>> how is c-span funded? >> publicly funded? >> donations maybe? i have no idea. >> government? >> c-span gets its funding through the taxes. >> federal funding? >> sort of the public funding thing. >> maybe, i don't know. >> how is c-span funded? thirty years ago america's cable companies created c-span as a public service, a private business initiative. no government mandate, no government money. >> this week on "the communicators," a discussion on how digital music, the internet and current copyright policy are affecting the music industry. our guest is david renzer, the chairman of universal music publishing. >> host: when you hear the term file sharing, what do you think? >> guest: i think about all my song writers who won't get paid,

you know? we represent established big arkansastists whether it's coldplay and u2, and we represent everyday working song writers. in nashville we've got a large group of song writers to come into our office and write songs for a living, and file sharing has wreaked havoc on our business. piracy is a huge issue. the music industry has been really at the front line in terms of, you know, the impact of digital on a intellectual property business, and i think the film and television industry has kind of looked at what's happened to our industry, and they're, you know, they're trying to prevent some of the things that have happened to our industry. so it's a huge challenge for us. but one in which i think we're seeing some, some positive government reaction to. recently in france they, they

enacted something we could call a three strikes kind of law which is if you are at home, wherever, and you download illegally, you get two warnings but the third time you're caught doing it, you are disconnected from the internet. and i think that sends a powerful message. and i think similarly there was a case recently, one in europe, against something called pirate bay. you know, there's a culture of people who kind of like to brag about being pirates, and there was a case, one that's being appealed, but it was a strong victory against this pirate bay web site. but this remains one of the biggest challenges to our industry and, frankly, to all creative industries, the fact that, you know, millions of people are able to download music and other, you know, films and television shows illegally

and creators don't get paid, our song writers don't get paid, our arkansastists don't -- artists don't get paid, and it's created an incredibly difficult environment. you're watching an industry struggle through this whole period of transformation. >> host: but you talked about france. what's to prevent somebody from download anything belgium, right next door, and send it over to somebody in france? i mean w the internet so international how do you stop the file sharing? >> guest: i believe what the french legislation is meant to do is to put pressure on local isp providers, and i think that's a message that i think is important, is we really want to see isp providers take some responsibility here, you know? you're providing a service to your customers, but that

shouldn't mean you're providing an access point for them to, you know, to steal. you know, to be blunt. and so that's really what, you know, and there are isp providers in each territory, and that's really what i think we'd like to see happen. you know, i think there has to be this kind of responsibility globally. i think this is something we should certainly see in the, you know, in the more advanced democratic countries, you know, when we look at, you know, the other territories around the world, china, for instance, and russia. again, huge, huge challenges in terms of, you know, it used to be the intellectual property or the piracy problem was physical. in other words, you could walk down the street -- and you still can if you go to certain territories, you can walk down the street and find in some cases movies that haven't even been released yet, certainly

cds being sold on the street, and physical piracy remains a big issue, but, you know, the internet has, of course, you know, it's, the problem has compounded exponentially. and so, you know, i think one of the goals of my industry is to have isps take more responsibility for the service they're providing and make sure that they're not just providing a huge, you know, kind of entree to intellectual property for free. >> host: what about in this country? has the u.s. congress, do you think, been be responsive to your concerns? >> guest: we haven't, we haven't really seen legislation, i think, introduced yet that would address a problem like this. so i think there is -- we've still got a ways to go here in the u.s. in terms of seeing, you know, legislation that would make isps more responsible for piracy.

certainly, downloading, you know, it's illegal, you know? it's illegal to buy, you know, pirated cds, it's illegal. the question is enforcement. you know, we have the laws, the difficulty is in enforcing them. >> host: rebecca hoffman is also here with us. >> guest: mr. renzer, i'd like to talk a little bit more about file sharing. some people believe that it's not, it's futile, it's useless to try and stop file sharing and that, perhaps, it should instead be embraced, and we should use it. is it possible, do you think, that file sharing could be used to the advantage of the music industry? >> guest: well, there are, there are all kinds of business models out there, and i think we're -- there's been a significant amount of experimentation. one of the things that we've certainly seen is there's been a

significant growth and i think the ipod and itunes is probably the best example we have in the u.s. of a legitimate digital business. you know, used to be, i think, probably years ago there was an argument that could have been made, well, consumers don't have legitimate options or ways of buying music online. that's why they're stealing. well, you know, you can't say that today. i think there are, you know, a plethora of services out there that are legitimate, you know? itunes is probably the most successful, you know, online legitimate, you know, legitimate site for buying music. it's incredibly popular. and there are, you know, amazon has launched, and there's many other legitimate ways to purchase online music. there's been a growth in so many different business models. you know, there's legitimate streaming services, there's

models where you can customize an online streaming radio station to music you might like. there's just so many different ways to actually get music in a legitimate way that i don't think it's really, i think we can't make that argument that it's, you know, it's okay to steal because i can't get it any other way. so really i think my industry's going to, you know, the industry is going to continue to evolve, and, you know, there's a huge popularity of online video, music videos. and one of the things my company's working on launching which you might have heard about is going to be an online channel, you know, for watching premium video content and other video content. and i think, again, it's evolving, but at the same time we're in this tremendous battle. you know, retail is shrinking. you used to be able to go to your record store in your favorite mall or your corner record store and, you know,

retail has taken a tremendous hit. you know, again, i think that's one of the symptoms of the shift to digital and also the tough economic conditions. but, you know, it's, we're kind of eventually, you know, it should be actually a good thing, right, because, you know, a retailer instead of having to stock all your favorite old records and have a deep catalog, you know, it's easier to do that online and to find your favorite releases. and, in fact, catalog sales online are actually growing and very popular, buying back albums, back catalog albums. so, you know, i think, i think, you know, again there's a wonderful opportunity to find great music online in a legitimate way, and that's what we have to encourage, and i think that education is important too. you know, we're battling, you know, kids unfortunately are growing up a generation that feels maybe that getting music

illegally is okay, so there's an educational process. there's a challenge economically because some of -- the model, i think, a lot of people who do buy online they're buying singles, and, you know, my business, our industry was very much geared towards albums. so that's a different challenge. that's more of a business model that has to find its way and evolve. but, you know, to me i just don't buy the argument that people say, you know, we should, you know, file sharing should be okay, and we should legitimize it. >> host: you, you're talking about economics, about people losing money such as the cd retailers but, of course, you also said that file sharing is wreaking havoc on the publishing business. can you explain that a little more? how, how is the money made in making music, and how is it now being lost because of the file sharing? >> guest: sure. well, you know, when you buy a

cd whether it's annal would remember let's say you download a single, apple makes money, the record company makes money, the song writer makes money, and the publisher makes money. there are two basic copyrights, the sound recording and the song. generally the copyright in the sound recording is controlled by the record label or the artist, and music publishers control the copyright in the song. and so that's my area of the business is making sure that the song is protected, that the song writer is compensated, and there are different rates globally, but in the u.s. we have a statutory rate, 9.1 cents. so every time a song is bought online, 9.1 cents has to get paid to the song writers and the publisher. and, you know, there's different ways that that gets split

depending on the deal, but that's the basic economics of song writing. songs also can generate money once they become successful. a song, you know, you download it, there's 9.1 cents for the purchase or the mechanical, and then a song can become a hit and suddenly you're on the radio, and you're generating performance income from radio play and if it gets synchronized to a commercial or if it gets synchronized in a film or television show, there will be different ways that performance income can be earned from that. we have some challenges. there's some, there's currently one of our big issues in the u.s. is the fact that when you download a piece of music in the u.s. unlike in most other territories around the world, there isn't performance income for download. there's that -- you get the mechanical if you download a song, but if you download a tv show, or if you download a film,

the composer does not get a mechanical, and the composer doesn't get any performance. so people that have made their living composing for film and tv are really very, very concerned about this. and this is one of the, one of the legislative priorities that we have as both the performing rights organizations, bmi who collect performance income in the u.s. are very concerned about this, and we're, you know, going to be looking for, you know, some potentially legislative solution, potentially, you know, there's also an appeal because this was a result of around court ruling. >> host: well, david renzer, before we go any further describe the business model of universal music publishing group for us. >> guest: well, we're a global publishing company, and we represent, again, song writers,

artists, in some cases it might be estates of, you know, the leonard bernstein estate, coldplay, artists that sell records around the world, it's -- in some cases there are songs that we have in our back catalog. actually some of the most successful songs, one of the composers is still alive is i will survive. this song has had incredible life. there's a new single just coming out by the partly cat dpussycat dolls, and that's just one twample of a song is a beautiful thing, right? songs can be covered so many times. you know, we have some songs in our catalog, some of the standards it's unbelievable the life that a song has, and, you know, we all appreciate that,

right? when we think back on our lives, special moments, frequently there's a piece of music that goes along with that special moment. and so, you know, that's our business is really, is to protect those songs and collect the income related to those songs. so globally every time our song is used in, you know, is recorded, used in a television show, in a film, in a commercial, you know, our job is to license it, collect the income around the world which we also use, we use the help of collection societies. in the u.s., for instance, it's difficult for a publisher to go to every radio station, every tv station, every bar and grill and say, hey, can you, please, pay my song writer? so there's ascap and bmi which are performance rights organizations, and there's an organization in the u.s. that

also helps us collect our mechanical income related to the sale of an individual song or an album. and so there are rights organizations around the world in every territory that help publishers and song writers collect their income through frequently through blanket licenses, etc. and so, you know, that's our business model, but again, our model is also probably we've been more resilient than any other business model in the music business because we do have these various revenue streams. but at the same time our songwriters and our business is going through a very, very challenging time because, you know, mechanical income related to the sale of those discs, i think you're aware that record sales are being tremendously impacted by the changing in technology and the access to free. or illegal. [laughter] so we're not immune to that. we're struggling through that as the whole music industry, record industry faces those challenges.

>> host: well, mr. renzer, the broadcasters, the television broadcasters have taken a tentative step or a step towards free tv on computers, and that's through hulu. do you see something like that in music's future? >> guest: that's an interesting question. well, i did mention, you know, universal's going to be launching a premium online video site called vivo. i don't know at this point if the plan is to launch with a fee or it's more ad supported. i believe it's going to have minute ad supported, and i believe they're talking to potential advertising partners. but i think hulu is one of the inspirations for that because the truth is video content is usually -- music video content is hugely popular online whether it's on youtube or various streaming sites, yahoo! music, etc., video content is very popular.

universal was, i think, one of the first companies that actually stood up and said, you know what? we'd like to get paid for that content, we'd like to get our artists and songwriters paid, and that's starting to happen. it's one of the new revenue streams for our songwriters and artists. but, you know, hulu's been very successful, and i think all indications are that music video online is a potentially, you know, could be very, very popular. and so it's going to be really interesting to see as we gear up to launch. i believe youtube is our partner in building that business, it's called vivo, and we've hired someone from universal who's going to be heading that business. and it's a division of our chairman, doug morris, and i think it's going to be potentially really an exciting development. >> host: besides apple and itunes is music, digital music economically successful? can it be? and how do you, how do you

prevent the leakage? >> guest: i think itunes has proved that digital music is hugely successful. i think they've surpassed a billion could downloads or someg like that. certainly it's been successful, also, in selling ipods. you know, but digital music online is certainly successful and, you know, there's experimentation going on as well, pricing experimentation, you know, should premium new releases be priced perhaps a little higher price point and older back catalog releases perhaps at a slightly lower price point. i think, you know, it's been an interesting evolution, you know, and it'll continue to evolve. there's so many different models, and we get approached every week by companies that, you know, have a new concept that are launching. we've, you know, there's the purely ad-supported model where, you know, it's free, but it's ad

supported, and we've licensed those sites. there's new devices, i believe sandisk cake to us and -- came to us and said we want to preload music for people who aren't perhaps as sophisticated at downloading legitimately, so we'll sell them an mp3 players and we want it loaded with a thousand songs. we always have to think outside the box with this because if you said, well, i want 9.1 song all those thousand songs, that wouldn't necessarily work. that's one of our challenges, and also for my company personally that's part of our business philosophy. i like to say we're technology agnostic. i don't ask my people, okay, what model is going to emerge that's going to become, you know, the dominant, you know, or the successful business model? you know, we're not geniuses.

we don't know. and ultimately, we don't know what the consumer's really going to respond to. so our goal, one of our goals is to license all the legitimate business people out there, the new businesses that want to launch, okay, we'll work with you. we'll work with you to try and figure it out and license your business so that you can launch, and we can get our songwriters paid. that's our goal as far as music publishers, and, you know, we're seeing it. we're being successful at doing it. and there are new business ones that people have never heard of yet that we've licensed, you know? there's some that are successful in europe. there's something called spotify in europe, and it's apparently, you know, a great success. we've launched in europe in territories something called nokia comes with music where you go and buy a new cell phone that

gives you access to, you know, a huge catalog of music. and kind of built into the price of the cell phone is this access. so, you know, there are so many different models, and it's exciting, and i think it's, you know, and, you know, i hope with the access to capital tightening up that we're not going to, you know, see a slowdown in these new ideas that launch, but, you know, i love entrepreneurs because i like to think that we -- you know, i respect them x we have to work be them, and i also like our company to be entrepreneurial. so if people come up with new business ideas, i think that's great. we want to work with you, and we want to license. >> host: you talked about royalties and how they're collected and why they're collected, and at bna we're a specialized news provider, and we're closely watching the performance rights act. and the debate over that

legislation is contentious, and i was wondering if you could tell us what that debate is about and how you would like to see it resolved? >> guest: okay. well, the performance right act is related to the sound recording, the copyright and the sound recording which in the u.s. currently there isn't a performance right attached to it. frankly, in a lot of other territories or most other territories around the world there actually is a performing right in the sound recording, and radio stations in europe, for instance, do have to pay a royalty to the, for the recording and then that's shared by the artist and -- who performs on the record, and the record company. so this is something that the record companies would like to see instituted and many artists as well would like to see

instituted in the u.s., and legislation has been proposed. and that legislation as well has language in it that would protect songwriters so that as radio stations negotiate their blanket licenses with ascap and bmi, for instance, that songwriters' income wouldn't be diminished by this performing right. and the truth is, you know, for artists who do perform in some cases artists are not the songwriter, the songwriter does get paid, the artist, you know, doesn't enjoy a performing right in that sound recording. and so i think the debate has become, well, you know, the nab, the broadcasters probably mostly in terms of being vocally opposed to it are basically have framed the argument as, well, we

don't feel like we should have to pay. we provide promotional support which, you know, there's some truth to that. but they framed it in some cases as this is another tax on, you know, on radio. but, you know, we, you know, we have a philosophy of we want to support the industry, we want to support -- we kind of have a one-music philosophy, and that means that, you know, content should be compensated. and so, and so publishers and songwriters have been supportive of the performing, performing right in a sound recording, and i think there's been, actually there's a lot of support, i think, on the hill for the concept that artists should get compensated and especially when you look at this is already happening in most other markets around the world. >> host: david renzer, when it

comes to copyright and piracy, how do you try to deal with that internationally? >> guest: well, i think we touched on some of it. there are, you know, probably in most territories there are strong copyright laws and antipiracy laws. i think the challenge everywhere is enforcement, and, you know, at the end of the day if songwriters aren't going to get paid, you know, i think, you know, yes, there'll be some motivation, but there won't really be a structure, an industry structure that will support, you know, music that we love. and so, you know, i think it's of tremendous, you know -- and also the trade value, you know, the export value of american music is huge. the, you know, and there's a tremendous value, you know, to many foreign markets, and i think when we have something,

for instance, in the u.s. where composers don't get paid when there's no performing right, for instance, in a download, just to differentiate, you know, from the performing right in the sound recording going back to a point i made earlier about when you download in the u.s. when you download a film or tv show, there's no performance income. well, foreign societies who represent composers whose songs and who are composing for, you know, for product that gets downloaded in the u.s. also look at that and they say, this isn't right. we're getting a performance income for downloads internationally, how can it be that in the u.s. we're not getting that? so we have to be, you know, there are different ways of protecting copyright, and i think that's the challenge, is making sure copyright is being compensated, that composers, songwriters are being fairly compensated so there can be an industry.

>> host: but is there an international group that does that? >> guest: yeah, there are several. in fact, there's a conference going on here in washington, d.c. it's an organization that represents the collecting societies around the world who help publishers and songwriters collect their income. there's ifpe which helps protect the recording industry and there are, frankly, there are probably dozens of intellectual property societies around the world whose job is to help protect intellectual property. and, you know, we all, you know, all the societies, you know, frankly, also invest a lot of money whether it's in lobbying, in, you know, in some cases, you know, various forms of enforcement, you know, in some cases there have been lawsuits, you know, that have to be brought, and that's part of the function of