Pay artists for radio air play. She thought, perhaps, finland was an exception in paying artists and that the rest of the world didnt pay artists. Their radio royalties. But it turns out that it was the other way around. The u. S. Was the exception in not paying radio royalties. There are two other countries, iran and north korea. Well, last summer, yanita proudly became a u. S. Citizen but in doing so shes now a citizen of a democratic country that doesnt honor am fm radio pay for its artists and she suffers a loss of significant income. This is not the American Dream that she envisioned. Her story shows that we need to fix the disparities in the current music licensing system to make sure artists are fairly compensated. If we dont, we risk losing the innovation from creators like her because they will no long very the incentive to create for the public. And so, id like to ask a question to Paul Williams. One area of agreement between you and the music licenseees on the panel appears of the importance of reserving the collective license mog tell that they pioneered. You made a compelling case that this is at risk of crumbling. Clearly that would be a bad result for music licenseees. What would that mean for the songwriters and composers, particularly youre smaller independent and upandcoming members . It would be devastating. First of all, thank you, congresswoman chu, for your advocacy. Youve been a great friend and we appreciate that. If the dissent decree is not modified our publishers are looking to withdraw their rights and this h if they do that it fragments the system and it becomes more expensive and less fsht. What we have to do is to look at the very, very quick adjustment to this system. But essentially, the entire Consent Decree is, at this point, is not like going into battle with one hand tied behind your back that youre going to fight where. One hand behind your back that youre going to feed your family with. As far as if performance and the sound recording, i absolutely believe that everybody should its a sad, sad story hearing of someone having a loss of income when they become an american citizen. We believe that everybody that contributes to the performance of music and creation of music should be honored. Its not an excuse to pay less to the people who create the music. We need to find a balance. And i think the trick is to let the fair market decide that for us. Thank you for that. My next question is, for both Chris Harrison of pandora and rosanne cash. Last year pandora embarked on a campaign to rally artists to sign a petition to congress in support of Internet Radio but it was during the time the Internet Radio freedom act was being debated in congress would have actually resulted in a cut to artists royalties. Pandoras letter to artists stated they simply wanted to have the artists voices heard and what some artists discovered this was not the actual intent. The implication for the artist signing the petition at that particular time is they were supporting cuts to themselves so mr. Harris, can you tell why pandora enlisted the help of artists and miss cash can you tell us what you and the Creative Community felt when this was happening . Part of my opening remarks i noted that pandora plays 100,000 recording artists every month. And 80 of those dont get played on terrestrial radio. A large part of singer and singer songwriters who value pandora because it is the only outlet or Distribution Platform available for them to find an audience that loves their music. Miss cash . That is what a lot of us are calling the exposure argument. That were seduced into thinksing that if we allow these performances without pay, that well get exposure. Therefore, drive consumers to buy our records. That may or may not be true. But the point still remains that we dont have control over those copyrights and were not paid fair compensation. Were not paid fair market rates. And as i said before, theres to transparency about this. Its somewhat ma may nip tip. They use our music as a loss leader to draw people in and they make the money. And to confirm what mr. Williams said, the place that artists have the most control are sync licenses. Ive given my songs for free, my choice, to College Students making their first film who want to use my song. Thats great. I want to support them. Ive negotiated a fair rate with Popular Television show that wanted to use my song. I have control over those things and thats the bottom line. That and fair compensation. Thank you, i yield back. I would like to give each member a chance to respond to this in writing, because theres too many. And i wont get through. If you would be so kind to tell me in your opinion, what a free market is. And what a fair market is. Comparing the two. Because i hear that those terms thrown around. Free market. Fair market. I asked the last panel to do this and im asking you to do the same and get that to me in writing if you care to do so. Ive been having meetings. My staff and i have been meeting with people have that a dog in this fight continually. Weve been doing it for months. If someone has not been invited to a meeting contact my office. Congressman tom or anybody the vice chair of this committee, let us know because i think we covered all the bases but theres many, many people involved in this. Im trying to get a consensus. I dont Want Congress to sit down and have to sort this out and ill show you why in a minute. This is very complex. Ive been studying this for months and talking to many people and heres the reason i dont Want Congress to sit down if we can get a consensus among everyone who has skin in the game. Ill read you a list of those individuals and i probably missed one or two. These are the partys that weve come to the conclues that are involved in this, excludeing the public. Songwriters, movie score composers. Performance rights, organizations, pros, skuch as bmi, and ascaff, royalty collectors for digital music, sound exchange, artists performers. Terrestrial radio, broadcasters. Satellite radio, cable tv radio. Digital radio, streaming, digital download. Providers like itunes. Record labels, copyrite owners. Music promoters, consumers, listeners, my cigarette publishers, collective music organizations. Music academy. Grammys. Recording engineers, copyrite offices. Groups that may hold exceptions likely prayers, universities, churches and im sure i missed someone. You see the litany of names and individuals and groups and entities we have involved here. Now what im going to show you for the record and without objection, id like this ask sche schematic that i have in front of me. I have a beautiful color display here on my ipad. You wont see it but ill hold it up. You may be able to understand some of it. This is an example of the breakdown and these are on both sides. So i have three documents here of the breakdown of the schematic, like a corporation would be set up. President , ceo, Vice President s, et cetera. This is the complication of the legislation that we have and those involved. Look at the subcategories underneath the subcategories underneath the subcategories on both sides of these documents. And the third one that i hold up here, as well. Then we get into issues such as payment. Whos going to be paid. How are they going to be paid . What are the courts going to do about it . And i do not even have the court schematic here showing the process one would go through if there are appeals. So i think i got my point across here about a complicated this is. How complex this is. But were also talking about in a fairness and unjust to songwriters and writers and individuals who are not being compensated, particularly those because of the legislation from 1972 prior to 1972, and that had something to do with state law, which is an issue that i think can be dealt with today. So as trying to be an individual that is learning as much as possible about this. Hearing from everyone. Some of you are a little disappointed because i havent said which way im leaning on the. As a prosecutor, i want all the information at my fingertips. Think about sitting down with us in a group, facetoface, looking at each other eyeball to eyeball, and say no instead of over the phone or an email. Maybe we can get together and you folks can help us get a consensus on this and that will retissue. I had a Monumental Task but well attempt it. My time has run out so thank you very much. Mr. Conyers. Thank you, chairman marino. Let me ask Paul Williams this question. Do you believe that the Consent Decree system severely limits ascaffs member from achieving competitive market rates for their works. Congressman conyers, you absolutely go to the heart of the reason that im here. To address something you just spoke about, one of the things were denied because the Consent Decree has the right to bundle rights. All these different places for all these wonderful uses of our music with one of the things about changing the dissent decree is we hope well be given at some point is the right to bundle it will rights. Its exhausting for people to go from one place to another to another for these rights. We can handle this there are two copyrites. A copyrite for the original material and a copyright for the recorded material. I think that it incredibly complicated what would be a great solution is to bring it back to us and let us let us control our future. Let us control our copyright. The last thing we need is to throw more of this into the governments lap to deal with it for us. So the decree hadnt accommodated the rapid and dramatic changes technologically that were all talking about . And we have to end up in a rate court on top of it all, and i think that this is the new situation that weve been in since the decree and im hoping that all of our members on the committee will take this into account. Now i want to say that broadcast radio has played an Important Role in the lives of people all across the country. Broadcasts have educated listeners to important event, emergencies, and a lot of new music. Including jazz, i might add. And well hear we want to work with the broadcasters to continue to do this work that just gets down to the community all the communities. Now, i just want if theres anybody of the nine witnesses here that oppose creating an am fm performance right, would you raise your hands so ill know who you are . We got a couple hands raised. And new that youve been identified and branded propertily, well know how to proceed but i thank you for your candor and frankness about this. Now, let me just ask, has the lack of im going to ask this to im going to ask one of the hand rangers, warfield, has the lack of a Public Performance right for terrestrial radio impacted the overall music marketplace . Mr. Conyers, i would say, ive been in this industry for over 37 years. Whats always been true during a period of time is the relationship that radio stations or Record Companies have had. We supported one another consistently through that period of time to the point that were looking at an industry here, Recording Industry, even with the challenges that it has like the radio industry has its challenges still the strongest Recording Industry in the world. I mean, ive heard remarksbility who we could be with that were not proud of but there are we have an industry Recording Industry here thats larger than any industry, any Recording Industry sthathank you. One question to miss cash before my time expires. Its about the respect act that i introduced with our colleague, congressman holding. Do you think it would address the payment disparity and do you think it important that we fix the loophole in the copyright protection for some recordings before a 1972 which refuses to pay the older artists . I thank you for introducing that bill. Of course i think that we have to fix that loophole. The example i gave you about my fair, his royalties, going to someone else, any father, who did a cover verse of his song, its hard to even understand how that could be possible. But these legacy artists, some of them, theyre growing older. Theyre ill, the ones that are still around, they would have to go on the road when they would rather not to make up for the money they would have received from their royalties. Its heartbreaking. I see this all the time. I know those people in that generation that are performing that are still around. Thank you so much. I yield back. Even though you exposed certain panelists i think you can walk the halls safely. Im more worried about them than me. I wont go there. Thank you, mr. Chairman. Chairman had said he wants to do comprehensive copyright reform and im going to take this opportunity to challenge all of you since you sort of represent, no kidding, the spectrum with the width and breadth of the problem in music, both written and, obviously, the broadcast of the performance. And well go back as we often do here, especially for the nonlawyers who were here on behalf of the constitution, to the cause. And im leaving words out because i only want to have the part related to copyright not the part related to patent. The constitution clearly says we have to promote the progress of useful art for a limited time on behalf of the authors exclusive right to the respective writings. Now it doesnt talk about the performance but weve all come to appreciate that a performance, is, in fact, part of that structure of writing. The constitution is an interesting document to go back to because sometimes its the illustrative that all of the mistakes that we on this side and president s have made during their time doing our job. Weve totally screwed up your industry relative to the constitution. If i read the constitution very clearly, although to promote it says, in fact, what we do in the way of granting you exclusive rights for a limited time is for the purpose, of, in fact, enhancing commerce. I dont believe that the founders ever thought that the promote would be to exclude a performance from being paid if, in fact, the owner of that who had the exclusive right, which to me is the right to exclude, didnt want it to be played for free. And, yet, we dont have that right and i join with mr. Conyers for years in trying to rectify that. But i think theres a bigger problem here today and id like yall to comment on it from your respective positions starting with miss cash. If, in fact, the intent has always been exclusive right, and ill read that back, right to exclude, belongs to the author or to the performer, or to be honest, to the many people that are part of that collective process that well just call a right, if that right were to be restored, wouldnt we essentially eliminate all of these court decisions. All of these consent judgments and most of the laws that weve helped to perpetuate including the exclusions and wed be down to congress determining that there had to be a fair use under free speech and so on. Wed want to have sam. Ing but not simpling as a ring ton, those kinds of things and wouldnt we then empower all of you to come together, mr. Williams, come together and decide that collectively youre going to offer your rights through peopling or individually, youll retain your rights if youre just say, the beatles. Isnt one of the fundamental things we should consider here, scrapping generations of legislation that now causes us to infinitely try to figure out whether in fact, pandora can effectively compete against broadcasters and effectively compete against satellite or effectively compete . Im seeing all of you wanting to get a level playingfield but not give you can the playing advantage you have, if you have one. And i think congress do that. Ill start down at the end. How do you see the possibility of a scrapping . Almost everything weve done and then giving the industry an opportunity to rebuild against the original intent of the constitution . Can i say that the question itself gave me hope. Thank you. That was so well stated. I would hope that exactly what you just said. That restoring, although i dont know if restoring is the right word because it was never there, performance royalty, would solve so many of these problems that you could then build from the ground up to created a new paradigm. I dont know but i hope so. I know that for every mick jagger in the world, there are 10,000 musicians who are in the trenches. And theyre automatic i thinker. And theyre all younger, too. And they depend on those royalties that theyre not getting. And, you know, the performance royalty, ill say this quickly, is kind of its kind of a way saying music should be free. If music should be free and im willing to have that discussion, when musicians arent the only ones who arent being paid. And i really want to hear from the broadcasters, too. Youve inherited your Business Model. You didnt create it. Your Companies Owners bought, based on a value that we put in that when mr. Conyers and i tried to change the law, to a certain ebs stent were taking away value you already bought and paid for and i want to be sensitive to everyone at the table has inherited an unfair deal in some way, please. The red line has illuminated so well hear from two witnesses, darrell. Who is most motivated to answer . Please. Well, let me touch on what mr. Marino was talking about. A fair market is a free market with a level playingfield that adequately again states all creators but serves the public interest. So if we crap everything and start from scratch, that should be the guiding principal. How do we make sure that small creators, big creators and the public, all their interests are well balanced . I think its something that the congress should consider. And, you know, is part of that consideration please take into account the concentration of ownership in the Music Industry and as you think about who is sitting across the table to negotiate the right, who actually is that . And in many cases, it isnt miss cash. Its universal music or sony or warner and on both the label side as well as the publishing side. The concentration that i go out every day and try to negotiate direct licenses and over the last six years ive negotiated 100 direct licenses with the Music Industry and none of them with major labels. The gentlemans time has expired. Sorry to cut you off. Your time has run out. My questions time ran out. My answering time, i thought, was unlimited, mr. Chairman. Im only kidding. The distinguished gentleman from florida. Thank you, mr. Chairman. Thanks for holding todays hearing. Its really easy to decide, for some, that the way things work today is the only way that they can work in the future. Or that the what is by all accounts, an absurdly kplebs system that doeveloped over the past 100 years. And certainly, some aspects of the system have helped but too many have been obstacles that the Music Industry has grown stronger by simply working around. Too frequently revisions of previous over the previous decades have ended up being both reactive and all, too often, parochial. Preserves one element without making enough effort to look at music licensing as a whole. While its tempting to point fingers and theres been plenty of that today, i think its helpful to recognize that everyone has the opportunity, everyone, everyone as this panel and our Previous Panel has the opportunity to benefit from new growth and markets if mr. Marino can agree on a basic framework that incentivizes and rep wards creators while giving Companies Profit from doing this. The goal has to be to fix the system so everyone has the opportunity to succeed together. And that new entrance can continue to transform the way we listen to music in the future. So thats, i think, how we ought to approach this. There are some issues that jump out at us and before i get to my questions i wanted to throw out one example of what i think represents the failure of a patchwork system, specifically the pre72 decision. This, for the youngsters in the crowd, is an album. This album is neil youngs harvest which includes legendary songs like old man and heart of gold. It was released on february 14th, 1972. The precise cutoff for pre72 recordings is february 15th, 1972. That means that any track in this album, this bestselling album in 1972, can be played without paying for it. But if it had been recorded on february 16th, released on february 16th, the day after its release, neil youngs songs from this album would be covered with full federal copyright protection. Now you side earlier in exchange that everyone should be paid. Why shouldnt that include legacy artists . I believe it should. I think congress had had two shots at this and has rendered its opinion both times. First back in 1972 and it decided to distinguish between recordings before that date and after it and the second time, 20 years ago, when it granted the sound recording performance right and did not extend that right to pre72. So if congress acted today, you would acknowledge that thats consistent with what you said earlier that everyone should get paid, you were supportive of those efforts. I would be supportive of closing the loophole that mr. Conyers referred to including terrestrial radio. Let me get to mr. Christian who said something earlier. Nd i appreciate that. You said something earlier that i think helps us focus a lot on what were dealing with. You said in your testimony that with particular reference to the recurring demand by the Recording Industry for a sound recording performance right to be imposed on terrestrial radio, understand, you said, that the radio industry is not some vast pot of riches that can be tapped as a bailout for a Recording Industry that failed to execute a Digital Strategy that addresses the decline in its own brick and mortar income. Kochk unambiguously intended. In exchange for your report, terrestrial radio should be treated differently and you say that premise hadnt changed. And then you go on to explain that any change in our approach will be met with opposition because tmd it would cripple a radio industry thats been financially treading water for years now. I submit this is what were trying to get at today. Going from the claim that there shouldnt be a performance right because the music guys havent been able to figure out their industry and we shouldnt impose it on the radio industry which you acknowledge, is as you put it, treading water. Has been treading water financially for years now. That doesnt help us solve the problem. Help us address this position that were in. And when you as was included in this document that was referenced, i think mr. Warfield, in your testimony, that says that conventional wisdom is that radio air play stimulates record sales. And that quotes a study from a law review article, 1974, and that theres a you talk about it talks about a survey of rock music buyers that found that 80 of albums were purchased because a particular track was first heard over the radio but that survey was conducted in 1972. I acknowledged the role that the broadcast radio plays and the Important Role it plays in our communities. But for us to go at this issue as if where we stand today in 2014 is somehow unchanged from the industry as it existed decades ago, i dont think is appropriate and i dont think its fair for all of us of the new market entrance musicians and the rest, i hope as we go forward in this debate, we can acknowledge the Important Role that everyone on the panel plays in furthering the Music Industry and providing unbelievable music and outlets for miss cash working and mr. Williams working for all the members. But lets do it in a way that recognizes that if we only take the parochial view of our industry, then were never going to come up with something that works for everyone. Were probably going to fail and that might satisfy some of you for a short time or but well be right back at this again in a couple of years if we havent had a chance to take that. I yield back. Thank you, mr. Chairman. The distinguished gentleman from utah is recognized. Thank the chairman and glad to see so many of you here having this discussion. I particularly have a keen interest in Internet Radio. I happen to thats a big part of the future and where i see my kids enjoying music that they probably never would have seen or married otherwise. They wouldnt have gotten on terrestrial radio and probably wouldnt be able to afford to buy the albums we did in generations past to have a chance to understand or see that. Ive been exposed to a whole host of artists that i enjoy on a regular basis but i would have never heard of before. Im also deeply concerned that the marketplace for Internet Radio is really isnt working. We can point to one whos been highly successful in pandora. I enjoy them but it concerns me that its not much more prevalent than that. And even under their model, theyre not making the kind of money, even though some people want to attack the ownership and the others for making money along the way. The reality is that the copyright royalty board has, twice, ftried to set the royalties and twice, the United States congress had to come in and saver the deal and change it so it would work at the last hour. We dont want to keep doing that. Any time you got to go to congress to get it fixed its probably not going to turn out the way anybody wants it to turn out. With that i have deep concerns about how do we make this a viable Business Model Going Forward so everybody can win along the way. And everybody can get paid along the way. We have two standards, the 801 b and the willing buyer willing seller which i think is grossly misnamed to suggest its a willing buyer and willing seller and not have all the information at your fingertips to enter into those discussions grossly misleading. So my question, well go to mr. Sherman, if i could. From what ive seen and my limited view point, a little inconsistent on one hand you like the 801 b and sometimes you dont, depending on which side of the notion youre on. Can you help clarify that for me . We said were fine to selling it to a willing buyer and sler standard across all platforms but we want it to be part of comprehensive reform. We dont want to pay on one standard and not get paid on the right standard. We think it is willing buyer willing seller for all creators across all platforms. Would that include all the Information Available for all parties . Is there anything you with hold from those negotiations . Certainly, the crb process has all the Information Available to all parties. How information can be disseminated when theres lots of private deals with nondisclosure agreements and so on becomes more complicated, obviously. Thats why im asking you. What would you do . It seems if you have willing buyer and willing seller you have to come to the table with all the information and not hide parts, which has happened in the past. Would you agree or disagree . I dont think anything the hidden because all of the information is available to all the parties and all the laurs litigating the case have all the information. A lot of those settlements take place after that information has completely circulated. One thing id like to comment on is you talk about whether Internet Radio is profitable so on and so forth. To look at a company like amazon, which has a 75 billion profit excuse me, capitalation rate. Everybody considers them a huge success but their profit last year was 1 , 274 million on 70 billion of revenue. This is part of the concern. Some of the biggest players into this music world, on the one hand is good to see amazon and apple get into this part of it. But when you saw Rolling Stone and mtv and you saw all these other organizations try to get into the space whose forte is the Music Industry theyve never been able to make us a go and they started into this and had to let go of it. Yahoo did it. Others could not make a go of it. My time is so short. I need to go to mr. Harrison. I want to understand what would happen to pandora if congress had not stepped in and fixed what happened at the copyright royalty board . The crb rates are part of the public rate. They are multiples of what the negotiated settlement was, the pure play rates. I guess you just have to do the past. Obviously if were paying 60 to 70 of the revenue under the pure play rates, if the crb rates are two or three times that, im not very good at math, but i dont think at 120 of revenue we can make it up on volume. What do we need to do to ensure more transparency and why dont you have more competitors . Thats an interesting question. I think youve touched on it a little bit. The rates certainly are an issue. The entrance weve seen recently are all engaged in other lines of business. Am, google, amazon and music is really an ancillary product designed to sell the primary service. Weve had east village radio which is a long standing Internet Radio service and mr. Conyers mr. Nadlers district and that recently went out of business because they couldnt afford the royalty rates. Certainly, if you look at the comments that came in from the Copyright Offices notice of inquiry from a large number of constituents including mr. Freer. Three some process improvements that need to be made in the copyright royalty board to improve the process and the potential outcome. I wish i had the opportunity to hear all your answers and i thank you for the extra time. The distinguished lady from california. Thank you, mr. Chair. My colleague, mr. I i sa asked a question so i want to ask it slightly different. He said if we were to scrap copyright and start over what would you like to see changed. My question is, could you briefly explain one provision that you would amend in the current law and i though that several of you didnt have a chance to respond. So those of you that didnt, maybe youd like to take the opportunity now. From the radio im sorry. Mr. Christian, i represent we havent had much to say here stayed. A lot has been said about us but weve not had an opportunity. Take the opportunity now. To say much. Im hearing a lot of comments about the industry that provides free play for free promotion and has done it for 80 years. And were talking about whats driving radio. I heard comments that radio doesnt drive record sales. I think congress nan deutsch left but in 2013 there was a study recently issues clearly more than any other platform radio air play does drive sales. Even in a digital platform it drives sales. This industry head has really helped to put these other businesses and give them the opportunity to go out and created a new Business Model. Unfortunately even on the radio side were not able to participate on the digital side. We pay into the system as it is now. We pay hundreds of millions of dollars. We pay tens of millions of dollars to sound exchange and we participate on the digital side but many broadcasters unfortunately cannot make a go of that as other entrants in the digital arena have found with the way the laws are written today, we cannot make money. We can spend money. We cannot make money and thats not a model thats healthy for any of the participants here. So from an nab perspective we would very much like to see changes in the streaming rate standards so that all of the participants here who all have concerns there, can participate more fully and grow a platform that will benefit artists, writers, performers, labels, all participants here. Are there examples . I think one of the things that wed like to see from congress, at some point in time, if you all could define what a performance is. Nobodys been able to tell us what a performance is. If you listen to sound exchange tham tell you its 3 seconds long this they wont tell you whether its the beginning, middle or end of what it is. Were subject to royalties that we cant even have a consensus of what the royalty payment is, especially on the digital screening part. On the other part, we must ask for oversight. Especially if the advent of new prompling rights organizations performing right now, there are no barriers to entry for a performing rights organization. You need a catalog and whatever. Unless those rights are protected for the aggregators or some oversight we run the risk of finding where there are antitrust things which is why the 810 b is more homogeneous. We really do need this oversight for an industry. We have 10,000 different performers different licenses to be administered which is why the blanket license is important to keep it in place and the dissent decree is important because otherwise, you can imagine the madness of trying to find a way to deal with individual radio stations in your home district and every district up here to give them a license, the recordkeeping and everything else. And one final thing. Thank you and then i want po move on. We need a transparency in terms of identification of catalogs. We need to be able to find out on a daily basis or whatever, who owns what who the performers are and what it is. Thank you. You look like you want to respond. Id like to respond to our friends at radio. The concept that the sound radio Industry Business is working im not sure the proper image has been presented to the committee. The fact of the matter, it isnt just pandora who last year alone, but the head of Clear Channel, bob pitman announced a few days ago, that the i heart radio, thats terrestrial radio simulcast on line, has 50 million users and has made hundreds of millions of dollars which i sure you is vastly in excess of the content of where we sit. Secondarily, we have 500 more services now using the statutory license that sound exchange, 500 more than were there two years ago when i last testified before this committee. The majority of those are 500 are broadcasters, like those that we were speaking about with going online. Mr. Williams . You asked about what we would change right now . Thanks to collins and jeffries its the song writerss equity act. It fixes it immediately. I agree with what mr. Christian says about the value of a blanket license. Its a wonderful way to come together and simplify the system and for somebody like pandora that 70 of their income is rolling out for royalty payments, i have to remind everybody that ascapp is getting about 1 or 2 . Im under oath, i wont say its 1 but its close to that. Its a tiny tiny part of that. I wouldnt pretend to tell you how to adjust your Business Model but theres some way to do this so music creators who create the one product you have can be properly compensated. Thank you. The gentle ladys time is expired. The gentleman in georgia, mr. Collins. Thank you, mr. Chairman. I think that one is sitting here today is one thing i have tried in this whole process and many of you on the panel but many of you on the second, third and fourth rows back have been in our offices and weve talked many times and, yes, the songwriter equity act is an issue we brought forward and other issues from Performance Rights to others and also, ive tried to be very consist tonight what the one thing that i feel is that the creator and this process and former theres a valuable inherent property rite there. I think i applaud the Supreme Court this morning for seeing theres a creative property right. That doesnt mean the broadcasters and i will probably get along, probably not. Thats okay. There are things in this debate we can all look at as i listened to you will of you and one thing ive tried need in whole process. Ive mad interesting comments, not to me, i hear at other places so, yes, it comes back, is that i want to take an arm from one and a leg from another and fix this all together. But what i have found in the last little bit is, that what has to happen in this process is, one, bad Business Model five years ago could now be the batched Business Model today and you dont need congress to come in and prop up either one of you. You need a process in which we can look at this and we fix it from a holistic approach. This is that everybody is included. The pie is enlarging. A lot of these went out because they couldnt afford the rates. Theres a lot of businesses in this country that go out of business because they cant afford their cost. Thats an issue we have to deal with on the broadcasters side and the digital side and performers and the coin write holders are in the middle. Thats the one thing that im looking at. One of the things that concerns me here, though, is that were wanting many times, to fix todays problem. And ive shared this with you when you come in. Thats not my goal. My goal is to fix this problem when pandora was, wow, i remember when i used to you still listen to that unless they changed greatly, no offense po to them. When i was listen a boy named sue live in san quentin. So you have to understand as we come together you have to remember that the bottom line theres a property right interest that many of you at this table that make very good money off of and that has to be rewarded. At all levels. And i appreciate all the of the background musicians and others. The problem is if you continue and if we continue in this round saying i have to protect my model and you have to protect your model and we dont get to that point my question is, where are we at 20 years from now when this panel looks different . Where are we at . So ill open up a question to you. I dont want your answer for today. Broadcasters say, protect our terrestrial radio where pandora says, look at our rates. Where are we going to be so were not coming back as my friend from utah said, every time theres a problem at the rate board we run to congress to fix it . The last thing he wanted to do and i did counseling in divorce work. The last thing you wanted was the judge to make a decision. Because in the end when the judge makes the decision, both parties are unhappy. When you make the decision, then we say, mr. Warfield we got 1 10. You got 30 seconds and mr. Williams you got 30 seconds. Tell me what you envision how to work this out so were not propping up bad models either way. I think it certainly needs to be a close look at the digital rates that are being challenged. Wed like to participate and grow there. We think it helps all the stakeholders here. The one thing id ask the come to keep in mind is the consumer, user. We talk about the rest yes, maam radio. It is free and remains free. No additional cost they have to incur. Lets keep them in mind as we talk about what these other businesses how this is going to be more efficient for them and more cost worthy. The Consumer Needs to be considered here, also. Mr. Williams . We have an exflegs recovery. Progress with not the people we need to think about who are the young songwriters starting out triing to have the kind of live that i have. I have a daughter thats a social worker. She got that because i was properly paid for the hard work i was doing. We can more control back to the songwriters and we dont want the judge to milwaukake automat these decisions but move back to an Arbitration Panel which makes it speedier and more efficient way to deal with the problems. I think the process will take longer than any of us want it to take but the fact is, if we dont fix step into it and make that first little adjustment, people are going to wind up getting day jobs instead of writing songs for an industry. The industry is moving forward, not backwards. Its not going to be automatic so you got to move forward. You all have to come to the table and talk about it. Thats what well continue to do. I thank the gentleman from georgia. The distinguished gentleman from louisiana. I stated mr. Richmond if you promise not to show up at the ball game tonight ill give you ten minutes. With ten minutes all i can do is get in trouble anyway. So ill take the five. Let me pick up where my colleague, mr. Collins left off. That is, you know, i think mr. Freer mentioned that we had congress had two chances to get it right with the 1972 and legacy and we didnt. All i can promise you is if we solve this problem, nobody is going the like it and its probably going to be wrong because were because were not the subject Matter Experts on it. The technology moves so fast and we will probably screw it up. But i say that to say you all are at the table, you all should be in the room trying to figure out who can give and come to some sort of solution and the other thing i would tell you all, just to be honest, is that nobody has a better bargaining position. Because if we do, well probably start from scratch and nobody will like the results. So, that would just be my recommendation, and, you know, the comment was made earlier that for every mick jaggar, theres 10,000 artists in the trenches. I think they all live in new orleans, by the way, and i want to make sure that they have an opportunity to continue to do and follow their passion and their dreams, but at the same time, be compensated for it. I tell people all the time when i go speak at schools, follow your dreams, do what you love, and if you do it well, youll make a living doing it. I want to be able to look those kids in the face and in our performing arts schools and all those things in new orleans and actually mean it. And it has benefited so many people in new orleans, and i would just like it to continue and to be there for the long term. Let me just ask you a very direct question. We beat around the bush. What impact would it have to your industry if you all had to pay the performance, i mean, to pay all the rights and royalties for what you play on the radio . I have testified to the financial, potential Financial Impact of that to radio broadcasting. Ive been in radio stations that have been sold. I work for a Wholly Owned Company that was the largest broadcast company in the country that no longer exists today. We made it clear at that point we could not afford to pay a performance royalty if it was imposed upon the industry. There are severe Financial Difficulties and many broadcasters would experience if that were the case. And ive been in this for 37 years. Been doing it for 37 years. Serve the communities. The communities that i came out of quite honestly in washington, d. C. , and anacostia continue to do that. Not necessarily to serve the stakeholders that are here but they benefit to what we do as terrestrial over the air broadcasters as free. Let me ask you a question. The station you talked about that closed closed anyway. To you think this would put, for example, Clear Channel out of business . There are many different size broadcasters. You know, there are over 15,000 im using Clear Channel i dont know. They are contributing and participated in the digital arena. My company could not afford to do that in a major way. We could not afford the cost of participating. I think everyone up here would like to see the pie grow. We like to see the digital platform grow. But not at the expense of our companies. And mr. Frear, you mentioned that if everybodys contributing, that 1972 was a number that congress picked. And are you saying that if we decided to pick another number that went back further, as long as everybody had to pay it, you all are okay with that . Quite honestly, on this issue weve been open to any number of solutions for years now ive had many discussions with major labels over the years about whether or not they dont want to find a way to compromise on this issue. Im happy with work with the congress, im happy to work with sound exchange and the major labels to, you know, find some appropriate ground in the middle that as i said before, i dont know why the choices were made and maybe there are other business reasons, good policy reason, why the choices that were made were made. And were wide open to the discussion. Well, i see that my time is about to expire. I would just say, again, that i would love to have balance on this and make sure that everybody at the table continues to thrive. We dont want to put anybody out of business and certainly dont want to send anyone to bankruptcy or influence anyone to stop following their dreams. So help us help you and that means get in the room and figure out ways to come to some sort of conclusion. With that, mr. Chairman, i yield back. Thank the gentleman from louisiana. Distinguished gentleman from missouri. Thank you, mr. Chairman. Its been interesting participating in these review hearings for the last year. Serving on this committee and one Common Ground i think that ive heard from all of you and the folks that ive been meeting with the Music Industry throughout is that we all love music. We just got to find more Common Ground. I look forward to working with all the stakeholders to try to get that Common Ground. I do have a few questions. I think it would be helpful at least to myself for you to lay out for us the standards that are used for determining royalties with respect to each copyright performance of a song. For instance, who is a willing buyer . Who is 801b . Who is set by the rate court . Can you tell me briefly who is subject to which standard for each of the two copyrights . Sure, thank you, congressman. Its a great question and complicated question. The best way probably to answer that is to give you an example. The example is this. Lets say youre driving your car down the road and youre listening to an excellent roseanne cash recording. And if you happen to be listening to that over your cell phone through an Internet Radio station, chances are most of those are set according to the fair market standard value. Willing buyer, willing seller. And the rate that you would that the service would pay for that would be set by the crb, and it would be anywhere between an eighth or a quarter of a penny for that stream. Lets say you decided to stop doing that on your cell phone and switch instead to get the same awesome roseanne cash sound recording through satellite radio. That is set by a complete ll ll different standard. 801b san datandard. The compensation flowing from that would be set according to different rules and they would pay about 9. 5 of their revenue p pro rata. Say you had to go with good old a. M. f. M. The answer there is zero. Keep in mind, thats the same record coming out of the same speakers in your car, hitting the same ears each one of those three is set differently according to different rules and thats just not right. Okay. Mr. Harrison, you mentioned in your testimony that pandora has paid 1 billion in royalties. Is that correct . Yes, this summer we will have paid 1 billion. My next question is how is it songwriters and artists claim theyre not getting paid . Thats an excellent question. Today pandora is the highest paying form of radio. We pay higher percentage of revenue than either terrestrial or satellite radio. Well pay north of 400 million in royalties this year alone. To the extent the copyright owners believe theres a different or better allocation of that revenue. Certainly we would say that the copyright owners, themselves, are better sictuated to make tht relative valuation. Mr. Williams, would you like it respond to that . I tholeole totally agree the copyright owners are those who make the decisions and all. I said it in my opening statement, the fact is were a tiny percentage of that cost. We need to find balance in this. When the song of the year, the grammy winning song of the year from 2011, is performed 72 million times on pandora and the four writers each get less than 1,500 a piece, theres something terribly broken in the system. And, you know, you could take from my comment, you know, that we have a major, major problem with pandora. We have a major problem with pandoras balance of payment. Were not going to suggest how they adjust that, but fair market will tell. Give us a chance. You know, we dont have the right to say no and we dont, in this case, we dont want to. We want our writers and copyright owners to be properly compensated. Song of the year in 2011 i need you now. Im going to turn to my the song of the year. It was need you now by lady antebellum. 72 million. 72 million performances. To give you the exact rate of exchange, we get 9 cents for 1,000 streams at pandora. I think its a little less than 9 cents. You just dont build a kingdom on those kinds of dollars. Miss cash, would you respond any differently . Im sorry. If all that money was paid out of pandora, i dont if it was paid in an aggregate, i dont know how it was dribt istribute. Certainly didnt come to artists. Notwithstanding my hard words against them, i want them to succeed. I see the future. I want all of us to succeed, but i just have to point out that all of these gentlemen on the panel would not be here had songs not been written, and its in their best interest to get us paid so were inclined to give them more songs. Thank you. Thank you. I thank the gentleman. The distinguished lady from washington state. Thank you, mr. Chair. And thanks to all of you for being here, for all of your time. I think we seem to be clear recognition across the board here that we are seeing a change in Business Model, definitely toward digital transmission of music, and thats where the industrys headed. And even broadcasters are talking about the need to move, you know, to streaming, et cetera. I wanted to ask you, mr. Warfield, you have folks who are also streaming content and digitally providing content. How are you seeing the Business Model move even for some terrestrial stations into the Digital World . We would certainly like to participate more. The rates that we pay for digital streaming is probably double what some other participants do pay. And as i have indicated to the panel here, it is not economically feasible for most broadcasters, particularly the mom and pop broadcasters, not the big guys that everyone tends to focus on, but what makes up most of the broadcast in this country, have not been able to find a way in paying those kinds of rates to be profitable. Many broadcasters have made a decision not to stream. So youre not seeing folks move that direction, and seeing more of their, you know, their audience moving we still reach, congresswoman, we reach over 240 Million People a week with radio. We still have the largest audience out there, which is why radio is the number one driver of music sales, whether it be sales in a Retail Outlet or digital downloads. So our audience is still loyal to what we do. We are free. No additional cost thats there for them, and we provide a lot more than just playing music. So our audience is still supportive of the Business Model we have and have been able to develop with the record industry. Given were talking about music today, do you see a change or would you say there is a change . I mean, were talking a lot about how folks are listening to music today. Would you acknowledge theres a change in where things are heading . Theres change. I think all of us listen to different platforms. I have been in radio for 37 years. I have always listened to radio. I still buy music. So there is a change. We want to participate in that change occurs, but theres still a basic broadcast industry here that our listeners, our audiences, our communities still rely on, and they still support. I have a question, maybe, for anyone who has an answer on this one, which is we have talked a little bit about internationally how our laws are different here versus around the world. Are there particular models youve seen in other parts of the world that you think are good examples of where we should be headed . International models pay almost in every country of the world with very few exceptions. We should simply follow that model. Its really very simple. And beyond performing, paying specifically, are there other unique aspects of models in other countries . There are other models in which Music Publishing rights are paid on a percentage base instead of on a centsbased system. We could learn from that. There are definitely models we could be looking at to try and redefine something for the United States. A lot of the questions have been what specific changes would you make . But the real answer is, we have to change everything. You cant pick one piece. Thats what we have done for the last decades, was pick one problem and fix one problem at a time. We do really need a holistic solution. Yes, mr. Williams . If i may, one of the things the europeans have that we dont have is a limited grant of rights. For us, as rights holders to be able to license some of our rights directly would be a great improvement. Yes, sir . And then just to echo what cary sherman was saying, it is that we dont have a broadcast right here. Thats the big difference. We do need a broadcast right, and it will also unlock lots of money from those International Markets with reciprocity. Our creators here will be able to get paid for their performances overseas. Okay. Thank you very much for your time, and i yield back my time, mr. Chairman. Thank you. Thank you. Mr. Sensenbrenner . I thank you, mr. Chairman. This brings me back to what i attempted to do and succeeded in about 15 years ago. With the fairness of music licensing act, which was put in the copyright Term Extension law, and that was easy compared to this because the people who were for my bill were those that didnt have any content over music, like retailers and restaurateurs, but they ended up getting nailed with a licensing fee, and everybody else was against it. And you know, i do remember very vividly that my good friend mr. Koval had a hearing in nashville on that subject and i had to be driven back to the National Airport in the car of the United States marshal who was a little bit worried about my safety. And he stayed with me until the wheels were up. Now, i did have a long series of debates with our late colleague sonny bono, and that ended when he was kind of shedding tears about the changing the music licensing law before an audience of the National Restaurant association, which was very sympathetic to my standpoint, and after he was very eloquent, i got up and turned around and said, what mr. Bono is telling you, quote, i got you, babe. Now, with this background, here everybody at the table has a different viewpoint on this issue. And i think that getting you all together and getting on one page will happen probably two days after the sun rises in the west. Now, you know, that being said, let me ask mr. Warfield a couple of questions. And it basically goes, under the Current System of licensing and royalty payments, have record sales gone up . And do you believe that the free over the air music that you and your members broadcast have a lot of people going and actually buying music and paying the royalty on the music that they buy . From what has been recorded by the Recording Industry, music sales have gone down, i believe, in terms of hard copies. Not through the fault of anything that radio has done. We continue to freely promote and play this music, and our audience does continue to go out and buy the music. Within that system, between radio and records, were still driving our consumers, our listeners to go out and buy music. Theres no other way to do it. Not recording what were doing on the air, stealing that content by recording our programming on the air then listening to it. There are alternatives they can go to. They can certainly go to digital platforms. If they go there, they have to pay just for the right to listen to what is there. Theres no charge to do what we do. Theres a digital model out there that none of us has really found a way to make it work. And i think we can all sit here and agree theres a challenge there that we have as a Business Model which can help hopefully grow the various platforms, benefit all of the stakeholders. The Recording Industry, also. Certainly not taking anything away from radio. Well, let me, you know, im kind of a simple country lawyer. And what you say that the existing system is that you give them free advertising by putting their music on the air, but you dont have to pay for giving them free advertising . Free air play, free promotion. Promotion and advertising are kind of synonymous, arent they . Okay. So what im hearing from some of the other folks is that they want you to pay for giving them free advertising. Is that kind of a simplistic way to get to the bottom of this . I have heard that from some participants, but the one thing that i will say relative to what radio does, radio has helped develop, helped the record industry develop, being as vibrant as it is today, even with the Financial Difficulties they have. Weve always supported the writers of the music. But we also helped to develop the careers of the artists that were here talking about in some cases today. It develop careers that in many cases today they may not be supported by record labels because of air play that were doing over the air, free, continued to promote what they do, they can still tour. Whether they choose to tour or not, thats a personal decision, but they have the opportunity to do that. We continue to support those artists in many ways. My time is almost expired so i yield back. I thank the gentleman. The distinguished gentleman from new york. Mr. Jeffries. I thank the chair, and let me also thank each and every one of the witnesses for your presence here today and in particular mr. Williams and mrs. Cash for your advocacy, for the Creative Community, and on behalf of your fellow artists and your fellow songwriters. Let me turn now to the subject of internet and or satellite radio, and let me first say that i believe the success of Internet Radio is critical for the overall music ecosystem in terms of providing a viable, meaningful alternative to the piracy that was previously taking place and was extremely rampant. Thats a point i believe cannot be overstated. I do think there are a few issues relative to the Compensation Structure in the Business Practices that i wanted to explore, so let me start with pandora, and mr. Harrison. Now, i believe you testified earlier today that one of your Business Practices is to insure that artists receive a fair share. Is that correct . First of all, congressman jeffries, thank you for the kind words about our service. What i was speaking about is the value that statutory blanket licenses have, not only for Services Like pandora that allow us to license content efficiently but that the songwriters and recordi ining artists actually participate directly in those royalty streams. Okay. Now, am i correct that pandora, however, notwithstanding what you just indicated, currently refuses to pay for the use of pre1972 recordings under either state or federal law . We do not pay under section 114 for the performance of pre72 sound recordings which is federal law. But youre also contesting the rights of recording artists to receive any compensation in state court as well, correct . We do have pending litigation in the state of new york and yes, we disagree with the claims that the record labels make in that case. Pre1972 recordings are an important part of your Business Model, true . Yes, they are. You have, for instance, 60s oldies channel, is that right . Yes. And a motown channel, correct . I believe so. Yes. 50s rock n roll channel, true . I believe so. Golden oldies channel . Youre aging out of my demographic, but i believe so. A do wap. I believe so. A classic soul channel, as well, correct . Yes, now, pandora doesnt pay anything for nany of the sound recordings played on any of these six channels, true . If the recordings were may after 1972, that would be correct. Okay. Before 1972. Correct . Correct. Okay, so for instance, respect which was recorded by Aretha Franklin in 1965, every time respect is played on pandora, Aretha Franklin doesnt receive a dime, correct . Receive a dime, correct . Well, pandora would not pay performance royalty to the record label. She would be paid if she were a song writer. Okay. So my girl was recorded by the temptations i believe in 1964. The temptations dont receive a dime of compensation from pandora every time this extremely popular song is played, correct . Again, if youre talking about a payment to the record label, thats correct. If theyre songwriters, they would get paid. Okay, the same would be true for soul man recorded by sam moore in 1967. A change is going to come recorded in 1964 by sam cooke. Stop in the name of love recorded in 1965 by the supremes. I would suggest that the failure to pay recording artists for pre1972 recordings is not a fair business practice, and in the context of this overall discussion, its a problem that should be voluntarily resolved, but if it is not voluntarily resolved, congress should act. Let me turn quickly to sirius xm, which i believe you also refuse to pay recording artists for pre1972 recordings, is that correct . Theres no Public Performance right and under the law, there is no amount due to them. Under federal law, but under state law, youre also in litigation, i believe, in california, trying to prevent compensation under california state law, correct . Its clear from litigation theres no Public Performance right under state law, either. In that California State Court proceeding, i believe you stated that granting a your company granting a pre1972 Public Performance right would produce a pure windfall to recording artists without any commensurate benefit to the public. That was in your filing in that california case, correct . Under the way the policy is written under copyright law, that statement is true. I would just suggest a windfall is defined as an unexpected, unearned or sudden gain or advantage in compensating artists for their creativity, even if it was recorded prior to 1972, its not a windfall, its the american way. Ill yield back. I thank the gentleman. The distinguished gentleman from rhode island is recognized. Thank you, mr. Chairman. And thank you to the witnesses. Im proud to come from the state of rhode island, which was the birthplace of the creator of the National Endowment for the arts and National Endowment for the humanities center, clayburn powell, who i think reminded us that the strength of our nation was not simply the power of our military or our Economic Resources but our ability to honor the creative artists and the culture of this country and protecting the work of our artists is an important part of protecting our democracy. So i thank all the witnesses for this really important testimony. I want to really begin with you, mr. Frear. You mentioned, you said, in fact, i believe everyone should be paid. I assume you believe everyone should be paid because they created a product and theyre entitled to be compensated for it, and that argument applies to creators before 1972 and after 1972. Based on this notion that people are entitled to value for what theyve created. Im not a copyright lawyer. Im just a history major. And it doesnt make a whole lot of sense to me that the dish distinctions made in the past between pre and post1972 let me finish, they granted the sound of performance recording rights, that they did not give it to pre1972 artists and it makes no sense that terrestrial radio gets a free walk. And you agree not only all of that should be compensated, and in a fair amount driven by the market . I agree, it has to be a working competitive market. Okay. Mr. Harrison, you spoke about the value that pandora provides to hundreds of millions of americans as a result of your service. But would you agree that there is some danger that if that product is provided without compensation, that the very product you sell could be in peril . I dont think i understand well, you rely on a product that you at least part of your inventory you dont compensate the artist for. If youre referring to sound recordings before 1972. The example miss cash used where someone rerecording her fathers song would be compensated but someone who was playing the original, a recording, would not be required to compensate her. That strikes you as inconsistent, nonsensical, not good public policy, i take it . Unlike david frear, im a copyright lawyer. Copyright makes a distinction like this all the time. A musical work written by w. C. Handy in 1920 is part of the Public Domain and isnt compensated, but if a modern day recording artist would record the song, they would receive a royalty. Having said all that, pandora would be in favor of following the recommendation, which is fully federalizing the pre72 recordings to allow them to benefit from the protections like fair use under the copyright act, allow recording artists to exercise their rights to terminate their transfers. So i understand the argument, sir, but if Congress Makes the decision to fully federalize pre72, wed be happy to pay. Does anything think that is a bad idea . Does anyone think this disting of 1972 makes any sense . We agree that the distinction ought to be erased. There are complications in terms of how to do it. And we have expressed a perfect willingness to figure out with the Copyright Office and other stakeholders how to federalize pre72. Meanwhile, this legislation which deals with legacy artists who need money now, theres no reason why action couldnt be taken on that immediately while we figure out the federalization. Mr. Christian, if i may ask you, you argue that this existing model ought to continue with free use of music and a. M. f. M. , and it strikes me im new to this committee, new to this issue, but its a curious argument that i cant think of in another context where the kind of creative results of musician or artist should whole kale be appropriated, used to build up a business, and generate revenues without any compensation. Im wondering why you dont think the marketplace, you know, assuming theres some value to promotion, which ill concede, that the artists would have an ability to understand what the value of that is and negotiate a price that made sense for you as the consumer of that music, and for the creator and artist who created it. Why would the marketplace not provide the kind of context for a Fair Exchange of that, and why would we ever permit this practice continue where that asset created that product created is just used for the Revenue Generation of a private enterprise, the expense of the people who created the products . Youre speaking of the pre1972 . Yes. That really is applicable to the radio industry as we dont play performers, we do pay for authors, composers, publishers rights. Im talking about performers post72. After 72 . We believe what we have right now, and that the promotional values applied to them, our product is free. For instance, we cant charge for our product. Please understand that. We provide a free product to listeners across the United States. Hundreds of millions of people. And we do this in marketing, and its also brought up in the advertising, but theres also promotion. I understand that. My question is, i recognize your argument that it has promotional value. But why is it not in the context of a free market, an exchange between the artist and you as the broadcaster, to say this has some value for promotion, so this is what i want to charge as an artist. This is the value it has to you because it helps to generate revenue for your country. Why will not the results of that be some fair price where the artist is compensated and you make money . The gentlemans time is expired. Youll be brief with your response, mr. Christian. Its a longer response. Ill be glad to deal with that directly. Thank you. I yield back. The gentle lady from texas. Chairman, thank you so very much for this hearing. Im excited to see so many of you i have worked with. I almost feel like calling the roll. Ms. Cash, thank you for the music i enjoy of your dad and im sure of your entire family. Thank you so very much. Its good to see mr. Sherman. Mr. Warfield, we have worked together before. Mr. Christian and mr. Paul williams and i could be considered brothers and sisters we have seen each other so much, and appreciated your work. Thank you so very much for what you do for children and teaching children about music. Chris harrison, mr. Huppe, i believe the name is, or did i add a pe on it that i should not have . Thats perfect. Thank you, and mr. Frear. Let me put on the record i hope this committee if its appropriate will have a hearing on the directv at t merger for the fact the content is included in that as well. To the witnesses here, my delay was provoked by the fact that this is a Year Anniversary of the shelby case, United States Supreme Court case, that in my opinion dismantled the Voting Rights of this country, and theres a hearing going on in the United States senate that is very important, and i would almost say that many of the artists that you represent, performers, benefiting on their opportunities to vote because of the Voting Rights s act. So i apologize for my delay in coming to the meeting, but this is no less than important hearing, one of the reasons why i dashed in here to be here. We have gone through this before, and i think i have made clear that i think that we have an issue that should draw the interest of all and the recognition of the talent of the artists, but also to understand, i have tried to take some time to understand the workings of radio and the expense that they incur, and so im prepared to be in this fight for a way forward. And i will pose my questions in that context. So i would ask both mr. Warfield and the representative for pandora, first of all, does the xm deal sound attractive in its construct for the pre1972 artists, the pay structure . And ill just say this, in the Early Morning hours of coming here and listening to radio, i heard that diana ross, i think shes got some music pre1972, was going to be at one of our venues here in this area. And apparently, they said something about national tour, and apparently, they felt very confident that there would be standing room only. These artists are attractive. They are still bringing in crowds. We still love their music as we will do in years to come for those who are now. So mr. Warfield, if you would, i would appreciate it. As representative, weve not taken a position on the pre1972. I would say our members if they are participating, i would probably argue that most of them are paying those fees in the digital arena. Theyre not looking for ways to avoid that. You know, we have some concerns whether or not there may be some intended consequences as a result of it. So were sort of studying that issue, but weve not taken a position to oppose the bill. Great. Would you continue to study it for me . Because i think your insight is going to be very important to a lot of members. Yes, maam. Id encourage you to do that. Mr. Harrison . If congress decides that protection for pre72 is an issue that needs to be resolved, we would support the position of the u. S. Copyright office which suggested a full federalization so that not only do the not only do consumers get the benefits of the copyright law, for example, the right of fause but artists potentially get the right to terminate their transfers under section 3. You just opened a door with respect to how we construct what may be most effective. So in the time i have, if we approach this from a comprehensive perspective, id like to have anyone who will press their button and tell us what do you want in the comprehensive approach that will pass the house, pass the senate and get signed by the president which is what i want to see happen, and not go another decades without a response that i think is so very important . I dont know who wants to start. Im looking at mr. Williams. What would be good if we just looked at the whole picture, said we want to answer everyones concern, what would be good to have in that comprehensive bill . Well, i think first of all, we have to work together. I mean, we all support, you know, we create a product which you all deliver. And were eternally grateful for that. Incidentally, thank you for your service. What you did this morning was incredibly important as well. We operate under a i im 73 years old. We operate under something thats a year younger than me. Almost everything on this 73yearold body works pretty good, there are parts of that decree that need to be dealt with. They simply dont work anymore. We have no right of refusal so someone can begin using our music immediately before theyve told us how theyre going to use the music. To prepare an appropriate bill for the this is what your rate is going to be. We need information. People begin using our music before we have that information. The decree has certain elements that can be changed. For your support in our efforts t another t at the doj are incredibly important. To go to rate court cost millions and millions of our members money. And arbitration would be so much simpler. It would be a huge part of that. You know, to allow our members, you know, right now were existing under an all in, all out rule imposed upon us so the major publishers who want to be able to go directly and license certain rights, separate, and its a right, i believe, they should have but not allowed to have that. The gentle ladys time has expired. Let me say, mr. Chairman, thank you for your indulgence. Im ready for all of us to come together and craft a portion of what mr. Williams said. I know others did not get a chance to answer my question. I would appreciate it if i could hear some of the commentse iingo we could work on the way mr. Williams has already laid out. I thank the gentleman, chairman, and Ranking Member. I yield back. Youre indeed welcome. I want to thank the panelists. And those in the audience who have been here almost three hours. By the way, the room must be cleared by 2 00 because of a scheduled hearing. Todays hearing has been conclu concluded. Thanks to all for attending. Without objection, all members will have five legislative days to submit additional written questions for the witnesses or additional materials for the record. The hearing stands adjourned. Earlier this week, the u. S. Stream court ruled that internet streaming company, areo is violating copyright laws. On this weeks Communicators Program we have the chance to ask the head of the National Broadcasters association about the ruling and its impact on broadcasters. Heres a little of what he had to say. The areo decision came down by the Supreme Court. Whats your reaction . Well, im smiling, peter. Im gratified that the Supreme Court stood by a principle which is as old as the constitution which is that copyright material has a value and those who own a copyright should be free to negotiate for its value. And i think they came down on the right side of law and history. In Justice Breyers opinion, he compared areo quite a bit to a cable company. Is that a fair comparison in your view . Of course it is because you have broadcast tv and then cable came along. And then satellite. What if satellite had said, you know, were different than cable . We have a slightly Different Technology. So were going to take that and not consider ourselves to be what is in law called an mvpd. So we dont have to negotiate. But satellite didnt do that. And so why should areo be able to come up with a Different Technology and say we dont have to negotiate for copyrighted material . We said from the beginning, this isnt about being opposed to technology. Theres still a technology there in areo, and maybe theres a Business Model for it. But that doesnt mean you can evade the law to run a business. So whats the Business Model that you could foresee . Well, they could do what cable and satellite does. They could deal with us on copyrighted material, and though its a technology that may have a place in the market, but they now have to obey the rules of the road that everyone else out there on the highway has to obey. So you could see the n. A. B. Or broadcasters dealing with areo as with cable companies, retransmission costs, et cetera . I mean, look, these are business decisions. My job as the president is to advocate for laws and regulat n regulations that allow my members to stay in business. Areo was an existential threat to that, if not a direct threat to that. And i would imagine that this does not go away, and that there will be discussions with areo and broadcasters, but thats beyond my responsibility and i will leave that to the judgment of my members. Well, joining our conversation is monty taylo of communications daily. Does its success suggest broadcasters should be doing something differently to capture that market or to take those customers . If i i mean, this is the thing about broadcasting. They were just doing what we were doing with antennas, but they were charging people for stuff going free over the airwaves and thats what triggers copyright law. I mean, i my own sense is were interested in every viewer having access to our content as long as its done lawfully. Its been suggested to me today by a few people that areo could try to respond to this by going to congress, lobbying. I know the house judiciary chair said the decision highlights how they should look at the copyright laws again. How would n. A. B. React to that . I mean, do you have a plan for a congressional battle over these rules . Well, absolutely i mean, look, im not suggesting the copyright law shouldnt be visited, but copyright law from my experience as a u. S. Senator is extremely difficult to do because its essentially about picking winners and losers. And its hard for congress to make those judgments. But that said, i believe we will be very cooperative and highly engaged in the development of an updated copyright law and already are. Senator smith, i want to read from Justice Scalias dissent. Scalia, breyer, thomas, dissent. On remand, Justice Scalia writes, one of the first questions the lower courts will face is whether areos record function which allows subscri subscribers to save a program while it is airing and watch it later infringes the networks Public Performance right. Yeah, thats certainly something yet for the courts to decide, and it will be remanded, but what was upheld today was the fundamental constitutional principle that you cant take someone elses copyrighted intellectual property and resell it without dealing with the owner of that copyright, so, you know, however future cases develop, that principle was decisively established and settled by the Supreme Court today. That was a portion of this weeks Communicators Program with gordon smith, head of the n. A. B. You can see the complete show on saturday at 6 30 p. M. Eastern on our companion network, cspan. What i have right here is a partially processed plant that ive cut down into sections that are the right length for hanging. And then i take off all the big fan leaves and those are sent to the kitchens to make edibles. They have a small amount of thc, is they get that for a really good price from us. Then these Little Leaves here are the tight trim and that can be dried and made into joints or it can be sent to the places that make extractions and made into hash and that sort of thing. And then right here we have a finished bud. This is sent over to cure and hang to dry then cured in buckets for a couple of weeks before they sell it in the dispensary. Washington journal looks at the Recreational Use and legal sale of marijuana in colorado with guests from denver and your phone calls live friday morning 7 00 to 10 00 eastern on cspan. Whats the governments role in supporting the u. S. Travel and Tourism Industry . As Senate Commerce science and transportation subcommittee held a hearing on thursday trying to answer that question. Witnesses including the commerce departments deputy undersecretary for International Trade, kenneth hyatt. The acting assistant secretary of state for Consular Affairs, Michelle Thorne bonds, and officials from the Homeland Security department and u. S. And customs and Border Protection. This is just over an hour 20 minutes. Good morning. Calling this hearing to order. Todays hearing will examine the federal governments efforts to reach our nations goal of attracting 100 Million International visitors annually by the year 2021. Last month, we heard from key industry stakeholders on how we can achieve this goal. It was clear that there were areas where the federal government could do better. Today id like to focus on three ways to increase tourism. The first is how the federal government engages in travel and tourism export promotion. Hawaii knows the importance of targeting International Markets to grow this sector. Having the right data about International Markets has been key to its success. Looking to states like hawaii as examples, the federal government should partner with industry to make sure the right data are collected. This will make us inform this will help us to make informed decisions about which markets to target at the national level. We need to shift our approach from meeting existing demand to driving demand, and in doing so, we must ensure federal resources are prepared to meet it. The second issue is improving accessibility. The fundment l piece of travel promotion. We can do all the Tourism Promotion we want, but if were not ready to receive travelers, our efforts are for naught. A key component is the arrivals process. Customs and Border Protection has initiated several programs to reduce wait times at our ports of entry, but the United States still faces challenges with long wait times. This makes travelers less likely to return. The u. S. Has also experienced challenges meeting demand for visas especially in emerging economies such as china and brazil. The state department has made progress in reducing visa interview wait times. As demand rises, we need to further streamline processes and leverage new technologies to make sure those who want to travel here can do so without unnecessary delay. To address accessibility challenges, senator scott and i have introduced the invite act. This bill would improve the arrivals process by expanding the Global Entry Program and strengthening the model Ports Program. The invite act would direct cbp and the state department to look at ways to coordinate the passport, visa, and global Entry Application processes. This would help to streamline application processes and encourage more travelers to apply for global industry. Our bill would also build upon the current model Ports Program and require them to develop metrics to measure the programs performance, and it would further Public Private partnerships by establishing a matching Grant Program for eligible u. S. Airports to create more userfriendly ports. I look forward to any comments the witnesses may have today related to this bill. The third issue is how we provide a quality Visitor Experience to attract new visitors and encourage repeat visitors. The federal government has a role to play in reducing barriers to a quality experience. We need to shift our mindset to become more customer focused in how we deliver federal services. This means rethinking how the federal government operates. It also means investing in todays workforce. We need to train employees at all levels to be forward leaning to deliver Better Services and create a positive experience for our visitors. As we address these issues, i look forward to hearing from the witnesses on how they are partnering with private sector stakeholders to grow our travel and Tourism Industry. Thank you all for being here today. If senator blunt has an opening statement, wed be happy to hear from him. Chairman, im just pleased youre holding this hearing and you understand these travel and tourism issues as well as the importance of encouraging visitors and dealing with visitors in appropriate ways so that they want to come back, but with the things we need to do to secure our entry and understand our exit system in the country, and i thank you for conducting this hearing. Thank you, senator blunt. Thank you for your leadership on these issues over the years on a bipartisan basis. Senator heller, do you have any remarks before we get going . Thank you. Senator nelson is going to wait for questioning as well. Senator scott is on his way. When he comes, hell be offering an opening statement. Id like to introduce the witness today. We have ken hyatt, deputy undersecretary for International Trade at the department of commerce. Michelle bond, acting assistant secretary. The bureau of Consular Affairs at the department of state. Michael stroud, acting assistant secretary for the private Sector Office at the department of Homeland Security. And john wagner, acting assistant commissioner for the office of Field Operations at the United States customs and Border Protection. Before we start, i want you to know your win statements will be part of the record. I want to remind you to please limit your oral remarks to five minutes. Mr. Hyatt, please proceed with your statement. Chairman, Ranking Member scott, members of the committee, thank you for the opportunity to speak about the department of commerces role in supporting and coordinating the u. S. Governments National Travel and tourism strategy. I first want to thank my colleagues here today for their leadership, partnership, and hard work in moving this strategy forward. It is truly an administrationwide effort. The travel and Tourism Industry now counts for more than 26 of Americas Services exports and 8 of exports overall. Travel and tourism is our largest services export. Al sw altogether the trade surplus in the industry is bigger than ever at 57 billion in 2013. Thats 20 higher than the 47. 5 billion surplus in 2012 and the largest on record. Were pleased to report a record 70 Million International visitors traveled to the United States in 2013. A 5 increase over 2012. And spent a record 180. 7 billion. These numbers are important. They represent export growth in the United States and support american jobs. InterNational Travel and tourism supports 1. 2 million jobs in the United States and more than 7. 8 million americans work in the u. S. Travel and Tourism Sector overall. Contributing to our growth in travel and tourism is our National Travel and tourism strategy. The strategy set an ambitious goal of attracting 100 Million International visitors annually to the United States by the end of 2021. The tourism policy council, a cabinetlevel group is coordinating the implementation of the strategy in cooperation with the private sector to help facilitate legitimate travel to the United States. However, even as demand has grown, challenges remain. Some travelers are experiencing bottlenecks at the borders, demand for visas remain high. Theres increased global competition for interNational Travelers. And the increase number of travelers are putting pressure on our infrastructure. Clearly, we have more work to do. The perspectives of the private sector have been incorporated into the five areas where we, the u. S. Government, are focusing our efforts moving forward. First, were working to continue improving visa processing. Second, we want to improve the experience of travelers at u. S. Ports of industry. To that end, on may 22nd, the president announceden effort to develop a National Goal to enhance the entry process for interNational Travelers to the United States. Along with the development of specific action plans at the nations busiest airports. President obama directed the secretaries of Homeland Security and commerce to lead this important effort. Third, we will promote the United States by supporting brand usa, the private Public Partnership established by the travel promotion act of 2009. Fourth, we want to make more data about federal tourist sites more accessible to industry for marketing use. And finally, we will explore ways to expand the statistical information we collect and publish on interNational Travelers to the United States. While the federal government is coordinating across the agencies, its important to highlight what the private sectors role is in implementing the strategy. The travel promotion act established the corporation for travel promotion, now doing business as brand usa with the mission of spearheading the nations First International marketing effort to promote the United States as the premiere Global Travel destination. As of september 2013, brand usa had recruited more than 400 partners who were participating in more than 100 programs around the world. These partners contributed more than 122 million in value in fiscal 2013. Theyre being utilized by brand usa to create and execute an International Marketing campaign. We will continue to work with brand usa to ensure that the u. S. Remains the top global tourist destination. With the National Strategy, im pleased to report that were doing better than ever before and well continue to improve in our Agency Coordination and our engagement with industry. It is truly only by working hand in hand across the public and private sectors that we will achieve the 100 million visitor goal set forth in the strategy. Thank you, and i welcome questions. Thank you very much. Ambassador bond . Good morning, chairman. Ranking member scott, and distinguished members of the subcommittee. My testimony this morning will focus on what the department of state has accomplished in support of the president s National Travel and tourism strategy. And im pleased to report that we have me the president s directive and have been surpassing the benchmark he set since 2012. We to this while continuing to protect our borders and the safety of our citizens. The numbers speak for themselves. In fiscal year 2013, consular officers issued more than 9. 2 million u. S. Visas, an increase of 42 over the past 3 years. Were on pace to surpass that number this fiscal year. The largest growth in travel comes from the worlds emerging economies where we have seen demand for u. S. Visas increase at a dramatic pace. In fact, nearly half of worldwide visa issuances come from just four countries. Mexico, china, brazil, and india. In the first half of this fiscal year, we processed more than three quarters of a million visas in china. A 28 increase. And more than half a million visas in brazil, a 17 increase over the previous fiscal year. Visa issuances in brazil have doubled since 2009 and almost quadrupled since 2006. Since august 2012, Consular Affairs has met the goals set by the president to interview 80 of applicants worldwide within three weeks of submitting their applications. In fact, so far this year, we have interviewed 71 of applicants within a week. And 95 of applicants within 3 weeks. At our busiest overseas post, sao palo, brazil, where we issued over half a million nonimmigrant visas last fiscal year, appointment wait times are consistently less than one week and the average visitor to the consular section spends 20 minutes in the building. Let me briefly highlight two key strategic improvements we have made to our visa processing model. First, we increased staffing. We now have 167 consular officers in Mission China and have more than doubled our consular staffing in Mission Brazil since 2011. 59 new adjudicatorses have been hired and deployed worldwide through a limited noncareer Appointment Program that hires visa adjudicators who already speak who already speak chinese, portuguese or spanish. Second, we expanded facilities to handle increased numbers of applicants and we are still growing. Were adding nearly 60 windows across our china post. Were moving into a new facility in mexico. In brazil and in china, we are opening entirely new consulates in coming years. In conclusion, let me state that our top priority in visa adjudication is always National Security. Every visa adjudication includes extensive, biographic and biometric checks. In 2013, we improved this process even more, making possible an even more streamlined, comprehensive, Continuous Monitoring of visa applicants. Were working with our colleagues across the government to expand the successful interview waiver program. We would like to discuss with congress the legislative authority to expand the amly ca applicant groups. Waiving interviews for travelers who are better known to us allows us to allocate better time and resources to lessknown travelers. We believe that u. S. Travel, trade promotion and Educational Exchange complement our Border Exchange commission. A unique space at the nexus of Foreign Policy and National Security. Our daily direct contact of the world gives us a perspective unlike any other in the u. S. Government. We will continue to innovate, increase our staff and improve our facilities to ensure that the United States continues to be a secure and welcoming country. Thank you. I will be pleased to answer your questions. Thank you, ambassador. Mr. Straud . Good morning. Im pleased to appear before you today, discuss the department of Homeland Securitys major travel tourism initiatives. The travel best showcases our dual goals of economic and National Security. Every year,dhs facilitates the travel of tens of millions of international visitors. We secure passengers and their baggage. Screen travels as they cross our borders play an Important Role among many other responsibleties. Facilitating secure travel is a priority for dhs. Dhs is working closely with the departments of commerce, state, grand usa to boost americas Tourism Industry. At dhs, we view security as a thriving economy. Not as a barrier. Our goals are fundamentally intertwined. In may, we set a goal of attracting international visitors. To meet this goal, dhs and the department of commerce have begun developing a National Strategy for International Air passengers. Specific action plans are under development, including input from both the private and public sectors. The stake holders improve airlines, local, state and federal government all with an essential role to play. Dhss greatest asset in securing interNational Travelers is our dedicated work force. Thanks to congressional support, 2,000 aufrgss improve the international experience. Dhs continues parter inning with pry vault industry, including leveraging advanced technologies and many trusted travel programs. One example is tsa precheck to International Carriers at urs airports, a longterm goal in our aviation security. Another example is the president s support for developing north american trusted travel program. Finally, dhs continues to support the expansion of global entry with its international partners. Dhs created a program that leverages private expertise. The loaned executive program. This Program Gives government expertise together to promote dhs travel and tourism goals. These loaned executives will help to improve the travel. Private sector and integration in development ensures a coordinated approach to identifying Innovative Solutions to our security challenge. Since 2003, dhs has expanded beyond our domestic borders. This is why we firmly believe come biened with expanding trusted travel programs will include National Security and facilitate legitimate travel all prior to boarding an aircraft bound for the United States. Thank you for the opportunity to appear before you today. I look forward to your questions. Thank you very much. Mr. Wagner . Thank you, for the opportunity to appear today to discuss ways u. S. Customs and Border Protection is securely facilitating travel to the United States. During 2013, cbp processed more than 362 million passengers welcoming a record 102 million air passengers. Since 2009, we have seen Remarkable Growth in interNational Travel with total passener jss rising approximately 4 each year. Pacing levels have an increased growth. One of the main challenges we face is the current International Air transportation model that creates large peaks of the passenger arrivals. At a place like miami, well ru teenly see about 16 flightings arrive per hour. Thats about 12,500 people over a fivehour period. To address this on going challenge, weve dwoded a threepart Research Optimization strategy that, one, identifying staffing. Two, ensures the efficient use of resources by optimizing Current Business resources and, three, supports funding strategies. The most recent results of the model show a need for 4,373 additional cbp officers through fiscal year 2015. The greatest goal of securing and facilitating travel is our professional works. Thanks to the 2014 appropriations acts, including funding for 2,000 new cbp officers. While the 2,000 additional officers will bring addition fall support, the staff load requires an additional 2,000 staff members. This has been included with a proposal for user fees. Cbp has been relentlessly self kri critical. We are incorporating technological advances and reducing paper forms for travelers. Weve implemented efficient processing modes. Like an easy pass lane at a toll booth, cbps trusted travel provides expedited processing through the use of automated kiosks. Theres over 2. 5 million travels with global entry benefits. To date, theyve been used over 9. 3 million times. On the busiest travel day of the week, they account for 10 of all International Air arrivals. Apc enables travelers to link the administrative portion of the arrivals process. Thereby, reducing the overall interaction time with the cbp officers and allows the cbp officer really to focus on the security aspects of that inspection process. In the past year, 16 airports have launched apcs. And several more are planned to join by the end of this year. At all of these airports, weve seen a 35 reduction. Weve also gather arrival and departure information automatically making the entry processier and faster for travelers. Were also looking at the paper customs declaration form in ways to automate or eliminate that process. Effective and efficient security should be attributed. Not guilty a barrier. Identifying and separating low lows risk travelers is a key element in efforts to facilitate and secure interNational Travel. Providing travelers with clear instructions in many entry process. Cbp continues to enhance the way we serve the public. We developed a Traveler Satisfaction survey to benchmark passenger satisfaction. Last year, over 90 of travelers agree that the professionals are helpful and efficient. Thank you for the opportunity to testify today. Im happy to answer your questions. Thank you very much. Well start with our Ranking Member scott