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S. HRG. 111–237 

THE PERFORMANCE RIGHTS ACT AND PARITY 

AMONG MUSIC DELIVERY PLATFORMS 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

AUGUST 4, 2009 

Serial No. J–111–41 

Printed for the use of the Committee on the Judiciary 

( 

(II) 

COMMITTEE ON THE JUDICIARY 

PATRICK J. LEAHY, Vermont, Chairman 

HERB KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

BENJAMIN L. CARDIN, Maryland 

SHELDON WHITEHOUSE, Rhode Island 

AMY KLOBUCHAR, Minnesota 

EDWARD E. KAUFMAN, Delaware 

ARLEN SPECTER, Pennsylvania 

AL FRANKEN, Minnesota 

JEFF SESSIONS, Alabama 

ORRIN G. HATCH, Utah 

CHARLES E. GRASSLEY, Iowa 

JON KYL, Arizona 

LINDSEY GRAHAM, South Carolina 

JOHN CORNYN, Texas 

TOM COBURN, Oklahoma 

BRUCE A. COHEN, Chief Counsel and Staff Director 

MATT MINER, Republican Chief Counsel 

(III) 

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page 

Feinstein, Hon. Dianne, a U.S. Senator from the State of California ................. 1 

prepred statement ............................................................................................ 39 

Franken, Al, a U.S. Senator from the State of Minnesota, prepared statement 41 

Leahy, Hon. Patrick, a U. S. Senator from the State of Vermont ....................... 3 

prepared statement .......................................................................................... 56 

WITNESSES 

Escovedo, Sheila, Grammy Award-Winning Artist, on behalf of the 

MusicFIRST Coalition, Sherman Oaks, California ........................................... 4 

Kimball, Robert, Executive Vice President, RealNetworks, Inc., Seattle, Washington .................................................................................................................... 7 

Leighton-Levy, Marian, Owner, Rounder Records, Burlington, Massachusetts . 9 

Newberry, Steve, Joint Board Chairman, National Association of Broadcasters, and President and Chief Executive Officer, Commonwealth Broadcasting Corporation, Glasgow, Kentucky ........................................................... 11 

Oman, Ralph, Adjunct Professor, George Washington University Law School, 

Washington, D.C. ................................................................................................. 13 

Winston, James L., Executive Director and General Counsel, National Association of Black Owned Broadcasters, Inc., Washington, D.C. ......................... 15 

QUESTIONS AND ANSWERS 

Responses of Ralph Oman to questions submitted by Senator Feinstein ........... 31 

SUBMISSIONS FOR THE RECORD 

Digital Media Association, Washington, D.C., August 11, 2009, letter ............... 32 

Escovedo, Sheila, Grammy Award-Winning Artist, on behalf of the 

MusicFIRST Coalition, Sherman Oaks, California, statement ........................ 36 

Kimball, Robert, Executive Vice President, RealNetworks, Inc., Seattle, Washington, statement ................................................................................................. 45 

Leighton-Levy, Marian, Owner, Rounder Records, Burlington, Massachusetts, 

statement .............................................................................................................. 58 

Moore, Joyce, Scottsdale, Arizona, August 10, 2009, letter ................................. 64 

Roger Friedman of Cox Radio, August 2, 2007, letter ................................... 69 

Sam Moore testimony before House Judiciary Committee, July 31, 2007 .. 72 

Newberry, Steve, Joint Board Chairman, National Association of Broadcasters, and President and Chief Executive Officer, Commonwealth Broadcasting Corporation, Glasgow, Kentucky, statement ........................................ 78 

Oman, Ralph, Adjunct Professor, George Washington University Law School, 

Washington, D.C., statement .............................................................................. 108 

Pandora Media, Inc., Oakland California, August 4, 2009, letter ....................... 116 

Peters, Marybeth, United States Copyright Office, Washington, D.C., statement ...................................................................................................................... 117 

Songwriters Guild of America, New York, New York, August 11, 2009, letter .. 119 

Winston, James L., Executive Director and General Counsel, National Association of Black Owned Broadcasters, Inc., Washington, D.C., statement ...... 120 

(1) 

THE PERFORMANCE RIGHTS ACT AND PARITY AMONG MUSIC DELIVERY PLATFORMS 

TUESDAY, AUGUST 4, 2009 

UNITED STATES SENATE, COMMITTEE ON THE JUDICIARY, Washington, D.C. 

The Committee met, pursuant to notice, at 2:34 p.m., in room 

SD09226, Dirksen Senate Office Building, Hon. Dianne Feinstein, 

presiding. 

Present: Senators Leahy, Feinstein, Durbin, Klobuchar, Specter, 

Franken, and Cornyn. 

OPENING STATEMENT OF HON. DIANNE FEINSTEIN, A U.S. 

SENATOR FROM THE STATE OF CALIFORNIA 

Senator FEINSTEIN. This hearing will come to order. 

Today’s hearing represents the continuation of work that Senator 

Leahy and I have been engaged in for some time aimed to protect 

and promote the work of musical performers, while at the same 

time resolving inequities that are currently created under copyright 

law. 

Copyright protection, as I think everybody in this room knows, 

has its foundation in our Constitution, and our copyright industries—music, movies, books, software—are a major contributor to 

our economy. 

A report released 2 weeks ago found some interesting things. 

One of them was that core copyright industries contributed over 22 

percent of the United States economy’s growth; and, secondly, copyright industries grew at twice the rate of the United States economy as a whole. I think that indicates how important these intellectual property areas are. But as the technology for delivering creative works has grown and evolved, especially so in the case of 

music, copyright law has become more and more complex. 

Music was once only available live at concerts or in small gatherings. Then, with the dawn of recordings and transmission, radios 

were born. But a radio used to be as large as a piece of furniture. 

Now music radio programs are provided in our autos, on MP3 players that are barely larger than a postage stamp, and we can access 

radio programming over the Internet, from cable, and from satellites. 

The availability of music in clear digital formats has grown from 

compact discs, to the Internet, and now to broadcast radio transmissions. As the availability and technical quality of music has increased, however, so has the ease of freely recording, copying, and 

sharing this music, without compensating the artist whose genius 

2 

created the music to begin with. In fact, the United States is the 

only industrialized nation that does not provide performers a full 

performance right. 

Let me say that again. We are the only industrialized nation on 

Earth that does not provide performers with a full performance 

right. 

At the same time, the incremental evolution of music delivery 

technologies has led to a hodgepodge of different copyright royalty 

schemes and rates. Playing the same piece of music to the same 

listener and even in the same place, such as their home, workplace, 

or car, can lead to significantly different royalty payments, or none 

at all, depending upon whether the listener receives the music via 

a satellite transmission, via a high-definition digital radio broadcast, or via the Internet, which itself can be accessed by copper 

wire, by satellite transmission, or by fiberoptic cable. 

Thus, innovative new businesses, which often have the benefit of 

exposing consumers to a broader array of artists, benefiting both 

the listener and the artist, compete at a disadvantage with other 

music delivery services. So the challenge facing us as lawmakers 

is how to encourage innovation, growth, and competition while at 

the same time protecting artists, musicians, and authors. 

Last Congress, I introduced bipartisan legislation, The PERFORM Act, that tried to accomplish these goals, and chaired a 

hearing on the bill and the surrounding issues that I have just discussed. 

We have just been joined by the Chairman of the Committee, the 

distinguished Senator from Vermont, Pat Leahy, who asked me if 

I would chair this hearing, and I am very pleased to do so. 

But following the earlier hearing, my staff have been working 

with the interested parties in an effort to bring them together and 

to clarify the differences that still exist. 

It appears that some significant progress has been made during 

that period of time. Building upon the work begun by the staff here 

in the Senate, the House Judiciary Committee has reported out 

counterpart legislation that appears to represent a significant step 

forward. 

For example, I understand that the recording industry and the 

webcasting industry actually are in agreement on a new rate 

standard. This is terrific and mildly surprising. I look forward to 

discussing this with their representatives who are here today. 

The House Judiciary Committee also made a number of accommodations to broadcasters to address criticisms and concerns that 

they have raised. I also look forward to hearing the views of the 

witnesses today on those accommodations. 

As our Committee takes up this legislation, further changes or 

additions will be necessary, but today’s hearing I hope will be a 

catalyst for clarifying and resolving what changes there may be. 

Music, I think, is an invaluable part of all our lives. New technologies and changing music platforms provide exciting new options for all consumers. As the industry continues to march forward 

into new frontiers, we have to ensure that our laws can stand the 

test of time and be fair to all. 

3 

So I look forward to working with the Chairman and working 

with my colleagues to pass legislation and to hear the witnesses’ 

thoughts on these issues. 

Now I am just delighted to recognize the distinguished Chairman 

of this Committee, Senator Leahy. 

STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR 

FROM THE STATE OF VERMONT 

Chairman LEAHY. Well, I want to first thank Senator Feinstein 

both for chairing this hearing today—she is also the chair of one 

of the most critical committees in the Senate, the Senate Select 

Committee on Intelligence, which takes a great deal of her time— 

and I want to thank her for her leadership on content protection 

issues. There is no way I could have done this hearing today. We 

have a significant Judiciary nomination on the floor—that New 

England understatement—and I am going to be heading for that 

very soon. 

But I think the issue is very simple, even if the solution can be 

complicated. Broadcast radio stations use the work of recording artists, and they profit from it. But, unlike webcasters, broadcast stations do not compensate the artists. Maybe the broadcasters might 

not like this, but it appears that they are using somebody else’s 

property without compensation. That may be okay in other countries, but it is not consistent with American property laws. It 

means that American artists do not receive millions of dollars each 

year that are collected in European allies’ countries and other 

countries to pay for the use of their music on their broadcast radio 

stations. They can do it. I do not know why we cannot do it. 

We are hearing from hard-working musicians across the country. 

The president of the Vermont Musicians Association recently wrote 

in the Burlington Free Press: ‘‘I am one of many hundreds of 

Vermonters employed in the music community. We are not celebrities; we are regular folks who work hard to help provide a decent 

living for our families, and we simply seek to be fairly compensated 

for our work.’’ 

I have also heard from radio stations in Vermont concerned 

about the impact of giving performing artists the same rights on 

broadcast radio that they have on the Internet. I would add that, 

unlike a State like Senator Feinstein’s, one of the most magnificent 

States in this country, Vermont is a very small State. I actually 

know most of the performers, and I know most of the radio station 

owners. And so I am making sure that the Performance Rights Act 

protects smaller broadcasters while providing fair compensation to 

artists and musicians. 

The House Judiciary Committee approved companion legislation 

with an amendment that would permit small stations to use sound 

recordings for a flat rate of $500 a year. That is less than they 

have to pay in dues for lobbyists to lobby against this bill. We are 

going to need to consider similar amendments to address the legitimate concerns of smaller broadcasters when the Committee turns 

to the Performance Rights Act. 

I say this not to beat up on the National Association of Broadcasters, an organization that has done a great deal of good in this 

country. But I think they have got to finally sit down and work 

4 

with us. We have invited them to work with us and work with 

those on the performer side to see if there is a way we can address 

the needs of both smaller broadcasters and performers. To date, 

that has not been done. 

This is legislation that is going to move. The time to sit down 

and talk is now. We have to ensure that songwriters remain protected. Songwriters are properly compensated by radio stations 

through private licensing agreements with ASCAP, BMI, and 

SESAC. A performance rights for recording artists should not come 

at the expense of songwriters, and we should establish parity 

across all music delivery platforms. 

I will put my whole statement in the record, but I think that it 

is time for the parties to sit down and talk because this is going 

to be legislation that will move. I appreciate that the Register of 

Copyrights submitted testimony today in support of ending the current inequity, but I cannot praise Senator Feinstein enough, who 

has talked to me considerably when we are not in the Committee 

about the importance of this, and I appreciate you holding this 

hearing. 

Senator FEINSTEIN. Thank you very much. Thank you very much, 

Mr. Chairman, and I very much agree with your comments, and I 

do agree that the time is now and that we need to know what the 

concerns are, and we need, more importantly, to have people who 

are willing to reconcile those concerns so that we can move forward. 

So, with that, I will enter into the record the statement of Mary 

Beth Peters, the Register of Copyrights, and the statement of Pandora Media as well, without objection. 

[The statements appear as a submission for the record.] 

Senator FEINSTEIN. The way I would like to proceed, ladies and 

gentlemen, is to ask each witness to confine your opening statement to 5 minutes, just state your point as clearly—you do not 

have to be fancy about it—and succinctly as you can, and that will 

provide more chance for us to answer questions. And I will go down 

the line and, beginning with Sheila, introduce each person prior to 

their 5 minutes. 

Let me begin with Sheila E. She hails from the San Francisco 

Bay Area. She is an award-winning singer, songwriter, and performing artist. She has recorded several top singles and has performed with some of the biggest names in music. She is also the 

president of Heaven Productions Music and a co-founder of the Elevate Hope Foundation, which is a charitable foundation that assists the needs of abused and abandoned children through music 

therapy. Sheila E has received the Imaging Foundation’s Humanitarian Award, the Angels Across America Award, and the Prism 

Lifetime Achievement Award for her charitable and humanitarian 

work. 

Welcome, Sheila, and we will begin with you. 

STATEMENT OF SHEILA ESCOVEDO, GRAMMY AWARD-WINNING ARTIST, ON BEHALF OF THE MUSICFIRST COALITION, 

SHERMAN OAKS, CALIFORNIA 

Ms. ESCOVEDO. Thank you, Chairman Leahy and Senator Feinstein. I am really, really honored to be here to today to represent 

5 

the hundreds of thousands of working musicians who seek one simple right—that is, to be compensated for their labor. 

My name is Sheila E., and I am here today on behalf of the 

MusicFIRST Coalition. I am also a member of AFTRA and AFM, 

as well as a board member of the Los Angeles Chapter of The Recording Academy, which represents thousands of music creators 

across the State of California. 

I want to talk about music and radio but, first, let’s talk about 

music. 

I was born into a musical family, the daughter of the legendary 

band leader Pete Escovedo, so music is truly my destiny. I started 

playing an instrument at age 3, and once I made my concert 

debut—a seasoned 5-year-old—I knew I wanted to be a musician. 

As I matured as a musician, I had many wonderful musical experiences, from earning multi Grammy nominations for my solo work, 

to performing with such artists as Lionel Richie, Gloria Estefan, 

Beyonce, Ringo Starr, and, of course, Prince. And speaking of 

Prince, the other Senators from Minnesota who are not here right 

now, I am sure that they know that the ‘‘Minneapolis Sound’’ is 

still very influential today. 

During that time, I began to discover much about the music business itself, and I was always at a loss to explain why one industry—traditional broadcast radio—is allowed to profit from the artists’ work without compensation to those artists. 

As I toured around the globe and I saw that broadcasters in 

every other developed nation in the world compensate their artists, 

the lack of payment in America became more puzzling to me. As 

Internet radio developed and recognized their obligation to pay artists, the lack of terrestrial radio’s payment became unacceptable. 

For all of the complex legal and legislative discussions that have 

taken place around this topic over the decades, the issue for musicians is really quite simple. We believe that being paid for one’s 

work is a basic American right. Whether your workplace is an office, a classroom, a factory, or a recording studio, every American 

worker deserves to be compensated for his or her labor. And any 

business that profits from another’s work should share some of that 

profit. 

All right. So let’s talk about radio. Artists love for their records 

to be played on the radio. That is a given, but that is not the point. 

Artists love to get bookings for live gigs, but we get paid for 

those live gigs. Artists love to get songs placed in movies and TV 

shows, and we get paid for those uses. Artists love to sell records, 

and we get paid for those sales. Radio is the only part of the music 

business where our work is used without permission or compensation. So when the National Association of Broadcasters tells us that 

they are a true friend of artists, we respond by saying, ‘‘Friends 

don’t let friends work without compensation.’’ 

Radio’s argument that a ‘‘promotional effect’’ exempts them from 

payment is a tired argument that will not hold water in any other 

context. Imagine the radio industry withholding payment from popular talk radio hosts claiming that they promote their book sales 

and TV ratings. Imagine the radio industry withholding payment 

from sports teams because airing the games promotes ticket sales. 

The talk show hosts and the sports teams will simply say, ‘‘No 

6 

broadcasting without fair payment.’’ But until the Performance 

Rights Act is passed, artists have no such right. 

Radio’s other arguments are just as worn out. The House version 

of the bill addresses the concerns of broadcasters, and we support 

the adoption of these provisions in the Senate bill. ‘‘Worried about 

small broadcasters? ’’ The bill lets them play all the music they 

want for as little as $1.37 a day. ‘‘Not the right time in the economy? ’’ The bill defers payment for up to 3 years. ‘‘Concerned about 

public service announcements? ’’ To use public airwaves for free, 

the stations must air them and that won’t change. 

One new argument I have heard has caused me particular disappointment: that the Performance Rights Act will hurt minority 

broadcasters. As a Latin artist, I want minority stations and minority artists to be able to thrive in this business. Many minorityowned stations are small and would rightly receive a special accommodation for the lower payments in the bill. And at the same time, 

the bill would allow Hispanic and African American artists their 

due payment for their important contributions to our American 

music mosaic. It is a sad irony that artists living throughout Latin 

America benefit from a radio performance right while their counterparts in the U.S.—the leader in intellectual property—do not. It 

is time to bring the U.S. in step with the rest of the developed 

world. 

So we have talked about music. We have talked about radio. Let 

me close by talking a little bit about the past and the future. 

First, the past. Last month my father, Pete Escovedo, turned a 

youthful, handsome 74. In addition to his own legendary band 

Azteca, he was a member of the group Santana and performed on 

a number of their records as well as other artists still heard on 

radio today. One of the most gratifying aspects of this legislation 

is that it will compensate so many great artists of my father’s generation and those who have contributed so much to our musical 

heritage. Every single participant—featured artists, background 

singers, session musicians, and producers alike—will all benefit 

from this bill. 

But this bill is just as much about the future. 

One of the great honors in my life was to co-found a charity 

called Elevate Hope Foundation, and we provide abused and abandoned children an alternative method of therapy through music 

and the arts. The magnitude of music becomes such a inspiring 

force in the lives of these children that I have seen firsthand—and 

I get emotional because I see what music does for these kids. And 

they say that I cannot get emotional up here, but I will, because 

music is my life. And it is not fair. It is not fair what is happening. 

We must encourage our youth through music and the arts. 

Through music, they learn how to respect themselves, and I teach 

them that they deserve respect as individuals and as budding 

music creators. What I ask of you today, distinguished Senators, is 

to ensure that the next generation of musicians will enjoy the respect that they deserve by simply being compensated by the businesses that use their creations for profit. Through the passage of 

the Performance Rights Act, musicians and broadcasters will enjoy 

a relationship of mutual respect that will allow both to flourish. 

Thank you. 

7 

[The prepared statement of Ms. Escovedo appears as a submission for the record.] 

Senator FEINSTEIN. Thank you very much, Sheila. 

Our next speaker is Bob Kimball, and he is the Executive Vice 

President for Corporate Development, the General Counsel, and 

Corporate Secretary of RealNetworks, Inc. Mr. Kimball currently 

serves on the boards of directors of the Digital Media Association 

and the European Committee for Interoperable Software. Prior to 

joining RealNetworks, Mr. Kimball was a senior attorney and manager of business relations for IBM Global Services and an attorney 

with the law firm of Sidley and Austin in Senator Durbin’s country, 

Chicago, Illinois. And we welcome Senator Durbin to these hearings. 

Mr. Kimball, would you proceed? Five minutes, please. 

STATEMENT OF ROBERT KIMBALL, EXECUTIVE VICE 

PRESIDENT, REALNETWORKS, INC., SEATTLE, WASHINGTON 

Mr. KIMBALL. Thank you. Chairman Leahy, Senator Feinstein, 

Senator Durbin, thank you for the opportunity to speak today. I am 

Bob Kimball, and I currently serve as Executive Vice President at 

RealNetworks. 

As the creator of the streaming technology that made Internet 

radio possible and as the operator of one of the largest Internet 

music services, RealNetworks is deeply interested in sound recording performance rights and royalty parity. 

First, I want to thank you, Chairman Leahy and Senator Feinstein, for championing royalty parity and fair competition, both of 

which will foster innovation and provide greater benefits to music 

fans and recording artists alike. Parity would mean that royalties 

for cable, satellite, Internet, and even broadcast radio would be established for the first time by using a single, uniform standard. 

Parity would establish royalties that do not discriminate against or 

favor competing technologies or business models. Parity would also 

have Congress provide small webcasters similar discounted royalty 

caps that the Performance Rights Act provides small broadcasters. 

As part of establishing a uniform standard, there should be one 

consolidated rate proceeding that includes all radio services. This 

would create substantial efficiencies and ensure fair application of 

the standard. 

Mr. Chairman, today a single device like the radio I have here— 

not quite the size of a piece of furniture but, still, it weighs a ton— 

this can play the same music program on FM radio, satellite radio, 

and Internet radio. How this works is invisible to the user. I simply 

push a button, and the radio plays. 

But, inexplicably, the current system imposes dramatically different sound recording royalties, or none at all, based solely on 

which button I happen to push on the device or what technology 

delivers the song. This makes no sense. The Copyright Act should 

not decide technology winners and losers. 

The most difficult question you face, I think, is deciding what 

uniform standard will ensure royalties that fairly balance the interests of copyright owners, licensees, and the general public. For two 

reasons, I suggest using the royalty arbitration standard in Section 

8 

801(b)(1) of the Copyright Act, which was carefully calibrated by 

Congress when it was enacted in 1976. 

Most importantly, the four objectives outlined in Section 

801(b)(1) equally balance the interests of copyright owners, licensees, and the general public. As a result, the royalty determinations 

that applied this standard have been fair and have avoided abovemarket pricing that characterizes the current Internet radio standard. 

I think the Committee will agree that the benefits of a statutory 

license almost disappear if the rate-setting standard actually drives 

companies out of the market rather than empowering the rate setter to protect against that very harm by balancing all interests. 

Second, 801(b)(1) is the right standard because on each occasion 

that Congress has introduced a new standard, such as the willing 

buyer/willing seller or fair market value standards that have applied to webcasters and satellite television services, the resulting 

royalties have threatened or actually forced companies out of business, requiring remedial congressional action. 

My final point concerns Section 5 of the Performance Rights Act, 

which is intended to protect songwriters from harms that could result from the imposition of sound recording royalties. 

Section 114(i) of the Copyright Act already establishes a complete 

evidentiary bar against the use of sound recording royalty information to set rates for musical works. This bar applies equally to composition licensors and licensees, meaning songwriters cannot use 

this information to argue for high rates and radio services cannot 

use this information to argue for low rates. 

Unfortunately, Section 5 may convert this evenhanded evidentiary shield into a unilateral litigation weapon for music 

licensors. One interpretation of Section 5 would allow the use of 

sound recording royalties to argue for increasing musical works 

royalty, but forbidding consideration of the same information to 

argue for lower royalties. Turning this balanced shield into a oneway sword is fundamentally unfair and certain to lead to irrational 

royalty results. 

A related issue is the Webcasters Settlement Act’s provisions allowing SoundExchange to cherrypick licenses that can be used as 

evidence before the Copyright Royalty Board. When 

SoundExchange negotiates a deal it likes, it shows the deal to the 

CRB. When the deal is less favorable, SoundExchange makes the 

deal confidential, and the board cannot consider it. Congress should 

no longer condone this practice and should require the copyright 

royalty judges to consider all relevant deals when setting royalties. 

In closing, I am sincerely grateful for the invitation to participate 

today, and I am encouraged that a level playing field might be in 

sight for Internet radio. I would be happy to answer any questions 

you may have. Thank you. 

[The prepared statement of Mr. Kimball appears as a submission 

for the record.] 

Senator FEINSTEIN. Thank you very much, Mr. Kimball. And I 

assume when you refer to Section 5, the section you are referring 

to is Section 5(b). 

Mr. KIMBALL. Yes. I believe that is correct. 

Senator FEINSTEIN. Thank you. 

9 

The next person is Marian Leighton-Levy. Marian Leighton-Levy 

is the co-founder and co-owner of Rounder Records in Burlington, 

Massachusetts. Her areas of specialty include publicity, promotion, 

and artist relations. She has served on the board of the Blues 

Foundation, the Advisory Board of the Rhythm and Blues Foundation, and is presently on the board of the International Bluegrass 

Music Museum in Owensboro, Kentucky. She is a graduate of 

Clark University in Worcester, Massachusetts, and we welcome you 

today. 

STATEMENT OF MARIAN LEIGHTON-LEVY, OWNER, ROUNDER 

RECORDS, BURLINGTON, MASSACHUSETTS 

Ms. LEIGHTON-LEVY. Thank you. Senator Feinstein, Chairman 

Leahy, and other distinguished members of the Committee, I am 

pleased to be here today to speak on behalf of so many talented 

and hard-working people in the music industry, and to voice the 

support of thousands of us who have waited so long for the fair 

treatment embodied in the Performance Rights Act. My name is 

Marian Leighton-Levy, and 39 years ago, two college friends and 

I founded Rounder Records, one of America’s largest independent 

labels. 

We at Rounder are extremely proud of the breadth and depth of 

our catalog because so much of it embodies our country’s cultural 

and musical heritage, from Alan Lomax’s seminal field recordings 

from the 1930s, to the complete recorded work of Jelly Roll Morton, 

from the Library of Congress, to the Woody Guthrie set coming out 

next month comprised of newly discovered old masters. Many of 

our most critically acclaimed releases will never sit at the top of 

the Billboard charts, or chart at all, for that matter. But they are, 

nonetheless, important recordings. Some will also receive significant airplay on radio stations both here but even more, in some 

cases, in other countries which revere and enjoy American music 

and culture. 

Perhaps Rounder’s approach gives us a unique perspective and 

view. Many of our artists are largely middle-class, hard-working 

singers and musicians, as Chairman Leahy referred to earlier from 

his home State, trying to make a living doing what they love. That 

is why the Performance Rights Act has tremendous support from 

labor groups across the country. This is not just about superstars 

and big-name acts. 

This legislation will provide significant revenue to many of the 

working artists and musicians we have recorded for the last 39 

years. Many have already seen significant checks from satellite, 

cable, and Internet radio play. If the PRA is passed, they will also 

benefit for the first time from overseas broadcast royalties, as well 

as royalties generated by specialty shows in the U.S. and from public and non-commercial radio play, too. 

You have undoubtedly heard the broadcasters’ primary rationale 

for not paying: that they promote our music. While this excuse may 

have had more significance 80 years ago when it was first used, it 

is much less meaningful today. Now, radio is just one way—admittedly an important way, but just one way—music is promoted. 

There are dozens of new platforms and businesses that reach conVerDate Nov 24 2008 11:41 Jan 28, 2010 Jkt 054557 PO 00000 Frm 00013 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\54557.TXT SJUD1 PsN: CMORC
10 

sumers which also promote music, but with one significant difference: that they do pay a performance royalty. 

Only broadcast radio gets this free pass from decades ago. Even 

using their own numbers, the value proposition offered by the 

broadcasters does not add up. Mr. Newberry has testified in the 

past that they provide as much as $2.5 billion in promotional value 

to performers. Meanwhile, they generated $14 billion from the use 

of our music last year. Does that sound like equal value to you? 

Anyway, the truth of the matter is, as an independent label focused on Americana, bluegrass, folk, blue, and similar niche musics, we may get less airplay here in the U.S. than others who release more mainstream recordings. But our music fills the airwaves 

overseas, so this performance royalty is as important to us for 

these reasons as for American radio. American music accounts for 

30 to 50 percent of all music broadcast on foreign stations. Yet, 

given our current law, because our stations do not pay a performance right, those foreign stations do not have to pay us either. 

Each year, there are tens of millions of dollars being left on the 

table—millions of dollars for compensation and for further investment that will flow to artists, musicians, and recording company 

owners when the Performance Rights Act finally becomes law. Denying American creators and copyright holders money they deserve 

from overseas so that broadcasters can receive a subsidy in the 

form of our property is fundamentally unfair. 

A striking example of this inequity can be found in the case of 

the recent Robert Plant and Alison Krauss record ‘‘Raising Sand,’’ 

which we released last year. It won five Grammy Awards, including Album of the Year and Song of the Year. Since Robert Plant 

is a U.K. native, he will be able to receive payment for his work 

on the recording when it is played around the world, but Alison 

Krauss will not be paid because she is a U.S. citizen. 

As I have become more involved in the fight for a performance 

right, I am continuously amazed at the broadcasters’ misinformation campaign on the Performance Rights Act. They state that this 

legislation is the evil brainchild of foreign-owned record companies 

when, in fact, the fight for a performance right was started by performers with the National Association of Performing Artists way 

back in 1936. They say that we are just looking for a bailout from 

our failed business model in the digital age when they have fought 

this right for more than seven decades, through up and down cycles, before anyone knew what the word ‘‘digital’’ was. They warn 

that more than half of the royalties are directed to record labels 

when neither the word ‘‘record’’ nor ‘‘label’’ appears anywhere in 

the bill. In reality, the legislation directs royalties to be split down 

the middle: 50 percent directly to artists and musicians, and 50 

percent to the copyright holder. And since many artists own their 

own master recordings, artists and musicians will actually get 

more than 50 percent of the payments. There are currently 1,200 

artist-owned independent labels signed up with SoundExchange, 

which collects and distributes the royalties already from digital and 

Internet radio. 

So, in closing, this is not an easy business, now more than ever. 

Imagine working in such a challenging industry. Imagine investing, 

as we do, in a volatile and unpredictable market. Now imagine 

11 

someone taking your product without consent and using it to profit 

his or her own business without so much as a penny in return. 

‘‘Unfair’’ is not the word. It is ‘‘unconscionable.’’ 

But that is the scenario of our current law, and that is the reality for all of us in the recording industry—labels, producers, managers, performers, and musicians. Today we stand united in seeking a right that should have been afforded to us decades ago. 

In the end, harming broadcasters is the last thing we want to do. 

They should be our partners in the music business. All we are asking for is fair compensation for use of our work. The Performance 

Rights Act provides us with the framework to secure that compensation and sets in place the proper balance of interests between 

creators and broadcasters. 

We sincerely look forward to working with broadcasters in the future—as lovers of music, as supporters of musicians, and as true 

partners in commerce and in art. 

[The prepared statement of Ms. Leighton-Levy appears as a submission for the record.] 

Senator FEINSTEIN. Thank you very much. 

And now we will move to Steve Newberry. He is the president 

and chief executive officer of Commonwealth Broadcasting Corporation, based in Glasgow, Kentucky. He is also currently serving as 

the Joint Board Chair for the National Association of Broadcasters. 

Mr. Newberry entered radio ownership at the age of 21 and has 

done just about every job around a radio station that one can do. 

He is a graduate of the University of Kentucky, and he resides in 

Hyattsville, Kentucky, with his family. 

Please go ahead, Mr. Newberry. 

STATEMENT OF STEVE NEWBERRY, JOINT BOARD CHAIRMAN, 

NATIONAL ASSOCIATION OF BROADCASTERS, AND PRESIDENT AND CHIEF EXECUTIVE OFFICER, COMMONWEALTH 

BROADCASTING CORPORATION, GLASGOW, KENTUCKY 

Mr. NEWBERRY. Thank you very much. Good afternoon, Chairwoman Feinstein, Chairman Leahy, and other members of this 

very distinguished Committee. My name is Steve Newberry. I am 

the owner and operator of Commonwealth Broadcasting, which 

does operate 23 small-market radio stations, based in Glasgow, 

Kentucky. I am testifying today, however, on behalf of the 6,800 

members of the National Association of Broadcasters, of which I do 

have the privilege of serving as joint board chair. 

I am sure it comes as no surprise to anyone in this room when 

I say that these stations across the country oppose the performance 

fee legislation that we are considering here today. 

I believe this legislation will up-end local radio broadcasting as 

you have known it. I have been a part of the radio industry for over 

30 years, and I can honestly tell you that I have never seen the 

economic pain the radio industry is currently experiencing. And as 

challenging as radio’s current economic landscape is, it will deteriorate even further if a performance fee were to be enacted. Already 

this year, publicly traded companies are reporting revenues down 

24 percent, down 20 percent, down 24 percent, down 25 percent, 

and the numbers continue. 

12 

But beyond radio’s economic landscape, we strongly believe that 

local radio stations do indeed provide compensation to the record 

labels and artists today. The artist is paid with free advertising 

and free exposure every time a station plays their music. Local free 

radio is a unique developer, exposer, promoter, and the great 

populizer of new and old music to multiple new and old generations 

of listeners. There is a value to radio’s promotional—to the promotion of radio that we provide to the labels and the artist. But 

how do we qualify it? How do we quantify it? 

Economist James Dertouzos has determined that radio airplay is directly responsible for $2.4 billion a year in music sales. By the 

way, that figure does not include the additional billions that are 

earned in concerts, merchandise sales from radio promotions, artist 

interviews, CD and concert ticket giveaways. 

Additionally, every day radio stations are flooded with calls, with 

e-mails, texts, and visits from record label promoters trying to get 

a song on the radio or to increase the number of spins or plays that 

a station will give a particular song. One station in Salt Lake City 

actually kept track of the number of calls and e-mails received from 

record labels. Between August 1st of 2008 and July 14th of this 

year, one radio station received 9,597 e-mails from the labels, 755 

calls—that is a total of 10,352 contacts in the course of a year. 

That is an average of 28 contacts per day 7 days a week. And that 

is one radio station in Salt Lake City, Utah. 

Free airplay is important enough for record labels to send gold 

and platinum albums, just as the one that I have here. This plaque 

was presented to radio station WIHT: ‘‘To commemorate RIAA’s 

certified multiplatinum sales of more than 9 million copies of ‘Confessions,’ ’’ Usher’s 2004 release. 

Finally, getting artists airplay on local radio is apparently valuable enough that record labels continue to spend thousands of dollars inviting radio program directors to hear private showcase concerts by recording artists. I would ask that this stack of e-mails 

demonstrating that practice be entered into the record. 

Senator FEINSTEIN. So ordered. It will be. Thank you. 

[The information appears as a submission for the record.] 

Mr. NEWBERRY. Thank you, ma’am. 

These private concerts offer a real glimpse into how much record 

labels need radio airplay. 

Chairman LEAHY. Excuse me. Could we just have—what was it 

you wanted entered in the record? You mean that whole stack or 

just the—— 

Mr. NEWBERRY. No. This stack. 

Chairman LEAHY. Okay. Thank you. 

Mr. NEWBERRY. At a later point in the hearing, yes, sir. 

Chairman LEAHY. At a later point in the hearing, if that request 

is made, what we will do is keep the stack available in the Committee room for anybody who wants to read it. The whole stack will 

not be part of the record. 

Mr. NEWBERRY. This is for a different topic later in the hearing, 

Mr. Chairman. 

Chairman LEAHY. All right. 

Mr. NEWBERRY. This is the reference that I was making in my 

oral argument. 

13 

It is true: Radio competes with other listening platforms. But 

this competition has not diminished the extraordinary value of 

radio. Satellite radio has 18.6 million subscribers. Satellite radio 

and Internet radio are certainly a growing media. Internet radio 

has approximately 42 million listeners, many of those paying for 

their services. But these numbers are dwarfed by the fact that 235 

million listeners receive free, over-the-air radio every week. Radio 

is the number one way to expose, promote, and get music into the 

lives of listeners who fund the recording industry through the sales 

of music, concert tickets, and merchandise. 

At the end of the day, no one has been able to prove that the 

value of music is always worth more than the value of radio’s promotion. None of the witnesses here today can tell you that. And before this Committee passes legislation that will have a devastating 

impact on the radio industry, it seems to me we should know the 

answer to that question. 

Competing resolutions opposed a new performance fee in the 

House and the Senate have garnered significant congressional support. S. Con Res. 14, introduced by Senators Lincoln and Barrasso, 

has collected 23 bipartisan cosponsors, and H. Con. Res. 49 in the 

House has 246 cosponsors, well over a majority of the House. 

Thank you for inviting local radio to tell our story. We are part 

of the engine that drives our economy. We are free, we are local, 

we are community based, and we are fighting to stay afloat in this 

very tough economy. 

Thank you, and I will be happy to answer any questions that you 

may have. 

[The prepared statement of Mr. Newberry appears as a submission for the record.] 

Senator FEINSTEIN. Thank you very much, Mr. Newberry. 

I would like to acknowledge that we have been joined by Senator 

Klobuchar and Senator Franken. I would acknowledge Senator 

Durbin and Senator Cornyn, so we are delighted to have you here. 

We will now move on to Mr. Oman. Ralph Oman is the Pravel 

Professor of Intellectual Property Law at George Washington University Law School, and he is a senior fellow at the Creative and 

Innovative Economy Center. From 1985 to 1993, he served as the 

Register of Copyrights for the United States. He has experience 

working for this Committee, having served as chief counsel on the 

Subcommittee on Patents, Copyrights, and Trademarks from 1983 

to 1985, and chief counsel of the Subcommittee on Criminal Law 

from 1981 to 1983. 

Welcome back, Mr. Oman. 

STATEMENT OF RALPH OMAN, ADJUNCT PROFESSOR, 

GEORGE WASHINGTON UNIVERSITY LAW SCHOOL, WASHINGTON, D.C. 

Mr. OMAN. Thank you very much, Senator Feinstein. It is a 

pleasure to be here, and members of the Judiciary Committee. For 

me, today’s hearing is deja-vu all over again. I have been involved 

in this issue since 1975 when my old boss, Hugh Scott of Pennsylvania, the Senate Minority Leader, scheduled and chaired a lively 

hearing before the Subcommittee on Patents, Trademarks, and 

14 

Copyrights that featured sultry Julie London singing the Mickey 

Mouse Club theme song as a steamy love ballad. 

[Laughter.] 

Mr. OMAN. It demonstrated the importance of the performer’s 

contribution to the success of music. It was a great success. 

Chairman LEAHY. I came to the Senate too late. 

[Laughter.] 

Mr. OMAN. In fact, the issue reaches far beyond my brief tenure 

in the Senate Judiciary Committee, all the way back to the 1920s, 

when radio was in its infancy. The first performance rights legislation for sound recordings was introduced in 1926. Since that time, 

dozens of bills have been introduced, several of them by Hugh Scott 

of Pennsylvania, trying to create the right for the performers and 

labels, but none of them has been able to finally get across the finish line. There has been strong support in the bar. The American 

Bar Association adopted its first resolution—the first of many— 

urging adoption of a public performance right for sound recordings 

in 1938. 

It comes down to this, in my opinion. As a matter of property 

rights, men and women who create and own a copyrighted work 

should have the right to get paid for it by the people who use their 

works. That is the basic premise of copyright protection. 

Nowhere else in copyright law—and nowhere in American jurisprudence generally—can one business take another’s private property without permission or without payment because the user concludes unilaterally that long term it would be in the interest, the 

long-term interest, of the property owner’s business, even if the 

owner does not agree, does not think it would be so. In our case, 

some broadcasters think that they are doing the performers and 

the labels a favor by creating promotional value. Who, I ask, is the 

best judge of this quid pro quo—the broadcasters or the creators? 

Over the years, Cabinet Secretaries, Trade Representatives, 

many Members of Congress, and many Registers of Copyrights 

have argued that we have no legal or economic justification for this 

anomaly in our law. 

The bipartisan performance rights legislation introduced in this 

Congress in both the House and the Senate really bends over backwards to provide unprecedented accommodations to the broadcasters. The bill sets low flat fees for most broadcasters, some as 

low as one-half of 1 percent of a broadcaster’s revenue. There is a 

delay in the implementation of the legislation to allow broadcasters 

relief during these hard economic times, and there is a long phasein period that gives them the chance to ease slowly into their new 

partnership with performers. 

Promotional value cannot justify free use. Instead, it should be 

a factor in determining the appropriate royalty. We use that factor 

in market negotiations for other content that radio stations use, 

and we use it setting the rate for statutory licenses for other platforms, such as Internet radio. 

True parity requires equal footing when it comes to figuring out 

how we should set the rates for these different platforms. It also 

is important in the ongoing negotiations in the private sector. 

Today, because of the patchwork or, as you said, Madam Chairwoman, the hodgepodge of provisions in the Section 114 license, we 

15 

have a confusing system of rate standards among the various radio 

platforms. This is unnecessary and unfair. Of course, different platforms reflect different business models and may wind up paying 

different rates ultimately, but the standard used to derive those 

rates should be uniform or standardized and reflect the fair market 

value for the use of these works. 

The statutory license was never intended to provide music at 

below-market rates. The best rate standard for all radio platforms 

is fair market value, as you proposed, Madam Chairwoman, in the 

Perform Act. Copyright owners and performers deserve nothing 

less for their works—especially when they have no choice but to 

allow their use. Because of the statutory license, what some call a 

‘‘compulsory license,’’ they cannot just say no. They cannot walk 

away from the bargaining table. That makes the negotiation onesided right from the outset. 

As you mentioned, Senator Feinstein, you and Senator Graham 

asked the stakeholders to get together and formulate a new rate 

standard. That effort led to a compromise provision adopted by the 

House Judiciary Committee in H.R. 848. That standard is a modification of the standard used today for satellite and cable radio proceedings. While I would prefer the language of your bill, Madam 

Chairwoman, I find the compromise language reasonable, and I 

would urge its adoption by the Committee? 

One last point, if I may. As you mentioned, Madam Chairman, 

this lack of a public performance right for sound recordings is a 

huge international embarrassment. The United States loses millions of dollars a year to foreign markets. I urge you to consult with 

the U.S. Trade Representative and get his take on the many advantages that would flow to the United States if we joined the almost unanimous international consensus in granting a public performance right for performers and sound recordings. 

Thank you very much for the opportunity to testify. I would be 

pleased to answer any questions. 

[The prepared statement of Mr. Oman appears as a submission 

for the record.] 

Senator FEINSTEIN. Thank you very much, Mr. Oman, and thank 

you for your service to this Committee. It is very much appreciated. 

I want you to know that. 

And, finally, we have Mr. Winston. James Winston is the Executive Director and General Counsel of the National Association of 

Black Owned Broadcasters, a position he has held since 1982. He 

is also a partner in the firm of Rubin, Winston, Diercks, Harris, 

and Cooke. From 1978 to 1980, Mr. Winston served as legal assistant to Commissioner Robert E. Lee at the Federal Communications 

Commission. 

Thank you and welcome, Mr. Winston. 

STATEMENT OF JAMES L. WINSTON, EXECUTIVE DIRECTOR 

AND GENERAL COUNSEL, NATIONAL ASSOCIATION OF 

BLACK OWNED BROADCASTERS, INC., WASHINGTON, D.C. 

Mr. WINSTON. Good afternoon, Senator Feinstein. I wanted to 

note at the outset that my light does not work for the time, so if 

I go over, it is only ignorance of the actual time. But I thank you 

16 

again, Senator Feinstein, Chairman Leahy, members of the Committee. Thank you for inviting me to testify this afternoon. 

You have invited me today to discuss imposing additional copyright royalty obligations upon radio broadcasters. In the discussion 

of additional copyright fees, the broadcasting industry has consistently been portrayed as one in which all of its participants make 

fat profits. Therefore, imposing additional copyright royalty payments on the industry merely skims a little off of those fat profits. 

For minority broadcasters, there are no fat profits to skim. In 

fact, most minority broadcasters today are struggling to survive. 

Therefore, I come before the Committee today to describe the current state of minority broadcasters and the issues that threaten to 

further erode minority broadcast station ownership. As a result of 

these threats, as I shall explain below, NABOB requests that the 

Committee consider investigations of the principal lenders to the 

broadcast industry and of the Arbitron ratings company which has 

a monopoly over radio ratings. It is my hope that once you understand the current plight of minority broadcasters, you will understand why it is impossible for us to agree to pay additional copyright royalties. 

Broadcast station advertising revenues have fallen drastically 

this year, and many minority broadcast companies find themselves 

unable to maintain these minimum cash position required by their 

bank loan agreements. This situation has been made worse because 

of a new breed of lender in the broadcast industry today: hedge 

funds. Therefore, I am here today to request that this Committee 

investigate the practices of the leading lenders to the broadcast industry, lenders such as Goldman Sachs, GE Credit, the combined 

Wells Fargo-Wachovia Bank, JP Morgan, and Bank of America. 

These banks have allowed hedge funds, such as Guggenheim, Fortress, Silver Point, and DB Zwirn into their consortia. Now they 

are acting at the behest of the hedge funds in refusing to enter into 

workout arrangements that will provide minority broadcasters an 

opportunity to keep their companies intact and restructure their 

loans for a brief period until the economy turns around. 

The reasonableness of this request is underscored by the fact 

that the banks listed above are all beneficiaries of Government relief through billions of dollars of Troubled Asset Relief Program— 

TARP—funds. Alternatively, NABOB requests that the company 

help NABOB seek assistance from the Treasury Department or 

Federal Reserve under one of their programs, such as the Term 

Asset-Backed Securities Loan Fund or the Commercial Paper 

Funding Facility. 

Minority broadcasters face an additional threat that is equally 

important for us to bring to your attention. This second threat is 

posed by Arbitron, Inc., an audience measurement company that 

maintains a monopoly in the measurement of radio audiences. Recently, developed the Portable People Meter, an electronic tracking 

device which records signals from the radio stations to which the 

wearer is exposed. Initial results from the PPM measurements 

have shown such huge rating declines for stations serving Black 

and Hispanic audiences that the financial survival of these stations 

is at stake. The damages to minority broadcasters that I am referVerDate Nov 24 2008 11:41 Jan 28, 2010 Jkt 054557 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 S:\GPO\HEARINGS\54557.TXT SJUD1 PsN: CMORC
17 

ring to are not theoretical. They are real, quantifiable, and devastating. 

Since PPM became operational in New York City in October 

2008, Spanish Broadcasting System has been forced to reduce staff 

by 37 percent. Inner City Broadcasting Corporation reports that in 

New York revenues are down 58 percent. And Inner City’s San 

Francisco station has been forced to lay off 13 percent of its staff 

and cut salaries by 10 percent. 

In Los Angeles, the situation is just as grim. KJLH, owned by 

Stevie Wonder, has seen its revenue fall over 48 percent, and it has 

been forced to lay off 13 percent of its staff. 

Arbitron has been sued over PPM by three Attorneys General, 

investigated by a fourth, and is currently being investigated by the 

FCC. In addition, this new PPM product has been denied accreditation by the Media Rating Council, the MRC. The MRC was created 

at the urging of Congress to prevent the kind of situation we are 

faced with today. NABOB, therefore, requests that the Committee 

investigate the PPM methodology and obtain information on the 

PPM accreditation process from Arbitron and the MRC. 

In conclusion, these two problems—the refusal of lenders to restructure broadcast loans to allow these otherwise healthy businesses to weather the current recession, and Arbitron’s abuse of its 

monopoly position in the radio ratings industry—are more than an 

antitrust issue for this Committee. They are more than a business 

crisis for African American and Hispanic station owners. They are 

a civil rights crisis for all of America. Without minority communities with strong, vibrant, independent voices, America loses an 

important part of what makes our democracy great—a Government 

in which all of its people participate and are heard. 

I thank you for the opportunity to appear here today. 

[The prepared statement of Mr. Winston appears as a submission 

for the record.] 

Senator FEINSTEIN. Thank you very much, Mr. Winston. 

Before going to questions, I would like to recognize a distinguished artist in the audience. She is Gloria Gaynor. She gave 

birth to the era of disco, moving into the mainstream dance scene, 

when her song ‘‘Never Can Say Goodbye’’ debuted at number one 

on the charts in 1973 and became the first dance song to reach 

number one status in dance music. Today, she is a very important 

part of music and has come to Washington to commemorate the 

30th anniversary of her hit ‘‘I Will Survive.’’ If you would stand, 

we would like to give you a round of applause. 

[Applause.] 

Senator FEINSTEIN. Welcome. We are delighted to have you here. 

Thank you. Thank you. 

Let me begin the questions. I am really perplexed. Let me tell 

you the kind of communication I have from the Southern California 

radio broadcasters: ‘‘I know you like to think you are protecting intellectual property, but in your attempt to protect the performers, 

you are trampling on the intellectual property rights of thousands 

of radio station brands, and actually in the long run, you will be 

hurting the performers, too.’’ 

And so I am reading Mr. Kimball’s testimony, and I come upon 

a chart, and the chart is on page 6 of his testimony. It is ‘‘2008 

18 

Radio Revenues and Royalties,’’ and at the right it says ‘‘Broadcast 

Radio (Music) 2008 Revenue, $16.5 Billion.’’ At the bottom is ‘‘Songwriter Royalties,’’ and as you go over to that same ‘‘Broadcast 

Radio (Music),’’ 3 percent of revenue. 

Let me ask this question: Do you believe these are fair and accurate figures, Mr. Kimball? 

Mr. KIMBALL. Yes, I do believe they are fair and accurate figures 

to the extent they can be compiled from public sources, which is 

not always the easiest thing to do. But to the best of our ability, 

using the sources available, I believe these are certainly roughly 

accurate figures that give you a perspective of the size of the economics involved and the amounts actually being paid. 

Senator FEINSTEIN. Thank you. 

Mr. Newberry, I do not know specifically about the problems Mr. 

Winston was elucidating, so let us put them over here for a moment. Take a look at the figure that was just $16.5 billion in profit—— 

Mr. NEWBERRY. That would be gross revenue, not profit. 

Senator FEINSTEIN. All right, whatever it is. Gross revenues to 

songwriters, 3 percent. And you made an eloquent argument, I 

think, as to why we should protect the status quo. I come from 

California. We are a big intellectual property State, and I have 

found over many decades that protecting copyright and patent interests is really important because it encourages the development 

of the industries that these copyrights and patents relate to. 

Mr. NEWBERRY. Yes, ma’am. 

Senator FEINSTEIN. You are saying that is not necessarily so. You 

are saying it is okay for us to take the content. You are saying it 

is okay for us to play them without recompense to the songwriter. 

I have a hard time understanding this. Can you explain why? 

Mr. NEWBERRY. Certainly. With all due respect, that is not what 

I was intending to say, and I do not believe that is what my testimony says. 

Senator FEINSTEIN. Okay. Fair enough. Explain it. 

Mr. NEWBERRY. We are saying that there is a difference in the 

way we compensate the composers of the music and the way we 

compensate the performers. We compensate the composers through 

ASCAP, BMI, and SESAC, and that is what equated historically to 

3 to 4 percent of the gross revenues of our industry, which is obviously a much higher percentage of our profit. We compensate the 

composers because they are not known. They do not have generally 

the benefit of celebrity. I can tell you that Jeffrey Steele is a songwriter in Nashville, Tennessee. Many of you may not know that 

name. But if I told you that he wrote the song ‘‘What Hurts the 

Most’’ for Rascal Flatts, you would certainly recognize that song. 

But you associate it with Rascal Flatts. 

We compensate the songwriters so that they have the ability to 

earn a living, their intellectual property, to create those great 

songs that America has. 

Senator FEINSTEIN. But not the performer. 

Mr. NEWBERRY. The performers are compensated through this 

partnership that we have had that has lasted for over 80 years, 

that has been one that while the record industry wants to change 

it now, they have spent millions of dollars to get their songs aired 

19 

on the radio because they know that creates money for them. It 

creates the sale of music. It creates the sale of concert tickets. It 

creates the sale of T-shirts. And that is how they have been compensated historically. 

Senator FEINSTEIN. Well, let me ask you this: Why are we the 

only industrialized country that does this? 

Mr. NEWBERRY. Well, we have an entirely different structure. In 

many—— 

Senator FEINSTEIN. How so? I mean, why are we separate from 

Europe or any other nation? 

Mr. NEWBERRY. First of all, I think without argument people 

would argue that the U.S. music industry is the most vibrant in 

the world. But there are also different copyright protections that 

occur here. Songs here are protected for copyright for 95 years. In 

many countries, it is 50. And if you were to apply that same standard, many of Elvis Presley’s, the original rock songs that came out 

in the 1950s would now be public domain. Soon, within the next 

10 years, all the Beatles songs, all of the Motown songs, all those 

songs would become public domain if we had the 50-year structure 

that a lot of European countries do. 

We protect those copyrights for 95 years so they are not public 

domain and they can still be monetized by the artist. 

Senator FEINSTEIN. Okay. I just must tell you—all right. Let me 

ask you another one. The National Association of Broadcasters is 

running ads across the country referring to this legislation as a 

tax. However, we all know taxes go to a government. Doesn’t the 

performance right royalty this legislation would establish go to the 

recording artists and their contractual partners, the record labels, 

and not to Government? 

Mr. NEWBERRY. Yes, ma’am, it does. 

Senator FEINSTEIN. Okay. Thus, isn’t it misleading to call this a 

new tax? 

Mr. NEWBERRY. You can call it a tax. You can call it a fee. You 

can call it whatever you want it to be called. There is no question 

that it is a movement of money from one industry to another, without a—if it is being done by the Government, without it being a 

fair market transaction. 

Senator FEINSTEIN. Do you consider the copyright royalties you 

collect from cable companies to be taxes? 

Mr. NEWBERRY. I do not collect any royalties from the cable companies, ma’am. 

Senator FEINSTEIN. You do not? 

Mr. NEWBERRY. No, ma’am. 

Senator FEINSTEIN. Okay. Then my information is wrong. 

Senator Cornyn, would you like to go next? And then we will go 

to Senator Leahy. 

Senator CORNYN. Thank you, Madam Chairman, and thanks to 

each of you witnesses for being here today. 

Mr. Oman, based on your testimony, it sounds like this fight has 

been going on a long, long time, and I do not know if we are any 

closer to resolution than we were when it started, but let me just 

suggest an idea. I think it was Ralph Waldo Emerson that said, 

‘‘To the person whose only tool is a hammer, that person tends to 

regard every problem as a nail.’’ And I would like to suggest maybe 

20 

the possibility of a different tool to address your concerns and see 

from the various witnesses whether there is any interest in this, 

any viability, because it strikes me that both parties to the debate 

are arguing that they confer value on the other, and to me it seems 

pretty obvious, that there is value being conferred both ways. The 

recording industry argues that music drives advertising revenues 

for radio stations. The broadcast industry contends that radio 

airplay drives sales of songs, albums, and concert tickets. 

One of the main complaints I have heard from the recording industry is that record companies and artists do not have any choice 

as to whether their music is played on the radio. I think, Mr. 

Oman, you mentioned that this is the taking of intellectual property. And I understand the frustration of artists having no say in 

whether their music is being played. 

But I wonder if one way, maybe another way of restoring choice 

to the performers who own their intellectual property without imposing a compulsory license, one possible way of accomplishing that 

would be a ‘‘Do Not Play’’ list under which artists could opt out of 

allowing their catalog to be played on terrestrial radio. This would 

give artists full control over their work. If an artists believed that 

the promotional value of being on the radio was not enough to 

make the radio play worthwhile, then the artist could take his or 

her songs out of circulation. So instead of the radio station having 

a unilateral option to play music, the radio station and artists 

would have to agree that free airplay is in their mutual interest. 

Would there be any, do you see any—well, let me just ask: What 

do you think about that kind of proposal? Mr. Winston, would you 

care to offer an opinion on that? 

Mr. WINSTON. I have heard that proposed, and I would have to 

see the structure that you are proposing. But I think if you make 

it a situation where the artist can opt out per station, what you are 

going to do is drive all small stations out of music because the artists will only do business with the big stations. So I think that, you 

know, if they are going to do a ‘‘Do Not Play’’ list, it has got to be 

nationwide, that they are going to say we do not want to be on the 

radio nationwide. Otherwise, they are only going to do business 

with the big stations. 

Senator CORNYN. That is an interesting perspective. That would 

not have occurred to me. 

Mr. Oman, would that address some of your concerns about taking of the intellectual property of the performers without compensation? 

Mr. OMAN. The copyright law has traditionally protected the 

small and the powerless against the powerful and the rich. By suggesting that we create a playlist, you would be in some ways forcing the unknown, the powerless new performers to give their rights 

up in exchange for this chance of exposure, this chance of air time 

that is so valuable to develop their careers. So I think that would 

be contrary to the approach of copyright, and it would also not 

serve the public interest. 

I think it is well established that the listening public generally 

has a preference for established performers, established repertoire, 

and if this system encouraged the radio stations to take only the 

new and hungry performers, it would not serve the public interest. 

21 

Senator CORNYN. Well, if I am the relatively new artist trying to 

get my music promoted by a radio station, I may well decide that 

it is in my personal financial interest to do so. But if I am perhaps 

a more accomplished artist that you do not need that kind of promotional airplay in order to—I am talking about something I do 

not know much about—to promote your music, then you could 

choose to do that. 

What do you think, Mr. Newberry? Would that work? 

Mr. NEWBERRY. Senator, I had not heard this concept until 

today. I think that it certainly draws a line and says if performers 

or record labels feel that there is not adequate value in the promotional level, then they would be saying, ‘‘Sure, do not play our 

songs,’’ and they would have to take the chances. 

I agree with Mr. Winston that if it is negotiated individually 

with each radio station, I think you would really do terrible harm 

to small independent radio stations, and you would probably have 

effects that you would not want. But if it is a blanket prohibition 

on radio, I can certainly see that that would force an artist or a 

label to say, ‘‘Is there value to radio or not? ’’ 

It is an interesting concept. I would want to think about the 

ramifications of it before I said whether it would be something I 

could support or not. But it certainly does draw the line in the 

sand and say, ‘‘Is there value to what radio does or not? ’’ And if 

an artist wants to take that chance, certainly it would put their 

money where their mouth is. 

Senator CORNYN. Thank you. My time has expired. 

Senator FEINSTEIN. Thank you very much, Senator Cornyn. 

Senator Leahy. 

Chairman LEAHY. I just want to make sure I fully understand. 

Mr. Newberry, you said if they were to negotiate with each single 

radio station, radio station by radio station. Another way could be 

for them to simply say any radio station that wants to play our 

music is going to have to negotiate with us. What do you think of 

that? 

Mr. NEWBERRY. Well, I think what—— 

Chairman LEAHY. I mean, are you saying the radio station, if we 

were to pass something, would be free to use any recording unless 

the artist has specifically called that radio station and said, ‘‘I do 

not want you using mine’’ ? 

Mr. NEWBERRY. No, I am not saying that because it is a proposal 

I heard just moments ago. But the concern that I have in that is, 

as a small-market broadcaster, a recording label or artist may say, 

‘‘It is not important to us whether our songs are played on stations 

in markets 100-plus; we just want to have our music played in the 

top 50 markets or the top 100 markets.’’ So I think that harms 

rural America’s exposure to the arts. 

The second thing that I would say is problematic to this is 

that—— 

Chairman LEAHY. What if they said they will play it only in 

those top stations unless they paid for it in the other stations at 

a rate, say, based on the size? 

Mr. NEWBERRY. I think when you move to where those artists 

and those labels with the most money get their songs played most, 

22 

you are setting up a very bad precedent for the way the music industry works and for new and evolving artists. 

Chairman LEAHY. Yes, but what I hear in the letters that your 

organization asks people to send to me, and several—and before 

you suggest they are all spontaneous, I have called several of these 

people, and they say they have gotten the form letter from you. 

Mr. NEWBERRY. I was not going to suggest that, Senator. 

Chairman LEAHY. All right. I was just trying to keep you from 

making a bad mistake here. But I hear that they say, ‘‘Well, of 

course, the music, the radio stations are doing the artists a service 

by playing their music.’’ You are not suggesting, I am sure, that 

people otherwise would be turning on the radio station in the interest of hearing the commercials. 

Mr. NEWBERRY. I am saying that our radio stations are much 

more than simply the songs we play, absolutely, sir. I think that 

there are local personalities. I think our commitment to our community—— 

Chairman LEAHY. I will grant you that. I will grant you that. 

And we have two or three radio stations or several radio stations 

in our State where I have complimented them over and over again 

because they actually care about the local area. One is just 5 or 6 

miles from where I live in Vermont. It is the only way you can actually find out if there has been a flood or if a bridge is out or a 

road during bad weather, and I have complimented them on that. 

I have even helped them on different things. But they do have 

radio personalities. 

We also have other radio stations where it is kind of a format, 

click in, one, two, three, four, speak, speak, speak, ad, ad, ad, one, 

two, three, four, speak, speak—I mean, you know those. And I 

think that music is a very significant part of their success. 

Mr. NEWBERRY. Yes, sir. 

Chairman LEAHY. But radio play, whether satellite radio, Internet radio, broadcast radio, does promote sound recording. But if 

you have the promotional value of that, if that is considered, why 

are you concerned that the royalty rates would be too high? 

Mr. NEWBERRY. Well, as a small-market broadcaster, I can tell 

you that I do not think the average small-market station in the 

country is going to see income from the record labels. And I realize 

that in the House there was a proposal for a flat fee for smaller 

amounts. I think as with any fee that I have ever seen, it grows 

over a period of time. 

Chairman LEAHY. Do you have a problem with the fee as it is 

now, the $500 fee? 

Mr. NEWBERRY. Yes, sir. In principle, I have a problem with that. 

Five hundred dollars for a station—— 

Chairman LEAHY. In principle or amount? 

Mr. NEWBERRY. Sir? 

Chairman LEAHY. What would that same station pay in dues to 

your organization? 

Mr. NEWBERRY. $500, $600, $60 a month. 

Chairman LEAHY. Okay. Over the last several years, the NAB argued that XM and Sirius should not be permitted to merge because 

radio stations compete with satellite radio and XM and Sirius 

would have an unfair advantage in the marketplace. So broadcast 

23 

radio competes with satellite radio, and I presume Internet radio. 

Why is it fair for competition that broadcast radio is the only 

media that does not pay for the sound recordings it uses to compete? XM and Sirius have to pay for it. You speak of them as 

being—you have argued against their merger because they are 

competition. But if they are paying for that, why shouldn’t you pay 

for it and you are competing with them? 

Mr. NEWBERRY. Well, there are two reasons that I would address 

particularly. Number one, they are competing for ears. They are 

competing for listeners. 

Chairman LEAHY. They are competing for what? 

Mr. NEWBERRY. Ears. They are competing for an audience. But 

their business model is one that is based on subscription. They get 

to charge their listeners for their product. I am very proud to be 

a broadcaster that has community service obligations. I am proud 

to serve my community. I am proud to have the restrictions on it 

that we do. But it is an entirely different model. 

When my fellow panelist here talked about you turn on the radio 

and the listener cannot differentiate between XM or Sirius or AM 

or FM or Internet, the listener may not differentiate. But when you 

press the button and you come to one of America’s licensed broadcasters, we have obscenity regulations, which I certainly am not 

advocating are removed; we have political requirements—— 

Chairman LEAHY. Because you would not get a very eager audience up here. 

Mr. NEWBERRY. But, sir, I would not get my audience in Glasgow, Kentucky. I am not pandering to this distinguished panel. I 

am saying—— 

Chairman LEAHY. I understand. No, I understand. We both agree 

on that. 

Mr. NEWBERRY. But we have a totally separate set of regulations, 

expectations, and obligations that over-the-air broadcasters have. 

So when we talk parity, we are not really talking parity. We are 

talking parity on the fee, but we are not talking parity in terms 

of operating requirements. 

Chairman LEAHY. Thank you. Thank you, Senator Feinstein, and 

I will work with you and Senator Cornyn on this, but I would urge 

your association to sit down and negotiate with the artists and talk 

with us, because legislation will move. I would rather have legislation move that reflects your interests as well as their interests. But 

that is only going to happen if you are sitting there at the table. 

Thank you. And thank you for answering my questions. 

Mr. NEWBERRY. Thank you, sir. 

Senator FEINSTEIN. Thank you very much, Senator Leahy. 

Senator Durbin, you are next up. 

Senator DURBIN. Thank you, Madam Chairman. 

Madam Chair, in my callow, reckless youth, I owned a restaurant/night club with live music. I learned more about music 

copyright law in one phone call than I ever learned at Georgetown 

Law School. A fellow called me and said, ‘‘I was at your club on 

Saturday night. It was really great. Nice crowd. Loved the music. 

And, incidentally, you played 22 ASCAP-licensed music selections, 

and so we are going to send you a bill.’’ 

[Laughter.] 

24 

Senator DURBIN. And I said, ‘‘Wait a minute. I paid the performers.’’ He said, ‘‘No. The law is written that you have got to pay 

us now, too. It is not just enough to pay the performers. You have 

got to pay the owners of the music that was played in your establishment. After all, you sold a lot of beer because of that music, 

right? ’’ 

Well, I learned a little bit about copyright law there. But I 

learned that it just was not enough to be satisfied with the obvious, 

and that is why I cannot quite grasp this particular issue from the 

viewpoint of radio stations. If you do not want to pay the performers, do not play their music. I mean, these folks have put their 

life into it, and they have created this music. 

Mr. Newberry, you referred to a partnership. A partnership suggests an agreement. You do not have an agreement with these performers not to pay them. You happen to have the protection of the 

law, which does not seem fundamentally just to me, that your radio 

station can make whatever profit it makes, in good and bad times, 

at the expense of performers and not compensate them. 

Mr. Cornyn’s suggestion—I am sorry he has left, but I think 

there is one element that raises doubt in my mind—you would 

have to have both the composer and the performer say ‘‘Do not 

play,’’ because they both have a property interest in the performance. The composer is being paid for it. And if the performer simply 

said, ‘‘Do not play,’’ the composer is going to say, ‘‘Wait a minute. 

I want them to play it because I get paid for it.’’ So it seems that 

there is some problem there in terms of what he is suggesting. 

Mr. Newberry, how do you come up with this partnership if, in 

fact, it is imposed on performers by law? Was there a sit-down 

agreement with performers? 

Mr. NEWBERRY. I was not here for that meeting, and so I cannot 

say there was. But I would say that it has been a partnership because for many years the record labels and radio stations worked 

very closely in breaking new artists, worked very closely in establishing those great catalogs that are there. 

So is there a formal agreement, to your point? No, sir. But there 

has been a demonstrated partnership. 

But you raise a point that I have a question with that I can understand. You talked about your night club where you paid the performers. But in restaurants, in ballparks, we have performances 

that occur every day, but yet this bill does not want to address 

that. It just wants to address radio stations. 

Senator DURBIN. That is a separate fight. I will say it. 

Mr. NEWBERRY. I understand, but for us it is difficult for us to 

understand why if it is about the principle of this argument, why 

is this not a comprehensive—— 

Senator DURBIN. We may be forced to visit that, as painful as it 

will be. And I have been in on this conversation. But, really, I do 

struggle with this notion that the radio stations can pick anybody’s 

performance and use it to their benefit and not compensate them. 

Mr. NEWBERRY. As can a restaurant, as can a ballpark. 

Senator DURBIN. But this is your business, the selling of music, 

and advertising to go with it. 

Mr. Oman, let me ask you this: I think you make a compelling 

argument in your statement here in just a few sentences, and I do 

25 

not have enough time to repeat all of them. But you say: ‘‘It comes 

down to this. . . . As a matter of property rights, men and women 

who create and own a copyrighted work should have the right to 

get paid . . . by the people who use their work. . . . Who is the 

best judge of the quid pro quo—the broadcasters or the creators? ’’ 

So can you—I mean, since you have witnessed this debate for 

decades, can you rationalize how we have come to the point that 

Internet, satellite, and cable radio stations have to pay for their 

songs and terrestrial radio stations do not? What is the logic behind that? 

Mr. OMAN. The new technologies were addressed by Congress in 

a comprehensive way, and liability was imposed where it should 

have been. The history of the public performance right vis-a-vis the 

broadcasters goes back into the mists of time, and there have always been efforts to impose a royalty on them. But for a variety 

of reasons—one of which was the political power of the broadcasters, another was originally the opposition of the songwriters— 

that confused the issue and encouraged Congress to continually put 

the issue off to another day. 

But I think we have reached the point where postponement is no 

longer the solution. The market has changed so dramatically. The 

public performance right looms so large in the eyes of the performers and the record companies, the reproduction right having 

diminished over the years, that now is the time to finally impose 

liability on the broadcasters and have them pay for the music they 

use. 

Senator DURBIN. Thank you. 

Let me close, Madam Chair, by just thanking Ms. Gaynor for 

being here. You have survived well. There are many disco fans 

among Senators. 

[Laughter.] 

Senator DURBIN. And we are glad you are here. Thank you. 

Senator FEINSTEIN. Thank you very much, Senator Durbin. 

Let us see. Senator Klobuchar was next, then Senator Franken. 

Senator FRANKEN. Thank you, Madam Chair. 

I am in an interesting position because I have been in radio, 

working for a radio network that has had some problems surviving. 

[Laughter.] 

Senator FRANKEN. And I also am someone who is keenly interested in intellectual property. I do not know if I am intellectual, 

but I have created some intellectual property. 

It seems to me Professor Oman, who has been in this a long 

time, makes some very powerful arguments, and, on the other 

hand, we have these stations that are—there are stations that are 

struggling to survive. So I have a question for Sheila E. The House 

version of this, as the professor referred to, contains provisions that 

allow broadcasters who make less than $100,000 or $500,000 in 

revenue to pay a lesser amount in performance royalties. It also 

contains a 1- to 3-year grace period for some broadcasters. 

As a representative of a coalition of performers and record labels, 

would you support these kind of measures in the Senate bill? 

Ms. ESCOVEDO. Yes, I think that it is fair. I think that we are 

at a place that changes need to happen, and I do not think that 

it is fair that radio uses the music that I have played on, performed 

26 

on, and not pay me for that. I do not think it is fair to all the other 

musicians that have performed on millions and millions of songs. 

I think it is fair for some of the smaller radio stations to pay a small fee, and $500, if it may be, or $1.37 a day, if that is what 

it may be, $500 for a year, you got to be kidding. I do not understand the logic behind saying that is too much money to pay us, 

a small fee. We are just asking to be fair. 

So I think it is disrespectful for the radio to not want to sit down 

with us and have a conversation about—we are partners. I depend 

on radio. I really do. And I want to sit down and talk with them. 

I just think that it is wrong that they do not want to talk, and I 

do not think there is a partnership right now. There is not. 

I think that one of the issues brought up about having the artist 

make a decision whether or not we would want radio to play our 

music I think is not a good thing, because that would absolutely 

shut music down, because I think the majority of—I am also not 

just a musician, but I am also a songwriter, and I own a lot of my 

masters as well. So I would choose not for radio to play my music 

because they are not paying me, and let my fans go to the other 

radio stations, digital, and I would get paid for that, and that 

would move the whole fan base. That would move everybody away 

from radio. 

So that is not a really good plan, but I still think—— 

Senator FRANKEN. I do not think that plan is really—— 

Ms. ESCOVEDO. No, it does work. 

Senator FRANKEN.—going to happen. 

Ms. ESCOVEDO. But also—yes. I just think that there needs to be 

a partnership. Right. 

Senator FRANKEN. As Mr. Newberry said, I think we all heard 

it for the first time today, and it was a nice try. 

Ms. ESCOVEDO. Yes, a nice try. 

Senator FRANKEN. But I do not think that is probably going to 

happen. 

Ms. ESCOVEDO. No, not a good—— 

Senator FRANKEN. You know—sorry to interrupt you, but actually radio stations already do have no-play lists. I know that. The 

radio stations already have those. 

How will this affect new artists? Because Mr. Newberry is making the argument that new artists want radio play, and is this 

going to make it harder for them? I mean, I do not buy Mr. 

Newberry’s argument on, say, Roy Orbison. Maybe you would make 

the argument you would pay Roy Orbison because his estate would 

get money, but you are certainly not promoting Roy Orbison concerts, right? 

Mr. NEWBERRY. No, sir. 

[Laughter.] 

Senator FRANKEN. So that part of the argument goes once the 

artist is not performing anymore, shall we say. 

Mr. NEWBERRY. May I make a statement to that, Senator? 

Senator FRANKEN. Sure. 

[Laughter.] 

Mr. NEWBERRY. Certainly in cases—Mr. Orbison, I do not know 

his particular case, but there are estates, there are ways that those 

monies can still be monetized. It is not a concert, but there are 

27 

items based on the familiarity and the play that do get purchased 

even after the artist has—— 

Senator FRANKEN. Okay. Fair enough, fair enough. 

Let me go back, I am sorry, to Sheila E. Will this have an effect 

on new artists? 

Ms. ESCOVEDO. I think right now in the position that we are in, 

it is going to affect everyone, like it has been for the last 80 years, 

that we need to make a change. Of course, there are tons of radio 

stations that play old music, you know, 1970s—well, 1960s, 1970s, 

1980s. I am in that category. But it is affecting not just the past 

but the future as well. So we do need to change this now and make 

a change so that we all get paid for past and future. You know, it 

is—I think the industry right now for the kids, the youth, they are 

looking at it, and they have said to us, you know, ‘‘Wow, you must 

make millions of dollars performing on all these songs. Radio plays 

you all the time.’’ No, I do not. I make the money as a songwriter 

but not as a performer. 

Senator FRANKEN. Thank you. 

Ms. ESCOVEDO. You are welcome. 

Senator FRANKEN. Thank you, Madam Chairman. 

Senator FEINSTEIN. Thank you very much, Senator Franken. 

Mr. Oman, something that you said piqued my interest. You 

know, I am concerned that we are the only nation in the industrialized world that does not provide these performance rights. And 

you mentioned, you know, we might want to talk to USTR about 

this. What exactly were you referring to? 

Mr. OMAN. Under the international regime of copyright, American artists are not entitled to collect royalties in foreign countries 

unless we provide reciprocal protection for the foreign artists. 

Senator FEINSTEIN. So they lose foreign royalties as well. 

Mr. OMAN. They lose foreign royalties, and that amounts to millions and millions of dollars every year. 

Senator FEINSTEIN. Thank you. I did not realize that. That is, I 

think, a very important point in all of this. 

Supposing they record in a foreign country, what happens then 

to their performance rights? 

Mr. OMAN. They would be entitled to payments by the broadcasters from that particular country, but not from the rest of the 

world. If they recorded their music in Great Britain, they could get 

royalties from the broadcasters for the use of that music in Great 

Britain, but they would not get that throughout Europe or in Japan 

or the other major markets in the world. 

Senator FEINSTEIN. Well, wouldn’t this encourage some of them 

to record in other countries? Which is not too difficult today to do. 

Mr. OMAN. I am not aware of that being done myself, but it certainly would be a temptation. American authors in the 19th century moved to Great Britain to get copyright protection for their 

works in Great Britain. It would be a shame if our copyright laws 

encouraged American artists to go overseas to record their works. 

Senator FEINSTEIN. It certainly would. Thank you. 

Ms. Leighton-Levy, you know both the House and Senate bills 

provide discounts for small broadcasters, those with annual revenues of $1.25 million or less, and offer them an option of a very 

28 

low fixed annual royalty of $5,000—or even lower for smaller 

broadcasters, and that is the House bill. 

In contrast, the license offered by SoundExchange to small webcasters with the same threshold of $1.25 million in annual revenues is 12 percent of revenues; thus, a small broadcaster at the 

threshold would pay $5,000 in annual royalty, while a small 

webcaster at that same threshold would pay an annual royalty of 

$150,000. Now, that is a big discrepancy, 30 times more. 

How is this fair? Doesn’t equity and a level playing field require 

that small webcasters receive the same discount structure that 

small broadcasters do? 

Ms. LEIGHTON-LEVY. There may be others here on this panel who 

would be better qualified to address this, to answer this than I, but 

I will say that off the top of my head it does seem to me that it 

is—I mean, that there is a rationale for having there be at least 

some disparity between the two because, of course, there are different responsibilities and obligations for the small broadcaster in 

a small market, and—— 

Senator FEINSTEIN. As opposed to the webcaster? 

Ms. LEIGHTON-LEVY. Exactly, yes. 

Senator FEINSTEIN. Okay. Anybody else have a view on that? 

Mr. Newberry. 

Mr. NEWBERRY. I would just point out that one significant difference, the small-market broadcasters are obligated to, among 

many other things, FCC regulations, FCC reporting, equal opportunity outreach, annual fees that are charged by the Federal Communications Commission, so there is an entirely different cost 

structure for a broadcaster versus a webcaster. 

So we are a fixed-cost business. I am certain that many in our 

industry would argue that if we could rid ourselves of all of the regulations and requirements, they would be glad to take a higher 

percentage on a fee. But it is apples and oranges. You cannot make 

the correlation between the two because we have an entirely different business structure. 

Mr. KIMBALL. Well, I very fundamentally disagree that you cannot make a correlation between the two. You can make a correlation between the two. These small broadcasters are all reaching out 

to niche audiences, exposing new artists that could not be exposed 

through big radio, through big commercially programmed radio. 

They are actually trying to achieve many of the same functions. 

And although their cost structures may be somewhat different, 

they are nowhere close to 30 times different. That is fundamentally 

unfair. 

Senator FEINSTEIN. Let me call for Solomon here. Dr. Oman, do 

you have a point of view on this? 

[Laughter.] 

Mr. OMAN. I hesitate to get between the two titans at the table, 

but the conclusion I draw from the exchange is that there seems 

to be no recognition by the broadcasters that they are getting a tremendous public subsidy in terms of free spectrum, that they do not 

have many of the other expenses that are borne by their competitors, and that they have a public obligation. And I think at the top 

of that list of public obligations is paying for the materials that 

they use fairly, and they are not doing that now. 

29 

Senator FEINSTEIN. Mr. Newberry, 30 seconds. 

Mr. NEWBERRY. Yes, ma’am. I will make it very quick. I said in 

my opening comments that I absolutely support, embrace the responsibilities and obligations that I have as a broadcaster that 

comes with my license. Mr. Oman—I do not know where he picked 

up that we were not acknowledging that. We have a public trust 

with our listeners, with our communities. I am very proud to be a 

local broadcaster, and we pay every day the opportunity to be—— 

Senator FEINSTEIN. I do not believe he was in any way impugning you. What he was saying—— 

Mr. NEWBERRY. I just want to be of record. 

Senator FEINSTEIN.—is that you have the airwaves, which technically do not belong to anybody. 

Mr. NEWBERRY. They belong to the public. 

Senator FEINSTEIN. That is correct. 

Mr. NEWBERRY. Yes, ma’am. 

Senator FEINSTEIN. And that is a big deal. 

Mr. NEWBERRY. Absolutely, and we embrace that, and I am 

proud of the record of service that the Nation’s broadcasters have 

provided as trustees of those airwaves. 

Senator FEINSTEIN. Okay, fine. 

Let me ask, Dr. Oman, webcasters argue that the songwriter protection provisions in both the Senate and the House bills would tilt 

the playing field in royalty rate proceedings between songwriters 

and webcasters, allowing the songwriters to introduce evidence of 

the rate for performance right royalties, which to date have been 

significantly higher than the songwriters’ rates, and to argue that 

songwriters’ rates should be increased but would not allow 

webcasters to use that same evidence to argue that they could not 

afford to pay more to songwriters because they are already paying 

so much of their revenues to performers. That is the argument. 

What do you think the validity of this argument is? 

Mr. OMAN. The parties are actually engaged in an ongoing discussion of that particular point right now, and I think the misunderstandings and the suspicions on both sides are about to be allayed, and I would not be surprised if we did not have an agreement on that point in the very near future. 

Senator FEINSTEIN. Good. 

Mr. OMAN. I think the fact that there is good faith on both sides 

is going to help reach the solution. It is a very complicated issue, 

and I would hope that, Madam Chairwoman, you would give me 

the opportunity to provide a more formal written answer after the 

hearing to supplement my oral commentary. 

Senator FEINSTEIN. If you would, it would be very much appreciated. I think your views are very much respected, so we would 

like to have them. 

Senator Franken, do you have other questions? 

Senator FRANKEN. No, I do not. I want to thank you, everyone, 

and, Solomon, thank you. 

[Laughter.] 

Senator FEINSTEIN. First of all, let me thank everybody who is 

not on the dais here, but who is working to try to bring the industries together and come to some conclusions about what is fair. It 

is very much appreciated. I would like to echo what Senator Leahy 

30 

said. I believe we will have a bill. So I think the degree to which 

you can sit down and solve the problems is very much appreciated. 

Then we will not have to. But if you do not, we certainly will try. 

And I want to thank our witnesses today. We very much appreciate 

their testimony. 

We will leave the record open for 1 week, and we appreciate your 

written comments. Thank you very much. The hearing is adjourned. 

[Whereupon, at 4:06 p.m., the Committee was adjourned.] 

[Questions and answers and submissions follow.] 

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54557.087
118 


54557.088
119 


54557.089
120 


54557.090
121 


54557.091
122 


54557.092
123 


54557.093
124 


54557.094
125 


54557.095
126 


54557.096
127 

Æ 


54557.097