the gulf of guinea, which is the source of many of these things. it's very much in europe's interest to help to secure libya and ensure that the soit earn coast of the mediterranean is properly policed all the way along. >> >>. >> so clearly there's some steps in the peace keeping force. >> all i'm saying is that i think there is a recognition across the european union that it would be to europe that the world looked to provide such a force. if flfs a peace to keep in the future. >> so that element was discussed. was there any other developments? that were discussed last friday around some con kreet steps in libya to win the peace?

there are outside players involved in supporting both sides and seeking to apply diplomatic pressure on outside players to seek to minimize. is there are concerns about protecting the assets of the libyan people in the form of the assets of the central bank to ensure that they don't get acquired by either side.

>> i think it's not about how much time he spent in libya. northeast of them are taking place outside libya meetings in rome meetings in malta, meetings in tunisia, meetings in cairo. i think that would understate what he's doing to look only at the time spent in libya. obviously, time spent in libya is restricted by security considerations.

to be able to forge meaningful relationship stz. >> good. president,you touched upon in anxiousing my questions on the issue of being on the doorstep to europe. if so, how do we counter this

threat, specifically on the migration issue? >> well, the migration challenge is a threat to the whole of europe, not just to the u.k. but to the extent that travel is facilitated within europe. obviously, irregular migrants arriving in italy or spain are potentially a threat to the u.k. it does occur through ill leaguely trafficked people. we believe that the only way to stem this is at source. to tackle the traffickers, the smugglers, the extortionists who prey on these people along if way and to seek to work among countries of origin. and to reduce the impulgs to travel as it were among that

group of potential mile grat e grants. >> when your minister came in front of the commission last week, he said and i quote we need a policy on dealing with isil in libya. it is still the case that the government does not have a policy on dealing with isil. >> yeah well the policy, the desire, is to establish a government of national unity behind which the international community can then get in the fight against isil. they're willing to take some risks now in getting early behind the government of national unity to help it to tackle the threat to libya from

isil and other established groups in that country. >> i am aware that that sounds sliegtly wishful thinking. we'd just like there to be a nice government of national unity and then we support it to deal with the isil problem. we have also discussed in eu foreign ministers the obvious fact that we can't wait forever for a government of national unity to be fought. and if the initiative does not succeed, we will have to look at alternative strategies to deal with specific threat from those

isil-related groups in libya. >> a real prospect in libya which appears to be in a semi or hypnotic state where the people with guns are basically running the country are going bankrupt. >> i think there is calls for some moderate optimism. but i wouldn't put it any higher than that. i don't think to be an expert on libya. but those who are tell me that the principle protagonists. >> if people are really fighting

over territory and money and oil. it is easier to find solutions which divide the riches. and this is a rich country. so i would be moderately optimistic, but no more than that. cautiously optimistic but there could be a chance of the government of national unity. i do think that the presence of isil in the country, the inevitability that there will be continued intervention that is able to deal with the problem itself. i do think those are helpful points of oppression on the sides of the civil war to think very hard about whether it's in their collective best interests to try and resolve their differences and work together.

>> foreign secretary, can we turn to iran and the nuclear negotiations going on at the moment. quite clearly, they've made a sensitive point. >> it could become a spanner in the works.

>> it sigsales coming out of teheran teheran, but there is a desire to find a deal. there's still some very, very difficult issues on which there has been no movement at all. and you have to make some really quite heroic assumptions to get to the point where it's all agreed in the next two or three weeks. but i think compared to where we were in vienna we've made quite significant progress over the past few weeks, but still very challenging. >> well, first of all, you may have seen one of the issues

which is, of course, in congress over the last couple of weeks, including with the visitor of prime minister, it has made in progress more previously than it has changed in the dynamic as far as the united states are concerned. as the foreign secretary said we have made some progress in the negotiations. i think the reason they're from both sides to try to reach a deal, but the obstacles are still formidable. these are difficult decisions and are critical to success from which we do not have movement. so, as the justice said, we go into the negotiations, the next round of the negotiations with the degree of optimism.

but we frankly will not know where we've got an agreement until we got one. >> would we be prepared to veto a bad deal? >> yes. >> bad deal is better than no deal? >> no deal is better than the bad deal. there has to be complete transparency. that one year breakout time, as it's called, is our bottom line.

the iranians understand that. >> the deadline is the 30th of march. so it's quite possible that the detail of this, after parliament is being dissolved is how, in a way, the more important part is there's more knew wans to it. it can't be -- you consult the opposition when its comes to a nato for the intervention.

>> on iran, the deal when it comes in -- >> i consider that we set out, and i've just done it again pretty clearly, the parameters of a deal that we bould find acceptable. i do not anticipate a situation where we are going to decide when parliament's dissolved that actually we want to do a deal on six-months breakout that. 's not going to happen. it would have to as ministers do defer to the technical experts, a 12-month breakout, what kind of structure would give us a 12-month breakout guarantee. so long as we are at 12-months breakout, i consider that we

have a clear view that parliament would endorse such a settlement. i certainly don't recall any colleagues saying a 12-month breakout time is insufficient in the mood of par limit would certainly regard 12 months as being adequate. we're clear for our own reasons. but, also,. >> would it require an international treaty which would require ratification? >> it would be on a motion to support the agreement. >> that would be a detail eded

agreement drawn up. at best, there might be an agreement on the key elements. it would take several months of huge detail to make sure the loopholes, the technical specifications have been nailed down. and you may recall that the extension of the joint action agreed in vienna runs until the 13th of june. and my guess, until you get to that point, which you may not have an agreement, where we can say yes, we now have an agreement. >> if the agreement as the response secretary said, would almost be the united nations security council for a form of endorsement. >> foreign secretary, do you agree that the iranian government is determined to maintain on a breakout, the capability of exercising the option of having a nuclear weapon?

>> there's not a homogeneous position. there are different factions as there are in many governments as there are in probably many iranian societies. i suspect quite sharply divided on this issue. i think the important point is that we are not assuming good intent. we are working from the

assumption that there could be a breakout that gives us a year's notice were that to happen. that's how we're approaching the debate. >> foreign secretary, that completes our questionnaire. if there's any note that you might want to refer to before i wrap things up? >> as it happens,. >> the seo reviewed all license extents in russia.

the,co ensured that all were revoked. there's around just over a hundred, we think joule use licenses remaining in place. but these are in respect of goods up for non-military uses. for example, i.t. security products, mobile telecons products products which require licenses but which are not for military use. if i may i'll write to you chairman, and just confirm the detail behind that. >> foreign secretary, this is the last time you will be joining us and we've enjoyed you over the last year or so. so we'd like to thank you to go to the annual fellow official ins front office for the cooperation you've given us over the last five years.

>> on behalf oeft committee,

>> the fact is any music publisher with sufficient size and scale to consider direct negotiations for selected rights such as a digital rights would have the same power in the market as the pr owes and raise the same antitrust concerns.

relaxing the consent decrees in this would enable music publishers who engage in the same behavior the proper the consent decrees in the first place and has been condemned by the court since. second the subcommittee need look no further than the recent antitrust actions against the third major pro to -- anticompetitive licensing practices undertaken by an unregulated collector. these practices which resulted in a $58 million settlement between them just a month ago are detailed in my written testimony and provide a real-world example of antitrust abuses that would be unavoidable outside of this consent decree framework. in conclusion, the subcommittee has long recognized the important role that the antitrust laws play in ensuring free and markets for the benefit of consumers. the ascap and bmi consent decrees remain vital.

thank you for inviting me to testify today. i look forward to answering any questions. >> thank you. mr. miller. >> good morning. my name is lee thomas miller. i am an american songwriter. i grew up on a small tobacco farm in kentucky. when i was 11 i started playing piano, then guitar, and violin. music as a way of kind of taking you over. i knew early on that it wasn't just a hobby. i went to college instead of studying something sensible like business as my mother wished studied classical music competition which basically just meant i was over qualified for my job, singing and playing in the bars at night. but there i was classically trained in writing of the top songs on the site. thing i learned about broadcast music incorporated. always looking for excuse to visit national so took a trip to be my. i met with the songwriter representative explained to me what bmi did.

when your song plays on the radio we collect the money, he said. and i said, sign me up. then type made recordings of the songs i've been writing and he was very blunt. you're not much of a singer guitar players are a dime a dozen. but i believe you can be a songwriter. i graduated college save $1000 moved to music city. for years i wrote songs. hundreds of songs. i played in bands and to temper jobs to pay the bills. i studied the song i heard on the radio and begin reading and learning from the songwriters who wrote them. at the time the music business was healthy and publishers could take chances. a prominent publisher took a chance on me. then the real work began. my first cuts were not memorable, when bmi said in my first performance royalty check it was for $4.69. today it is framed and hanging on my office wall. that checkmate everything. that checkmate that i was a professional songwriter.

all in all it took 11 years after i moved to nashville to have a hit on the radio. in 2003 to receive my first bmi award, given to the 50 most played songs of the year. it was a song titled the impossible. ironically the song was about overcome insurmountable odds through faith and determination and believing anything is actually possible. to me earning my first bmi of what was like a ballplayer going from aaa to the major leagues. in today's music industry environment songwriters come under poor -- on to perform rights societies. we do not to work. we do not sell t-shirts. we write songs all day every day day. and when we succeed weekly self-employment income tax. with what remains we buy gas and bread and white picket fences. but since the year 2000, the nashville songwriters association, where i serve as

president, estimates that america is lost between 80-90% of its professional songwriters whose primary income is from royalties. i'm talking about creators. and what we create is not some obsolete, irrelevant, cultural product of days gone by. it's music. what we create is there when you fall in love you it is there when your heart breaks. it heals. it inspires. it time travels. it crosses party lines. so how does that bmi consent decree impact me? i feel that it puts bmi and songwriters at a disadvantage in several important ways. for instance, if great disputes could be resolved by arbitration rather than expensive litigation and that would feel like a win for everyone. new services could launch, and songwriters could get paid quickly without spending lots of money on lawsuits. songwriters also worry that bmi is not allowed to license rights other than the performance

right. most new services need several rights. a one stop license from bmi would be a quick and efficient way to get the services off the ground. these aspects of the bmi consent decree, in my view, have the valid the musical composition to the point where the songwriters are being crushed. it is bad enough it is so easy to steal the music today by the legal framework that allows songs to be streamed for nearly free will destroy the livelihood of the american songwriter if it is allowed to continue. u.s. department of justice is present undertaking a comprehensive review of the ascap and bmi consent decrees. we hope they will recommend substantial changes that will allow us the flexibility we need to operate in the free market. i am america's smallest small business. i sit down and make stuff up. i can make you laugh. i can make you cry. i can make you do both with one

three minute story. that's the power of music and it all begins with islam. but i'm here to tell you there are not many of us left. thank you, chairman lee ranking member klobuchar, and members of the subcommittee. >> thank you mr. miller. ms. griffin. >> chairman lee, ranking member klobuchar, and members of the subcommittee. thank you for inviting me to testify today. i would like to thank you, thank you for your remarks about competition policy this were so foremost about protecting consumers. my name is jodie griffin and i'm a senior staff attorney at public knowledge, an organization that advocates for policies that promote freedom of expression, affordable communications and the public the ability to create and access creative work. before public knowledge i was a musician and helped launch and worked for the five time nominee -- grammy nominated some.

this comes at a pivotal time for the music business. now more than ever it is crucial that policymakers promote competition and innovation in music description to benefit listeners and artists alike. music service give consumers convenient ways to legally access music at reasonable prices and they have the potential to give artists greater control over their own careers. however, this market is still new and it is still growing and it is crucial to encourage competition and innovation for consumers and importers will only be left with fewer options and less leverage in the marketplace. antitrust and copyright policy should promote a robust and competitive music marketplace where artists can get to music out of the market receive a fair price, end-users have competitive choices among legal music services. if all of the middleman in the music business from publishers to labels to distributors are facing robust competition that forces them to be accountable to

musicians and audiences. but the intermediary can leverage a large catalog of copyright acquisitions to comment the market, it has the power and incentive to use that leverage to raise prices for consumers, pathless revenue on and prevent new services that would challenge its dominance. for example on the sound recording side one of the major ledgers negotiate licenses directly that they've been able to use their market power to obtain large lump sum cash advances and equity in the new company, the benefits of which are not passed on to artists and the intimate labels argue that the majors can depend royalties disproportionate to the actual market share because they have enough market power to veto new services. the very active crater large collective licensing organizations concentrate market power and the market for public performance rights and composition is concentrated. this has been the case for decades. we've had antitrust settlements ensuring that the largest

performing rights organizations offer reasonable licenses despite their market power. this doesn't mean it is inappropriate to periodically review and update the consent decrees to encourage and work -- and more competitive market but at this moment we can already see multiple warning signs at dismantling the protection and the consent decrees would result in a less competitive and innovative marked with fewer choices for consumers. in recent years the music publishing industry has only got more consolidated as the biggest publishers buy up smaller firms. ironically enough some of those mergers were justified by the art the post merger publishers could not possibly act at the competitively because we could rely on the market protections and the consent decrees and and in statutory licenses. even more recently a federal judge found when the major publishers attempted to license their digital rights directly to pandora w.h.o.'s collusion over competition. they could've used that opportunity to compete with each other and with ascap but instead

they chose to coordinate with each other. despite the objections of some songwriters and independent publishers within ascap. a federal judge later examined these negotiations and found that the publisher's behavior magnify their market power so much so that the resulting licenses could not even be honestly considered free market benchmarks. again this does not mean we must always have consent decrees nor they can never change, but the evidence shows at this moment in time we need to protect competition more than ever. as the department of justice in congress review competition in the music licensing marketplace and the antitrust consent decrees in particular it is crucial to continue to support policies that encourage a competitive market in which no company has the power to pick winners and losers. a marketplace that allows new entrants to compete with among copyright owners or distribution services ultimately benefit consumers and artists alike. thank you, and i look forward to your questions.

>> thanks to all of you for your opening statement but those are very helpful. we will now begin our question and answer period with five minute rounds. i will go first and then senator klobuchar, and then we will alternate on each side of the aisle. ms. matthews, we will start with you. your consent decrees been around since the early 1940s. i guess the second oldest of the two consent decrees. we look at music market today. we can see that it has changed a lot over the last 75 years. we survey say that delivery methods in particular have changed a great deal since the early 1940s. what can you tell me about about this about how the market has changed over the last 75 years and how this those changes, in your opinion bring about the

need for some kind of modification of the status quo? [inaudible] >> push the button thanks. >> excuse me. the competitive market has increased dramatically since the '40s. we compete both with regulated competitors such as a bmi and several unregulated new market entrants have shown up on the scene in the last several years. the most important change i think that has happened in the past decade has been consumer behavior. because people are no longer buying music, a major source of revenue related to mechanical reproductions has steadily declined for songwriters. so as a result of reliance on public performance is increasing. digital services are becoming increasingly more customized and personalized with the proliferation of wireless device adoption, broadband penetration rates with high speed services to the home. more music is being played than

ever before. so while the volume of music has increased in terms of overall public performances, the raven is simply not tracking in terms of increased. and at the end of the songwriters are being harmed. as a result major music publishers are threatening to resign. if they resign collective licensing will collapse. >> thank you. mr. harrison, i'm presumptively always supportive of free market solutions to competition issues. now, you've suggested that the very old consent decrees are not outdated at all. what evidence in the market leads you to believe that the consent decrees that we are talking about today, as they are written, are necessary even in the digital age even in the digital sector? >> i think there is two things i

would point, i would point you to. the first is just the structure of ascap and bmi. they are horizontal joint sales agent. they take works and otherwise competing publishers, aggregate those, catalog together and then fix a single price across all of their members catalogs. as mr. dowdle, indicated, that is normally viewed as a per se antitrust violation and the consent decrees provide because of the protections they provide and immunize ascap and bmi do private antitrust once. more contemporaneously, pandora over the last few years has experienced what happened when publishers attempt to partially withdraw. you alluded to the judge's opinion in which he found that when given the opportunity to compete against each other the publishers and ascap chose not

to and instead just coordinate their behavior, use their market power and drive rates above the competitive market rates. >> and speaking of that litigation, speaking of judge côte, i want to turn back to you for a minute, ms. matthews. in the pandora ascap litigation, the way the judge discussed it with samples of this behavior that she found to be questionable. as this issue continues to arise out of to get a chance to respond to some of those. if the publishers are permitted to partially withdraw, with ascap even as competitors in the market for music licenses? and if so do you think that will result in competitive pricing? [inaudible] >> excuse me. it's counterintuitive i know but ascap used a major publisher independent publishers as

competitors today. we only accept a nonexclusive grant of brightening that they're always free to correct license with any music service including pandora. if it were a loud to grant us a partial grant of right, which is supportive of u.s. copyright law because copyrights are divisible, they would simply remove those rights from ascap in their entirety so we would not be competing for them with respect to that particular license, but it would be pro-competitive innocents would create more choice for music licensing services. >> we will probably want to follow-upfollow up on that all of it later by my time has expired and we'll send it over to senator klobuchar. >> i think i will start where he left off their. significant amount of attention placed on the partial withdrawal of certain rights from the performance rights organization. has discussed a recent letter of the doj was filed on friday

indicates the department believes the consent decrees is currently written do not permit partial withdrawals. ms. matthews, you answered that. mr. pincus, why don't we start with you. what are the partial withdrawals needed, in your view? >> well, the current system works quite well with respect to most aspects of collective licensing. i think there's broad satisfaction with the radio licensing system, the television licensing system the bars restaurants, stadiums licensing systems. but with respect to the additional rights ugly the rates are artificially being suppressed. if you look at markets competitive rates they have been up to three to four times higher in multiple situations. there are many companies that are doing business in an unregulated way in the digital market that are functioning just

fine without government oversight. and that puts us in a position where we feel like if our earnings are going down and the listenership of radio is migrating to the lower end rate and our businesses are going to suffer over the long term. and what we rather be able to do like any other small business is be able to negotiate directly for those rights. >> mr. dowdle, you want to respond to that, this idea of a partial withdrawal? >> yes, thank you, senator klobuchar. there's an old adage as a young lawyer i was a litigator. there's and old adage time honored in a profession that says bad facts make bad law. hypersecretive -- in this case of which is urge the members of this committee not to make a decision based upon hypothetical threat. that's first. second of all the very fact that

music publishers we're talking about are big enough to make a threat that scares ascap and bmi should raise a lot of eyebrows on this committee and that the department of justice. those withdrawals are best as has been mentioned, the possibly of those withdrawals is best put into light of what might happen if you take a look at what happened when they threatened them. they engaged immediately in the lives of an anti-competitive activity. if you want to see what will happen, they give you pretty good idea of what should happen. that i think should really raised some eyebrows and raise a question of whether they to their own consent decrees, frankly. >> do you want to respond at all? >> i agree with what mr. dowdle said. the concern is is not partial withdrawals industry. the concern is partial withdrawals in practice. and what we expect over the last few years when given an

opportunity to compete when actually believed they had partially withdrawn, the publishers chose not to. and to the extent that the department is looking into this issue, i think it's wise for the subcommittee to be mindful of actual behavior, not what folks might say they want to do. >> my last question. there's a number of different ways that licensing rates are set throughout the industry. some of argued rates should be set on the free market rather than being subject to terms administered and regulated by the government. mr. pincus, you talk about the right of public performances quote inherently a free market rights. what do you mean by that? if you could answer briefly so i can get some of the comments on that. >> well, if it weren't for the consent decree is governing ascap and bmi, negotiation would be between publishers a licensing directly. >> okay. said you think that's a good idea then?

>> i do. i think while i extend their anti-competitive concerns i for one, have there been accused of acting anti-competitive league. my business isn't a skill yet and yet i'm regulated by a system that is meant to protect against anti-competitive behavior on it like it basis. >> okay. ms. griffin, you want to respond to that? >> i think, so what i think of what a true free market is it is one that has competition, one that brings more choices and lower prices to consumers. when we look at the publishing market right now it is hard to know what a true free market rate is because we don't have examples of negotiations with a licensee can say no and still stay in business. and that is why we still need the competition protections like a statutory license. >> okay. anyone else want to respond to that? okay. ms. mack is? >> i would like to point out under the concern consent

decrees, the licensees compulsory, meaning there is no negotiation whatsoever in order to have access to the assets. it's the antithesis of a free market negotiation, a licensee applies for a license. they immediately can exploit those copyrights. >> all right thank you very much. i will turn over to my colleagues. >> mr. jealous. >> mr. dowdle, if the partial withdrawal is allowed out with his address broadcaster to do simulcast through digital channels? >> well, it would be faced with having to negotiate it could call it the negotiation with people who we don't know how much of the product may be used in our programming, therefore we have to have those licenses. our hands are tied. we have to come to an agreement with them. that gives them an and even field on which we have deployed immediately.

we don't have a choice. we have to sit down. we can't say no. second of all, we've already seen how they behave in a quote-unquote free and open marketplace. they colluded. they will immediately go to the conduct we believe that they've already proven they go to. that is, they tend to conduct themselves in an anticompetitive way. that's what we will be faced with. >> what is the consumer interest? how to consent decrees help consumers? >> thank you, senator. consumers benefit when they have choices for different services that give them different types of offerings and different price points, so here the role of the consent decrees in creating that market is allowing prospective new licensees to enter the market, pay artists and then

launched a service and give consumers a new choice. >> i have a guess a general question for anyone who would like to speak on the. i'm trying to get a sense of each of your view what their market value means from your perspective. and unhappy does anyone, but i'm really just trying to understand how the consent decree stands in the way of achieving it as well, but to anyone. we can start hundred with ms. matthews. >> so a free market would encompass a willing buyer and a willing seller negotiating openly, and an instance where they do not agree either party can simply walk away. when they do agree presumably they would reach a free market rate. conversely under the consent decrees, that negotiation does not happen because the right is compulsory to ascap and bmi didn't have the right to say no.

>> mr. harrison. >> i would agree was -- with ms. matthews first characterization of their market value is the value that clears the marconi have a willing buyer and willing seller without information asymmetry and with the ability to walk away. i would also agree with mr. dowdle's character session of services, answering the experience of pandora, that when publishers will not tell you what they own and then threaten willful copyright infringement which comes along with $150,000 damage potential for each work infringed, services don't feel that the ability to walk away either. >> mr. pincus? >> at this small business -- as a small biz person i think every market is a place where i can decide what is most appropriate for my business. and in this context i don't feel like i can do that.

>> senator, with all due respect to our discussion about a free market, we have actors at their very existence would not exist in a free market. we've collected that are sanctioned in the activity. their very existence doesn't allow the free market as such to operate. set to come out side of this sort of theoretical free market immediately when you give the right to collectives to bargain in the way that they do. there has to be a construct to govern that sort of activity. i agree that if one seller and one buyer are talking that would work. when we are talking about a seller of the size and magnitude of large music publishers or collective societies you don't have a free market. >> mr. miller? >> well, free market is something of the songwriters can only dream of. we have never had this. we've been told what our contract was worth since the beginning of writing songs.

it's got us to the place today where it's quickly becoming unsustainable. the thought of being up to sit down and have a negotiation in 2015, what our craft maybe work would be life-changing to our profession. we are the ultimate player the can't say no. we are handcuffed to the bottom of the ocean come and we are just looking. >> i would agree with ms. matthews the free market is one were either side can walk away with a going out of business entirely. and i would note i think mr. miller mentioned how songwriters feel that have to go through these licensees and i think sort of the recent songwriters feel that way is that the pro's dominate this is so much that you do have to go through them and that's what makes it so dangerous from a competitive perspective. >> think you. thank you, mr. chair. >> mr. kohn.

>> this method, if i might just go back to your opening statement that the competitive environment of ascap faces today, to become more and more challenging. how this ascap compete with the other pr pose questions can do little more detail on how the competition to the action plays out. and answer my questions, the licensees will end up needing a license all the p.r.o.s? >> the current business practice most licensees obtain a blanket license agreement from the three largest bureaus. they are always free however to license around meaning they can program program around those assets purpose of because they complete creative control over the programming except in an instance where as mr. dowdle pointed out perhaps licensing programming from other sources. the barriers to enter the space however today are so low, an individual could simply buy one

catalog of copyrights and compete with a pro. publishers are directly competing with pro's. international foreign societies are competing with p.r.o.'s and it wouldn't be surprised if technology companies into the space and start competing with p.r.o.'s. mr. dowdle, your view on that same? >> thank you, senator, yes. first of all on a number of ascap, have been for over 20 years. i'm a very important member of ascap i am a member of ascap and still a publishing interest as well in musical works. these are friends of mine so not trying to say anything personal about their personal behavior, but they don't really compete is to protect the wood because they don't allow people to license with those societies to us to the works in the catalogs the deal exclusively. i don't think that is

competition, frankly. spin ms. griffin, cottages as to what risks do we run if doj were to disband the consent decree also? if we really got to a free market of light on antitrust statutes, and that is partial withdrawal medicaid or aggregate those risks? >> so if we were to disband the consent decrees entirely i think the three major publishers would have the market power to demand whatever they want for licenses. they may or may not be able to efficiently licensed the nondigital pieces of the market like restaurants and bars and cafés, and that could be a big mess as well but just looking at the digital side, i think the issue is that i come from the recording side of the business and we see that in the major labels when the license uses that not governed by licenses

can we see them demand equity stakes in the company so they can get vertically integrated. we've seen them get large lump-sum advances, which it is reported that they will often say that that's not a trivial to their artist contract so doesn't go down to the arts at the end of the day. and then independent labels say that the majors get royalties that are more than their share of the market so much so that some of the independent labels are asking for more statutory licenses which is a pretty telling example of what the state of competition is there. so i think the public should be able to begin to act like that because they have similar levels of market concentration. and for partial withdrawals i think the danger with the partial withdrawals over just disband the consent decrees entirely is that we have seen how the bureaus and ascap act when they think that they can partially withdraw and drizzle and a lot of competition

problems. and my concern is that if the dj was to then say had been seen it, you can partial withdrawal. they could see even an overtly seen as giving the government to the compete in the market. >> mr. miller, i really appreciated your testimony. just as reminder of the creative individuals who are in many ways at the beginning of this conversation, although ms. griffin altered mice as consumers are also critical peace. there's different folks involved in this, a lot of different stages. not all songwriters want to have some of their performance rights pulled out of p.r.o.s. why is that if you agree or disagree? >> well, it's a complicated music relicensing situation. my take on partial withdrawal is that it's only with the songwriters can achieve higher rates. and yes, it makes sense but we're accustomed to our share of being paid directly to our

p.r.o. mine being bmi. that tune is working efficiently and stable. the copyright office has recommended services pay the songwriters directly, under partial withdrawal. something from that standpoint it makes sense. again if the endgame is we find a way to revalue the copyright and get out from under, restrictions that think it is worth to me in the ditch is based i think it the songwriters. we aren't in a situation now where millions of spins in the digital space equals millions of dollars. >> thank you all for your testimony. >> thank you, mr. coons. it's now my honor to recognize my friend and establish colleague who happens to be an actual songwriter, senator hatch. >> don't hold it against me.

let me just, we're happy to have all of you here and i'm pleased with our leaders for holding this hearing. let me just ask this to the panel to last june senator whitehouse and i wrote to attorney general holder about ascap and bmi licensing practices. i would ask unanimous consent that letter be placed in the record at this point. >> without objection spent we encourage the department just to modify the consent decrees to allow for competitive benchmarks and ratesetting, licensing flexibility arbitration as an alternative to litigation and bundled rights. some of you have argued that modernizing the consent decrees would be a bad thing and the decrease need to be preserved in their current form in order to prevent anticompetitive conduct by p.r.o.s. tell me, why would allowing for

arbitration in lieu of expensive litigation fit the so-called antitrust? i would like to know that come or why would allowing all performance rights organizations destroyed the free market? these seem like common sense changes to me. and maybe we can start with you over on that end. >> thank you senator hatch. we agree with you. these are commonsense changes. to be clear we are not asking to commit the consent decree. we're merely asking for the changes that senator hatch just referenced. our request for alternative dispute resolution's seems to be a win-win for everyone. we should be able to reach consensus without the time-consuming incredibly costly federal litigation that gets repeated again in a second rate court proceeding with our competitor bmi with a different federal judge whose oftentimes leads to inconsistent decisions.

bundling also seems to be a win-win for people. services often require more than one right, not just the right of public performance. if we did offer to be a one stop shop for them that seems to have a pro-competitive and efficiency benefit for everyone. partial grant of rights, i'm hearing concerns regarding transparency. and you should not the ascap fully supports transparency but we believe licensees have the right to know what they are licensing and from whom. >> senator, i think the concern i would have about arbitration, at least the way it's been characterized so far is that it would be mandatory and binding. there's often significant sums at issue when the radio music license committee settled its dispute with ascap and bmi in 2012, the radio music licensing committee estimated that adequate was going to say than

$1 billion over the following seven years. while as someone who has litigated rate case against ascap and this in a rate setting with bmi understand how expensive they are put the protection of the federal rules of civil procedure and the federal rules of evidence is what allowed pandora to discover the behavior that judge cote ultimately concluded was coordinated and that the benchmarks that ascap had introduced as allegedly competitive benchmarks were not. without those protections my concern is we choose the cheap answer not the right answer. >> i am not a lawyer or a litigated but as a small business person i know enough to know that when lawyers and litigation into the business process, things slow down and get very costly. so anything that moves us away from the divided makes it even be too blame for my business for the long term.

>> senator hatch, thank you. our experience has been through the license committees that we have, that arbitration which we had to resort to with regard to sesac from time to time prior to the antitrust suits that have been filed is really not any less expensive or less time-consuming, frankly. and what you give up is the expertise that the rate courts have on musicians. there's a deep and broad extremes in these rate courts with these issues, and they understand the lay of the land. it's also been brought up by mr. harrison, you have protections within the federal court system. these are proven then use come and have been relied upon for a long time by both parties as they have resorted to them. ascap and bmi have gone to these rate courts themselves many times over the years. and i don't think that throwing the baby out with this

particular bathwater would be a very good thing to do. the snare of be careful what you wish for. >> -- the scenario. >> speaking as a songwriter, not a lawyer, all i can say is these issues just show how our back is against the wall. we have very little to say. we have no say in what got us to where we are today as far as the rules are written and it seems like certainly want to get into lawsuits, you know, we need all the really think it has force that goes because we get pounded pretty quick because with the smallest guy in the room. so yes these two seem like common sense asks. it seems like common sense we're asking for something to be done about 1941 regulations. i don't know what other businesses in america are as constrained as we are by something that happened during

world war ii. >> thank you. >> i think especially considering bundling and arbitration, my concern is that both of those would ultimately increase the power of the largest player at the expense of the smaller ones including the smaller rights holders. for example, for bundling if the p.r.o.s were allowed to require mandatory bundling for licensees, that would make it harder for smaller rights holders to license those mechanical rights separately. for it for arbitration to our lot of transparency concerns for me on the outside. in order to have a true free market we have to know what you're buying in order to figure out how much it should cost. and also i would note that on the songwriter's site they have broader concerns about transparency because arbitration might lead to issues where the

artists themselves don't necessarily know what the rate is or how it was decided. >> i think my time is up mr. chairman. >> thank you. senator franken. >> thank you, mr. chairman, for this hearing. mr. harrison you talked about this $150,000 fine that could be imposed for infringing. have you ever paid such a fine? >> no, sir. >> how many times has that fine, in your experience your knowledge, then imposed? >> well, in the context of pandora, i mean, it was not -- >> just in the whole ecosystem of this. >> oh, there's hundreds if not thousands of copyright infringement cases going on right now. for railways was involved with marvin gates estate over word

lines where statutory damages and local infringement are being sought by the plaintiffs. >> i will go back to the question every times of the $150000 fine been imposed? >> the maximum? i can give you an actual number. >> it was brought up as, you brought that up spent yes. and/or was threatened by music publisher combined outside counsel. >> i want to know how real a threat that is. ms. matthews come in your testimony you say section 114 -- i have the copyright act prohibits a rate court for the performed musical greats paying for the same service to the recording entity for the performance of sound recordings leading to rate disparities in favor of sound recordings on the order of 12 to one. and i think this is why mr. miller is insane that on the

digital area there is just an imbalance. i don't want to get into -- mr. miller is saying. -- this is about p.r.o.s today, but it seems very ironic that in terrestrial which is what we been living with since 1941, the performers get nothing and the copyright holder, the songwriter and publishers there's an imbalance within obviously. and here we just got the exact reverse where the performers do very well and the songwriters get next to nothing. i mean this is why we are here what's going on in the digital

space. that's i think we're here, a big reason why we're here is the digital space gets nothing, practically nothing. i mean it adds up over billions of plays to a little something, but this ain't no way to earn a living. i think that if you want to use that mr. miller this ain't no way to earn a living -- [laughter] i would -- >> it will be demoed by the end of the week. week. [laughter] spent and i would get, what, half? spent would you like to know what that would equate to on a string? >> on, yes, i would like to know. three plays. >> can i talk to the whole panel hear about this issue? i know it gets into something we are really discussing that which is the right of the performer but what would it entail to try to address this where you would sort of equalize, and i know that, you know, the performers

would go like, oh great we have been doing radio for 70 years, and now you want to equalize this. but what would that tell besides looking at these consent decrees, what with us all entail? if anyone would want to handle that. how would you sort of knowing that we're going more and more and more into the digital, and this will kill the songwriter how would you equalize this more? anybody. >> if i may you should recall that the largest record label in the world owns the second largest publisher in the world and the second largest record label in the world owns the world's largest publishing company. at the end of the day rights holders believe it was a different dissipation of the royalties, $450 million in 2014 that reference pandora thing, if the rights holders themselves

wanted to shoot it that money differently, they are controlled by the same corporate parent and could, frankly in the best position to understand the relative value of the inputs for our service. >> does that sound right to you guys? >> if i may -- >> first mr. pincus. i'm sorry, but -- >> i'm a music publisher who does not share a corporate parent with a record company and what i would say is that in one very good example of where there's a free market for these two rights the rights are 50/50. they are equal. >> okay. >> so mr. pincus is referring to the market for audiovisual synchronization, and i would also like to point out anecdotally that outside of the united states oftentimes those two copyrights, the copyright in the sound recording versus a copyright in the musical composition are equally valued. so our proposal would be as part of copyright reform we have

platform neutral technology neutral laws and we let the free market is up with allegations of valley should be between those two rights. >> thank you, mr. chairman. >> thank you, senator franken. senator hatch is the chairman of the finance committee he had to get back to the meeting so we let him take a few more minutes before he has to leave us. >> i appreciate that, mr. chairman. i am in the middle of the hearing on taxes, and all of you will be very interested in that i'm sure. let me ask ms. matthews to the notion that copyright law privilege the rate court judge from taking into account evidence of what other rights holders are faced with the same piece of music, that doesn't make much sense to me. that is why last week together with senators white house, alexander and corker, i introduced a songwriter equity out to remove this adventure he barrier.

the songwriter equity act would authorize the rate court judge to consider rates paid to other rights holders such as performers as part of determining a fair market rate. now, do you believe this reform makes sense of and how will it help the rate setting process? >> i do believe this makes sense but i think it's a step in the right direction. we believe it would be helpful and direction and credit important for a judge to be able to have all of the information about how the money flows. >> okay, thank you. mr. harrison, in your testimony of stress the creation of a single database of record -- copyright music information to to enable the services to identify a catalog by catalog basis the owners of the song they performed. this sounds like a good idea but how much would that cost? who would pay for it and it would manage the day-to-day? >> all excellent questions,

senator. i think the best answer i could give is and/or and services like pandora would certainly be willing to bear their share of the burden in creating such a database. because it's vitally important for the transparency that currently lacks in the system, and so we would be more than happy to contribute to its creation. >> thank you. mr. dowdle, the ascap and bmi consent decrees are were seven years old and have been amended only twice. in light of the significant technological advance in the music is over the last 70 years, do you support making any modifications of the degree? >> thank you, senator hatch. i think we have to be a little bit more mindful of the fact that the nature of the music services and the distribution

models may change. there may be modifications that could be undertaken to address those types of issues. but the actual at the competitive nature the year owes and the market power that they wield in this space doesn't change. -- p.r.o.s but in the nature of the rights really that their admission doesn't change. so even if you have to address new technology, the actual underlying problems still remain. and so any changes that would be proposed you had in mind it would have been within a construct that allows and enables the market to function. if you take it outside of that construct you're going to have a difficult time having an efficient system. >> ms. matthews, again, can you tell me what your expenses been with the rate court process? and how does that process impact

songwriters? >> since 2000 ascap has spent approximately $86 million on rate court litigation. in the pandora litigation a loan, we discovered more than 75,000 documents. we deposed more than 35 individuals. these rate court proceedings sometimes last years, and sometimes require an appeals process to the second circuit. we think any other form of alternative dispute resolution is better than the process that we have now. for every dollar that we spend a ghost outside counsel to lawyers, those are dollars coming out of the pockets of the songwriters. >> all right. let me go to mr. harrison begin. compared to the 48% of revenue that you pay for performances of musical works is paying 1.7% to songwriters the amount you proposed to the rate court judgment is that really an

equitable rate for songwriter? >> at 1.7% that pandora proposed in the ascap rate court proceedings is the rate that terrestrial radio pays the songwriters to publicly perform their works. we compete most closely with terrestrial radio both our listeners and for ad dollars to deliver going to have a distribution neutral royalty structure, the 1.7% of revenue would be appropriate. >> thank you. mr. chairman, could i ask just one more question? i apologize to my fellow senators, but i've got to get back to the income tax matter. some songwriter groups have expressed concern over the lack of transparency and direct licensing deals. the terms of which are often subject to nondisclosure agreements. under these confidential arrangements, songwriters and composers don't even know the

details of the agreement under which they're supposed to be paid. do any of you have any ideas about how to address that particular problem? it's a big problem as far as i can see. does anybody want to take a crack at that? >> one of the roles that the p.r.o.s play for people like me who would have a hard time replicating the scale of what we do this providing transparency in the market in the same way. so i think having the pr oh played a constructive role in administering digital agreements would be a very good way to handle that spent senator hatch when the things that pandora did last year was launch its artist marketing platform. admitted it is geared towards recording artists but it allows any recording artist to sign onto the service and see other music is performed to a number of times it is performed who their audience is where their audience is but there's nothing

that would prevent us other than the lack of transparency in the music publishing osha for pandora to provide the same kind of visibility it may not allow a songwriter shoe track the dollars that come from the service into their checking account but it would enable them to see other if the music is performed on the service and whether they are actually getting the money they believe they deserve. >> senator hatch if i might. i think the one thing given ms. matthews has already opined on this and i appreciate her statement, the one thing i think all of us on this panel could agree with is that if the consent decrees are modified at all, they should be modified in a way that creates better transparency throughout the system both for licensees, for songwriters, for the p.r.o.s for that matter. we ought to know what it is we are licensing, how much is being paid, why whom and to whom so that this is all public, all available to those who are anticipating in the system. i think we can all agree that

transparency is a really big issue. and if anything comes out of this hearing it should be that. >> thank you, mr. chairman i appreciate the courtesy. >> thank you, chairman hatch and wish you the best of luck as you reform our tax code. >> it's going to take a lot of luck. >> senator perdue. >> thank you, mr. chairman. i would like to thank you and the ranking member for raging this meeting. thank you, panelist, for being here. -- arranging this meeting. >> as one who moved from nashville to atlanta i can tell you that there's a lot of music activity in atlanta but i think everyone agrees the music market place is really changed and undergone radical change in the last few decades since bmi consent decrees made in 1994 a year in which by the way the billboard top 100 single had singles by bryan adams and boyz ii men. only my two kids know who they are. i would like to start with a

threshold question today, a policy question about both consent decrees. and 79 the department justice revise its consent decree policy and mandated that except such antics were to circumstances all the doj consent decrees would contain a sunset provision. the sunset provisions would terminate the decree within 10 years. this was in response to congressional action to strengthen the penalties for sherman act violation. so for more than 35 years it has been doj policy that consent decree should not be perpetual it should terminate in order in under a decade unless exceptional industry specific circumstances are present. the policy was of course prospective i think the rationale underlying is worth considering in the context of consent decrees we are looking at today. my question is this pickup like to get each of you to respond. for those witnesses in support continuation in the present form can get a -- and they get a quick description of the music licensing market that trump be a just response from -- a minute

of the consent decree deeply the sunset presumption applies? would you like to start, ms. matthews? >> so did the ascap is not requesting a termination of the consent decrees. while i do think it is inappropriate to have some reasonable pathway to consider regular modifications to the consent decree possibly eventual sunset. today we're only asking for a few discrete changes to save collective licensing. the hypothetical of publishers leaving ascap is not a hypothetical. this will happen if we don't make these changes. and it is our greatest fear for the songwriters that we're running out of time. >> thank you. >> senator i think the key issue what makes this

exceptional and suggests that sunset is an appropriate is most of the time i consent decree is entered, the behavior that gave rise to the consent decree goes away and so they could send degrees no longer needed it at the end of the day what ascap and bmi are, are horizontal sales agencies. they take otherwise competing publishers, aggregate them together and fix a single price for what otherwise would be competing catalogs. unless that behavior changes it doesn't seem appropriate to did away with the protections that providing licensees for there to be abuse of market power and super competitive rates. >> in the market today there are many, many digital music services that operate with the kind of regulation that music publishers operate under and the market is thriving. as to transparency, for example my understand is that the majority of publishing data is

currently available on a voluntary basis by private actors. so i think where the market is more free in this particular area it becomes more competitive competitive. >> senator perdue, thank you for the question. as mr. harrison said, these are very unusual decrees. the department of justice entered into these degrees not as it usually does, to prevent and deter anti-competitive conduct. the actual entered into these degrees to enable anti-competitive product within a construct that it could be regulated. that makes them their unique and it makes the necessary if we're going to continue in the role and have ascap bmi sesac global rights and all of these others plus the large publishers represent, if they can operate the way they do there has to be a construct or they will engage in anticompetitive activity. >> well, in a perfect world i

think consent decrees could go away. what we don't want to see happen is we don't want to destabilize our collective agencies, mine being bmi. it's just too important to we could open to find ways to modify it to give us some really -- some relief but it's crucial to what we do now, and the relationship with the p.r.o.s by and large is good. my wife of 23 years as i was running some of these technicalities by her looking for a little bit of wisdom, she says, i don't know what any of that means but i do know this. the only days i serve on my calendar every year are the four days your bmi check is coming. do whatever you've got to do with that. >> thank you. >> senator i agree that consent decrees have been in place for an unusually long time because these are unusual circumstances. and i would settle think anybody at the table would be happier