songwriters and music publishers of mechanical reproduction royalties. other provisions of the copyright act prevents songwriters and publishers from providing evidence in federal rate court under dissent decrees governing licensing of their works that came into existence in 1941. the songwriter equity act would remove that evidence gerry van that's helping them obtain fair market value for their work. in the meantime the department of justice just announced in much-needed review of the descent decrees that covered two of the performance rights organizations responsible for collecting and distributing royalties. meanwhile no one is paying artists recorded many of our culture's greatest musical classics before 1972, like aretha franklin or the birds or that it -- temptations. the respect act would close an existing loophole in the law that has allowed digital providers to argue against paying in the lord -- royalties for these great legacy artist. one of the most glaring

inconsistencies and injustices is our performing artists receive absolutely no compensation when their music is played over the air on terrestrial, meaning a.m. / fm radio. congress required payment when sound recordings are transmitted digitally and 95 but have yet to extend its basic protection to artists when their songs are played down after more a.m. radio. this is incredibly on just. the bottom line is that terrestrial radio profits from intellectual property of recording on this for free. i am aware of no other instance in the united states for this is allowed, and it needs to be remedied. ..

i agree and i plan to take up their charge. colleagues on both sides of the aisle by developing legislation to address the various problems in existing law and one unified bill. bringing fairness and efficiency to her music licensing system and ensuring no particular reason enjoys a special advantage against new and innovative technologies. consumers don't know the button i pushed on a car dashboard or smartphone arbitrarily determines how much writers will be paid assuming they will be paid at all. we can create a better system for competitors for artists and songwriters and for fans all of whom depend on a vital healthy market for music and basic services. way of a wide range of witnesses

here today and a second hearing is scheduled may 25. i look forward to their testimony and i hope we can all come together to agree on and pass meaningful comprehensive reform. thank you mr. chairman and i yield back the balance of my time. steve although the opening statement without objection will be made part of a record. we have a distinguished panel today and i both begin by swearing in our witness prior to to introducing himself you a gentleman please stand and i will submit the oath to you. do you swear the testimony you're about to give us the truth of whole truth and nothing but the truth so help you god? let the record show that all answered in a permanent and i will now introduce the witnesses. our first witness this morning is mr. dale port knight chief executive of the recording academy. he served as vice president of the west coast division at --

mr. portnoy has a degree from university. our second witness is lee thomas miller songwriter and president of the national songwriters association international. mr. miller said three-time grammy award nominee and his written country singing that has reached number one. he received his bachelor's degree in music theory and compensation from eastern kentucky university. our third witness is mr. david israelite president and chief executive and officer of national music publishing association where he protects and advances the interests of music publishers and songwriters in matters relating to domestic and global protection of copyright. mr. israelite received his b.a. in political science and medication from the william jewell college and got his j.d. from the university of missouri columbia law school. our fourth list this is mr. anil

chief executive officer bmi also known as broadcast music. in his position mr. o'neal oversees all of bmi domestic and global business operations and directs the company strategic growth. mr. o'neal received his undergraduate degree in business administration from montclair university and got his mba from university. our fifth witness is mr. lee dodd director of digital media association and also known as did not. prior to joining he practiced entertainment law in new york for 20 years representing individual songwriters recording artists and producers. he earned his b.a. from st. johns university and his j.d. from the brooklyn school of law. our six witness is mr. will colon executive director of the tv music committee. prior to joining the television

music committee mr. hoyt spent 25 years as the executive nation rights medications eight. he graduated from a ohio wesleyan university and received his j.d. from ohio school of law. our seventh and final witness is mr. griffin managing director and owner of one house llc. mr. griffin consults extensively on digital music media registries and scholarly publishing. prior to one house houthi surface present at the music licensing at warner music group. mr. griffin received his degree from the university of kentucky. gentleman we have a full roster here today. it's good to have all of you with us. to assist you there will be a timer on your desk reflecting certain lights. when the light goes from red to yellow -- the strike that. when the light goes from green to yellow that is your warning

that you have one minute remaining in which the icu are skating on is becoming increasingly thin. when the yellow light appears you notice that one minute is upcoming so if you will all comply that we would be appreciative. mr. portnoy duyvil now commence with you but again thank you all for being here. >> thank you. chairman goodlatte chairman coble ranking members conyers and members of the committee -- so you might pull that microphone closer to you. >> my name is bill portnow and i'm presidency of according -- recording academy known for grammy awards. the academy is a trade association that represents a six creator songwriters and studio professionals. i thank you for the opportunity to address the subcommittee this morning and since i have the honor of being the first witness let me start at the beginning of

the capri clause of the constitution. the framers gave authors the exclusive right to do works for a time in order to promote the progress of science and useful arts. as today's hearing is focused on music licensing we should at the outset remember who the authors of music are. they are the songwriters and composers who create the very dna of music. they feature that ground performers who performed the songs and bring them to life. they are the producers and engineers who create the overall sound and recordings that we loved. over the next few hearings i urge you to keep music creators foremost in your mind. they are found as expressly protected. of course the framers intended copyright to be the incentive to create but today we have a patchwork of laws that do not address the challenges of the digital marketplace and often create a disincentive to make music. low streaming rates prevent

creators and making living performers and composers must police the internet to take down infringing works and traditional radio continues to use artist recordings without compensation while leveraging this unfair advantage as they move to the digital world. this last point is the most glaring. it's the only industry in america built on using another's intellectual property without permission or compensation. broad kesterson every other developed country in the world compensate their performance. the national association of broadcasters has spent a lot of money lobbying to maintain their free rights. since they are not on the panel today allow me to recount the history of their failed argument. first they said the radio artist relationship is quote symbiotic but even their own bias study found the benefits of radio is 10 times any perceived promotional benefit. then they said they are

different because radio is free until they remembered that most internet radio is free but still pays royalties. then they set a world tape will put small stations out of business until we offered the smallest degree forcible stations a flat world he rates with as little as a few bucks a day. and they said the free market would take care of the issue until they oppose the free market realty out there would actually create one. finally they said it's a tax. until grover norquist said it's not an angry over those attacks when he sees one. the n.a.b. has run out of arguments amount of time. the white house to the capri to assume political groups ranging from the afl-cio and the naacp to americans for tax reform agree with us and talk radio touts a nonsensical and nonbinding resolution congressional leaders from both parties are working on real legislation to resolve this issue. any cop rate reform simply must

improve radio performance rights. to resolve this and other issues we support several thoughtful bills. the songwriter equity act will allow songwriters to be paid fair market value. protecting the rights of musicians that would insist that of broadcasters value their own content they must value the content of others. the respect act would remove a loophole that denies older artist royalties. but now it's time for a unified holistic approach to music licensing. it's time for a music omnibus bill for music buffs for sure. with copyright review underway we need our industry and congress to be visionary and creating unified approach for the future of our business and the music bus idea is simple. fair market pay for all music creators across all platforms. and the music on this spill may not wait for the copyright act

to be revised as congress's own advice on copyright maria puente noted cloke these issues are ripe for resolution. mr. chairman a legal framework that includes compulsory licenses government rates course and consent decrees are ready to diminish as they framers vision of exclusive rights. music makers must be subject to these restrictions let's at least assure them that the result represents what the free market would have provided. we are not asking for special treatment. we are simply asking for what is fair. fair market pay for all music creators across all platforms. a simple concept a single build a just framework for music licensing. thank you very much. >> thank you mr. portnow. mr. miller. pull that microphone closer to

you mr. miller. see i am a writer not an artist. good morning. my name is lee thomas miller. i grew up on the small tobacco film in kentucky. i started playing piano by ear when i was 11. by the time i was 15 and was writing bad songs playing them with me even worse band that we were just kids of the people cheered if only out of pity. i went to college to study music theory and composition graduated with a bachelor's degree from eastern kentucky university. that simply meant i was overqualified to plan the honky-tonks gripe in singing. it was formally educated in classical music composition while writing country songs on the side and these are two very different things according to my professors. my parents were thrilled when i finish finished college and mortified when i save a thousand dollars and moved to nashville. for years i wrote songs,

hundreds of songs. i played in bands and took temporary jobs to pay bills when needed. i studied the songs i heard on the radio and began learning from the songwriters who wrote them. on september 1, 1996 i became a full-time songwriter and then the real work started creating 11 years. from the day i moved from nashville at take 11 years to have a hit song. since then i've been lucky enough and blessed. i've i have had hits and continued to earn a living. walking into a room where there is nothing in making up something out of thin air something that is real something that is tangible something that creates commerce. what i make is i make as they seek that fuels the entire music business. it generates thousands of jobs and shapes the culture we live than because let's face it nearly everybody loves music. but i am one of the remaining few. since i started nine out of 10 of my colleagues don't write songs as a profession anymore

because their world sees can no longer feed their families. this is an unjust system that must be change. rules established in 1909 largely to prevent one player piano company from becoming a monopoly required me to grant a compulsory license paying 9.1 cents for the sale of a song which i split with my co-writers and publishers regardless of what the marketplace might say my son is worth. it's not much of the pay raise from the original 2 cents paid in 1909. in a world sees for my song on the internet radio station are set under consent decrees from world war ii. a judge determined us rates for bid and from considering what the marketplace is my song is worth. consequently i only received thousands on a penny for those performances. i appreciate the luxury of the internet as much as you do and i suppose i'm as much of a slave to my smartphone is anyone but the current system has devalued the musical composition to the point where songwriters are being crushed.

it's bad enough that it's so easy to steal the music today but a legal framework that allows songs to be streamed for nearly free will destroy the livelihood of the american songwriter if it's allowed to continue. an important piece of legislation called the songwriter act would be introduced that would allow my capri eight value to be considered in ratesetting procedures that i want to thank introducing sponsors congressman collins and hakim jeffries in the co-sponsors of this legislation. while it's a great start older revisions to the current copyright law and music licensing rules are necessary to establish true equity for composers. it's time for congress to illuminate the compulsory license is time for congress to eliminate what drastically alter world war ii era consent decrees. also in the future songwriter should be represented on the governing bodies of music licensing and collection entities and dispute resolution committees. future licensing and collection agencies should deal to compete

with those with large market shares. i am america's smallest small business. i sit down and make stuff up. i do not succeed at my songs are not recorded, sold and played and when i do get paid i pay self-employment income tax. with the money that remains i raise babies. i buy bread, gasoline anniversary flowers cough medicine braces and guitar strings. i can make you laugh or cry. i can make you do both inside the same three minutes story. that is the power of music and it all begins with a saw and. congress today i ask you on behalf of my family and the families of all american songwriters to change the archaic government regulations that prohibit us from pursuing a fair market opportunity for the songs we create. thank you mr. chairman and members of the committee.

>> thank you mr. miller. mr. israelite. >> good morning. i would rather give me five more minutes minutes to top what is the principle trade association of publishers and their partners in united states we thank you for the opportunity to testify. the committee is aware they're two different copyrights involved in music the copyright for the underlying musical composition which is the path of the music industry are present in the separate copyright for any sound recording of that song. what is striking is just how different these two copyrights are treated under the law and through government regulation. first copyright law contains antiquated regulations that unfairly distort the value of the songwriters work. the copyright in the song is the property right and should not be regulated by the government unless there is a compelling reason to do so. song should be valued in the free market just like sound recordings.

second, if there is to be regulation then add a minimum songwriters deserve to be paid a fair market value. there is no intellectually honest objection to this point. third, congress should reject any attempts to expand compulsory licenses. any additional regulation could have long-term harmful consequences for creators. songwriters attempt to earn a living through three primary means mechanical reproductions, public performances and audiovisual synchronization is. mechanical reproductions used to represent our dominant income stream for today comprise only about a quarter of our revenue. section 115 of the copyright act imposes a compulsory license that dates back to 1909. as a result of this world war i era law songwriters and music publishers are denied the right to negotiate the value of intellectual property and a free market. in 1909 the mechanical license rate was sent at 2 cents per song for today's mechanical rate

would be more than 50 cents if adjusted for inflation. remarkably the current statutory rate stands at 9.1 cents and for those who tire of hearing that statistic imagined the fatigue of songwriters being paid something less than the fair market value. this paltry numbers digit copyright board using antiquated below standard rate known as the 801b standard. it's a standard that is harmful to creators. as former register of copyrights argues eloquently quote while the section 115 statutory license may have served the public well with respect to the nascent industry after the turn of the century it is no longer necessary and unjustifiably abrogates copyright owner abrogates copyright owner's rights today. fortunately legislation has been introduced to address this inequity and i thank represented collins jeffries and members of the committee including chairman

kobo for supporting the songwriter's equity act. public performance world represents the largest industry for songwriters. the songwriter public performance right is inherently a free-market right. it is not regulated by law. but because the department of justice impose consent decrees on ascap and bmi in 1941 incredibly those consent decrees are still in effect today. they do not sunset. under these world war ii era consent decrees songwriters and publishers may not negotiate in a free market. instead federal judge in the southern district of new york dictates how much each songwriters paid. last week the department of justice announces undertaking a rupees dissent decrease and we hope they will act quickly to ensure songwriters receive fair market compensation. synchronize music represents a third significant source or songwriters. this includes using music and movies television shows as well as new forms of writing

including music videos and youtube. this is a free-market right. it is not regulated by law. it's not regulated by consent decrees. because the market is a free-market it is the useful barometer for assessing the fair market value of songs. not surprisingly given both copyrights are negotiating negotiating a free market the common industry practice is to pay both copyright owners under the same terms. there is an amazing amount of digital content available to consumers on the itunes store google play store amazon store. movies books, video games, magazines, television shows, recorded music are all available and all of those copyrights are negotiated in license and the free market. only the content produced by songwriters is uniquely singled out and subject to heavy regulation. on behalf of those songwriters i ask you to let them be paid

fairly by letting them be free. thank you. >> thank you mr. israelite. mr. knife. >> thank you chairman ranking member nadler vice chairman marino and members of the subcommittee i thank you for inviting me to testify here today. my name is lee sub on and i currently serve as the executive director of the digital media association for dema for short. dema is a nationally recognized trade association that represents many of the leading players in the digital music marketplace. you're probably familiar with many of our larger members which include companies like amazon.com apple itunes google youtube microsoft and rhapsody but there are several additional companies we represent that play an equally important part in the development of the digital music at the system. for a little more than a decade's worth of time the

roller companies have grown to play with the music industry is simply amazing. with respect to consumers our ingenuity has provided fans about my music with to new services and offerings that satisfy almost every conceivable price point. from on line music download stores to on-demand streaming to add supported internet radio and more recently club-based offerings. through respective copyright owners are effort had met the creation of revenue streams that have enhanced and rewarded content creators and their agents for their creative endeavors great sound exchange for example recently reported a 312% increase in the total sum of rupees to pay to recording artists and labels in 2012 versus 2008. this is thanks to monies paid by services operating under the section 114 compulsory license many of which we represent. with respect to songwriter

incomes ascap and bmi at the two largest performing rights organizations recently reported record high revenues of $944 million each in 2013. meanwhile the smallest of the three has witnessed its revenue growing from $9 million in 1994 to $167 million last year. all of these accomplishments i am pleased to report have come as members increasingly have been able to successfully convert would-be pirates into regular users of legitimate world t-pain music services. this task hasn't been easy. in the current music licensing regime where asked to advocate makes it no less difficult. it's safe to say that if we were writing from a blank slate today no one would develop the current system where asked to operate under. in the remaining minutes of my time i want to offer just a few thoughts on what essential elamin should be included in any

future music licensing reform package followed by a quick evaluation of quieting to recently introduced legislative proposals in particular constitute bad public policy. first, the 21st century licensing regime that's properly suited to handle the needs of an innovative industry and the consumer base that is consistently demanding legal access to content when and where they want it has to include one, efficiency, too transparency, three safeguards that adequately protect licensees from anti-competitive behavior four a level playing field among similarly situated competitors and finally five, it should shield licensees from excessive legal risks when those licensees are acted diligently and in good faith. greater efficiency has immediately apparent benefits for licensees to guarantee his new products and services can be brought to the market sooner

which helps us in our fight against on line piracy. for creators greater efficiency will mean less of the world sees we pay for the right to perform or distribute content will be used to covert ministry of expenses. last year alone more than $200 million in world sees paid by music licensees was redirected to cover pr o. operating expenses. greater efficiency would mean fewer middlemen and more money in the pockets of songwriters. the importance of transparency is obvious. service providers can't find the rightful owner of copyright protected works and they can't license and pay for them. which means the creator misses out on a royalty in the general public is deprived of the benefit of enjoying his or her creativity. for creators greater transparency provides full visibility into the total payments made by music services and away those payments are at minister by the agencies and affiliates that the artists rely on to administer their rights.

this in turn will allow those artist to make better informed decisions about which agents they choose to employ to maximize the net payments that ultimately receive. in the area of competition they need to protect licensees from anti-competitive behavior may be greater now than anytime in history. due to the recent consolidation in the recording and music publishing industries. so particular in the concept of licensing of musical works i have taken issue with this notion and assess certain requirements imposed on the department of justice's consent decrees be modified. before taking his considerable step would strongly urge policymakers to review the history of the ascap and bmi consent decrees attached to my testimony and also recent federal court cases which have made note of continuing anti-competitive behavior carried out by various parties acting on behalf of the music publishing industry. further on the subject of

competition a hallmark of a good competitive landscape requires a level playing field be established among similarly situated competitors. for several years now -- have had one simple request mainly the same rate-setting standard be a standard colonel used to determine performance realties for cable and satellite radio he used to establish rates for internet radio. record labels have relied on that 801b standard while licensing a musical work since the 70s. while cable and satellite radio providers have relied on it while licensing sound recording since the 90s all without any. >> your time is about to expire. your time has expired. >> i'm sorry. >> i would just like to close by saying we should consider the collective issues that i raised when we consider an omnibus approach to copyright reform.

>> thank you sir i appreciate that. mr. o'neill. steam mr. chairman mr. ranking member subcommittee members than q. were inviting me today. i'm honored to be here. i would also like to thank on richmond collins for his sponsorship of the acts. it's been well received by my members. my name is michael a anil and i'm president and ceo of bmi. i have been working with songwriters composers and publishers and businesses for over 20 years while at bmi. we were founded in 1939 as a not-for-profit company and bmi today's one of the world's leading performing rights organizations. under copyright law whenever music is played in the public the creators of that music people like thomas miller are entitled to be compensated for their work. we represent over 600,000 songwriters and composers and

publishers and license there over 8.5 million works to businesses across the country. we also work with societies all over the world wherever american songwriters music is used to make sure they are paid for it. today through the marriage technology and artistic creativity digital media is truly democratized the industry. it has knocked down barriers and created more opportunities for creators than ever before and while this is promising, as these new innovations come out bmi's mission is and always has been to ensure that her songwriters and publishers are paid fairly for their creative labors. that issue how bursting frustrated by regulatory framework. bmi like our competitor ascap are governed in a consent decree. almost all of those rules in the consent decree date -- date back to 1966 and beyond.

essentially we are locked into a model that might have been appropriate when the beatles first came to america. that might've been appropriate when you had to get out of your chair or your sofa to turn the channel on your television but it's not appropriate in today's modern world. here are four model proposals to bring bmi in the world of music licensing into the 21st century. first, publishers do not currently have the flexibility to decide when they choose to utilize bmi license works in winnakee licenses works exclusively for themselves. bmis rates court has held that publishers must choose between giving their works completely to bmi for all conceivable uses or not joining bmi at all. a publisher that wishes to license one digital service on its own without the involvement of bmi must pull out for every other use from bmi does re-creating what bmi does across

the 600,000 businesses we license. publishers should be allowed to decide what rights they wish to convey to bmi licensees in what businesses and rights they want to license themselves. this will work wire a change in a consent decree. second, we need to be able to license more than just a performing right. under copyright law businesses often need multiple rights especially on line. why make them seek out multiple people to get those licenses? given the expertise and experience in relationships of the business world and the creative world the world of music, i believe bmi's vision may be that one-stop shop where businesses can secure every right they need and are decree should make that clear. third, if bmi and ascap rate courts should be modernized. we propose an arbitration model.

it would be faster less expensive than being more rock market responsive for all parties. finally the consent decree should sunset when the basis for those decrees to longer exists. as bmi's relative strength in the marketplace is reduced by many new entrants new participants competing with bmi we should be allowed to operate on behalf of our writers on the same terms and conditions as our competitors do. so in conclusion, bmi songwriters and publishers face a competitive landscape. in order to meet those challenges all participants need to provide greater flexibility and operate more efficiently. when songwriters are unable to make these sustainable living we are all impacted. the department of justice is undertaking a look at our decree and we are very excited and look forward to working with them to

make those changes. on behalf of all of bmi songwriters across all 50 states i thank you for your time. >> thank you mr. o'neill. mr. hoyt. >> good morning chairman goodlatte and coble ranking members conyers and nadler and members of the subcommittee. i am the executive director of the tml c.. and has on behalf of its members been involved in negotiations arbitration and litigation for decades with a performing rights collectives that represent composers and publishers to ascap bmi and c-span. based on decades of experience interacting with ascap and bmi and more recently with c. sack the distant decree restrictions must stay in place and considerations should be given to extending these types of

restrictions to any entity that aggregator bundles the power rightfully vested in the individual copyright ownership by congress. local television stations broadcast network syndicated and locally produced programs. in most syndicated programs stations do not selector control the music used in these programs but are required to broadcast these programs precisely as produced and recorded by third-party producers and then required to license the public performances embedded in the program. the station's license these performance to ascap bmi or csac. because they have distinct respiratory seat station much -- must take a license from each prl. historically these piero's if issued licenses that permit the use of all of the aggregated copyright in their repertory without regard to the number of performances actually made by

local stations. this is the so-called blanket license. decades ago ascap and bmi entered into consent decrees with the department of justice in order to settle antitrust actions commenced by the department. these consent decrees have been instrumental in providing stations the right to reasonable license terms in light of the extraordinary market power that ascap and bmi enjoy by virtue of aggregation of performance rights insistence on licensing most copyrights only on a collective or monthly basis. independent federal judges have ruled for instance that under the ascap and bmi consent decrees a station is entitled to unlimited reduction in blanket fees where some of the rice to perform music in the programming or license from the copyright owner. these judicial rulings have helped facilitate more direct licensing within the industry and therefore more competition. these alternative licensing arrangements and fee structures

were denounced by ascap and bmi fought for and litigation by stations and would not have been possible without the consent decree provisions. as explained in my written testimony csac is not subject to these restrictions and is the subject of an antitrust suit brought by broadcasters with support from tmlc. licensing practice of csac demonstrate when a performance rights or other organization that aggregates copyright will do without the types of restrictions obtained in a the dissent agrees. a federal court recently denied summary judgment in a class-action antitrust case brought than television. the judge observed its undisputed that csac possesses monopoly power in the relevant market and describe the evidence of actions taken place csac in recent years that are specifically banned by the ascap and bmi consent decrees. attempts by tmlc to gain access

to music performance information maintained by pr zero about the music contained in television programs have often been denied on the grounds that such music information is supposedly proprietary raid a general policy requires collectives to publicly release information and in which user fees and distributions are based would help promote a more competitive market. we stand ready to cooperate with creators, collectors and other users to find common ground on legislation that would promote competitive market values for the right to perform musical works. that is, legislation that will fulfill the constitutional provision to enhance the public interest. thank you all very much for your time. >> thank you mr. hoyt. mr. griffin. you are the cleanup hitter today mr. griffin. >> i'm used to doing that.

so my name is jim griffin. i'm immediate technologist which i think means i am panels -- and 20 years ago this coming saturday when i was the director of technology we released the first full-length song on line aerosmith had first in 1994 so it's been 20 years ago. there are so many issues that are at the forefront of today's hearing and i'm fascinated by all of them but i'm going to focus on only one issue and that is the growing need for registries or databases. comprehensive databases information related to creative works and not just music so my remarks while they focus on music really span the field of copyright. i'm going to make just a half a dozen fundamental points.

the first is that our goal should need to make it fast easy and simple to pay for music through other expressions of ideas such that the market can work with efficiency. if we make it fast easy and simple to pay more people will. secondly, we need comprehensive public directives. it is unnecessarily difficult to pay or license from those difficult to identify the relocate. we must work to record in to record in memory to an update public databases that give creators pay and works licenses let alone provide attribution creating a historic record of our culture's heritage. two years ago i co-authored the scholarly paper of the attainment law journal entitled rights unenumerated rights disrespected. the title tells the story and

that's all of the story you need to know. without rights enumerated they are very difficult to respect. my third key point is that we should include all creators when we build these databases. [inaudible] see mr. griffin you may want to pull the mic a little closer to you. [inaudible] >> is this better? i guess i have two minutes to

repeat a lot of it. i will go very quickly here for you and just to repeat that my name is jim griffin and i am the panels heat the panels geek. immediate technologist here. >> excuse me sir we heard it clearly. see then that is just fine by me area the fourth key point that i'm going to make is that we need globally unique identifiers no less than a bank check or a credit card. we have to have a number for each song and each book, each thing that we are trying to track. simply using the title or the artist name is not enough. there are so many different ways to spell the creators name or the title that it makes matching extremely difficult and yes it's true we do rely upon semantic matching absent global unique

identifiers. globally unique identifiers are easy to explain. they are just like the thin number on a car. without of the number they cannot accurately describe them. and when we have these unique identifiers we need to have them in a public database that is accessible to anyone to read and we do not now have appropriate databases for music photos graphics to cite a few examples where it's not done at all. this has many impacts. the key concern is absent the use of these unique global numbers money disappears along its path to its intended receiver. where does this money go? that goes to pools of unattributed income their market share formulas that the organizations that collect the money and not to the specific creator for which it is intended. fitfully i will say there's a market solution and it does not require the government to step in to fi fix it.

the government i think should provide a wholesale core database that encourages retail activity and the edge of the market no different than what happens with the internet domain use. as a wholesale market at the center but it encourages detailed market solution at the end. sixth i will finish by saying the problem is growing exponentially in front of us. in roughly the year 2000 we saw 50,000 sound recording downloads released a year. by today's standards because do that in four days on sound club on january 4 and sometime on january 1 youtube sees that much content. we have got a moving target. if we expect respect for rights, rights need in admiration. this issue cuts across all concerns regardless of how you license. you need to keep track of the stuff you are licensing. thank you. >> thank you mr. griffith.

as we examine the wall we try to stay within a five-minute role as well. i'm told that chairman goodlatte has a meeting that he must attend so we will let him kick it off. >> mr. chairman thank you for your forbearance and to all of our witnesses thank you. the clock is ticking. i've got four questions for all of you and with 28 answers and if eight answers into the really short and also yes or no. number one, i will start with you mr. portnow. what a free-market alternative be a better alternative than a licensing system we have today? >> well it's a seller -- fair market that we need. in other words we have to pay. >> mr. miller. >> yes that is exactly what we are asking for today. >> mr. israelite? >> yes. the mr. knife. ca think we need a fair market is mr. portnow was saying. >> please, yes.

see if you can define free market as a competitive market yes. >> mr. griffin. >> as much as possible but copyright is tough because you start without one. >> dome i know. number two former messenger copyright marybeth peters suggested music services can more quickly get started. would you suggest such a music rights organization model rather than the current system mr. portnow? >> eight complicated question. it would depend on what that looks like. what i would say is our community cannot subsidize the establishment of businesses off our backs. >> we support anything that re-values the copyright. >> mr. israelite. >> that would happen in a free-market. >> mr. knife. >> we wouldn't support the addition of other layers of administration but we do support

anything that leads to efficiency in the marketplace. >> mr. o'neill. >> yes. >> mr. hoyt. >> we don't see the necessity for a government-regulated single unit and we believe the competitive market will work in the long run. >> mr. griffin. >> i favor consolidation that you describe. >> here is the tough one. you have to do mental calculations quickly. what is the appropriate split between a songwriter and performer for their work. should congress determine the split or should someone else and if so, whom? been nobody is getting rich from the services. we have regulatory bodies at this point they were making that judgment. if it's done on a fair market value that is what's important that each of the creators have what is there in the

marketplace. >> mr. miller. >> essentially it's the two underlying things reading of the sound recording and mr. israelite would have to speak to the complications of that. >> mr. israelite. >> a free market would answer that question and the one place where there is a free market for both copyrights which is the synchronization right it is generally split 50/50. >> mr. knife. >> we are generally agnostic to it that split would be that we are inclined to move towards a system where we would only have to pay one person and others would define what the split is amongst their rights. >> mr. o'neill. see cif songwriters better artists and songwriters that are just songwriters and they argue that point often. i think the free market would ultimately determine that. >> if you can create a competitive market that competitive market will determine the rates. >> mr. griffin.

>> i don't think you should compel a particular percentage. you should allow the markets to reach an agreement that they cannot than it to be an alternate. >> congratulations. we are through 21 of the 28 suggestions and we still have a green light. mr. portnow what are the less dismal issues that congress should be aware of this review our nation's licensing laws? >> i think we have got her hands full to with the ones that are visible and i'd be happy to talk about that. >> mr. miller. >> the current state of the digital world is so debilitating to the songwriting community that i assure you no one can see beyond the obvious. >> there's a lot of focus on the market powerfully and his fellow songwriters as opposed to the market power of the people we licensed to so i don't think google and amazon and apple need protection in their negotiations with songwriters.

>> mr. mr. sub on. >> some issues that aren't being addressed or issues regarding the way money flows to the system. their large amounts of royalties being paid by my member companies and at we still hear complaints from songwriters that they are not getting paid. >> mr. on mail. there are many issues that we just don't have time for. >> perhaps it will cause you or others to comment as we move forward. mr. hoyt and mr. griffin if i may. >> in the interest of public policy i think you have to really look at the balance between the benefits of aggregation and the potential of lamination of price competition. >> mr. griffin. >> i think it's a very difficult question to answer definitively and i will simply say we have to maintain in order to ensure

balance. >> mr. chairman thank you for your for parents. 28 answers and five in-app minutes. >> your barely made it. distinguished gentleman from new york for five minutes. >> thank you mr. chairman. mr. portnow you endorse the conference identified legislative approach and licensing. we sometimes hear -- what are the advantages to a comprehensive approach are the harms and doing it piecemeal and briefly please because i have a lot of questions. >> i think we see the results of the mandate approach. over the years we have cobbled together these various rights from different generations and when we arrive at where we are today it just does not work and to do it piecemeal at this point when we have a great opportunity to make a difference you hear everybody on this panel clearly saying we have to make changes.

i've heard most of you say that changes need to be made. we need to grab that opportunity. it's certain not going to be easy. it's complicated. >> why do we need a comprehensive approach? >> comprehensive is the way to go in the long run because the piecemeal has not served us well. >> thank you. we also sometimes a better world to performing artist playing on fm radio would benefit the biggest stars and -- what is the data date out there showing that? >> their performance right, the way it would work is that it would go to the artist and the artist whether it's a large artist or a small artists really is not relevant. the fact is when somebody's work is played on the air day performer ought to be paid. there's no sample and american history of business that profits

from the works of others. >> actually there is but it's before the civil war. mr. israelite within the compulsory asic licensing system one goal is to dare to maximize fair market value. how do you envision achieving that end can we do in a conference of fashion so we don't leave anyone behind? >> about a quarter of our industry is regulated by a compulsory license with a great standard. our first preference would be to get rid of the compulsory license. we don't think the government should have any business setting prices for songwriters at the next best thing in the thing that perhaps is more doable is to at least give us a rate standard willing seller willing buyer. if that were the case i can promise you on $1.29 download the songwriter would make more than 1.9 cents on absence of being given a free market opportunity and at least let the judges that set our rate approximate what would happen.

>> what did you say it's worth today? >> with inflation it would be 50 cents. >> but it's only 9 cents? >> it's 9.1. >> mr. knife under current law establishing rights for cable and satellite than for internet rating. how is this impacting your member's? >> clearly the biggest issue the biggest biggest way this affected them as they pay considerably higher rates. the willing buyer standards has led to higher rates than they ate hundred 1b. >> some of your competitors have an advantage over you in leveling the playing field? >> absolutely sir. >> why should we do the 801 b. matt? >> there a are couple of reasons. first and foremost is the willing buyer is relatively new thing in the short tenure of its application it has resulted in some disastrous results that

this is deemed houses saw -- seen fit to intervene intervene on where's the 801b has been in existence for far longer period of time and has resulted in any difficulty. >> let me quickly ask mr. israelite and mr. portnow agree with that statement quickly. >> the people that use songs may find it offensive to pay fair market rate for them but the fact that would be a newer standards no argument why a songwriter does not deserve the market rate. >> back to mr. knife given potentially thousands of price that must be cleared for single song counter production is a free and fair market system -- michaud we make this work and how do you deal with thousands of rights for a particular song? >> i think those issues were addressed by mr. hoyt and mr. griffin. we have to balance the interest between an efficient marketplace

which might include the collectivization of rights licensing with fair royalty rates. we have to kind of balance those issues to make sure we are controlling those monopolized entries. >> mr. griffin my last question obviously. you said it's unnecessarily difficult to pay a license. we must work to create a conference of registry system. my question is first of all teaming going forward are going backward? how long would it take to set up who would pay for it and why? the user should pay for it. it doesn't cost anything because it's profitable. if you look at the internet domain name. >> wouldn't cost anything to set up the master set? >> my point is that you make it a market pay system you invite the go daddy's of the world and to help you fill it and populate the database and they make money doing so so if you build a

market-based system of registration i believe -- see how long would it take to set that up? >> i think it could be done within a year. >> are you talking about going forward are going that? >> forward and backwards and up allows anyone to register and to register any claim. >> you think you could register every song going back to the song of miriam in the bible? >> no problem with that. true it should happen happen happen that we register. >> let me ask does anyone else want to speak on the practicality. >> i think it would be extremely difficult. you have to leave the current system in place. >> mr. owen neal. >> there was a global repertory database contemplated to be built overseas that had cost estimates between $30,000,100,000,000 that fell apart after three years of service. >> thank you very much.

my time has expired. .. >> well, for digital broadcasters the mechanical part of it would not really affect them at all, and for the other part of the bill that deals with performance, the truth of the matter is that all it would do would allow parties to make arguments of the federal judge.

we think it is very not a significant burden on any broadcaster to have to deal with the evidence of what rates would be in a free market when arguing to the judge that eventually is going to set the rates anyway. >> i was going to discuss the split, but i think you all pretty well responded to that with the chairman's comments. mr. griffin, would you elaborate on the importance of fair market value for all music performed -- performances? i think you all did that close to unanimously in response to a previous question. >> it was hard for me to hear the end of your -- >> elaborate on the importance of fair market value for all music performances, and do you feel that really studies are harmonized or need some massaging? >> i do think that music should receive its fair market value. there is no question about that, and that think it is essential that in order to do so we track music and its owners such that

we can identify them and those who participated in them so that we can get them the money they deserve that the market provides. today that money often disappears on its way to the creator. >> at thank you for that, sir. mr. miller, have been asked to put these three questions to you that may or may not be applicable to today's hearing. to you know bluegrass? do you know tom t. hall? can you play the fiddle? [laughter] >> that is ironic. i dreamt i -- do. i played the fiddle in nashville my first job was playing fiddle for tom see all. i lasted three days and he fired me. [laughter] >> i take it you do in the no and. [laughter] >> very well, sir. thank you. i think fed chairman pretty well touched the question i had. thank you for your response. i tell you, i will identify and

devil's the identity of the person you ask those questions presented to you. thank you again and i now yield to and who is next in line. five minutes. >> thank you so much. as co-chair of the caucus i firmly believe all artists should be fairly compensated across all platforms. that is why amoco sponsor. to me it is just not feel it -- fair for songwriters to be paid on average $0.8 for every 1,000 streams of their songs and digital radio. is not fair for a legacy part is so pre-1972 recordings to be paid nothing when entire digital stations are dedicated to the kneesies of the 40's, 50's's, and 60's. let's not forget that they are paid nothing for countless plays of their song on radio. last week i have listed a music

leader round table where i heard from many people about the challenges they face trying to make a living in today's music market. one of the most legendary songwriters there told me about the challenges that he has having to work at age 72 because he has paid very little for songs that he has written that play on digital radio despite the fact he has written and produced over 504 number one motown hits. so today's hearing comes at a crucial time for music creators. these were realty disparities are in need of attention and ultimately a resolution so that we can continue to have a vibrant environment that fosters creativity and growth. i will look like to ask, because of a statutory mandate songwriters and publishers are forced to grant a license to anyone who wants to use the musical work for reproduction and distribution in exchange for paying a royalty set by the

government. and the rate was first set by congress in the early 1900's at $0.2 per song. today in 2014 it remains painfully low at just over $0.9 per saw. let's not forget that this is split by the songwriter and publisher. let's assume the status quo prevails, what does the world look like in five years for music publishers and songwriters how can songwriters who are not also artists make a living off of a very low rates that a company streaming services? >> in five years if i am fortunate enough to still represents songwriters and publishers what i fear is that i would not have lee miller sitting next to me because he would not be able to make a living as a songwriter. it is simply inexcusable that you cannot get a fair market rate for property value of the song when someone purchases it. we are thankful for your sponsorship of the songwriter equity act. it is of importance that we're

getting to a place where a songwriter can still make a living. >> the reality is this songwriter's association looks at the numbers that we've lost 80 to 90 percent of songwriters of the past 12 years. five years as a long time. i fear what that would mean. if we have status quo and he's more into a streaming model it seems as catastrophic, as we would assume that it is. what is interesting is my wife told me this morning late last night by a 11-year-old asked what happens after today? all of that these problems solved? which caused my wife to call and say, i should understand more than i do the answer to that question, what happens after today. does it get better. tyr i have to say, i don't know. it is a hard and complicated process.

i am not the legal right. i look for words to rhyme with love every day. yesterday i had never used the word. [laughter] that is the truth. but i will say this, i hope that you will take all of fairfax and the consideration and understand the american profession is in a lot of trouble. we are hurting. >> i will give you a shocking statistic about the low rates paid by one particular company, pandora. i believe one of the founders has been a witness before this body. that founder cashed out more in his stock ownership last year than every song writer in the united states combined was paid from the pandora. that speaks to how low rates are because we don't have the right to negotiate the value in a free-market. >> and could you talk about the role of producers and engineers and creating music. why is it important we highlight their contributions as we review

the licensing scheme? >> i know a little bit about producers and engineers because when i was a young man in a band that played music would experience having a recording contract and having a producer in the studio. as of the analogy -- and then i became one. i was a record producer on staff for years. the producer is more analogous to what we would call a director of a film and television business. he or she is the person that puts it all together, everything from booking the studio to find a massage to creating the sound and the environment of those recordings and we would not have recordings without them. they are not currently covered in statute. that is important because they need to be compensated fairly. we are in negotiations with recording academies from our friends that sound exchange. we think we have some good beginning solutions. at be happy to talk about that

further beyond the hearing today . >> thank you, i yield back. >> the gentle lady's time has expired. the gentleman from texas. i stand corrected, that john and from pennsylvania. >> thank you, chairman. i normally do not do this, but i have a brief statement of want to make before i ask a couple of questions. the number of issues to work through in this copyright review process, the music agency may be one of the next complex issues. i know firsthand because i have been meeting with state cole was involved in this in d.c., new york, los angeles, and most importantly to my district one thing is for certain, no one is happy. the current laws in the scent decrees that stakeholders must operate under to negotiate the copyright licensing royalties are simply not working. i also found this to be an incredibly divided group of stakeholders who all seem to show some opposition to find

commonalities to work toward a solution, and it is high time we need to work harder to find middle ground. omnibus' pieces of legislation, to use some words from your lyrics, mr. miller -- they tend to omit all of us. i put that little line in their toward the -- [laughter] many of you have heard this, but when it comes to creating a solution those of you in the private sector need to get more involved in that discussion for a solution because if we can't come up with anything you are really not going to like what we legislate. i would like to see all sides of the music licensing issue come to the table to come up with something that works for all industries involved as well as for consumers. we don't have to revisit this

time and time again. and i look forward to working with you, and i will say this in the beginning. many of you coming to see me and talking about issues, and if you care to continue that my door's always open. he stated it your testimony that your clients revenues are significantly below what they would be in a free-market can you elaborate on how you came up with your figures and why you believe in getting rid of section 115 moving to a free-market. >> thank you for the question. i completely appreciate your opening comments and would point out when a songwriter has been underpaid for over a hundred years in the solution that involves fair market compensation is going to be opposed by anyone in baseball music. it is understandable why there are such deep divisions. the reason we believe it would lead to a significant increase in songwriter compensation is if

you look at the 75 percent of our industry that is regulated. for the 50%, the dissent decree with performance rights, we know that the dissent degrees lead to significantly lower rates than what would happen in a free-market. we have a recent window of opportunity where there were free-market negotiations for a very similar radio services with apple that happened with pandora , and the result was staggering. on the mechanical saw the difference between a willing seller willing buyer standard and an aide to one be standard, the copyright royalty board has spoken to that issue in the past and indicated there is a significant gap between the two standards. so just by allowing us to have a fair market rates in that 75 percent of our industry, we know it would lead to higher rates. the industry that is unregulated , the rate structures are significantly higher. there is no doubt that would happen and is understandable that anyone who has been

benefiting from this government regulation by not being songwriters' fairly would fight hard against any change that would lead to fair market compensation for songwriters. >> although some stakeholders are kurds to to move to a free-market system i know others are very leery of this. can you explain why in this particular industry the free-market approach might be questionable. >> again, i think it has to do with the idea that some of the president's -- principles i announced -- we are talking about the marketplace that needs transparency and efficiency. a free-market system would necessarily not be efficient. when mr. k-9 talks about the synchronization license, he is not talking about licensing synchronization rights on a wholesale basis of 30 million songs are more at once. synchronization licenses have been individually. the song its license and no movie or television program and

is a rather slow and laborious process. we have to balance the ideas of making sure we have an efficient marketplace that might include the collectivization of rights licensing and making sure that is not used as an undue market power. >> i yield back the remainder of my time. >> if i could quickly respond to that. while many are done on an individual basis, that promises some believe wrong. the largest music acquisition source on earth is youtube. youtube needs a synchronization license. it is completely licensed. it happened in a free marketplace, and the rates are significantly higher than other forms of competitive services that are regulated by consent decrees and compulsory licenses. >> the chairman's time has expired. >> quickly, i would just say our experience in television is that when you do locally produced programming in what would be considered a relatively free market, those rates we think we

have a lot of evidence that they are much lower than they are coming from others. >> the gentleman's time has expired. the distinguished gentleman from florida. >> thank you, mr. chairman. a free-market system would not be efficient. the system we have now is very efficient. it is inefficient at putting an awful lot of songwriters out of work. that is the system we have now. before getting to my questions, i have a question for you. how many songwriters -- how many songwriters were there ten years ago, 20 years ago verses today? how many americans had to give up their profession because of this system as it has evolved. >> we can only speak to very tight communities. we have the luxury of knowing everybody to some degree.

we certainly figure based on prior to consolidation of major publishers. you can quickly look at the possibility of three or 4,000 writers making a living doing this down to three or 400. >> which i think is an important point to remember. this hearing is important, and the issues are complex. without picking winners or losers, but i was intrigued by what you said earlier. you said no one would develop the system if we were starting from a blank slate. you also spoke about the need for a level playing field which is what is driving or should be driving this whole debate and process we are engaged in. so if we start with that, what is a level playing field, i would point out a couple of things that i think are unfair and did not represent a level playing field. maintaining different performance rights to the for

terrestrial radio and digital and its digital competitors seems unfair so that individual services and to the performers who is no less valuable one plan over the air, that strikes me as not a good deal. and holding the music recorded before 1972 should be treated differently is disrespectful of the class of artists who have been treated so much of the musical legacy. most importantly that makes no logical sense to differentiate. i would also agree with the point that songwriters are too often given the short straw in that private service, the songwriter equity act that would allow a rate to consider other royalty rates as evidence for establishing the digitally and adapting a fair rate standard. those are means to leveling the playing field. this is not -- what we have now is not what we would have

started with, but if ultimately the goal is to level the playing field, let's talk about how we do that. you answered some of the unfair arguments that have been used. for me the question is not do we make the change but can we defend the system without making that change. again, is it fair to your members who are mandated to pay for the music they play so broadcasters don't pay for the music they play? >> i think it is probably not fare as a general principle, but i would leave it to this body to determine who should be paying royalties and who should not. yes, we are asking for that kind of comprehensive review. >> this seems like we are saying new technology, you pay for those rights because you larger starting now. the same thing over terrestrial air raids while the status quo there is sacrosanct. that is my problem with so much

of this debate. they're is a sense that because things are the way they are, that makes them sacrosanct. that is what broadcasters should not have to pay performance right. we continue to rely on decisions from the 1940's as amended in the 60's. those are the issues we have. let me just go back you. i hate to think that you would spend a second after this hearing trying to run anything with on the bus. there is no one who would buy that record, listen to that record, least of all members of congress. let me just ask, you talked about how -- what this has meant in-fill. add up the story you told about your experience with your wife was powerful. can you give a little more about what this debate means to you and that thousands of americans

who can no longer in the living because of the system that we continue to have a place that needs to be changed? >> the competition to write a hit song is tough enough. it is hard. it takes a long time. we understand we're competing against the best in the world, and that is fine because we go and learn our craft. the problem we are up against now where even when we do have a song, it may not mean anything. but yet millions and millions and millions of people like assuming that song, requiring that song, and listening to that song and sitting at their weddings and their kids graduation. i am not sure what we're supposed to do with that, and i am perplexed at the idea that we need to help out the entrepreneur who wants to start a business by giving him the product. i suppose if we gave the general store owner or as the former give corn and potatoes for free he would have more luck

succeeding in his business, what i'm not sure what that means of former. the way we look at it, we're running of farmers. so that part of it is frustrating. on the other hand, all of my colleagues are right now sitting in a room not thinking about any of this. they're concentrating and have a right the best on a possibly can to get on the album to get on the radio. first and foremost, that is what we think about. all of our energy goes into writing the song. >> thank you. >> if i could take a moment to respond to the point about songwriters. >> very briefly. go ahead. >> thank you very much, sir. i was just going to say, we keep hearing there are less and less songwriter's based upon the economics of this environment. i think in bmi press releases they have indicated that the has increased 100 percent between

2003 and 2013. i think as that passing a -- similar growth figures. i'm not sure where the idea that we're losing stock market -- songwriters is coming from. >> may i respond to that? >> yes. >> we have grown in the number of songwriters. the advent of the internet has allowed us the higher -- sign songwriters more than before. the question of how many is getting paid. is that number growing. that number is not growing. >> the gentleman from texas. >> thank you. i would like to take a minute to say a word about a previous questioner was asking just because things are the way that they are. businesses count on things being the way that they are. the local radio station that is counting on things to continue to be the way they are when they decide whether not to give the morning deejay raised or go out and buy a new transmitter. as we change these rules, we have to be leery of the fact

that different companies throughout the country have invested in may business decisions based upon these rules we have to really make a clear and convincing case. now will get off my soap box. maybe not. i will ask this report led the question. i am a former broadcaster. sympathetic to the fact that it is a tough struggle for broadcasters. the same forces that your industry is struggling with a new distribution medium to figure out how to do compensation, there is no way area station will get compensation from pandora. they are facing a tough challenge. there are a litany of reasons why they are not different, but i do point out day our historic radio's highly regulated,

limited resources, limited bandwidth what you have basically unlimited room for expansion in new programs digitally. so i just wanted to point out there is uniqueness and a synergy that radius stations have provided in allowing new music to be exposed. it is different now when you can customize almost down to the saw when you listen to what the internet. it used to be the record labels and music publishers would pay folks to go try to get ready of stations to play songs. we have got to keep that history in mind. anyway, i want to go now to bmi. if we allow publishers to choose what they license, how do are now what i am buying from bmi, what lessons i have and what i don't half? in recent ascap pandora trials

another @booktv number of individual publishers with two places in writes in an attempt to negotiate more favorable royalty outside the descent degrees. when pandora refused higher rates proposed they ask for a list of work owned by the publishers so they could pull them from the playlist. the publishers and ascap, obviously your competitor, refused to provide a list. this left pandora with the option to pay the piper, not pay the price and face infringement, or stop playing all music altogether. how do you answer that when you are asking for change there when you deal with this issue? >> thank you, congressman. i am a former broadcaster also. i cannot really comment on what

was done by my competitor, ascap i can't comment on what bmi has done. i got done with testimony in our pandora trial command the same question was raised to me. we provided the information where necessary and where customers told us to. as far as providing the information transparency, the department of justice, the review of our descent decree, this is a big subject they're looking at, and we are willing to explore that. we spent 75 years at bmi building that business, that expertise, that data. we like transparency, and our riders demand transparency. that is how we pay them. i don't think it is appropriate giving that same date it to our competitors to build their business, and we fight against that. >> how you feel about mr. griffin's guid proposal? it used to be you could go and look on the label of a record

and it would have the artist's name printed. a lot of times this is not even available in mid to data. >> i think it has merit. there was a recent venture formed where we are filing our two databases along with marrying it up with our partners in canada to get at the retail data. i do think the industry is moving in that direction. >> i really do like the idea that you think it can be done in the year. >> that is the irony. we already have it. we are not recorded in and putting them in the database and making them available for the public. why? what kind of market could we possibly have without the affirmation? it would be like a stock exchange without the listing. >> i see my time has expired. >> i also want to say a u2 is completely licensed commanded is not

. players who are not -- who youtube cannot find. it is obvious because the concept has no ads wrapped around it is often unclear because they cannot rap ads around that which they have not cleared, so an enormous amount of their content is on lice is precisely because they cannot find the owner. >> cannot make a comment on the answer? so that you understand, we have been trying to get transparency from the as gap bmi, and sees that for years. we cannot get it. there refused to give the information to us. it is my view that until that information is made public all of the details made public you cannot attain a competitive market, and despite -- if you notice, his answer included. we don't get the users, we don't

get to participate. we offered to invest in a series of trying to get more information, which is will we have for television. they refuse to allow us to participate. so to the extent they're is a transparency issue, i think it is as much the collectives as it is anybody else. >> the gentleman's time has expired. >> thank you, mr. chairman. i would like to address the justice department's announcement that it will review the consent decrees that govern that pissarro. i know that some of you feel that these consent decrees are addict -- antiquated. at the same time, i recognize, as indicated by the judge's decision in their recent pandora ascap case, that there are some who feel these dissent degrees are in place for good reason and should remain. regardless, i think we have to ensure the music marketplace is sustainable and works for

creators, platforms, and consumers. as the doj conducts its review i wanted to know if the panel can tell me what it wants to see and what it thinks can be done to ensure songwriters are protected , the legitimate marketplace is protected, and the system works for all parties . maybe the kid just kinda briefly , and my time, go down the list. would you like to begin? >> i am going to differ. this is not my issue. >> okay. >> i think if you look at the most recent antitrust class suit brought by television broadcasters you will see the absolute necessity of having it is a degree in place. what happens is under current practices of law the collectives are allowed to aggregate copyright's, individual copyrights and then refuse to sell them on any of their way

than on a blanket basis. we have a significant problem in modifying the descent degrees. in the long run it would run into major antitrust problems. >> thank you. >> i believe there are many things that need to be addressed. i actually believe consent decrees should be sunset and done away with personally. mr. white earlier commented on a direct license and a marketplace that led to lower rates. it only lead to lower rates because the publisher or writer did not have the power to say no and were not able to get outside of the regulatory framework to see what the free-market could have negotiated, would have negotiated because that buyers they did not agree could have stolen back. that was the feeling. they could have never went above the ceiling. that is the framework. we're trying to give the marketplace, songwriters and publishers the power to go on

and make their own deal and see what a true free market will. >> it is early. we are still evaluating our position with regard to the announcement, but i think it is safe to say that when you have a marketplace that is entirely controlled by three players, to being rather significant, some type of control is necessary. i think we would probably pursue the application of the consent decree. >> these are the longest running consent decrees in existence. in 1979 the justice department adopted a policy of no longer having consent decrees that don't sunset. this decree never sunsets and has not since 1941. to the point of market concentration, one of the most important issues in this question is whether a right holder can pull things out of the collective and go into the

marketplace, and we are being told no. that is completely antithetical to the purpose of the consent decree. they want to complain about having three powerful organizations but denied the ability of our rights holder to leave them and further take the market into a more decentralized way. there are so many things that should be changed. there is no reason our rights holder should not be able to leave for a limited purpose of the cheese so. the most egregious as there is no reason why a licensee should be able to use the music by simply asking without there being even an interim rates at which takes all of the incentive out of negotiating a rate. >> thank you. >> every argument and point i have made today is due to a unnecessary government restrictions on songs i create. i believe it is decades overdue in making some of this go away. >> thank you.

>> what i think is clear is that consent decrees as currently written do not result in very outcomes for songwriters and should be modified. the recording academy will be filing comments on this issue. >> in my time left does anyone else want to respond? >> i will add because i deferred. this is a situation much like that that is sports based and john kennedy introduced the sports marketing act that allowed baseball, basketball, football, hockey to work together, owners, reveries, players. an extraordinary time where people are sharing content to get around licensing and where people are sharing a think it is appropriate to allow the industry work together i would lean toward more freedom with regard to consent decrees. >> thank you. >> please don't forget the licensees are the ones that

benefit the most from the collective license. and while they complain about having to negotiate, you, the truth is licensees are the ones that benefit the most from having the ability to have the licenses collected. >> i think there are two different opinions. >> thank you, congresswoman. the chair and our record as is the gentleman from georgia. >> thank you. as many in this room know, this is something that is close to my heart and the work that we are doing. i appreciate everyone on the panel. i have questions that i want to go back to because in the end before i ask any questions, my views come from one thing. when we talk of intellectual property and musical rights, we

talk about that dream, hope, a motion, which are all valuable property rights and need to be compensated fairly in a place in which we can do that. the numbers in written testimony point to the fact that digital music services based songwriters and publishers significantly less than they paid. do you think that a sound recording is nine to 12 times more valuable than musical composition? >> again, my organization and most of my members are agnostic on the issue. we don't have a view as to whether or not the songwriter or song is any more valuable than the summer according. we would like to see a market place that allows us to acquire both rights and a reasonable rate and let the parties to have interest beyond that determine what the appropriate split is. >> you are at this point from this testimony today opposed to moving to a willing buyer willing seller standard.

>> i am opposed to a willing buyer willing seller standard that would unfairly continue to fragment the licensing. >> that is not agnostic. that is a belief in one view. >> had bought your original question was whether or not i had a view as to what the split would be between the sound recording. >> the actual question was was it more valuable not. i fall upon what you had said. >> it is not surprising that people that pay for music would find it inconvenient to pay songwriters' under that standard we look at this in two parts. for a service that uses music, what should they be paying for content? we are completely aligned on the question that music has value and the total amount paid for contents is something a free-market should decide. the second question is how you divide revenue.

the current system is so out of whack that while in every other country in the world real money is generally divided 5050 or better. in this country you have two things. broadcast radio does not pay anything to artists and record labels which is wrong. for digital radio you're seeing split divisions as high as 57% to 4% which is insane. the only reason that can happen is a different rate structures and regulation but on copyrights >> to add to that, i agree with what was just said. to hit the free-market concept, i believe everyone benefits from i free-market. the songwriters, composers, publishers, and business because it reads innovation. all of the topics we talk about what have to come about because of the competitiveness of a free-market.

do you have for the record and for those who may not know, do you have evidence that supports the conclusion? and i do have another question. >> to specific pieces of evidence that i mentioned earlier with regard to mechanical rates. the difference between 801 be standard and a willing seller willing buyer standard, you could look to previous copyright royalty board decisions with have commented on the difference between the two great standards and m1 case suggested a willing seller willing buyer standard was worth as much as twice as in 801 be standard. with regard to performances several of -- several of us have talked about a limited window or publishers try to withdraw their rights and were later told there would, but in the window there was a free market negotiation with apple radio. and that was reported and printed a result that was more than twice the value of the

consent decree results. it is undeniable that these significantly hurt the value of copyright. >> a you saying that committee should move forward on updating licensing was independent of a larger copyright act rewrite? or in conjunction with? >> we are suffering for the fact that we have not upgraded and brought ourselves into the current environment. we believe that the music concept is the way to go. we can get their in various different ways. the free-market. >> the biggest thing is we are dealing with something which i want this committee and the leader, the chairman and others are looking for. we are looking at what it will look like ten to 15 years down the road. i yield back. >> it could i make a comment? there have been several suggestions we operate in an free-market a.

to so everyone understands on this panel that we do not believe that we are operating in a freak math in the market in television. one of the things that ascap said in there and allied, a seller's ability to refuse to sell is a key requirement for market transaction. on the other side of that issue of buyers' ability to refuse to buy is a key requirement for market transaction. we don't have that freedom. >> the gentleman from new york. >> thank you. i think the panelists for their presence here today and their testimony. let me begin, i believe in your testimony, certainly in your written submission, you indicate the songwriter equity act and the respect act take us in the wrong direction. >> yes.

>> and you indicate that these two pieces of legislation seek to create a music licensing from work that cater to the unique interest of a limited group of stakeholders, correct? >> correct. >> now, the limited group of takeovers that you refer to are songwriters, correct? >> songwriters and their collectives and record levels and performing artists and their collectives. >> in the music ecosystem that exists you have a recording artists, publishers, broadcasters, satellite radio commented that radial and you have also got songwriters. >> yes. >> are songwriters fundamental to the music ecosystem we just went over? >> absolutely. >> so legislation designed to provide them with fair compensation is not a tangential

legislative joyride, correct? that is an effort to deal with fair competition for a group of individuals central to the music ecosystem. >> i disagree. i think it continues down the road of what mr. neil portnow has complained about, which is the piecemeal approach to updating copyright's as opposed to the holistic view of making sure that we have all of the concerns that have been expressed here today addressed comprehensively. >> to carry. i'd agree with all agree head a comprehensive approach -- and i believe testimony has been rendered to that effect by a wide variety of people -- is the preferred ways to go. and try to get an understanding of whether you believe there are inequities in the system. songwriters are central to the music ecosystem, we can agree?

>> yes. >> are they currently compensated in a fair fashion? >> obviously songwriters don't think they are, but there are a lot of issues that tended to that. as testified to earlier, there are inefficiencies in the system where my member companies pay hundreds of millions of dollars, partly over a billion per year for royalties, yet we still hear complaints about songwriter's at the end of the system not being compensated appropriately. >> i think that requires us to look at the entire system. >> there is reasonable evidence on the record to indicate that songwriters are not fairly compensated under the current system. and perhaps the reason that occurs is because we are not operating in a free-market context. true? >> yes. >> you indicated that there are

inefficiencies if we move to a free-market context. >> i did not say there were inefficiencies. what i said is, there is a large potential for inefficiencies, and what we have to do here, what this body should be trying to do is strike a very delicate balance between the efficiencies that are necessary for large-scale music licensing verses the potential for market abuse by creating collectives that allow the negotiation for large bodies of work. >> to could potentially abuse the system? the context of a free-market. i am struggling with the understanding your position here in the context of the history of the republic which is that a free market has led to innovation, creativity, prosperity. 200 plus years of record evidence of the united states of

america that the free-market system is not inefficient but efficient when properly regulated. who is going to abuse the system in the context of a free-market designed to provide songwriters with reasonable compensation. >> we see that with that incident and -- dissing degrees. we have heard talk about how the descent degrees are decades old and have not been updated, yet we have a rate court decision that was rendered within this year, earlier this year this seems to indicate why a lot of the behavior that the decision degrees were intended to oversee and regulate still occur. i think there are opportunities for collectors to engage in anticompetitive behavior. >> i think a perfect example of that is seesaw act and its actions tense -- since 2008 and the television industry. if you take a close look at that

you will see that i do not disagree with you if there is truly a free-market that it will be efficient. >> and let me also note -- bynum my time has run out, but in the context of anti-competitive behavior, right now we have ascap, bmi. the supreme court or courts in this country have consistently stated, if you have three entities engaged, three entities you do not have conditions for anti-competitive behavior. that is what exists currently in the music industry if we were able to move to a free-market standard. >> not here to defend itself, but quickly you have an organization that probably has significantly less than 10 percent of the market and yet you have accusations that they somehow have such concentration within the regulation. i think that is a ridiculous proposition which i have to respond to that.

>> the gentleman's time has expired. very briefly. >> it does not take very much in terms of copyright aggregation to be in a monopoly position. if you read the decision by the judge, you will find that he very clearly believes that there is at least a potential. we have not proved it yet, but they're is a potential for violation of the antitrust law. >> sigell copyright law definition is a monopoly. >> the gentleman's time has expired. >> thank you, mr. chairman. i am glad the last words i heard a word the company rate is monopoly. i am pretty sure that the restraint of trade is not the intention of copyright. at the time of our founding a think it is clear that the goal was to get offers and songwriters, but offers compensation to induce the

creation of these useful arts. nowhere was restraint considered to be there. so the idea that there is only one seller of an asset does not a monopoly make. any of you, you know, antitrust attorneys here? would love to have one. i gamble. >> i am glad you're babbling. because i cannot think of a song -- and i have some 90 -- dearly love. i cannot think of a song that i can't live without in favor of millions of others, hundreds of thousands of least. the fact his songs are in competition, and the author and the performance are simply people in competition to sell their wares to look at this as hell they get their wares to market. do not strain your eyes.

this is sort of complex. i have a musical work in them a publisher, songwriter or label and artist. hal i get to what was billed. it is a power point you don't ever want to spend that much time on. [laughter] i have been listening to everyone talk about free-market and the chairman of the full committee has absolutely said he wants comprehensive reform for reason, which is it needs it. everyone of you has a vested interest in some part of the status quo and everyone of you is railing against some part of the status quo. i think some time ago -- i am chairing the committee next door but when i was here before i pretty much think i heard you complain about how much money the founder of pandora gile when he cast doubt. >> i was not complaining about how much he made.

i was complaining to that about compared to the total amount paid to sohn waiters. >> and that is a good question. if you looked at the revenue being made from siriusxm and pandora, it is not insufficient if you compare it with all of a.m. and fm. >> you must divide between the money paid to record labels and artists purses songwriters and music publishers. if you look at the totality of money paid from performances it is about half of our revenue. i believe it is significantly undervalued. >> let's get back to that. real marketplace, doesn't it start off with the identity of the true owner before sublicensing? isn't that the first question, who owns rights to the, if you will, song and performance and isn't that pretty opaque today?

even though you are a technology expert are will let you answer. >> we live in a time of tarzan economics moving from one vine to the next. the old one was music to product in the new world it is almost like car ads. they use of music, sometimes they're not even sure what they are broadcasting because it comes from third parties. new music services allow people to upload songs. >> my question, famously i told eric colder here he was not a good witness because he did not ever answer the question asked. you are getting there. [laughter] the question that i asked is, isn't there an update this to who the original owners are? >> no question. >> would one of the things from a technology standpoint and reforms some point be that there should be transparency as to who

own the rights, and, of course that is a lot of people and only one person in some cases. transparency as to who has taken on the right. the original owner, access to the contract gives the third party rights, shouldn't that be transparent, and wouldn't that be the beginning have been powering be willing buyer willing seller to have the opportunity for the reforms that some of you are talking about? >> testimony today was that we should build directories and go further than the honor because the performers have that downstream remuneration right. >> i was talking of all the beneficial owners. >> i can answer your question in one word, absolutely. >> your silence is golden. >> i believe that the blanket license has served radio since the dawn of radio. >> radio does not pay is said to

the performers. they have been paid well. >> i made a lot about the needs for transparency and efficiency, and hire transparency necessarily leads to greater transparency. if we had transparency at the primary level of them would necessarily lead to more efficiency. >> the best way to get transparency is put as in the free-market because then you have an incentive if you want to license our copyright. there is an assumption in your question a somehow copyright owner could not say no, could not decide to create copyright and keep it to myself and don't want to license it which is a right to the property of france >> if you could answer whatever he has. >> personally i think we have a lot to lose with a free market, but we have a lot to gain also. allowing publishers to go out to

license directly or exclusively. shouldn't you be scared of that, but i think we would retain them we would have to be competitive and innovative in a way that would be different. >> mike deserves a lot of credit for that position. >> the gentleman's time has expired. the distinguished lady from california is recognized for five minutes. >> thank you, mr. chairman. i think this is one of the better panels we ever had on this subject. anyone listening, although we don't necessarily know the answer, we know what the questions are. i sometimes think if you just follow the money is helps you understand what is going on. we're looking at mr. miller who has a legitimate desire to be paid for his work, just some

statistics. it is my understanding that, for example, bmi reported record high revenues last year, a 5 percent increase over 2012 revenues. if you take a look at revenues going to be in my just as an example, in 2003 it was 629 million. last year 944 million. that is a 50% increase in revenue in bmi. take a look at streaming internet services. much has been said that maybe they are not paying enough. none of them is making a profit. if you take a look at spotify, it's just reached 10 million paid subscribers and has never posted a profit. pandora has over 3 million

subscribers and last quarter it posted $29 million loss. the generator research data analysis and said that no current music subscription service including our key brands like pandora and spotify can ever be profitable even if they execute perfectly because they are paying 67% of revenue from licensing, which is unsustainable. i look at the statistics and of wondering why mr. miller is not getting paid and how we fix this. as i listen to you and seems to me what you are proposing basically is a transparent system that takes the middle man completely out of this scenario. is that going to work? >> i don't think it takes the middleman out at all. they are extraordinary voluble

four aggregation, promotion, any number of roles. they only grow. it is critical that we record company numerate, and maintain updates of those who are involved, own, who needs to be paid, and we did not do that now it is extraordinarily difficult to talk about the market when you cannot look up and find all of the songwriters. let me tell you, there are some times more than 30 songwriters resin those on. i suspect that if they all get divorced once there are 60 rights holders to contact. that is an important role, but you have to be able to split the money correctly and find those who you would contact to directly license if you wish to do so under a supposedly free market. >> is seems to me that as we take a look at -- you know, no one buy cds in the more.

everything is going on line, down loaded, and it is important that we have that digital delivery of music compensated so that artists like mr. miller can be paid. they're is a delicate balance where you need to make the services profitable because if they go away all that is left is not a desirable outcome. do you have any suggestions? >> that would be a very, very long answer. the short version is that we should move carefully as one of the other congressman said. businesses bill based on assumptions of cost and how business will run over the years lying has been established plans. as we look at all of these issues, the comprehensive licensing, compulsory licensing,

blanket licensing, we need to move carefully and make sure that whatever system we come up with adequately takes into account the fact that people of building their business is based on the expectation. .. all of us agreed that we ought to follow the money and make sure we end up with a system that compensates rights holders and this is a key element of that