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PERFORMANCE RIGHTS ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

ON

H.R. 4789 

JUNE 11, 2008 

Serial No. 110–141 

Printed for the use of the Committee on the Judiciary 

( 

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

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

ROBERT WEXLER, Florida 

LINDA T. SA ́ NCHEZ, California 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BETTY SUTTON, Ohio 

LUIS V. GUTIERREZ, Illinois 

BRAD SHERMAN, California 

TAMMY BALDWIN, Wisconsin 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ARTUR DAVIS, Alabama 

DEBBIE WASSERMAN SCHULTZ, Florida 

KEITH ELLISON, Minnesota 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

DANIEL E. LUNGREN, California 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TOM FEENEY, Florida 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

PERRY APELBAUM, Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

HOWARD L. BERMAN, California, Chairman 

JOHN CONYERS, JR., Michigan 

RICK BOUCHER, Virginia 

ROBERT WEXLER, Florida 

MELVIN L. WATT, North Carolina 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HANK JOHNSON, Georgia 

BRAD SHERMAN, California 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

ZOE LOFGREN, California 

BETTY SUTTON, Ohio 

HOWARD COBLE, North Carolina 

TOM FEENEY, Florida 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

STEVE CHABOT, Ohio 

CHRIS CANNON, Utah 

RIC KELLER, Florida 

DARRELL ISSA, California 

MIKE PENCE, Indiana 

SHANNA WINTERS, Chief Counsel 

BLAINE MERRITT, Minority Counsel 

(III) 

C O N T E N T S 

JUNE 11, 2008 

Page 

THE BILL 

H.R. 4789, the ‘‘Performance Rights Act’’ .............................................................. 4 

OPENING STATEMENTS 

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

State of California, and Chairman, Subcommittee on Courts, the Internet, 

and Intellectual Property .................................................................................... 1 

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

of North Carolina, and Ranking Member, Subcommittee on Courts, the 

Internet, and Intellectual Property .................................................................... 9 

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

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

Subcommittee on Courts, the Internet, and Intellectual Property .................. 10 

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

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

Subcommittee on Courts, the Internet, and Intellectual Property .................. 11 

The Honorable Sheila Jackson Lee, a Representative in Congress from the 

State of Texas, and Member, Subcommittee on Courts, the Internet, and 

Intellectual Property ............................................................................................ 13 

The Honorable Tom Feeney, a Representative in Congress from the State 

of Florida, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 20 

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

of Tennessee, and Member, Subcommittee on Courts, the Internet, and 

Intellectual Property ............................................................................................ 21 

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

of Virginia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 24 

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

of Caifornia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 24 

The Honorable Ric Keller, a Representative in Congress from the State of 

Florida, and Member, Subcommittee on Courts, the Internet, and Intellectual Property ........................................................................................................ 26 

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

of Caifornia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 27 

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

of Caifornia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 27 

The Honorable Hank Johnson, a Representative in Congress from the State 

of Georgia, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 29 

The Honorable Mike Pence, a Representative in Congress from the State 

of Indiana, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 33 

The Honorable Robert Wexler, a Representative in Congress from the State 

of Florida, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 34 

Page

IV 

WITNESSES 

Ms. Nancy Sinatra, daughter of the late Frank Sinatra, legendary recording 

artist 

Oral Testimony ..................................................................................................... 40 

Prepared Statement ............................................................................................. 43 

Mr. Steven W. Newberry, President and CEO, Commonwealth Broadcasting 

Corporation 

Oral Testimony ..................................................................................................... 46 

Prepared Statement ............................................................................................. 48 

Mr. Charles Warfield, President and COO, ICBC Broadcast Holdings, Incorporated 

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

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

Mr. Thomas F. Lee, President, American Federation of Musicians 

Oral Testimony ..................................................................................................... 81 

Prepared Statement ............................................................................................. 84 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

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

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

Judiciary, and Member, Subcommittee on Courts, the Internet, and Intellectual Property .................................................................................................... 11 

Prepared Statement of Honorable Sheila Jackson Lee, a Representative in 

Congress from the State of Texas, and Member, Subcommittee on Courts, 

the Internet, and Intellectual Property .............................................................. 14 

Prepared Statement of the Honorable Steve Cohen, a Representative in Congress from the State of Tennessee, and Member, Subcommittee on Courts, 

the Internet, and Intellectual Property .............................................................. 23 

Prepared Statement of the Honorable Hank Johnson, a Representative in 

Congress from the State of Georgia, and Member, Subcommittee on Courts, 

the Internet, and Intellectual Property .............................................................. 31 

Prepared Statement of the Honorable Robert Wexler, a Representative in 

Congress from the State of Florida, and Member, Subcommittee on Courts, 

the Internet, and Intellectual Property .............................................................. 35 

APPENDIX 

Material Submitted for the Hearing Record .......................................................... 117 

(1) 

PERFORMANCE RIGHTS ACT 

WEDNESDAY, JUNE 11, 2008 

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, THE INTERNET, 

AND INTELLECTUAL PROPERTY, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 3:22 p.m., in Room 

2141, Rayburn House Office Building, the Honorable Howard L. 

Berman (Chairman of the Subcommittee) presiding. 

Present: Representatives Conyers, Berman, Wexler, Watt, Jackson Lee, Cohen, Johnson, Sherman, Lofgren, Coble, Feeney, Sensenbrenner, Smith, Goodlatte, Cannon, Keller, Issa, and Pence. 

Mr. BERMAN. This 1 hour and 20-minute-late hearing of the Subcommittee on Courts, Internet, and Intellectual Property will come 

to order. I apologize to everyone, but it truly was events beyond my 

control. 

I would like to begin by welcoming everyone to this hearing on 

H.R. 4789, the ‘‘Performance Rights Act.’’ As I said last July, I have 

supported the expansion of the performance rights and sound recording for over 20 years with two caveats. First is that by extending this right, it should not diminish the rights and revenues of the 

creators of musical works. Secondly, terrestrial broadcasters large 

and small must remain a viable source of music. 

The bill we introduced in December does just that. The bill is designed to fix a glaring inequity. Currently Section 114 provides a 

compulsory license to publicly perform a sound recording where 

there is a digital audio transmission. However, terrestrial broadcasters or over-the-air radio broadcasters as they are sometimes referred to are not required to pay a royalty for their transmissions. 

They enjoy an exemption from the performance right. 

I have long been convinced that fairness mandates that all those 

in the creative chain of the artists, musicians and others who bring 

the recording to life should get compensated for the way they enrich our lives. The U.S. is one of the only developed countries in 

the world that doesn’t—one of the few developed countries in the 

world—the debate of whether or not China is now a developed 

country—that doesn’t require over-the-air radio stations to compensate those artists and musicians producing the music that 

broadcasters use to attract the audience that generates ad revenues. 

In large part because of music radio is able to profit. Not compensating those performers of the music is unfair and ultimately 

2 

harmful to music creation that benefits everyone, including the 

broadcasters. 

Furthermore, the law currently requires all other platforms in 

the U.S. such as satellite and Internet radio to compensate the 

copyright owner. Let me begin by clarifying how we have narrowly 

tailored this legislation. 

First, the bill repeals the current broadcaster exemption, but it 

does not apply to bars and restaurants and other venues. Secondly, 

the bill provides an accommodation for small and non-commercial 

broadcasting by setting a low, flat annual fee to allay any expenses 

relating to negotiation, litigation or arbitration. Nearly 77 percent 

of the existing broadcasting stations in this country, including college stations and public broadcast, will pay only a nominal flat fee 

rather than having to pay a percentage of their revenues as royalties. 

Third, the bill extends certain performance rights to artists, musicians and their record labels. It does not harm or adversely affect 

the revenues rightfully paid to the songwriters and other existing 

copyright owners. Although I also understand there are additional 

protections the songwriters are seeking, which we will consider. 

The broadcasters have argued that this bill is unnecessary and 

the exemption is appropriate because of a symbiotic relationship 

that exists between the airplay on radio and the promotion of the 

music leading to future sales. Furthermore, the broadcasters suggest that to pay compensation to artists and musicians for publicly 

performing their sound recordings is tantamount to a performance 

tax. 

Finally, there is concern as to how smaller broadcasters can survive if required to pay. I would like to briefly address each argument in turn and ask any of the witnesses to respond. In terms of 

the promotion argument, let’s assume radio broadcasts do promote 

music which leads to greater sales. Don’t radio broadcasts of sports 

games also promote the sale of tickets and team merchandise, yet 

don’t broadcasters pay to broadcast these games? 

Why does the possibility of promotion in the case of music sales 

from over-the-air radio lead to the conclusion that there should be 

no payment made by the broadcasters? How is it that Internet and 

satellite also promote yet they are required to pay? Why should 

over-the-air broadcasts be treated differently? 

Assuming there is a promotional value in the broadcast of music, 

there is nothing in the bill which would prevent a copyright royalty 

judge from factoring in the value of this promotion in determining 

the rates the radio station would have to pay. The argument about 

promotion should not be about whether to pay, but how much to 

pay. 

As to the tax argument, my notion is while calling the performance right a tax might make for good rhetoric, it is even more accurate to call the exemption enjoyed by the broadcasters corporate 

welfare or even, God forbid, government confiscation of property. 

Since the U.S. code compels performers to give broadcasters their 

music for free, the bill merely eliminates an unjustified subsidy to 

broadcasters and requires them to compensate those whose work 

they use and profit from. 

3 

Furthermore, broadcasters do not argue that the money they pay 

to the songwriters constitutes a tax. What is the difference? 

Finally, the impact on small broadcasters was clearly a concern 

for us and therefore in the bill, as mentioned earlier, we have provided an accommodation for those broadcasters. With this bill we 

have begun to move toward platform parity, rights parity, and 

international parity. The equity argument that performers should 

be entitled to receive revenue for their works can no longer be ignored. The Department of Commerce just yesterday offered their 

support for this legislation. 

Circumstances have changed, but it is now time to reconsider the 

exemption for over-the-air broadcasters. In other words, put me 

down as leaning yes on this bill. 

I look forward to working with Members of the Committee to address the inequity in the current law. I intend to proceed to markup shortly and welcome suggestions for adjustments to build broader consensus for this bill. 

I now have the pleasure of recognizing our distinguished Ranking minority Member, Howard Coble, for his opening statement. 

[The bill, H.R. 4789, follows:] 

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Mr. COBLE. Thank you, Mr. Chairman. Mr. Chairman, most of 

our colleagues here—strike that. Many of our colleagues here and 

perhaps most, but certainly many regard this bill as black and 

white. If you support the performers, you are adamantly opposed 

to the broadcasters. If you support the broadcasters, you are adamantly opposed to the performers. I don’t see it, Mr. Chairman, as 

black and white. I see subtle shades of gray. And I hear and read 

compelling and convincing arguments and positions from each side. 

Mr. Chairman, as you know, on this Hill when Members of Congress don’t want to become involved with issues, their stock answer 

is I have no dog in that fight, and I am therefore removed. Folks, 

I have nothing but dogs in this fight. 

The broadcasters on the one hand, friends, performers on the 

other hand, friends. For two and-a-half decades, Mr. Chairman, or 

almost two and-a-half decades on issues involving the broadcast industry I have come down on the side of broadcasters, not just because I like them, which I do like them, but because their positions 

were sound and meritorious. 

But the issue before us, I believe—this may be subject to interpretation. But I believe the issue before us, Mr. Chairman, leans 

toward the performers. I think the performer right advocates probably have the better of the argument. 

Last week I announced that I intend to support the bill at markup. I was not a co-sponsor because I wanted to retain my objectivity. I reached that decision, my friends and Mr. Chairman, after 

much deliberation and consideration of the respective arguments 

presented by all of my friends on either side of the issue. 

While I still have questions going forward that I hope we can address about how precisely the law should be amended as well as 

concerns about the timing and implementation of any changes, the 

deciding factor for me is that the idea of continuing this exemption 

in perpetuity just does not strike me as the right thing to do. 

I have difficulty in reconciling a system of copyright law, Mr. 

Chairman, that requires radio stations to pay the owners of musical works a royalty, but denies such treatment to the owners of 

sound recordings. Nor does it make sense, in my opinion, for the 

copyright law to, in effect, choose sides and grant preferences to 

one technology over another, as in this case, where satellite and 

Internet radio broadcasters pay copyright royalties to the owners of 

sound recordings and musical works, but traditional radio pays royalties to only the owners of the musical works. 

And finally, Mr. Chairman, you will remember as television 

broadcasters maintained that they should be paid retransmission 

consent fees when cable companies carry their signal. It seems to 

me that the Federal law ought to provide the owners of copyrighted 

works, which after all are property, payment when their works are 

selected to be performed publicly and for profit by other broadcasters. 

I recognize that changing the law in a manner that affects an entire industry, particularly one that is as valuable to our communities as our home town broadcasters, is not something that ought 

to be done hurriedly. If this change is to be made, Mr. Chairman, 

I hope we will be able to benefit from active discussions and involvement by those who will be most directly affected about how 

10 

best to transition from the old world of complete exemption to the 

new world of full participation in this aspect of our copyright law. 

Mr. Chairman, I thank you for having convened this hearing 

today and for assuring all of us that we have excellent witnesses 

so we can benefit from their perspective. It is good to have all of 

you with us. 

And, Mr. Chairman, with that I yield back the balance of my 

time. 

Mr. BERMAN. Well, thank you very much, Mr. Coble. 

And I now am pleased to recognize a co-sponsor of this legislation 

and the Chairman of the Judiciary Committee, Mr. Conyers, for an 

opening statement. 

Chairman CONYERS. Thank you, Chairman Berman. 

I welcome all of our witnesses here today. And I would just like 

to see a show of hands of all the performers and artists that are 

with us today. Raise your hands. I even see some instruments out 

there in the audience as well. Thank you. 

And I am reminded of the passing last week of one of the founding fathers of rock and roll, Bo Diddley, who I know would be looking down upon us today thinking of how much progress we are 

making. Unfortunately, he didn’t see much fairness in terms of 

compensation in his lifetime. And I have been working on this 

issue, I say without embarrassment, longer than anybody else here 

in the Congress. 

But Howard Berman has done an excellent job, not just as Chairman of this Committee on Intellectual Property, but in terms of his 

new responsibilities as Chairman of the Foreign Affairs Committee 

as well. And his description of this issue doesn’t require me to add 

any additional comments. 

I am not leaning slightly in favor of this bill. I am 100 percent 

in support. And we are not going to rest until we get this taken 

care of. Why? Because creativity and intellectual property considerations are what the Judiciary Committee is all about. 

We want to encourage and stimulate the great American sound 

that now is enjoyed and repeated around the world. I happened to 

be, in particular of all of our music, a jazz aficionado. And the lives 

of musicians and performers and singers has been unduly complicated by the fact that we are not fully compensating them for all 

of the great talent and the enjoyment that they have brought to us 

across the years. 

And so, for Chairman Berman and Ranking Member Coble and 

all of us here on this Committee that support your great work, I 

am very proud to see you today. And I think this is an historic moment in bringing the equity that characterizes this Committee in 

terms of intellectual property, rights and creativity to a new high 

to include you in, and not continue to exclude you out of, the great 

benefits of this country. 

Thank you. 

[The prepared statement of Mr. Conyers follows:] 

11 

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

IN CONGRESS FROM THE STATE OF MICHIGAN, CHAIRMAN, COMMITTEE ON THE JUDICIARY, AND MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY

I commend Howard Berman for his leadership in introducing H.R. 4789, and for 

holding this second hearing on such an important issue. 

As many of you know, earlier this week a resolution I and others introduced honoring the contributions of a founding father of rock and roll, the great Bo Diddley, 

passed the House. 

While he was a music pioneer who created the very foundation of the majority 

of the music played on the radio today, I mention Bo Diddley today because of his 

tireless work in his later years for the cause of fair treatment of musical artists. 

Unfortunately, Bo Diddley did not see such fairness in his lifetime. Despite all his 

hard work and his invaluable cultural contributions, he had to stay on the road performing into his 78th year. 

He could not afford the ‘‘luxury’’ of retirement and only stopped performing last 

year when complications from a stroke forced him to. 

Bo Diddley would be pleased that this Committee is doing more than just talking 

about performance rights—that we are taking action to promote fairness in the 

treatment of musical artists. 

The current situation is quite simply not fair to the recording artists or to the 

recording labels. 

I’m sensitive to the interests of broadcasters, and have taken pains to ensure that 

they are not harmed. But everyone but the broadcasters agrees that the current system is seriously flawed. 

Every other platform—including satellite radio, cable radio and Internet 

webcasters—pays a performance royalty. Terrestrial radio is the only platform that 

does not pay a royalty for use of an artist’s music. 

That is a completely untenable situation in the 21st century. 

The specific broadcaster exemption created in 1995 may have made sense for the 

music marketplace of the 20th century, but with rapid changes in technology come 

dramatic changes in usage. And the law should be updated to reflect those changes 

when the old rationales no longer apply. 

Calcification of the law—stuck in an outdated reality—is not acceptable if we are 

to fulfill our constitutional directive of promoting creativity and innovation. 

The bipartisan and bicameral legislation bill we are discussing today would create 

fairness by bringing broadcasters up to the same standards that we require of other 

music platforms. 

Moreover, this bill will bring the United States in line with other developed nations, every one of which currently grants performers a right to be compensated for 

their work when it is broadcast on terrestrial radio. 

If you were to go out on the street and speak to 100 people at random, most would 

be shocked to hear that recording artists receive no monetary compensation when 

their songs are played on broadcast radio. 

Today we consider taking an important step closer to ensuring that artists who 

enrich our lives with their talent are treated fairly, are able to reap a benefit from 

their efforts at least somewhat proportional to their contribution. 

This bill will establish a fair system in copyright law for compensating performers 

of sound recordings, with appropriate accommodations for smaller stations, public 

broadcast stations, religious services, and incidental users. 

And it explicitly protects the public performance rights or royalties payable to 

songwriters or copyright owners of musical works. 

I look forward to hearing from our witnesses today as we consider this important 

step. 

Mr. BERMAN. Thank you very much, Mr. Chairman, for your 

comments to me as well as your substantive remarks. 

I now am pleased to recognize the Ranking Member of the Judiciary Committee, my friend, Lamar Smith. 

Mr. SMITH. Thank you, Mr. Chairman. Mr. Chairman, I want to 

thank you and Ranking Member Coble for having this hearing on 

H.R. 4789, the ‘‘Performance Rights Act.’’ Recording artists contribute their unique talents and ability to every song they perform. 

These artists enrich the lives of their fans and listeners. 

12 

Requiring a full statutory performance right for sound recordings 

has been sought for many years. In 1995 Congress enacted the Digital Performance Royalty and Sound Recordings Act, which established a compulsory license for sound recordings for non-interactive 

cable and satellite services. It has only been since then that sound 

recordings have been subject to even a limited public performance 

right. 

At that time, Congress considered and determined to expressly 

exempt both non-subscription transmissions and retransmissions of 

sound recordings such as television, radio and business establishment broadcasts. It reasoned that public performance on these 

media benefits artists through increased record sales and thus 

should not be subject to a new direct royalty payment. 

I understand the witnesses for the broadcasters today will 

present new evidence that they believe demonstrates a direct positive correlation between local radio airplay of songs and increased 

revenue to artists and record labels. The reality is copyright law 

does make distinctions among classes of owners and types of technologies with respect to both the entitlement to receive and the obligation to pay performance royalties. 

Whether or not these distinctions are sensible and justified as 

sound copyright policy will be the focus of discussion today and I 

expect for some time to come. But neither this Subcommittee nor 

the Congress operates in a world of academic theory. The decisions 

we make impact the lives of real individuals and industries, and 

the effects can be immediate and lasting. 

As we move forward in studying this issue, we must anticipate 

and consider the possible effects of any legislation in this area and 

take appropriate steps to eliminate or mitigate harmful or undesirable outcomes. For that reason I appreciate the steps the Chairman 

and other sponsors of this bill have taken to try and address the 

specific concerns of certain communities and classes of broadcasters. 

In a moment we will have the opportunity to hear two broadcasters’ own views of whether these proposed accommodations address the concerns their members have with this bill. But before 

we do, it appears that the primary justification for changing the 

law seems to be to achieve parity among platforms, copyright owners and our international trading partners. Without regard to the 

specifics of each one of the parity arguments, it is likely that this 

measure would actually create a number of new disparities that 

may or may not be entirely justified by present or future circumstances. 

That said, this is a complex issue. Outside the Committee approximately 200 of our colleagues have sponsored a resolution that 

basically questions the content of this bill. It is clear that the advocates for this measure have more to do to persuade our colleagues 

in the House that this measure reflects sound public policy. 

Mr. Chairman, again I appreciate your having this hearing 

today. And I know there are meritorious arguments on both sides, 

so we have much to learn. And I will yield back the balance of my 

time. 

Mr. BERMAN. Are there any other Members who would wish not 

to follow my example and make brief opening statements? 

13 

The gentlelady from Texas? 

Ms. JACKSON LEE. Mr. Chairman, you have such an example it 

is hard not to follow your example. And since I came in after your 

example, I will assume that you had a distinguished comment to 

make, one or two at least. 

I do want to echo the comments of my distinguished Ranking 

Member of the full Committee. We have much to learn. And as my 

very distinguished Chairman indicated, that the rights of properties are cherished in this Nation. And I would imagine that we 

are also facing, for many who are not here to speak, many who 

have gone on, a great deal of hurt that we have to repair as well. 

Property comes in many forms. It comes in the form of the intellectual rights of so many musical giants of yesterday, today and tomorrow. This past week I introduced commemoration of gospel heritage in the United States. I happen to believe that we should take 

credit for some distinctly Americana music which may range from 

rock and roll, jazz, gospel and many other, if you will, additions to 

that line. 

For that reason I believe that this legislation is very important. 

And I would add that the ownership of all mom and pop locally 

based radio stations are also property rights and assets that we 

should be concerned with. So as I listen to the presentation of the 

very important and renown witnesses, who I know will speak from 

the heart and factually as well, I think that we have the makings 

of an important balance. 

And that is the balance that respect, tenets that are invested in 

the Constitution, the due process and the respect of property and 

as well the idea that someone’s hard earned intellect has to be respected. And when I say the two distinguishing factors, I talk 

about small businesses and small radio stations not versus, but 

also the recognition of individual talents of which the Chairman of 

the full Committee spoke. 

So I hope that this hearing will find common ground to respect 

these two important elements. And since this is the International 

Intellectual Property Subcommittee, what better place for this debate and discussion to go forward and the understanding of this 

legislation and the resolution of this legislation and the fair treatment, the fair treatment, the importance of fair treatment to all of 

those who have given us joy, given us comfort and have given us 

a few steps of dance when we needed it. I do think it is time to 

resolve this in this manner as we go forward. 

And with that, Mr. Chairman, I yield back. 

[The prepared statement of Ms. Jackson Lee follows:] 

14 

HONORABLE SHEILA JACKSON LEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE

OF TEXAS, AND MEMBER, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


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Mr. BERMAN. I thank the gentlelady. 

The gentleman from Florida, Mr. Feeney? 

Mr. FEENEY. Thank you, Mr. Chairman, for bringing this important issue to us. And I think the gentlelady from Texas used the 

word balance. And I think that is what the hearing today hopefully 

is all about, how we consider the Performance Rights Act in this 

Subcommittee how we balance the rights of copyright owners to be 

compensated for the use of their work and the interest of terrestrial broadcasters who currently enjoy an exemption, but also provide some great utility to America and our communities. 

Since the beginning of the radio music era, terrestrial broadcasters have been exempt from paying performance royalties. For 

decades radio was virtually the only medium that efficiently took 

artists’ works and put them into the ears of Americans. If you became a major artist in America, radio played a pivotal role. 

They promoted CD sales, before that, record sales, concerts, endorsements, et cetera. But the technology explosion over the last 

quarter century has not only changed the music and broadcast industries, but it has changed markets, and it has changed America 

itself. 

Satellite-based radio, Internet sales and music, other subscription-based services have entered the marketplace and altered the 

dynamic by which artists are exposed to the general public. In 

some instances, artists have gained substantial amounts of exposure in the marketplace by uploading their songs to social networking sites like MySpace, for example. Users listen to the music 

and recommend it to their friends on the site. 

Nevertheless, the promotional value of local radio airplay does 

seem to translate into some significant revenues for some artists 

and record labels for some period of time after a song is initially 

released. While the promotional value is real, we can also see a 

clear property right that belongs to the performing artist or their 

supporting record label or a combination of both. Generally speaking, the purpose of the copyright law is to give creative minds and 

talented individuals exclusive control over the use and exposure of 

their work. 

I formed on a bipartisan basis with several colleagues the intellectual property caucus in this House. The two questions are directed at the heart of the issue before us today. Number one, does 

the current promotional value in light of changes in technology of 

radio airplay fairly compensate artists and radio labels for their 

copyrights? Secondly, should Congress continue to intercede in the 

marketplace to categorically determine that promotional value of 

music and that it is always sufficient payment for artists in the 

changing marketplace? 

In this rapidly changing environment of mass media we can expect intellectual property issues not just in this arena, but in many 

other technological areas to force this Committee to deal with updates in the way we protect intellectual property and reward and 

protect artists or others that are involved in grading intellectual 

property. 

But I think the gentlelady from Texas put it right. Balance is the 

key for me here. I look forward to hearing the witnesses’ testimony. 

21 

I have met extensively with all sides in this argument and grateful 

that the Chairman has held this hearing today. 

Mr. BERMAN. I thank the gentleman. His time has expired. 

The gentleman from Tennessee, Mr. Cohen? 

Mr. COHEN. Thank you, Mr. Chairman. This issue is one that affects quite a few of my constituents in Memphis and also some 

folks in Nashville who are also my constituents. I lived there for 

many years. And they are songwriters and they are singers, performers. And while the songwriter has been compensated—and I 

have a strong alliance and appreciation of songwriters—I think 

that the singers and performers have been shortchanged. 

I met Sammy Conn one time, and it was great to meet him. And 

I have read about Timmy Van Heusen and listened to Harold 

Arlen’s music over the years and all these great songwriters. And 

they have produced beautiful music, and they were geniuses. But 

if it weren’t for Frank Sinatra singing their songs, people wouldn’t 

be listening. 

There is a way that a performer delivers a song that makes it 

special. And, yes, the songwriter creates it, and the songwriter is 

compensated. But without the singer emoting and making it special, you are not going to have people listening. 

I agree that back in the 1950’s people like Allen Freid who 

played rock and roll and Dewey Phillips in my home town of Memphis who kind of got Elvis out there—without them spinning 

records that people otherwise wouldn’t have had access to, you 

wouldn’t have had rock and roll. You might not have had Elvis. 

But that is not the situation anymore with the Internet and 

other forms out there. It is not the disc jockeys who are mostly 

playing program music which doesn’t give people who were originally creative people, originators, an opportunity to really get 

heard. Those people are getting heard on low-frequency stations, 

the ones that I am pleased this bill takes into consideration. And 

I appreciate the RIAA and everybody else that worked with NPR 

and the small wattage stations to see that they are not adversely 

effected by what wasn’t intended in this bill. 

They are the ones that give the new creative folks an opportunity. It used to be that the major broadcast stations did. That 

doesn’t happen anymore. 

So I think it has been an injustice that the performers had— 

Elvis, I don’t think, ever wrote a song. I doubt Frank Sinatra did. 

But nobody could perform a song like Frank Sinatra and Elvis. 

When you think of singers and you think of music, you think of 

them. You don’t think of Stoller and his partner. You don’t think 

necessarily of Sammy Conn or Jimmy Van Heusen. You think of 

Elvis. You think of Frank Sinatra. 

When I think of ‘‘These Boots are Made for Walkin’,’’ I think of 

Nancy Sinatra. I am not sure if another singer could have made 

them dance, could have made them walk. Lee Hazlewood wrote it, 

but it was Nancy that made those boots walk. And it is the performer that makes things special. 

So they need to be compensated. I think we have come a long 

way. And I am pleased to be part of this Committee that is going 

to end this injustice that has gone on for years and the free use 

of these great people’s talents. 

22 

And if I can take 1 minute to reflect, I want to thank Ms. Sinatra 

for being here. I am a big fan of her father’s, have seen him perform four or five times in my life, have his picture up, a big picture 

in my home and all kind of Sinatra books everywhere. But he came 

to Memphis and performed at the St. Jude shower of stars on several occasions, which was a big thing in Memphis and a big thing 

for me to attend. 

And I know that when Elvis came back from serving in our military in Germany you facilitated his going to be on that show. And 

I don’t think there is a greater moment in show business, even 

though they made those songs, than your father singing Love Me 

Tender and Elvis singing Witchcraft, a great moment. Thank you 

very much. 

[The prepared statement of Mr. Cohen follows:] 

23 

PREPARED STATEMENT OF THE HONORABLE STEVE COHEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF TENNESSEE, AND MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


Cohen.eps
24 

Mr. BERMAN. I am pleased to recognize the gentleman from Virginia, Mr. Goodlatte. 

Mr. GOODLATTE. Thank you, Mr. Chairman. I would like to 

thank you and Ranking Member Coble for holding this hearing on 

the Performance Rights Act. Because the United States has been 

the pioneer for strong intellectual property protections, it is no surprise that the copyright industries are so successful and are so crucial to our national economy. 

The U.S. copyright industries have created millions of highskilled, high-paying U.S. jobs and have contributed billions to our 

economy. Today we are examining whether an exemption that has 

existed for years which allowed terrestrial broadcasters to play 

copyrighted works without paying performance rights royalties is 

still justified in the digital age. This is a tough issue. 

Broadcasters argue that recording artists receive great benefits 

from the airplay their songs get, which result in higher sales for 

the artists. While this is likely true, I believe that digital music 

technologies have come to fruition over the past 5 to 10 years that 

consumers do not rely solely on terrestrial broadcast stations for 

their music any more. Other media like satellite radio and online 

broadcasters also deliver promotional value to the recording artists 

that they pay performance right royalties. 

On the other hand, I am very concerned about maintaining local 

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

least expensive ways that citizens gain access to news and emergency information in their communities. At a time when consolidation seems to be the norm, I believe it is important to do what we 

can to encourage radio stations to continue to provide local news 

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

radio stations. 

As such, I am pleased that H.R. 4789 contains provisions to 

grant relief to small radio operators who fall underneath the revenue threshold in the bill. However, I am still concerned that the 

exemption does not strike the right balance, that some radio stations that provide excellent local programming that may make 

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

be on the fringe. 

It would be a shame if this legislation were to be the last straw 

that caused stations like these to make the decision to go ahead 

and sell to a national conglomerate. I am working to ensure that 

local programming is not adversely affected by the good intentions 

of this bill. And it is my hope that the Chairman and Ranking 

Member of the Subcommittee will join me in this effort. 

And again, I thank you for holding this hearing. And I look forward to hearing from all of our very interesting witnesses today. 

Mr. BERMAN. I recognize the gentleman from California, Mr. 

Sherman. 

Mr. SHERMAN. Thank you, Mr. Chairman. Thanks for introducing 

this bill and for your 20 years of work to try to bring fairness and 

justice to those who perform. 

You know, you get a lot of wisdom before kindergarten from fairy 

tales. And we learned before kindergarten that terrible things happen to a society that refuses to pay the piper. As Americans we believe in the rule of law. We believe in the protection of private 

25 

property. We have one highly anomalous exception, and that is the 

rights of performers of recorded music. 

The unfairness and anomalous situation is proven by so many 

examples. We see that satellite and cable broadcasters have to pay, 

giving them an unfair disadvantage perhaps when they compete 

with broadcasters. At the same time, no one has argued recently 

that the satellite and cable broadcasters should not have to pay the 

performance artists, yet they do as much for promotion as do the 

broadcasters. 

We hear the use of the word tax, which is an ugly misuse of the 

English language. A tax produces revenue for government. This bill 

will not. 

And where would we be if the Chinese decided that they could 

use any patent or copyright for anything they manufacture and if 

our private companies want a royalty, that is a tax that they are 

not obligated to pay? Of course, imagine a Chinese textile company 

making Mickey Mouse t-shirts and saying we don’t have to pay the 

Disney company. After all, we are promoting Disneyland. 

The idea that the satellite or cable broadcasters of paying a tax 

is absurd. The idea that the broadcasters are paying a tax when 

they pay for sports broadcasting is absurd. Calling this a tax is absurd. 

One could imagine that I could take my TiVo, record any television broadcast, edit out the commercials, Webcast that. Would I 

then when stopped from that activity say I am being taxed, I am 

promoting the program? Because if people watch last week’s episode they are be inspired to watch this week’s episode. 

Where are the broadcasters demanding that I start that activity, 

that I have the legal right to do so? Don’t they need their programs 

promoted? Likewise, the idea that somehow this promotion justifies 

the free use of these works is absurd. Imagine Lindsey Lohan 

steals a car from the Hertz lot, drives it around, refuses to pay and 

then says I was promoting Hertz. 

Now, it is true that under this bill some may decide—and this 

is the voluntary right of any property owner—to allow the use of 

their property without compensation. Hertz might very well decide 

to give Lindsey Lohan the key. But she can’t steal them under our 

law. 

Likewise, some garage band may decide that its best approach is 

to allow free broadcast, uncompensated broadcast of their efforts. 

I should point out also that this bill is important from a U.S. competitiveness standpoint. Our current law puts this at odds with the 

laws of the rest of the world. 

We both sit on the Foreign Affairs Committee and know how important it is to the Chairman of the Foreign Affairs Committee that 

we reach out to the world and show that we are willing to harmonize our behavior with world expectations. And in addition we 

would pick up some $70 million for our artists from foreign sources 

perhaps providing some slight help with our enormous great deficit. 

We ought to believe in the rule of law, the right to private property. And that means that you do not allow people to steal—that 

is to say to take the use of private property without permission and 

26 

without compensation. This bill is long past due. Put me down as 

undecided. I yield back. 

Mr. BERMAN. The gentleman from Florida, Mr. Keller? 

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

Thank you, to the witnesses, for being here. I certainly respect 

your opinions on both sides and look forward to hearing from you. 

There is a bit of a distinction about how folks in this industry 

get their revenue. Songwriters get most of their royalties to do the 

public performances of their musical compositions. While record 

companies and performers get most of their money through record 

sales, concert tickets and merchandising. And there is no question 

that record labels and artists both are hurting right now for two 

principle reasons. 

Number one, it is piracy. I am very sympathetic to that cause 

and have taken steps to help them. And number two, their business model at times was a bit off. People didn’t want to pay $17.99 

for a CD that had 12 songs on it and they only had one good song. 

So folks went to iTunes and bought that song for 99 cents instead. 

And now the music industry has adapted, and hopefully they can 

reap the benefits of that. 

But these two things that are hurting the music industry were 

not caused by broadcasters. In fact, the benefit of having songs 

played on the free radio by the local radio stations are tremendous. 

When the songs are played, record sales go up. When concerts are 

promoted, concert attendance goes up. When more people attend 

concerts, merchandising profit goes up, all to the benefit of these 

artists and record companies. 

In fact, the benefits that local radio stations provide to artists 

and record labels is so great that these record labels would pay the 

stations if they were able to get away with it. In fact, that is what 

used to happen in the 1950’s. We had payola scandals. And payola 

is the practice by which a record label and some independent promoters offer money and other gifts in exchange for broadcast 

airtime for particular songs or artists. 

It was such a benefit that the practice has continued as late as 

December of 2006. One company, a radio conglomerate called Intercom settled a suit brought by the New York attorney general for 

$4.25 million for engaging in payola. So clearly, there must be 

some benefit to the record companies and artists or else they 

wouldn’t be paying the local radio station, sometimes illegally, to 

play their music. 

And so, it was mentioned that, well, look at what happens with 

Disney. They get paid. Well, actually under this bill they don’t get 

paid. This proposes to put a fee on the local radio stations only. If 

you are playing the same songs in a Wal-Mart or a theme park like 

Disney or at Olive Garden, the performer would not get paid. If you 

want to be intellectually pure, then you should be paid in those 

venues just as well as on the—if the song is played on the radio. 

And so, I am looking forward to what the witnesses have to say 

about these issues. I was amused to see a letter. This was issued 

yesterday by the Department of Commerce in support of this bill 

where they say that there is an economic benefit to broadcasters 

from this bill. I would be curious if the broadcasters feel that there 

is an economic benefit, if they think this is in their best interest. 

27 

And I look forward to hearing from both sides on this issue. And 

thank you to our witnesses. I yield back the balance of my time. 

Mr. BERMAN. I thank the gentleman. 

And I yield to the gentlelady from California, Ms. Lofgren. 

Ms. LOFGREN. Thank you, Mr. Chairman. I will be brief. I know 

we all want to listen to our witnesses. 

But I just wanted to say I think there are good arguments that 

we will hear on both sides of these issues—of this issue. But one 

of the things that is of concern to me is that if we are going to have 

kind of a parity situation, we need to look at platform parity as 

well. To me, it doesn’t make sense to have technology used to deliver music determine the amount of royalties that are going to be 

assessed. 

And the recording industry feels that it is adversely impacted by 

the absence of performance royalties from the terrestrial broadcasters. The broadcast industry argues that royalty payments will 

devastate local radio. But the industry that is in real trouble today 

is Internet radio. Many Webcasters are facing royalty payments 

that are in excess of their entire revenues. And the Arbitron data 

now shows that Internet radio listenership is falling. 

We have 150 Members of the House who co-sponsored a bill to 

take a look at that situation a year ago. And I would ask unanimous consent to put a letter in the record. We asked that we have 

a hearing on this subject. I do think it is pretty essential to do so. 

I mean, if we take a look at the cable/satellite fees, it is about— 

well, the revenues, total revenues are about $2 billion in those sectors. Six to 15 percent of it is being paid out in royalties. The Internet radio companies generated about $150 million in revenue. And 

they paid at least 50 percent of that revenue in royalties. And some 

paid 100 percent of their revenue in royalties. Meanwhile, the 

broadcast industry generated $15.5 billion, and they paid nothing. 

So it seems to me that if we are going to take a look at disparity 

across platforms and it is fair and appropriate to do so, it would 

be a real mistake not to use the opportunity to also take a look at 

Internet radio. And I think if we wait too much longer we are not 

going to have a discussion because it is not going to exist any more. 

And I think that would be a tragic outcome because if you want 

to look at how new artists newly break in without being too beholden to labels, it is on Internet radio. That is really the freedom 

and the opportunity. 

And I have heard from some artists who are now telling me that 

one of their top priorities is not pirates any more. It is Net neutrality so that they are going to have an opportunity to control 

their future. 

So I wanted to raise that issue. I look forward to hearing this debate. But it will not be complete for me until we include the Internet radio discussion. 

And I thank the Chairman for recognizing me and yield back. 

Mr. BERMAN. I thank the gentlelady. 

And the gentleman from California, the chief Republican co-sponsor of this legislation, H.R. 4789, Mr. Issa? 

Mr. ISSA. Thank you, Mr. Chairman. And it has been a privilege 

to work together on this bill and to see it come so far so quickly. 

When you and I were talking about this, I guess, a year-and-a-half 

28 

ago, I am not sure that we really knew that we would catch on so 

quickly to people realizing that this is a question that has to be answered now, not later. 

Very clearly, I think the panel has heard that this is a divided 

dais, that there are some people who are undecided. There are 

some people who are, like Mr. Sherman, undecided in one direction. 

I am also one of those people that is undecided in the direction of 

the intellectual property holders. 

But in setting the tone for this hearing and the markup to follow, 

I would hope that I would set a tone for the broadcasters that my 

co-authorship of this bill, my belief that this is clearly a law whose 

time has come to be reviewed and changed does so with an understanding that broadcasters bought their band width. The vast majority of them didn’t get it for free yesterday. They, in fact, purchased their station based on a set of rules of the road that existed 

at that time. 

In a strange and perverse way their stations were worth more 

money because they didn’t pay the performer. That is a reality of 

the price they paid. 

So as we transition—and I am confident that we will go from free 

being the balance between the two extremes to some amount of 

money—I think we have to do so recognizing that, in fact, we are 

in a transition. The broadcasters are transitioning from analogue 

to digital. The recording artists are dealing with the days of the 

eight-track and cassette being in the rearview mirror and the day 

of the perfect digital master being available on the Internet being 

here. And it has not been a pretty thing to deal with. 

So I would hope that we start looking for the common ground 

that we have not yet found. Broadcasters have, not just in large, 

but in absolute unison, have told me that they cannot afford to pay 

anything. I don’t believe that is true. 

I do believe that this bill at least offers out an olive branch with 

concessions for the small broadcaster and certain other broadcasters, religious broadcasters and so on. I believe that there are 

additional olive branches that can be offered. 

I believe that a transition period, a significant transition period 

could be put in this bill. But it won’t be put in if zero versus an 

intellectual property right is the common ground that we are having to choose between. We have to choose a compromise, which 

means both sides have to come to the table. 

To that end, I would hope that as we transition from this hearing 

to the markup and beyond that we understand that at least in 

some cases—for example, a performer whose records are no longer 

available commercially cannot get the benefit of promotion on the 

radio. So at least in that case there must be some alternative revenue that a person would be entitled to if promotion by definition 

gains them no benefit at all. And there are such artists. 

I think additionally if we assume that in some cases the broadcasters are, in fact, extremely valuable—the word payola was used. 

And that is clearly illegal. But the fact is that I think that the companies representing the artists and the artists themselves need to 

come to terms with the fact that an arm’s length relationship publicly, you know, done above the table that leads to real promotion 

should be put in the work. 

29 

Meaning your station should be able to say—because you have 

an absolute right to play who you want to or not play who you 

don’t want to—that, in fact, if you are going to put airtime into promoting a new artist, if you are going to put airtime, quite frankly, 

into playing the ones that everyone has forgotten—somebody 

talked about 12 songs and only one was good. Well, I am a Harry 

Chapin fan. So I have got to tell you I like them all. They are all 

long, but I like them all. 

And some of them don’t get the play time. And I would hope that 

they would. So I would hope that we would come to the common 

ground. 

I for one—and I know the Chairman for another—would absolutely welcome a constructive dialogue leading to innovative ideas 

on how the broadcasters could find a way to transition to paying 

some revenue, the intellectual property holders and their representatives understanding that broadcasters will need to find revenue in return for affirmative promotion, that we can bring those 

two together. 

So I look forward to this panel. I know that it will be diverse in 

its views. But I also look forward to the negotiations that will be 

necessary to bring this bill to be law. 

And with that, I thank the Chairman for his indulgence. 

Mr. BERMAN. The time of the gentleman has expired. 

The gentleman from Georgia, Mr. Johnson? 

Mr. JOHNSON. Thank you, Mr. Chairman. Mr. Chairman, last 

week was the death of Bo Diddley, an artist who did not have control over his performances, over his works actually. And so, he did 

not receive royalties for the performance of his hits. And at the age 

of 79 he was still out touring trying to make ends meet. And I can 

think of no greater tragedy than an artist who has caused so much 

joy in the hearts of listeners to have to listen to their own rendition 

played on broadcast radio and everyone else in the chain is getting 

paid except for the artist. 

And the artist has to go out and try to duplicate that performance every night, six nights a week, 250 nights a year, however 

many nights it is, and could never rest on the just royalties that 

should have been paid for that performance because we don’t have 

that right here in the United States to pay performance royalties 

to artists. They are not fairly compensated for their creativity and 

for their investment. 

They are paid royalties, these artists, when their music is played 

on cable television, satellite radio or the Internet. But I think most 

people don’t realize that when they turn on an AM or FM dial and 

listen at a rendition that has played repeatedly over the past 30, 

40, 45 years that the artists who made that rendition are not being 

paid for the performance of that work. 

And so, the Performance Rights Act, which I am a co-sponsor of, 

I am proud to be a co-sponsor of, would correct that imbalance and 

that injustice so that artists from pop stars to backup singers 

would be fairly rewarded when broadcast radio stations played 

their music. And this bill will ensure that musicians who are 

threatened or artists who are threatened by today’s pervasive online piracy would still have strong economic incentives and protections when they provide us with their works. 

30 

Indeed, the architects of our political system realized that creativity must be protected. And Congress has a constitutional obligation to protect these artists’ work. Article 1, Section 8 mandates 

that Congress—Article 1, Section 8 of our Constitution mandates 

that Congress, ‘‘Promote the progress of science and the useful arts 

by securing for limited times to authors the exclusive right to their 

writing.’’ 

And understanding that writers and authors have this exclusive 

right, it stands to reason that we should compensate the performers of those rights for the work that they do as well. The 

courts have held that this mandate applies not only to authors of 

written works, but to all creators of intellectual property from inventors to musicians. Congress must protect American creation as 

the property of their creator. 

I encourage my colleagues to support this legislation. It will reward musicians for their work and other artists. And it will fulfill 

our constitutional obligation to promote the arts by securing artists’ 

performance rights to the musical performances that they create. 

And I yield back. 

[The prepared statement of Mr. Johnson follows:] 

31 

PREPARED STATEMENT OF THE HONORABLE HANK JOHNSON, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF GEORGIA, AND MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


Hank-1.eps
32 


Hank-2.eps
33 

Mr. BERMAN. I thank the gentleman. 

The gentleman from Indiana, Mr. Pence? 

Mr. PENCE. Thank you, Chairman. Thanks for calling this hearing. I am very much looking forward to hearing from this panel, 

our distinguished witnesses and people on whom I had a crush at 

the age of 10. 

Mr. BERMAN. It is not you, Tom. 

Mr. PENCE. This is a very important issue. I want to identify myself with Mr. Keller’s remarks. I understand both sides of this entertainment economy are hurting. And as Congressman Keller said, 

I am aware that on the performance side the principal villain is piracy. 

And let me renew my appreciation for the Ranking Member’s 

longstanding leadership on intellectual property issues and the 

Chairman’s leadership in this area. This very Subcommittee exists 

for the purpose of addressing and protecting the intellectual property rights of the interests represented on this side of the argument. 

The other is I am also aware that people are struggling among 

terrestrial broadcasters. I made a living for about 10 years in and 

around local radio back in Indiana. And in the ever more diverse 

entertainment economy that we have today the point, click, 

download choices that simply weren’t there when people were out 

trying to hustle advertising sales even back in the early 1990’s represents a very serious, if not existential threat to the economic vitality of local radio and terrestrial radio. And so, I understand 

those pressures very much. 

And, Mr. Chairman, I am always interested in new business 

models for the new economy. I can’t help but wonder aloud if radio 

stations ultimately will be required by Congress to pay artists directly performance fees as considered in H.R. 4789. Shouldn’t radio 

stations perhaps enjoy some of the revenues from sales within that 

ADI? And doesn’t the technology actually exist today to allow a 

portion of that revenue stream that comes out of that ADI to flow 

back to replenish the coffers of performance fees that might be 

paid? I just find myself thinking out loud about that. 

Because I struggle with the Performance Rights Act as currently 

crafted. Although I know there has been a sincere effort to carve 

out exceptions and the like, religious broadcasters and local broadcasters. But my question is oftentimes as performers if, you know, 

you could pay radio stations to air your records, would you? And 

that is usually the one where the most respected representatives 

in this industry will look at me blankly and not answer me. 

I mean, and if they, in fact, would be willing to pay, isn’t that 

kind of prima facie evidence that there is value in the airtime? And 

I listened with great interest to my colleagues’ thoughtful reflections on the life and career of Bo Diddley who recently passed. And 

as he used the words how tragic it was for him to hear his records 

played on a local radio station and not be compensated for that. 

And I respect the gentleman’s opinion on that. 

I would only add that I think the only thing more tragic for him 

or any other artist than hearing their record played on a local radio 

station and not being paid would be not hearing your record played 

on a local radio station. I mean, the very opportunity for artists to 

34 

be heard—I expect there have been generations of Americans who 

have come to appreciate the genius of Bo Diddley and the genius 

of other artists who have been able to sustain careers over many 

decades precisely because of the infrastructure of local radio in 

America that keeps the work of these people alive and before the 

public. 

So I am listening. I have an open, if not fertile, mind on these 

issues. But I do bring these fundamental questions to this panel. 

And I look forward very much to the testimony and to the ability 

to have anyone on this panel respond to those core issues. 

And I yield back. 

Mr. BERMAN. I thank the gentleman. 

The gentleman from Florida, Mr. Wexler? 

Mr. WEXLER. Thank you, Mr. Chairman. I am not undecided. I 

have two points that seem to me compelling. One, if I understand 

it correctly, the radio stations took in $16 billion in advertising revenue last year, and not one cent was paid out to compensate performing artists for their music, which makes the radio station viable. So $16 billion in advertising revenue, zero in payments to performing artists. Something is wrong. 

Some of our colleagues have talked about an issue of fair compensation. This isn’t an issue of fair compensation. This is an issue 

of no compensation. 

We are not talking about 3 percent versus 5 percent or whatever 

the number might be. This is zero versus $16 billion in revenue. 

Also, this argument of well, we don’t have to pay because we promote. And I am just curious when unilaterally declaring that we 

promote someone’s product, when that replaced in the American 

economy the requirement that you pay for it. 

It would be one thing if you negotiated it and both parties said, 

well, because you are promoting it, therefore we will reduce our 

price or you won’t have to pay us under certain circumstances. But 

the idea that one party unilaterally says, well, I am promoting your 

product, therefore I don’t owe you anything else—I just don’t understand how that fits into any type of economic model. 

And when you take that argument to its logical conclusion, as 

some people have talked about older music, well, does that mean 

because older music really is well beyond being promoted that older 

music should be paid for but newer music should not? Clearly, that 

wouldn’t seem to be particularly sensible, either. 

Thank you, Mr. Chairman, for pushing this very important issue. 

[The prepared statement of Mr. Wexler follows:] 

35 

PREPARED STATEMENT OF THE HONORABLE ROBERT WEXLER, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF FLORIDA, AND MEMBER, SUBCOMMITTEE ON

COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY


Wexler-1.eps
36 


Wexler-2.eps
37 


Wexler-3.eps
38 


Wexler-4.eps
39 


Wexler-5.eps
40 

Mr. BERMAN. I thank the gentleman. 

I should note for the record that the fact that a Member chose 

not to speak on this issue does not mean that that Member is not 

interested in this issue. Secondly, the warm-up performers are finished. We will now go to the main event. 

Nancy Sinatra is a world famous recording artist with more than 

24 chart hits in the U.S. and internationally, including the song 

‘‘These Boots are Made for Walkin’.’’ Nancy has written two books 

about her father, Frank Sinatra. She is very active in charitable 

causes, including Jerry Lewis’ MDA telethon and songs of love. In 

2006 Nancy received a star on the Hollywood walk of fame in recognition of her career achievements and her contributions to society, and for a long time, and I assume it still is, a constituent of 

Los Angeles and our area. 

Steve Newberry is president and CEO of Commonwealth Broadcasting Corporation, a multi-station radio broadcast group with stations throughout Kentucky. Steve has served as vice-chair of the 

National Association of Broadcasters Radio board of directors and 

president of the Kentucky Association of Broadcasters Radio board 

of directors and president of the Kentucky Broadcasters Association. Steve has been active in public broadcasting having served for 

6 years as a member of the national board of trustees of America’s 

public television stations and 5 years as chairman of the Authority 

for Kentucky Educational. 

Charles Warfield, good to have you here again. He is president 

and COO of ICBC Broadcast Holdings, which owns and operates 17 

radio stations in New York City; San Francisco; Jackson, MS; and 

Columbia, SC. Throughout his career Charles has served as top 

manager for radio stations, including WRKS FM in New York, 

WDAS AM/FM in Philadelphia and KKBT FM in Los Angeles. 

Presently he serves on the Radio Advertising Bureau executive 

committee. His community commitments have included the American Red Cross, the United Negro College Fund, the Urban League, 

Harlem YMCA and various other groups. 

Thomas Lee is the international president of the American Federation of Musicians of the United States and Canada. The AFM 

is an international labor organization representing over 90,000 professional musicians and over 230 local throughout the United 

States and Canada. Mr. Lee is also a professional pianist and 

served for 24 years on active military duty with the President’s 

own Marine band performing 3 or more days a week at White 

House functions. 

It is a pleasure to have all of you here. We appreciate your patience. 

And, Ms. Sinatra, why don’t you start? 

TESTIMONY OF NANCY SINATRA, DAUGHTER OF THE LATE 

FRANK SINATRA, LEGENDARY RECORDING ARTIST 

Ms. SINATRA. Can you hear me? It is a blonde thing. I didn’t turn 

it on. Sorry. 

Chairman Berman, Ranking Member Coble, and Members of this 

Committee. thank you all so much for inviting me here today. I am 

very nervous. The truth is I would rather be at the Hollywood Bowl 

41 

in front of 18,000 people singing a song. But I am very grateful to 

you for inviting me. 

When most people are asked how much do you think artists are 

paid when their music is played on the radio they usually say a 

few cents. But as our chairman knows, over the years he has 

learned that we are paid zero. You all know that. 

I actually feel like I should tear up my script and throw it out 

because you have all said practically everything that is in here. But 

then I wouldn’t be doing my job. So I will read ahead. 

I want to thank Chairman Berman for the leadership you have 

shown on this issue. On behalf of all recording artists—and this 

goes for the musicians, the rhythm sections, the horn sections, the 

reed sections, the string sections—whose names people don’t know 

and, of course, the people whose names are on marquees, on a CD 

cover or on an iTunes download. We are all very grateful. 

Many years have gone by since we began trying to right this 

wrong. Yet performers still are not compensated for the use of their 

work on broadcast radio. And we are still here still trying to get 

fair pay. 

This is an injustice that compelled my father 40 years ago to 

lend his voice to the cause of fairness. For some of the singers and 

musicians that I know, especially back in the band era, their only 

compensation was their initial salary as a band singer, a stipend 

perhaps. But if they were to receive a royalty from their classic recordings that are still being played four and five decades later, it 

would mean the difference between having food and prescription 

drugs or not. 

Imagine, if you will, struggling in your job, perhaps for years, to 

make the best product you can, a product made of your blood, 

sweat and tears. And now imagine people taking that product to 

use to build their own hugely successful businesses, just taking it, 

no permission, no payment, no conscience. 

Imagine those people telling you they are doing you a favor by 

taking your product without your consent because some more people might come to know about you and your product. Imagine those 

people now telling you to shoo and go find compensation from those 

other people. And by the way, make some more of that product so 

we can take that, too. 

Now, why is this scenario—does that mean something? Why is 

this scenario so outrageous in the abstract, yet perfectly acceptable 

in the reality of broadcasting? Why is the broadcasters’ exemption 

allowed to rob us of our hard-earned income, including the millions 

from broadcasters overseas, very important point, who don’t have 

to pay us because our country doesn’t? 

Why is the broadcasters’ exemption allowed to disadvantage 

every other radio platform that does correctly pay us? In what 

other business is the promise of some promotion justification for 

taking someone’s product? 

Again, we are in no way seeking to harm broadcasters. Please believe me. We just want our fair share. And that is why I was 

pleased also to see that the legislation not only seeks fair royalties 

for recording artists, but it protects songwriters and gives an important break to religious, educational, non-commercial and small 

42 

radio stations, the ones, who, like the artists we are talking about 

today. 

Mr. BERMAN. This means that in about 10 minutes we are going 

to have to recess for a while. But go ahead. 

Ms. SINATRA. I will hurry. I will hurry. 

Mr. BERMAN. No. 

Ms. SINATRA. This search for justice is not about those of us 

whose careers have branched out and lasted for decades. It is not 

about me. It is not about my dad. Certainly, Dad wasn’t fighting 

for this because he needed more money. His fight carried on by us 

all is a simple one of fairness. We are in search of fairness. 

Our power lies in communicating our situation and feelings. We 

can sing about injustice, and our instruments can express our frustration and yearning, but your power lies in making the change. I 

hope you will consider supporting the Performance Rights Act. And 

thank you very much. 

I would like to know what is ADI. I don’t know what that means. 

Mr. BERMAN. I know what ATD is. 

Ms. SINATRA. Okay. I just got it. Thank you. I am sorry I took 

so long. 

[The prepared statement of Ms. Sinatra follows:] 

43 

PREPARED STATEMENT OF NANCY SINATRA


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Mr. BERMAN. I am sorry if that was one of the initials I used 

somewhere. Okay. Thank you very much. I did mention earlier that 

all of your statements will be included in the record. We would ask 

you to limit your testimony to 5 minutes. Probably after Mr. 

Newberry we will have to recess. We have two votes which make 

take 15 or 20 minutes and then come back and continue the hearing. 

Mr. Newberry? 

Mr. COBLE. Mr. Chairman, may I ask Mr. Newberry a quick 

question? What does ADI mean, Mr. Newberry? 

Mr. NEWBERRY. Area of dominant influence. It is a ratings definition for a market area or geographical area. 

Mr. COBLE. Thank you. 

I didn’t know, either, Ms. Sinatra. 

TESTIMONY OF STEVEN W. NEWBERRY, PRESIDENT AND CEO, 

COMMONWEALTH BROADCASTING CORPORATION 

Mr. NEWBERRY. Good afternoon, Chairman Berman, Ranking 

Member Coble and Members of this Subcommittee. My name is 

Steve Newberry, and I am president and CEO of Commonwealth 

Broadcasting, which operates 23 stations located in Kentucky. 

Thank you for inviting me to testify today on behalf of the over 

6,800 local radio members of the National Association of Broadcasters. 

I can tell you that all broadcasters, urban, rural, religious, public, community, ethnic, large and small broadcasters like me have 

concerns and oppose H.R. 4789. Local radio provides to the recording industry what no other music platform can, pure music promotion. Radio is free. It is pervasive, and no one is harming record 

label sales by stealing music from over the air radio. 

Don’t take my word for it. Just look at the recent studies that 

confirm local radio’s promotional value. First, NAB compiled a report using data from the Nielsen Company and from Pollstar that 

showed the extraordinary promotional value that local radio provides to artists and record labels. These slides unequivocally show 

that there is a direct correlation between the number of spins or 

plays on the local radio and the sales of albums and singles. 

This direct and positive impact on record sales is consistent 

across diverse genres and is seen regardless of the audience. As 

you can see on the screen and also on the sheet in front of me, Taylor Swift, who is the new country artist, has an increase in preradio airplay. You also see a corresponding spike in record sales. 

The sales mirror the spins. And it happens over and over with each 

song. 

Now, that correlation can also be seen with an artist who may 

initially break on the Internet like Colbie Caillat. On her slide you 

can see the early but modest bump in sales that resulted from 

Internet play of her song Bubbly. But once she got exposure on 

local radio, her sales hit the roof. 

So clearly, there is a strong and predictive relationship between 

radio airplay and sales. But can we quantify it in dollars and 

cents? Yes, we can. 

In a paper just released, economist and Ph.D., Dr. James 

Dertouzos completed an economic analysis that measures the proVerDate Aug 31 2005 12:40 Dec 17, 2008 Jkt 000000 PO 00000 Frm 00050 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\061108\42829.000 HJUD1 PsN: 42829
47 

motional value of free radio airplay to record sales. And according 

to this analysis, Dertouzos found that the significant portion of 

record industry sales of albums and digital tracks can be attributed 

to local radio airplay at a minimum 14 percent and as high as 23 

percent. That translates to between $1.5 billion and $2.4 billion of 

promotion annually. 

Now, those numbers only include the promotional value to record 

sales. It would go even higher if it included the promotional value 

of concerts, tickets or merchandise sales. And this is the promotion 

that artists and labels are getting for free. 

Under H.R. 4789 the value of this extraordinary promotional and 

all of the financial benefits that come from it would be harmed. Ultimately, less music will be played. Less exposure will be provided 

for artists, particularly for new artists and music sales will suffer. 

On the international front it is simplistic to argue that because 

other countries pay a performance royalty the United States should 

as well. First, comparing the United States to totalitarian countries 

like Iran or North Korea is just plain silly when you consider the 

artistic freedom of expression that we have here in the United 

States of America. But it is also comparing apples to oranges. 

Most of these other countries created performance royalties when 

the broadcast systems were either government owned and operated 

or at least substantially subsidized by tax dollars. Often it was the 

government who was paying the royalty. 

The U.S. broadcasting system, however, is predominately privately owned and operated and does not receive any tax subsidies. 

Clearly, the lack of a performance right has not affected the quality 

or quantity of music in the United States. At the end of the day, 

the U.S. recording industry is the most prolific in the world and is 

more successful than the United Kingdom, France, Germany, Canada, Australia, Italy, Spain and Mexico combined, all of which have 

a performance fee. 

Additionally, levying a new performance fee on local radio will 

not and cannot establish true parity. Yes, satellite and Internet 

radio do indeed pay performance fees. But satellite and Internet 

generally rely on subscription fees and offer interactivity so listeners aren’t encouraged to buy the music. 

Most importantly, I want this Committee to understand what 

this means to local radio should H.R. 4789 become law. Many local 

radio stations are struggling to be profitable since most of our operating costs are fixed and our advertising revenues are flat, and 

they are projected to remain flat in the foreseeable future. 

I know the intent was to protect smaller market radio broadcasters. But as an owner of local radio stations in rural markets, 

I fear it does not. 

I have been in local radio for many years, and for the life of me 

I do fail to understand why the record labels are looking to local 

radio to make up lost revenue. Because weakening radio will ultimately harm the performers. 

Local radio is a purely promotional vehicle for artists. Radio 

airplay drives record sales. The system in place today has produced 

the best broadcasting, music and sound recording industries in the 

world. It is not broken. And it is not in need of fixing. 

48 

Thank you for inviting me today to give my perspective on H.R. 

4789. And I will certainly entertain any questions. 

[The prepared statement of Mr. Newberry follows:] 

PREPARED STATEMENT OF STEVEN W. NEWBERRY


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Mr. BERMAN. Well, thank you very much, Mr. Newberry. And I 

think we will now recess the Committee for these two votes. Hopefully we will be back in about 20 minutes. You can make new flight 

arrangements while we are in recess. 

[Recess.] 

Mr. BERMAN. All right, the hearing will resume. And hopefully 

we can get a little time in before the next commercial break. 

Mr. Warfield? 

TESTIMONY OF CHARLES WARFIELD, PRESIDENT AND COO, 

ICBC BROADCAST HOLDINGS, INCORPORATED 

Mr. WARFIELD. Thank you. And I was going to start out by saying good afternoon, but I guess it is good evening, Chairman Berman and Ranking Member Coble and Members of the Subcommittee. And thank you for inviting me back to the Subcommittee to give you my comments on H.R. 4789, the Performance 

Rights Act. 

My name is Charles Warfield. And I am president and COO of 

ICBC Broadcast Holdings serving primarily African-American communities in New York City; San Francisco; Columbia, South Carolina; and Jackson, Mississippi. It should come as no surprise to 

anyone that local broadcasters are strongly opposed to H.R. 4789 

and the imposition of any new performance royalties, what we 

broadcasters consider a performance tax, on local radio for the benefits for the recording industry. And we oppose H.R. 4789 for one 

very simple reason. This bill is not fair. 

It is said all the time the music business is a product of a true 

symbiotic relationship. Unfortunately, today you have before you 

only two of the three groups that make up that relationship. The 

witnesses’ table is missing the third arm of the music industry trio. 

Recording Industry Association of America, or RIAA, which represents the big four record labels. 

Clearly, the crux of this issue is performer compensation. And 

frankly, I don’t blame the artists. For over 2 years I worked for a 

record label. And I have seen from the inside how this industry 

works. But I can tell you the artists have focused their aim on the 

wrong target. We should be addressing the root cause of the artist 

compensation concern, the record labels. 

First, is it fair that the record labels will take a full 50 percent 

of any new performer’s royalty under H.R. 4789? Unfortunately, 

RIAA is not here to explain why it needs half of a new performer’s 

fee that is designed for artist compensation. 

Second, H.R. 4789 is unfair in that it targets local radio stations 

when the real culprits for the lack of artist compensation is the result of inequitable, one-sided contracts that artists find themselves 

entangled in for years after they have signed with a label. I have 

heard these awful stories about artists who were forced to tour in 

their later years. But the reason these older artists are slogging 

from city to city instead of spending time with their families is not 

local radio. It is their record label. 

An example is rock pioneer Bo Diddley, as we have heard this 

afternoon who recently passed away at the age of 79. Despite ill 

health, Diddley remained a live performing artist almost until the 

end of his life. That is because, according to the Associated Press, 

62 

he and his contemporaries were often paid a flat fee to record an 

album with all rights going to the recording company. Records were 

sold, but Diddley received no royalties. 

The A.P. quoted him saying ‘‘I am old. I have never got paid. A 

dude with a pencil is worse than a cat with a machine gun.’’ Even 

today artists continue to complain that they lack true bargaining 

power when they sign with a record label. 

Don Henley, front man for the Eagles, called the recording industry a dirty business. According to Henley, most artists don’t see a 

penny of profit until their second or third album. 

One of the most reported examples is the artist Prince, who 

scribbled the word ‘‘slave’’ on his cheek to describe his relationship 

with his label, Warner Brothers. Ultimately, Prince was so desperate to get out of his recording contract that he abandoned his 

name to the label. 

And you have multi-platinum artists like TLC and Tony Braxton 

who were forced to declare bankruptcy because their recording contracts didn’t pay them enough to survive. And these are only the 

most publicized stories. There are untold others by smaller, lesser 

known artists that never get reported. There is undoubtedly a 

problem with artists’ compensation, but it is not the fault of local 

radio. 

Third, H.R. 4789 equates artists being paid fairly as being paid 

the same as composers. Yes, composers and their publishers who 

were typically a division of the big four record labels receive a royalty from local radio airplay. And this makes sense because unlike 

performers the composers do not have the ability to capitalize on 

their celebrity as do performers. 

Rather an artist is compensated with radio airplay and free exposure to 235 million listeners a week. It is this broad and far-reaching promotion that propels music sales, touring revenues, merchandise sales and a variety of other gains. 

Finally, in addition to targeting the wrong industry to solve the 

artist compensation problem, H.R. 4789 is unfair in that it claims 

to achieve parity between music platforms when no true parity can 

exist. Being a local radio broadcaster carries with it large regulatory responsibilities which the other platforms do not have. True 

parity would mean Internet and satellite radio abide by decency 

regulations, public interest obligations, payola rules and emergency 

alert requirements. 

But the fact of the matter is that local radio is different. We are 

local. We are free. We are purely promotional. And true parity cannot exist. 

The current symbiotic relationship that has existed for years between radio and recorded industries is the very essence of fairness. 

But H.R. 4789 takes this balanced system and places the heavy 

thumb of government on one side of the scale—dramatically in 

favor of the performers and records. I believe that H.R. 4789 would 

also have a negative impact on everyone at this witness table and 

even those like RIAA who are not at this table. 

Thank you for inviting me here today. And I am happy to answer 

your questions. 

[The prepared statement of Mr. Warfield follows:] 

63 

PREPARED STATEMENT OF CHARLES WARFIELD


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Mr. BERMAN. Thank you, Mr. Warfield. 

And Mr. Lee? 

TESTIMONY OF THOMAS F. LEE, PRESIDENT, 

AMERICAN FEDERATION OF MUSICIANS 

Mr. LEE. Good afternoon, or close to early evening. Chairman 

Berman, Ranking Member Coble, Members of the Committee, my 

name is Tom Lee. I am the international president of the American 

Federation of Musicians on behalf of 90,000 AFM members and 

artist members in over 230 affiliated locals across the country, I 

thank you for your attention and your leadership on this important 

issue of performance rights. 

And I am also honored to speak to you today on behalf of AFM’s 

fellow performer organization, AFGRA, the Music Managers 

Forum, the Recording Academy, the Recording Artists Coalition, 

the Rhythm and Blues Foundation, the Society of Singers and the 

Vocal Group Hall of Fame. Together we represent tens of thousands of performers. 

Dozens of our members have been here to Washington this week 

and today to tell you their stories. And I just want you to know 

how much they appreciate the opportunity to meet with you and 

be part of this hearing. 

Many others are visiting their Congress Members probably as we 

speak, so they are not present here. I am privileged to appear here 

with Ms. Nancy Sinatra, who is a great performer. There is nobody 

in this room, I would bet you, who hasn’t tried to attempt to sing 

‘‘These Boots are Made for Walkin’ ’’ or ‘‘Something Stupid’’ or 

‘‘Only Live Twice.’’ In fact, some of my best friends sing ‘‘Something 

Stupid’’ when they are around me. I don’t understand it. 

But, of course, it is a great pleasure to honor Ms. Sinatra’s father, the incomparable Frank Sinatra. He loved musicians. And I 

know they loved him. And he was a member of our union for over 

50 years. And no matter how big Frank Sinatra got, he never forgot the musicians who helped him. 

One of Sinatra’s biographers quotes him as saying that he liked 

to be around bands and be part of their glamour. And, of course, 

in the end he was the most glamorous and had the most glamorous 

career of all. But he never forgot the artistic partnership between 

musicians who play an instrument and musicians whose instrument is their voice. 

There is a tremendous amount of talent in our business, but not 

really that much glamour. So fame and fortune are very much the 

exception, not the rule. A successful performer is not necessarily 

one who is a household name. Successful performers are the ones 

who can quit their day jobs. Their music may be classical or 

grunge, jazz or country, rock or sahano, bondo or blues or folk. 

They may be established mid-tier artists, or they may be just starting out. 

They create artistically successful recordings aimed at loyal fans. 

And those fans follow their careers avidly, even though they are 

not front page news. Or they may be successful session performers 

who contribute to the professionalism and creativity of recordings. 

And I am thinking, for example, of Vice President Harold Bradley 

of the International Federation of Musicians. You probably haven’t 

82 

heard his name before today, but you absolutely have heard his 

guitar. 

He was recording with Elvis. He has recorded with Patsy Kline 

when she did ‘‘Crazy,’’ Brenda Lee’s ‘‘I Am Sorry,’’ Roy Orbison’s 

‘‘Only the Lonely,’’ Roger Miller’s ‘‘King of the Road,’’ Tammy 

Wynette’s ‘‘Stand By Your Man,’’ Johnny Horton’s ‘‘Battle of New 

Orleans’’ and, in fact, 30,000 recording sessions this individual has 

been on. He is a true session artist. 

All these varied performers have a few things in common. First, 

they have tremendous talent. They take a song, whether their own 

or someone else’s and transform it to words and notes on a piece 

of paper into a unique living and breathing work of art that has 

tremendous value as we know today. 

Second, they are incredibly hard working. Performers labor long 

and hard to develop their musical skills and their business opportunities. 

Third, they may do it for love, but they also have to eat. They 

have to provide for their families just like everybody in this room. 

Fourth, in most instances, they don’t get a weekly or monthly 

paycheck. They are entrepreneurs, small business people who 

patch together many different income streams to earn their living. 

Royalties, concert fees, t-shirts and the whole range of payments 

for artists and background musicians, every kind of payment, large 

or small is important to string together for them to make a living. 

Like Frank Sinatra, the AFM started fighting for a performance 

right in sound recordings decades ago. And we are all still fighting 

today. And it is not because we are greedy, and it is not because 

we don’t care about radio. 

It is a question of justice, business and art. And it is a question 

of paying people for their creation of an intellectual property that 

has great value. The truth is that the art we make has a business 

value. Radio is not the only industry that uses recorded music to 

make money. But it is the only one with a free pass to pay performers nothing. That is unfair any way you cut it. 

It is even more unfair given that radio’s competitors, satellite 

radio, Internet radio and cable pay us. And it hurts the American 

economy because it causes us to lose millions of dollars in payments for our U.S. musicians. The United States is the only developed country without a performance right in sound recordings. 

What is wrong with this picture? 

And the U.S. repertoire played by foreign radio is huge. But none 

of that money flows to the U.S. because we don’t have a reciprocal 

right. 

Artists around the world see this as unfair. And a few months 

ago, more than 6,000 of them expressed support for performance 

right in the United States. And I am pleased to announce that an 

additional 1,500 additional artists have stepped forward since then 

to add their voices to our cause, including such celebrated artists 

as Paul McCartney, Eric Clapton, P.J. Harvey and Ozzy Osbourne. 

With your permission, Mr. Chairman, I would like to enter that 

document into the record. 

Mr. BERMAN. Without objection, that will be included. 

83 

Mr. LEE. Thank you, sir. Today the sound recording is the second 

class citizen of copyright law. Every other performable work enjoys 

a performance right. 

For example, radio pays songwriters for the use of their underlying song. And it is right, and it is fair, and it is part of H.R. 4789 

to protect those songwriters’ interests. And as performers we will 

work in any way we can to make sure that our songwriters’ interests are protected. 

We are just asking for the same fair treatment. H.R. 4789 contains special provisions to benefit small and non-profit radio stations. Their royalty obligations will be small and predictable. But 

performers are the classic small business. They are always taking 

risks. Their rewards are generally modest and never predictable. 

And they need help. 

Radio may help to spread cultures. But let’s be clear about one 

thing. It is the performers that create the culture. Every business 

that benefits from their worth should contribute to their livelihood. 

That is fair. That is American. That is what will keep the art and 

business of music strong in this country. 

This hearing is not about the record labels and their relationship 

with their artists. That is a different topic on a different day. This 

is about fairness in radio. This is about paying those who create 

intellectual property that is deemed to have value. And indeed, $16 

billion a year in value, as far as I am concerned, proves that it has 

value. 

So let’s take into consideration the individuals whose enormous 

talent create this intellectual property of great value. Thank you 

for your attention and for your help. And I stand ready to answer 

any questions. 

[The prepared statement of Mr. Lee follows:] 

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PREPARED STATEMENT OF THOMAS F. LEE


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Mr. BERMAN. Well, thank you, Mr. Lee and all the witnesses. I 

am going to defer my questions and comments until the end. And 

I will recognize my Ranking Member, Mr. Coble, for 5 minutes. 

Mr. COBLE. Thank you, Mr. Chairman. 

Good to have you panelists with us today. 

Mr. Warfield, you were with us about a year ago. You need to 

visit more often. It is good to see you again. 

It is good to see all of you. 

Mr. Newberry, let me start with you. The bill, as you all know, 

includes a carve out for small radio stations so they are able to pay 

a flat annual fee of $5,000 for the unlimited performance of recorded music. Mr. Newberry, does this provision address your concerns regarding the impact of small stations and small businesses? 

Mr. NEWBERRY. Congressman, it is problematic from the standpoint that a lot of small market stations—and granted in Washington I am sure $5,000 is a small amount of money. But for a 

small market operator of an AM station or a small FM station that 

may very well be dealing less than $100,000 a year with a profit 

margin of 10 percent or less—and profit margin in most of these 

cases defines what the owners take home for their work. This is 

not after they have been paid. It is their take home pay. 

So $5,000 is a significant amount. And if you take a small broadcast operation that has an AM/FM combination in a small community like Princeton, Kentucky or somewhere in rural North Carolina, now you have $10,000 of obligations to pay. So I understand 

the intent with that. 

As a small market broadcaster I appreciate the intent. But I 

think the amount is something that would be an economic burden 

on those who find it most difficult to find profitability in our industry. 

Mr. COBLE. I thank you, sir. 

Mr. Warfield, you expressed concern about the economic circumstances of recording artists and criticized the bill because it 

would direct half the fee to the record label rather than to the artist. Now, are you suggesting, Mr. Warfield, that broadcasters could 

support a bill that provides a higher percentage of the royalty directly to the artist? Or do your concerns relate to other aspects of 

the bill? 

Mr. WARFIELD. My concerns relate to the status and the condition of the artists themselves and experiences that I have had with 

artists and in the industry as to why they face some of the financial difficulties that they have. And it has nothing to do, quite honestly, with the bill or with radio with this issue. And I think that 

that is an issue that should be looked at and considered. 

Mr. COBLE. I thank you for that. 

Mr. Lee, broadcasters have testified that radio stations provide 

tens of millions of dollars in free publicity and promotion to the 

performers of sound recordings in the form of concert promotion 

and publicity, et cetera. Given the truth of this statement, and I 

don’t doubt it, why is it that this valuable compensation is not considered by artists to be sufficient payment for the performance of 

their works? 

Mr. LEE. Well, sir, first of all, the graphs that were shown to us 

today I have no understanding of the study. That wasn’t shared 

90 

with us. And I don’t think anyone disagrees that there is a promotional spike when radio stations play certain artists’ recordings. 

But there is a lot more that goes into a touring artist than a radio 

station playing the recording. 

You buy newspaper ads. You put up billboards. You have all 

kinds of promotional material that is taking place. To attribute 

every artist’s spike in their record sales to simply the fact that they 

are being played on the radio is not taking into consideration all 

of the other things that go on around promoting that artist. 

And I would say to you, as someone said earlier, when you broadcast a baseball game, a basketball game, NFL football, you are promoting the purchasing of tickets at actually a lot higher fees in 

some cases than what they are for concert artists. You are promoting a huge organization. And you are paying for it. 

The radio stations have to pay for that signal. We are suggesting 

that there is nothing different if you are going to pay for a signal 

to promote a basketball game than intellectual property owners 

and the creators are entitled to these fees as compensation as well. 

Mr. COBLE. Thank you, Mr. Lee. 

One more question, if I may, Mr. Chairman. 

Ms. Sinatra, we have heard about the recent passing of Bo 

Diddley. And I was an avid Bo Diddley fan. But my genre, as most 

of my colleagues know, flows more from country and bluegrass and 

Porter Wagoner, of course, pre-deceased Bo Diddley. Let me ask 

you this, Ms. Sinatra. How do you think your life and the lives of 

the late Porter Wagoner, of the late Bo Diddley—how might those 

lives may have been different if the Congress had enacted a performance right for recording artists when it was considered some 

almost three decades ago? 

Ms. SINATRA. Addressing the older performers, the recording artists, I am only guessing that their lives, I am pretty sure, their 

lives would have been a lot better. 

I know of many singers, including some in the 1940’s and 1950’s, 

who died penniless, and I think that they could have maybe lived 

longer—who knows? Their families could be enjoying, or they could 

be enjoying, something a little better now, if they had received royalties all those years. 

As far as I am concerned, my own career, I have done extremely 

well, so I am not talking about me with this. I am talking about 

them, talking about the younger people starting out, who need royalties in order to continue their work in the arts. They don’t receive 

them. 

And I am also talking about the musicians, many of whom that 

I have worked with for 40-plus years, still travel with me to this 

day—that is the only time they get paid is when they are working 

for me, and I make sure they get paid. And the side of that is that 

I never make a dime on the road. So if we are talking about that, 

I don’t know what to tell you. 

Mr. COBLE. Well, that is a fair response. I thank the witness. 

And, Mr. Chairman, I thank you as well and yield back. 

Mr. BERMAN. The time of the gentleman has expired. 

Next, the gentleman from North Carolina? 

Okay. Then the gentlelady from Texas, based on order of coming 

in earlier? 

91 

Okay. You are going to yield your time to Mr. Wexler? Oh. 

All right. Then I think it is Mr. Johnson. [Laughter.] 

The gentleman is recognized for 5 minutes. 

Mr. JOHNSON. Thank you. Me first, gentlemen. Yes. Okay. 

Ms. Sinatra. 

Ms. SINATRA. Yes, sir. 

Mr. JOHNSON. I want to thank you vicariously. I want to thank 

you. I really want to thank your daddy for creating so many works 

on wax that people listen to and will continue to listen to in perpetuity. And he gave so much joy. 

And he was also a man who looked kindly upon people of my 

race, by the way, and I deeply appreciate that. 

By getting back to what we are talking about, Mr. Sinatra has 

so many renditions that are so special and unique that they could 

never be duplicated, and so we just play them over and over again. 

And whenever that is broadcast on broadcast radio, the artist, or 

his estate, does not partake in that moneymaking proposition. 

And I assume that your life and the life of Mr. Sinatra’s heirs 

would be enhanced, if you all were able to partake in such revenues. Am I correct about that? 

Ms. SINATRA. I am sure you must be. We are very fortunate in 

that my dad owned most of his own masters, as I own most of my 

masters. 

Mr. JOHNSON. Okay. So that shuts that down. 

Ms. SINATRA. It takes the other stuff away—— 

Mr. JOHNSON. Your dad was very smart. 

Ms. SINATRA. That is why I said we don’t talk about us in this 

particular bill—— 

Mr. JOHNSON. Yes. 

Ms. SINATRA [continuing]. Because we are already okay. 

Mr. JOHNSON. Well, I tell you, that it is not the norm, though, 

among the performers. Most performers don’t own their masters. 

Ms. SINATRA. That is right. 

Mr. JOHNSON. And so what I said applies to so many others, who 

you are representing today, and I appreciate that. 

Let me ask Mr. Newberry. The broadcast radio industry has undergone substantial conglomeration since Congress first established 

copyright protection for sound recordings in 1971. Isn’t that a fact? 

Mr. NEWBERRY. The world has changed. Yes, sir. There has been 

a change in the organization of our industry, and there is a tremendous amount of additional competition. 

Mr. JOHNSON. A lot of conglomeration or consolidation. 

Mr. NEWBERRY. Certainly. 

Mr. JOHNSON. And so therefore it is true to report that many of 

the stations that broadcast popular music are owned by major 

media corporations, correct? 

Mr. NEWBERRY. Well—— 

Mr. JOHNSON. True or false? 

Mr. NEWBERRY. Commonwealth Broadcasting is certainly not a 

major media corporation, but certainly there are publicly traded 

companies in broadcasting. 

Mr. JOHNSON. But it is a multinational company. 

Mr. NEWBERRY. Yes, sir. 

Mr. JOHNSON. And this—— 

92 

Mr. NEWBERRY. Just as further clarification, minimal amount of 

international activity. Most of these are American companies, 

American licenses. 

Mr. JOHNSON. Certainly, but big companies. 

Mr. NEWBERRY. And small ones. 

Mr. JOHNSON. But mostly the major media companies have been 

consolidating their hold on the broadcast radio industry. Would you 

agree to that, Mr. Lee? 

Mr. LEE. I absolutely would agree to that. 

Mr. JOHNSON. And would you agree to it also, Mr. Warfield? 

Mr. WARFIELD. There has been a certain amount of consolidation 

in our industry, but there are 13,000 stations in the United States. 

Many of those radio stations are owned by what we refer to as 

Mom and Pop, small organizations. 

Mr. JOHNSON. Certainly. I know there are a lot of small, fivewatt, 20-watt, 100-watt stations, but the 50,000-watt stations, 

100,000-watt stations, the big boys—they are owned by the big 

media conglomerate. 

Mr. NEWBERRY. That is not correct. 

Mr. WARFIELD. That is not correct. Many stations are in individual hands and run small companies. 

Mr. NEWBERRY. A 100,000-watt station in Bowling Green, Kentucky, owned by a competitor of mine. 

Mr. JOHNSON. Okay. 

Mr. NEWBERRY. Small market, small business. 

Mr. JOHNSON. Small markets, but large markets, where the real 

money is made—they are controlled by the major media corporations. Now, you are going to try to hoodwink us on that, but I think 

everybody that there has been consolidation in the industry, and 

you all have admitted to it. 

Now, given this shift into more larger media conglomerates controlling the broadcast industry, and while at the same time they 

have TV and newspaper outlets as well, this consolidation has been 

ubiquitous, and everybody knows it. 

Don’t you think, Mr. Lee, that the industry is much better 

equipped today than it was in 1971 to pay performance royalties? 

Mr. LEE. I think they absolutely are equipped, much better 

equipped to pay performance royalties. 

And I just want to make one thing clear. We are not out to make 

the small companies a lot of business. We want them to play our 

members’ products. We are interested in that taking place. But we 

have 75 percent, I think is the number, that are small radio stations, and we have made provisions in the bill for small radio stations. 

But when Beyonce Knowle comes out with a new recording, that 

radio station is going to say, ‘‘We have to play her recording and 

every other top artists’ recordings, because that is how they sell 

their ads.’’ It is a $16 billion a year ad industry. 

They are not promoting our records as much as they are selling 

ads to make money for themselves. 2.3 million sound recordings 

are played a day. Now, those are not all the top recordings that are 

getting the promotional service that seems to be suggested here. 

And I just have to say one other thing to Mr. Coble’s question 

about the individual, the older musician. I can tell you right now 

93 

of a musician in Nashville, Tennessee. He was on 18,000 recording 

sessions. 

That individual now is sitting in the nursing home, recovering 

from a broken hip. He is almost blind, and his hearing is almost 

gone, but he can hear well enough to hear a radio station that 

plays his songs—that is from Elvis to Dolly Parton to Ray Price to 

Emmylou Harris to Conway Twitty to Charlie Pride to Porter Wagoner to Loretta Lynn. He is hearing those songs play, and he is getting no revenue from it, and everybody else is making money off 

of it. 

Mr. BERMAN. The time of the gentleman has expired. 

The gentleman from Florida, Mr. Keller, is recognized for 5 minutes. 

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

Mr. Lee, let me begin with you. Under this proposed performance 

fee legislation, the record labels would get 50 percent of the money, 

and musicians 2.5 percent. From the musician’s perspective, is that 

a fair allocation, for the record companies to get 20 times as much 

as the musician? 

Mr. LEE. Well, the artist will get 45 percent. The singers and 

background musicians will share 5 percent. That is correct. 

Mr. KELLER. And musicians are 2.5 percent, and the background 

singers 2.5 percent. Is that correct? 

Mr. LEE. That is correct. 

Mr. KELLER. And you are here as part of the musicians’ union, 

correct? 

Mr. LEE. To represent that this legislation should be—— 

Mr. KELLER. Right. And my question is from a musician’s perspective, who is slated to get 2.5 percent, is that a fair allocation, 

compared to the 50 percent given to the record label? 

Mr. LEE. Well, we would always be interested in acquiring more 

percentage for the musicians. I think everybody would understand 

that. But there is one other aspect to this. When you have been on 

18,000 recordings, and your recordings are for multiple artists, that 

adds up rather quickly. 

Mr. KELLER. Right. Now, I will stick with you, Mr. Lee. The 

copyright registrar has testified that restaurants, bars and retail 

stores should also be paying a performance fee. Do you agree? 

Mr. LEE. That is not the subject of this legislation. 

Mr. KELLER. That is the subject of my question, and it may well 

be the subject of legislation, if I seek an amendment, so I would 

like you to answer it. Do you agree that these bars and restaurants 

and retail stores should also be paying a performance fee? 

Mr. LEE. If you were to offer that as an amendment, we would 

absolutely not oppose that. 

Mr. KELLER. Would you support it? 

Mr. LEE. We would support it. 

Mr. KELLER. Okay. 

Mr. Warfield, turning to you, the Department of Commerce sent 

out a letter yesterday. Have you had a chance to look at that? 

Mr. WARFIELD. No, sir. I have not. 

Mr. KELLER. In this letter the Department of Commerce says 

this bill is good for you, that it is in the broadcasters’ economic inVerDate Aug 31 2005 12:40 Dec 17, 2008 Jkt 000000 PO 00000 Frm 00097 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\061108\42829.000 HJUD1 PsN: 42829
94 

terests to support this legislation. I will just read you the quote, 

since you haven’t read it. 

The Department of Commerce ‘‘testified before this Committee 

that establishing a public performance right to a sound recording 

was in the long-range economic interests of all parties, including 

U.S. recording companies and broadcasting stations.’’ 

You are a broadcaster. Do you think it is in your economic interests to pass this legislation? 

Mr. WARFIELD. Absolutely not, sir. 

Mr. KELLER. Did they ever contact you and ask you if it was in 

your economic interests while writing this letter? 

Mr. WARFIELD. Absolutely not. 

Mr. KELLER. Mr. Newberry, do you think it is in your economic 

interest as a broadcaster to pass this legislation? 

Mr. NEWBERRY. No, sir, I do not. 

Mr. KELLER. Has the Department of Commerce ever contacted 

you and asked you if it was in your economic interests to pass this 

legislation? 

Mr. NEWBERRY. No, sir, it did not. 

Mr. KELLER. Okay. 

Ms. Sinatra, you have had the number one hit in America in 

1966 with ‘‘These Boots are Made for Walkin’.’’ In a very humble 

way, you didn’t even mention it in your opening statement. 

Let me ask you, as someone who has done what few people have 

ever done—that is, have a number one hit—do you believe your famous song could have become a number one hit without the local 

airplay it got from local radio stations? 

Ms. SINATRA. That was just so long ago. It was way back in the 

last century. I don’t know the answer to that, for my success was 

extremely visual. That is why—and it sounds terribly immodest— 

it was almost iconic, because it was the look, the boots, the miniskirt, the hair. 

Mr. KELLER. Right. 

Ms. SINATRA. Everybody copied. I did television mostly in those 

days, and I think radio may have helped me. I don’t know. I know 

they jumped on the record at some point, but I honestly don’t know 

at what point. 

Mr. KELLER. Okay. Thank you. 

Well, did you tour to promote that song with concerts? 

Ms. SINATRA. I actually never toured—— 

Mr. KELLER. Okay. 

Ms. SINATRA [continuing]. To promote the record. It was basically 

Ed Sullivan, Smothers Brothers, shows like that that made that 

record for me, I think. 

Mr. KELLER. All right. Thank you. 

Turning back to broadcasters, we have heard comments from the 

other side that essentially boil down to this. You all sometimes 

have a lot of revenue, so why don’t you just take that revenue and 

pay it to the performers? And it is essentially trying to characterize 

you as greedy, to be honest. 

I have to tell you what I have observed from my local radio station, as someone from Orlando, Florida. After 9/11 happened, our 

local Top 40 stations and country stations dropped everything they 

95 

were doing every single day to put me on the air, at no benefit to 

them, just to let people know what is going on. 

I went through Hurricane Charlie in 2004. My mom lost her 

home. That was destroyed. They had me on the air, radio and top 

stations, every day to advise people what was going on. 

We went through tornadoes that killed over 20 people in my congressional district. With no benefit to themselves, they dropped all 

their programming and their advertising to have me on the air 

every single day. 

Let me start with Mr. Newberry. 

Mr. BERMAN. Mr. Keller, time is—why don’t you finish this? 

Mr. KELLER. I will try to wrap this up. 

Mr. Newberry and Warfield, are you concerned that by imposing 

this so-called performance fee, that radio stations would be less 

able, in the event of national emergencies and other critical things 

like 9/11 and Hurricane Katrina, to provide that type of service to 

their communities? 

We will start with Mr. Warfield. 

Mr. WARFIELD. I take it there are some operators that would 

have to cut significant services, would not necessarily have staff to 

that, or have the ability to do that and forego the revenue that 

would be required. I think there would certainly be a diminution 

of services provided to the community, unfortunately, as well as information and programming. 

Mr. NEWBERRY. Yes, I do. And just to make a correlation to what 

you are talking about, and I appreciate the fact that your local stations did that, Mr. Lee earlier said there is a lot more that goes 

into the success of a concert than radio promotion, and I will tell 

you there is a lot more that goes into the success of a radio station 

than the music. 

And it is the connection it has with the local community. And for 

us to look at assessing a fee on the top dollar of a radio station 

would cause dramatic effect to the services we could be provide. 

Mr. BERMAN. Mr. Newberry? 

Mr. KELLER. Thank you, Mr. Chairman. 

Mr. BERMAN. Mr. Keller, your time has expired. 

The gentleman from—— 

Ms. Jackson Lee is recognized for 5 minutes. 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. Thank 

you very much, Mr. Chairman. 

I am glad I followed by distinguished friend from Florida, because I don’t perceive what we are trying to do as ‘‘I got you.’’ This 

is not an ‘‘I got you’’ piece of legislation. 

I hope that although applause came when song names were rendered, I hope that applause comes when members want to strike 

a balance to make this work, because frankly, it is a broken system, and we do need to fix it. 

And we need to distinguish between heaps of profits that some 

broadcasters are making versus the smaller entities, and we need 

to find the kind of balance, if you will, that comports to the response to the songs, to songsters, the persons who give life to these 

songs, along with those who own the business entity of broadcasting. 

96 

So I first of all want to thank all of the witnesses for their presence here today. And I ask for you to beg my pardon, if I in some 

way accelerate the questioning, because it is pointed in order to get 

the right solutions here. 

Let me first start with Ms. Sinatra and thank her so very much. 

I am so glad that she is admitting non-humbleness, because you 

are an icon, and I want it to be matched to your father, because 

you are here, but let us not in any way discount the wonderful entertainment and fun that you provided for us and continue to do 

so in the music that is being played. 

Ms. SINATRA. Thank you. 

Ms. JACKSON LEE. And certainly there is nothing to diminish the 

heroic status of your dad, both in theater and movies and certainly 

in song. 

And my question would be to you, because one of the witnesses 

made mention of—and probably not in a purposeful, wrongful manner—but made mention of whose fault is it that people of yesteryear got these unfortunately deadbeat contracts. 

And in the arena that I have traveled in, the music that maybe 

my mom and dad listened to, there were a lot of Negro and colored 

artists, who got a lot of deadbeat contracts. And they got them pennies on the song, if you will. 

Do you think it is the fault of those that sang songs over the decades for the kind of—were they, if you will, delinquent and without 

diligence, that they would up sometimes paupers, as they sang 

songs that made us joyful? 

Ms. Sinatra, was it the fault of those who sang songs that some 

of their contracts were poorly done? 

Ms. SINATRA. Well, without diligence, perhaps it was true, because most musicians are just so grateful to have any opportunity 

to perform. They will do just about anything to be able to get a 

record made, and probably be a little careless regarding the contract. 

But most of us, or I should say many of us, don’t even have labels anymore. So many labels are gone, and I don’t know how 

much we can blame this on the label release. 

Ms. JACKSON LEE. So in essence, you are balancing your answer, 

which is that the love of the art caused a lot of singers to just go 

forward. 

Ms. SINATRA. I think that is true. 

Ms. JACKSON LEE. And the labels that were there may not even 

exist now, and so there is no real relief to go even back to the label. 

Ms. SINATRA. In many cases, yes. 

Ms. JACKSON LEE. And maybe the label was equally in the dark 

in those years past, because it has been pointed that the labels 

have been at fault. 

And I want to go to Mr. Warfield, because you did seem to suggest, ‘‘I have got mine, and you get yours.’’ And I don’t think in this 

hearing room that can be the only solution. We have got to find a 

way to balance this question. 

So tell me in the array of individuals or the way of your representation, what is the average, if you will, yearly revenue that 

your broadcast stations have? What is the range of them? 

97 

Mr. WARFIELD. I can speak on behalf of the industry overall. Our industry generated roughly $20 billion revenue in 2007, and our industry also in 1999 generated $20 billion in revenues. We have an 

industry that is a—you look at in place here when you look at it— 

is down, and has been experiencing difficulties as an industry for 

a number of years. 

And that is just the facts about radio. I have heard questions 

about consolidation and the impact, and there is sort of behind that 

the greed factor about broadcasters. We are trying to provide the 

best service that we can in our communities, to continue to serve 

those communities and to be viable businesses in an industry that 

is not growing. 

Ms. JACKSON LEE. Well, but you do have consolidation. 

Mr. BERMAN. I am sorry, but the time of the gentlelady has expired. 

Ms. JACKSON LEE. Did he finish his point? 

Mr. BERMAN. I think he did. 

Did you? 

Yes. 

Ms. JACKSON LEE. All right. Are we having a second round, Mr. 

Chairman? 

Mr. BERMAN. If you want to. 

Ms. JACKSON LEE. I would like one. Thank you. 

Mr. BERMAN. I have got a hearing. We have got to get done before the votes. 

Ms. JACKSON LEE. That would be great. 

Mr. BERMAN. No rounds after the votes. 

We will let you go. Until the votes, you are captive. 

Ms. JACKSON LEE. Thank you. I yield back. 

Mr. BERMAN. Okay. 

The gentleman from California, Mr. Issa? 

Mr. ISSA. Thank you. And I will probably sort of continue in the 

same genre as the gentlelady from Texas. 

Mr. Warfield, I have a set of figures that we have compiled. We 

think it is accurate. You have 17 stations? 

Mr. WARFIELD. Our company today has 17 stations. That is correct. 

Mr. ISSA. Okay. Fourteen have revenues less than $1.25 million. 

Mr. WARFIELD. That is correct. I don’t know the numbers by 

heart, but I won’t question that. 

Mr. ISSA. I was a CEO once. I didn’t know the numbers by heart, 

but I was always pretty close. 

So those 14 stations would each pay $5,000 under this act, 

agreed? 

Mr. WARFIELD. As the act is? 

Mr. ISSA. Okay. 

Mr. WARFIELD. Just calculate that based on what is there, that 

sounds about right. 

Mr. ISSA. Okay. And let us just take sort of a middle of the road 

kind of a station. Well, let us take one. KVVN-AM revenues are 

about $1.2 million. 

Mr. WARFIELD. That is correct. 

Mr. ISSA. How much of that is labor? 

Mr. WARFIELD. How much of that—excuse me? 

98 

Mr. ISSA. Is labor. 

Mr. WARFIELD. Labor? I would say at least 50 percent of that. 

Mr. ISSA. So you have got $600,000 in labor. I would assume that 

you have $60,000 in health care costs alone just for that labor, 

right? 

Mr. WARFIELD. Roughly 10 percent. 

Mr. ISSA. Okay. So could you afford $5,000 into $1.2 million in 

that case? 

Mr. WARFIELD. That radio station is a talk radio station, so it 

would not apply. 

Mr. ISSA. Oh, I am sorry. The format said ethnic. It didn’t—— 

Mr. WARFIELD. It is targeted to the Vietnamese community in 

the San Francisco Bay Area. 

Mr. ISSA. Okay. Well, let us actually move up. I am going to take 

a liberty. WARQ Rock revenues are about $1.4 million to $1.5 million, not covered by the current $5,000 cap. But let us just say for 

a moment that it was .5 percent, so you would be at $7,000. On 

$1.425 million, half of it being $700,000 worth of labor, would 

$7,000 make the difference of that company staying in business or 

not? 

Mr. WARFIELD. Labor at that radio station is considerably higher, 

because this is a rock radio station. There are a lot of air personalities, and all of our day parts, and the costs of marketing, promotion. That radio station, the cost of operations is probably close 

to 85 percent. 

Mr. ISSA. Okay. So if you went on that station and said we have 

paid $7,000 to the performing artists, because we think it is the 

right thing to do—.5 percent of our gross revenues—and we think 

that is the right thing to do, because we think these old rockers 

ought to get some revenue, when they can no longer roll through 

town and tour, do you think that would be worth—would that be 

a normal promotion that might pay you a dividend of at least 

$7,000 of listener royalties? 

Mr. WARFIELD. Probably not. 

Mr. ISSA. You don’t think people would care enough that you—— 

Mr. WARFIELD. I think the fact that the radio station is supporting those artists and playing that music in that marketplace 

and doing other promotion for the—— 

Mr. ISSA. I appreciate that. My question, though, is could you afford it? Could you afford $7,000 into $1.4 million on that? 

Mr. WARFIELD. It would probably cost us services in our operation in the Columbia, South Carolina, market. It is not a standalone radio station. It is part of a group of stations. 

Mr. ISSA. But you wouldn’t fold, if we mandated you pay $7,000. 

Mr. WARFIELD. Would we fold? Probably not. But it would cost 

in services to the community. 

Mr. ISSA. And don’t you pay roughly $28,000 to the songwriters 

on that $1.4 million, roughly? 

Mr. WARFIELD. There is a requirement to pay that. That is absolutely correct. 

Mr. ISSA. Okay. So it doesn’t kill you to pay $28,000, but $7,000 

would cause cutbacks. 

Mr. WARFIELD. Cost of that operation. 

99 

Mr. ISSA. Okay. If you are already paying the $7,000, it would 

be figured into your business model, but you are not paying it right 

now. 

Mr. WARFIELD. Well, it might go into a decision that we would 

make as to what we would do with our radio stations in that market. 

Mr. ISSA. Okay. I kind of see that. So I think we can probably live with the fact that you pay $28,000 to the songwriters—$7,000 

or even $28,000 probably isn’t what we are talking about. We are 

talking about whether or not your promotion value makes it legitimate to pay nothing. 

Mr. WARFIELD. Yes. 

Mr. ISSA. That is basically the status quo. 

Mr. WARFIELD. Yes. 

Mr. ISSA. Okay. Let me ask you another question. I am being 

rhetorical, but it is important, because we are trying to find some 

middle ground, and the NAB isn’t going to give us middle ground, 

so I am hoping I can get it from businessmen. 

If we allowed you straight over the table to charge for every song 

that you played, if you were promoting a song or a concert coming 

through town, and you could earn revenues from that, then would 

it be unfair to take 2 or 2.5 percent or some figure for what you 

play, remember that you can offset that with revenue? 

Mr. WARFIELD. I don’t know what kind of a business model that 

is. I would have to sit down as the CEO of the company and see 

if that makes sense in a marketplace that is going through tough 

times. 

Mr. ISSA. One last follow up. The question I am asking—you said 

that it was worth paying nothing to the people whose music you 

are playing, because of the promotion value. 

I am saying if you can monetize that, wouldn’t it be fair to collect 

from those that you choose to pay that you haven’t monetized, and 

collect from those that you believe you are promoting? 

Mr. WARFIELD. I don’t know how that model would work, sir. 

Mr. ISSA. Okay. So I am going to summarize for you that you believe as of today that your worth of your promotion causes you to 

pay nothing, but you haven’t looked into what the value of monetizing your promotion would be. 

Thank you, Mr. Chairman. I got my point across. 

Mr. BERMAN. Thanks. I think so. 

The gentleman from Florida, Mr. Wexler? 

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

Mr. Warfield, if I could just follow up Mr. Issa’s conversation 

with you, I am having a hard time understanding the equity of 

your position. 

I understand you make the argument that somehow the value of 

the promotion that you provide therefore obviates the need to provide even one cent of compensation to the performing artists. 

It would seem to me the only logical position would be that yes, 

in fact, there is a promotional value that a radio station provides 

to a performing artist, and that promotional value should be a factor in the formulation of the royalty that is paid. 

That is a value provided by the radio station, and the value of 

the music provided by the performing artist to the radio station 

100 

should be calculated together, and there should be an economic calculation that is made, based on the equities of the situation. 

But to have the strident formula that the value of the promotion 

always exceeds in every situation from the beginning of time till 

the end of time the value of the product of the performing artist 

defies logic to me. 

So we seem to have two extreme situations in the music industry. On the one hand, we have Internet radio, which pays what 

seem to be fairly significant percentages of revenue, and then we 

have your companies that pay zero percent of their revenue to royalties. 

And as the questioning points out, which of course is in the bill, 

the idea that somehow this bill compromises the financial interests 

of smaller stations—that is really a misnomer. 

That is really not an argument, because as we now know, smaller stations will pay out a flat fee. And that flat fee in most instances will be $5,000 or even less in terms, I understand, of educational institutions or some other institutions, which $5,000 in the 

context of most of these businesses is a fairly small, almost nonexistent percentage, of the business activity. 

So help me understand the equity of your position in light of the 

value of the promotion. And tell me why is it that in other instances like Internet radio, where the royalty represents a very significant amount, in some instances I understand even half or more, 

why should we go on with this relationship that you benefit by, 

when there doesn’t seem to be any economic justification or fairness to the performing artists? 

Mr. WARFIELD. I have been in this industry for 30 years, running 

radio stations in large markets, small markets, have worked with 

artists, have been with radio stations that have, quite honestly, 

launched the careers of many artists, some of whom are household 

names today, some of whom would have never had careers without 

the benefit of airplay in our markets, and at no point was there 

any question about the value of what we did. 

The same thing is true today, as we continue to promote those 

artists—those artists that I started with some 30 years ago, as well 

as the new artists today. There is a tremendous benefit to these 

artists and to the labels. 

You want to equate that with fees that we pay by streaming the 

Internet. I think it was even said here at some point this afternoon 

that maybe those fees, maybe that is exorbitant. 

We had a business model that is running people away and causing these businesses to fail. Is that what the intent of this might 

be? 

Mr. WEXLER. Tell me, if you would, why isn’t it not the best response that the value of the promotion, the factor in the royalty 

payment, why is it always 100 percent and zero? Why isn’t it a factor? 

Mr. WARFIELD. The ratio as it has existed through all of these 

years has been the fact that it has benefited these artists, as well 

as these labels, for the entire time I have been in this career. 

There has been a tremendous benefit that has accrued to all of 

them through this. And we feel that that balance has been well for 

this industry for the last 60 years and should continue. 

101 

Mr. WEXLER. So you are saying that in every instance the value 

of the promotion exceeds the value of what the work product was 

of the recording artist to the radio station. Therefore, you owe them 

nothing, in every instance since the beginning of music. 

Mr. WARFIELD. There is a strong recording industry in this country, stronger than any other country, in America, and I think the 

value has certainly been reflected in their success. 

Mr. WEXLER. Thank you. 

Mr. BERMAN. The gentleman from Tennessee. We should note 

that sometimes the victory goes to those who stay the latest. Notice 

who is left. [Laughter.] 

Mr. COHEN. The last shall be first. 

Let me ask the two gentlemen here from the broadcast companies. I don’t know which would be the best one. Maybe this is for 

the purpose of Mr. Warfield, I guess. 

What is the typical percentage that a good, healthy radio station 

pays out right now on copyrights for compositions or music? 

Mr. WARFIELD. It is not a percentage. It is calculated now based 

on the market size that the operation is in. 

Mr. COHEN. Yes, now a percentage of your gross you could probably guess what is an average. Is it 1 percent of the gross sales? 

Is it 2 percent, 20 percent? 

Mr. WARFIELD. It is a fee that is set. It is not a percentage. It 

is a fee that is set with the—— 

Mr. COHEN. I know that that is not, but you get a radio station—— 

Mr. WARFIELD. As your revenues fluctuate, that number fluctuates also, but it is set based on the market size. 

Mr. NEWBERRY. There was an historic basis that did not work on 

the percentage. And he is not trying to avoid the question. The 

honest answer is totally the percentage will move, based on the 

revenue of the station. 

Mr. COHEN. Well, let us take the work I did. 

Mr. NEWBERRY. It is 5 to 7 percent. 

Mr. COHEN. Five to 7 percent. Good. 

Mr. NEWBERRY. Historically. 

Mr. COHEN. That is what I am trying to get to. And you make 

this up. You have advertises, right? What do you think it would 

cost, if we pass this bill? Do you expect it is going to cost you another 5 to 7 percent? 

Mr. WARFIELD. It could cost this industry $5 billion to $7 billion. 

Mr. COHEN. I don’t mean that, but I mean a percentage of a typical radio station. Five to seven is what you pay out normally to 

the copyrights that you pay now. 

Mr. NEWBERRY. I can tell you that $5,000 a year for a lot of stations, small market stations, would be well in excess of 5 to 7 percent. 

Mr. COHEN. So if it is 5 to 7 percent, you could just increase your 

advertising costs by 5 to 7 percent, couldn’t you? 

Mr. NEWBERRY. On today’s economy, no. 

Mr. WARFIELD. Not in today’s economy we are in. 

Mr. COHEN. But you could do it. Are you suggesting that people 

wouldn’t advertise? 

102 

Mr. WARFIELD. It would not be supported by the advertising community. That is correct. 

Mr. COHEN. What would they do? Just kind of go to a color ad 

or something? 

Mr. WARFIELD. What has been happening is they would buy less 

advertising from the industry. 

Mr. COHEN. They would buy less advertising. 

I didn’t realize the industry was hurting that bad. 

Mr. WARFIELD. Well, he referenced earlier that our industry has 

been flat for the past 5 years. 

Mr. COHEN. Your executives—what do you think their income increased last year? Do you have any idea what the average broadcasters—say NBC—what percentage did his or her income increase 

last year? 

Mr. NEWBERRY. He has no radio station, so I wouldn’t have anything to—— 

Mr. WARFIELD. I can only say—— 

Mr. COHEN. Give me some fine radio station—Clear Channel. 

Mr. NEWBERRY. The compensation was down last year. 

Mr. COHEN. The compensation was down? 

Mr. NEWBERRY. The CEO’s compensation, to my recollection, was 

down last year. 

Mr. COHEN. What do you think it has been over the last 5 years? 

Mr. NEWBERRY. Don’t know. 

Mr. COHEN. I would submit to you that if you look at it—we can 

look at it afterwards—that the compensation of the executives, 

managers has increased on an annual basis over a certain number 

of years by a goodly percentage. And that is borne by the advertising costs. 

And somehow or another, they all do good enough to charge more 

to the advertisers to compensate for your executive salaries, and we 

get along. But when it comes to paying the singers that give you 

the songs that give you the income to give the executives their salaries, you can’t afford it. 

Mr. NEWBERRY. Congressman, I can tell you as a matter of fact 

that my compensation has been flat for the past 5 years. 

Mr. WARFIELD. And I can also sit here and say that over the last 

5 years my compensation has been down. 

Mr. BERMAN. I think Ms. Sinatra has something you wanted to 

say on this question? 

Ms. SINATRA. I am sorry to interrupt. I just have a question. I 

think ‘‘Something Stupid,’’ the duet with my dad, was number one 

in 1968—something like that. And I remember those days vividly, 

because my father was so excited to have a number one record. I 

think it might have been his first one. I don’t know. 

But in those days radio was announcing who was singing, what 

the label was, what the song was called, sometimes before they 

played it, and sometimes after. 

Now, fast-forward 40 years. What I hear mostly is a computergenerated program. So my question is, where is the promotion 

now? 

Mr. NEWBERRY. I can address—— 

Mr. COHEN. I yield the balance of my time to Ms. Sinatra. 

[Laughter.] 

103 

Mr. NEWBERRY. I can address that from my personal experience, 

and I am sure we could line up broadcasters all day that had similar experiences. 

WPTQ in Bowling Green, Kentucky, is a rock station. It has a 

Saturday night show, it has a Sunday night show, that is promoting local artists. It back announces songs that are released 

within the past 6 months to a year. No, we don’t. Every time we 

play Led Zeppelin, we don’t tell you the song, because it is a standard. It is a classic. But that is part of the promotional value of that 

radio station. 

I can bring bands that we play that are not able to get recording 

contracts, but we play them, because they are able to do their own 

recording. That value is there, and for it to summarily be said that 

our industry is being run by computers I think is an over exaggeration. 

Ms. SINATRA. No, I didn’t say that. I just need to move. [Laughter.] 

Mr. BERMAN. Do you want to get a last gasp in here, Steve? 

Mr. COHEN. Further Congressman saith not. 

Mr. BERMAN. I am just going to yield myself 5 minutes to make 

a couple of comments and ask a few questions. 

Mr. Warfield, both of you are really great witnesses. You have 

a tough argument, but you are great witnesses, and you do as well 

as can be done. You, Mr. Warfield, have not mellowed in 9 months. 

[Laughter.] 

And there is something funny about the point raised by Mr. Keller. The Commerce Department thinks you will do better if our bill 

passes. You don’t know why they think that, but they don’t think 

you are the right judge of how your industry will do better. They 

are a better judge of it. 

You are a better judge of how the recording industry will do than 

they are of what they think is in their interests, because they are 

wrong to be pursuing payment for performance, because all they 

are going to do is kill the goose and all that. So you are a better 

judge of their business model and what they think is in their interests than they are. 

And on the issue of who is testifying and who isn’t, I think we 

should one day have a hearing—I say this; it is not a promise, but 

it is in my mind clear—let us get Clear Channel and the biggest 

music label and have just a hearing of them. 

In other words, we aren’t seeing the big multinational conglomerate radio station owners coming to testify here. We are seeing a 

couple of very effective entrepreneurial owners of some stations, 

but many of them on the smaller side, make the case. So each 

group does what they want to do. 

But the thing I most wanted to disabuse you of is—and I understand why you say it, and I think there is some historical truth to 

it—the notion that these days—I think the labels would love it, if 

it were still the case—that the labels have put a ring through the 

nose of the recording artists and are leading them to be their front 

people for their interests, and that the recording artists do not 

have a sophisticated and intelligent understanding of what their 

interests are, and that somehow these people, whatever the conditions were 25 years ago or 40 years ago or 50 years ago—and we 

104 

know some horrible stories from those periods of time and those 

contracts. 

That is all true and accurate history—but the notion that—these 

days that they have formed a vibrant coalition, aggressively pursued their interests, and hand-in-hand with the union representing 

the musicians and the other organizations—they don’t have the 

ability to know what is in their interests, and they are being led 

somehow by the labels, that ain’t the world today. 

And I am sure the labels, off the record, will let you know that 

they maybe wish that were the world today, but it isn’t anymore. 

So I don’t think we should discount the sophistication of the recording artists in understanding what they are facing now. 

My question is two things—you haven’t really responded to 

this—I raised in my opening statement. Others have touched on it. 

Explain to me why this is a tax, and what you pay for musical compositions isn’t a tax. 

Explain to me why what you promote for owners of sound recordings and for the performers and the musicians and the backup 

singers is so valuable to them that you shouldn’t have to pay that, 

like your promotional value for the musical compositions that promote these early sales. 

And I think there is a debate about whether spin on the radio 

causes sales or popularity of the recording causes the spin. I am 

not sure your study effectively addresses that. But explain what is 

the distinction between the two. Why is it okay to pay that for the 

musical compositions, and not here? 

And then the second one, and then I will let you folks respond, 

is baseball, sports, promotion. Here we are mandating a compulsory license. You don’t have to go out and negotiate with the NBA 

and the major league baseball and come to an agreement with 

them. 

And I know those guys, and they are trying to suck as money out 

of you as they possibly can, to give you the right to broadcast their 

game. 

And you promote their sports, and you promote their attendance, 

and you promote their merchandising by virtue of your coverage of 

their game. And you still pay them a lot of money for the promotional benefits you give them. What is the justification for that? 

Mr. WARFIELD. Sir, I am going to defer to my associate, Mr. 

Newberry, on this last question about the baseball and sports franchises. 

Mr. NEWBERRY. I am glad you brought that up, because I think 

that is a classic case and analogy for the situation we are talking 

about here. 

There are many stations that will negotiate with a baseball team 

or a football team, but this same concept was attempted to be applied down to smaller teams that have less market value, have less 

name recognition. 

So at high schools and small colleges, they attempted to charge 

radio stations a fee to carry the game. Radio stations stopped carrying the ball game, because it did not make sense. 

Mr. BERMAN. Fair enough. 

Mr. NEWBERRY. Can I continue? 

Mr. BERMAN. Sure. 

105 

Mr. NEWBERRY. And I think what you are going to see is if we 

turn the relationship that has served this industry, performers and 

the radio stations, so well for these years, if we turn this into 

strictly monetary exchange, we are going to find ourselves in the 

exact same situation, that we will only play the songs that give us 

the highest return on that investment, and that smaller artists and 

unknown artists and people that are trying to get into the industry 

are going to have a much more difficult time finding time on the 

airwaves, because they are going to be like that single A baseball 

team or that small college team. 

And if there is not a return on the investment, we are going to 

make a decision that that is not what we should be playing. 

So the unintended consequence of this bill is going to be that 

those that have money are going to make a lot more money, and 

those that are struggling are going to be left out on a lot of radio 

stations. 

It is exactly like the—— 

Mr. BERMAN. And the musical compositions? 

Mr. NEWBERRY. Those people don’t have an opportunity to monetize. The composers—— 

Mr. BERMAN. What is the mechanical? 

Mr. NEWBERRY. Excuse me? 

Mr. BERMAN. What is the mechanical? 

Mr. NEWBERRY. The composers write the songs and hand it off. 

The only way they have the ability to earn income is from the—— 

Mr. BERMAN. Wait, wait, wait, wait, wait, wait. You play. People 

buy. That is your argument. 

Mr. NEWBERRY. They don’t make any money off of—— 

Mr. BERMAN. Sales of records, of CDs? 

Mr. NEWBERRY. I don’t know what the mechanics of that compensation are, but they certainly can’t do T-shirts, they can’t do 

concerts, they can’t tour. 

Mr. BERMAN. No, they have—— 

Mr. NEWBERRY. A witness here earlier today talked about how 

there are people that have been involved in writing many, many 

songs. 

Mr. BERMAN. So they have a mechanical. 

Mr. NEWBERRY. But you don’t know who they are. They do not 

have the celebrity that our industry has created for the performer. 

Mr. BERMAN. My time has expired by a lot. 

Mr. ISSA. Mr. Chairman, I was so captivated I didn’t notice. But 

I am going to continue as best I can down somewhat the same 

track. 

Mr. Warfield, I will give you a little bit of a break. I think we 

sort of beat to death Q & A, other than one question. You did previously testify that the amount paid off to the writer by the industry was about $450 million to $500 million a year. Is that right? 

Mr. WARFIELD. That is correct, sir. 

Mr. ISSA. Okay. So the industry can afford $450 million a year 

to the people who created the sheet music, but not anything to the 

people who actually did the performance. That is what we are saying here. 

106 

Mr. WARFIELD. There is a benefit that accrues to those individuals above and beyond the $500 million that is paid by broadcasters. So there is a benefit that they do get. 

Mr. ISSA. Okay. 

Mr. Newberry, I am going to switch to you for a little bit. 

And Ms. Streisand, I hope you understand that you can come up 

with a question at any time, because you did so well. 

But, Mr. Newberry, you said something about the sheet music 

that kind of got me. Somebody writes a song. They are going to 

make money when I perform it live in concert, right, if I am a singer. They are going to make money off of my DVD. 

They are going to make money if, quite frankly, I need to buy 

500 copies of the song so that we could sing it at church. So there 

are ways to monetize that have nothing to do with your radio station, right? 

Mr. NEWBERRY. Sure. 

Mr. ISSA. Okay. I just wanted to make sure that if radio goes out 

of business, that these writers may still make a living somewhere. 

I agree with you that they can’t tour, except maybe doing an American Express commercial saying, ‘‘You don’t know me,’’ but it is 

hard getting me through the station. 

I mentioned Harry Chapin. He is gone. He is a writer. His family 

continues to get revenues on that side, but they don’t get anything 

when ‘‘Cats in the Cradle’’ plays, unless he gets it from the writing. 

He doesn’t get it from his rendition of it. 

What if we up here determine that every rendition was in fact 

an original work of art definably separate from the writing? In 

other words, Ms. Sinatra there, when she did a song, her song was 

very different from the sheet music. What if we simply decided that 

we were going to give that a separate right, and as such it would 

have to be negotiated separately. Would that give you a problem? 

Mr. NEWBERRY. First, I don’t have copyright experience or expertise, but certainly if I am trying to negotiate with every individual, 

there is a logistics that would—— 

Mr. ISSA. Okay. Do you benefit from the mandated? 

Mr. NEWBERRY. But we would not play the song. 

Mr. ISSA. Okay. Well, if all songs fell under that. But right now 

you benefit from the fact that you can grab any song and play it— 

any song and play it. 

Mr. NEWBERRY. Any broadcaster can. 

Mr. ISSA. Okay. So you have the right to play, but they don’t 

have the right to withhold. 

Now, all the bands these days are doing music video. If starting 

tomorrow, 100 percent of their performances were music video, and 

they did not in fact produce a separate DVD, you wouldn’t have the 

right to strip it out, so you would lose the ability to play their 

music on your station, even though they had a music video, because stripping it out would be illegal. 

You can’t take TV shows and simply rebroadcast them. You can’t 

take music videos and DVDs and broadcast them. You don’t have 

that right. So in a sense they could take away your right by simply 

moving. 

If CDs aren’t selling, they might just go to their copyrights being 

linked to their music video, and as a result, you would lose the 

107 

ability to play all the new music, right? What would that do to your 

business model? 

Mr. NEWBERRY. It would change my business model. 

Mr. ISSA. Okay. Well, let us do a couple more business models, 

because I am a hard-nosed businessman. If I went to sing right 

now, it would end the industry, at least as we know it. 

So presently both of your stations are substantially still analog, 

I assume? 

Mr. NEWBERRY. Yes, sir. 

Mr. ISSA. Okay. Do you want to make them digital? 

Mr. NEWBERRY. We are converting one of our stations. 

Mr. ISSA. Okay. But what if we up here—because we have the 

responsibility; it is actually next door at the Energy and Commerce—but what if we, recognizing that the fair use that has existed—and I came out of the consumer electronics industry; I believe in fair use—the fair use that allowed for copy over the air 

radio for me to put on to my cassette or eight-track or whatever 

happened—what if we said, well, you know what? Since you are 

not paying anything, we can’t allow that to continue digitally, because now there is going to be a perfect copy made. 

What if we took away that ability? Do you think that would affect your business model, when people just couldn’t? 

Mr. NEWBERRY. Sure. I would do more talk. 

Mr. ISSA. Okay. But in other words, if people couldn’t record off 

the air, because you didn’t pay anything for that performance, and 

if they turned into a personal digital copy—— 

Mr. NEWBERRY. I am just saying I would not program that station. If I made the decision to go to digital, I would either, a, not 

go digital, or I would put a product on there that didn’t require me 

to. 

Mr. WARFIELD. In many cases it is just business not to go digital. 

Mr. ISSA. Okay. So you may stay analog, and that is fine. Some 

people do that. 

Just one last question. What if we simply gave all the individual 

artists the right—or the record labels—to withhold, and said, look, 

you have the right to withhold from terrestrial broadcasts? 

And what would you do? Would you simply only play the ones 

who in fact didn’t withhold? Or would you negotiate with the ones 

who had the right, and chose to withhold? And I am talking about 

the major labels or individuals. 

Mr. WARFIELD. Being the business manager, I would make a 

business decision. I would make a decision where I wanted to invest the money. And if they wanted to withhold, and I determined 

it wasn’t worth it, I wouldn’t play it. 

Mr. ISSA. Okay. So if we changed it, and the Beatles label was 

withhold for separation negotiation, you would suspect some station would step forward and pay 3, 4, 5 percent and play them, and 

as a result there would be revenue where there isn’t, regardless of 

the historic promotion. Is that fair to say? 

Mr. NEWBERRY. You would have a dramatically different broadcast industry. You would have communities that would suffer dramatically because of that decision. 

Mr. ISSA. No, I understand. I just suspect that ‘‘Abby Road’’ 

would get a little more play for pay. 

108 

Mr. Chairman, I only have one question sort of for the record. 

Mr. Newberry, I gave Mr. Warfield so many questions I missed 

one that I would appreciate it if you would answer it for the record. 

You talked about your promotion. Would you deliver to this Committee a record of what songs, labels and individuals over the last 

year you feel you have promoted by your playing—separately from 

simply playing? In other words what benefit you have analyzed in 

your company you gave by promoting the singer, label, the song, 

a concert coming up. 

Mr. NEWBERRY. Sure. 

Mr. ISSA. Okay. I would appreciate it if you would deliver that 

for the record. 

Mr. NEWBERRY. Absolutely. 

Mr. ISSA. Thank you very much. 

Thank you, Mr. Chairman. 

Mr. BERMAN. The gentlelady from Texas? 

Ms. JACKSON LEE. Thank you very much, Mr. Chairman. 

All of us, I guess, will put on the record that any song coming 

from our lips would run everybody out of the room. So we admire 

all of you for the fact that you know music and enjoy music. 

Mr. Chairman, this is a comment that I hope that you will listen 

to. I think as we have had this very open discussion, it really 

comes down to numbers. I think that when I say numbers—profit— 

how much this would ultimately cost, what the burden would be on 

the various broadcast owners. 

And it think it is important to note on the record that we do have 

Section 3 in the bill that deals with the special treatment for small 

noncommercial, educational and religious stations and certain uses. 

And I know that one of my colleagues raised the question, and 

there is a certain amount, and, Mr. Chairman, I am going to on 

the record now indicate that I would like to work with you. 

I believe in this present market that number might need to be 

increased, because I think the intent is to—but it might need to be 

increased, because small numbers because of inflation, small stations, whether religious or otherwise, might be worth more than 

what the figure is in this bill. 

But I do want, for example, the station in Houston, Texas, 

KCOH, in case anybody is running back to report on this hearing, 

to be aware that I am aware of their circumstance. And as I am 

aware of their circumstance, I am concerned about the underlying 

issues. 

Mr. Lee, I am not going to leave you out—my namesake—and so 

I want to pose this question, that I think has been represented by 

Mr. Newberry and Mr. Warfield very eloquently, and that is that 

they pay a licensing fee. The radio stations will say we pay what 

they call—contribute to the licensing of music. So they pay some 

money. 

And you represent your side of the industry. So the question they 

would ask is why then they don’t need to pay an artist fee, because 

they make a payment that contributes to the licensing of music. 

Can you explain that argument from your perspective, maybe? 

Does that substitute for paying the artist, in your instance? 

And you are in the industry. Do you think the framework of this 

legislation—you have heard the two gentlemen; I respect their inVerDate Aug 31 2005 12:40 Dec 17, 2008 Jkt 000000 PO 00000 Frm 00112 Fmt 6633 Sfmt 6601 H:\WORK\COURTS\061108\42829.000 HJUD1 PsN: 42829
109 

dustry; I am concerned about what they have represented here— 

do you think this is the final act that breaks the camel is back, 

with respect to this legislative framework? 

Is this going to put, from your perspective, these gentlemen and 

others out of business? Mr. Lee? 

Mr. LEE. Five thousand—— 

Ms. JACKSON LEE. You have to turn on your mike and speak 

loudly. Thank you. 

Mr. LEE [continuing]. Five thousand dollars I cannot believe is 

going to put any small radio station out of business. It is going to 

recognize that artists have created something of value. It is a very 

small amount of money to pay. And by the way, all of us own the 

airways, and they are free. 

And it is really appalling that people, who create the kind of 

value that is played over and over and over for the last 40 and 50 

years, are perceived as having—‘‘Gee, we just don’t have enough 

money to recognize your talent and ability.’’ 

Ms. JACKSON LEE. And how do you respond to their point that 

they contribute to the licensing of music. They pay some kind of 

fee, and so they shouldn’t have to pay an artist. 

Mr. LEE. I am not sure that I understand it. They pay a licensing 

fee. They pay the songwriters, and that is whom they pay at this 

point in time. But licensing fee to the musicians—there is nothing. 

Ms. JACKSON LEE. And so the payment to the songwriters you 

don’t think equates as a business expense that could substitute for 

what they might have to pay to the artist. 

Mr. LEE. I believe there is enough money in radio ads, and it is clear the kind of money that is being made. It is a $4 billion industry for talk shows. 

I believe that if the radio industry felt that they could make 

more money with talk shows—and by the way, they have to pay 

people when they do talk shows—if they could make more money 

by doing $20 billion in talk shows, I think you would see that take 

place. 

It is clearly there is a huge value for music. And as much as they 

have tried to walk around that, the fact is it is intellectual property. 

It is created by highly talented individuals, and right now those 

individuals—we are offended that we are sitting here listening to 

people say there is no value to that. Well, maybe there is, but we 

can’t pay you anything for it. 

Ms. JACKSON LEE. And Mr. Lee, this is a game of numbers. And 

if small stations are now exceeding in revenue, and they are still 

small, you would see the reason for possibly lifting the cap so that 

you would include more small stations. 

You are not here trying to harm real Mom and Pop stations, are 

you? 

Mr. LEE. We absolutely are not. And it is important to our local 

musicians to be able to have their recordings broadcast on their 

local stations. 

Ms. JACKSON LEE. So if the cap was raised just a little bit to 

meet inflation, you would be okay with that. You think that would 

be reasonable. 

Mr. LEE. Certainly. 

110 

Ms. JACKSON LEE. Mr. Warfield and Mr. Newberry—if I could 

finish this Chairman, Mr. Chairman—you heard the comparison 

about talk radio, which I think Mr. Newberry commented on. 

Frankly, would you in essence shut down all of your music stations, if this legislation was passed, and go to talk? And do you 

think the market would tolerate that? 

Mr. WARFIELD. I would say that no, that is not realistic that everyone would go to talk. What you would see is there would be 

more broadcasters’ formats, certain formats, would not be viable, 

would not be played. 

Gospel would certainly be one of those formats that would be 

challenged if it had to pay a fee, simply because it is not one that 

gets a significant amount of advertiser support relative to some 

other formats. 

You would see some of those formats just go away. Smooth jazz 

might be another one of those. It would probably just go away, because there would not be enough support to offset any additional 

fees that would be attempted to be charged against some of these 

formats. 

Ms. JACKSON LEE. Mr. Newberry? 

Mr. NEWBERRY. In our size market, there is a tremendous 

amount of talk programming that is available on a barter basis, 

barter being that there is imbedded advertising from national services, so we are able to broadcast at no additional cost. That makes 

it very appealing. 

I would also agree that while all of the music stations would not 

go away, in Glasgow, Kentucky, I have four stations that are currently playing music. 

I would expect I would take the most successful stations that I 

had—one or two—be willing to pay some type of fee, move some 

other products to talk, and then play only the songs that I thought 

would give us the highest return on that investment, and wouldn’t 

be taking as many risks with new artists. 

Ms. JACKSON LEE. Mr. Chairman, I know my time is up. 

Mr. BERMAN. Your time is. 

Ms. JACKSON LEE. And I will simply say I think this is a story 

that we heard before the FTC came into business or the STC. 

I frankly believe these distinguished businessmen would make it 

work. They would have music stations. They would pay the fees, 

and all would be well. I would like to work with them. I think we 

can, as we make our way through this legislative process. 

I thank the witnesses. 

And I thank the Chairman. 

Mr. BERMAN. Thank you. 

The gentleman from California? 

Mr. ISSA. Ms. Sinatra, I want to close on—— 

Mr. BERMAN. We will be out of here by nine. [Laughter.] 

Ms. JACKSON LEE. Now there is a third round. Good. 

Mr. ISSA. Ms. Sinatra, I just want to close on sort of an upbeat, 

downbeat note. Not only did you have your own personal success, 

but you come from a legendary family. You grew up in the music 

business. 

If you could just close by telling us not about your success, not 

about your father’s success, but about just briefly the hundreds of 

111 

artists that you remember that did great work that you don’t hear 

played on the radio today. 

They have no revenue from performance. They were probably 

played in the 1950’s, 1960’s and 1970’s. They are not played today, 

and their CDs are out of print. But if you would just give us a little 

inkling, because you lived with those people going in and out of 

your life. 

I would appreciate it, because this hearing is concentrated on 

what is played and what the value is. And I think uniquely somebody who has had so many decades—successful decades—in this 

business knows about the people that were left behind. And if you 

would close on that, I would appreciate it. 

Ms. SINATRA. Well, thank you for that question for two reasons— 

one because of my friends that I grew up in this music business 

with, and the other because I have my own radio show on satellite 

radio. 

And I purposefully play those people, such as Joanie Sommers, 

who is probably one of the best singers who ever lived. And I heard 

a terrible rumor that she is not doing well right now. Jerry Southern. I am trying to think of who else I would play that you might 

know. 

I play the early band singers—Helen Forrest, of course, and 

Helen O’Connell. I am naming all women, but, believe me, there 

are a lot of men in this thing. 

And my listeners email me and call me. I have a way of receiving 

phone calls. And they are so grateful to hear their favorites again, 

like Harry James, Betty Grable, Alice Faye, Tommy Dorsey. 

I am also playing people like Neil Diamond, even though the station is called Seriously Sinatra, I am playing what I consider to be 

the new American songbook—writers like Burt Bacharach, Neil Diamond, Paul McCartney. 

So I am trying to present to people, in my 3-hour show, a vast 

array and eclectic array of artists. And, yes, you are right, many 

of whom are never played—that I know of—on other stations. 

Mr. ISSA. Thank you, Ms. Sinatra. And if you would play Dolores 

Hope for me sometime, you will play—I have her album. Almost 

nobody does. 

Ms. SINATRA. I promise. 

Mr. ISSA. I look forward to it. Thank you. 

I yield back, Mr. Chairman. 

Mr. BERMAN. Just in closing, I would be curious if 77 percent of 

the stations receive the $5,000, or in some cases, $1,000 cap under 

this legislation, if $5,000 were too much, is there a reasonable ‘‘affordable’’ figure here that is less than that? Or is zero the only reasonable amount? 

Mr. NEWBERRY. Mr. Chairman, I think one thing that was stated 

earlier that I want to make sure I clarify. There is value for what 

these artists have done. There is no question about that. 

I think Mr. Lee said that all I have created—and I think speak 

for Mr. Warfield—we are not saying that there is not a tremendous 

value of the products that have been created. 

What we are saying is there is that there is tremendous value 

in the promotions we have provided. 

112 

Mr. BERMAN. But that is the point. We can’t—we don’t know 

quite how here, and we shouldn’t be weighting that. That is what 

existing law says. ‘‘Whether or not the service may substitute for 

or may promote the sales of phono records or otherwise may interfere with or may enhance the sound recording of the copyright owners’ other streams of revenue from a sound recording.’’ 

That is just the kind of argument that is right to make before 

a copyright royalty judge or panel, and put into evidence. And if 

this bill needs to make that more explicit, tell us how to. 

No one is trying to deny the promotional value. You are conceding the value of what these artists and these sound recordings 

contribute to your stream of revenue. We have a meeting of the 

minds about values. We just don’t know how to monetize them. 

That is what this process will produce. It is how to weigh all of 

that. And I don’t think anything we are doing in this bill takes way 

from your argument. It just requires you to risk paying some 

money for what you are now using that somebody else owns. 

Mr. NEWBERRY. And I think that—again, I can only speak from 

the perspective of the small market broadcaster—record labels 

used to work with stations in our size markets very aggressively 

to break artists and make sure that they got played. They have 

made financial decisions, and we don’t hear from record label representatives anymore. 

We do hear from independent artists that are looking to get 

played. We do hear from people that are trying to do it. 

But I think in the Glasgow, Kentuckys, of the world it is going 

to be extremely difficult to quantify the value of the promotional 

outlet. I think it is absolutely. I think it is real. 

But I think it is much more diversified and spread among many, 

many more artists than it is as it is concentrated as you move up, 

and those artists become more successful. 

So I am not trying to not answer your question. But I think that 

there is a principle there that we obviously disagree with. And that 

is not intended to say—to Mr. Wexler’s point earlier—this is not intended to say we don’t see value. We just want to make sure that 

the value of what we provide is seen. 

Mr. BERMAN. Mr. Goodlatte has seen that we were still in the 

fourth hour of this hearing and has come to join us and is recognized. 

Mr. GOODLATTE. Imagine how much more time would have been, 

if I had not joined you this early for your third round of questions. 

But thank you, Mr. Chairman. 

Mr. BERMAN. You are welcome. 

Mr. GOODLATTE. I do appreciate your forbearance, and I would 

just like to explore one area that I understand in my absence 

hasn’t been addressed, and that is the Nielsen report related to impact that playing songs on the radio has in terms of the sales of 

the song. 

And I wondered if Ms. Sinatra or Mr. Lee were familiar with 

that report, and if you have any reaction to it. 

Ms. SINATRA. Yes, I know what it is, I think. The Nielsen report 

is the rating—— 

113 

Mr. GOODLATTE. It is a rating service, but in this case they did 

a study, which indicated that when an artist’s song is played on the 

radio, the sales of the song increase. I wondered if you had—— 

Ms. SINATRA. Oh, no, sir. I haven’t seen that. 

Have you, Tom? 

Mr. LEE. No, I haven’t seen it. And I would like to have seen it 

before we sat down here. I don’t know who paid for the report. I 

have no idea what the parameters were. 

I do know that if a company is commissioning a report, and a 

predetermined outcome is adjusted, that it is not difficult for any 

well-run company to come out with a report that may be positive 

to the person who is paying the bill. 

Mr. GOODLATTE. Well, and since I have a copy of the report here, 

and it has the National Association of Broadcaster’s name on it, 

that certainly would cause us to ask Mr. Newberry and Mr. Warfield if they would like to comment on it. 

But let me—— 

Mr. WARFIELD. There certainly has been—— 

Mr. GOODLATTE. Mr. Warfield, if I might put it in context first, 

because I agree that this appears to show that there is promotional 

value in playing songs over the airwaves. 

I am wondering, though, don’t the sales numbers and the data 

also reflect that there is a value of playing those songs over the 

other media that do pay performance rights royalties, like satellite 

radio and online broadcasters. 

Mr. WARFIELD. Well, first of all, that is Nielsen’s report that is 

being distributed by the NAB. And I don’t believe that that report 

reflects any other promotional support behind that. It does show 

what happens with a trusted radio and spin and sales. 

Mr. BERMAN. Would the gentleman yield just on that? 

Mr. GOODLATTE. Yes, sir. 

Mr. BERMAN. A quick look at this chart, without any offer of expertise, indicates that it is ambiguous. If there is a clear relationship, it is what extent do sales lead to greater radio play, or radio 

play lead to greater sales. 

And just a quick look at the chart, it is not so clear that it is 

the greater the radio play that leads to sales as it is that there is 

an equally likely conclusion that when those sales start going up, 

the radio starts playing those songs. 

And I just throw that out as a possible alternative reading to this 

NAB perspective. 

Mr. NEWBERRY. Not to be argumentative, Mr. Chairman, but I 

believe the report clearly indicates that it is the airplay that helps 

drive the sales of those individual artists, whether they were being 

played on satellite or other alternative formats and then were 

played on terrestrial radio, that there were spikes—clear spikes— 

in the sales of their material. 

Mr. GOODLATTE. Well, if I might ask a follow-up question to this 

very excellent question of the Chairman, would the spin numbers 

for satellite radio and online broadcasters generally correspond to 

the spin numbers shown in the Nielsen report? 

In other words, in general do a Top 40 station on a satellite radio 

and a Top 40 terrestrial broadcast station play a similar assortment of songs a similar number of times during a given period? 

114 

Mr. WARFIELD. On certain channels, they could. But I think I 

know where you are going with that, but there is a difference in 

the number of subscribers for a satellite network in total, and then 

divide it by 100 channels, versus the 270 million listeners that we 

reach each week. 

So terrestrial radio is so much more ubiquitous than satellite 

radio. It is certainly at this point. I don’t know whether it will always remain that way. But you would think that, yes, on the Top 

40 channel on one of the satellite services, the spins might increase. But this is based on terrestrial spin time. 

Mr. GOODLATTE. Let me ask all of you in my closing moments 

here to tell me what you think about the future of music delivery. 

Where will the recording industry structure its delivery and sales 

in the future in a way that allows recording artists and record companies to reap the reward of their work? Anybody have any 

thoughts about that? 

Ms. SINATRA. I don’t know, but it looks like it is going to the 

Internet, doesn’t it? 

Mr. LEE. It may. It may. 

Mr. GOODLATTE. Mr. Lee, go ahead. You jumped in first. Go 

ahead, Mr. Lee. 

Mr. LEE. Okay. I think the recording industry and the artists 

and the musicians are all exploring what is the best business 

model. There are potentials, as you see now, for catalogs to be licensed to iPhones—not for sure, but catalogs to be licensed to organizations or a company that allows a legal download. 

We are all concerned about piracy, and I think all of us understand that the business model has to change. But in the same context, the business model with radio listening has changed as well. 

There are more people that are listening to music on the radio, in 

our estimation, than ever has been in the past. 

And so, as people have more choices to listen to the different 

styles of music, that is terrific, because when you have a Sirius or 

a satellite that has something like 70 or 80 or however many channels they have, you can actually pick out the style of music you 

want to listen to on a regular basis. 

And I believe Congress recently passed a piece of legislation that 

allows radio companies to have several HD channels. So it would 

be possible for a radio station to do that—I believe this is the 

case—to have a classic rock station and three substations, one for 

1970’s rock, one for 1980’s rock, and one for 1990’s rock. 

So we believe it is important that all of those streams of income, 

which may be the new business model for musicians and for the 

holders of copyrighted material, have to be incorporated into income for musicians and copyright holders. 

Mr. GOODLATTE. Mr. Chairman, if I might allow the broadcasters 

to share their thoughts on whether that is a correct vision, or 

whether you think you would set it a different way. 

Mr. NEWBERRY. I think you can look back on the radio industry, 

that we have made efforts to adapt to increased competition. I 

think just as an observer, the record industry really struggled with 

how to modify from traditional retail sales to distribution in the 

digital age. 

115 

So I do think in the future—to Ms. Sinatra’s point—I do think 

you are going to see distribution by the Internet. But I think, Mr. 

Chairman and others, this is a classic case where our two industries could be partnering with each other to help the end result, as 

opposed to being at opposite ends. 

I think the radio industry would certainly help monetize the 

value of our promotion, and many stations are already doing this. 

You hear a song on the radio. You can go to the Web site, and 

it will show you the last 10 songs that were played. You are able 

to say I would like to download that song or I would like to make 

the purchase. 

Radio stations are doing that all across the country, and I think 

that is how the partnership is intended to work between radio stations, recording artists. And certainly the record labels are part of 

this three-legged stool. 

Mr. BERMAN. Is this what you meant earlier by bartering? 

Mr. NEWBERRY. No, sir. 

Mr. BERMAN. Oh. [Laughter.] 

Mr. NEWBERRY. We would certainly be glad to profit share with 

you on it. 

Mr. LEE. It is the listeners’ choice as to whether they want to 

purchase it or not. As long as they can listen to it for free, or listen 

to it for whatever a subscription fee is, they don’t necessarily have 

to purchase it. And if they are going to listen to it, then the musicians and the artists and the intellectual property holders are entitled to be compensated. 

Mr. WARFIELD. There is a history in this industry and in the 

country that as these songs are heard, and they are heard on free 

over the air terrestrial radio, that it does drive sales. 

It is no question about that. These artists continue to benefit 

from it, unlike any other platform that is available to them. It 

shows that this business model, as it has been in place, is still 

working for all parties. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Mr. BERMAN. I think it is a good time to end. 

[Whereupon, at 6:51 p.m., the Subcommittee was adjourned.] 

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