[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]
ENSURING ARTISTS FAIR COMPENSATION: UPDATING THE PERFORMANCE RIGHT AND
PLATFORM PARITY FOR THE 21ST CENTURY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
JULY 31, 2007
__________
Serial No. 110-49
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
U.S. GOVERNMENT PRINTING OFFICE
37-011 PDF WASHINGTON DC: 2007
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas STEVE CHABOT, Ohio
MAXINE WATERS, California DANIEL E. LUNGREN, California
WILLIAM D. DELAHUNT, Massachusetts CHRIS CANNON, Utah
ROBERT WEXLER, Florida RIC KELLER, Florida
LINDA T. SANCHEZ, California DARRELL ISSA, California
STEVE COHEN, Tennessee MIKE PENCE, Indiana
HANK JOHNSON, Georgia J. RANDY FORBES, Virginia
BETTY SUTTON, Ohio STEVE KING, Iowa
LUIS V. GUTIERREZ, Illinois TOM FEENEY, Florida
BRAD SHERMAN, California TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas
ANTHONY D. WEINER, New York JIM JORDAN, Ohio
ADAM B. SCHIFF, California
ARTUR DAVIS, Alabama
DEBBIE WASSERMAN SCHULTZ, Florida
KEITH ELLISON, Minnesota
Perry Apelbaum, Staff Director and Chief Counsel
Joseph Gibson, Minority Chief Counsel
------
Subcommittee on Courts, the Internet, and Intellectual Property
HOWARD L. BERMAN, California, Chairman
JOHN CONYERS, Jr., Michigan HOWARD COBLE, North Carolina
RICK BOUCHER, Virginia TOM FEENEY, Florida
ROBERT WEXLER, Florida LAMAR SMITH, Texas
MELVIN L. WATT, North Carolina F. JAMES SENSENBRENNER, Jr.,
SHEILA JACKSON LEE, Texas Wisconsin
STEVE COHEN, Tennessee ELTON GALLEGLY, California
HANK JOHNSON, Georgia BOB GOODLATTE, Virginia
BRAD SHERMAN, California STEVE CHABOT, Ohio
ANTHONY D. WEINER, New York CHRIS CANNON, Utah
ADAM B. SCHIFF, California RIC KELLER, Florida
ZOE LOFGREN, California DARRELL ISSA, California
BETTY SUTTON, Ohio MIKE PENCE, Indiana
Shanna Winters, Chief Counsel
Blaine Merritt, Minority Counsel
C O N T E N T S
----------
JULY 31, 2007
Page
OPENING STATEMENT
The Honorable Howard L. Berman, a Representative in Congress from
the State of California, and Chairman, Subcommittee on Courts,
the Internet, and Intellectual Property........................ 1
The Honorable John Conyers, Jr., a Representative in Congress
from the State of Michigan, Chairman, Committee on the
Judiciary, and Member, Subcommittee on Courts, the Internet,
and Intellectual Property...................................... 3
The Honorable Lamar Smith, a Representative in Congress from the
State of Texas, and Ranking Member, Committee on the Judiciary. 4
The Honorable Howard Coble, a Representative in Congress from the
State of North Carolina, and Ranking Member, Subcommittee on
Courts, the Internet, and Intellectual Property................ 5
The Honorable Darrell Issa, a Representative in Congress from the
State of California, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 7
The Honorable Steve Cohen, a Representative in Congress from the
State of Tennessee, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 8
The Honorable Zoe Lofgren, a Representative in Congress from the
State of California, and Member, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 9
The Honorable Adam B. Schiff, a Representative in Congress from
the State of California, and Member, Subcommittee on Courts,
the Internet, and Intellectual Property........................ 10
WITNESSES
The Honorable Paul Hodes, a Representative in Congress from the
State of New Hampshire
Oral Testimony................................................. 11
Prepared Statement............................................. 13
Ms. Marybeth Peters, Register of Copyrights, U.S. Copyright
Office, Washington, DC
Oral Testimony................................................. 13
Prepared Statement............................................. 16
Ms. Judy Collins, Recording Artist
Oral Testimony................................................. 31
Prepared Statement............................................. 34
Mr. Charles M. Warfield, Jr., President and Chief Operating
Officer, ICBC Broadcast Holding, Inc., New York, NY
Oral Testimony................................................. 39
Prepared Statement............................................. 41
Mr. Sam Moore, Recording Artist
Oral Testimony................................................. 91
Prepared Statement............................................. 93
ENSURING ARTISTS FAIR COMPENSATION: UPDATING THE PERFORMANCE RIGHT AND
PLATFORM PARITY FOR THE 21ST CENTURY
----------
TUESDAY, JULY 31, 2007
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10:08 a.m., in
Room 2141, Rayburn House Office Building, the Honorable Howard
Berman (Chairman of the Subcommittee) presiding.
Present: Representatives Berman, Conyers, Watt, Jackson
Lee, Cohen, Johnson, Schiff, Lofgren, Coble, Feeney, Smith,
Goodlatte, Cannon, Chabot, Keller, Issa, and Pence.
Mr. Berman. The hearing of the Subcommittee on Courts, the
Internet, and Intellectual Property will come to order.
And I would like to begin by welcoming everyone to this
hearing, which is entitled, ``Ensuring Artists Fair
Compensation: Updating the Performance Right and Platform
Parity for the 21st Century.''
I would like to welcome our distinguished panel of
witnesses who each have a personal story and a unique
perspective about the performance rights issue. In addition, I
would like to welcome back Marybeth Peters, who remains a
tremendously valuable resource to this Subcommittee.
I have wanted to hold this hearing for a very long time,
not only because of my constituents, but because as a policy
matter it is time for Congress to re-evaluate the limitations
of the current performance right for sound recordings.
I have supported the expansion of the performance right for
over 20 years, with two caveats. One is that, by extending this
right, it does not diminish the rights and revenues of the
creators of musical works. And secondly, that terrestrial
broadcasters large and small remain a viable source of music.
Over time, the Copyright Act has provided protection for
various types of works in a piecemeal fashion. As early as
1909, Congress recognized the right in the musical composition.
Over 70 years later, Congress provided limited protection for
sound recordings.
The copyright system is complex for it applies to multiple
types of works, each entitled to multiple but separate rights.
Moreover, each work can be utilized on multiple platforms, each
of which has a different set of rules.
Some rights are exclusive and provide the copyright owner
the ability to negotiate freely in the marketplace. Some are
constrained by a compulsory license, which entitles users to
access the work without permission, providing that they pay the
set rates and adhere to specific conditions. Some rights are
even further limited by providing users an exemption from
getting permission or providing payment for use of the work.
This is the last category which is most troublesome from the
perspective of a copyright holder.
If Congress were writing the statute from scratch, it would
probably not look the way it does. As time passes, it is
incumbent on Congress to re-evaluate the various provisions of
the licensing structure to see how markets or businesses have
changed, and whether it is time to reform the law.
Currently, section 114 provides a compulsory license to
publicly perform a sound recording where there is a digital
audio transmission. Terrestrial broadcasters, however, aren't
required to pay a royalty for their transmissions. They enjoy
an exemption from the digital performance right.
Historically, the broadcasters have argued that the
exemption is appropriate because of the symbiotic relationship
that exists between the over-the-air airplay on radio and the
promotion of the music leading to future sales. To a certain
extent, the existence of payola was evidence of this idea.
Furthermore, the broadcasters suggest that to incur a
further requirement of compensation for sound recordings to
artists and musicians, that is tantamount to a performance tax.
Finally, there is concern as to how smaller broadcasters
will survive if required to pay it.
I am sure we will hear cogent arguments from our witnesses
today about the history of the exemption for broadcasters and
the effect of providing a performance right. However, I would
like to initially engage on a number of these arguments and the
primary question: Is there justification today for this
exemption given the number of outlets for music and how
consumers acquire it?
First, Rights parity: Regardless of whether there remains a
symbiotic relationship and whether, in fact, airplay
constitutes promotion or substitution, there is an equity
argument that has been consistently ignored. Performers and
musicians as creators should be entitled to control use and at
least receive revenue for their works. That Patsy Cline's
estate is not compensated for the over-the-air performance of
her rendition of ``Crazy'' seems crazy.
In addition, my notion is that removal of a Government
compulsion for labels, artists, and musicians to provide
something for free--that repeal to the exemption removal--
removal of that compulsion is not a tax. In fact, if anything,
the Government's provision of free spectrum to radio stations
is a tax to benefit broadcasters imposed on U.S. taxpayers, who
pay for it.
Platform parity: Nowhere in the past has there been more
engaging technological platforms which offer music to consumers
at almost any time in any format. Especially with the rollout
of high-definition radio, which will provide more choice, as it
becomes harder to justify an exemption for any one platform.
Satellite, Internet and cable all provide and promote music to
their listeners, yet all pay fair compensation to artists and
musicians.
Then there is international parity. Because America does
not have an adequate performance right, we disadvantage our own
creators because they can't receive foreign royalties. In many
countries, between 20 and 50 percent of the music played abroad
is American made. And because of lack of reciprocity, we are
denying our creators millions of dollars in revenue.
As we work toward crafting a bill, I take note of at least
two considerations.
One is that we need to ensure that songwriters are not
adversely affected by the elimination of the broadcast
exemption. I would note, however, in countries where there is a
performance right for sound recordings, as well as a
performance right for musical compositions, there has been no
decrease in the royalties to owners of musical composition. In
fact, the royalties have grown over time, as have royalties for
performers and sound recording owners.
Furthermore, I am open to a special consideration for small
broadcasters.
Just one last note. Because I have heard from business
establishments and others, let me start out today's hearing by
saying that this Subcommittee's examination of the performance
right is limited to re-evaluating the current exemption and the
compulsory license for terrestrial broadcast radio. We are not
considering the extension of a full performance right for sound
recordings like the one afforded musical works.
Thus, restaurants, bars, establishments, venues and others
who pay performance royalties to songwriters and music
publishers would not be affected. Rather, because there is a
special exemption in the current compulsory license for radio
services that benefits only terrestrial radio over other types
of radio, the question is whether circumstances have changed so
that it is now time to reconsider that particular exemption.
I now have the great pleasure of introducing my friend and
Ranking Member. But before I do that, I am going to introduce,
if he doesn't mind, because the Chairman of the Committee has
to go to the floor, our distinguished Chair. All right, what we
are doing is we are going to recognize the Chair, and then the
Ranking Member of the full Committee and then the Ranking
Member of the Subcommittee.
If I had known this before I started talking, I might have
done it before I went ahead.
But, Mr. Conyers, you are recognized. [Laughter.]
Chairman Conyers. Thank you, my good friend.
I am delighted to have heard you because now that we have
heard everything on the subject, we can just welcome our
witnesses. And that is all I want to do today.
And I have to stay here from the floor, we have a lobbying
bill up. We have been working on this package. And my good
friend Howard Coble and I are both due on the floor. Lamar
Smith is due on the floor, as well.
All I wanted to do is say hello to Sam Moore. And let him
know that I will be seeing Aretha Franklin in Detroit when the
session ends, and I will be giving her your good regards.
And, Judy Collins, one of our favorite artists, we are so
happy to see you today, my dear.
It is great for you all to be here.
Let me just say that it is very important that we realize
how unfair the system is to artists and other music platforms
as artists, under the current law. They are not compensated
when their songs are played on broadcast radio. And, you know,
that is my big thing to examine here today.
Satellite pays. The Internet pays. Broadcast still hasn't
come around.
Now, there was a time when just being played on the radio
would do it. That would make you. But those days, as everybody
here knows, are not the same anymore.
We have so many different venues. And it is in this sense
that songwriters who receive compensation regardless of which
platform performs their songs, artists are only paid when their
songs are played over the Internet, on satellite radio, or
cable.
I just want to conclude--and I will put in the record my
remarks--is that I think we can work out some kind of
compensation package, Chairman Berman, without harming the
songwriters. And they have had to come through a long period of
time for them to be compensated.
So, over the years, it has been debated whether Congress
should amend current law to eliminate the specific exemption
for broadcasters from the duty of paying the performance
royalty. And we should all be mindful of the potential impact
this right would have on songwriters who currently are paid
every time their songs are played on radio.
And so, I am going to review this testimony carefully.
I am so glad that all of you are here today. It is great to
see all those who have worked so hard.
And as I look all over the audience, I see a lot of people
connected to this entertainment industry here today, not
excluding people who have worked on the Hill for so many years.
[Laughter.]
And so, maybe there is a connection between what I am going
to do on the floor and what is going on here. Who knows?
[Laughter.]
Thank you for this opportunity, Mr. Chairman.
Mr. Berman. If, when you come back, half the audience is
gone, we will know you---- [Laughter.]
I am now pleased to recognize the Ranking Member of the
full Committee, who also has to go to the floor on the same
piece of legislation. The gentleman from Texas, our Ranking
Member, Lamar Smith?
Mr. Smith. Thank you, Mr. Chairman.
I also want to thank Mr. Coble for deferring to me and
yielding me the time to go ahead of him in making an opening
statement.
And, has already been mentioned, let me apologize to our
witnesses today that, unfortunately, I do need to go to the
floor, along with the Chairman, to manage a certain lobbying
reform bill. So I will not be able to stay as I would like to.
Clearly, though, it is obvious that there is a lot of
interest in the subject today and deservedly so.
Mr. Chairman, thank you for convening today's oversight
hearing on music licensing and the proposal to expand the
performance royalty to cover over-the-air radio broadcast of
sound recordings.
With the Subcommittee's high-profile emphasis on advancing
patent reform in this Congress, a casual observer could easily
presume that copyright issues in general, and music issues in
particular, have not received much attention so far. That
conclusion would be wrong.
This oversight hearing marks the third copyright-focused
hearing in the IP Subcommittee this year to focus on the
protection and promotion of the music industry and the rights
of recording artists and composers.
Mr. Chairman, you and I have spent a great deal of time,
both personal time and public time, over the past several
Congresses working together in a bipartisan effort to
streamline, modernize and improve the music licensing process,
with the shared goal of adapting the compulsory license process
to the digital age. Over this time, we have made tremendous
progress in identifying and narrowing many of the process-
related issues.
But the goal of enacting a public law and actually
implementing some of our agreed reforms remains. I continue to
believe this task can be achieved in this Congress.
Unlike our effort to reform the process for clearing the
legal rights to use copyrighted musical works and sound
recordings and adjudicating the royalties to be paid to
recording artists and copyright owners, the subject of today's
hearing is one that affects the substantive rights of these
parties, as well as the settled expectations of those in the
traditional radio broadcasting industry.
The goal of enacting a full statutory performance right for
sound recordings is one that has been sought by performing
artists and the recording industry for many years. It has only
been 12 years since Congress first provided a limited public
performance right in sound recordings with the enactment of the
Digital Performance Right in Sound Recordings Act, a law that
made available a compulsory license for sound recordings to
non-interactive cable and satellite services.
But in that span of a dozen years, recording artists, along
with the music and broadcasting industries, have confronted
many unanticipated challenges and experienced seismic changes.
Competition and technological advances have generated both
positive and negative aspects for all. The transition to high-
definition radio holds great promise for broadcasters. In
contrast, the trend among young consumers to download the music
they want--sometimes legally, but all too often illegally--
rather than purchase CDs or other physical media, holds great
peril for recording artists and record labels.
I consider this subject to be one whose significance should
not be underestimated, and I hope we will address it this year.
Mr. Chairman, I will yield back the balance of my time.
Mr. Berman. Thank you very much, Mr. Smith.
And now, the Ranking Member of the Subcommittee, who, when
he was Chairman, we were delving into this issue as well, Mr.
Howard Coble of North Carolina.
Mr. Coble. Thank you, Mr. Chairman.
And I want to repeat what the others have said. It is good
to have this distinguished panel before us.
And I would be remiss if I did not recognize, especially,
our distinguished Register. Good to have you back, Marybeth.
Mr. Chairman, the stated purpose of today's hearing is to
begin an examination of concerns that relate to proposals to
remove the exemption for terrestrial radio broadcast in the
copyright compulsory license for public performances. What that
means in layman's terms is the Subcommittee intends to consider
whether the copyright law should be amended to require over-
the-air broadcasters to pay compensation directly to recording
artists when their songs are played over the radio.
If the testimony of the two recording artists who are with
us today represents the views of other musicians and
performers, then it seems there is a fairly strong consensus in
that community that the law should be so amended.
Indeed, the Copyright Office and the record labels also
share that perspective, asserting that a principled and
consistent application of the copyright law requires that audio
transmissions of sound recordings ought to benefit from the
same performance right that has been extended to music
publishers and composers for nearly a century.
It is not surprising that the broadcasters who would be
statutorily obliged to pay such a royalty, and who are
represented by the National Association of Broadcasters,
considers such an amendment to be an anathema. Their view is
that Congress should leave well enough alone; that is, unless
the Congress wishes to amend the compulsory copyright license
to enable broadcasters to stream their signals over the
Internet without paying a performance royalty to performers, or
to lighten the regulatory and reporting requirements required
when a broadcaster chooses to simulcast its signals over the
Web.
Proponents, Mr. Chairman, appear to rely upon three main
arguments in asserting that the over-the-air broadcast
exemption should be jettisoned.
One, the exemption was never justified as a matter of
copyright law, but today serves as an anachronism and a glaring
inequity.
Two, the copyright law requires cable, satellite and
Internet radio services to pay performance royalties to both
composers and recording artists. Therefore, nondiscrimination
and platform parity demand that traditional radio broadcasters
should also pay a proportionate share.
And finally, the United States is alone among free market
economic powers in denying a performance right in terrestrial
radio broadcasts to artists and performers.
Among other things, the broadcasters conversely respond
they already pay $450 million a year in performance royalties
to composers and music publishers.
They contend over-the-air radio has a symbiotic
relationship with recording artists who benefit from free
promotional airplay, which in turn, spurs demand for product
sales, touring promotions and souvenir revenue.
Traditional radio formats, which do not include multi-
channel offerings of various music formats, do not pose a
serious threat to the distribution of sound recordings, they
contend.
Broadcasters are subject to numerous Commerce Committee and
FCC-imposed statutory and regulatory obligations that justify
exemption from the ordinary application of the copyright law.
And finally, the United States recording and broadcasting
industries are unique, and policies implemented elsewhere are
not appropriate for United States conditions.
Believe it or not, this summary barely touches the surface
of the strongly held views that will soon be articulated by the
parties involved in this debate.
As the Subcommittee embarks on this examination, Mr.
Chairman, I am mindful of other interests not directly
represented here today. For instance, the public benefits
enormously when Congress exercises, in an appropriate manner,
the authority granted in article I, section 8 of the
Constitution, which calls upon us to promote creativity and
expression by securing for limited times to authors the
exclusive right to their writings.
In addition, I think it is important to bear in mind the
interests of other copyright owners, which should not be
diminished by any prospective changes in the law.
Mr. Chairman, in closing, I will simply note that I look
forward to learning more about the intricacies of this debate,
and by observing that I have friends on both sides of this
issue. All of you I embrace very warmly.
I recall, Mr. Chairman, I think one of the first hearings I
attended as a freshman Member of Congress, I heard a Member in
this very hearing room conclude his remarks with these words.
He said: I have friends on both issues of this subject, and I
want to make it perfectly clear I am with my friends.
[Laughter.]
If it were only that easy, Mr. Chairman. I hope, at the
day's end, that no one will feel rejected, that all will feel
embraced, and that we can get something with which everyone can
live.
And, finally, Mr. Chairman, I have a Coast Guard hearing
that I may have to attend, with your permission, later on. And
I don't want my abrupt departure to be indicating that I am not
interested in this very, very important issue.
And I yield back, Mr. Chairman.
Mr. Berman. Well, thank you very much.
Hopefully, you will get to the panel as soon as possible,
but given that I don't really have clean hands, having spent at
least 7 or so minutes with an opening statement, are there any
other Members who want to make comments at this time?
Mr. Issa?
Mr. Issa. Mr. Chairman, there wouldn't be any possibility,
any possibility that it wouldn't be appropriate to make just a
few comments here today, because I think what you are doing
here is so monumental.
In my 7 years in Congress, this is the first time that, in
a no-ifs-ands-or-buts way, it has been made clear that the
status quo will no longer be acceptable. Although this is a
hearing and not a markup, I think we all understand here today
that the broadcasters are on notice that we intend to look at a
reorganization of this.
I certainly hope that we have additional follow-up
hearings. I certainly would like to see a panel that was all
made up of broadcasters and broadcaster-related people, giving
us sort of their view, in addition to what we are going to hear
today, of how they are going to deal in a more balanced way.
Certainly, as Mr. Coble said, it is very clear that finding
a common platform where broadcast and simulcast can be dealt
with fairly should be on the table.
I believe that, in fact, the broadcasters should embrace
this as an opportunity to create transparency between what they
presently do on a terrestrial basis and the other ventures that
these companies are now expanding into.
I think the fact that high-definition and digital is about
to go to high-power, high-definition digital, it is very clear
that we are going to need to make this move in a timely
fashion, because what has been coming out in the satellite
industry for a number of years is clearly going to be coming
out of our radios in our cars as we drive.
Additionally, digital recording devices are going to be
undoubtedly made by the consumer electronics industry to record
on-air broadcasts as it has never been recorded before: in
digital format, in a sound quality that very much will be, for
most people's ears, the equivalent of CDs.
I certainly also think that we in Congress have long ago
lost our clean hands on the concept that broadcasters are
promoting.
It is very clear that perhaps Judy Collins or Sam Moore, a
few years ago, in the earlier part of your careers, might well
have signed away for 3, 5 or 10 years the rights to receive any
royalties from their performance, in return for a guarantee
that they would be promoted when their songs were not so--or
their music--was not so well-regarded.
It is also clear that artists who are deceased--their
estates today cannot say we are going to perform. We are not
going to go on the road.
Actually, Mr. Moore was here previously talking about when
you are no longer on the road but somebody else is saying they
are you. And we have already dealt with some of those.
It is very, very clear, though, that we need to create a
recognition that the performing artist has a right. The
broadcaster must show any offset to that right.
That is why, not only am I thrilled that you are holding
this hearing today, but I am encouraging that we thoughtfully
go through listening to all parties, because I think the change
we make is a change that we make for the rest of the world who
today provide a revenue stream for performing artists, while we
don't. If we are going to make a change, let us make a change
we are all proud of.
And with that, I yield back.
Mr. Berman. I thank the gentleman.
And the gentleman from Tennessee.
Mr. Cohen. Thank you. Thank you very much, Mr. Chairman.
``The gentleman from Tennessee.'' I feel like Johnny Cash
or something like that. [Laughter.]
But I just wanted to----
Mr. Berman. Another guy with a predisposition, huh?
[Laughter.]
Mr. Cohen. Well, I just wanted to testify what your voices
have meant to me.
What, I guess, the system is now, if you are the
songwriter, which is a great talent--composer--you get paid,
but if you sing and perform, you don't.
And our performers we have out here--Ms. Collins, I have
listened to a lot of your music over the years, and it has
meant a lot to me. The writers were brilliant, but without your
voice, I wouldn't have been listening to it.
And the idea that you are getting promoted, and that they
are doing you some favor as a by-product, I mean, it should be
B-U-Y product.
With that logic, they would never pay Muhammad Ali--or
wouldn't have paid him--to show his fights, because they were
promoting him so more people would want to go out to the
stadium to see him fight or whatever. And they could just show
it for free on free TV. ``Oh, we are promoting you.''
And the same thing for baseball and football and
basketball: We shouldn't have to pay for showing the Lakers and
Kobe. We are giving everybody the chance to see Kobe, and then
they will go to the arena and see Kobe.
That is absurd. And they have just kind of gotten a free
ride over the years.
As great as all the songwriters were, if it weren't for
Frank Sinatra, people would not have listened to those songs.
And Frank Sinatra should have been compensated as the
performers are, just like the songwriters.
So, as the gentleman from Tennessee--and from Memphis, in
particular--I am here with the performers and the songwriters
and artistic artists being paid for what they do to make our
lives better. And I thank each of you.
Mr. Berman. I thank the gentleman.
And now the gentlelady from California is recognized.
Ms. Lofgren. Thank you, Mr. Chairman. I will be very brief.
I think this is a very useful hearing, and I thank the
Chairman for scheduling it. I think the concept of how we level
the playing field in the marketplace is important, as well as
the need to make sure that artists get compensated.
And so I am thrilled that we have two artists who I greatly
admire that we can listen to. I know that we will not touch on
it today, but as we look at this issue of equity among the
platforms, I think we need to look at not just who gets paid,
but how much.
We know that in the Internet radio environment right now--
and the Chairman, I know, is well-aware of this--there are
small Internet radios that are going to be charged 300 percent
of their revenue. That is not going to work for them. I mean,
they are niche stations--Beethoven all the time, and the like--
so at some point, as we look at making sure artists get paid as
they should, we need to figure out how we have equity across
all platforms in all ways. And I look forward to being a part
of that debate.
And I thank the Chairman for his leadership on this issue
and for this hearing today. And I yield back.
Mr. Berman. I thank the gentlelady.
And Mr. Schiff from California?
Mr. Schiff. Thank you, Mr. Chairman. I am going to be very
brief, as well.
It is an honor to have you with us here today. And, as you
can tell, we are all fans, and we are just delighted to be in
your presence.
I appreciate the Chairman calling this Committee hearing
and, not only on this fairly specific issue, but on the broader
issue of reform in this area.
This is one of those areas of law, I think, of which there
are many in national security and a whole variety of other
issues where if we were starting today drafting the rules of
the road, we would never draft a system that looked anything
like this. But we are where we are, and we have to try to
either improve it or junk it.
And I just appreciate our Chairman's tenacity in this
wildly complex area.
And it is nice, actually, today to have a very discrete,
very manageable, very understandable issue. And I am very much
looking forward to hearing your testimony.
Thank you, Mr. Chairman.
Mr. Berman. Thank you.
And now we will go to the panel unless--we will do that.
Our first witness, our only colleague who sought to testify
and someone who based on his unique background belongs at the
panel table, is Congressman Paul Hodes, who represents New
Hampshire's 2nd Congressional District. He is president of the
freshman congressional class of 2006.
Prior to entering Congress, Congressman Hodes was a partner
at Shaheen & Gordon. He is well-known for his musical talents
on the guitar. He and his wife, Peggo Hodes, have recorded
several albums together that have received critical acclaim
from the Parents' Choice Awards. The duo were invited to
perform at the White House in 1996, and they continue to
perform at many charity fundraising events, not to mention our
caucus.
Good to have you here, Paul.
Marybeth Peters--she has been referenced before. She is the
United States register of copyrights, and with almost 40 years
of experience at the U.S. Copyright Office, she is one of the
nation's leading experts on copyright law. A graduate of George
Washington University's School of Law, Ms. Peters has lectured
on copyright law at Catholic University's Columbus School of
Law, as well as Georgetown University Law Center. She has
received numerous awards recognizing her distinguished career,
and also served as a consultant on copyright law to the World
Intellectual Property Organization in Geneva, Switzerland.
Like many of my colleagues, I am a great fan of our next
witness. Judy Collins has inspired millions across the globe
with her music. Her rendition of ``Send in the Clowns'' won the
Grammy Award for song of the year, and her version of ``Both
Sides Now'' is part of the Grammy's Hall of Fame. Judy Collins
continues to enthrall audiences with her voice, her passion,
and her grace.
Charles Warfield Jr.: president and chief operating officer
of ICBC Broadcast. He oversees nearly 20 radio stations. Mr.
Warfield's career in the broadcasting industry spans over 30
years, including serving as vice president and general manager
of WRKS-FM New York, which was named the most listened to radio
station in America. In addition to his work in broadcasting,
Mr. Warfield is active with the American Red Cross, the United
Negro College Fund, and a Partnership for a Drug-Free Greater
New York, among other organizations.
Mr. Warfield, it is good to have you here today.
And, finally, Sam Moore, who has been called the greatest
living soul singer and is perhaps best known for his
performance of ``Soul Man'' and ``Hold On I'm Comin''' as part
of the soul and R&B duo Sam and Dave. Most recently, in 2006,
Sam Moore released the critically acclaimed solo album entitled
``Overnight Sensational,'' which received a Grammy nomination
for the song, ``You Are So Beautiful.'' His music continues to
thrill audiences worldwide, and he has been an inspiration to a
generation of artists.
All of your written statements will be made part of the
record. I would ask you to summarize your testimony in 5
minutes or less.
There will be a timing light at your table, and when 1
minute remains, that light will switch from green to yellow and
then red when the 5 minutes are up. And we would appreciate you
summing up at that point. And then we will have time to talk to
you further through questions and dialogue.
We welcome you all.
And, Congressman Hodes, why don't you begin?
TESTIMONY OF THE HONORABLE PAUL HODES, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW HAMPSHIRE
Mr. Hodes. Thank you, Mr. Chairman and Ranking Member
Coble, Members of the Subcommittee. I really appreciate the
opportunity to testify at this hearing on updating the
performance right and platform parity in the 21st century. I am
honored beyond description to be on a panel with the
distinguished artists who are sitting with me, as well as the
members of the industry and the register of copyrights for the
United States.
You know, I was taught as a musician that it all begins
with the song. And I have written numbers of songs, which I
have published at a small publishing company. I am a member of
ASCAP. And I have also performed other people's songs and
recorded other people's songs.
And what we are really dealing here today with is something
very fundamental. While it all begins with the song, the song
does not come alive without the performance. Without the
performance on a recording of a song, that song might as well
be dust. It might as well sit on a piece of paper in terms of
listening to that song.
Mr. Coble talked about the argument that the exemption is
an anachronism. And I think about the way the music business
has changed just in my lifetime.
I first recorded in the mid-1980's in a studio--I was lucky
enough to go into a great studio--and when I was done with that
recording, it came out on a big, round record. It was vinyl.
There was no Internet radio. There was no satellite. There
was no cable. And I was desperate to try to get some radio play
for that vinyl record.
And over the years, there has been a revolution in the way
we record and distribute music.
Today, by contrast, I have a studio in my home with digital
equipment. It goes out over the Internet. It is transmitted
digitally by cable, by satellite.
I am pleased to say that I got a check the other day from
SoundExchange for $19.58. [Laughter.]
I am a member of the American Federation of Musicians. I am
proud to be part of that union.
I belong to the National Music Publishers Association.
I am a former member of the New Hampshire State Council on
the Arts. As a councilor, I have been chairman of an art
center, former minority shareholder in a small radio station.
And I have really pursued music out of love, more than out
of money.
So in some sense, given that my wife and I have recorded
six records, I have produced numbers of others, I think I speak
for many of the thousands of small, independent businesses.
Because that is what musicians are: they are small businesses
who are looking for fairness and justice, and looking for ways
to make a living through many, many different streams of
income. Many, because, like all small businesses, they are
struggling with all the issues that affect us today. They are
on tight budgets. They have to manage their income carefully.
I have now come to Congress, and I serve on the Oversight
and Government Reform Committee. And I have been pleased to
have the opportunity to investigate numerous areas of Federal
policy that need changing.
This area of Federal policy is one that has needed change
for a very, very long time. I believe that what we are talking
about today is rectifying a situation which has needed
correction for more years than I have been alive.
It is time for terrestrial radio to pay a performance right
to performing musicians whose indispensable contribution to
bringing the music alive needs to be recognized.
I have worked as an entertainment lawyer, and I will just
end with one story.
I represented a great artist, an African-American who was
born in Louisiana, who at a young age was taken by a manager to
Florida to record a record. And when I asked him what his deal
was--because it was somebody else's song that rose very high in
the charts at a time when there was only radio, no Internet, no
satellite, no cable--there was only radio--I asked him what his
deal was. And he said, ``I don't remember.'' I said, ``Well,
was there a contract?'' He said, ``Not that I know about.'' And
I said, ``Have you ever seen any money from that fabulous song
which charted really well?'' He said, ``Well, they paid me $50
and gave me a bottle of scotch.'' [Laughter.]
And I went and I tried to track down the deal and the
contract. And we reached lots of dead ends.
He had a tough life and now lives in New Hampshire and is
making a good life for himself. On his behalf, I am here to say
it is time to correct the injustice that was done to him for
many years, when his life should have been easier, for a fair
and balanced performance royalty, because his song was played a
lot on the radio.
So, on his behalf, I say it is time for fairness and
justice. And I thank you for the opportunity to testify here
today.
[The prepared statement of Mr. Hodes follows:]
Prepared Statement of the Honorable Paul Hodes, a Representative in
Congress from the State of New Hampshire
Mr. Chairman and Members of the Subcommittee, thank you for
inviting me to testify today at this hearing on Updating the
Performance Right and Platform Parity in the 21st Century. I look
forward to sharing my experience as an entertainment lawyer, proprietor
of a small independent record label, a performer, producer, songwriter,
publisher, member of the American Federation of Musicians, National
Music Publishers Association, and American Society of Composer, Authors
and Publishers, and former member of the New Hampshire State Council on
the Arts.
Most recording artists are much like the other small business
owners that drive our nation's economy. They have tight budgets and
have to manage their income carefully to stay afloat. Unlike almost any
other profession, artists must take advantage of every source of income
available in order to stay in business. In addition to selling albums
and performing at live concerts, this means collecting royalty payments
when their songs are played on internet, cable, and satellite radio,
and directed by current law. Because they don't receive any royalty
payment when their songs are played on air radio, these small
businessmen and women are missing out on a large source of capital that
they deserve.
In my first term in Congress and as a Member of the House Committee
of Oversight and Government Reform, I have had the opportunity to
investigate a wide variety of sectors of federal policy that are
outdated and in need of reform. I believe this sector is an area that
needs new policy to meet the changing way people listen to music. In
the last 15 years new platforms have emerged that helped small scale
and independent artists reach new audiences in ways that were never
before imagined. As these new formats grew, royalty rates were set that
compensated the artists for the hard work and creativity they put into
their work. However, terrestrial radio, a format which nearly half of
all listeners still choose for their music, still pays no royalty to
musicians.
Not only does this market structure give an unfair advantage to AM
and FM radio over their competitors, it also discourages aspiring
musicians from contributing to the creative economy that is a vital
part of our society. Royalty payments are an issue of fairness for
thousands of American performers. I look forward to discussing these
issues with the members of the Subcommittee today.
Mr. Berman. Thank you very much, Paul.
Ms. Peters?
TESTIMONY OF MARYBETH PETERS, REGISTER OF COPYRIGHTS, U.S.
COPYRIGHT OFFICE, WASHINGTON, DC
Ms. Peters. Okay. Thank you.
Mr. Chairman, Mr. Coble, Members of the Subcommittee, thank
you for the opportunity to testify on removing the existing
exemption for the public performance of sound recordings by
terrestrial radio broadcasts.
Sound recordings became subject to Federal copyright
protection on February 15, 1972. In the 1960's and 1970's, the
main issue was unauthorized duplication of recordings, tape
piracy. And the protection given was the right to control the
reproduction and distribution of recorded performances. Thus,
protection was limited to that which was required to address
the then-existing problem.
Although there was a major push to include a performance
right in the 1976 Copyright Act, it was not included. Instead,
the register of copyrights was charged with studying the
problem and delivering a report to Congress by January 3, 1978.
In her 1978 report, the register recommended a performing
right for sound recordings, saying: A performance right would
bring sound recordings into parity with other categories of
copyrightable subject matter. No legislation was enacted in
response to the register's plea.
Congressional action was spurred by technologies of the
early 1990's which made it possible to transmit sound
recordings digitally throughout the world and allowed
individuals to make copies of these transmissions, thereby
diminishing the sale of copies--physical copies and mp3 files.
In 1995, when Congress first established a public
performance right, it created a very narrow right. In section
106(6) and section 114, it was limited only to digital
transmissions by interactive and subscription services. All
other digital transmissions, including over-the-air broadcasts,
were exempted.
In 1998, the statutory license was broadened to
specifically include non-subscription webcasts, but not over-
the-air broadcasts.
Today's reality, as you said, is that satellite and cable
radio pay, as well as webcasters. Broadcasters do not.
The question before you is one of parity: parity among the
users of sound recordings, parity among copyright owners,
parity with respect to technology. The goal is leveling the
playing field, but it is a matter of basic equity and fairness.
It is also a matter of the position of the United States in the
area of protection of intellectual property.
To achieve equity and parity, the public performance right
for sound recordings needs to be broadened to include all
commercial transmissions, but especially broadcasts.
Today, the careful balance that Congress struck in 1995 and
1998 has been undermined by technology, new business models, as
well as the changed relationship that we have heard about
between radio broadcasters and performers of sound recordings.
Broadcasters, however, continue to assert that there is a
mutually-beneficial economic relationship with record
companies, citing the promotional value of the performance of
sound recordings. Whether there is such a relationship or not--
and I tend to think there is not--as a matter of principle and
equity, broadcasters should pay royalties for sound recordings
they broadcast, just as others do.
Historically, the record industry has been a very
profitable industry, making its money in the United States from
distribution of copies. That, coupled with the political clout
of broadcasters--basically a clout that they have always
enjoyed--has led to today's situation.
Today, however, the recording industry is hemorrhaging
because of the reproduction and distribution rights which can
no longer generate the revenues to support the industry. In
part that is due to the epidemic of online piracy that we have
yet to come to grips with and that we will never be able to
control completely. In part it is due to technological advances
that allow people to get copies for free.
So broadcasting is clearly a threat, as well as a benefit.
In this new environment, we can no longer afford the
anomalous treatment that has been accorded to sound recordings.
As works that are primarily enjoyed by means of performance,
they should be subject to public performance rights that
provide, at a minimum, compensation from those who financially
benefit from their public performances.
One other point: I am extremely disappointed and troubled
by the persistent characterization of compensation for
performers as a tax. This is especially true when broadcasters
for the last 8 years have been seeking international protection
in the form of exclusive right for their signals, which,
according to their logic, should really be a broadcast tax. Of
course, they have never used the word tax with respect to the
protection they are seeking.
I won't go into it, because it has been covered, but there
is also the international issue.
In conclusion, equity and fairness require the law to be
changed to create parity and compensation. Commercial entities
who use sound recordings as part of their businesses should pay
performers, producers of those recordings. Performers and
producers need to be paid for their performances to ensure that
the creativity and variety of recordings that we all enjoy
continue. It is time to end this anomaly.
I agree with you, Mr. Berman, that in doing this, we must
ensure that songwriters and music publishers are not negatively
affected. And we must ensure that small broadcasters survive.
But we can do that through carefully structured legislation
that does achieve the appropriate balance.
I appreciate the opportunity to express the Copyright
Office's views on this subject. And I look forward to working
with you and Mr. Coble and your staffs on correcting this long-
standing imbalance in our law.
Thank you.
[The prepared statement of Ms. Peters follows:]
Prepared Statement of Marybeth Peters
Mr. Berman. Well, thank you very much, Ms. Peters.
And now, Judy Collins?
TESTIMONY OF JUDY COLLINS, RECORDING ARTIST
Ms. Collins. Thank you so much Mr. Chairman, Ranking Member
Coble, Members of the Subcommittee, thank you for the
opportunity to testify today.
I am pleased to be here on behalf of musicFIRST Coalition
and my more than 150 fellow founding artists and the thousands
of working musicians and singers around the country who care
deeply about this issue, which I do consider a glaring
inequity.
Songs have always told my story and, I hope, given me a
voice to tell others.
I learned the love of song from my own father, who was a
fine singer and a sometime writer of songs. He knew the secret
of hunting for the right song for his voice and taught me that
the search for those jewels was the discipline of a singer's
life. He was in radio for 30 years, sang his heart out, was
never paid a cent for his voice.
I believe that musicians and artists, as well as
songwriters, should be rewarded and awarded and paid properly
for their talent and artistry in making the music, and
deserving the right to be paid for their creations, whether
they are performed or written and, much the way creators of
literary and dramatic works are paid, to have the disparity in
the equity of payment changed for the better.
You know, I have had dozens of platinum-and gold-selling
albums. It is nearly 50 years. I know I don't look it, but I
took Social Security---- [Laughter.]
I wanted to tell you, I took Social Security this year
before it runs out. [Laughter.]
Mr. Berman. Well, don't open up that one. [Laughter.]
Ms. Collins. Well, as I said, for the most part artists are
treated equally. There is one glaring exception in today's
music marketplace where musicians, artists and sound recording
copyright owners are left behind: Terrestrial radio stations do
not compensate artists for our performances when they play our
music over the air, which you have heard this morning.
For example, you remember a little song that Stephen
Sondheim wrote. I recorded ``Send in the Clowns'' in 1975, and
shortly after the record's release, it became a top hit.
Unfortunately, I did not earn a cent from radio when that song
was played time and time again.
In fact, I just came across a letter the other day when we
were meeting about this conference, and I would like to read it
to you, if I might. It says Stephen Sondheim on the top. It
says March 2, 1976. ``Dear Judy: And thank you for giving me my
first hit song. Gratefully, Stephen Sondheim.''
Songwriters enjoy a performance right and deservedly so.
Stephen Sondheim deserves every penny he makes on every song.
Their creativity and talent should be, and is, rewarded when
their musical composition is played on the radio.
I have recorded songs of many, many artists--Joni Mitchell,
Ian & Sylvia, Stephen Sondheim--and never been paid a cent. It
is a privilege to have helped them make a living. I would like
to do the same for myself with your help.
It is only fair that the artists, background singers, and
musicians who breathe that life in the song should also be
compensated.
I want to tell you, just sitting here with Sam, you know, I
am thinking, ``God, this is a disgrace that he has not been
paid for playing, for his singing on the radio.''
You know, the other countries who do this? China, Rwanda,
Sudan, Iran.
Don't get me wrong. I love the radio. My father had his own
radio program, as I said, and that is how I grew up, listening
to radio, singing on the radio. I just don't believe it is
fair, nor has it ever been, that musicians and recording
artists don't get paid when our music is played on the radio.
Patsy Cline's heirs deserve to have that.
Paid for play. Every other music platform, like satellite,
cable and Internet radio, reward artists and musicians for our
performances, and it is time radio did, too.
As I said at the outset, I and Sam both have been very
fortunate in our careers. We work like mad, harder than ever,
as far as I know.
There are lots of great artists and musicians who are still
struggling to just earn a living doing what they do and get
over that first hump of public recognition. When their music is
played on the radio, they deserve to get paid.
Many of my musical compatriots, like me, are on the road
touring.
I tour more than I ever did. I do 50 to 80 shows a year.
And I have never taken a year off.
I mean, as I said, I am 68 years old, which I was not going
to read into this record---- [Laughter.]
I was advised, don't say that. I am proud of it.
I have been able to make my living in a career of my
choice. I should be paid. And not being paid is like a lawyer
going to a party every day and having people say, ``You want to
practice a little law,'' 365 days a year. [Laughter.]
There are artists just starting out their careers. My
record label, Wildflower Records, has many wonderful young
artists on it. I want to see them paid for their performances
on radio.
Kenny White, for example, one of my artists on the label,
is now on KFOG in San Francisco. He is not earning radio
royalties. I was on KFOG years ago. I didn't earn radio
royalties either.
Yet, when his music is played on XM satellite station the
Loft, he earns performance royalties.
Mr. Chairman, royalties that were held by broadcasters
should have been my annuity, my pension. I should have been
able to retire from top hits like ``Amazing Grace,'' ``Both
Sides Now,'' ``Someday Soon, ``Chelsea Morning,'' ``Who Knows
Where the Time Goes,'' and ``Send in the Clowns.''
It is music that people love. It is not commercials. Our
music sells those commercials, if you have noticed, on the
radio.
We simply believe that broadcasters should share the profit
they earn at the expense of artists.
Mr. Chairman, thank you for holding this hearing today.
Songs have value. Singers have value. Musicians have value.
We are asking for recognition of that value and urging you to
change the law to right this long overdue injustice.
And thank you so much.
[The prepared statement of Ms. Collins follows:]
Prepared Statement of Judy Collins
Mr. Berman. Well, thank you very much.
And now we will turn to Charles Warfield.
TESTIMONY OF CHARLES M. WARFIELD, JR., PRESIDENT AND CHIEF
OPERATING OFFICER, ICBC BROADCAST HOLDING, INC., NEW YORK, NY
Mr. Warfield. Good morning, Chairman Berman, Ranking Member
Coble and Members of the Subcommittee. And thank you for
inviting me here today to offer the broadcaster perspective on
the issue of performance rights for sound recordings.
My name is Charles Warfield, and I am president and COO of
ICBC Broadcast Holdings, serving primarily African-American
communities in New York City; San Francisco; Columbia, South
Carolina; and Jackson, Mississippi. And I am also testifying on
behalf of the over 6,800 local radio members of the National
Association of Broadcasters.
With regard to the issue of creating a new performance
royalty for sound recordings, which we do consider a
performance tax on local broadcasters, NAB strongly opposes any
such proposal. We oppose a performance tax because compensation
to the record labels and artists is provided under the current
system. And the effort to upset the careful balance envisioned
by Congress and beneficial to all parties for the last 80 years
is misguided.
The existing model works for one very significant reason:
The promotional value that the record labels and artists
receive from free airplay on local radio stations drives
consumers to purchase music.
A survey done by Critical Mass Media shows far and away FM
radio is the dominant medium for listening to music. In fact,
85 percent of listeners identify FM radio as the place they
first heard music they purchased.
With an audience of 232 million listeners a week, there is
no better way to expose and promote talent, or as Tom Biery,
senior vice president for promotions for Warner Brothers
Records said: It is clearly the number one way that we are
getting our music exposed. Nothing else affects retail sales
the way terrestrial radio does.
Beyond just playing music, consider that stations give away
free concert tickets, conduct on-air interviews with bands
releasing a new CD, or hype a newly-discovered artist. Local
radio is without question the engine that drives music sales.
Any suggestion that radio play does not boost sales or actually
diminishes sales runs counter to simple common sense.
While it is true that the recording industry has seen its
profits dip in this new digital world, in no way can that
decline be attributed to radio; just the opposite. Local radio
is free advertising for record labels and artists and provides
the best and most direct way to reach consumers.
In 1995, when Congress last examined this issue, lawmakers
rightly considered what new digital mediums were a threat to
the sale of music. Satellite and Internet radio, which were
covered by the 1995 law, are services often available by
subscription and both offer consumers true interactivity to
download songs.
Local radio, however, is free. There is no subscription. It
is not interactive. And between disc jockey lead-ins and
commercials, people are not stealing music from over-the-air
radio.
Congress came to this same conclusion. That local radio
airplay does not threaten music sales, as satellite and
Internet radio does, but rather, directly and positively
promotes the sale of music.
I came to this debate from experience on both sides of this
issue, from my many years in broadcasting and some years as a
record label executive. What I have failed to understand after
30 years in the industry is why the recording industry is
willing to essentially bite the hand that feeds it.
The free airplay for free promotion concept has established
a natural symbiotic relationship between local radio and the
recording industry. Both grow and flourish together. A
performance tax, however, will financially hamstring
broadcasters.
The effect of such a dramatic increase in radio station
costs will not go unnoticed.
Broadcasting is an industry that is funded entirely through
advertising revenue. We do not have the option of raising our
subscription rates. The funding to pay for this new fee has to
come from somewhere.
So do we cut the $10.3 billion that broadcasters donated in
2005 to public service announcements and community service for
charities and other worthy causes?
Do we run more advertisements, which will have the effect
of playing less music, which will ultimately harm the recording
industry?
Or what about small urban and rural radio stations that
serve niche communities, such as minority groups? There is a
reason that the National Association of Black Owned
Broadcasters, or NABOB, also opposes the imposition of this
tax.
Finally, how will such a tax degrade the ability for
stations to offer programming for their local community, such
as community affairs, traffic, and essential news and weather
in times of emergency?
The answers are not simple and the consequences of this
debate will hit both industries in unanticipated ways. The
bottom line is that there is no justification for changing a
system that has worked for the music industry as a whole for so
many years.
The United States has the most prolific and successful
music industry that is the envy of the world. Upsetting the
careful balance that Congress struck by imposing a performance
tax on local radio broadcasters would be a shift of seismic
proportions. For over 80 years, Congress has not seen fit to
alter this mutually-beneficial policy, and there is no reason
to do so now.
I thank you for inviting me here this morning.
[The prepared statement of Mr. Warfield follows:]
Prepared Statement of Charles M. Warfield, Jr.
ATTACHMENT 1
ATTACHMENT 2
Mr. Berman. Well, thank you very much, Mr. Warfield.
And now, finally, is our concluding witness, Sam Moore.
TESTIMONY OF SAM MOORE, RECORDING ARTIST
Mr. Moore. Thank you. Good morning, Mr. Chairman and
Ranking Member Coble. My performance here this morning may be
the most important gig of my career.
I am grateful to the Subcommittee for holding a hearing on
this vital issue that faces us American recording artists.
I am proud to be here as a founding member of the
musicFIRST Coalition, and a member of AFTRA, SAG, RAC and the
Recording Academy.
I will tell you a little bit about my career, and I promise
to be brief, no matter how long it takes. [Laughter.]
40 years ago, I formed a duo that made it big in the mid-
1960's. Our famous Sam and Dave recording became a series of
top hits as in ``Hold On I'm Comin','' ``I Thank You,'' and, of
course, a little, small hit called, ``Soul Man.'' You can hear
those songs today on radio across the country and all over the
world. That is pretty amazing.
My most recent album, ``Overnight Sensational,'' was
nominated for a Grammy last year, 40 years after my first
nomination. But at 71, I am still forced to go out on the road
to support my family and myself.
To shed light on this issue of broadcast performance
royalties for artists, let me share something I hear all the
time, even from some of you members of this great body, just
learning of this issue who mistakenly believe I get paid when
my recordings are played on the radio.
You would be amazed at how shocked people are when they
learn, whenever I say, I am not getting nothing. No royalties
whatsoever from the broadcasters for my performance that has
been enjoyed by the audience and used by them to draw that
audience support and to support their families.
I just heard that the radio industry thinks they are going
to do me some kind of favor by playing my recordings. They
think they are promoting me through my music so I can sell
records and concert tickets----
I say, in no uncertain terms, radio does absolutely nothing
to promote me or sales of my recording unless I have a current
product and a huge promotional budget. People hear the bulk of
my recordings so frequently on oldies stations that they don't
have to buy my records at all.
As for radio allowing me to, and helping me to, sell
tickets, well, thank you very much. But at almost 72, I would
rather be at home spending time with my grandchildren and
running a golf ball thinking I am Tiger Woods.
If broadcast shared any of the money they earned from
playing my records, I would not have to continue to spend so
much of my life running up and down the road. I don't have the
private jets and the extravagant tour buses with staff to make
my life comfortable. And my posse? My wife, Joyce, the bag
schlep.
So while my record continues to bring joy to music lovers
worldwide and continues to help the radio business become a $20
billion industry, I struggle to even make a living, even if I
look successful.
Broadcasters also claim they are serving the community.
Well, what about the artists? Aren't we part of the community?
And haven't we been struggling independently, small
businessmen, before some of us got the right to vote?
Those recordings are my legacy. They, and I, the artist,
deserve to be protected with a full performance right. In every
other developed country in the world, artists have such a
right.
Adding insult to injury, when my recordings are played on
stations overseas, I cannot claim any of the funds paid for my
songs there, simply because the U.S. does not require payments
here.
I learned the other day coming here that a friend of mine,
Mr. Howard Veegal, told me about Little Jimmy Scott who is in
the hospital that hurt his good hip. He was out working. Now,
he is almost going to be tossed out of the hospital because his
nursing home, at 85, said he can't pay. He is frail, and he
can't work.
We are also talking about the Mary Wells, the Ruth Browns,
the Junior Walkers--all worked until they died because they had
to because of charity cases. Why?
Mr. Chairman, this is the only thing about--this whole
thing is about fairness and equity. American broadcasters
literally earn billions by playing our records. All we are
asking is to receive what artists in every country around the
world, when their recordings are broadcast, is fair
compensation for the performance of our work.
Our legacy is our music. Please help us fix this historic
injustice. We have sought the rights to help for more than 50
years. Let us just play fair. That is what it is all about.
Personally, I pray I live to see this important legislation
pass in my lifetime, and I remind you, I am looking hard at 72.
I am grateful for your invitation to share my views with
you today. Thank you.
[The prepared statement of Mr. Moore follows:]
Prepared Statement of Sam Moore
Mr. Berman. Well, thank you all very, very much.
And the Chair is now going to recognize the Ranking Member,
Mr. Coble, for 5 minutes for questions.
Mr. Coble. Thank you, Mr. Chair, for this courtesy. Mr.
Chairman, an outstanding panel and a superb, productive hearing
I believe.
Madam Register, if the performance royalty exemption for
broadcasters is eliminated, would it create a sizable impact,
either negative or positive, for songwriters, performers, and
the music industry as a whole?
Ms. Peters. Hopefully not.
One of the things that already is in section 114, when the
very first performance right--limited as it was--performance
right was created was that that was in no way to affect rights
that are basically guaranteed--the public performance rights
for composers and for music publishers. That is also an
international treaty obligation: that you cannot derogate from
those rights.
So that has to be a commitment, both a national and
international commitment, so I would say----
Mr. Coble. Thank you for that.
Mr. Warfield, I am going to give you a simplistic question.
I think most people--strike that--maybe not most. Many people
respond to this issue in this way: More people are listening to
music more and more each day, I am told, because of Internet
and satellite broadcasting. Why should not terrestrial
broadcasters, many people ask, pay the same performance
royalties that Internet and satellite broadcasters pay?
And let me put a second question to you, Mr. Warfield, if I
may. Toward the conclusion of your statement, you noted that
the United States commercial radio broadcasting industry was,
for the most part, built by private commercial entrepreneurs--
and I am in agreement with that--but who did not and do not
receive one cent from the Government or its listeners.
Now, Mr. Warfield, I am thinking now about the spectrum.
What would be your estimate of costs to the industry to replace
the spectrum, if you were forced to pay a commercial rate for
it?
If you would respond to those two questions?
Mr. Warfield. Well, Mr. Coble, I can't answer the last
question there in terms of what would the costs be for the
spectrum.
I do know, though, as a licensed broadcaster by the FCC,
there are responsibilities that we all have to our communities.
There is a public affairs program in that we provide public
interest obligations that we meet, public service announcements
that we provide to the community. There is local news and
weather information that we provide, that we are obligated to
provide, and we are happy to do that. We also provide essential
information in the event of emergencies.
So there are certainly obligations that we, as
broadcasters, have with the spectrum that we have the right to
broadcast on.
So, you know, I could not put a dollar value on that. I do
know that we did provide over $10 billion worth of these types
of public services in 2005, the last year that those numbers
are available. So we are being responsible in that regard.
In terms of the new platforms and the listening of music, I
still go back to indicate that, you know, radio still reaches
over 232 million listeners a week. Many of those listeners are
listening to music radio. And it is still evidence that radio
is still the primary means in which most of these individuals
learn about new artists and new music, which they may then go
to other platforms. They may decide to purchase some of that
music.
But there is still the awareness factor and the exposure
factor that still is there as a result of the free broadcasting
that we do in radio.
Mr. Coble. I thank you, sir.
And I thank you all again for being with us today.
Mr. Chairman, I am going to the Coast Guard hearing, and I
am going to try to come back. But, in conclusion, Mr. Chairman,
I want to repeat what I said earlier.
I am high on broadcasters. Do you hear me, Mr. Warfield? I
am high on broadcasters. I am also high on performers.
And I am hoping we can strike some sort of balance, Mr.
Chairman, that will result in a not-too-burdensome conclusion.
And I yield back.
Mr. Berman. I think there is a song there. [Laughter.]
Thank you very much, Mr. Coble.
Mr. Coble. Do I get paid for it, Mr. Chairman? [Laughter.]
Ms. Collins. Would you perform it?
Mr. Berman. The gentleman from North Carolina, Mr. Watt?
Mr. Watt. I think if I wasn't going to get paid for it, I
am not planning to sing it. [Laughter.]
Let me first thank the witnesses for being here and thank
the Chairman for convening the hearing.
I feel kind of like the new guy on the block, as I have
since I got on this Subcommittee. And I was reluctant to give
any kind of opening statement because I am in a learning mode
and listening mode more than a talking mode. And I suspected
that there had to be multiple sides to this issue. And Mr.
Warfield certainly helped us paint that picture.
I feel like I am blessed, obviously, to be in the presence
of all these artists. And I am embarrassed that I have really
kind of assumed that music would be available in my life.
I get mad at the radio for running commercials. I get
disappointed when I can't hear exactly what I want to hear.
And so I come to this with--kind of as a blank slate
without any background in it. And I suspect the same thing will
happen that has happened on the patent reform bill: that blank
slate, and the recognition that I am a blank slate, will leave
open the door for various people to come in and paint what that
slate should consist of.
So I suspect, Mr. Chairman, you are opening yet another one
of those doors for the various interests to come and visit and
try to educate me. And I look forward to that.
Ms. Peters, I am just wondering how one might approach
structuring a compensation system that would both be fair to
the performing artists, the writers, and not burdensome or
detrimental, at least, to terrestrial radio. How would you go
about--has anybody done any studies on that issue? How would
you----
Ms. Peters. Well, remember that almost all countries in the
world already have a structure in place.
Mr. Watt. Okay. Maybe I am asking the question----
Ms. Peters. And Canada actually has----
Mr. Watt [continuing]. How are other countries doing it?
Ms. Peters. You can look at Canada. They make a difference
between the size of the broadcast station, how many hours in
which music is being played.
We are not talking about an exclusive right, where you go
and negotiate with everybody. We are talking about a statutory
license which guarantees equitable remuneration for the
performer and the record producer. So that is what we already
have in our law with regard to webcasts.
The criteria could take into consideration the size of the
station. The basic principle that you try to put in place, but
make it as painless as possible, is what a willing buyer and a
willing seller would do under the circumstances. So a small
broadcaster would pay a lot less than a large broadcaster. You
know, a huge broadcaster who has music 24 hours a day, 7 days a
week, would pay a lot more than someone who only had music
several hours a day.
So I think it really isn't that difficult to achieve the
correct balance.
Mr. Watt. Let me get one more question in to----
Ms. Peters. Yes.
Mr. Watt [continuing]. Mr. Warfield.
Are you associated with radio stations in other countries?
And how do you differentiate the way terrestrial radio is
treated in the U.S. vis-a-vis those other countries?
Mr. Warfield. As a broadcaster, our company does not own
any radio stations outside of the continental United States.
But as I look at our industry here--I have not really been
involved with international radio as a broadcaster in my
career. However, as I look at the U.S. radio system, as I
indicated in my testimony, we, as broadcasters, support the
most lucrative and successful recording industry in the world.
And under a system that we have with no performance tax, the
U.S. record industry is larger than the industry for the U.K.,
France, Germany, Canada, Australia, Italy, Spain, Mexico
combined.
So I think when we talk about the relationship that has
existed and the success of the recording industry and, through
that success, the success of artists, through this 80-year
history, makes me as a broadcaster say, ``Why would the system
really need to be changed?''
Mr. Watt. Thank you, Mr. Chairman. I appreciate you getting
me in this bind again.
Mr. Berman. Well, it may be a blank slate, but it has a
great deal of adhesiveness.
Mr. Goodlatte?
Mr. Goodlatte. Thank you, Mr. Chairman. And thank you for
holding this hearing.
I want to thank all the witnesses. This has been a very,
very interesting hearing. And I would be willing to hum along
with Mr. Coble if he does the song that finds the cure to this.
[Laughter.]
Let me start with Mr. Warfield.
One of the rationales for exempting terrestrial
broadcasters from the requirement to pay royalties for the
public performance of sound recordings was that terrestrial
radio gave performers and owners of sound recordings
substantial promotional value in that more consumers were
likely to purchase these songs when they heard them on the
radio.
I wonder if you might comment on how the rollout of
satellite radio, iPods, Internet radio, and other new
technologies have weakened that argument that terrestrial radio
alone provides a substantial enough promotional value over
these other technologies to justify keeping the exemption.
Mr. Warfield. You know, we all--the record industry, the
radio industry--we are all competing against these new
platforms that are emerging today. Still, terrestrial radio
still reaches, as I indicated, over 230 million people per week
across this country. The symbiotic partnership that still
exists between radio and the recording industry has helped
these companies become the envy of the world, as I had
indicated.
But now what we are looking at and the challenges that the
record industry, unfortunately, has not necessarily kept up
with these changing times, and then coming here as part of a
coalition seeking taxes from local broadcasters to subsidize
their challenged business model.
There is no question that the industry is challenged today
in selling music with these new alternatives that are out here,
but in no way would we indicate is there any evidence that the
work that local broadcasters do and the free promotion that we
provide is responsible for any of that. As I indicated, we are
not----
Mr. Goodlatte. I don't think they are responsible for it,
but they are suggesting that if some of these other platforms
are paying performance royalties, that they are also providing
a means by which songs are promoted and there is a disparity
there that somehow we need to find a way to bridge the gap.
Ms. Peters, would you care to comment on that?
Ms. Peters. That is exactly the point. That all of these
people are paying, and that the principle is that this is a
copyright and this is a right that is being exercised and it
forms the basic business model of radio stations. And that, in
fairness, they should pay also. You can talk about under what
terms and what conditions, but they should pay.
Mr. Goodlatte. Ms. Peters, let me follow up with that.
What are foreign nations doing? Are they currently
withholding royalty payments to U.S. performers and sound
recording owners--their nations are not compensated when their
songs are performed over U.S. terrestrial broadcast signals?
Ms. Peters. It depends on the country.
Mr. Berman. I think we need a sound engineer.
Ms. Peters. Yes, right.
It depends on the country, but in many countries they
collect for all sound recordings, including U.S., and don't
pay. In others, they don't collect. But under either scenario,
their performers are getting paid and our performers are not,
even though the performances of both are taking place in that
particular country.
Mr. Goodlatte. Thank you.
Ms. Collins, would you care to comment on this
relationship?
Ms. Collins. Yes. I think you, you know, it is interesting.
I am sitting here wondering about class actions suits.
You know, all of the artists, excluding the issue of
whether or not we should be paid as artists in this country--
and I think I have settled that in my own mind, we certainly
should--and it should be a sliding scale for those who can
afford more, for those who can afford less.
But the fact that my records across the world have not been
paid for means that many, many thousands, millions, perhaps, of
artists over a period of what is it, 80 years? Is that the--it
is 80 years. Eighty years and all of these musicians who are
not being paid in countries which have laws which protect the
artist, where is that money? It is not in my pocket.
And in the case of ``Amazing Grace,'' which played around
the world and which most of you know, amazing grace, you know,
how sweet the sound---- [Laughter.]
How sweet the free sound, it turns out. [Laughter.]
I am curious about that idea, because with this coalition
of artists, that might be a subject that we might want to bring
up.
We are certainly not talking about a retroactive situation,
although legally we might, but the idea of the money that is
sitting internationally and why we don't respect other artists
in this country who are not receiving payments for their
performances either. It is a complicated question, but once we
solve this one, then we will look at that.
Mr. Goodlatte. Thank you, Mr. Chairman.
Mr. Berman. Thank you.
The bells have gone off. The situation is we have about 15
more minutes and then 3 votes, and then we will come back. But
I do believe we have time for one more witness before we
recess.
So the gentlelady from Texas, Ms. Sheila Jackson Lee?
Ms. Jackson Lee. Chairman, thank you.
Let me add my affirmation that you managed to find the
armadillo in the middle of the road when it comes to questions
that I think are enormously important.
Let me quickly go to the esteemed Sam and Dave, but Mr.
Moore, thank you, all of you, for your testimony.
Would you just give me the list of names--I happen to
represent, I believe, the last remaining member of The Ink
Spots. He is close to 100-plus years old, and he is living in a
nursing home. I would imagine what he would be able to find a
way to live if we had some altering of this process.
Would you just give me the names of those who have
suffered? Jackie Wilson, I know, had a terrible time. But you
mentioned Billy Preston. Are there any others? Would you just
mention some of those names for us that really have suffered in
the later years of their lives?
Mr. Moore. Well, let us see. You said Jackie Wilson, yes.
How about Bo Diddley? That was in Iowa not long ago, about
2 or 3 weeks ago, working on stage and had a stroke.
Now, you must understand that, before the stroke, he was an
amputee on his left foot. Now, you know, if he was getting
performance pay, he could have that $3,000, $4,000, $5,000 a
month to pay and not worry about taking care of his bills or
his family or anything else. He could not worry about anything
other than taking care of his health. So that is----
Ms. Jackson Lee. Those are glaring examples. Thank you very
much.
Ms. Peters, can you give me any legal--legally speaking, is
there any way to justify the sole exemption of sound recordings
from a performance right? And do you know how such exemption
came about? And because bells are ringing, I am asking for
quick songs at this point.
Ms. Peters. The answer is no. I don't know of a
justification. I have been advocating this for almost 25-plus
years, and before that, my predecessors have.
I will argue--and I think I sort of suggested it--that it
is the effectiveness of the broadcast lobby.
Ms. Jackson Lee. In the 1998--the register, which--was that
you in 1998?
Ms. Peters. No. It was Barbara Ringer.
Ms. Jackson Lee. Went on record affirmatively for that----
Ms. Peters. And I have gone on record----
Ms. Jackson Lee [continuing]. For that position of those
payments.
Ms. Peters [continuing]. Absolutely, yes.
Ms. Jackson Lee. Would you understand the value of--as we
try to forge--which I think my good friend Howard Coble
suggested, a reasoned place in the middle--the exemption of
certain small radio stations which would probably suffer
greatly and close if they were to come under such a
requirement?
Ms. Peters. I believe that when you craft a solution you
craft it so that it is equitable. Yes, the basic principle is
paying, but, yes, you can have special provisions and even
exemptions for small broadcasters.
Ms. Jackson Lee. Thank you.
Mr. Warfield, broadcasters have labeled the payment to
artists a performance tax. Is that how you are viewing payments
to songwriters for radio play or do you view them as royalty
payments? Why wouldn't payments to performers be royalty
payments?
Mr. Warfield. The performance tax that we are discussing
today would go to what is referred to as artists and record
companies who, in the existing system, benefit greatly from the
free on-air airplay of their product. Record sales result from
that, which benefits the artists, as well as the record label
at this point. Whereas the composers of the music--the writers
of the music--do not receive that type of a benefit, which is
why there are payments being made to them and have been
statutorily required throughout our broadcast industry.
Ms. Jackson Lee. I think the industry has changed so much,
Mr. Warfield. And I want to thank you for your leadership, but
that probably is not accurate. I can't really agree that there
is such an enormous benefit to performers that we would
classify one as a tax and one as a royalty. But I hope we can
find common ground.
I don't want to leave my good friend, Congressman Hodes,
out of--for the fact that people should know that he sings very
well, even as a congressperson, and we have enjoyed very much
his singing.
But, Congressman, is there a way to balance this?
And I might conclude quickly by asking Ms. Collins, should
we not have a balance on the royalty payments on these Internet
radio royalties where Clear Channel, Yahoo, and Microsoft pay
so much, should we not have royalty rates for that lower level
that will create music diversity?
So I am going to go to the congressman and then, since I
got in before the light, if you would be able to answer that.
Congressman?
Mr. Hodes. Thank you for your question.
Very quickly, there are models that are already in place
that point the way to the kind of balanced and fair system that
this Committee, with its expertise, is well-capable of
crafting.
Ms. Peters has talked about sliding scales. There are
potential exemptions. There are lots of ways to make this work,
and we already have some models in what has happened in the
digital realm.
Ms. Jackson Lee. Ms. Collins, I----
Ms. Collins. Thank you.
Ms. Jackson Lee [continuing]. Would hear ``Amazing Grace''
forever, but the Chairman is going to gavel me down.
Just to balance out the Internet rates, should they be?
Ms. Collins. I believe that the equitable distribution of
royalties, not taxes, should be worked on and a fair and
equitable decision made about this.
But I want to just remind us of why we are really here. We,
in this country, do not recognize the value of our artists as
we do in other countries. That is really what this is about. We
have devalued the contribution of great, great, great artists,
and that needs to be remedied.
Ms. Jackson Lee. Thank you.
Thank you, Mr. Chairman.
Mr. Berman. We will now recess. We hope very much that all
of you can stay because, if you do, we will come back.
[Laughter.]
[Recess.]
Mr. Berman. The Subcommittee hearing will resume.
And I am pleased to recognize the gentleman from Florida,
Mr. Keller, for 5 minutes.
Mr. Keller. Well, thank you, Mr. Chairman. I very much
appreciate that.
I want to thank all the witnesses for your testimony.
This is an issue that I certainly approach with an open
mind. And so I am going to ask some easy and tough questions,
hopefully of both sides, because I genuinely want to learn a
few things.
Let me begin with Mr. Warfield to make sure that I have got
this scenario correct.
For free radio, also called terrestrial radio, the
songwriter would get paid a royalty but not the performer? Is
that correct?
Mr. Warfield. That is correct.
Mr. Keller. And on satellite radio, the performer would get
paid a royalty. Is that right?
Mr. Warfield. That is correct.
Mr. Keller. Now, if a law, such as the topic that we are
talking about today, is implemented requiring terrestrial radio
to pay a royalty for performers, how would radio adjust to this
new law? Would you have to raise advertising revenue by
increasing advertising prices, or what would you do?
Mr. Warfield. I am sure some broadcasters would attempt to
do that, but in the current environment, that would be very
difficult to do.
Unfortunately, I believe some broadcasters would, if not
change format and get away from a music format--some
broadcasters, unfortunately, would probably be forced to sell
their radio stations and get out of the business. And our
concern is that many of the smaller market medium-size
broadcasters that would be a very real option that they would
have to consider.
Mr. Keller. So your three options: You are going to have to
change your format to go to talk radio, where you don't have to
pay these royalties, or you are going to have to layoff some
people for overhead, or you are going to have to increase the
advertising revenue rate.
Mr. Warfield. Make an effort to do that.
Mr. Keller. So when I buy my ads on radio for my next
political campaign, I may have to pay more money to make sure
the Dixie Chicks have higher profits? There is your trouble
with that particular scenario.
Now, you have said that this is a tax. Let me ask you, do
you consider the current system of paying the songwriters to be
a tax?
Mr. Warfield. No, we consider that to be a royalty. It is
part of our operation that we understand, since they do not
benefit in the same manner that the record labels and the
artists do under the existing system that has been in place for
80 years.
Mr. Keller. Well, if this were implemented, the Treasury
would get no money from this new royalty to performers. Is that
correct?
Mr. Warfield. I don't know what form it would ultimately
take.
Mr. Keller. Does the Treasury get any money today by paying
the songwriters a royalty fee?
Mr. Warfield. Not to my knowledge, no.
Mr. Keller. Okay. So I would just point out some folks
wouldn't consider that to be a tax.
Let me just say this. Listening to you all, it seems to
me--and again, I am open-minded--that the radio stations are a
bit underappreciated here.
You have made the argument, Mr. Warfield, that there is a
symbiotic beneficial relationship and that by putting an
artist's songs into the regular rotation and getting them
substantial airplay that that helps the record sales and helps
promote concerts. Is that correct?
Mr. Warfield. That is correct, as further evidenced by this
morning's USA Today that has music charts in it based upon
radio airplay.
Mr. Keller. Okay.
Mr. Warfield. That is correct.
Mr. Keller. And I have heard Ms. Marybeth Peters and Mr.
Sam Moore take a different view that--I believe she said that
she is not inclined to think there is a mutually beneficial
relationship.
I just have to say, on this issue I think the radio
stations are a bit underappreciated on it. Because, during the
break, while I am voting, I just picked up the phone and called
the head of music programming for my local radio station, the
main one in Orlando. And he tells me that the record companies
and their publicists call him nearly every day begging for
their songs to be put into the regular play list rotation.
And if there is no benefit to the record companies or the
artists from getting regular airplay, I wonder why in the world
they keep begging the radio stations to put their music on the
air.
Mr. Warfield. I agree with that. It is a situation that in
the industry--and I have been in the industry for 30 years and
a couple of those years in the record industry--quite a bit of
their time, quite a bit of our staff's time is spent in
conversation and dialogue with the record industry every week.
Mr. Keller. Now, Mr. Sam Moore, let me just thank you so
much for being here today. And if you never did nothing in your
life, you have already changed our culture with your great
performances with ``Soul Man.''
Is the gist of your argument that it is very unfair to you
that you are paid a royalty when your music appears on
satellite radio and other venues but not on regular radio? Is
that the gist of it?
Mr. Moore. I think my only argument is this: If I don't
know anything else, I only know this. We just want to even the
field, be fair, you know.
The writers are getting what they are getting. I don't know
nothing about the figures. I am not a CPA and all that stuff.
But I do have a question, if I may.
Mr. Keller. Sure.
Mr. Moore. Wouldn't it take a full credit to reduce your
tax burden of what you pay? I would ask Charles that.
Mr. Warfield. Was the question--I am sorry to misunderstand
the question, but would it be a cost of operation and therefore
be a taxable operating expense? Depending upon how that is
structured, most likely, sure.
Mr. Keller. Well, I have more questions. I want to get some
hard questions to the other side, too, in fairness. But I have
to tell you, I ran out of time.
So, Mr. Chairman, I will yield back the balance of my time.
Mr. Berman. Thank you, Mr. Keller.
Ms. Collins. May I address that question with a little
comment here?
Mr. Berman. Does the gentleman from Tennessee wish to allow
the----
Mr. Cohen. I would gladly yield my time to the lady from
California. Had a feeling---- [Laughter.]
Ms. Collins. Thank you.
As a business owner myself--and I am a small business, and
I am the product--I pay taxes. They are always very high.
And I understand--I have had to come to this, because it
has taken me a long time to learn about how any business
operates. I am a slow learner. However, I know when I have a
business expense, my taxes go down. And I think that is one
question we could address.
Also, I don't want to underestimate the value of radio
either. I love radio. Radio has been fantastic to me. There is
no reason why I shouldn't be paid for my presence on radio, but
I value, I value the institution tremendously.
So I don't want anybody to get the idea that we don't
appreciate what it does. We just want to get paid for our work.
Mr. Berman. On the tax issue, have you thought about
starting a hedge fund? [Laughter.]
Never mind.
Ms. Collins. I run my own mutual fund. [Laughter.]
Mr. Cohen. Thank you, Mr. Chairman.
First, this is just on my mind. Mr. Moore said he didn't
know anything about math. And I will ask Congressman Hodes
because he can probably answer this question. I was trying to--
what are the words to that. It is I don't know algebra, don't
know anything about, just know that I----
Ms. Collins. Oh, yes.
Mr. Cohen. What is the song called?
Ms. Collins. Don't know much about history----
Mr. Hodes. Don't know much about----
Mr. Moore. ``What a Wonderful World,'' Sam Cooke.
Mr. Cohen. Thank you, sir. Name that tune. [Laughter.]
Mr. Moore. Right.
Mr. Cohen. Mr. Moore, last time I saw you I think was
Governor Sundquist's inauguration or Tennessee 2000 or
something like that. But you were doing a nice event in
Nashville, and I appreciate your coming back and doing that
whenever you are in Memphis.
``Soul Man,'' you don't get paid when it gets on the radio
but the songwriters get paid for that, right?
Mr. Moore. Yes.
Mr. Cohen. Is that David Porter?
Mr. Moore. David Porter and Isaac Hayes.
Mr. Cohen. And they are both friends of mine. Would you
like me to negotiate for you? [Laughter.]
Mr. Moore. Would you mind? [Laughter.]
Mr. Cohen. I think Mr. Bainwall's friend, Mr. Moore, could
do that better than I, but.
You know, they wrote it, but I don't know that--of course,
they are a different situation. I was kind of thinking about
Elvis. Elvis never wrote anything.
Mr. Moore. Right.
Mr. Cohen. Except maybe a check.
Mr. Moore. Right.
Mr. Cohen. But Elvis doing the song, that was the song.
Mr. Moore. Right.
Mr. Cohen. And the writers got paid and Elvis didn't.
Mr. Moore. Right.
Mr. Cohen. And without Elvis, there wasn't a song.
Mr. Moore. That is right.
Mr. Cohen. Without a song----
Mr. Moore. Without a song.
Mr. Cohen [continuing]. Et cetera, et cetera.
Mr. Moore. The world would never end.
Mr. Cohen. Keep going. Don't let me----
Mr. Moore. No, no, no. [Laughter.]
I will have to charge you then. [Laughter.]
Mr. Cohen. Let me ask Mr. Warfield.
I understand your position, obviously. And I have, like Mr.
Coble, friends in broadcasting, as well. But how can you
distinguish the system in America from the system in Europe, as
far as its appreciation of or paying of songwriters? Do the--I
mean, singers. Do the singers in Europe not get the benefit and
get to perform and get more people to come to their concerts
and buy their records?
Mr. Warfield. I think just the sheer magnitude of the
industry here, both the recording industry, the size of the
recording industry, the profitability of the recording industry
and the revenues that are generated through the support of over
6,800 local radio stations, significantly dwarfs what is
available to many of these artists in foreign countries versus
the United States.
And I think that size issue and the fact that the
broadcasting industry for 80 years has been providing this type
of free exposure to artists and labels is what has helped this
industry grow to the size that it has been and spawned so many
very successful artists over the last 70-plus years.
Mr. Cohen. Even if, you know, size is important, but
nevertheless, in Europe, where they have got a different
market, they still have to get paid, the singers. And they do
get paid in Europe. You don't see that there is some equity
there?
Mr. Warfield. I think that the reality of a lot of these
artists that are international are looking for that type of
support here in the United States, support that is provided by
radio airplay, would indicate that they are sort of willing to
work with the system that is in place here in the United
States. They see the rewards and the benefits that have accrued
to many labels and many artists over a long period of time.
And I think that many of them--they don't--they are not
sitting here today. Would they trade that? I am not sure. But
it is certainly a benefit that they would consider.
Mr. Cohen. Do you have a proposal that would make some kind
of equitable solution? Do you have something you want to put on
the table?
Mr. Warfield. I would like to leave the system the exact
way it is today----
Mr. Cohen. I know. But if you couldn't leave it the way it
is, what would be your suggestion, other than a de minimis
amount of money?
Mr. Warfield. I could not agree to do anything more than
the system as it exists today, Mr. Cohen?
Mr. Cohen. Okay. Well--and I guess it is. I---- [Laughter.]
You know, if you had Mr. Hodes singing ``Suspicious
Minds,'' instead of Mr. Presley, you wouldn't have as many
people listening to your station, I suspect. [Laughter.]
And so Mr. Presley's estate should be paid for that.
[Laughter.]
Mr. Berman. Is that a compliment? I don't think so.
[Laughter.]
Mr. Warfield. And I was going to leave that one alone. I
wasn't going there. [Laughter.]
Mr. Cohen. Thank you, Mr. Chairman.
Mr. Berman. The gentleman from Georgia.
Mr. Johnson. Yes, thank you, Mr. Chairman. I certainly want
to commend you for holding this hearing. It is a matter of
equity and fairness.
And I might first begin by saying that, you know, when you
rub a cat the wrong way, the cat gets kind of agitated. And I
feel like a cat that has--my hairs have been rubbed the wrong
way when I hear the term performance tax.
And what I wanted you to answer for me, sir, is, I mean, a
tax is generally paid to the State. A tax is always paid to a
governmental entity. But you would not be paying--broadcasters
would not be paying revenues to a governmental entity. It would
just be simply paying to a performer on a sound recording.
Why is it that you persist in using the term performance
tax?
Mr. Warfield. Well, this is a payment that broadcasters
both large and small would have to pay. You know, some people
look at this as a wealth transfer that is going to very
successful record companies who would benefit from this in
addition to the artists. Radio stations----
Mr. Johnson. How would record companies benefit from paying
royalties to performers, especially when the record companies
are already receiving income from their publishing rights?
Mr. Warfield. As I understand the coalition that is----
Mr. Johnson. Sometimes they have even taken the writer's
share.
Ms. Collins. Absolutely.
Mr. Warfield. The record labels?
I would only indicate there, and it is, you know, it is
sort of along the lines of earlier comments about the artists
who have not been treated fairly. I would put that back as a
responsibility of the record labels.
Why have the record labels allowed that to happen with
artists that have helped make them as successful as they are
today? And it is not the responsibility of the broadcasters to
cover, I would say in some cases, the misdeeds of the record
labels.
Mr. Johnson. Well, the fact is, though, that terrestrial
broadcasters make a lot of money on those sound recordings
themselves.
Mr. Warfield. I wouldn't say we make money on the
recordings.
Mr. Johnson. Well, if----
Mr. Warfield. The free broadcasting of those records that
are provided to us by the record labels is what allows them to
expose that music to the consumer, which will then turn around
and purchase those records, which benefits both the label and
the artist at that point.
Mr. Johnson. And having those sound recordings broadcast
causes you to be able to reap----
Ms. Collins. Exactly.
Mr. Johnson [continuing]. The benefits of advertising
revenues that are derived from that exploitation.
Mr. Warfield. I wouldn't use exploitation, but there are
certainly some broadcasters that do well with that. There are
some that do not.
And the imposition of this additional tax on many of these
broadcasters in small and medium markets could be the
difference between whether they remain in business or not,
whether they continue to service the communities that they are
licensed to serve. And, unfortunately, as a minority
broadcaster, a lot of small and medium broadcasters that target
these audiences are people that I am very much aware of that
don't have the means, unfortunately, to pay additional costs.
Mr. Johnson. Well, I tell you now, I am looking at Clear
Channel--I am looking at a report here where Clear Channel
Communications reported revenues of $1.8 billion in the second
quarter of 2007, an increase of 5 percent from the $1.7 billion
reported for the second quarter of 2006. And then the net
income increased 19 percent to $236 million in the second
quarter of 2007.
There is a lot of money in terrestrial broadcasting. Part
of that money comes from Web broadcasters who pay royalties to
the terrestrial broadcasters for running their transmissions
over the Web, isn't that correct?
Mr. Warfield. Mr. Johnson, I would respectfully indicate
that our industry--and I believe I saw a press release
yesterday that the broadcast industry has grown from $15
billion to a $20 billion industry from 1998 through 2006.
Mr. Johnson. My question----
Mr. Warfield. But what I would indicate with that is that
all of that growth occurred between 1998 and 2000. There has
been absolutely no growth in our industry----
Mr. Johnson. Okay.
Mr. Warfield. Respectfully, what Clear Channel has done,
that is wonderful for Clear Channel. But that certainly does
not translate to many broadcasters in this country today.
Mr. Johnson. Well, my question is this: Webcasters pay a
fee to broadcast terrestrial radio over the Web, correct?
Mr. Warfield. In some cases, that may be true.
Mr. Johnson. Well, I mean, no respectable broadcast radio
transmitter would allow their signal to be broadcast over the
Web without getting paid for it.
Mr. Warfield. We broadcast ourselves. We stream two of our
radio stations. Of the group that we have, we stream two radio
stations on the Web only.
Mr. Johnson. And if anybody wanted to broadcast your
programming over the Web, you would want them to pay you for
that.
Mr. Warfield. If you know anyone that would like to do
that, I would love to speak with them. I have not had that
opportunity in our company.
Mr. Johnson. Well, there are a lot of folks out there who
are broadcasting over the Web and paying money for it. And if
you look at that in terms of that Web broadcast being like a
sound recording, it is paying the performer, in other words, to
broadcast. And so I don't see why terrestrial broadcasters
should be exempt from having to pay for the----
Mr. Berman. The time of the gentleman has expired.
Mr. Johnson. Thank you, Mr. Chairman.
Mr. Berman. I will recognize myself for 5 minutes.
If it is any consolation, Mr. Keller, my guess is that the
radio stations you will be advertising on are probably
boycotting the Dixie Chicks. [Laughter.]
Mr. Keller. I hope so. [Laughter.]
Mr. Berman. Mr. Warfield, continuing to beat on you.
[Laughter.]
I grew up and live in Los Angeles. There is a wonderful
baseball announcer there named Vin Scully who broadcasts a
pretty magical game in a very magical way. And no one can tell
me that Vin Scully's broadcasts of Los Angeles Dodgers games
doesn't attract fans to go to those baseball games.
In other words, I really don't have serious doubts that
your promotion of records gets people interested in that music.
But I think no one in the world would suggest that, because the
station that broadcasts Los Angeles Dodgers games is helping
the Dodgers increase its fan base and its purchase of uniforms
and caps and other things for which they have ownership rights,
that the Dodgers are somehow obligated to allow that station to
broadcast the Dodger games for free.
Analytically, what is different about this situation than
that?
Mr. Warfield. Mr. Chairman, I was, you know, born and
raised here in Washington, D.C. It was----
Mr. Berman. Well, that is a different problem. [Laughter.]
Mr. Warfield. I was a Senators fan, by the way, you know,
living in Anacostia.
And I grew up here in Washington, D.C., sitting on my porch
listening to a--trying to pick up a small AM radio station in
Baltimore, WEBB, to hear music that ultimately I would actually
go out and buy. More years ago than I might want to say, it is
almost 50 years ago that I did that. But that relationship with
music radio stations and record companies and artists continues
today.
I had such an extensive collection simply because of what I
heard, and I went out and bought. And I would argue that today,
that practice is still in effect. I spoke to my nephew
yesterday afternoon----
Mr. Berman. Yes. I don't contest it. I am not challenging
the mutually beneficial nature of the relationship.
I am just trying to understand why, in this area, the
recognition of that relationship makes one conclude that
therefore one party to that relationship shouldn't pay for what
they are playing.
Mr. Warfield. I am sure that was a negotiation that existed
between that broadcaster and that baseball team at that point.
In terms of driving people to the seats, it is sort of whether
they are winning or losing.
Mr. Berman. Fair--that is a--so maybe the thing isn't to
pass a statutory license to compel record labels and recording
artists and bands to provide their music at a certain price.
Maybe it is to just let the free market play and let a radio
station have to negotiate for every record it wants to use with
the owner and the----
Ms. Collins. Right.
Mr. Berman [continuing]. Recording artists and all the
people who have interest in that sound recording. But that is
not a good system. Is it?
Mr. Warfield. I think the system that is in place now has
worked very well for the recording industry and the radio
industry----
Mr. Berman. Right. All right.
Mr. Warfield [continuing]. And for the artists, as a matter
of fact.
Mr. Berman. Well, but part of it is because it is a
mutually beneficial system, right?
Mr. Warfield. Mutually between the radio stations, the
record labels, and the artists----
Mr. Berman. Yes.
Mr. Warfield [continuing]. Absolutely.
Mr. Berman. When one party to a relationship that the other
party thinks is mutually beneficial thinks it aint that
beneficial, in America we let the parties sort of decide----
Ms. Collins. Right.
Mr. Berman [continuing]. Whether that relationship is
mutually beneficial, don't we?
Mr. Warfield. Well, when those individuals--I know, again,
we have music day in our radio stations in all of our markets
at least once a week. And we have no shortage of individuals
from the record labels, nor artists, that want to come to the
radio station and work to get airplay or work to have
interviews.
I think that at that point I see a relationship that is
certainly mutually beneficial for all parties. It is helpful to
the radio station. It is helpful for the record labels, and
certainly provides exceptional exposure for that artist,
whether it be a new artist or an established artist that has
new releases.
So I think it is absolutely beneficial to all parties.
Mr. Berman. All right. Well, my time has expired. But I
am--oh, good. [Laughter.]
Mr. Issa. I am there for you, Chairman. [Laughter.]
Mr. Berman. The gentleman from California, Mr. Issa?
Mr. Issa. Thank you, Mr. Chairman.
And I rushed back because this is so important.
Ms. Collins, if you had the right to withhold from those
who do not pay you a fee for your performance, today would you
exercise it?
Ms. Collins. I am sorry. Could you repeat the question?
Mr. Issa. It is a tough one.
The gentleman sitting next to you is happy to promote your
music. He is doing you a favor. If you had the right to tell
him that you did not want him to do the favor at his station
anymore, if you had the right to do that, would you likely do
that or consider it? Or, this is assuming he is paying you
nothing.
Ms. Collins. Oh, I am getting an education here after being
in the dark for so many years. And, of course, I would say,
yes. Let us negotiate a price.
I mean, that is a free market enterprise. That is what free
markets are about. We have other systems of Government which
preclude this kind of negotiation. We at least say that we
don't--that we are not those societies. We are an open, free
market society.
Yes, I would negotiate.
By the way, even if there is promotional value--and of
course there is on the radio--but that must be paid for. That
is a service, and there is a profit being made.
As I said before, we are selling, with our music, plenty of
advertising. And we are making, in most cases--now, there are
exceptions and, you know, we were talking about the--
distinguishing between those stations which can afford to pay X
and those who can afford to pay Y--I think pay for play is the
question here and respecting the artists in a society that says
it respects artists.
Mr. Issa. I am going to ask you a question I should know as
a fan of yours, but I am unfortunately a fan of your music not
currently being written.
Have you done anything in the last few years that you would
like to get play on? Are you doing any kind of music anymore?
Ms. Collins. I am always touring. As I said, I do----
Mr. Issa. No. But I am asking a question----
Ms. Collins [continuing]. I make records. They are on the
market----
Mr. Issa. But I am asking a question for a reason, and bear
with me.
I told you I have spent a little bit more time with Carole
King because she has been around here on other issues. And one
time she did a concert, and she played songs I had never heard,
some of which I liked and some of which I wasn't interested in.
And I asked about them. And they basically don't get any play
because the oldies, if you will, in fact, are what the stations
play.
And I asked about it. She said: Well, this isn't what I am
known for but this is a lot of what I am doing, and I am
continuing to create.
If you had the ability to negotiate and were in Carole's
position, for example, I am assuming that you would include in
for playing my best known songs, the ones that are played
habitually on the radio, that you would also want those
promoted, something that is not happening today on any of these
radio stations. Is that something that you feel you are being
denied because, in fact, there is an absolute right to play
your winners and no obligation to play those?
Ms. Collins. No. No, I don't feel that is true. I think
that the market will dictate and the audience for the song will
dictate--you know, I would love to have some of my lesser known
songs played a lot on the radio.
When I do a concert, I design the concert. I include new
things, old things, classic things, brand-new songs. My job as
an artist is to bring all of those things together and to
create a balance. And the radio has helped me do that.
Mr. Issa. Right.
Ms. Collins. It still means that I have to be--must be paid
for my performing.
Mr. Issa. Mr. Moore, in your case, has a station ever been
willing to promote your pieces, or do they prefer to play the
best-known pieces----
Mr. Moore. No, no.
Mr. Issa [continuing]. As they like?
Mr. Moore. No, no.
I just--well, last year, I have been promoting a new album.
And you would be surprised, if you don't have the album, with
some of the people I have had on there.
But, no, radio--and I am pretty sure that my dear colleague
next to me--they didn't give--I don't think they gave--I have
to believe, until I am straightened out, that they didn't give
me the airplay.
Mr. Issa. Okay. So the real bottom line is that they play
what sells for them. They don't play what you would like to
have promoted.
Mr. Moore. Oh, no. No, no, no, no. No, that is true.
Mr. Issa. As a general rule.
Mr. Moore. That is true.
Mr. Issa. Well, that has been my finding.
Now, of course, part of the problem is I want to listen to
oldies stations. The music that I like is the music that they
are not making anymore for the most part. And that would be one
of my questions for Mr. Warfield.
How in the world do you justify the promotional value of an
oldies station if, in fact, you say you are promoting, but
these are songs that are well-established and that is
exclusively what is being played on lots and lots of AM and FM
stations?
Mr. Warfield. Within our company, we don't have any oldies
stations.
But I will say to Mr. Moore--we had a brief conversation
before this session started this morning--we do have a radio
station in New York City, WBLS, that is a contemporary music
station. But we have an air personality on on Sunday mornings,
Mr. Hal Jackson, who has been a broadcaster for nearly 70 years
who--I do have a copy of Mr. Moore's album because that is
something that--his new material, as well as his better-known
material, was played on that program. And we did give the
audience an opportunity to hear that. So----
Mr. Issa. Okay.
Mr. Chairman, could I ask one follow-up question if there
is time? Thank you for your indulgence.
Because I think it is clear that we are going to deal with
the disparity that exists between different forms of
communication of people's performances, hypothetically, Mr.
Warfield, if, in fact, you had the right that you presently
have for your stations for the first 12 months of a new album,
of a brand-new song, and you could play that for free, would
that be a congressional way and an industry way of encouraging
you to play the new--even if it is re-mastered--but, in fact,
clearly promote what I think Mr. Moore and perhaps Ms. Collins
would like to have promoted?
Mr. Warfield. The decision of what gets played on the
various radio stations in our company is made on a market-by-
market basis----
Mr. Issa. No, no. I was only asking a very narrow question.
Mr. Warfield. I, I----
Mr. Issa. Would you tend to play free versus pay because
there would be a financial benefit to your promoting new?
Mr. Warfield. I think that becomes a matter, again, for
each individual market. It can----
Mr. Issa. No. I am only asking you.
Mr. Warfield. I would say I would leave that decision to
the local programmers. I don't get involved in programming
decisions in music.
Mr. Issa. Thank you, Mr. Chairman.
I guess I am not going to be entitled to an answer of
whether free sells better than cost. [Laughter.]
But I think we have established that in other hearings.
Ms. Collins. Free.
Mr. Berman. It is a willing buyer, willing seller
situation.
Ms. Collins. Yes, yes, yes.
Mr. Keller. Mr. Chairman?
Mr. Berman. I was going to let anyone else who, until the
last one drops. [Laughter.]
Mr. Keller, the gentleman from Florida.
Mr. Keller. Thank you.
Mr. Hodes, if you had made it big during your days as a
performer and songwriter, would you be stuck with the low-end
Government job that you are stuck with right now? [Laughter.]
Mr. Hodes. Well, I did make it big. Here I am.
Mr. Keller. All right. [Laughter.]
We are happy you are here, at least that side is, I am
sure, but---- [Laughter.]
Mr. Hodes. That is okay with me.
Mr. Keller. Just teasing. I am just teasing.
Mr. Berman. Us and the country.
Mr. Keller. And the country. Fair enough.
Ms. Peters, you have talked about making sure the
performers are paid royalties. Do you think those royalties
should be paid in cases where their music is played in
restaurants, bars, retail shops, shopping centers, and sporting
venues?
Ms. Peters. Ultimately, yes. But the focus today is on
radio over the terrestrial broadcasts. But I have always
supported a broad performance right.
Mr. Keller. And should they be paid when their music is
played in small-and medium-sized radio stations?
Ms. Peters. I think it is the marketplace. The issue is we
are really talking about equitable remuneration. And equitable
means under the circumstances; willing buyer, willing seller,
and the circumstances that both find themselves.
Mr. Keller. Right.
But what I am getting at is you have heard from Mr. Berman
earlier today, who is an acknowledged leader and well-respected
on this issue, that when it comes to making sure performers are
paid royalties, he is not going to be going after restaurants,
bars, retail stores, sports venues, shopping centers, and small
radio stations. And I just want to know if there is any sound
basis in the copyright law for making that distinction.
Ms. Peters. I would suggest to you that every step forward
in expanding the performance right is a positive step. And it
is up to Congress to decide the scope of the step it is willing
to take at any particular time.
Mr. Keller. Well, thank you. You sound like the politician
here. [Laughter.]
Let me go to Ms. Collins.
You have heard from Mr. Warfield that if they have to pay
performers these royalty fees, then maybe they will just switch
to other formats like talk radio----
Ms. Collins. Well, they would have to pay the talkers.
Mr. Keller. Do you think that is realistic that a top-
rated, top-40 station is going to switch and try to compete
with Rush Limbaugh?
Ms. Collins. Well, I don't think that is the question.
I think people want to hear music. And I think if the
stations are going to broadcast music, then they need to pay
the performer.
So I don't--I think, again, it is a market-driven question.
It is a question of what advertisers want. It is what happens
between the buyer and the seller. And we don't want to be left
out in the cold.
Mr. Keller. And I don't want to cut you off, but I only
have 5 minutes here.
And I agree. I think a marginal-rated station may do that,
but you are not going to have the number one-rated top-40
station switch and try to do talk radio, especially when the
market is flooded as it is.
Mr. Warfield, in your testimony, you talked about
broadcasters paying songwriters $450 million a year in direct
performance royalty, yet they are paying the performers zero.
They get, instead, indirect promotional benefit by playing
their records, you suggest.
Can you please explain why, in the broadcasters' rationale,
it is okay to pay the songwriters for their copyrighted works
but not okay to pay the performers?
Mr. Warfield. The songwriters are not benefiting actually
from the sale of the records that is generated by the airplay.
The same way that the artist is benefiting, the record label is
benefiting through the sale of the product----
Mr. Keller. I get it.
Mr. Warfield [continuing]. The composer----
Mr. Keller. Well, the songwriter benefits from the record
sales, too. He gets a certain amount for each record sold.
Let me go to my next question. Can you explain the
distinction, Mr. Warfield, as why it is okay to pay the
performer in terms of satellite radio, but not with respect to
terrestrial radio? What is the distinction that makes it okay
for you guys not to pay the performer?
Mr. Warfield. I think that there are three distinctions:
one, digital; secondly, the interactivity of the new streams
that are out there; and the fact that they are also
subscription. I think there are three distinctions that
separate these new platforms from terrestrial broadcasting.
Mr. Keller. I thought you were going to say it is because
we do things like public interest programming and public
service announcements and that sort of thing. That is not your
argument for why you shouldn't be treated differently from
satellite radio?
Mr. Warfield. Well, we still do that. We are required to do
that. And we are happy to do that. And we will continue to do
that.
Mr. Keller. Okay.
Ms. Collins, you are a songwriter, as well as a performer?
Ms. Collins. I am.
Mr. Keller. Do you benefit from increased record sales?
Ms. Collins. By the play on the radio?
Mr. Keller. Yes, ma'am.
Ms. Collins. I think it is a large subject. I think
everything interacts. But if one of my income streams has been
cut completely off for 50 years, you can see where my business
and my personal life and my health care as I grow older is
suffering.
Mr. Keller. Thank you.
My time has expired, Mr. Chairman.
Mr. Berman. I thank the gentleman.
And, just at some point after Mr. Cohen questions, I do
want to come back to the register of copyrights on the issue of
when a record is sold, you know, retail, what the compensation
stream and whom it goes to, just to clarify it for the record.
The gentleman from Tennessee, Mr. Cohen?
Mr. Cohen. Thank you, sir.
Mr. Keller asked one of the questions I was going to ask
and it was of Mr. Warfield. And I still don't think we got the
answer. But the belief in why songwriters should get paid and a
singer shouldn't when you play that song.
Mr. Warfield. The system has been in place for the last 80
years. Certainly, it is designed to support the creator of the
music.
You know, the copyright is certainly designed to promote
the progress of science and useful arts.
And, you know, absent a performance tax to date, there is
certainly no lack of sound recordings being produced.
Certainly, as I have indicated in this industry----
Mr. Cohen. I know that, but what is the difference? Why
should Mr. Porter get money when you play ``Soul Man'' and Mr.
Hayes get money, and not Mr. Moore?
Mr. Warfield. Well, the benefit to Mr. Moore and to the
record label accrued to them upon the airplay, which then
generated the record sales, which then benefited the label----
Mr. Cohen. But that is a by-product. Why should Mr. Porter
and Mr. Hayes get paid also when they buy that record? The
songwriters get paid every time.
Ms. Collins. Every time.
Mr. Cohen. They always get paid.
Ms. Collins. Always.
Mr. Cohen. It is only the singer. And there are more
singers that, to be honest with you, sir, that are minorities
who I represent than there are songwriters----
Mr. Warfield. It is----
Mr. Cohen. The songwriters oftentimes are Caucasian, more
often than not, and a lot of the performers are African-
American. They are minorities. And they are really, because of
your system, they are getting shortchanged.
Mr. Warfield. I wouldn't say because of our system. I think
what we need to also acknowledge here is that there is a long
history of African-American and minority performers that have
been mistreated by the record labels and not necessarily due to
any fault----
Mr. Cohen. So that is wrong--because that is wrong----
Mr. Warfield. And that argument--you are absolutely right,
but that is really an issue with the record labels and their
artists that have helped them generate significant revenues
over the years----
Mr. Cohen. No, sir.
Mr. Warfield [continuing]. Rather than----
Mr. Cohen. Excuse me, if I can?
It is the fact that when you play the song on the radio the
minority guys don't get paid. It is the Stoller and Lieber, or
whatever their names are. They get paid, the songwriters.
Ms. Collins. Always.
Mr. Cohen. But the guys in Rocky Joes don't get paid, or
Smokey Joes, or whatever it is.
Ms. Collins. That is right.
Mr. Cohen. They don't get paid when they sing it. It is the
guy that writes it, the Tin Pan Alley guy. And you and I should
be on the same team.
Mr. Warfield. I am on the side of the team that has built a
very successful business for the last 80 years and don't find--
I think that, on your argument, there certainly needs to be
something addressed with the record labels themselves. That is
not a responsibility that should be laid at the feet of the
radio broadcasters.
Mr. Cohen. Ms. Collins, let me ask you. You have listened
to Mr. Warfield here today. Can you see both sides now?
[Laughter.]
Ms. Collins. You mean, rows and flows of angel hair? We
need a little music here.
Mr. Cohen. I have got more time. Keep going. [Laughter.]
Ms. Collins. You know, the issue of the performer as a
misused and abused section of the entertainment population is a
very important one. It is true. All writers get paid all the
time.
Mr. Cohen. Right.
Ms. Collins. They get paid when the song goes on the radio.
They get paid when I do a concert including my songs or other
people's. They get paid when the record sells.
So they are getting the double dip--that is where the
double dipping is happening in a way. That is equitable. I
agree with that. I approve of that.
But the performer, the artist, is treated badly.
I was saying before, you know, it is sort of like, you
know, we still, all of us performers, for the most part, go in
the back door, through the kitchen. And I think of this as a
kitchen route. You know, through the funny little entrances
which you can't find to do the show. This is one of those
situations.
I don't know why it has happened. I think the lobby is very
strong.
Yes, it is very profitable not to pay the artists. Not for
the artists, but it is very profitable. In 80 years, it has got
to be extremely profitable.
Mr. Cohen. You know, Leonard Cohen is a great songwriter,
and he was blessed with a great voice, too. But, nevertheless,
when Jennifer Warnes sings his songs, they are better. And
shouldn't Jennifer Warnes get paid for that?
Ms. Collins. She certainly should. And he should and does.
Mr. Cohen. Mr. Warfield, you said you like the system like
it is today. What if we passed a bill that said the songwriters
don't get paid when they get their songs played----
Ms. Collins. Yes, let us change places.
Mr. Cohen. Yes. Would you like that better?
Mr. Warfield. I sort of like it the way it is right now.
[Laughter.]
I am not for advocating any changes, as I said here today.
Thank you.
Mr. Cohen. Thank you, sir.
And thank all the panelists.
And I want to thank--I haven't thanked the Chairman. And
this is like the Academy Awards when you are up here. You have
to thank all the members of the Academy and my father----
[Laughter.]
Mr. Berman. And don't forget your family.
Mr. Cohen. Yes. My father thanks you, my mother thanks you,
my brother thanks you, and I thank you.
Mr. Berman. Just to, I guess, to recognize myself, and
then--first, Mr. Warfield, I am old enough to remember a time
when the broadcasters did want to change the way the
songwriters got paid for their music. They wanted to reduce it.
They wanted to change the nature of the license. It was a major
struggle here in the late 1980's.
So you may think it is just fine now, but there was a time
when the industry didn't think it was so fine.
I would just like to ask the register to clarify one, this
issue of who gets paid and when in, you know, short, simple
terms. I think it has been said but it is--these things get
complicated, and it is good to repeat it.
And also, Mr. Coble had a question prepared, but he had to
go to his hearing. If there was a performance right, if we got
rid of that exemption for terrestrial radio, why doesn't the
money just go to the labels? What is the mechanism by which
that money would be distributed?
So if you could just deal with those two issues.
Ms. Peters. Okay. Let us start with the first one, who gets
paid. And actually, your colleague knows the answer as well as
I do.
Composers, lyricists, musical composition copyright holders
have a full panoply of rights. And, certainly, the reproduction
and distribution right is implicated in the making and sale of
a phono record.
And they, actually, by statute, get paid subject to a
compulsory license. It is called a mechanical compulsory
license, section 115. It can be voluntarily negotiated, but
because the mechanical license has a rate, it is bargained
down.
But there is a payment to every composer and every music
publisher for every recording that is sold in the marketplace.
And just as there is for every, you know, for most
performances.
The beauty of section 114 that deals with performance
rights for sound recordings is that there is direct payment to
performers. The income does not funnel through the record
companies.
There are representatives here of SoundExchange. The money
goes to SoundExchange, and it is distributed to the record
producers and to the performers. So it is not, as is typical
with record sales, funneled through the record companies.
Mr. Berman. Mr. Issa?
Mr. Issa. Thank you.
You know, I spent a couple years in business. And I
finished up my last few minutes debating the relative merits of
free versus pay. And I was kind of confounded that the
broadcasters wouldn't have a fairly simple, you know, decision
on which they prefer, because the youth of America certainly
do.
And I would like to touch on that for a moment.
It is very clear over the last decade, the 12 years,
actually, since the 1995 act, that free trumps pay. It is
clearly why we have had to deal with the copyright issues. It
is clearly why those evil record labels that pay the artists
nothing have seen their ability to pay them that nothing go
down pretty precipitously. [Laughter.]
You know, there is no more lose lose than there is no money
coming in, there is no money going out. Record sales have been
dropping. And they have been dropping not because people listen
to less music but because music is ripped and then ripped off.
When your industry improves from analog to digital, you are
going to be able to deliver far better broadcasts, while you
still have a little loop in the system and one that we are very
aware of, which is that I can record your terrestrial
broadcast. I can record that all I want.
There is no legal prohibition on my taking the analog.
There is no legal prohibition on my taking the metadata, the
digital information that is going to tell me that it is Mr.
Moore's or Ms. Collins's music. It is going to tell me
everything I need to know. It will probably give me the words
so I can sing along because you will be broadcasting the
information for karaoke machines.
All of that is going to be, under the current statutes--and
correct me if I am wrong; that is why we have the Copyright
Office here--it is going to be all free for me to download
digitally because today terrestrial broadcast has essentially a
free license for me to buy a piece of equipment to record that
all I want.
Have I missed anything from the standpoint of current
copyright?
I mean, that is correct. I see you are shaking your head
so----
Mr. Warfield. Oh, for me?
Right now, with HD-radio, which is in its infancy in our
industry, there are no pieces of hardware at this point that
allows that type of recording, as a matter of fact----
Mr. Issa. Well, I can tell you that the consumer
electronics industry is well-represented here for a reason,
because clearly that is a nanosecond away.
I have recused myself from the antitrust hearings on XM and
Sirius because a company that I founded is now a hardware
supplier in that industry, even though I don't own any stock.
So I am acutely aware that what is happening in Sirius and XM
is not a technological--as a matter of fact, it is easier to do
on your music, which is not encrypted and encoded and requiring
a separate chip.
In fact, there is no reason it couldn't be done today. And
there is no reason that it actually--that the equipment doesn't
exist other than, to be honest, you are not broadcasting enough
stations in high enough, you know, supply, if you will. But it
is only a matter of 6 months, 1 year, 2 years. It is an
inevitability.
And I am the former chairman of the Consumer Electronics
Association. I am definitely here to tell you we will see those
at CES, if not this January, then next January.
And I am proud of the industry I came from. I think it is a
very innovative industry. However, the songwriters and the
musicians are a very innovative group.
And, in fact, you are sitting here today saying to me your
industry cannot afford or doesn't owe anything for the huge
amount of content that you play every day and that, under
existing laws, if this body, this literal Committee, doesn't
take action, will be broadcast in high-definition, very nice
sound quality with digital data so you know what song it is to
the listeners that will be recorded within a year or two and,
as a result, CD sales that you claim to be promoting will
plummet probably to zero.
And you are here today saying you can't afford to do
anything about either problem, is that correct?
Mr. Warfield. That is not a problem that we are facing
right now. It is just not available in our industry----
Mr. Issa. It is not your problem today.
Mr. Warfield. It is not an issue within our industry at
this point because they are not----
Mr. Issa. When that recording device is on the market in a
January Consumer Electronics Show this year, next year January,
will it be your problem? And what will you do about it?
Mr. Warfield. I think that would be an industry concern at
that point. I don't know what we would do.
Mr. Issa. Okay. So, you know, look, I am a friend of the
broadcaster, maybe a little more, little less than Mr. Coble.
But I have to ask, if we don't act, will we destroy an industry
that you claim you want to promote if we don't deal with both
of those problems and do it in a timely fashion?
And I know my time is expired. And, Mr. Chairman, thank you
for your indulgence.
I want us to continue working on this because I think you
are here today. I hope that we have individual broadcasters
back here so they can answer those two questions of what
happens when all of their high-quality music is recordable with
metadata and, in fact, the record industry goes from a shadow
of what it once is to nothing, then who--won't the songwriters
also be losing?
Thank you, Mr. Chairman. I yield back.
Mr. Berman. I think we are about to close. I am first going
to yield half a minute to the gentleman from Florida, Mr.
Keller.
Mr. Keller. Thank you, Mr. Chairman.
I want to thank all of our witnesses for being here. I am
still confused, but on a much higher plane, having been through
this. [Laughter.]
Mr. Warfield, you have been there, the only one out of five
espousing your position, the broadcasting position, so you have
appropriately earned your last name today. [Laughter.]
And I want to thank you especially. [Laughter.]
I thank all of the witnesses. I tried to be fair with all
of you, to get your all sides, and I think we brought those
out. And it means a lot that you took time out of your busy
schedule to be here, and especially my esteemed congressman,
Mr. Hodes. And I wish I had your creative background, as well
as your political skills. I want to thank you for being here.
And I will yield back the balance of my time.
Mr. Berman. I thank the gentleman.
I might point out that we did try to get another witness
who was opposed to this concept of compensating for the
performance right, but Mr. Warfield you were a good warrior.
[Laughter.]
And other than anything else the panel wishes to say to us
or each other, I am prepared to--is there any----
Mr. Issa. Can they make a deal here today? [Laughter.]
Mr. Hodes. Mr. Chairman?
Ms. Collins. I----
Mr. Berman. Ms. Collins?
Ms. Collins [continuing]. Respectfully just want to say
that I am very grateful to be here. That you have all made
yourselves available to this issue, put in so much time on
thinking about it, and I know the future of music is going to
benefit from this meeting today. Thank you.
Mr. Berman. Paul?
Mr. Hodes. We have a tradition in this country of change.
And sometimes change is a four-letter word. But the broadcast
industry has enjoyed a tremendous benefit for 80 years, and I
believe the change is coming.
If it is any consolation to Mr. Warfield, when the
broadcast industry pays a fair and equitable performance
royalty, the richness of our music in this country will be
enhanced. Performers will do better. By doing better, they will
make more and better music, and ultimately, that will inure to
the benefit of the broadcasters.
So I am hoping that the broadcasters can look at the bright
side because there is one, even though change is tough.
Mr. Berman. Did I get a sighting from my right here?
Mr. Cohen. Yes. Without conjuring up images that they shoot
horses, don't they, I would like to ask one last thing.
Mr. Warfield, if we pass something to give songwriters
money, that would cause the broadcasters----
Mr. Hodes. Performers.
Mr. Cohen [continuing]. Performers--excuse me, I am sorry--
performers money, that would cost you some of your additional
costs, right?
Mr. Warfield. Correct.
Mr. Cohen. And then would you just reduce your costs--your
profits, or would you charge the advertisers a little bit more
money?
Mr. Warfield. In some cases, broadcasters will not have the
opportunity to increase their revenue generation from
advertising. And, unfortunately, there is this perception that
all broadcasters are, you know, making a lot of money. And,
unfortunately, some broadcasters, quite honestly, would
possibly have to go out of business or to sell their radio
stations.
Mr. Cohen. You don't think you could charge a little more
advertising? It is not a lot of money. You could charge just a
little more and then the public would pay for it when they buy
goods, and the public, you know, that is where it ends up
being?
Mr. Warfield. We have an industry that from 2001 through
2006, as evidenced in many trade articles, is absolutely flat
with no revenue growth whatsoever. So to counter that, to
believe that we would be able to generate additional revenue
through higher rates, is not supported by the performance of
the industry over the last 6 years.
Mr. Cohen. Okay. Thank you, sir.
Mr. Berman. The hearing of the Subcommittee is adjourned.
Thank you all very much.
[Whereupon, at 1:16 p.m., the Subcommittee was adjourned.]