan of the record labels. I have 

had my battles with them through the years. I, as an artist, negoVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00213 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
210 

tiated in good faith with the labels over my rights. So, from my end 

and from the label’s end, it is just a rights issue. 

If you go to a free market free-for-all, it probably would not work 

because it would be very hard to get everybody to agree, so I think 

that is why everyone is looking for some sort of framework by 

which to negotiate. 

Mr. WATT. People would not agree. I am not trying to make litigation, but if you all think that we ought not to be setting up a 

structure here to work this out, as we have in other entertainment 

settings, then the option is that we recognize the right and let the 

market and the individuals work it out. 

Mr. CORGAN. So to answer a question you did not ask, they 

would not play the music if it were not worth something. It would 

just go to something else that would give their stations more value. 

They are playing the music, whether it is Motown or my group, 

because it adds value to the station. No one is arguing that they 

do not add value. Everybody just wants to work together, but if you 

do not establish the right, what can you do? There is no conversation. 

Mr. WATT. Mr. Newberry, you do not think there is a right. Everybody else has a right except the person who performed it? 

Mr. NEWBERRY. I think we have a system that is not perfect, but 

I think we have a system that, if tinkered with, can become much 

more imperfect. I think we—— 

Mr. WATT. Are you going in the room to talk to people now? 

Mr. NEWBERRY. May I finish my statement? Then I will answer 

your question. 

Mr. WATT. Okay. 

Mr. NEWBERRY. I think we have a system where, if we go to 

where it is a business transaction, as proposed, the most recognized 

artists are going to get more play and the least recognized artists 

are going to get less play. I mean, we can find examples, and we 

can talk about big record companies, but Madonna bought a $38 

million condo in New York; and that is more than the market cap 

of many of our largest companies right now. 

Mr. WATT. Mr. Newberry, this is not about Madonna. This is 

about whether individual artists have any rights. Madonna’s right 

is more valuable because she has—— 

Mr. NEWBERRY. She is played a lot on the radio. 

Mr. WATT [continuing]. She has made a lot of money, that’s right. 

That is not a reason not to recognize a right that Joe Blow or Joe 

the Plumber has if he makes a record. 

I mean, you can still decide whether to play that music or not 

to play it; I am not trying to take that right away from you. But 

it just seems to me that for you all to say there is no ownership 

right here that ought not be enforced in some kind of way—under 

some framework or individually case by case by case—I do not understand that. 

Mr. NEWBERRY. I understand your point, sir. 

Mr. WATT. Okay. I yield back. 

Mr. CONYERS. Our first attorney general, Dan Lungren. 

Mr. LUNGREN. Mr. Chairman, I just say for my friend from North 

Carolina, I think if you want to hear Joe the Plumber, it will probably be on talk radio rather than singing radio. 

211 

Mr. WATT. No, if they want to play him on music radio, it is fine 

with me. I mean, I don’t listen—I won’t listen—— 

Mr. LUNGREN. You won’t listen in either event I’ll bet. 

Mr. WATT. That’s right, that’s right. 

Mr. LUNGREN. If I can go back to why we are all here, as I read 

the Constitution, we are here because it says in Article 1 Section 

8 that Congress has the power to promote the progress of science 

and useful arts by securing for limited times to authors and inventors the exclusive right to their respected writings and discoveries. 

In other words, it was to promote ingenuity, creativity and so forth. 

So I was very interested, Mr. Corgan, your comment that musical—I believe these are your words—musical accomplishment has 

diminished over the past few years, which would suggest that there 

is less creativity in the American musical industry today than 

there was before. Can you elaborate on that? 

Mr. CORGAN. Well, it starts with the erosion of the revenue base. 

And like in any business, people get more conservative, and so you 

see a conservatism creep into the mainstream musical formats, 

and—— 

Mr. LUNGREN. I guess my question is, what is the quantifiable 

proof to that, that there is less musical accomplishment or it has 

diminished over the past few years? 

Mr. CORGAN. It is a generally held opinion that I am voicing, and 

people would agree with me. But we, as a musical culture, and I’m 

talking about all genres of music, feel that music has been sort of 

hijacked by kind of corporate interests. And you see less of that 

leading-edge artist that you used to see. And as someone—I work 

with Mr. Azoff who was here recently said, we’re not creating new 

stars. And I think that is the best quantifiable thing I can say. 

You’re not seeing as many new stars per generation. If you think 

back to, say, the ’60’s and you look at the amount of stars that 

came out of that generation and the stars that are coming out of 

this generation, it is very different. And I don’t mean different in 

style. I mean different in just sheer numbers. 

Mr. LUNGREN. Would that also mean that there are less new 

bands, less new performers? 

Mr. CORGAN. No, there are actually more. There’s more artists 

than ever. 

Mr. LUNGREN. But there’s fewer stars? 

Mr. CORGAN. Exactly. So if you want to try to make a math proposition out of it, there must be something going on that is creating 

less stars because they must be out there. I mean, just sheer numbers, you would say more people playing more music would equal 

more stars. 

Mr. LUNGREN. Okay. Let me ask you the question that has been 

raised by a couple of comments here, which is if, in fact, this proposal were to go into effect unamended, the suggestion by the operators is that since it is a business decision to run a radio station, 

that the bottom line is very important. So that would, if in fact 

they would continue to play music, mean that they would be most 

likely to play those performers who are already established stars 

as opposed to taking a chance on the cutting-edge, as you suggest, 

which is a manifestation of the fact that there has been a diminishment of creativity. How do you respond to that? 

212 

Mr. CORGAN. I would argue the flip side that you need the capital revenue to invest in the artists’ careers. In my case, my band 

didn’t really hit the top of the charts until really our third album. 

And now it is commonly understood you have one album when you 

are entering as a new artist. A lot of artists that are now established as big names—Bruce Springsteen is a classic example—he 

didn’t become the Bruce Springsteen that we know on the first 

record. It took until the fourth or fifth record. Artists’ careers aren’t 

given the time to develop because the labels aren’t willing to make 

the capital investment over the long term. 

Mr. LUNGREN. So your argument would be that the capital investment has been diminished; therefore, on that side of the equation, there would be fewer opportunities for emerging artists to become stars. On the other hand, what we’ve heard from the radio 

stations is that they would not take the chance on those. And I 

guess that would go to the question—— 

Mr. CORGAN. I don’t—— 

Mr. LUNGREN. Mr. Liebowitz, that somehow, as I understand 

what you are saying, actual exposure on the radio stations doesn’t 

really increase the universe of artists that are getting played. If 

you accept that argument, then it seems to me to be somewhat of 

a self-defeating proposition, is what—I’m just trying to figure 

out—— 

Mr. CORGAN. I would say it is like a sports franchise. Stars drive 

the business. The NFL is a huge business now because stars drive 

the business. They finally realized that seeing behind guys’ helmets 

made for bigger revenues at the gates and more merchandise and 

stuff like that. Stars still drive the business. 

Mr. LUNGREN. So your definition of a star is someone who makes 

a lot of money? 

Mr. CORGAN. My generation of a star is somebody who changes 

the musical culture and, through the change of musical culture, enacts an interest in the field. You know, like somebody mentioned 

Madonna. Well, when Madonna came in, suddenly there was a 

whole interest in people like Madonna. So, you know, it has a kind 

of a sweeping effect behind the star. 

Mr. LUNGREN. If you had more stars but fewer emerging—if you 

had more stars but fewer people actually going out there and trying out, that would still, by your definition, be an increase in creativity? 

Mr. CORGAN. Again, sir, I would argue that the revenue base is 

necessary for the capital investment. It is like any business. If you 

don’t have the capital investment, people get really conservative in 

their choice-making. 

Mr. LUNGREN. But if the capital investment is based in part on 

what the radio stations do, and the radio stations are telling you, 

in terms of their capital investment, they are more likely to continue to play already-established stars—— 

Mr. CORGAN. I don’t buy that, sir. 

Mr. LUNGREN. You don’t buy that. 

Mr. CORGAN. I think that is a fake argument, in all due respect. 

Mr. NEWBERRY. This is one of the things that frustrates me as 

a broadcaster because for years, the recording industry—I have 

played Mr. Corgan’s songs on your stations, big fan of his group. 

213 

The radio and the recording industry should partner together to 

find ways to solve the business and the model moving forward instead of taking guns and knives to one another. 

Mr. LUNGREN. Well, that’s the negotiations we’re talking 

about—— 

Mr. NEWBERRY. We are, as an industry—we as an industry are 

more than willing to find ways to promote the music, to find ways 

to take what we have, which is promotional value, and help the recording industry monetize that, for both the benefit of the performers and the labels. 

But instead, what we find in this legislation is it is being turned 

back on us and saying, wait, we are going to bite the hand that 

has fed us these years, because our business model is disrupted as 

a result of the Internet. 

Mr. BAINWOL. For us to have an expectation—may I? May I, Mr. 

Chairman? 

Mr. CONYERS. Yes. 

Mr. BAINWOL. For us to be characterized that we’re taking knives 

when all we want is to have a right and to be paid for our product 

is kind of a distortion. We—— 

Mr. NEWBERRY. I would say both industries are doing it to each 

other. 

Mr. BAINWOL. Well, the reality here is we need to work on this 

together. We do have a symbiotic relationship, but that shouldn’t 

be one way. And we can figure out moving into the future, if we 

sit down and talk and you recognize that there ought to be a right. 

The world has changed dramatically. It is no longer a single platform world. And that is where this whole question of creativity 

really comes into question. I mean, you’re as likely to break an act 

on YouTube now as you are on Clear Channel. And that is the reality. 

They are spending half of their air play on oldies. So they are 

not really breaking acts with that, and we’re not getting paid for 

that because there is no promotional value in effect. So this is a 

very complicated question, but we can’t get to the bottom of it until 

we sit down, and they recognize that we ought to have a right. 

Mr. NEWBERRY. I would say that I think YouTube is very effective for babies crying and people falling down and some pratfalls, 

but I don’t know any artist that has become a superstar because 

they were broken on YouTube. 

Mr. CONYERS. The Chair recognizes the Constitutional Committee Chairman, Jerry Nadler of New York. 

Mr. NADLER. Thank you, Mr. Chairman. 

Mr. Newberry, I missed the beginning of the hearing. I was at 

an economic hearing. So if I repeat any question or concept, forgive 

me. 

As we have discussed, one of your primary—I have difficulty, I 

must say, with the idea that someone shouldn’t get paid because 

someone else decides that the exposure is enough. One of your primary arguments is just that; it is that artists receive a tremendous 

benefit from their recordings being played, the promotional value 

should be enough to obviate the need for royalty payments. That 

is essentially the argument, correct? 

Mr. NEWBERRY. It is an argument based on history, yes, sir. 

214 

Mr. NADLER. All right. How much value is enough to take the 

place of royalty payments? How does one decide how much professional or other value is enough to obviate the need for royalty payments? How would you judge that? 

Mr. NEWBERRY. I think that is the purpose of a suggested study 

that has been offered earlier that we had a discussion on, that 

there is not enough information at this point in time to identify a 

lot of this. I would argue that our promotional value is more than 

the value of the air play. I’m sure the recording industry would 

argue the other side. But we certainly would support a study to 

learn more information on that. 

Mr. NADLER. Should such a principle be extended to other industries? 

Mr. NEWBERRY. Sir? 

Mr. NADLER. Would the same principle be valid in any other industry in your opinion? 

Mr. NEWBERRY. I think it is risky to make a blanket statement 

because the metrics and the way that each business operates is different. 

Mr. NADLER. Can you think of any other industry where this 

might be a valid principle? 

Mr. NEWBERRY. I’m sure I could. I haven’t given any time to 

think of it in that context. 

Mr. NADLER. You cite a study by Dr. James Dertouzos in your 

written testimony that regular air play increases music sales. 

Mr. NEWBERRY. Yes, sir. 

Mr. NADLER. According to another of our witnesses, Professor 

Liebowitz, Dr. Dertouzos was hired by the NAB, a fact not included 

in your prepared statement; is that correct? 

Mr. NEWBERRY. Yes, sir, he was. 

Mr. NADLER. Now, Professor Liebowitz conducted an economic 

study and concluded that not only did radio not increase music 

sales but caused them to drop. The NAB called the study—you 

called the study bogus. But according to Professor Liebowitz, the 

methodologies employed by him and Dr. Dertouzos, who came out 

with the conclusions you liked, were similar methodologies. How 

would you differentiate their methodologies? And if you can’t, why 

would you consider one bogus and one valid? 

Mr. NEWBERRY. Well, Professor Liebowitz’ testimony that he had 

earlier today is basically making the argument that there are 24 

hours in a day. 

Mr. NADLER. Do you doubt that argument? 

Mr. NEWBERRY. No, sir, I don’t deny that. It is a very valid argument. But he also makes—goes back and says, if radio were to not 

be there. And he talks about, what would happen—that is the reality of where we were. If TV were not there, if movie theaters 

were not there, if schools were not there, our children would have 

a lot more time for physical education. That does not necessarily 

mean it is a valid argument of why you should do away with 

schools. So we have—— 

Mr. NADLER. I’m sorry. You lost me. You went too fast. 

Mr. NEWBERRY. There is X amount of time in a given day for 

someone to listen to recorded material or for them to listen to the 

radio or for them to go out and buy. That is the point of his study. 

215 

You can make that same argument by saying there are only X 

number of hours in the day for a child. If we have them going to 

school, they can’t exercise as much. That doesn’t mean that school 

is a bad thing. And I’m saying—I stand by my point. There is a 

limited amount of time. There is a limited amount of inventory. I 

think that the study does not take into account the value of the 

promotional ad—promotional incentives radio play brings to the recording industry. And for him to say that radio has dropped the 

amount of record sales based on what occurred in 1930, I don’t disagree with that. But I think it is out of connection with what is 

occurring in today’s society. 

Mr. NADLER. Would you comment, Professor Liebowitz, please? 

Mr. LIEBOWITZ. Yeah, thank you. I suspect—and I don’t blame 

Mr. Newberry—that he hasn’t read my paper or Professor 

Dertouzos’ because it is very hard to understand what is in those 

papers if you’re not an economist. 

In fact, we used a similar methodology. We looked at 100 different cities. I have two papers. This is the econometrics paper. I 

looked at 100 different cities and looked from 1998 to 2003 to see 

how record sales changed and radio listening changed. He took the 

period 2004 to 2006, took the same 100 cities, did a very similar 

thing with some slightly different variables in terms of how he 

measured radio usage basically. We got completely opposite results 

from one another, even when he said he was trying to emulate as 

closely as possible exactly how I did mine. 

Now, when you have differences that are that great, it is very 

unlikely that the slight years that we used that were different 

would be the cause. My guess is that one of us has made a mistake, 

that there is a problem with the data. Because you don’t get results 

so black and white unless there is an error usually. So I suggested 

to him that we exchange the data to see if we could figure out who 

has made the mistake. He said he would be happy to do that, but 

the NAB wouldn’t allow him to do that. 

Mr. NEWBERRY. I will be glad to do that—— 

Mr. LIEBOWITZ. That’s where we are with that. 

Mr. NADLER. Mr. Newberry, Professor Liebowitz is saying in effect that the NAB wouldn’t allow Professor—Dr. Dertouzos to share 

the data; is that correct? 

Mr. NEWBERRY. The data belongs to the Arbitron Company. Our 

license did not allow us to distribute that. It is available if anyone—if the professor would like to get it, it is readily available 

from the Arbitron Company. 

Mr. NADLER. Professor? 

Mr. LIEBOWITZ. Yeah, that is conceivable. See, I have data from 

the Arbitron Company as well. I don’t have a time restriction. They 

say they do. I don’t deny—doubt that. But you don’t recreate someone’s study from scratch if you just want to find out where the 

error is. What you do is you take what they have, and actually, a 

methodology that is relatively recent that the profession has come 

up with to try to be able to check the work of different scholars in 

leading journals now. You have to provide the data and you have 

to say how you created the data and you have to give all the formulas that you used in the statistical package to show how you got 

your results because otherwise there would be so much work for 

216 

someone to recreate someone—effort that nobody would ever bother 

doing it. So to say, oh, yeah, I could go and get all the data from 

scratch for the years he did and redo it—— 

Mr. NADLER. What I don’t understand is, if you can get the data 

from Arbitron and if Mr. Newberry—the NAB’s objection is that 

the data is from Arbitron, I don’t understand why there is a problem with allowing—first of all, I’m missing something. You can get 

the same data from Arbitron that he won’t give you? 

Mr. LIEBOWITZ. I’m not sure it is exactly the same. I had it for 

different years that he does. 

Mr. NADLER. If Arbitron doesn’t mind their data being given out, 

though, Mr. Newberry, why can’t you give or the NAB allow Dr. 

Dertouzos to show his data and so everybody can compare it? That 

is a normal scientific method. 

Mr. NEWBERRY. We bought the data for a specific use, and that’s 

what our license of the data was. I don’t know what Arbitron—— 

Mr. NADLER. Would you ask them? 

Mr. NEWBERRY. I can certainly inquire on that, certainly. 

Mr. NADLER. Because presumably if they are willing to give their 

data—we have got a conflict here that ought to be easily—normally 

if you can’t reproduce results or if you get different results in any 

scientific experiment, you go back to the data, and the data is 

openly available and the peer-reviewed literature looks at it and so 

forth. It ought to be the same here. 

Mr. PATRICK. Arbitron is a company based up in Columbia, 

Maryland. They are a research company. They would rather sell 

the same data to two different people. They are not giving NAB the 

right to allow anybody else to see it, other than the Dr. Dertouzos, 

who has been doing performance rights analysis for almost 20, almost 30 years now. 

Mr. WEINER. Will they give me the data? 

Mr. PATRICK. If you want to buy it. 

Mr. NADLER. Let me just suggest—— 

Mr. LIEBOWITZ. He doesn’t have acces to it anymore. 

Mr. NADLER. Let me just suggest, because my time is up, I would 

just suggest that if the NAB wants anybody or Congress to rely on 

this—I mean, if you want to cite Dr. Dertouzos’ study, you have to 

do whatever you have to do with Arbitron to make that data available so that people can look at its validity. 

Thank you. I yield back. 

Mr. CONYERS. The gentleman from Virginia, Bob Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. Let me ask a question of all the panelists and perhaps, starting with Mr. Bainwol 

and just move to the—proponents of the Performance Rights Act 

point to the arguments that other technologies, such as Webcasters 

and satellite radio and others, compete with terrestrial broadcasters and provide promotional value and thus that the exemption 

for terrestrial broadcasters does not make sense to them. Don’t 

these same arguments also weigh in favor of all music-delivery 

technologies being subject to the same standard for determining 

the appropriate royalty to pay the recording artist? And if so, what 

should the standard be? 

217 

Mr. BAINWOL. We think the concept of parity on rate standard 

makes sense and feel like that is the direction we are moving in, 

yes, sir. 

Mr. GOODLATTE. Any guidance on what that standard ought to 

be? 

Mr. BAINWOL. It ought to mimic as close as possible the free market. 

Mr. GOODLATTE. Mr. Newberry? 

Mr. NEWBERRY. Congressman, I hate to ask you to repeat that, 

but I want to make sure that I understand the question completely. 

Mr. GOODLATTE. Sure. I noted that there are other forms of 

music being delivered, through satellite and the Internet and so on, 

that do pay broadcast—they pay royalties, and so the question is, 

going beyond the issue that you’re here today about, which is, 

should you be paying something at all; if you do, do you think it 

should be standard across all the different technologies? 

Mr. NEWBERRY. That’s a big assumption, so I will say, assuming 

that if we were to have to, which I would not agree with, but I 

think that the business model of each of those enterprises is entirely different. Webcasters don’t have any of the public service obligations that a broadcaster does. Satellite radio is a subscription 

service. Cable is a subscription service. So I think for you to say 

that an equal rate creates an equal platform is an incorrect statement. 

Mr. GOODLATTE. Okay. 

Professor Liebowitz. 

Mr. LIEBOWITZ. In a general way, when I heard the term market, 

there would be a way to answer actually some of the general questions here about whether the promotional value is sufficiently high 

that the payment would be zero or not. And that would be better 

than a study, because studies are very hard to come to good definitive conclusions about that. 

Provide the right so that radio can’t broadcast the music without 

the permission of the copyright owner and see what the price is. 

If the broadcaster is correct, the price would be zero. If the broadcasters aren’t correct, the price would be positive and the performers will get the money that they feel they deserve. And that 

is a way that one would like the market to work. 

The reason it started might not being able to work properly in 

these circumstances is because there are 10,000 radio stations and 

there are hundreds and hundreds of thousands of songs and keeping track of what is going on at all the stations might be too difficult for that to occur. 

Mr. GOODLATTE. I have to cut you off because I have got—— 

Mr. PATRICK. I would agree with Mr. Newberry. 

Congressman, these are very different platforms. These are—I 

think you were out of the room for a moment. But these are very 

different sized businesses. And they were built on different assumptions, some subscription, some advertiser supported, and some 

that deliver huge promotional impact; others don’t. And I don’t 

think that the rate is necessarily the same in all cases. 

Mr. GOODLATTE. True, but that is the same amongst radio stations as well, is it not? The size is different. The local contribution 

that they make is—— 

218 

Mr. PATRICK. There is no doubt. There is no doubt that the different sized companies and different stations and different markets 

deliver different value to the artists. 

Mr. GOODLATTE. Mr. Almeida. 

Mr. ALMEIDA. I think there are two points. One is, why do the 

other platforms have a performance right that go to the artist? And 

I think that is the inequity. And I think, from our vantage point, 

we’ve been willing to sit down and negotiate over this, and what 

the right position is as far as that is concerned. We have been more 

than willing to sit down and negotiate over that. And many of your 

colleagues have said that is what the parties should be doing. 

Mr. GOODLATTE. Mr. Corgan. 

Mr. CORGAN. From my end, artistic end and somewhat label representative, free market determines value, you know. And if you 

can create a system that encourages hard work, which is what the 

free market system is supposed to do, then innovation, better programming, better stars, everybody should profit from the idea of 

everybody pursuing a bigger piece of the pie. It is doing the opposite. It is creating almost, like, a negative return. 

Mr. GOODLATTE. Let me—Mr. Chairman, if I might, the legislation currently establishes a threshold that protects many small 

broadcasters from much of the uncertainty concerning the level of 

royalties they will be required to pay. However, I’m still not convinced that the bill strikes the right balance, and I’m particularly 

worried about local broadcasters who may own multiple stations 

and who have decided to provide robust local news and information, one of the points that has just been made, sometimes at a loss 

to the owner’s bottom-line for that station. My concern is that these 

broadcasters could be forced to eliminate that robust local coverage 

of news in order to make ends meet with the new obligation to pay 

royalty fees. And I’m asking if you would agree to work with those 

of us who have this concern, to find a solution to this concern before the full Committee markup on this legislation? 

Mr. CONYERS. I think it would be very important to do that. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

And with that I yield back. 

Mr. CONYERS. All right. 

The gentlelady from Texas, Sheila Jackson Lee. 

Ms. JACKSON LEE. Thank you, Mr. Chairman. I think this is a 

vitally important hearing, and I thank all of the panelists for their 

participation here today. 

And I would like to follow up with a line of questioning that 

some of my colleagues who preceded me engaged in. But first I’d 

like to suggest that a companion body of law, patent law, that provides copyrights, I think has already laid the precedent for establishing that songs and performance, performance artists have in 

fact a property right. Otherwise, we would not be asking them to 

rush to copyright or to insist that the particular talent or the particular property be registered to be protected. 

So, gentlemen, I think that we have a separate body of law, a 

separate process that establishes the fact that there is a property 

right. But saying that, I believe that we should be attempting to 

follow that great philosopher out in California, Brother Rodney, 

who said, can we all get along? 

219 

And I do think there is a common ground. And I want to compliment the Chairman because we went through this last year, Mr. 

Chairman. 

And when we wrote this legislation, we provided—my colleague 

just mentioned it, Section 3, special treatment for small, noncommercial educational and religious stations because we were concerned about the group that you were speaking of, Mr. Patrick, and 

that we wanted to be open minded. 

Let me ask, Professor—let me ask Professor Liebowitz, on the 

economic analysis, can we find a balance to respect the property 

right of performing artists but answer the questions of our good 

friend, Steve Newberry? 

Mr. LIEBOWITZ. Well, it is always going to be the case if you have 

to pay for something that you didn’t have to pay for before, that 

you’re going to be worse off because you have less money than you 

did before. 

The question is twofold. One is, should you have been paying, or 

is it something you should be paying regardless? And I think they 

have been using the property without any requirement that they 

get the permission of the owner, and that is very unusual. 

Can you—— 

Ms. JACKSON LEE. You accept the premise that it is property? Go 

ahead. 

Mr. LIEBOWITZ. Yes. When I first came across this particular 

market, I was astounded because I had known about the movie 

market, and I knew television broadcasters always had to pay to 

get a movie, except for that Christmas movie which apparently had 

the copyright expire on it. But then when I found out from radio 

that they didn’t have to get anyone’s permission, I thought that 

was very odd. 

The payment, if it is one that is run by either the government 

or some sort of organization and not the market, you can certainly 

manage it or massage it so that certain types of broadcasters pay 

much less. So I have dealt with, in Canada, where I’ve worked with 

performing rights for the composers, and I know that up there, 

they have multiple tiers of what the payment would be for the 

radio broadcasters, and the various smaller broadcasters pay almost nothing. And if you’re in a different classification, if you’re a 

nonprofit broadcaster, you pay almost nothing. And then, when you 

get above a certain level, then you start paying the full rate. 

Ms. JACKSON LEE. If I could refer you to Section 3, we attempted 

to craft that language. And I know that all of us, as we proceed 

to markup, will look at that to refine it even more. Let me thank 

you. 

Let me go to Billy Corgan and thank you for your testimony. 

How do you answer the question—you own a property right. You’ve 

been hearing from the broadcasters that this is going to undermine 

their economic scheme. What is your response to that? What balance do you think this bill or the idea presents itself in terms of 

compensating the performing artists because you have a property 

right and balancing their needs? 

Mr. CORGAN. I don’t think anybody on the artistic side of the 

music business wants to see terrestrial radio go out of business. I 

can’t think of anybody who would want that. I think the proVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00223 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
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motional value, the significance in the culture, the local cultures, 

is all recognized. I don’t think that is at the base of the argument. 

It is simply a rights issue, and then when you have—establish the 

rights issue, then everybody should be able to negotiate in good 

faith in the value of the things. 

As I said before, if these—what is interesting is that it is particular performances. There is only one version of ‘‘My Girl’’ that 

people want to hear. They don’t want to hear necessarily someone 

else’s version. They want to hear that version. So—— 

Ms. JACKSON LEE. I think that is a good point that you’re making, That there is refinement in the type of versions that belong to 

that particular artist. 

Mr. CORGAN. So you’re recognizing an accomplishment. And that 

accomplishment continues to have value. So if you’re talking about 

a 40-year-old song that continues to be played, it has value. 

Ms. JACKSON LEE. And so would you be accepting of a stair 

step—if we had to look at stair step payments based upon how long 

or what level, you would be open to that? 

Mr. CORGAN. Yes, ma’am. Absolutely. But you just have to establish the right to be able to figure out the formulas. Nobody wants 

to see anybody go out of business. That would be the last thing 

anybody would want. 

Ms. JACKSON LEE. Mr. Newberry, very quickly, do you pay for 

Rush Limbaugh programming? 

Mr. NEWBERRY. No, ma’am. 

Ms. JACKSON LEE. So is his programming free? 

Mr. NEWBERRY. I don’t carry Rush Limbaugh. 

Ms. JACKSON LEE. No, that is not the question I’m asking. When 

he is played on radio stations, do the we have—do the owners pay 

for it? 

Mr. NEWBERRY. It will vary. In some cases, it will be on a barter 

basis. In other cases, it will be a compensated basis. They are buying the exclusive rights to that program in their market. 

Ms. JACKSON LEE. And someone considers that—whatever our 

disparate tastes may be, some of us may turn that programming 

off. It is still the property right that goes to Mr. Limbaugh; is that 

correct? He is assessed as a property right? 

Mr. NEWBERRY. It is a product. It is a negotiation, and stations 

do make compensation. 

Ms. JACKSON LEE. With that in mind, inasmuch as I said, there 

will be stations that won’t have to pay for him, knowing their audience would be happy that they did not. But with respect to the 

music, then it equates to the similar context, can you find a compromise for us? And how do we act to protect the property right 

of a performing musical artist and also work with your constituents 

in which you have been eloquent in protecting their rights? Can 

you see the need, an opportunity for balance? 

Mr. NEWBERRY. For me to immediately say no to you sounds as 

if I’m digging in and trying to be obstinate. And, Congressman, I 

do not mean that at all. 

But I will go back to the fundamental issue that we have had 

an institution that has existed for years. And I certainly recognize 

that there are artists whose music we are playing decades after 

they were original hits. But many of those artists are still having 

221 

the opportunity to monetize from that. And if they are not able to 

do that, I would tell you that I think that is a flaw in the original 

recording contract that they have with their record label. So it is 

an imperfect system. But changing it as proposed in this particular 

piece of legislation I think could really upend the system that much 

more. 

Ms. JACKSON LEE. Mr. Chairman, let me—Mr.—if you’d just finish on my last question, Mr. Bainwol. We appreciate you being 

here. And I’m not trying to cast dispersions, but the record industry has been mentioned quite frequently. I think both of us would 

be dishonest not to admit the treatment that African-American artists got in the old days, barely a nickel on profit. We can call their 

names, call the rolls. How do you respond to the fact that this is 

generated from the miscontracting that the record industry engaged in? 

Mr. BAINWOL. I understand the long history here and your particular assertion about the way African-American artists were 

treated in the past. 

I was a very good friend of Isaac Hayes, and I heard stories. And 

without pinning the blame on any one institution, I understand 

that what you are suggesting is something that we need to recognize. 

What we are talking about now, though, is a bill about moving 

forward, and the artist community, the label community, big labels, 

small labels, small businesses all over this Nation are seeking just 

compensation for the property that we generate. And we are joined 

at the hip together as a creative community. Again, the labels, the 

artists and the musicians, and this is with an equity moving forward where there will be direct payment to the artists and to the 

performers. 

Ms. JACKSON LEE. And that’s what I want to end on. You will 

be not—you will allow a pure direct payment to the artist and the 

performer? 

Mr. BAINWOL. That is stipulated in the statute, yes, ma’am. 

Ms. JACKSON LEE. Do you mean the bill we have before us? 

Mr. BAINWOL. Yes. 

Ms. JACKSON LEE. I just want to make that clear for the record. 

And there will be no intervening or intervention on behalf of the 

company. 

Mr. BAINWOL. The revenues would flow from the radio stations 

to Sound Exchange, direct to the performer. 

Ms. JACKSON LEE. Let me thank the Chairman, and I’m happy 

to yield back. 

Mr. CONYERS. Former judge, Ted Poe. 

Mr. POE. Thank you, Mr. Chairman. 

I appreciate all of you being here, especially appreciate the passion with which you try to educate us on this Committee. 

Clay Walker and Tracy Byrd are both from my district, very good 

friends of mine. And I like them because they sing songs I understand. 

But I’m also concerned about small town radio stations. I have 

several of those, not near as many as there used to be. And I know 

that they’re operating on a shoestring. And when they quit operating, they go out of business or they get bought. 

222 

And I’m also concerned about the big conglomerates that are 

buying up all of the radio stations in the country, and we don’t 

have the local flavor. We have somebody from New York City down 

there in Baytown, Texas, talking on the radio. 

Be that as it may, I would hope there would be a study on this 

to see what the bottom line is. And also I would also hope that this 

could be worked out among the people involved rather than getting 

Congress involved in this. I really think that could happen. It reminds me of a divorce case I once saw or heard. After hearing the 

passionate pleas from both sides, I denied the divorce and told 

them they deserve each other and figure out how to stay together. 

And without being harsh, I think maybe that is something that 

ought to happen in this situation. 

I would like to know how much—I write a song, how much do 

I get paid to be on a radio station? How does that work mechanically? And how much do I get each time my song is played that 

I wrote? 

Mr. NEWBERRY. Congressman, I can’t tell you specifically what— 

I can tell you how we compensate. I can’t tell you specifically how 

that is delineated to the individual composer. 

We pay one of three rights organizations, the ASCAP, BMI and 

SESAC organizations are the three that we are involved with. For 

many years, it was a percentage of revenue. In the current license 

term, it is a flat fee. So that is adding further stress on the broadcast industry—— 

Mr. POE. What is the fee? 

Mr. NEWBERRY. It will vary by market size. 

Mr. POE. Give me some idea. Give me something I can understand. 

Mr. NEWBERRY. Four or 5 percent generally is an approximation 

of what the income of the station is, but it is not based on revenue 

right now. I don’t have the fee at the top of my head. I can certainly provide it. 

Mr. POE. So 4 or 5 percent goes to the writers of the songs you 

play on the radio station? Approximately. 

Mr. NEWBERRY. Yes, sir. 

Mr. POE. Is that right, Mr. Patrick. 

Mr. PATRICK. It goes to the music licensing organizations who 

then split it, but how each—— 

Mr. POE. You’ll have to turn the microphone on. 

Mr. PATRICK. I’m sorry. Billy may be able to explain more. Each 

song writer has some leverage in negotiating with how much they 

are going to get. It is also based on number of spins or the number 

of plays, and it is not just radio, BMI, SESAC—ASCAP, BMI and 

ASCAP are the big ones. They are pulling money from the people 

that have stereos in their businesses, from jukeboxes, to live performance from any number of things. And at end of the day, they 

ask—on the radio side, they ask us to tell them basically what 

songs we played in a sample week, and they go across the country 

and use different weeks. And at the end of the year, it is a compilation of saying it is—you know, Billy’s, you know, group played X 

number of millions of times and that represents .9 percent of the 

total. And he gets—you know, they scrape off a little bit for adminVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00226 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
223 

istration, and he gets the rest of it. Now, the other issue obviously—— 

Mr. POE. Let me interrupt you. I want to go on to another subject 

since my time is limited. 

Thank you, Mr. Patrick. 

It seems to me that there is value in the radio station playing 

music. But there is also value to the performer for the music being 

played on the radio station. So there is value each way. And if we 

are talking about compensation, why aren’t we talking about compensation for both? It seems like this legislation automatically devalues the value of playing it on the radio to the performer. 

Would you like to comment on that, Mr. Patrick? 

Mr. PATRICK. Okay—— 

Mr. POE. I get to pick who I want to answer the question. 

Mr. CORGAN. I understand. 

Mr. PATRICK. There is no doubt there is value to the artist and 

value to the record company when we play a song, and it is why 

there are—I think, in Salt Lake City, one of the stations said they 

have got 3,800 calls in 1 month asking—from a record company 

asking them to play a particular song or to play a particular artist. 

It happens all the time. It is why they want radio stations, why 

they take full page ads out in the trade press constantly, begging 

the radio stations to basically play music. 

Mr. POE. Do they have an agent or someone that contacts the 

radio station, saying, hey, play Bubba’s music this Friday or whatever? 

Mr. PATRICK. There are independent producers that in fact— 

independent promotion people that in fact call the radio stations all 

the time. I’ve run radio stations where I have had to say, you can 

only call on Tuesday or only on Thursday because we’re overwhelmed with how many calls are coming in. 

Mr. POE. Mr. Newberry, let me ask you this question regarding 

value. Have you ever—has the industry ever put a price on the 

value to the performer when the song is played on radio stations? 

Mr. NEWBERRY. Not that I’m aware of. And just one thing just 

for clarity, Mr. Patrick. We heard 3,800 in 1 month. I have since 

learned it is in 6 months. So I want to make sure that he is aware 

of that. It is a 6-month period. It is still a lot of calls. 

No, sir, I’m not aware of any placement of value. You could probably do an extrapolation, but it would be—it would be an unscientific method certainly for a broadcaster from Kentucky. I’m sure 

there are people qualified to do that, but I’m not aware of one. 

Mr. POE. Maybe the GAO study will solve that for us. 

Mr. NEWBERRY. That might be a good point. 

Mr. POE. Let me ask you another question, Mr. Newberry. 

If what you say and Mr. Patrick say occurs and it hurts radio 

stations and they have to go to syndicated talk shows or whatever, 

would that—I mean, would that—what would happen, otherwise go 

out of business, you would go to a talk format where it may or may 

not appeal to the public? 

Mr. NEWBERRY. I think what would happen is, and we talked 

about this when I had the opportunity to appear here earlier this 

year or last year, I don’t think it is a case that every radio station 

that is playing music would disappear. But the number of stations 

224 

playing music would dramatically decrease as alternative programming was introduced. 

Most of that programming is not going to originate nature from 

a local community. It is going to be brought in by satellite because 

of the economic question Mr. Watt raised earlier. So you’re going 

to have local programming that is disappearing. You’re going to 

have the amount of diversity of music that disappears, and you’re 

going to have the most familiar artists that are getting played because of the business reality of the transaction, again, the unintended consequences that I spoke to in my opening testimony. 

Mr. POE. Last comment, question. If we’re talking about the free 

market. This industry is not a free market. It is regulated by Congress. And so this bill regulates the free market even more. In a 

true free market, there would be no—there would be a contract between the broadcasters, the radio labels, the performers, with the 

broadcasters. There would be a contract, and they would figure out 

who pays who rather than Congress saying, you pay this person 

every time, or in this legislation, we are flipping the legislation 

where we pay the opposite person. What do you think about a free 

market industry? 

Mr. Patrick, I’ll ask you, and that will be my last question. 

Mr. PATRICK. We always like free market industries, and to some 

extent, what you are describing is some of what we have with BMI 

and ASCAP. We have regular, every couple of years, negotiating on 

behalf of the industry with them as to what the rates are going to 

be. And in essence, we take into account what the value that they 

bring and the value they bring to us. 

Mr. POE. My time has expired. 

Thank you, Mr. Chairman. I yield back. 

Mr. CONYERS. The distinguished lady from California, Maxine 

Waters. 

Ms. WATERS. Thank you very much, Mr. Chairman. 

Let me just say that this has been a very beneficial discussion 

here today. And I think that all of us have learned an awful lot 

about what is happening in this industry. Let me just cite a few 

of my thoughts. 

Mr. Liebowitz, I don’t think that, despite the fact that we respect 

your work, I don’t think anybody here is going to believe that there 

is no promotional value that the performers enjoy that causes the 

purchase of records. Most of us believe that, when these radio stations play this music, that there are people that still go out and 

buy records, despite the other platforms that are being discussed 

here today. But to indicate that there is really no real promotional 

value is just hard for us to—most of us to digest. 

Let me also say, to Mr. Newberry, I think you have made an excellent case here today, but none of us, I think, believe that performance artists don’t deserve to be paid. We believe that they deserve to be paid. So what we have here is basically an impasse. 

And Members of Congress at some point will make some decisions. Whatever the decisions are, somebody is going to benefit. I 

think there is a possibility that both sides could benefit, but the 

best way that both sides can benefit is that if both sides get together and work it out and then bring the solution to us. That 

would be the best of all worlds. 

225 

Let me just say to Mr. Mitch Bainwol, why—why—why should 

the record companies get 50 percent of the performance fees? 

Mr. BAINWOL. The record companies are the investors who put 

money into new artists and existing artists to help make their careers go. 

Ms. WATERS. Don’t they charge them for that? Isn’t that what 

some of the young artists don’t understand, that all of the production, all of the clothing, all of the what have you is being charged 

to them and they’ve got to pay it? Isn’t that what happens? 

Mr. BAINWOL. First of all, we are talking about—when we use 

the phrase labels, we’re really talking about copyright holders. 

They can be major labels. They can be small mom-and-pop individual labels. And there are thousands of those around the country. 

Or they can be artists who have their own—artist-owned labels. So, 

in this case, what we are saying is the copyright holder gets 50 percent for making the investment that sets a career in motion. 

Ms. WATERS. All of those that you just described, 50 percent 

across the board? 

Mr. BAINWOL. Fifty percent of the performance royalty, correct. 

Ms. WATERS. And my question is, whether you describe that as 

small, individual copyright holders or the big conglomerate, they 

should all be treated the same, with 50 percent? 

Mr. BAINWOL. The objective, both behind the language and the 

Constitution and behind any kind of exercise that is venture capital, is to produce more of the product. And in order to produce 

product, you have to be able to get a return. And in today’s marketplace, where sales have diminished so much, the future of the market is in fact in performance and in access. So it is important for 

the folks who invest capital, whether they are big or they’re small 

or they are the artists themselves, to develop a return on that investment so you can have more creativity. 

Ms. WATERS. Am I to understand that, say, the big copyright 

holders who invest and who promote and who charge the artists for 

every aspect of the promotion and whatever they do, they are not 

getting a return on investment? 

Mr. BAINWOL. I can tell you that sales have gone from $15 billion in 1999 to about $6 billion physical last year. When you throw in 

digital, it is about $9 billion. So the investment in creativity is not 

realizing the same return. The marketplace is fundamentally different today than it was—— 

Ms. WATERS. So they’re not deducting this from the artists’ earnings at all? 

Mr. BAINWOL. No. No, ma’am. 

You make an investment in an artist, and there is an advance 

and you pay royalties on sales. Okay? When sales diminish, there 

are fewer royalties to pay, and there is also less of an investment 

basis to invest in the next Bruce Springsteen, the next Billy 

Corgan. 

Ms. WATERS. Well—— 

Mr. LIEBOWITZ. Can I respond to the question that you had about 

whether or not there is promotion? 

Ms. WATERS. Yes. 

Mr. LIEBOWITZ. I don’t want you to misunderstand. I’m not saying radio doesn’t promote music. It does. What I am saying is—— 

226 

Ms. WATERS. You are saying that it doesn’t cause the purchase 

of records. 

Mr. LIEBOWITZ. Oh, no. What I said is the net effect overall of 

radio is that it causes people to spend more time listening to radio 

than they otherwise would and therefore less time listening to 

music, and therefore, the net effect is to actually hurt the sales of 

sound recordings. But that is because there are two effects. There 

is a promotional effect, which is positive, which is being used these 

days to determine which songs are getting the biggest sales. But 

then there is also the substitution effect because when you’re listening to radio, you’re not listening to prerecorded music. And they 

conflict with one another, and the question is which one is stronger—— 

Ms. WATERS. We are really interested in the bottom line here. 

There’s some information that shows us that the companies, the industry solicit still radios to play their artists’ recordings; is that 

correct? 

Mr. LIEBOWITZ. That’s correct. 

Ms. WATERS. And they do that simply because they like to hear 

it or it has a bottom line for them? 

Mr. LIEBOWITZ. They want to have increased sales of particular 

artists that they have. 

Ms. WATERS. Do you think that they would continue to do that 

if, in fact, they did not see that the bottom line was being affected 

by the—— 

Mr. LIEBOWITZ. They can’t control whether or not radio is playing 

records. They can’t reduce the amount of time radio is on there 

substituting for music, substituting for prerecorded music. Because 

they have no control, because they don’t have a property right, all 

they can do is say, music is going to do what it is going to do, the 

radio is going to substitute the way it is going to substitute and 

we can’t control that, we want to at least have our songs, the ones 

that have the biggest market. 

Ms. WATERS. I’m old enough to have lived through payola. 

Mr. LIEBOWITZ. Yes. 

Ms. WATERS. What was Payola all about? 

Mr. LIEBOWITZ. Payola was all about the fact that radio stations 

are willing to—record companies are willing to pay radio stations—— 

Ms. WATERS. Why were they willing to pay them? 

Mr. LIEBOWITZ. Because it helps the sales of individual songs. 

But there is nothing they can do to stop the substitution effect. 

So they can control the size of the piece of the pie, but the record 

companies have no control over the size of the pie because they 

can’t keep radio from being the size it is. 

Ms. WATERS. Well, still, the bottom line is that there is value in 

promotions. What that value is, I don’t know. I am not saying that 

artists should not be paid because of the promotions. I’m saying 

that it just should be recognized as value. 

And having said that, let me just say to Mr. Corgan that your 

testimony here today was perhaps the best that I have heard in 

helping us to understand from so many vantage points that you 

have been able to share with us today. And so, again, I would like 

to see this worked out so that the artists are paid and the broadVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00230 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
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casters are—the problems of broadcasters are recognized in some 

fashion. 

My bottom line on the broadcasting is this, I do not want to see 

small broadcasters, minority broadcasters, out of business. I think 

it is good for our communities. It is good for this democracy, and 

we must have that kind of interplay, otherwise we are at the mercy 

of the conglomerates who don’t give a darn about some the issues 

that we care about. So I’m hopeful that you guys can work it out 

and not just leave it to us to try and figure it out. 

And I yield back the balance of my time. 

Mr. SHERMAN. [presiding.] Thank you. 

Mr. Gohmert. 

Oh, you’re next? Oh. 

Mr. KING. Thank you, Mr. Chair. Am I recognized? 

Mr. SHERMAN. Yes, you’re recognized. 

Mr. KING. Thank you. I have been patiently sitting here, and I’m 

sure Mr. Gohmert understands—we’ve had our conservations, and 

we are both very interested in this, and we have I think shown as 

much interest as anyone in the Judiciary Committee today by at 

least the length of our presence and our attention. 

I picked up a lot here. It is curious to me that we have been at 

this for several hours now, and the room is still full. That tells me 

not just that this is an important issue to this country, but there 

is an important broad constituency that supports each of your arguments that are before this Committee today. 

I tend to revert to the Constitution and try to determine the 

foundation that we are acting upon here in this Judiciary Committee especially. And I know that Mr. Lungren focused on the 

Constitution as well. 

I think there is a bit of an irony here. Article I, Section 8, the 

subject of our discussion here, to promote—it reads as, quote, to 

promote the progress of science and useful arts by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries, closed quote. 

It is interesting to me that that is in our Constitution, Article I 

Section 8, just slightly above to define and punish piracies. There 

is a certain irony there, and it happens to be right above the power 

to declare war. So we know the Founders put high value on property rights, on intellectual property. 

They put a couple caveats in there that we haven’t discussed to 

much length here. One of them is the term—and I would have to 

look at it here—the useful—the useful arts. And that tells me that, 

then, that Congress has the authority to determine what is useful 

in the process of making a determination on what is going to be 

done with property rights. That is part of our subject here today, 

even though it has not been any part significantly that I’ve heard 

of the testimony. And I don’t intend to go there. I just make that 

point. 

And another component of this is for limited times. And that is 

something that didn’t come clear to me. 

But I wanted to follow up on the gentlelady from California’s 

statement, and starting on my left. And that is that I expected to 

hear the testimony of an artist today, Mr. Corgan. And I heard the 

testimony of a businessman, I think, who has significant clarity in 

228 

this. So I want to ask you in this way: If you write the lyrics of 

a song, you can copyright those lyrics and receive compensation? 

Mr. CORGAN. Yes, sir. 

Mr. KING. And if you write the musical, the instrumental for a 

song, you can copyright the instrumental and receive compensation? 

Mr. CORGAN. As an author? Or in the performance—— 

Mr. KING. As an author. 

Mr. CORGAN. Yes, sir. 

Mr. KING. And then if you write the lyrics and your base player 

writes the instrumental, which would be actually probably the opposite of what is likely to happen, I think, then you can join together and negotiate with a record label those copyrights to the 

lyrics and the instrumental that comprises a song that you have 

not yet performed? 

Mr. CORGAN. Normally, those are internal agreements with the 

group or between the writers. They are not necessarily happening 

through the label. 

Mr. KING. Fair enough. And I think you ought to have that right 

of contract to negotiate with whomever you’re doing business with 

and package that up because it is more marketable as a package. 

Then when you perform that song that you and your base player 

have written, both the lyrics and the music, and have copyrighted, 

well, then you receive a payment on that if you perform in concert? 

Mr. CORGAN. Yes, sir. 

Mr. KING. And the label markets and you get royalties off the 

sales of anything that might be downloaded and paid for and anything that might be a CD or a DVD? 

Mr. CORGAN. That’s the concept. 

Mr. KING. Yes, and I did mention—— 

Mr. CORGAN. That is another tangent, but, yeah, that is the concept. 

Mr. KING. I want to let you know, I have let the Chinese know 

about this. 

Mr. CORGAN. Thank you. I appreciate that. 

Mr. KING. And I think that it is a cost of business for them to 

continue to talk this thing to death. Sometime I’ll take up another 

subject there. 

So that takes us down this other way, this other thought, the 

other side of the right to property. Now, Mr. Patrick said that his 

record labels calling him on Tuesdays and Thursdays; that is the 

days that are allowed. And I understand that. Do they ever—and 

again, I turn to Mr. Patrick. Do they then ever offer to pay you to 

play their songs? 

Mr. PATRICK. Yes. But it is illegal for us to take it unless we disclose that to the FCC. And 99 percent of all stations say they will 

not allow an employee to ever do that. But that is Payola. 

Mr. KING. But what about the company? If you own a radio station that is grossing $1.249 million and you decide that part of 

your revenue stream could be to negotiate with the record label 

created by Mr. Corgan, who might offer to pay you to play that, 

today is anybody doing that? 

Mr. PATRICK. Nobody—to my knowledge, nobody is doing that, 

sir. I think they are all scared of the Payola rules. 

229 

Mr. KING. But isn’t that—aren’t you talking about disc jockeys 

on Payola rules? And isn’t it a different equation when it comes to 

a radio station management transaction? 

Mr. PATRICK. It doesn’t matter. It is the station or the individual 

that does it. 

And could there be a world in which there was free market 

where Billy comes to a company and says, I’ve got a new release 

and I actually would like to buy my way on to make sure it gets 

enough spins, theoretically, it could. 

Mr. KING. I’d just like unanimous consent to complete this line 

of questioning. I know my red light is up, and I’ll make it brief, 

Mr. Chairman. 

Mr. SHERMAN. Sure. 

Mr. KING. Thank you. Then I just make this observation, and 

that is that there is value to playing songs to the emerging artist 

who has not yet emerged on the stage. At some point—I mean, say, 

if I write a song and I play it as—then there would be value in me 

being able to pay the radio station to play that, so that we could 

get to the point where it got to the other side of the equation where 

I could collect payment on the other side. Wouldn’t it be appropriate to allow for—if we are going to pay the artists copyright or 

the artists who perform this and require that that be paid over the 

radio stations that play it, who are promoting it, shouldn’t we allow 

stations then to collect from those that want to promote before they 

become a marketable commodity? 

And I would ask Mr. Newberry. 

Mr. NEWBERRY. What is good for the goose is good for the gander, but I don’t think that is the appropriate model for anything 

that is based on artistic creativity and merit of the music as opposed to music that goes to the highest bidder. 

I think that our industry has always operated—there are always 

bad apples within any sector, and we’ve had issues, as Congresswoman Waters mentioned earlier with Payola. I’m absolutely 

against anything that even hints of that. And going to the highest 

bidder wins in terms of who gets played I think is a very slippery 

slope for our industry, for the recording industry, for the artist. 

Mr. SHERMAN. Thank you. 

And I think just the one answer. 

Mr. KING. That will be the last word. Thank you. 

Mr. SHERMAN. Without objection, I’d like to enter into the record 

some letters the Committee has received from musicians supporting the bill, including Paul McCartney, Gloria Estefan, Brian 

Wilson, Ricky Martin, Celine Dion and John Legend. 

Without objection, those will be part of the record. 

[The information referred to follows:] 

230 


C-1.eps
231 


C-2.eps
232 


D.eps
233 


E.eps
234 


F.eps
235 


G.eps
236 


H.eps
237 

Mr. SHERMAN. I will now recognize myself for 5 minutes. 

Mr. Corgan, first, thank you for your excellent testimony, and 

also thank you for the effect you have had on American culture because now when people see a bald guy, they think rock star. 

Mr. CORGAN. But, sir, you’re not completely bald. You’re not 

there yet. 

Mr. SHERMAN. I’m not completely a rock star? 

Mr. CORGAN. No, sir. No, you’re not. 

But we need new stars. We need new stars. 

Mr. SHERMAN. Bainwol, we’ll talk. 

There has been some discussion as to whether the bill reflects a 

fair compromise between the artists and the label. It is my understanding that the artists and the labels are both behind this bill 

and this division; is that correct? 

Mr. CORGAN. Yeah. That is the basic idea. 

Mr. SHERMAN. So the attempt by those that don’t want to pay 

anything to create a fight as between the labels and the artists or 

to attack the bill for being unfairly artist or unfairly label, is that— 

you come here as a united front? 

Mr. CORGAN. Yes, sir. But can I make one comment? In the mechanical rights issue with songwriters, which was, you know, was 

enacted by Congress, labels have been really wishy-washy on paying the full mechanical rate. And they have used that as a negotiating tool, so if you’re going to do this, if you are actually going to 

say it is the right thing to divide this pie 50/50, make it 50/50, 

don’t let the labels then exert pressure on the artists to whittle 

down their share, which they’ve done in the mechanical rights 

issue. That is something that is very irritating to me as an artist. 

Mr. BAINWOL. If I can clarify—— 

Mr. SHERMAN. Mr. Almedia, do you also agree that the bill has 

the right division between the artists and the labels? 

Mr. ALMEIDA. Yes, we have come together and—— 

Mr. SHERMAN. Mr. Bainwol, do you agree with the bill as it is 

drafted and you are going to pay the full 50 percent, or are you 

going to be negotiating the artist down? 

Mr. BAINWOL. Yes, yes, and no. 

Mr. SHERMAN. So no to negotiating the artist down. 

Let me move on in the questioning. 

Mr. Newberry, you point out that the stations do public service. 

You didn’t mention that you get tens of billions of dollars worth of 

free spectrum. And while almost all the businesses in this country 

perform important public service when they can, very few of them 

get that kind of valuable right. So the two go hand in hand. 

I’d like you to imagine a big rock band entourage that goes 

crashing into a restaurant, eats well, and then refuses to pay. And 

when they refuse to pay, when they steal the food, they say, well, 

our business model was created on the assumption that we’d always steal food. Or times are tough; we’ve got to steal the food 

now. Or this band performs a lot of good public service, so we 

should be able to steal the food. Or our band is so popular, we are 

providing promotion to this restaurant, it is going to be the hot restaurant because we were seen here. Or our band is a small local 

business, so we should be able to steal food. Or we need to do a 

study to determine whether or not we should steal the, food and 

238 

until such time as that study is completed and agreed to by everyone as being an accurate study, we should steal the food. 

In this society, do we usually allow theft on the theory that the 

thief is struggling or the thief is public-spirited or that somehow 

the victim unwillingly and without their consent benefits from the 

theft? 

Mr. NEWBERRY. Would you like for me to answer that? 

Mr. SHERMAN. Quickly. 

Mr. NEWBERRY. If the restaurant went to the band 3,800 times 

in the course of 6 months and said, please come eat our food; we 

would like for you—— 

Mr. SHERMAN. Sir, I think that Mr. Liebowitz has well illustrated 

the fact that, obviously, each individual band, record label, and 

record has it in their interest to be played more, but in total, the 

industry suffers. And we’ve seen—I mean, I think he has illustrated that rather well. 

But to say that because you get 3,800 flyers saying, come eat at 

the restaurant, that you get to go for free, seems a bit absurd. But 

I do want to shift to Mr. Liebowitz. 

Mr. NEWBERRY. Well, I would also like to go on record that the 

assertion that it is stealing and thievery is somewhat a 

mischaracterization. It is an industry that has worked jointly with 

the radio and recording industry over the years to promote—— 

Mr. SHERMAN. Sir, if one of your members produces a station— 

produces the Limbaugh show, which I know you don’t air—and I 

put it on my station and I run it for free, but not with the barter, 

I just put only my own commercials in, and I say, wait a minute, 

I’m helping Limbaugh become popular in my area, and he wanted 

to be on my show, and I’m helping his book sales, therefore I don’t 

have to pay or provide any barter for the show, I think you would 

be here asking the government to enforce the rights of the station 

involved. 

But Mr. Liebowitz, two rival studies, one is yours and one is the 

other’s side. 

They won’t share the data with you. Have you shared your data 

with them? And have they found any holes in it? 

Mr. LIEBOWITZ. Well, I offered to exchange data, and they basically said—— 

Mr. SHERMAN. When you say ‘‘exchange,’’ is your willingness to 

share your data contingent on them providing their data? 

Mr. LIEBOWITZ. Well, I wasn’t sure exactly what my answer 

would be if they said, ‘‘Well, we will take your data, but we are not 

going to give you ours.’’ 

Mr. SHERMAN. I am asking the question, so tell us the answer. 

Mr. LIEBOWITZ. So it never actually came up. 

Mr. SHERMAN. Okay. Now it is coming up. 

Mr. LIEBOWITZ. I am not sure what my answer would be. 

Mr. SHERMAN. What would your answer be, Mr. Liebowitz? 

Mr. LIEBOWITZ. I am a little reluctant to, sort of, let them make 

the final decision as to who is right and who is wrong. But if there 

was a third party, I certainly would be willing to—— 

Mr. SHERMAN. Maybe you would want to give the Committee 

your data. That would be the solution to this. 

Mr. LIEBOWITZ. Excuse me? 

239 

Mr. SHERMAN. What? 

Mr. LIEBOWITZ. I am sorry, I missed what you said. I didn’t catch 

it. 

Mr. SHERMAN. Maybe you would want to furnish to this Committee for this hearing the data—— 

Mr. LIEBOWITZ. Sure, I can do that. 

Mr. SHERMAN [continuing]. So that everyone could then see 

whether either of these studies could withstand scrutiny. If your 

data is furnished and withstands scrutiny and their data remains 

hidden for reasons that have been previously talked about, then we 

will know which study we can rely on. 

My time has expired. I believe we have Mr. Gohmert. 

Mr. GOHMERT. Does that mean I am recognized? 

Mr. SHERMAN. Yes, it does, for 5 minutes. 

Mr. GOHMERT. Thank you, Mr. Chairman. 

Of course, Rush Limbaugh has been mentioned a few times, and 

I guess his radio show and Al Franken’s show are not exactly analogous since, you know, like, Rush’s show goes on for 3 hours—and 

that is right—Mr. Franken’s doesn’t go on at all anymore. But with 

a 3-minute song compared to a 3-hour program, I am not sure how 

analogous those are. 

You may have heard Howard Coble say earlier that he asked one 

of our Members of the Committee if that Member supported the 

performers or the radio stations, and the response was ‘‘yes.’’ Well, 

that was me. 

And I have been struggling with this a great deal. On the one 

hand, I represent east Texas. Most of our radio stations are very 

rural, and a lot of them are combined, so they might end up getting 

hammered for a couple of fees if this goes into effect. And they say 

their profit margin is so thin, especially these days with advertisers 

pulling out, it might just be what undoes them or sends them completely to talk radio. 

And I know, in deference to my friend Ms. Waters from California, I mean, I am living proof. I have bought two albums in the 

last couple of months. I am one of the old guys who—I may hear 

it on the radio and then go to the Web site to hear a little part— 

‘‘Ooh, I like that’’—and then I actually go physically buy the CD. 

But both of them I have heard on the radio and go, ‘‘Ooh, I like 

that,’’ and so I go buy it. So I know there is value in hearing things 

on the radio. I know there is. I hear that. And whether we can 

whitewash that and say that it is all a wash and that it doesn’t 

really matter or that maybe it is costing, I don’t know. But I would 

like to get to the bottom of it. 

I was shocked when I found out that performers didn’t get any 

cut of the royalties that were paid, because that just seemed inherently unfair. It seemed fair that the writers got that. But then I 

come back to—and I have been trying to do research. And, as somebody who has written songs for my wedding, for my kids and stuff, 

I know it is a lot of work, and especially if you are going to make 

it as good a product as something that people will actually buy. 

But, Mr. Corgan, I go back to the record companies again. And 

I heard the comment that, you know, 50 percent may go to the 

record companies for setting a career in motion and its investment 

in creativity, but, as I understand it now, the artists have to go onVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00243 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
240 

line and create their own career and get enough hits to their own 

Web sites and their own music, and so they have set their own career in motion. Finally, somebody says, ‘‘Okay, I will help you. I 

will make 3,800 calls to radio stations and try to get them to play 

your music,’’ or something, ‘‘try to set you in motion.’’ 

But I am wondering, I know what we have heard from people 

coming to our offices is that performers have really been cut in 

their income. But it sounds more like the record companies are suffering the biggest cut. And I am curious. I don’t know who your 

label is, but what kind of cut does a record company normally get 

from a group as well established as Smashing Pumpkins? 

Mr. CORGAN. Well, in our case, we are now an independent entity. We have actually decided to go without labels. So something 

like this—— 

Mr. GOHMERT. Wait. You are saying that they no longer have all 

this help to give you as a performer? 

Mr. CORGAN. Well, we have posthumous work—oh, I didn’t understand. Sorry. 

Mr. GOHMERT. I am sorry. I shouldn’t be sarcastic. I am sorry. 

Mr. CORGAN. We are without a label now. We are completely 

independent. Although we—— 

Mr. GOHMERT. Has that devastated your sales now that you don’t 

have a label? 

Mr. CORGAN. Well, it is a new model that we are trying to arrange. And, you know, again—— 

Mr. GOHMERT. The fact is more performers are going with this 

model; isn’t that correct? 

Mr. CORGAN. Well, because of what I was saying to the other 

Congressman before, because you have less capital available to the 

labels and then you have less investment, what is happening now 

is they are putting the onus on the artists to develop their own careers and then they just cherry-pick. 

Mr. GOHMERT. Right. So, as an independent now, if you put your 

songs on iTunes—and I haven’t looked. I assume you have songs 

available on iTunes, right? 

Mr. CORGAN. Yes, sir. 

Mr. GOHMERT. What cut of that do you get? 

Mr. CORGAN. Well, we actually renegotiated our contract, our old 

contract, if you are talking about, like, say, my old music. So we 

have a 50-50 cut with our old record company. But that is very 

novel. We had to negotiate that. 

Mr. GOHMERT. As I understand it, you may be lucky to get 30, 

40 percent. 

Mr. CORGAN. Most artists are probably in the 20 percentile 

range. 

Mr. GOHMERT. And then if you sign with a record label, I have 

been told that perhaps the record label can negotiate 60 or 70 percent for them and 30 percent for iTunes, but then the artist still 

gets a small cut of that, after deductions for expenses. 

Mr. CORGAN. Yes, sir. But, again, in a free-market situation, the 

artist has the right to say no. They decide, ‘‘Well, do I want to 

enter into this system of opportunity?’’ And I think what is being 

argued here is, there isn’t that same system of opportunity. You 

241 

know, you get the straight ‘‘no,’’ and then there is nothing to negotiate. 

Mr. GOHMERT. Okay. Well, I see my time has expired, and I am 

obviously not going to get 10 minutes, like my other friend from 

Texas. So my time has expired. 

But let me just say I really appreciate everybody’s input. You 

know, I was a judge, and we would get evidence from all sides. And 

I am still struggling with this issue, you know, what is fair. And 

so I really appreciate you all making the effort to be here and to 

participate. Thank you very much. 

Mr. SHERMAN. I thank the gentleman from Texas and recognize 

the gentleman from New York. 

Mr. WEINER. Thank you, Mr. Chairman. 

You know, I think in this, if we divide the issue between the 

right and the rate, I think that the equities of the right are almost 

agreed to. I mean, I didn’t hear too many people on this panel who 

didn’t believe that the performers have a right to something. So I 

think that issue is done. So then it becomes a conversation of rate, 

and I think that it is much better resolved, frankly, with guidance 

from Congress but, frankly, letting you all work out some of these 

things. 

I think, for example, a smart record company would probably negotiate a lower rate for an unknown artist, you know, one that they 

want to try to promote. I think that you might even have artists 

who say, ‘‘Listen, I will take a discount because I am one of the 

46,000 calls to get on the air.’’ 

But if I could drill a little bit into this thing that we have glossed 

over, Mr. Newberry, do you believe that if you have a radio station 

that features Glenn Beck, do you believe you should have to pay 

for his programming? I mean, he, too, is benefiting from the promotion. He, too, is benefiting with his books and the marketing 

that he is getting for his things that are non-radio-related. As a 

matter of philosophy, do you believe that you should have to pay 

for his programming? 

Mr. NEWBERRY. I don’t believe I should have to pay for his programming. I believe I have the right to decide whether that is an 

investment or not. 

Mr. WEINER. Yeah, but do you believe that he should have a 

right that, if you play it, he should be compensated? Do you believe 

that right that exists on his part? 

Mr. NEWBERRY. I think that is dependent on how each model is 

established. So I can’t say whether he has a right to do it, but if 

that is how he wants to set up his business, that is his problem. 

Mr. WEINER. No, I am asking a different question. I am not asking about his motivation. I am asking about from your perspective. 

You have described that you believe—and forgive me for summarizing your position—that, since you provide such a value to performers by promoting their product, that they should not have a 

right to be compensated for that. Do you have the same belief 

about people who engage in another performance art, say, the spoken word? 

Mr. NEWBERRY. I am saying that we have provided compensation 

to the recording artist through the promotion. I am not saying they 

242 

don’t have a right to compensation. I am saying we are providing 

compensation. 

Mr. WEINER. Do you believe the same thing exists for someone— 

I mean, I don’t if you really don’t understand my question or you 

are just dancing around it. But do you believe that the same circumstance exists with people like Glenn Beck, who, frankly, I believe, when I hear him on the radio, he should have to pay me, but 

that is a different story. 

Mr. NEWBERRY. I would concur. 

Mr. WEINER. But I am just asking whether you have the same— 

you seem to have a philosophical position that, since you provide 

a promotion right to the performers, that that should be in lieu of 

any payment you give. Do you have the same philosophical sense 

about the spoken word? This has come up a couple of times here. 

I just want to hear what your position is. 

Mr. NEWBERRY. Okay, let me address it then in something—I 

don’t carry Glenn Beck, so let me address it because Chairman 

Berman earlier mentioned sports. We carry sports teams that we 

do not provide any compensation for the broadcast. Do they have 

a right to that compensation? No. They come to us and say, ‘‘Listen, we have a struggling team. We have a team that would benefit 

from the exposure. We have a university that would benefit from 

the promotional value of having their games on your radio station.’’ 

And they don’t pay us. We make a decision, is that a programming 

decision, and is that something that is beneficial to our listeners. 

Mr. WEINER. And so do they. 

Mr. NEWBERRY. Right. 

Mr. WEINER. They make that decision. But in the relationship 

you have with performance artists, you want to be able to decide 

that it is a no-compensation thing for the performers. That is the 

difference there. 

I agree with you, Mr. Newberry. I think, as a result of this legislation, which there now seems to be emerging consensus that performers have this right, as a result of this legislation, you could 

well find yourself having people come to you and say, ‘‘You know 

what? I don’t want a dime to be on your radio, so you don’t have 

to compensate me at all, because it would be so good for me if I 

am going to catch up with—my artist is going to catch up with the 

Smashing Pumpkins that, you know what? You don’t have to pay 

me a dime. I am going to negotiate that with you.’’ 

But the question is different that I am asking you. The New 

York Mets have a right to negotiate that. The Glenn Becks of the 

world have a right to negotiate that. The performers, in your view, 

just to make sure I understand, should not have that same right. 

Is that just a fair explanation of your position? 

Mr. NEWBERRY. The system that we have under the current circumstance is not perfect. I am opposed to changing it under the 

proposed legislation because I think it causes unintended consequences. So, to say should that right be introduced now after 80 

years of a balanced relationship, yes, sir, I disagree with your position. 

Mr. WEINER. Mr. Newberry, I understand that that is the question you would like to answer. I am asking you a philosophical 

question, you and me, that we are not talking about 80 years of 

243 

this. And I would stipulate, to what the gentleman says, that these 

are tough economic times, I would stipulate to Mr. Liebowitz—I 

mean, God bless you, but I think it is the least newsworthy research ever, that it helps some people but basically it doesn’t help 

other people. Like, that was interesting, but it doesn’t really get to 

this point, which is: On a philosophical level, do you believe, today, 

that there is inequity there? 

I mean, I think there is no doubt that all legislation involves a 

balance of equities and a balance of the politics. And, yes, clearly, 

you have a good hand you are holding, being someone who represents broadcasters from around the country. But on the equities 

of it, it seems that there is no really good argument except you 

don’t want to change something for 80 years. 

Mr. NEWBERRY. Would you like me to answer that? 

Mr. WEINER. I would, except the gentleman two seats to your 

right has been gesturing that he wants to. 

Mr. PATRICK. One other thing is, when you are talking about 

Glenn Beck or anybody else, you are talking about exclusivity, and 

that may be what you are paying for. You may not like him, I may 

not like him, but you are getting that, and 10 other stations or 50 

other stations in your market don’t get that. Or sports rights—only 

one person gets the Mets in New York, not all of the other stations. 

Mr. WEINER. But, Mr. Patrick, you are right about those details, 

but you are missing the premise. The premise is the equity of the 

Mets or Glenn Beck being able to negotiate for themselves what 

that value terms and condition is of the performance that they are 

having. 

You are right, there are plenty different combinations of permutations, which is why, at the end of the day when we are about 

to pass this, you are going to get into a room and say, ‘‘Please 

don’t. We have worked out a deal.’’ That is what is going to wind 

up happening. 

Mr. SHERMAN. I think the gentleman’s time has expired. 

Mr. WEINER. Thank you, sir. 

Mr. SHERMAN. The Chair will now recognize the gentleman from 

New York. 

Mr. MAFFEI. Thank you, Mr. Chairman. 

I do want to clarify some of the stuff that came up in Ms. Jackson Lee, the gentlewoman from Texas’s testimony. And I think she 

was talking to Mr. Corgan, so I want to address a similar question 

to Mr. Bainwol. 

I understand this legislation has accommodations for small commercial and noncommercial broadcasters, which would allow them 

to pay a lower rate than what would likely be set by the Copyright 

Royalty Board for large commercial stations. This is really good for 

districts like mine. I have a mixed district. It has a small city, it 

has rural areas, and we do have very small stations in my district. 

And even the accommodations provided in the bill might be too 

burdensome for them. 

For instance, if a small rural station makes only about $50,000 

in revenue, that might be difficult for them to afford even $5,000. 

And, similarly, if you look at a tiny, noncommercial station, for instance a small college radio station, that makes no money at all, 

$1,000 might be a little unworkable to them. 

244 

So would you be willing to consider some sort of a sliding scale 

that would allow even really the smallest stations—the student-run 

stations, the rural stations—to pay a rate that is commensurate 

with their actual income and ability to pay? 

Mr. BAINWOL. The short answer is yes. We have been literally 

begging to get into a room to negotiate for a year, and we haven’t 

found a partner with whom to negotiate. 

But this is not about the small stations. We are prepared to be 

perfectly rational and reasonable about how this gets crafted and 

make any adjustments. This is about whether or not big corporate 

radio that is consolidated is going to make payment for the property they use to build their businesses. 

Mr. MAFFEI. Okay. Mr. Newberry and Mr. Patrick, is there anything here that you could live with? Is that true? 

Mr. PATRICK. I think you have hit on one thing that we had 

talked about earlier. The non-com stations, the little religious stations, the minority stations, and the very rural stations like Steve 

owns and I own—— 

Mr. MAFFEI. Don’t forget the college stations. I used to work for 

one. 

Mr. PATRICK. Yes—$5,000 is way too high. And I appreciate the 

fact that they would like to carve out a sliding scale, and what that 

is, who knows? That presupposes there is a right. And so far, 

broadcasters are not quite there yet, if they are ever going to get 

there. 

But on the rate issue, I think you are correct. There has to be 

much more flexibility on that concept. 

Mr. MAFFEI. Do you want to add something, Mr. Newberry? 

Mr. NEWBERRY. I think it goes back—and I am not sure, Congressman, if you were here when we had the earlier discussions, 

but it is perplexing, as a broadcaster, the sliding scale. Is $5 better 

than $5,000? Sure, that is common sense, and I am not going to 

sit here and argue that. But there is basically a principle argument 

here, that if the effort is to protect the performers, if the effort is 

to improve the status of persons like Mr. Corgan. 

There was a panel discussion that occurred just this past Friday 

out in Nashville. And if I could take 30 seconds to read this, because this summarizes it. It is between Blake Shelton, who is a 

country music performer; Heidi Newfield, who is a country music 

performer; and Mike Dugan, who is the president and CEO of Capitol Records in Nashville. 

Mr. Shelton, talking about the performance rights debate: ‘‘I 

think it is a terrible idea for now. I think it is a terrible time to 

be even going there.’’ Heidi Newfield: ‘‘I agree.’’ Blake Shelton: 

‘‘But, I mean, I am really rich,’’ to which the room laughs. Mike 

Dugan: ‘‘There is no question that the timing of this is horrible. 

This would have been a much healthier conversation a couple of 

years ago.’’ 

Then Ms. Newfield says: ‘‘I think it also needs to start—stems 

from the building of a record contract. I think the artists and management and their record companies need to sit down and get real 

about when it comes to the bottom line of what we are actually 

making. There is a huge misconception of what we are making. I 

am $100,000 in debt, but that is the cost of doing business. It was 

245 

worth that to start over again. We need to talk about this more 

with our people.’’ This is an artist saying this. 

Then the president of the record label says: ‘‘There is no question 

that we get so much promotional value from radio. And I will tell 

you that, if it wasn’t for radio, we would not be here.’’ Radio also 

gets value from music. 

Mr. MAFFEI. Okay. No, actually, I appreciate those comments. I 

think my problem with that is that it just doesn’t seem that only 

the radio station should decide the promotional value of radio. It 

seems that that should be something that—— 

Mr. NEWBERRY. Well, that is from the president of a record label. 

Mr. MAFFEI. Maybe so, but I might disagree with it, and other 

Members of this Committee might disagree with it—— 

Mr. NEWBERRY. I understand. 

Mr. MAFFEI [continuing]. Even though he is the president of a 

record label. So a lot of us, I think, would just like to see both sides 

get together and try to decide a little bit more what the promotional value is, rather than just one side of it. 

What my question is trying to get at is: Obviously, the promotional value is much less if you run a tiny college station or a 

station that doesn’t bring in more than $25,000 or $30,000 a year, 

so trying to get to a sliding scale would seem fair on both sides of 

that. 

My time has expired, but I do want to make the point, though, 

that what we are looking for here is some sort of a way to find 

something that both sides can live with. And, you know, clearly, as 

has been said before, folks deserve to be compensated for their 

work. On the other hand, there might be a promotional value here. 

I just don’t know if only one side of the debate should decide what 

that promotional value is. 

Thank you, Mr. Chairman. 

Mr. SHERMAN. I thank the gentleman from New York. 

And there, for a while, I thought the joy would end, but the 

music goes on. The gentleman from Texas is recognized, should he 

wish to be. 

Mr. GONZALEZ. Thank you very much, Mr. Chairman. I rushed 

back. I am sure you think I have the most exciting question to 

pose, but not really. I think everything has been said in one form 

or another. 

But the concern and the difficulty we all have, especially on this 

Committee, with so many lawyers, is that we recognize a right, but 

it may be a right without rights or an unprotectable right. And 

that is a very foreign concept to us. That is why we are having 

such difficulty here. 

Then the question comes in the marketplace: How does that 

unprotectable right or the right without rights for so many years 

become protectable? And there is some sort of compensation for 

that particular right or for the acknowledgment of it. 

And I apologize. I had to run up here. 

The only way that you can justify the continuation—because you 

lose on the fairness argument, but you would have to say that the 

promotional value is the compensation, that the promotional value 

is the subsidy. Conceptually, you have to meet that first argument. 

And it is going to be very difficult, because I have, obviously, a difVerDate Aug 31 2005 12:10 Jun 04, 2009 Jkt 000000 PO 00000 Frm 00249 Fmt 6633 Sfmt 6601 H:\WORK\FULL\031009\47922.000 HJUD1 PsN: 47922
246 

ference of opinion as to whether that is true or not. And that jury 

is still out, are we going to have an independent study, and so on? 

At the end of this whole process, who knows? But I am not really 

certain where we are today, despite the testimony of Professor 

Liebowitz. 

The fallback position, to continue the status quo, is to say it will 

be the demise of radio station using the public airwaves. And I find 

great value in—whether it is television or whether it is radio, it is 

the only direct link that government has when it comes to communication out there, because of the use of the public airwaves. To diminish it in any capacity diminishes the ability for us to represent 

the best interests of our constituents. And I really look at it that 

way. I have made this argument before on Energy and Commerce 

when it comes to telecommunications, the Internet and so on, cable, 

satellite and such, as opposed to over-the-air broadcasters. So the 

real question is, where are we today? 

There is one aspect—and I am not sure, Mr. Chairman, whether 

it was covered in my absence—there is one school of thought of, 

why this now? I recognize that I think the performers and artists 

should be compensated. It really is a foreign concept to me that 

they are not and have not been, but I am willing to listen to that 

argument that has been advanced in the past and that was advanced here today. 

There is another argument—and I am not sure if this is true or 

not, maybe the professor and Mr. Patrick and others can enlighten 

me on it—and that is that maybe there is greater emphasis on it 

today because there is no single platform, Mr. Bainwol, as you had 

pointed out. And because of that, it is a whole new dynamic out 

there. So if you download, if you share, if you are part of all the 

tremendous piracy that goes on out there, where does the performer then realize just compensation? And that now, because it is 

not just one platform and because of technology, they have to make 

up that revenue stream elsewhere and maybe look to the radio stations. 

Can I have any comments regarding that particular thought that 

is out there and is being expressed? And I think I will start with 

Mr. Newberry. 

Mr. NEWBERRY. I concur. I think that the record labels and the 

performers have been dealing with a very unfortunate circumstance of business that has occurred since the Internet and 

since downloading. I am sure that there are thousands of people 

who would like to say, ‘‘Man, we really wish we could go back and 

change the way we handled the digital transition and the way we 

handled the whole issue of downloads.’’ The model did not work. 

Our industry is absolutely against piracy. We want to do everything that we can to protect the integrity of those works. But it is 

a feeling of, ‘‘Look, the model has collapsed around, so we are going 

to turn and go back toward the one source of consistent revenue 

where we know where it is, instead of finding ways to adapt to an 

expanding platform.’’ 

Mr. GONZALEZ. Well, Mr. Bainwol—and, of course, I sense that 

you are going to disagree with Mr. Newberry—but what about the 

argument simply that, if you can’ control it in another delivery system—I don’t know what we want to call everything that is out 

247 

there—that you have to go to that which maybe is more accessible? 

At this point, it would be compensation from the radio stations. 

Mr. BAINWOL. This issue is not about piracy. This issue is about 

a fundamental change in the nature of consumption of music. And 

in the old days—and I think our friends, the broadcasters, are nostalgically clinging to an American-pie past. We are not in the old 

days where you turn on the radio and you buy a piece of plastic. 

Today’s model is entirely different. It is multiple platforms broadcasting music, with consumers, instead of buying music, accessing 

music and listening to performances, whether it is on YouTube, 

whether it is on Pandora, whether it is on cable TV, whether it is 

on their iPod. It is all about access and listening to performance. 

If we care about creativity and we care about creating an investment basis for the next generation of art, then we have to find a 

way to make sure that we connect to the emerging model. That 

means performance. In that context, having the single biggest platform enjoy a benefit relative to Pandora, relative to Real Networks, 

relative to any of the other DiMA companies, makes absolutely no 

sense to the integrity of the marketplace or to fairness for creators. 

Mr. GONZALEZ. Well, do you think we would be here today had 

it not been for these new platforms? 

Mr. BAINWOL. I think the new platforms dramatize why this is 

so outrageous as a matter of equity. 

And the other point here that I think is critical is the argument 

that this is symbiotic gets totally blown away with the question 

that Mr. Weiner was going through, where we don’t get to participate in this question of balance. They get to take our property, use 

it, and we can’t say no. They call it symbiotic; I call that a taking. 

Mr. GONZALEZ. My time is up, Mr. Chairman. 

Mr. SHERMAN. I thank the gentleman from Texas. 

At the request of the Committee counsel, I have one clarifying 

question. 

Mr. Newberry and Mr. Bainwol, are you folks willing to sit down 

and negotiate, yes or no? 

Mr. BAINWOL. I would like to have lunch first, but yes. 

Mr. NEWBERRY. No, sir. We remain opposed to this legislation. To 

negotiate on that we think is counter to the interests of our industry and service to the public. 

Mr. SHERMAN. Don’t slit your throat, but don’t do it here. Thank 

you. 

[Whereupon, at 1:34 p.m., the Committee was adjourned.] 

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