significant buildup of debts to gazprom but what they have also agreed in a proposal that the e.u. put on the table they would immediately make payments if in fact there was a package agreement around all of these efforts. russia walked away from that proposed agreement for one basic reason. i think. there were issues that were related to price. there were issues that related to debt but what was really a sticking point, was the ukrainians and e.u. sported them on this, said they needed a mutually agreed contract that was not simply a russian adjustment to an earlier negotiated contract where russia decides to give a discount. what is the reason for that? well the prevailing earlier contract is from 2009 during the period of -- the earlier discount was for the black see fleet. . .

>> thank you. that was extremely helpful and, i think, a fantastic complement to what we've heard. jan and i have negotiated. what we have decided to do is take one round of several questions, and then give the panel a chance to very briefly close, and then we hope we won't run too far over. there was -- right there. >> teresa, national war college. i wanted to ask a question about the storage. ambassador pascual, you noted that there's 14 billion cubic meters in ukraine right now. as far as i know, their storage capacity is 30 billion. i want to understand the ownership of that storage. does -- is there a transparency problem? is there a part russian ownership problem? in what sense is the storage in

ukraine usable, and in what sense does it continue to be county. >> okay. and right there. >> thank you. i'm from russia. what are the u.s. policy goals in the energy field in ukraine, and what are the instruments to achieve those goals? my question is for ambassador pascual and others who want to comment. because we've been talking about anything, about managing ukrainian affairs, managing european affairs but not about u.s. interests. so that's my focus. and then secondly just technically, ambassador, i listened very intensively to your presentation, i still do not understand. do you support the ukrainians paying their debts to russia? because everybody agree around this table that they do not have any other short-term options before this coming winter. other than restoring the flow of the gas if it's interrupted. >> okay.

>> and that demands debt payment. thank you. >> and last question right here. >> david goldwyn spoke about pop gating natural gas -- >> your name, affiliation. >> my name's mariah blake, i'm with mother jones. pop a gating unconventional natural gas production in other countries, and i'm wondering what has been done on this front so far, whether the united states is stepping up these efforts in light of the cry ice in concern crisis in crimea, and there was also, i believe he said not enough was being done on this front, what more would he like to see be done on this front. >> okay. great. why don't we just go from here down to carlos. is that, does that work for you, jan? >> yeah, although we don't -- i think most of them are for carlos. >> defer from one ambassador to

another. >> okay, on storage, you're correct, ukraine has 30 billion meters of capacity. that is gas which is within ukraine's ownership. whether there are specific entities within ukraine who own portions of that gas is not completely clear. that's one of the things that still needs to be confirmed. but one of the things that has been a great step forward is that the european union maintains a system for realtime reporting of gas stores of gas movements and gas supplies. ukraine is thousand participating in that. -- now participating in that. they're posting it online on a weekly basis, they're not doing it daily, but that has been a very important step forward in actually promoting transparency about what gas stores they have available. so we have a pretty good feel for what they have to work with. in terms of what u.s. policy goals are in ukraine, i think they're really goals that are

almost universal, which is to be able to see within ukraine and within europe an environment for the development of natural resources and the consumption of national resources which happens in a context of competition and diversification of supplies. that's good for consumers, to have that kind of competitive environment. all of us seek to have multiple suppliers to satisfy our energy needs, that's a source of greater energy security. we want to be able to have an environment that allows us to develop our own energy resources, and creating the right kind of environment that attracts private investment to the that, because that is absolutely key, it is fundamental. and it's those basic things that have been at the heart of u.s. policy, and they're not that different from the way we would explain the way that we would deal with other countries throughout the world. in terms of ukraine paying its debt, i think more important than what the united states thinks is that ukraine has said it should pay its debt. and the negotiations that they had with russia, one part of that proposed agreement was that

the day after the package was agreed to is that ukraine would make a payment of $1 billion. and the critical issue here is that ukraine has put on the table and the e.u. has been supportive of this, is that you should have a package arrangement that deals with the whole set of issues. what's the price of gas going to be in the future, how do you handle debt, what are the rights in arbitration, and everybody should have that and have it transparent so that the week, the following week that you don't just get into another dispute over another issue, and you really have a foundation to be able to move forward. i'll just say one thing about natural gas in the region, but david goldwyn started a program called the shale gas technical exchange program. it's now focused on unvex algas. -- unconventional gas. the united states has been engaged with many countries throughout the region to exchange best practices on the development of shale and on convention algas resources.

the final thing i just want to say is the importance of recognizing that the issues that we're dealing with here on energy fundamentally involve both, fundamentally involve commercial players and private players making investments on the basis of what they think is going to be commercially viable and sustainable. and so what we all need to try to do is to work together to help the countries that are involved in these disputes to be able to create an environment that allows commercially-sound decisions to be reached that are in the economic interest of all of the countries and not have geopolitical factors and influence be the driving factors of those commercial arrangements. the foundation for those arrangements really needs to be what makes commercial sense, and that's one of the things that we're trying to get to. >> thank you. >> i think i'll defer to david, because it's really the shale gas question that's the next. yeah. >> thanks for the question.

actually, i said i thought that the u.s. was, i understand, stepping up its support for ukraine. but in ukraine and all these countries, really the point of what was then the global shale gas initiative, now the unconventional gas technology exchange program is for our government to help other governments learn how to regulate properly. the real challenge in most of these countries other than what is the local benefit, are the governments sharing the revenues in a way that will help local development, is how do do you get regulators comfortable that they can protect groundwater, that they can mediate between agriculture and the locality, that they can avoid seismicity issues, and that's are intro to regulation. it's also leveraging all the things we've learned in the last three years about the need to require baseline testing of water, baseline testing of emissions, distance to aquifers, setbacks, disclosure. all these things which we learned kind of the hard way

need to be the starting point for these european cups. but while they -- countries. but i think the conversation in the european union and the conversation between the united states and the european union ought to move from the whether we should do this to the how we should do this. and i think there's just a discomfort sometimes, you know, with u.s. policy not really at the state department with ambassador pascual's program, but it's this discomfort with how do we support development of gas at the same time we're promoting a climate change agenda? you can do both especially if you're backing out coal safely. i think i'd like to see us do more because i'd like to see europe do more. ultimately, you can only get so much lng in these countries that you're going to be relying on russian gas until they get to the renewable future for us and for them is probably a decade off. gas is the bridge, and they need to build it quickly. >> great. we're so far over time, maybe if there are any final burning comments, we can take them, otherwise i think, wrap up?

jan? >> well, i just endorse very much the idea of a package giving incentives to develop both short-term and longer-term approaches. and one of the things here to keep in mind is that competition is not only a matter of the european space, but there's more and more competition in the russian space. a point that i made earlier about how novatech and gas prom are competing themselves, so the notion of encouraging a market-based approach should not be dismissed out of hand. the critical challenge is to develop a political environment in which a stabilization of the crisis in ukraine makes it possible to talk sensibly again about how it's in the economic interest not just of the west, but frankly, of the east to adopt these approaches. everybody will be better off. and i think that's the

opportunity. through crisis, you get to an opportunity. >> well, let's thank our panelists for this fantastic discussion and all of you -- [applause] thank you for joining us. [inaudible conversations] >> as this discussion comes to a close, if you missed any of it, you can watch it anytime in the c-span video library. go to c-span.org. and we have more live coverage coming up this afternoon starting at two eastern. pentagon press secretary rear admiral john kirby will brief reporters on a number of issues including the decision to send an additional 300 military advisers to iraq to secure the airport and the u.s. embassy in baghdad. that'll be live on c-span,

again, starting at two p.m. eastern. tonight at eight, a look at consumer drones taking your picture, cleaning the outsides of high-rise buildings, just a few of the tasks being performed in a rapidly-expanding industry. smartphone technologies is leading to the creation of smaller and cheaper drones. the churchill club in california is recently, has recently hosted a discussion on the future of the technology, and here's a quick review. >> well, this weekend three follow me projects launched. follow me is one of these things where the drone follows you. you're biking, you're skiing, you're running, whatever, and the drone just stays back, 30 feet back and 30 feet up, and keeps the camera focused on you and gets that kind of perfect cinematic, hollywood view. that's, you know, on one level that's, you know, that is, you know, exactly what the youtube generation wants. on another level, it's

incredibly complex artificial intelligence function, it's using gps and image, you know, image recognition, spotting you and creatively trying to figure out what the right angle is looking at the sun and the shadows, this is the kind of stuff that was science fiction a few years ago. this is the destroyed you're looking for, right? [laughter] >> and this was just this weekend there were three projects that launched, and one of them just raised a half million dollars in a day. all based on our platform, i hasten to add. so that's just, that was just -- [laughter] that was just today. tomorrow this mapping function we're talking about, so what christian's doing is this notion of construction. construction is arguably the number two industry in the world. agriculture is the number one. so what this $300 copter can do is a one-button mapper. it does circles around a construction site, takes pictures, gets sent to the

cloud, in this case autodesk, and creates this 3-d model. that model gets snapped on to the cab model that the engineering company's already doing, and it's happening every day all in an automated fashion thanks to the recharging stations, and now owe get -- you're the client. you want to know what's going on at the construction site, well, you can either drive to the site or watch on the cloud, watch your building snapped onto the model you approved, watch it building up digitally, you know, digitized, perfectly aligned. there's no bs. you've got ground truth or air truth, if you will. >> >> yes. >> and, you know, that's a $300 copter that's doing one-button building mapping. just imagine what's going to happen in, like, another five years. >> and you can see the swire event tonight -- entire event tonight starting at eight eastern on our companion network, c-span. here on c-span 2, booktv in prime time. lynne cheney's book on president james madison, thomas piketty,

and mallory factor's book "the big tent." ting booktv in prime time all this week starting at eight eastern here on c-span2. >> booktv sat down with former secretary of state hillary clinton in little rock to discuss her new book, "hard choices." >> getting to the point where you can make peace is never easy, because you don't make peace with your friends, you make it with people who are your adversaries, who have killed those you care about, your own people or those who you are trying to protect, and it's a psychological drama. you have to get into the heads of those on the other side, because you have to change their calculation enough to get them to the table. you know, i talk about what we did in iran. we had to put a lot of economic pressure to try to get them to the table, and we'll see what happens, but that has to be the first stepment and -- step. and i write about what we did in afghanistan and pakistan, trying

to get the taliban to the table for a comprehensive discussion with the government of afghanistan. well, in iraq today i think what we have to understand is that it is primarily a political problem that has to be addressed. the ascension of the sunni extremists, the so-called isis group is taking advantage of the breakdown in political dialogue and the total lack of trust between the maliki government, the sunni leaders and the kurdish leaders. >> more with hillary clinton saturday at seven p.m. eastern and sunday morning at 9:15 on c-span2's booktv. >> a house judiciary subcommittee recently held a hearing on music licensing laws with a focus on the broadcast of music over radio and the internet. singer roh san cash, daughter of

johnny cash, testified along with singer/songwriter paul williams. >> good morning, ladies and gentlemen. the subcommittee will come to order without objection. the chair is authorized to declare recesses of the subcommittee at any time. we welcome all our witnesses today. let me get my chair adjusted here. give me a push. that's good, thank you. good morning and welcome to the second of two hearings on music licensing issues. two weeks ago this subcommittee heard from your fellow music industry representatives about their concerns with the state of music licensing copyright laws. look around the room, and i think we can conclude that you all have more than a passing, casual interest in this issue, and welcome all of you here today.

at the earlier meeting, i mentioned my fondness for old time bluegrass and country. i don't know that that has bolstered the popularity across the country, probably hasn't, but i'll continue to try to do that. and i'll make my opening statement very brief, because we have a long day ahead of us. although the witnesses on in this panel may not agree on everything, i believe they all agree that music enriches the world in which we live. since this is part two of the music licensing hearings, i won't repeat all the outstanding music issues that congress needs to address. i simply hope that the effort to improve the music licensing system we don't lose sight of the fact that creators need to be paid for their work just like everyone else in this room. although our creative industries are the envy of the world, i'm not sure that our music licensing system is. it may well be time for a change, and that will be exposed, perhaps, today as we go

through this maybe arduous journey, but maybe pleasant, productive journey. i yield back the balance of my time and recognize the gentleman from new york, the distinguished mr.-- [inaudible] for his opening statement. >> thank you, mr. chairman, and thank you for holding this second hearing on music licensing under title 17. at the first hearing two weeks ago, we heard from a diverse panel of witnesses representing performance song writers, publishers, television licensees and digital music delivery services. although there are varying points of view, there was widespread agreement that the system is in need of comprehensive reform. as i stated at the first hearing, the current music licensing system is rife with inconsistent rules and inequities that make no rational sense. if we started from scratch, nobody would write the law the way it stands today. terrestrial satellite and internet radio compete under different rules for compensating song writers, performance and other rights holders, assuming those artists are even paid at

all for their works. several of the service providers who play an important role in the music ecosystem are with us today. local broadcasters provide critical programming including news, weather and emergency alerts and often form strong public service partnerships with the communities they serve. we also have representatives of digital radio such as siriusxm and pandora, new and innovative ways. although we may have differing views, i look forward to a productive discussion about how to come together to improve the music licensing system. as i noted at the first hearing, our current scheme so haphazard because in large part pieces were developed at different times and often in response to different innovations in the music and technology industries. rather than continuing to adjust the system in a piecemeal fashion, i believe we must take a comprehensive approach. i'm not alone in my belief that a comprehensive approach is needed. recording academy president and

ceo neil portnow called for the industry to coalesce behind a single bill later echoed by house majority leader kevin mccarthy and democratic leader nancy pelosi who agreed the time has come for congress to address these issues in one package. that is why i pledged the first hearing to develop a bill which some people have dubbed the music bus to update music copyright law. congress should get out of the business of dictating winners and losers and once and for all create a level playing field. the law should be platform neutral, and all music creators should receive fair market-based compensation for their work. there's a growing consensus that the system is this need of reform. in addition to this committee's ongoing copyright review, the copyright office is conducting a music licensing study. just this week it concluded a series of round tables held around the country in nashville, lang -- los angeles and new york. the congress department issued a green paper in updating copyright for the digital age, and the department of justice is

conducting a much-needed review of the consent decrees that govern two of the rights organizations responsible for collecting and distributing royalties. i hope the review will be completely quickly as time is of the essence for all the parties involved. today's hearing is a part of this larger effort. i am interested in hearing from today's witnesses about the specific issues they believe should be addressed and about how we can best enact meaningful comprehensive reform. i have no doubt that today's cushion -- discussion will be just as informative as the discussion at our first hearing. i thank you and yield back the balance of my time. >> i thank the gentleman. chair recognizes the distinguished from virginia, the chairman of the house judiciary committee, mr. goodlatte. >> thank you, mr. chairman. thank you for holding this hearing, and thank you for your diligence in the number of hearings and the impressive array of hearings that we have held on copyright issues. and i can see we have another

full house. so good morning to you all, and welcome to the subcommittee's second music licensing hearing. i see the size of the witness panel has grown with interest in this issue. two weeks ago a number of problems in the music licensing system that currently exists were highlighted. in reviewing the written testimony submitted in advance of this hearing, there does seem to be agreement that a her robust copyright -- a more robust copyright ownership database is needed. there also seems to be an interest by many in simplifying the diverse licensing and rate making systems. however, disagreement remains on whether all those who use music should pay for it and what specific rate standards should be used, among other issues. as i mentioned two weeks ago, as we consider challenges and potential solutions to the copyright laws relating to music, we should keep in mind ideas that incorporate more free market principles. we should also be mindful of the tremendous role that digital music delivery services play in

the music ecosystem for consumers and creators alike. i have long said that the content community and the technology community need each other. it is my hope that we can identify improvements to our copyright laws that can benefit both groups as well as consumers by maintaining strong protections for copyrighted works and strong incentives for further innovation. thank you and appreciate you all making time to be here this morning, and i'll yield back, mr. chairman. >> i thank the gentleman. the distinguished gentleman from michigan, the ranking member, is recognized for his opening statement. >> thank you, chairman coble, and good morning to our distinguished panel. i see faces that i've worked with before, and we welcome all the supporters of this subject matter that are here in the judiciary hearing room this morning. since i agree with everything that's been said by my

predecessors, the gentleman from new york and the chairman himself, i'm going to just put my statement in the record. it would be largely repetitive. many of you know where i stand. i've supported music as a important and vital source in our national interests, and it's in that spirit that i welcome you all to the judiciary committee this morning. i ask unanimous consent the put my statement in the record and yield back the balance of my time. >> i thank the gentleman, and statements of other members will be made a part of the record, without objection. let me introduce our panel of witnesses as we proceed with the business at hand. our first witness this morning is ms. roast an cash, singer,

song writer, author and performer. i can hardly see because of the impediment here, ms. cash. ms. cash has released 15 albums that have earned a grammy award and nominations for 12 more including 11 number one singles. she completed her residency at the library of congress in december of 2013 and was given the lifetime achievement award for song recording in 2012. ms. cash is testifying today on behalf of the american music association, and ms. cash, as i mentioned to you earlier, your late dad also appeared before this subcommittee, and we enjoyed having him here as well. good to have you here. >> thank you. >> our second witness, i can't see you either because of the impediment, but i'll hold you harmless for that. mr. sherman is chairman and chief executive officer of the recording industry association of hurricane. mr. sherman represents the interest of the seven billion dollar recording industry.

he receives his bs from cornell university and his jd degree from the harvard school of law. our third witness is mr. charles war teeld, senior adviser of -- [inaudible] media. 31-year veteran of the broadcasting industry and is here today on bea-of the national association of broadcasters. he received his bs in accounting from hampton university. good to have you with us, mr. warfield. our fourth witness is mr. darius -- [inaudible] co-founder of the group family of american independent recording label based in bloomington, illinois. he is testifying today on behalf of the hearn association of independent -- american association of independent music. mr. van harman attended the university of virginia. our fifth witness is mr. ed christian, chairman of the radio music license committee also known as rmlc. he teaches courses at media

management, broadcast programming and radio operations at central university of michigan. central michigan university. he received his ba in mass communications from wayne state university and his ma in management from central michigan university. our sixth witness is mr. paul williams, president and chairman of the board of the american society of composers, authors and publishers, ascap represents hundreds of thousands of music creators worldwide. mr. williams is an oscar, grammy and golden globe-winning hall of fame composer and song writer. you'll be glad to know that your friend be, mr. gilmore from texas, admonished me to be easy on you today -- [laughter] so looking down from his seat, we'll be careful to adhere to that request. our seventh witness, mr. chris harrison, vice president of business affairs and assistant general counsel at -- [inaudible] media. he's also an adjunct professor

teaching music law at the university of texas school of law. mr. harrison received his jd from the university of north carolina, i'm pleased to say, and his ph.d. in political science also from the university of north carolina, chapel hill. mr. hair soften, good to have a fellow tarheel in the room today. our eighth witness is mr. michael hoop by, president and chief executive office of -- [inaudible] he is responsible for establishing long-term strategic plan and vision for the organization. he received his ba from the university of virginia and his jd from the harvard school of law. our ninth and final witness is mr. david frear, chief financial officer at siriusxm. in his position, mr. frear is responsible for overseeing finance, i.t. and satellite development operations. he received his mba from the university of michigan at ann arbor. gentlemen, before we begin hearing from the witnesses, i'd

like for each of you to stand, if you will, and i'll swear you in. do you, do you hereby testify that the testimony will be the truth, nothing but the truth so help you god? let the record show that all of them responded in the affirmative. we will start with ms. cash. folks, i'll remind you if you can, try to comply with the five minute rule. when the timing light on your table goes there green to amber, that's your warning that you have a minute to go to reach the five minute pinnacle. you will not be severely punished the you don't comply with that, but if you could stay with that, we try to comply with the five minute rule as well. the good news is i don't think there's going to be a vote until afternoon, so that we won't be interrupted by floor votes. ms. cash, you're recognized for five minutes. >> thank you.

chairman goodlatte, chairman coble, ranking members conyers and nadler, members of the subcommittee, thank you for the opportunity to testify on behalf of the americana music association. i want to address a few obstacles to making a living as a songwriter and recording artist today. everything i say is guided by one principle: all creative people are entitled to fair market compensation when their work is used by others regardless of the platform. i have been both a professional hue decision and songwriter for -- musician and songwriter for 35 years. i grew up in the music industry. i've been signed to major labels since 1978 and am currently on the esteemed blue note label. the climate among musicians at the moment is disspiritted. we feel marginalized and

devalued, although our passion for our work remains unchanged. every artist i know says regarding their work that they have no choice, we don't create out of whimsy, narcissism or lack of ambition for more financially-dependable professions. we are fueled by an artistic sensibility that can be ruthless in its demand for discipline, and in some ways, we are in a service industry. we are here to help people feel, to inspire, to reveal the secrets of the heart, to entertain and provide us demanages for the soul -- us us demanages for the soul. creating music is a collaborative effort, and the creation of music, co-writers, producers, fellow musicians, recording engineers, background singers and various support people come together with a single purpose, to create one

work. i am a fan of new technology, and i'm excited about the potential i see. and the new ways of distributing music that are being offered to music lovers. my enthusiasm is tempered, however, by the realization that these new services are all cast against the backdrop of crushing digital piracy and licensed under outdated and byzantine laws. which stand in the way of creators being paid fairly for their work. among the problems facing us are : 1, the lack of a public performance right for radio play for recording artists. the united states is one of a few countries including china, north korea and iran that lack a radio performance right for artists. the failure to recognize this right means that performers

cannot collect royalties for their work even when it is broadcast in countries where the right exists. because the treaties the u.s. has signed are reciprocal. two, issues concerning how rates are set for licenses that songwriters offer for their work. currently, the law prevents courts from considering all the evidence that might be useful in setting the fairest rates for licenses the performing rights organizations offer, and royalty rates are not set on a fair market basis. this makes no sense. the songwriter equity act, introduced by congressman collins and jeffries, would address these issues, and i thank them for that. three, the lack of federal copyright protection for pre-'72 sound recordings. there is a gap in copyright protection for sound recordings created before 1972 which digital services use as an

excuse to refuse to pay legacy arounds. artists. i thank ranking member conyers and congressman holding for introducing the respect act to treat the work of legacy musicians fairly. for example, if my father were alive today, he would receive no payment for digital performances of his song, "i walk the line," written and recorded in the 1956. but anyone who rerecorded that song today would receive a royalty. the injustice defies description. these are a few of the many challenges we face as performers and songwriters, and i understand ranking member nadler is considering legislation to comprehensively address these and additional concerns. thank you, congressman nadler. bottom line, copyright law should not discriminate among individual music creators. each should be fairly compensated for their role in

the creation and delivery of music to audiences. i see young musicians give up their dreams every single day because they cannot make a living doing the thing they most love, the thing they just might be on the planet to do. they deserve our encouragement and are respect. musicians and artists of all kinds should be valued members of american society, compensated fairly for honest, hard work. i believe we can find solutions so that artists and musicians can succeed together with both new and existing music services. and i thank you for this time. >> i thank you, ms. cash. mr. sherman, let's start with you, you're recognized for your statement. >> chairman goodlatte and coble and ranking members conyers and nadler and members of the subcommittee, my name is carey sherman, ceo of the recording

association of america representing such iconic labels as columbia, motown, capital, atlantic to name a few. our members have worked hard over the past two decades to build a viable, diverse and consumer-friendly digital music marketplace. millions of music lovers can find whatever they want, wherever and whenever they want it. digital models can account for more than two-thirds of our revenue, and that number is growing. but before the music marketplace can realize its full potential, there remain serious systemic issues to address. records are the economic engine that drives the entire music industry. it's the recording invested in, marketed and promoted by record labels that produces real revenue for the songwriter, for the artist, for broadcasters, for digital music services. record labels invest not just their financial capital, but their human capital; years of experience and exbe per tease from the likes of clive davis, jimmy i spring, mo austin who

work with artists to bring out their very interest, resulting in music that not only captivates fans, but recognizes capital in the value chain. in embracing digital distribution, record labels have revolutionized the business and streamlined their operations, all while revenues have plummeted. even in tough times, however, as a percentage of net sales revenue over the last decade, major label payments for artist royalties have increased by 36%, and mechanical royalties for song writing have increased by 44%. impediments to licensing impact the ability of record labels to sustain the investment that benefits the entire music ecosystem. today's antiquated, complex and time consuming licensing regime undermines that system. and that's why we believe music licensing must be fixed, because behind the seamless experience

provided to consumers lurks an inefficient and, frankly, broken system. we've got to rethink it. here's what we suggest. first, grant a broadcast performance right for sound recording. it is, frankly, inexcusable that the u.s. still provides a special interest exemption for the benefit of am/fm radio broadcasters, a subsidy which is taken out of the pockets of artists and record labels. it's time for that to end. second, make sure artists recorded before 1972 are paid. because sound recordings are covered by federal law after february '72 and state law before that date, some of our most cherished artists are not being paid by businesses who take advantage of the compulsory license. we are extremely grateful to representatives holding and conyers and other sponsors who proposed the respect act to fix this anomaly. third, allow rights to be bundled and administered together. owners of every other type of

copyrighted work are able to license all the copyrights necessary for all uses. a movie-streaming service doesn't have to go to one entity to license the performance and a different entity to license the server copy. so it should be with musical works. fourth, create an across-the-board, market-based rate standard. we should have one fair market value rate standard for uses of all music that remain under a compulsory license. finally, consider a one-stop shop for musical work licenses. we have filed with the copyright office an idea laying out one possible way to license musical works in this manner. it is a potential path toward simplifying the complicated way musical works must be licensed today. but we also understand, as we stated repeatedly in our submission, that no admission to the regime can move forward unless publishers, songwriters and all the relevant stakeholders in the music community come to a solution on

which they agree. the goals of any solution should be to align the economic interests and incentives of music creators, insure that songwriters and publishers receive a fair portion of revenue from the licensing of the sound recording, avoid competition between record labels and music publishers for the same dollars from licensees, speed the licensing process, making it quicker and easier for consumers to enjoy new music services, and make royalty payments to songwriters and publishers more efficient and more transparent. we welcome the opportunity to engage with our music industry partners on our idea as well as on any other ideas they may have to improve the status quo. the music business has reinvented itself, but our work is not done. we hope that by working together with our music industry colleagues, we can find the consensus necessary to simplify licensing and insure all creators are paid fairly. thank you. >> thank you, mr. chairman. mr. warfield.

>> good morning -- [inaudible] >> mr. warfield, pull your mic closer to you, if you will. >> good morning, chairman, ranking member and members of the subcommittee, hi name is charles warfield, and i am the joint board chair of the national association of broadcasters. over my 37-year career, i've served as president of one of the country's first wholly-minority-owned radio groups. i even worked as an executive at a record label. i learned that broadcasters serve our listens in significant ways. radio broadcasters inform, educate and alert listeners. we introduce them to new and old music, we entertain them with sports talk and interviews. for those reasons, i am proud to testify today on behalf of the thousands of free local over-the-air radiostations across the united states. the supreme court has repeatedly held that the core objective of copyright law is a public good.

not the creator's interest be, the users' interest, but the interest of the public at large. unfortunately, some are arguing for fixes to copyright law that serve a very different goal, insuring that their individual constituencies receive greater compensation at the expense of both music licensees and listeners. nowhere in their arguments do they emphasize the need for balance, the interest of consumers or enhancements to competition. any one of which would promote the public good. in contrast, stepping back from any one piecemeal legislative proposal before this subcommittee, it is clear that taken as a whole the time-tested laws that govern the relationship between the music and broadcast industries promote the public good in three important ways. first, the existing law has enabled a locally-focused radio industry that is completely free to listeners. anyone with an am/fm antenna can access our programming completely free of charge, especially in times of emergency when other forms of communication fail. radio is unique among entertainment mediums in that

there is no subscription, no broadcast package or expensive wireless data connection needed for access. second, the resulting popularity of radio has significantly contributed to a u.s. recording industry that is the envy of the world, both in terms of size and scope. while copyright law may contain some critical differences from its international counterparts, those differences have fostered the largest recording industry in the world, one that dwarfs that of the u.k., germany, france and italy combined. our unique system of free air play for free promotion has served both the broadcasting and recording industries well for decades to benefit of listenser. listeners. in all 37 years of my career, i have never had a record executive come to my station and say why are you playing all of my music? a promotion d. refuse to provide us with their new record. they see the value and realize that we are the greatest promotional tool for their artist, and we're happy to

provide them with that. third and most importantly, the community-based nature of local broadcasting has driven our industry to extraordinary levels of public service. for example, in the wake of hurricane sandy, new york city's wqht, hot 97, put its music on hold and broadcast steadily throughout multiple power outages, providing a much-needed connection to life-saving news. and then in the days following, hot 97 ran continuing announcements providing critical information about disaster relief locations and assistance. further, they provided blankets, clothing, hd radios and essentials to residents throughout the crisis. this is just one camp of our industry's commitment to service -- example of our industry's commitment to service. each of you knows this as you see the value of local broadcasters back in your districts every day. but make no mistake, the unique community focus of broadcast radio is only enabled by the current legal framework. i would urge this committee to tread carefully and resist

piecemeal changes to law that might disrupt this delicate balance. turning briefly to streaming, i agree with others on this panel that the current legal framework governing webcasting imposes obstacles on every corner of the music ecosystem that currently prevents our businesses from collectively serving the public good. today, whether you are a large or small broadcaster, the revenue generated from streaming simply does not and not offset the costs. so many of our members simply do not do it. i urge this subcommittee to focus on law that will promote a webcasting industry to the benefit of artists, songwriters and conclusion. nab stands ready to work with you to insure a vibrant and competitive broadcast industry now and in the future that serves the public good. i am pleased to answer any questions and welcome your invitation to he this morning. thank you. >> thank you, mr. warfield.

mr. van arman. >> chairman coble and ranking member nadler and members of the subcommittee, thank you for inviting me to testify today on behalf of the shawl and heed yum-sized -- small and medium-seized businesses that make up the american association of independent music, a2im. i am darius van arman, and i am an entrepreneur. i am the co-founder is co-owner of secretly group headquartered in the midwest of the united states. we currently employ 70 u.s. employees. we have multiple gold albums and singles, and one of our recording artists from the state of wisconsin has won multiple grammys. i'm also on the board of a2im, a not for-for profit trade organization representing 300 record labels of all shapes is and sizes from all over the u.s. from hawaii to florida. our sector now comprises 34.6% of the u.s. recorded music sales

mask. market. first and foremost, the american independent sector wants nothing more than a free market with a level playing field. however, there's one thing standing in our way; big companies using their power and resources to take what is not fairly due to them. large technology companies use our music, but because of the safe harbors our current copyright law provides to them, artists, creators and independent labels are not being fairly or adequately compensated. broadcasters are not paying anything at all on am/fm radio. this is not only unfair to us on the creators' side, but it is also unfair to those digital services who do pay creators. and within our music industry, there is one imbalance that is the primary threat to musical creative enterprise, market concentration. today just three major label groups exist comprising about 65% of the u.s. recorded music

sales market based upon copyright ownership, the large two of which are subsidiaries of foreign corporations. congress intended that copyright would stimulate new, creative works for the public interest, for consumers. it did not intend for it to enable just a handful of private interests the ability to make huge profits unfairly on the backs of creators. while we like the idea of a comprehensive approach to music copyright legislation, this music bus must be driven by all members of the music creator community, not steered by just a few major private interests towards only their goals. so what do we need? we need stronger copyright protections. the shape of copyright law now is currently subsidizing large technology companies. we need a broadcast performance right, broadcasters fairly compensate all creators so the creation process can continue. it will also give us international reciprocity in receipt of overseas radio royalties which will improve

america's balance of trade. we need more transparency and more efficiency in our music licensing system. our industry can't afford to unfairly take value away from artist/creators and those who invest in these creators. finally, we need a stronger compulsory statutory license for noninteractive performances as it is the best friend of a level playing field. create or pay must be based on actual music usage. the current music licensing system is broken. it provides incentives for the wrong behavior. large companies take advantage of whatever inefficiencies exist in the marketplace to make an extra buck, so we need copyright law revisions that do the following: increase the value of music, make copyright more equitable, reduce inefficiencies and enable creators to create what consumers desire. our sincere hope is that we can come to these revisions in partnership with all industry participants.

the vast majority of small and medium enterprises that comprise the american sector are american companies employing american citizens in american offices and directly supporting american creators. almost every dollar that is earned by an independently-owned copyright has a much greater impact on the u.s. economy than every dollar earned by a foreign control major label copyright. congress and the copyright office should keep in this mind when it thinks of revisions. it should inyou are primarily to the benefit of american creators and american enterprises. in the end, all the independent sector wants is a free market with a level playing field. we want to compete to provide the economic growth and job creation that our american economy needs. thank you. >> thank you, mr. van arman. mr. christian. >> mr. chairman, ranking member nadler and members of the subcommittee, my name is ed christian, chairman of the radio music license committee, the rmlc. the rmlc has been in existence

for well over 50 years and is a nonprofit that represents some 10,000 local radio stations in the united states with respect to music licensing matters. over the years the rmlc has been involved in extensive music license negotiations with the two largest performing rights organizations, ascap and bmi. the mission of the radio music license committee has always been to provide a competitive market for music licensing in which radio station operators pay a fair price for performance rights and copyright owners receive equitable compensation. the rmlc has historically achieved fair and radio licenses with ascap and bmi through a come by nation of industry-wide legislation. more recently, the rmlc has found itself involved in antitrust litigation involving the smallest of the performing rights in the nation in order to curb anticompetitive licensing practices. i'll start by saying

unequivocally that licensing redistribution concepts that rely upon the radio industry for funding are misguided. with particular reference to the recurring demand by the recording industry for a sound recording performance right to be imposed upon terrestrial radio, please understand that the radio industry is not some vast pot of riches that can be tapped as a bailout for a recording industry that has failed to execute a digital strategy that addresses a decline in its own brick and mortar income. congress unambiguously intended that an exchange for promotional support afforded radio artists should be treated differently from other transmission platforms. that premise has not changed. local radio station operators are responsible for obtaining licenses for the public performance of copyrights musical works. the vast majority of operators this equates to a blanket license that permits a station

to air music from a particular prose pep story without having -- repertory without having to account for usage. the administrative benefits of a blanket license has outweighed antitrust assets associated with the structure that permits pros to aggregate works in a way that is the hallmarks of a monopoly. the rmlc believes that a retention of collective licensing in some form is efficient and advisable. in this regard, the independent and experienced federal judges associated with the ascap and bmi rate courts have been able to deliver appropriate rate-setting oversight. a ourly free market approach -- purely free market approach to music licensing coupled with the absence of consent decrees monitored by the department of justice would invite market abuse and represent a step backward from a system that has served parties well for decades. indeed, the fact that there are currently two antitrust cases in

federal court is a testament to what has happened in the absence of government supervision of entities that wield the leverage of aggregated musical works combined with the club of statutory penalties for copyright infringement. now, if congress is dedicated to bold reform that could lead to process efficiencies and enhanced royalty payment to creators, it might want to explore the prospect of a superlicensing collective along the lines proposed by other stakeholders. outside of brazil, it is hard to identify another country in the world that supports multiple licensing entities that administer a single right such as the public performance right in the musical composition. the fact that the u.s. continues to maintain three organizations for this purpose -- ascap, bmi and ccac -- sets up a redundant licensing system and likely guarantees that precious royalty payments due creators are being

diminished this their journey from the -- in their journey from the licensee to the copyright owner. this example doesn't even account for the role of the licensing agencies such as the sound exchange and the harry fox agency that further contribute to the 40 rahs. morass. creators of musical works to the level of fees paid by music users, the radio industry, we really need to carefully scrutinize the royalty distribution process that dictates how and what creators are paid relative to incoming license fees. the rmlc brings longstanding and professional expertise to the table, and we stand ready to work with other stake molders -- stakeholders in fashioning a pragmatic music licensing regime that is fair to all and preferential to none. thank you. >> thank you, mr. christian. mr. williams? >> [inaudible] >> mr. williams, pull that mic

closer to you, if you will. >> there we go. good morning, chairman coble and goodlatte, ranking member nadler and conyers and members of the subcommittee and visiting members of the larger organization. my name is paul williams, and i'm an american songwriter. i also have the great pleasure and honor of being president and chairman of the board of the american society of composers, authors and publishers. we are ascap. in 1914 a small but visionary group of american songwriters had an idea. they believed they could protect their rights as music creators more effectively if they joined together rather than going it alone, so thank god they formed ascap. today more than 500,000 congresswriters, composers and music publishers trust and fend on ascap to negotiate licenses, monitor public performances and distribute royalties all in a not-for-profit basis. i'll repeat that, on a not-for-profit basis.

i'm horned to appear -- honored to appear before you today to speak on their behalf. we're here today because technology is changing in the world in wonderful ways. we're moving into a world where people no longer own the music they love, they stream it. whenever and wherever they want. at the same time, the federal regulations that govern how music is licensed and, thus, how songwriters like myself are compensated for our work do not reflect the way people listen to music today. in fact, they're stuck in the distant past, and it's threatening the very future of american music. ascap is governed by a consent decree created in 1941 and last updated in 2001. that's, incidentally, before the ipod ever hit a store. we all know the music marketplace has changed dramatically since then, and new -- sadly, new music services are finding ways to take advantage of this outdated regulatory system. consider the fact that it takes one million streams on pandora for a songwriter to earn $90,

9-0 dollars. for some perspective, one of the most popular songs in 2011 was lady antebellum's wonderful hit, "need you know." for 72 million streams on pandora, the four song writers earned less than $1500 apiece. ..

i sit herhere surrounded by representatives of multibillion-dollar corporations that profit from our songs and i find it beyond perplexing, american songwriters like roseanne and myself are ones subject to heaviest government regulation. be that as it may, i believe all of us working together to modernize the music licensing system will allow songwriters and composers to thrive alongside businesses that revolve around our music. we want you to be a giant success. you are delivering our sentence to the world. to that end we are proposing several updates to the consent decree with the department of justice. we believe these updates can save voluntary collective licensing from the serious risks facing it to the benefit of music users, and creators alike.

first, we need, we need a faster, less expensive process for settling rate disputes with businesses that use music, one that considers independent agreements reached in the free market as benchmarks. second, songwriters need flexibility to manage our own writes. we should be allowed to grant ascap the right to license our music for some uses while remaining to license to our uses as well. it is our music. to do so would foster greater competition in the marketplace. finally we can streamline the licensing process for thousands of music creators and users by giving the ascap the ability to license all the composition rights tore a business to needs to operate their license in one transaction. passage of the songwriters equity act introduced by representative collins and jeffries for which we are most grateful is another crucial piece of this puzzle. it's a simple and reasonable fix which will enable a court to consider sound recording royalty rates as evidence when establishing songwriter royalty

rates. working together to make these changes i'm confident we can preserve the immense benefits of voluntary collective licensing. this will benefit businesses that license music and listeners who enjoy it. insuring that songwriters composers and music publishers are compensated for the true value, for the true value of our music. the true value our music brings to the marketplace. thank you for the opportunity to share this with you today. thank you so much. >> thank you, mr. williams. mr. harrison? >> thank you, mr. chairman, ranking member nadler, chairman goodlatte, ranking member conyers and other members of the committee. pandora appreciate this is opportunity to testify at this important hearing. without question pan do a's delivering tremendous value to listeners, artists, songwriters and the music industry of the 77 million music listeners tuned into pandora last month and

listened for an average 22 hours. every month pandora performs 1.5 million songs by more than 100,000 recording artists, 0% of whom were not played onter rest teal radio. pandora' contributes hundreds of millions of dollars to a new royalty stream to artists that did not exist 20 years ago. nine years after launching pandora will celebrate a major milestone later this summer. -- 08%. one billion dollars of total royalties paid. as the committee pandora hopes the committee will appreciate the essential aspectses of our current system. statutory blanket licenses including consent decrease which encourage innovation through simplified licensing procedures, protect users from anticompetitive behavior of big copyright owners and assure artists receive their fair share of hundreds of millions of dollars in royalties that services like pandora pay each year. in today's highly concentrated

music industry with fragmented and opaque copyright ownership, statutory blanket licensing is the most efficient means for digital music services to license millions of copyrights owned by tens of thousands of copyright owners and are necessary to offer a compelling service to consumers. as the future of music coalition recently stated quote, the incredible growth of internet radio would have been inconceivable fledgling webcast terse been compelled with negotiate all the music publishers individually. without an easier way to obtain permission to play songs internet radio might never have happened, close quote. that being said, pan do a's recent experience reflects very real and anticompetitive behavior of major music publishers and performing rights societies reflect continued need for government protection. as concluded by the federal judge who oversaw pandora's rate proceeding with ascap, the

evidence at trial revealed troubling coordination between sony, universal music publishing and ascap which implicates a core antitrust concern underlying the as spiv cap connascent decree, quote clothe. blanket licensing provides transparency how royalty payments are calculated and provide direct payment to songwriters. without them the royalty payment process would be controlled by record labels or music publishers where unrecouped advances are deducted and small percentage of royalty, if any are passed through to the artist. while pandora believes statutory blanket licensing should remain a central felt turf copyright law, congress can improve the efficiency of determining reasonable fees for such licenses. for example, several respondents to the copyright office's recent notice of inquiry noted the expense and burden of the current copyright royalty board

rate-setting process. highlighting number one, the need for application of federal rules of civil procedure in evidence. two, the establishment of a unitary proceeding with ample time for discovery and presentation of evidence. and three, the application of so-called 801-b standard. we would also recommend in order to foster greater transparency the creation of a single database of record, hosted by the copyright office and housing all relevant copyright ownership information. participation need not be mandatory but congress could incent robust participation. for example, justice -- chapter 4 of the copyright act prevents a copy right owner seeking statutory damage unless of work at issue is registered, congress could require statutory damages would be contingent on registering and keeping accurate information in the database. this would help prevent copyright owners holding services such as pandora hostage

during negotiations, something we experienced directly in 2013 when a handful of major publishers threatened our business with massive copyright penalties while refusing to disclose their rep at thatter to. a single database of record would also enable services to identify the owners of the songs it performs which would encourage real competition among could copyright owners for drib shun across all platforms. it is important to note that while transparency would help mitigate anticompetitive behavior it would not alleviate such abusive practices entirely. that's why the protection of statutory blanket licensing and consent decrease must be preserved. thank you and i look forward to answering your questions. >> thank you, mr. harrison. mr. hupp pe. >> mr. chairman and members of the subcommittee, i would like to tell you something you probably don't hear very often. congratulations to congress for getting it right. for over 10 years sound exchange

administered the statutory license for sound recordings on digital radio that this committee created in 1995. and that decision shines as a true legislative success story. it provides transparency and efficiency that makes possible digital radio services enjoyed today by over 100 million americans. it is led to a critical and growing revenue stream for sound exchange's 100,000 accounts which represent featured artists, background musicians, labels and rights owners large and small. and statutory license has provide ad huge commercial benefit to the 2500 services who used it to build their business. some of america's best known and fastest growing companies with household names like pandora and siriusxm, providing them easy access to the product they needed to get off the ground. congress greased the tracks, removed barriers to entry and burgeoning, multibillion-dollar industry grew. and while you've heard many parties discuss problems elsewhere in the industry, mr. chairman, everyone, everyone

connected with the soundexchange world which includes entire recorded music side of the business, artists, labels, unions, even digital services themselves, everyone uniformly supports the fundamentals of the system. but as we move forward there is one core principle that should guide everything we discuss and that is this. all creators should receive fair pay on all platforms when ever their music is used, period. everyone who has a hand in the creation of music deserves fair market value for their work and i mean everyone, mr. chairman. songwriters, publishers, studio producers and engineers. the artists who give compositions life and record companies who help artists fill their creative vision. fair pay would insure justice for creators whose contributions form the soul of these services. fair pay would level the playing field for radio services and fair pay would insure a healthy, vibrant ecosystem for listeners and fans much. with that guiding principle i would like to propose a few

modifications to make this good system work even better. first, congress must address the current royalty crisis facing legacy artists with recordings made before 1972. refusal of some radio services to pay royalties for this era of music makes no sense as matter of policy and surely not when this committee intended when it created digital radio license. it is wrong to pay nothing to artist who is created most iconic era of music history. on behalf of soundexchange and artists we represent and i thank all the committee members who join them in supporting the respect act. i urge them to support this critical piece. pre--1972 artists simply can not afford to wait. second, congress must ensure all radio platforms pay all creators. means eliminating the ancient and unfair loophole that allows

$17 billion am-fm radio industry to pay nothing for the source of its lifeblood. fm radio uses music to draw the crowd and make its profits yet ignores the performers at center of its stage. fm's tired and steal justifications for taking advantage artists rings hollow and unfair to other services seated with me here today. and third, mr. chairman, once all platforms start paying creators, they should pay according to the same fair market standard. it makes no sense that similar radio platforms play by different rules, especially in today's world where those plat forms may compete against one another in the same places over the same speakers, to the same listeners. to quote ranking member nadler's opening statement, the government must get out of the business of picking winners and losers in this industry. if we want innovation, the law shouldn't give favorable rates to some companies or breaks to older formats.

stated another way, mr. chairman, these businesses should compete based on their lehman appeal and economic value, not on strength of their legal loopholes. so, mr. chairman, what would success look like for music licensing going forward? it would be a system where many of the challenges we're talking about here today would fade into the background. where the back office would work seamlessly and invest whether i. where we are focused on business models and consumer offerings, rather than rate standards and inequity. success would mean a system where the entire music community worked cooperatively to address these issues for the collective good and most importantly success would mean a system based on guiding principle i set for the earlier, all creators receive fair pay on all platforms whenever their music is used. in closing, mr. chairman, the american music industry represents some of our best talent and our most cherished assets. all we're asking for is something pretty simple. that those responsible for bringing these treasures to life

be treated fairly when someone else profits off of their work. thank you, mr. chairman. >> thank you, mr. huppe. in frear? >> chairman goodlatte, chairman coble, reining members conyers and nadler, members of the subcommittee, thank you for the opportunity to testify today. my name is david frear. i'm executive vice president and chief financial officer of siriusxm. siriusxm is one of the largest radio providers in the united states. we have 25 million subscribers, subscribers residing in every congressional district in the continental u.s. and we employ 2100 people around the nation. siriusxm is well-positioned to offer testimony on these copyright issues. in 2013 we paid $325 million in royalties to record companies, publishers, songwriters and artists. we have paid over 1.8 billion in music royalties since we launched service 11 years ago. i'd like you to take away four key themes from my testimony. first, parity.

radio is radio whether it is am, fm, satellite or interned radio. all radio companies should pay for the music they use on the same basis, no exceptions. continuing to exempt the terrestrial radio companies that dominate radio listening with over 90% of the market and generate 15 billion in revenue is bad policy. copyright law does not distinguish between am and fm radio based on technology and it should not distinguish between am, fm, satellite or internet radio either based on technology. second, today's copy right act creates an unfair digital disadvantage. drawing any distinction based on the claim that some radio services are digital while others are not is based upon a false premise and produce as distorted result. terrestrial radio began broadcasting digital signals over a decade ago and they have routinely main digital copies in the ordinary course of their

broadcasts operations since the 1908's. similar services regardless of mechanism or medium through which they are delivered should be treated similarly. with each rate-setting proceeding the digital disadvantage between terrestrial radio and other radio services just gets wider of the two pending bills, songwriter equity act and respect act, will only further widen this digital disadvantage. third, protection from market power. the music business is never been more concentrated than it is today. three companies control nearly 90% of the market for distribution of music. the same three companies control nearly 70% of the music publishing market. two pros control over 90% of the musical performance rights and one collective records sound recording performance rights. the consent decrease are crucial to protecting against non-competitive rate demands. the consent decrease do not interfere with competition. they prevent activities that would otherwise constitute clear violations ever the antitrust

laws. recent attempts by copyright owners to partially withdraw from ascap or bmi in an attempt to cherry-pick entities relying on their pro licenses for access to those pub leshs works are troubling especially in the light of the publishers refusal to provide the catalog data that would allow the services to remove the catalog from the air in the event they couldn't reach agreement on the fees. fourth and finally, fair rates. the willing buyer, willing seller standard can have meaning only where marketplace transactions reflect the workings of an actual free market. there is no functioning free market in music licensing because of the unprecedented concentration in the music industry and aggragation of power in the pros. congress should instead adopt the 801-b rate setting standard for broad array of music licenses purposes. that provides the copyright royalty board with wide latitude to insure copyright owners and users are treated fairly

including potential new users like terrestrial radio. the 801-b standard is matter of simple fairness. congress adopted that standard in recognition that services subject to those standards founded their services at a time there was no sound recording performance right at all. to change the standard now would fundamentally undercut the reliance interest of those services. so in summary, while the $15 billion am-fm industry pays pr ofts $300 million a year they do not pay a penny for sound recording performances. by comparison radio companies like pandora and siriusxm are less than 1/3 of size of am and fm in terms of revenue. yet we will pay more than 2 1/2 times, nearly $800 million in music royalties this year. it is simply bad public policy to reward the biggest entities in the radio field with a competitive cost advantage while penalizing innovation and emerging services that increase

economic activity and create jobs. as you consider new legislation is my hope you will recognize the unbalanced playing field for music licensing today and craft an equitable and durable solution. i thank you for the opportunity to testify. >> thank you, mr. frear. i appreciate that. i want to thank panelists for no one abused the five-minute rule and for that i am appreciative to you. we try to comply with the five-minute rule too. if you all could keep your responses as tersely as spongessable we would appreciative to you. miss cash, let me start with you, with a simple cash but i think it may be pertinent. do you believe the music licensing system should be set up in such a way that makes it easy or at least more simple for artists to understand how they're being paid and who is paying them? >> i do. i think that on transparency is essential and that is the lack of transparency is a huge part of the problem. for instance, there was a

petition going around not long ago from pandora, asking musicians to sign it and it was very enthusiastic about how that would benefit us. we found that to be somewhat manipulative, not transparent. and in fact, they lobbied for lower rates for us. so fans are confused which they are. they come to me all the time, how do i buy your record? what is the decent thing to do? how can i support you so you keep making records? then if they're confused and we're a bit confused, i think transparency would go a long way towards clearing some of this up. >> miss cash, you opened the transparency door so let me walk through that door. i'm going to put this question, if i will, to mr. harrison and mr. williams. transparency is a word this subcommittee heard repeatedly. quite a bit, including transparency in copyright

ownership, transparency who pays what and transparency how royalties are divided. how should congress in your opinion consider the issue of transparency as we consider potential changes to our music licensing laws? is transparency just as important and vital as other issues, starting with you, mr. williams and following with mr. harrison? >> mr. chairman, i apologize, my hear something a little bit, if i get the gist of what you said, my hear something not the best. >> nor is mine. i can relate to that. >> so your question i think, as much as i could hear was related to transparency and ascap is very proud of our transparency. we have a database for our members, if "the love boat" theme that wrote is being played in lithuania right now can jump online and find out is being played. i must, i have to disagree with mr. harrison. i think he was perhaps misinformed in something of what

evolved in the pandora case with sony. i want to straighten that out, first of all. we're very proud of the fact that we are open and transparent on all cases. when pandora requested information on licenses, for example, we, two days he have about the end of their, the trial, we immediately gathered that information and after two days of, when we had it all together we reached out to pandora and said, would you like this information? we never heard back from them. i understand the communication in a multibillion-dollar organization steams is not the best. perhaps that didn't reach the head office but we had the information that they wanted and we have it today. and i have to tell you, mr. chairman, that i believe that any business that we do, any licensee we do business with has the right to know what they're getting for their money. so we have that information. it is open and available. we're proud of our transparency on all levels. incidentally there was never any finding of any improper

coordination between ascap and any of the publishers. that, if it had been i'm sure that the very capable judge would have brought it to our attention to you and would have filed on it. there was never any such filing. >> thank you, sir. mr. harrison? >> yes. transparency is a key part, as mr. frear, indicated, to any free and competitive market. the ability for users to understand who owns the content that is supposedly being licensed and our ability to access that information. with due respect to mr. williams i don't want to get debate what happened in the trial. there is 136-page opinion detailed by judge cote. if i'm happy, i will be happy to provide it for you. >> let me ask one question before the red light appears. mr. sharman, with the world going digital and need up to date our laws with the digital

age, is it finally time to resolve music licensing issues once and for all us? >> definitely. the opportunity has never been greater. it is when the system is in crisis there is actual opportunity to bring people together to actually try and make a difference. that time seems to be now. >> anybody else want to add very briefly to that? i will open the floor, the door if you want to. my red light is about to illuminate? i recognize the distinguished gentleman from new york, mr. nadler. >> thank you very much. let me just say first before i begin some questions that for a lot of testimony today we heard testimony about the advantage of the, you call it the free, the free airplay for free promotion system has served the industry, served everybody well and it's, you know it's a good thing. let me say i find that argument

incredible. in a capitalist system it may be somebody's judgment that not paying people for their performances because they get compensated through promotions, et cetera, that may be a judgment, it may be correct. it may be equitable but it should be the decision of the person who's services or is being broadcast. you won't go into a store and say, i decide that the price of that is fairly such and sufficient. therefore i will take it for that price. someone who performs can not be told that, i don't see how in any rational or fair system can be told, we have decided for all these reasons you should be happy with just promotion. i don't see how equitiably or morally anybody has the right to make such a decision and certainly not congress. let me, so all the arguments

based on that, simply nonstarters as far as i'm concerned. lots of debate on everything else, balancing considerations but there is no balance for saying we'll take your work and not pay for it. that is not a balance. that is not a consideration. mr. huppe, many said it is time for unified approach to address licensing problems for the music din us have i. do you agree and what steps should congress take to help bring that about? >> yes, mr. nadler. thank you for your comments on promotion. i could not agree more with your thoughts on that. the concept that the broadcasters believe they can take that right and not pay for it is as ludicrous as suggesting that book could be made of a movie and yet the author of the book does not have to be compensated or that the nfl can broadcast games on national tv but yet nfl doesn't have to be compensated. in terms of unification i agree with you. we do need to streamline the system of licensing. one of the benefits of the

statutory license that soundexchange operates under it is a system that is transparent and efficient. we're the most efficient what we do. 90% of the royalties that come into our shop are out the door within 75 days. we have the lowest admin rate. so having coordinated streamlined licensing system is absolutely urgent. >> thank you. and briefly, how is the lack of a public performance right for terrestrial radio impacted artists and overall music marketplace? >> artists are losing hundreds of millions of dollars over the course of past several years not only in the united states where radio makes $17 billion but compensates artists zero. they also lose royalties overseas -- >> lack of reciprocity. >> lack of reciprocity. >> if they got that money, what impact would have on broadcast industry. >> overseas mooney. >> here. >> depends on what the rate is, mr. understand letter, if they got the money 2 would go a long way to pay the eight artists for

the central way they play into these services. >> thank you. miss cash, would you comment on those services. >> the idea that that i'm patted on head, it is promotional, it is good for you, is, i would rather have control of my copyrights and rather be paid for that. i'm a songwriter as well. so i live in both worlds but the fact that they can use my song from the radio, my sound recordings, to make billions of dollars for themselves and basically use my work to sell ads is not only ludicrous, it is insulting. an artist should have control of their copyrights. >> thank you. mr. frear, you said that there is no reason that satellite radio and internet radio should pay sound recording performance royalties while terrestrial radio continues to enjoy an exemption from that obligation. should i take it from that that you would agree that everyone should get paid or no one should

get paid? >> i actually do feel everyone should get paid. >> thank you. >> let me ask, there are different rate-setting standards applicable to different uses of music. some were established under the 081-b standard which others argue are below market rates and others are set by willing buyer, willing seller approach. satellite radio, are set by 801-b and anothers are set by willing buyer, willing seller standards. are these standards justified? who should i ask that of? >> they really shouldn't be justified. everybody should be paying on the same rate standard regardless of the platform on which the music is appearing. it doesn't make sense to have different standards for different platforms. it is having congress pick winners and losers which is not what congress ought to be doing. >> would anyone on the panel disagree with that? >> if i may, the fact is there are some different, this is paul williams. down here.

[laughter] you know, ascap licenses many, many different platforms for our music, radio, television, cable, satellite. and happily now pandora. you know, we operate, we're one of the most efficient performing rights organizations in the world. we don't operate at the percentage that you do, sir at soundexchange because we have much wider group of people we're servicing with our music of the fact is that trying to operate under the consent decree as it existing right now is crippling to us. you know, we operate at 12%, 12%, which is, would come down considerably if we could be relieved of some of the millions and millions of dollars we spend in -- >> i'm sorry. what do you mean you operate at 12%? 2007% of what? >> let me ask if pandora will be kind and help me on this one. >> 12% is our, 88 cents of every dollar we collect goes to our

writers. >> i'm a songwriter. that 12% takes care after large group of people keeping track of everything else going on. we do it more efficiently than anybody else in the world. we're one of the most efficient. honesty part of my recovery and part of my oath today. i'm proud the way we operate. when you look at a system where recording labels and artists receive 12 to 14 times more than the exact same thing we get, something is broken. you can do two things for us at congress. first of all you can support our efforts with the department of justice and you can pass songwriters equity act which will allow us to go into court and present both sides of both copyrights and the information around what they're both being paid. the huge, huge, what congressman collins and jeff frist have offered is not a comprehensive, it is not going to fix everything but it is a beautiful inroad to putting some balance into the way we operate. we're so grateful for that.

i think that what we all want is to see, i mean i want pandora, not survive, i want pandora to thrive. i made albums my family didn't even buy. i love the idea that he will go out there to make it available for anybody if they might want it. >> thank you. my time expired. i yield back. >> thank you. mr. chabot. >> thank you, mr. chairman. i would first like to ask unanimous consent to insert into the hearing record house current resolution 16 which is the local radio freedom act which states in part, that quote, congress should not impose any new performance fee, tax, royalty or other charge relating to the public performance of sound recordings on local radio station for broadcasting, sound recordings over the air. local radio stations provide promotion of the music they play at mo cost to the listener. this concurrent resolution has 225 bipartisan cosponsors

including myself which is more than a majority in the house. and i think it is important to at least mention, i know we've had some kind of disparaging remarks about the recording industry from some of our panel members and i certainly understand that but i thought that should be at least part of the record. i would also, just a couple comments before i get to a question. mr. huppe -- >> without objection those documents are entered into the record. >> thank you. mr., huppe? >> huppe, yes, sir. >> i just wanted to thank you. i think, i think we're at something like 7% approval now and to say congress actually did something right, we don't hear that much around here. >> happy to oblige. >> thank you very much. and mr. williams, we've had an opportunity to meet number of times over the years. you've been here. you're a national treasure. >> thank you. >> thank you for everything that you've done to make life better.

got some amazing songs, thank you. let's see. >> thank you. >> mr. frear, being kind of an old congear, i enjoy something that we, i guess cirrus was in our car when we got it. we kept the service and enjoy it especially traveling around the country. >> i thank you, congressman. my daughters thank you as well. >> cousin bruce in particular and herman hermits. peter noon is, we relate to that. it is interesting. and now to a, i guess one question i always have. this is a very large panel. we usually fouring something like that. we have nine. a lot of interests are recognized. is there any interest probably should have been added or we could have added that didn't or either got overlooked? anybody have any comment on that on the panel? is there anybody else that

perhaps we could have thought of that didn't get? was either overlooked or whatever? >> i would say one thing mr., congressman, we have, obviously a large panel here and we have great performing artist representatives obviously with two artists to our right. one very important constituency of soundexchange and two leading unions in our industry. afm, american federation of musicians and sag-afra. the unions represent in addition to featured artists, another important group of non-featured artists, background musicians and vocalists who have a very important voice in this debate. >> thank you. during the copyright hearings that we've had, we heard the term, free market, obviously used a lot. from every different side of the debate. kind of like to hear how recording artists view a free market system working.

do artists believe a free market model to be a better alternative than the licensing system that we have today? with so much consolidation in the industry, do you believe it is even possible for music to truly become a free market? mr. williams? >> that is exactly what we're seeking. we're seeking a free market, because a free market will dictate what something is worth. and the last thing, the last thing that we need is less control of our music. you know, the one area where you could really get a sense what the free market is in sync licenses. everything else is basically controlled under our agreement with the consent degree with the department of justice but if you look at sync licenses which are straight ahead, free market, it is about 2015 split. -- 50/50 split. this is the united states of america. we can trust business to work things out. incidentally i want to thank

pandora right now. classic example of two of us working together and i can't hear what you're asking me and he tells me. i am actually tell trusting that he is telling me the actual question. the fact is that -- >> the question is what about the performance right? >> i'm a little david and goliath moment here sitting between the giants of the industry. i left my shrink sling. at home i brought the truth. the truth i represent 500,000 songwriters, composers and publishers. what an honor to share this time with roseanne. what we do is reach into the center of our chest, you know, try to write something that will affect people's lives, that will comfort them, in sad times. all i wanted was to write something that would make young lady say yes when i asked her to marry her and three times thankfully that happened. [laughing] so we can all work together. i can turn to pandora for help. i thank you so much for examining this system. the system is broken.

you know, we've, most of our money always come from traditional, bars and grills, radio, wonderful radio, amazing relationship we've had with radio through the years. they give us a piece of their advertising money in a fair and system that we've always been able to work out, you know, sit down and roll up your sleeves and you strike a deal. it's a great way to work and all. but the fact is, that the world is changing. people don't want to own their music anymore. they want to stream it. thanks to people like pandora, and spotify i can hear my music anywhere in the world. in my car, whatever the like. it is a wonderful, it's a wonderful time. it should be the golden age of music. for the music listener who is the person we care most about. this is a time they should celebrate. the stream is a dream it should not be the a nightmare for men and women who create music. >> thank you. paul, you should have brought the infamous, you should have brought the infamous stack of phone books we talked about a

couple times? >> exactly. that's i did. i conducted an orchestra for dick clark standing on a bunch of phone books. in this room i stand on the bible. dr.? >> thank you, as co-chair of the creative rights caucus i firmly believe that artists should be fairly compensated across all platforms but we know this is not the case in the u.s. in fact, let me tell you about the story of yanita who provides a contrast between finland and u.s. she is recording artist originally from finland. she lived there her first 18 years. became a professional singer at a young age in her home country. she was paid for her performances on the radio in finland which was about a third of her income. then she moved to new york when she was 17 to take the next steps in her career. she achieved success with having two "billboard" magazine top 40 u.s. radio hits but was shocked to find out that the u.s. didn't pay artists for radio airplay.

she thought perhaps finland was an exception in paying artists and the rest of the world didn't pay artists their radio royalties. but it turns out that it was the other way around. the u.s. was the exception in not paying radio royalties. well there are two other countries. iran and north korea. well, last summer yanita proudly became a u.s. citizen, in doing so she is citizen after democratic country that doesn't honor am-fm radio pay for its artists. and she suffers a loss of significant income. this is not the american dream that she envisioned. her story shows that we need to fix the disparities in the current music licensing system to make sure artists are fairly compensated. if we don't, we risk losing innovation from creators like her because they will no longer have incentive to create for the public. and so i would like to ask a question to paul williams.

what area of agreement between you and the music licensees on the panel appears to be the importance of preserving, voluntary collective licensing model that ascap pioneered. you have made a compelling case that this is at risk of crumbling. clearly that would be a bad result for music licensees. what would that mean for ascap songwriters and 70 posers, particularly smaller, independent and up-and-coming members? >> oh, it would be devastating. first of all, thank you, congresswoman chu, for your advocacy. you've been a great friend of music creators. we appreciate that. you know, if things don't change, if the consent decree isn't modified our major publishers are looking to withdraw their rights. if they do that it fragments a system, it becomes more expensive. it becomes less efficient. i think what we have to do is we have to look at the very, very quick adjustment to the system but essentially the entire, the

enfire consent decree is at this point is not like going into battle with one hand tied behind your back that you will fight with. it is one hand tied behind your back that you will feed your family with. as far as performance and sound recording, i absolutely believe that everybody should, it's a sad, sad story to hear of somebody losing their loss of income when they become an american citizen. you know, we absolutely believe that everybody that contributes to the performance of music, creation of music, should be honored. but it is not an excuse to pay less to the people who create the music though. we need to find a balance and i think the trick is to let the fair market decide that for us. >> thank you for that. my next question is for both chris harrison of pandora and roseanne cash. last year pandora embarked on a campaign to rally artists to sign a petition to congress in support of internet radio but it was during the time when the internet radio freedom act was

being debated in congress which would have actually resulted in a cut to artists royalties. pandora's letter to artists stated, that they simply wanted to have the artists voice heard and yet, from what some artists discovered, this was not the actual intent. the implication for the artists signing a petition of that particular time was that they were supporting cuts to themselves. so, mr. harris, can you tell why pandora enlisted help of artists? miss cash, can you tell us what you and the creative community felt when this was happening? >> part of my opening remarks i noted that pandora plays 100,000 recording artists every month and 80% of those regard recording artists don't get played on terrestrial radio. there actually a large group of independent, primarily recording artists and singer songwriters who do value pandora because it is the only outlet, the only distribution platform available

for them to find and audience that loves their music. >> miss cash? >> that is what a lot of us are calling the exposure argument. that we are seduced into thinking if we allow these performances without play and we'll get exposure that would drive consumers to buy our records. that may or may not be true. but the point is we don't have control over the copyrights. we are not paid fair compensation. we are not paid fair market rates. as i said before there is no transparency about this. it is somewhat manipulative. i feel we end up subsidizing these multibillion dollars companies. they use our music as something like a loss leader to draw people in. and then they make the money. and to confirm what mr. williams said, the place that artists

have the most control are sync licenses. i have given my songs for free, my choice, to college students making their first film who want to use my song. that's great. i want to support them. then i have negotiated a fair rate with popular television show that wanted to use my song. i have control over those things and that is the bottom line. that and fair compensation. >> thank you. i yield back. >> thank you. mrs., i'm going to ask some questions now or more so make some statements and hopefully get a response. first of all, i would like to give each member of the distinguished panel an opportunity to respond to my question, this question, following question in writing, if you care to do it because there are too many and we're not going to get through my couple of minutes. if you would be so kind as to tell me in your opinion what a free market is, and what a fair

market is, comparing the two. because i hear that, those terms thrown around. free market, fair market. i asked the last panel to do this and i'm asking you to do the same and, get that to me in writing if you care to do so. i have been having meetings. my staff and i have been meeting with people that have a dog in this fight continually. we've been doing it for months. if someone has not been invited to a meeting, please contact my office. i'm congressman tom marino. i vice-chair this committee and let us know because i think we have covered all the bases but there are many, many people involved in this. i'm trying to get a consensus. i don't want congress to sit down and have to sort this out. i will show you why in a minute. this is very complex. i've been studying this for months and talking to many people and and hire's the reason

why i do not want congress to sit down, if we get a consensus among everyone who has skin in the game. i will read you a list of those individuals and i probably missed one or two. these are the parties that we've come to the conclusion that are involved in this. excluding the public. songwriters, movie score composers, performance rights organizations, pros, such as bmi, and ascap. royalty collectors for digital music. soundexchange. artists/performers. terrestrial radio. broadcasters. satellite radio. cable tv radio. digital radio. streaming. digital download. providers like itunes. record labels. copyright owners. music promoters. consumers, listeners. music publishers. collective music organization the music academy. grammys. recording engineers. copyright offices.

groups that may hold exemptions such as libraries universities and churches and i'm sure i missed someone. so you see a litany of names and individuals and groups and entities that we have involved here. now what i'm going to show you for the record, and without objection i'd like this schematic they've in front of me. it's a schematic of the music licensing marketplace and publish ir/songwriters and anyone else involved in the litany of names i have read off. i have a beautiful color display on my ipad. you're not going to see it. i will just hold this up. you may be able to understand some of it. this is an example of the breakdown and these are on both sides. so i have three documents here of the breakdown of the seem mat tick, just like a corporation would be set up. president, ceo, vice president, et cetera. this is the complication of the legislation that we have and those involved.

look at the subcategories. underneath the subcat goreries and underneath the subcategories on both sides of these documents and the third one i hold up here as well. then we get into issues such as payment. who is going to be paid. how are they going to be paid. what are the courts going to do about this? and i do not even have the court schematic here showing the process one would go through if there are appeals. so i think i got my point across here about how complicated this is. how complex this is. but we're also talking about, you know, fairness and justice to songwriters and writers and individuals who are not being compensated, particularly those because of the legislation from 1972 prior to 1972. that has something to do with state law which is an issue that i think can be dealt with today.

so as trying to be an individual that is learning as much as possible about this, hearing from everyone, some of you are a little disappointed because i haven't said way i'm leaning on this as a prosecutor i want all the information at my fingertips before i make a decision but also, i am asking everyone that i mentioned here today, to please, please, think about sitting down with us in a group, face-to-face. it is real difficult, more difficult to sit face-to-face to look at each other, eyeball to eyeball to say no instead of over the phone or an email. maybe we can get together and you folks can help us get a consensus on this and that will resolve the issue. that is monumental task. we will attempt it. my time has run out. so thank you very much. >> mr. conyers.

>> thank you chairman marino. let me ask paul williams this question. do you believe that the concept decree system severely limits ascap's members from achieving competitive market rate for their works? >> congressman conyers, you absolutely go to the heart of the reason that i'm here and to address something you just spoke about, one of the things we're denied because of the consent decree is the right to bundle rights. you go to all these different places for all these wonderful uses of our music. one of the things by changing the consent decree you will give us which we're hoping which be given at sop point the right to bundle these rights. it is exhausting for people to go to one place to another to another for these rights. we could handle this, there are two copyrights. there is copyright for the

original material. there's a copyright for the recorded material. i think that it is incredibly complicated. what would be a great solution to bring it back to us and let us control our future. let us control your copyright. the last thing we need to throw more of this into the government's lap to deal with it for us. >> so the decree hasn't accommodated the rapid and dramatic changes technologically that we're all talking about. and we have to end up in a rate court on top of it all and i think that the, this is the, the new situation that we have been in since the decree. and i'm hoping that all of our members on the committee will take this into account. now i want to say to broadcast

radio's played an important role in the lives of people all across the country. broadcasts have educated listeners to important events, emergencies and a lot of new music, including jazz, i might add. we want to work with broadcasters to continue to do this work that drifts down to the communities, all the communities. now, i just want, if there is anybody of the nine witnesses here that oppose creating an am-fm performance right, would you just raise your hands so i will know who you are -- okay. we have a couple of hands raised. and now that you've been identified and branded

appropriately -- we'll know how to proceed. but i thank you for your candor. and, and frankness about this. now, let me just ask, has the lack of, i'm going to ask this to, i'm going to ask one of the hand-raisers, warfield, has the lack of a public performance right for terrestrial radio impacted the overall music marketplace? >> mr. conyers, i would say, i've been in this industry for over 37 years and. what always has been true during that period of time that the relationship radio stations and record companies had. we supported one another

consistently in that period of time, we're looking industry, recording industry with challenges that it has just like radio industry still has its challenges, the still the strongest recording industry in the world. i heard remarks who we could be with we're not proud of, we have an industry, recording industry here larger than any industry, any recording industry in the market. >> thank you. let me get the question in to miss cash before my time expires it is about the respect act that i introduced with our colleague, congressman holding. do you think it would address the payment disparity? do you think it important that we fix loophole in the copyright protection for sound recordings before 1972, which refuses to pay older artists? >> i thank you for introducing that bill. of course i think that we have to fix that loophole.

the example i gave you about my father, his royalties going to someone else, who did a cover version of his song, it is hard to even understand how that could be possible. but these legacy artists, some of them they're growing older, they're ill. the ones who are still around. they have to go on the road when they would rather not, to make up for money they would have received from these royalties. it is heartbreaking. i see this all the time. i know these people in that generation before me who are still around. >> thank you so much, mr. chairman. i yield back. >> mr. conyers, even though you exposed certain panelists i think you will be able to walk the hauls safely. >> i'm more worried about them than me. [laughter] >> i won't go there. distinguished gentleman from california, mr. issa. >> thank you, mr. chairman. chairman goodlatte has said he wants to do comprehensive

copyright reform. and i'm going to take this opportunity today to challenge all of you, since you start sort of represent, no kidding, the spectrum, the width and breadth of the problem in in music, both written and obviously the broadcast of the performance. and we'll just go back as we often do here, especially for the non-lawyers who are here on behalf of the constitution. to the clause. and i'm leaving words out because i only want to have the part related to copyright, not the part related to patent. the constitution clearly says that we have to promote the progress of useful art for a limited time, on behalf of the authors, ex-cheeks sieve right to the -- exclusive right to the respective writings. now it doesn't actually talk about the performance but we've

all come to appreciate that a performance is in fact a participate of that structure of writing. the constitution is an interesting document to go back to because sometimes it is illustrative of all the mistakes we on this side of the dais and presidents have made during their time doing our job. we have totally screwed up your industry relative to the constitution. if i read the constitution very clearly, although the promote does say that in fact, what we do in the way of granting you exclusive rights for a limited time is for the purpose of in fact enhancing commerce. i don't believe that the founders ever thought that the promote would be to exclude a performance from being paid if in fact the own other of that -- owner of that who had the exclusive right, which to me is the right to exclude, didn't

want it to be played for free. and yet we don't have that right and i have joined with mr. conyers for years in trying to rectify that. but i think there's a bigger problem here today and i would like y'all to comment on it from your respective positions starting with his cash. if in fact the intent has always been exclusive right, and i'll read that backpacks wards, right to exclude, belongs to the author or the to performer or to be honest, the many people that are part of that collective process that we'll just call a right, if that right were to be restored, wouldn't we essentially eliminate all of these court decisions, all of these consent judgments and most of the laws we helped perpetuate, and including exclusions? we could down to congress determining fair use under free speech and so on.

we want that sampling but not sampling as a ring tone necessarily, those kinds of things? wouldn't we then empower all of you to come together, mr. williams, come together and decide to collectively you're going to offer your rights through pooling or individually you're going to retain your rights if you're just say, the beatles? . .