the hosts go joining us this week i'm treated to is steve bene,

counsel for pandora media. how did pandora get started? >> guest: first, thanks for having me. this is a tremendous honor to be on the show. how did pandora get started? back in 2000, our founder tim westergren had the edge here because he had been a composer for film and when he went and talked to directors that he was supposed to conform some sort, it sounded like this is some kind of sound they had in mind off an existing musician or band. he would try to create something like that. when he decided he didn't want to be a film composer anymore, he instead thought it would be interesting if you are able to walk into a record store when you had a band or artist you

like that you didn't a lot of artists that were breaking or anything like that. if you were working to a kiosk in that store and punched in the name of the band you like and put on the headphones and the kiosk could tell you samples of songs because you've indicated he thought a particular band or artist was a favorite. that was how the music genome project was born. they went about cataloging all of the songs and thousands and thousands and we now have over a million and a half in the genome. all of those songs have different musical attributes and they've been very painstakingly catalogued by music experts come in many of them practicing musicians come in many with music degrees who will catalog a song from 150 to 450 attributes.

things like the instrumentals and prove that careful cataloging, they put together a library of songs, each on that date genetic fingerprint or genome. and then they went out and put these into record scores and did exactly what they were supposed to do. the music industry changes from time to time in producing record stores are not the best business model to be in. in 2005 they took the same technology and repurposed into internet radio. pandora as a service was born 10 years ago on the web with a use for genome technology with signals we get from our users like starting a station and then we would program the radio station and tracks and blogs are used to stream the station under

a federal statutory license. >> host: what are you doing in washington? >> guest: we have that -- well, as i mentioned before the statutory license has been the mainstay of our music licensing until very recently although we are not quickly moving past it. they have various raise interest in terms of the publishing that goes into the songs they played on the radio stations as well. all of the constituencies are based out here. although they've been interested in the going ons in washington d.c., it is only in the last two years we've really built up to engage with lawmakers and policymakers to try to shape laws, policies and things in a

way not only for pandora but the entire ecosystem. we are interested in a service and operating as part of the music world for everybody started gets a fair seat at the table and where the spoils are shared so everyone has an end date to create creating. post go to help us delve into those issues, alex byers who covers technologies for "politico" is joining us. >> guest: thanks, peter. the biggest focus has been moving from just the internet radio to on-demand streaming. give us a little update on what that has entailed an progress on the business side of things, product side of things and also the policy side of things in washington. what do you have to do to make that on-demand product or reality? >> guest: sure, this is the relative soul-searching strategic thing in going on that dates back a couple years now. it was because the radio product that we had had been immensely

successful. we smashed this tremendous audience and 80 million monthly, 100 million a quarter who come to canberra on a regular basis to bypass b-day or dj with lots of response and engagement in picking different radio stations and all the things you can do on our platform. we have started to find that listeners want more than just that experience. a couple years ago we started looking around in the on-demand players in the space who sort of satisfied. i want to listen to it now or want to create a playlist of music i'm really interested in. what we found is people move in and out of different listening state that different times during their day. sometimes you want to be not

engaged. you want someone you knows you well enough through the engaged in the engaged or service depicted music for you and sometimes you want to be highly engaged in the music you hear. he won a listen to a full album or do something like that. when we started looking up at the pandora service and products could be, we took this greenfield holistic view and the different products that could offer people and some people are going to be radio listeners and they don't find the advertising. they put a value that good enough for them to broadcast radio has existed for decades. other listeners they like the fact we play music and select music for them that requires little effort on their part. they don't want to listen and so for those folks who just introduced a product is another great of our existing product.

we call the pandora plus and it takes the existing radio service but it adds extra things people like to do like skippy and where we play. you hear a song you like, you want to replay it. you can do it right on pandora. also the ability to play music when you are not to the internet. if you're at a place of cell coverage, you thought that to add to the product as well. we are currently in development on a pandora style version of what an on-demand would look like. we can't go into the details yet, but it's going to be on demand in a that only pandora with their data, genome, decades of experience in helping users discover new music and select music they might want to hear and how the musical taste and expand, we will pride back to a

non-demand product we think is really key. have we gone about developing not just do an awful lot of sweat and hard work and we've also made key acquisitions over the last year. one of the key ones of those not entirely intuitively until you think about the full story was the ticketing business. it is meant to address this very large engaged user base. people who are music aficionados most of those people have been to a concert or two and we found out is for looking at different parts of the ecosystem that musicians make an awful lot of their money and live events. there is promoting and the biggest single problem is

putting interested fans and others a concert coming. when we were doing the studies that led to the acquisition can we found 40% of tickets go unsold particularly when you talk about live music venues in the primary reason the tickets go unsold is because people didn't know about the event and who would've otherwise been interested in going didn't know until they were today. pandora has a unique ability to solve the problem. if you use them in a little more contemporary. if we know you are a adele fan for different ticketing company but if you're a fan of a particular artist and we know the artist is coming near you, we can put a shout out and to

your feed that lets you know the artist is coming and as soon as we do more work will be able to let you purchase tickets on the surveys while you're listening to this song. >> that has been an issue you guys have worked on in washington with the bill you guys are big supporters of that basically would prohibit ticket buying programs from gobbling up the ticket and then reselling them at high premium. it seems to me that it had a lot of success so far. earlier today it passed the house this week or last week. a lot of people sort of like the underlying idea. i wonder if you've gotten any pushback on parts of the bill especially given that it necessarily seeks to control with computers, the programs are allowed to write with digital

activists in the past with computer fraud. is that initiates had to deal with as you advocate for the bill? >> guest: you're absolutely right it's been great to get the bike came on bipartisan support so we are very encouraged by it. we view it as a matter of access. the dubai ticket, but they keep other fans out of the market and what we are finding a sound fans really want to go see a concert and they match the buttons on their computer but you can't beat a box. they are not able to get tickets in their first run at their list price and so they are left with only the opportunity of buying tickets on the secondary market

and pass them along to promoters who then raised the prices significantly. a lot of those fans don't have the opportunity because they are priced out of the market. fans who can buy those tickets are paying a lot more for them than they would otherwise have had to if they would've had fair access to tickets when they first went on sale. although this doesn't doesn't put any more money in the pockets of promoters or artist. we see this as a fundamental fairness issue to the ability to buy a ticket. the general public does not have access to program a computer to get tickets as quickly as possible. now the stock market where people who are trying to trade individually on the stock market face a tremendous disadvantage who can react in a second. this is trying to solve the same

problem and continue the remedy stream that allows sponsors and venues to reach the fans they want to reach. artists are particularly interested in this because they want the fans there. billy was less concerned if they put up the ticket and less concerned because the secondary market went through the roof. >> on the radio side there is a lot of talk about how artists are compensated. at pandora, what is your policy? how are artists who are played on your radio station? >> guest: this is what is going through major shift right now is to move into additional products. historically our compensation have used this statutory license to play the sound recording in our service and section 114

comes to big cnn different artists at different times. functionality we can provide because it's meant to be a radio like service. with that, a statutory license rate through the preceding flashier and as a result of that, we cannot the number of plays of any particular song that we have and it's in the billions. every quarter we send the information to a service called sound exchange which is the designated service on behalf of the board to administer the payment for the statutory license. we write the check to sound exchange for all the plays on the service we have and they divvy it up under the different rights holders. half of those payments go directly to the featured artists. the backup artist and in some cases they work on those albums

and roughly half of that goes to the label. that is one of the great preachers about statutory license is that artists get paid directly through those. they don't have to go through labor recruitment models to get that check so they get a nice reliable check every month, every quarter they are able to count on those services. >> this is what is going on in washington right now. chairman goodlatte on the judiciary committee and the talk is the next congress will be when the rear of action have been speared give me your assessment bill. we were supposed to see more from the committee over the past several months in terms of the outlines of the directions they might be going. as far as i'm aware both have been in circulating. not publicly.

is that time and frankly too big of a list? >> guest: first off, i don't know anything you don't know. i don't know what time it is likely and i haven't seen any contours of what a comprehensive copy rate licensing bill might be. what i hope and we sort of been consistent about this in a conversation which had. there are a lot of different things folded into a copyright rewrite. people can debate all kinds of different set of issues and pieces about a copyright rewrite could include. my view is none of this will come to fruition or be affected until you solve the core data problem that lies at the problem there is just no way for services like as for artist

groups, publisher groups should know with fidelity and certainty who owns what. this is especially acute in the publishing arena because there's so many different co-writers and co-owners. there is just no way of knowing who owns right into what piece of the copyrighted music. my view is an endorsement that came out last year, which was there is nobody better than the government to at least oversee this data project. and so, the right and i hope that any kind of copyright rewrite will come with the requirement or some kind of framework for putting data into central repository where people have access to it and can be

searched not only on individual item by item basis but a scale basis because we ran 2.5 million songs and we will get more and our everyday as we move toward service. you can search for rights in an individual song races. you need to have a machine based that searches for those things. >> let's talk about copyright office. conventional wisdom if there is something to be addressed in the near term on a copyright review, it will be modernization of the office which is known to be black or when it to outdated technology. there has been a question of should the copyright office be part of the library of congress? should it be part of the department of commerce and there's been a lot of debate there. though lately there seems to be groups that are blind with

pandora on a lot of issues questioning the biases of the motive of the copyright office saying they are in the pocket of the industry. i'm wondering if you worry about the same thing or if there is something else that needs to be done in terms of making sure the copyright office is an arbiter. >> what is most important is the first point you mentioned. i'm not sure the copyright office is the right place for a data repository of licensing for the ownership. if that's the right place to live but they will certainly have a very big role oversee the creation of something like that if it were to come to fruition. the technological advances forward are very much a part of copyright office reform and i think that is exactly where they

have this is not to be placed. they have a big role to play in being able to fulfill this kind of omission. i'm not sure that having a bias one way or another with and that particular avenue of effort is going to matter so much. it matters more that they are trying to get something like this created and there contributes the mechanisms or incentives and they can at least oversee whether it's a public-private collaboration or whether it is a full on public endeavor that it is done in the right way. >> even outside the transparency context, when the office is waiting in on matters of copyright law, is it your sense they do so for many tropospheric dead? is there a particular instance you're thinking of?

>> guest: there have been papers written by public knowledge on the frontier foundation as well. i haven't read all of their literature. the center of the contention is this is a recurring issue. >> i guess in the matters that we have looked at the office that we have studied the day of put out the opinions to help inform good major issues. i didn't get a sense of bias when i was lucky not to copyright office white paper that came out last year. that i thought offered some in the background section of that, there is some language that might've been a little bit negative towards pandora particularly than i might not have agreed with. i thought those were largely down the road in terms of the

way that they were trying to envision the problems that they saw. recently i know that they have some criticism for the input they gave to the justice department and the dissent to create. i know that what you're talking about have criticized them for that. my criticism on that score is less about them being biased in terms of content are not and not much more that necessity were speaking. leung copyright law issues, but this is not a purely copyright law problem. whether they were just sticking to the mandate of commenting on the copyright law as it applies to the dissent to create issues

or whether they were trying to point to a certain outcome by not addressing issues. i don't know the motivation or biases, but that fans like a limitation in the response. >> host: steve bene, despite a five, faced the same scrutiny or regulations the fm station would face and if not, should you? >> guest: the answer to that question is generally yes we do. all distributors and outlets for popular music by generally -- well, not so much criticism that i would say. people assume that our interests are aligned in the way that we approach music policy in the way we approach the music ecosystem. there's a little bit of

misconception around that. there are some issues where we very much pay in the same way into the same mechanisms and have very aligned interests. talking about the dissent decrees and the way we pay for composition rights through bmi and the other pri was. in that case, the outcome of pandora has the same kind of license is that the broadcasters do, for example that's bona fide does an apple does. when we talk about publishing lovers forum, we are very much speaking from a similar experience. we are not speaking to sound recording policy reform. we have been one of the heaviest users of section 114 statutory license for sound recording. that's not going to be true going forward because we signed

a landmark agreement with not only for the major sound aggregators out there and aggregation labels from europe and others in the u.s. but we've also signed dozens of direct deals with a lot of independent labels. so we are quickly moving from the statutory regime. i know that is not the case for serious and an broadcast radio doesn't pay at all for the sound recordings play. we come from very different is that i think we have a very different relationship as a result of that with content holders and the rest of the songwriters, artists in the industry as a result of the different ways we chosen to engage with them. >> host: you guys have purchased a station in south dakota.

last i saw a filing in russia. this year said we might sell it. has there been a decision on whether to divest that? >> guest: that was actually some misinformation out there and certainly not released by us. we had asked if that were possible that we could delay. they have a condition of granting the license or transfer the license does to put some charter documents are make sure we were keeping track of the foreign ownership of the company. we asked them for your delay to put that in front of shareholders. it wasn't a result of wanting to sell the business. it was the result of having things we need to focus on and we are hoping to get an extra year to comply with that provision. the sec said no. we went and put it into her

charter documents. it has been -- what we hoped is that the process of playlists and in providing music for listeners would also be a good value add in a good way to revolutionize the way broadcast radio music was played. it's been an interesting experiment in that way. i don't know if we are interested in broadening that. they are part of the pandora family. >> host: finally, steve bene, you mention that pandora is updating the d.c. office. doesn't ever surprise you how much interaction you are having with the legislators? >> guest: no, it doesn't surprise me. by upgrading, you mean we

started with nobody and now we have a fully functioning and extremely affect his group of folks here engaging in our policy issues. we think that there's a lot of good that pandora can do in terms of advancing the policy agenda. one of the things we are talking about is the bill that alex raised before and we are also working right now with #-number-sign those sites of congress and in most houses. to address the issue of 72 sound recordings. the system where we pay into an exchange and the money gets taken in and paid to recording artist doesn't apply to records that were cut before february february 1972. there's no effective way right now, although we know which pre-72 sound sleep play there's

no way of determining how much those people get paid. it is really a shame because with the artists are left with is no other way to get compensated than to file litigations. class-action litigations are the worst way can think of. so we are working, like i said come with numbers of both houses of congress across the aisle to get a bill put together that would allow these pre-72 recordings to be accounted for and paid in the same way with the exchange mechanism that recordings have been for a long time now. >> host: steve bene as general counsel and alex byars covers technology. >> guest: thank you.