Ur rate is 15 20 5 . This structure, this payment structure, is it set by the industry and by the interested parties, or does the federal government have a role in this as well . Allen the federal government plays a big role. Regulating rates such as mechanical royalties which are the royalties paid for the reproduction of a song or musical composition. The sound recording side remember there are two copyrights in music the Music Publishing side, which is the underlying side of words and music, and then there is a sound recording, which is the of that musical composition. On the sound recording side, typically those rates are negotiated on a fair market basis. Some would argue that the songwriters and publishers are a are at a slight disadvantage because they are regulated while the sound recording site is not. Peter joining us is jimm phillips. Jimm good morning. A lot of the recommendations in your report kind of look at how the industry can Work Together to advance some of these ideas. Obviously, a compromise has been fairly difficult thus far. Are extent should the the recommendations that you are proposing going to require congressional mandates, as opposed to Industry Collaboration . Peter i think in the Music Industry is a fractured industry because there are two copyrights and two size to the revenue split. A lot of times, you see the two sides in a fight on who gets what share of the of a particular pie. And there doesnt seem to be a lot of collaboration as to grow that high p ie. Ofhink there register copyrights has been pretty active in looking into some of the issues. 245 page report on licensing this year. Some of the recommendations requirede have governmental intervention. In other areas, there may be a ine for a nonprofit to get and try to play an agnostic role and solve some of the problems we highlight in the report. Ultimately, congressional activity may be required as well. Peter we recently talked to gary sherman of the recording industry. Here is a little bit of what he is calling for when it comes to changes in the Music Industry. [video clip] paid byuld want to be a. M. fm radio. People are shocked to learn that in todayss day and age, a. M. And fm radio do not pay artists when they play the music. Industry 16 billion where they are earning 16 billion in advertising revenues every year from basically the use of music and they pay nothing for it. There is no other copyrighted work that is discriminated in that way. There are virtually no other developed countries and the world that discriminate recordings that way. Yet, special exemption in u. S. Situation. Ique we want to fix that. We want to fix a belowmarket rate standards. For some reason, they were grandfathered at a time when they were a start up. That grandfather still exist even though they are making money hand over fist. They want to be sharing their revenues more fairly with the people who create the music on which their service is based. That needs to be fixed as well. We really need to do something about making sure that all valuers are a fair market regardless of the platform they are on. Peter do you agree with mr. Sherman . Allen yes, it is pretty shocking when you look at the industrialized nations around the world that are paying or providing this performance right for sound recordings that we dont have in the u. S. I believe the other countries that are not paying the performance right include china, ira it is all of europen, south america who are. Worldsid as the wealthiest country and we are not providing back to our artists. It is shocking that there has been congressional activity on much in the last several congressional session and it has not moved forward. Price pay act to try to provide that performance right. If you look back over time, generally labels were happy to have their music played on radio and did not care necessarily about being paid for it because they viewed it as a promotional tool. You got on the radio, you sold a cd, everyone is happy. We shifted to this era of listening. It is no longer music as a product as we move to spotify and other streaming Services Like youtube. We are living in an era of access to music and a listening. Listening on the radio is another form of listening that should be paid for. Should the issues involved with them music licensing industry, like what is being addressed in the fair play a number of stakeholders are concerned the wider issues like this one of the copyright authors could get swallowed up could swallow up concerns within the Music Industry and other industries . Allen i think there is room to move forward on this immediately. Rewrite or wholesale wholesale revision of the takeight act needs to place. Maria has a knowledge that with the report that came out earlier this year that there is no reason that the issue cannot be advanced this year. Again, we are the world possible of country and it is not right we are not providing. That there is a contravening bill to prevent this right from happening. Peter what is that bill . Allen local radio free to act local area local radio freedom act. Peter with that bill and the supporters of that bill argue that this artist is getting great promotion in this free play. Allen right, i think that has traditionally been the argument. I think labels and artists have been happy over the past several decades to be able to sell a cd, but we have moved into an era paid byople are being listening. If you look at some of the conference of the conference about streaming rates from digital streaming services, i think on that comes from the fact that we are looking at a totally different Business Model and a totally different model for people to consume and listen to music. You are being paid every time someone listens to your song, not when someone goes out and buys a product and listens to it once, or listens to a thousand times later. Peter in your rethink music report, transparency and parents and payment flows in the Music Industry, you call for greater transparency. What do you mean . Allen there are two facets to that. There is revenue transparency and rights transparency. Revenueng transparency is giving artists and creators, songwriters, more insight into where their money is coming from, how those payment flows are making their way to them, who is taking a cut along the middle. What are the rates being paid for by spotify and other Digital Services . I think everyone knows what itunes is paying for a download. It is more difficult to know how us of scripture is being split up by spotify. On the right transparency side, there is a big issue created by a lack of requirement for copyright registration and that comes under the convention of the International Copyright treaty that requires for International Copyright protection that you cannot a copyright to be registered. If i create a song today, i have immediate copyright ownership of that. I am not required to send it to the library of congress or the register of copyrights to have that protection. What that means is often times, it is difficult to know who owns what copyright. Song into may write a a publishing deal, the publisher may subsequently sell the copyright to someone else and then you e up with Digital Servicesnd of someone who may want to use that. They may not know who to pay. That is the other part of this transparency piece. Peter when it comes to the payment transparency, is this something new in the past 15 years in the digital age, or has payment to musicians always been a little bit opaque . Allen i think certainly the narrative of artists and songwriters feeling like they dont understand where their money is coming from is not new. I think we are living in a world today where everyone is trackable everything is trackable. They can know where i am, you are, know what you are talking about on your cell phone aired there is no reason that artists and creators shouldnt be able to know where their songs are being streamed and how they are being paid for that. A significant time lag. In the worldwhere the song was played, they may come in up to 18 months after the listen of the sale happens. Jimm one of your major recommendations is to use globalit to meet a database. How would a nonprofit succeed in this area as opposed to the efforts of that have stalled over time . Allen when you look at the European Commission and the eu, try to greet a global rights database on the Music Publishing 2008 toughly between 2012, they spent 200 heroes investigating it and the project fell apart. Over issues about who was going to pay for it and who was going to put the data into it. Bringing believed that that could bring folks together in order to create a right database could help to solve that issue, but i think we also look at it as something we try to solve the issue on a go forward basis. One of the problems in the past has been trying to get folks to agree to give their data on older recordings and older views ago compositions and what we are saying is today there are 30 million songs available on spotify. The estimation is in 2025, there songs onillions of spotify. Could we aggregate those songs that will, over the next decade . An ngo canroll that come in and play and driving market shift to hopefully create rights transparency, or maybe create a system that allows more licensing of music. Jimm which should the industrys role be in all of this . We at berkeley are considering the possibility of working at a University Consortium to create this ngo. We dont believe we can move forward without input from the labels, also major independent labels. As the eu project improved getting everyone and all of the stakeholder groups to agree on every single point before you roll out a particular database or product is going to be very difficult. I think we are looking at it as we want folks to be involved and folks to provide us with advice and whether it is berkeley or some other in deal most forward, i do think you have to have those stakeholder groups involved. Speak to theyou Digital World that we are living in now when it comes to music, a getw that has changed our music in the last 15 years . Back i think if you look to 1995, 20 years ago, people would listen to am fm radio, hear a song that became a hit, they would like it, and go down to their Tower Records and buy a cd. They would buy a cd for a pretty significant amount of money, roughly 20 for a cd. I think the Music Industry became very accustomed to selling expensive products. There were a lot of people who were also upgrading their vinyl and cassette collection, older music they had. They were be buying it on cd. That shifted in 1999 when napster came around. The Music Industry was very slow to adjust to napster. It was not until 2003 that steve jobs convinced the Music Industry that there should be a download store. He begun to shift to this Music Service model. It is not really a new model anymore, it has been around since 2004, 2005, with a more legitimate napster. It was shot who Music Subscription Service yahoo Music Subscription Service. It wasnt until spotify arrived and integrated with facebook where people could see were their friends listened to ere people could see with their friends were listening to. We had moved into this era, i dont want to say everything is free, but everything feels like free. Part of that is been something to Music Industry is trying fight piracy. At least make it a frictionless transaction, ticket and dollar the formion fee in of some hifi servicing get folks all you can eat access to music. Phase. Still in a nascent we dont yet know where that is going to andy up. Certainly Subscription Services are growing very quickly. A 50 number of streams this year is growing. Subscriber bases are up and i think you will really see over the next two years where that model is going to head. Paris are going to where we are going to end up with that model. What is the Current System benefit the most . Allen major publishers because they are the ones with the negotiating power. Its an unfortunate reality, but i think perhaps the smaller artists dont just have publicer that a Major Corporation does when you are negotiating with some of these groups, or some of the services. Jimm professor, i was interested in what you have to say in the role of watching technology can play in music rights management. Can you explain how that would work . To pretend not want to be a blocking expert. Is hink it is something something that should be explored. A you look at the concept of decentralized right registry created by an ngo, and a block chain component where the world , for those ofed you who dont know, block chain is the system that powers crypto currency, a decentralized system that allows payments to be made and verified across a distributed computer network. With block chain in music, there is a lot of investigation of can you have what is called a smart contract that allows for those royalties to be paid at source . , hypothetical situation spotify is connected to block chain, block chain nose who should receive what royalty, and rather than the royalty going from spotify to a major label, or spotify to a major Rights Organization and trickling its way down to a artists, the split is made at the point at which spotify puts it on to the block chain. Professor, recently taylor swift recently pulled her Service Music from one of the services. With the she accomplished . Allen to answer your second question, i think she certainly accomplished elevating the issue of digital streaming payments to. Rtists and songwriters and she is certainly not the first person to bring this up, but she very publicly made a stand against, i guess what you would call free music. She pulled that music from spotify because he was opposed to the concept of their free service, their free ad supported service. She wanted to be able to have her music available on spotify only in the case that the subscriber only in the case that the person had a paid subscription. Spotify has two tears right now, a free tier or you can listen to all you want as long as you are willing to accept some advertising. And they have a subscriptionbased service where you pay 10 a month and can listen to all the music you want without ads. She wanted to be firewall away because she felt it was devaluing music. I certainly think she elevated the issue and made it very public. I want concern would be whether or not some of the stories that are coming out about payments from Digital Services are going to actually impact the uptake of those services, and we wont have the chance to see where they can end up if the general public is the idea that, i should not pay to i should not be personified because the money does not go to the creator anyway. The 10 a month you pay on spotify, you can listen to the list 24 hours a day if you like. Correct . Is she get paid for every play to mark allen she gets paid on a revenue share. The first ring with the calling everyream rate differs month based on a number of subscribers, or the subscriber revenue pool divided by the number of streams. Essentially, they take all of the money that is brought in and pay it out based on the total number of streams. So, to answer your questions are yes, she is paying for streams. Jimm on the ad supported services, just the rates are a lot lower. So there are also a number of efforts for instance, the department of justice is looking at the ad cap and the copyright royalty board is going through some of its rates proceedings for different types from music streaming another performance venues. To what extent is that going to the results of those proceedings tend to change the status quo . Allen again, on the publishing side, which is where at cap sit, there have been some concern that that site is at a disadvantage if you are taking sides. They are overregulated. Att of the review is to look whether or not there can be a more fluid system for licensing on the Music Publishing side. There has also been and will have more parity on the rate setting between Music Publishing and the sound recording side. Us,er why is it that siri pandora, they all have different ways of either not paying, or paying for music . Allen i think a lot of that is andup by the copyright act a lot of it is said by the copyright royalty board. The copyright royalty board is a tribunal appointed by the library of congress and the register of copyrights. Judgese a group of three and a look at copyright royalty up triednd they end an to set a royalty rate they feel very fairly represents the deservedion that is for the performance of the music. Royaltyhe copyright board only gets involved in certain situations. So, the amount of money a record label is able to negotiate to be paid from spotify is not touched by the copyright world keyboards. Yet, the rates that pandora pays are. You are looking at a fractured system were some of it is regulated and some of it is not. That has been the argument over the past two years. Peter in your report, you reprint the u. S. Happy office recommendations. It one of those is full federal protection of sound recordings made prior to february 15, 1972, closing and unjustifiable loophole and copyright legislature. Whats magic about the great 15th 1972 . February 15 1972 . Sound recordings that came before that have no protection based to a loophole based on a loophole in the way government was enacted. Earlierrt acknowledged that that is something that should be updated and there should be no difference for a summit was written and recorded in the 1960s versus one that was written and recorded in the 1980s. Peter have you see the role in the apples and 400 plus authorized Music Services that are available . Takeaways of the big from our report is really the technological back end of the music business has not caught up with the technical technological frontend of the business. Technological they were started in 2008 and built on cuttingedge Technology Just by virtue of the age of the company. They have to report their place to record labels and publishers will have been in existence for a long time. The standardsetting and the formats in which the Digital Services are required to report, there really is not a lot of standardization across the boards. Spotify reports in different formats to the three major labels and formats. Aggregators. Ts to there is the digital data exchange. I think that was one of the biggest takeaways from our report is that there is a tremendous challenge of the lack of technological back end to support these services. Going back to my comment a little bit earlier about everything and trackable these days, i think that there really needs to be a bigger move and that is one of the recommendations we make in the report to implement better technologies to track the payment from the time a listener listens to the music on spotify in the u. S. , sweden, japan, or and ever, to the writer musician. Is in the Music Industry transition in the digital era. This is something of library of congress and the u. S. Congress are all involved in. The executivee is director everything music and come and came out with a new report. Onnk you for being our guest the communicator. Allen thank you for having me. Cspan, created by americas Cable Companies 35 years ago and brought to you as a Public Service by your local cable or satellite provider. Coming up next, our series landmark cases concludes with the Supreme Courts 1973 decision in roe versus rate. Row versus wade. Later, the mayor of gary, indiana, suggests discusses gun violence. Persons having business before the Honorable Supreme Court of the United States is invited to draw near and get their attention. Produced incorporation with the National Constitution center. Exploring the human story and constitutional dramas behind 12 his stork Supreme Court decisions. Number 759. We hear arguments of number 18. And many of our most famous decisions are once the court took the unpopular. Casess go through a few that illustrate very dramatically and visually what ofmeans to live in a society 310 million different people who helped stick together because they believe in a rule of law. 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