>> host: and c-span we want to introduce you to professor allen bargfrede an associate professor at the berkeley college of music in boston and executive director of an organization called rethink music. professor bargfrede what is rethink music and what's the report you just came out on the music industry? >> guest: rethink music is a think tanker form to berkeley so obvious over the past 15 years there has been a number of changes in the industry because we have more than 1000 graduates from our college every year and to have a viable career in the music industry we chose to open up a think tank or research initiative to really look at some of this and try to foster a sustainable ecosystem for them. >> host: well, two questions. number one is when somebody downloads or uploads a tune from itunes it's $1.99 just for one song. word is that $1.99 go? do you get it? >> guest: typically a download from itunes, 30% of that is paid out to apple and 70% is paid out to the rights holders and that's generally with roughly 10% of u.s. songwriters and music publishers and about 60% of the record labels. >> host: and the artists themselves, how much of that, how much do they get out of that 70%? >> guest: depends on the contractual deal and artists. specifically it's 15 to 25% royalties depending on the negotiating power of the artist. there are friday of direct -- deductions for come into play as they are paid out that iraq could label. there's also recoupment of costs oftentimes labels charge back for marketing so really depends on a case-by-case basis what typically the base rate is 15 to 25% of the 70%. >> host: professor bargfrede when the structure, this payment structure is a set type emit interested parties or does the federal government have a role in this? >> guest: the federal government plays a -- pretty big role on the publishing and songwriter site. regulating mechanical world sees which is in the reproduction of a song or composition and then on the sound recording side and remember there are two copyright there's a publishing site which is the underlying words and lyrics of the music and the sound recording and a recording of that musical composition. on the sound recording side typically those rates are negotiated on the fair market basis so some would argue that the songwriters and publishers are at a slight disadvantage because they are being regulated while others are not. >> host: joining us tonight, or station is legrier. professor a lot of the recommendations that are in your report kind of look at how the industry can work together to advance some of these ideas, but obviously compromise has been a fairly difficult thus far so to what extent, to what extent of the recommendations they are imposing going to require congressional mandates is supposed to industry? >> guest: in the music industry you see a very fractured industry and part of that is because there are copyright revenue splits on the publisher side in the record label side and a lot of times you see the two sides ending up in a fight over who gets what share of her particular and it doesn't seem to be a lot of collaboration so a larger size and everyone slices a little bit bigger so i think maria pallone taken as the register now the u.s. pretty active in looking into these issues. they put out a 245 page report on licensing earlier this year. i think that some of the recommendations she has made has recommended to have required governmental intervention. in other areas there may be a role for an ngo or a nonprofit to try to play an agnostic role and to solve some of the problems in the report but i do think congressional activity may be required as well. >> host: professor bargfrede we recently talked with barry sherman a. recording industry association of america ceo and president and here's a little bit of what he's calling for when it comes to changes in the music industry. >> we would want to be paid by am/fm radio. i think it's remarkable, most people are shocked to learn that in today's day and age am/fm radio pays nothing to artists and record labels when they broadcast their music. they have pay the songwriters and publishers so this is a 16 billion-dollar industry where they are earning $16 billion in advertising every year from basically the use of music and they pay nothing for it. there's no other copyright at work that is discriminated against in that way and there are virtually no other developed countries in the world that discriminate that way yet special exemptions in the u.s. law and a unique u.s. situation. we would want to fix the below market rate standard that sirius xm enjoys. for some reason they were grandfathered at a time when they were a startup and that grandfather still exists even though they are making money hand over fist. they had to be sharing their revenues more fairly with people who create the music in which their services based. that needs to be fixed as well. we really need to do something about making sure that all creators are paid far market -- the fair market value regardless of the platform they are on. >> host: professor bargfrede du agreed? >> guest: it's pretty shocking if you look at industrialized nations around the world that we don't have it in the u.s.. i believe the other countries that are not paying that performance right include china iran but if you look at those a lot of latin american south america and here we sit as really the world's wealthiest country and we are not providing this right to our artisan artist and to me it's a little bit shocking that there has been congressional activity on this pretty much in the last several congressional sessions. right now there's a fair play act to try to provide that performance right and i think if you look back over time generally labels were happy to have their music played on the radio and they didn't care necessarily about being paid for it and they use it as a promotional tool. you got on the radio and were seen on tv, everyone is happy that we have shifted to this area -- era of listening. no longer is the product but it's streaming services like youtube. we are living in an era of facts is and that era i think listening on the radio is another form of listening. >> host: jimm phillips. >> guest: should a lot of the issues involved with the music licensing industry like what's being addressed in this fair pay fair play act should those be the house judiciary committee is considering? a number of stakeholders are concerned the wider issues like the placement of the copyright office could get swallowed up, could swallow up concerns within the music industry and other industries. >> guest: yeah i think there's room to move forward on this immediately. i think a wholesale rewrite of a wholesale copy eight right at probably needs to take place. maria has acknowledge that with her report that came out earlier this year. there's no reason it can't happen this year and again we are the world's wealthiest country and we are not providing a contravening bill in congress to prevent this from happening. >> host: and what is that bill? >> guest: at the local radio freedom act supported by nearly half of the house. >> host: at the same time, with that bill and the supporters of that bill argue that hey this artist is getting great promotion in this free play. >> guest: ride and i think that has traditionally been the argument and labels and artists have been happy over the past several decades to be able to sell a cd but again we are in an era where people are being paid by listenings so if you look of the complaints about low streaming services i think some of that comes from the fact that we are looking at a totally different business model and model for people to consume and listen to music. they are being paid, every time someone listens to your song not every time someone goes out of my surprise it and the sponsor listens to it a thousand times later. >> host: professor bargfrede in your rethink music report "fair music" transparency and payment flows in the music industry you call for greater transparency transparency. what do you mean? >> guest: i think there are two facets to that and that's what i call revenue transparency and then there is what i would call revenue transparency. revenue transparency is giving artists, creators and songwriters more insight as to where their money is coming from , how those payment flows are making their way and he's taking a cut down the middle? what are the rates that are being paid by spotify and other services? everyone knows what itunes is paying for download and then on the rights transparency side there's a big issue created by a lack of requirement for copyright. the copyright treaty requires international copyright they cannot require a copyright to be registered. if i create a song today i have immediate copyright ownership of that. i'm not required by the library of commerce and the registry of copyright in order to have that protection by what that means is oftentimes it's difficult to know who owns the copyright so a songwriter may write a song and the publisher may subsequently sell that copyright to someone else and then you end up with digital services or anyone else who may want to use that musical composition and a place where they don't know the owner and doesn't get up -- doesn't end up getting paid. >> host: professor when it comes to payment transparency is this something new in the past 15 years in the digital age or has payment to musicians always been a little bit opaque? >> guest: i think certainly the narrative of artists and songwriters feeling like they don't understand is not new but we are living in the a world today where everything is trackable. the nsa can know where i am and they can know where you are and they can know what you are talking about in your cell phone. there's no reason that artists and creators shouldn't be able to know where their songs are being streamed and not on a significant time lag either. we have songwriters that are taking checks from performing rights organizations that make come and depending on where they song was played. it can be a after 18 months after the sale happened. >> host: professor bargfrede one of the major recommendations in the report is to use a nonprofit to meet a global rights database. how would a nonprofit seed in this area supposed to efforts to solve those? >> guest: well if you look at the european commission of the e.u. and try to created global rights database only in the music publishing side roughly between 2008 in 2012 they spent nearly 10 million euros investigating this in the project fell apart, over issues like who is going to pay for it and who is going to put the data into it and we really believe that bringing in agnostic ngo that can perhaps bring folks together in order to create a rights database and solve that issue but we also look at it as something that where we try to solve the issue. one of the problems in the past has been trying to get folks to agree to give their data on older recordings and other musical compositions and what we are saying is today there are 30 million songs available on spotify. the estimate is in 2025 it will be 100 available for listening on spotify. can spotify. can we just start to collect and aggregate that right for 70 million songs that are going to come over the next decade and a role that an ngo can jump in and play and hopefully drive the market shift to hopefully create a rights transparency that maybe create a system by allowing more license folks to be licensed. >> guest: the industry -- >> guest: we have work we are considering the possibility of working in a university consortium and we want active involvement from all facets of the industry. we also need to move forward without the riaa and the major publishers and also independent artists, independent labels but i think as the e.u. project approved getting everyone in all the stakeholder groups to agree before you allow a particular database of product is going to be very difficult. i think we are looking at it as we want folks to be involved in the want folks to advise and whether it's berkeley is part of the university consortium or some other ngo i do think you have to have those stakeholders involved. >> host: professor bargfrede can you speak to the digital world that we are living in when it comes to music and how that has changed how we get our music >> guest: yeah, i mean i think you look back to say 1995, 20 years ago, people would listen to am/fm radio and it would be, hit on a country or hip-hop or pop station. they would like it and they would go to their tower records and buy a cd and they would buy a cd for a significant amount of money, roughly $20 per cd. i think the music industry became accustomed to selling expensive products. there were a lot of people who are upgrading their set and collection and the older music they had they were reviving it on cd and i shifted in 1999. the music industry was fairly slow to adopt it and it wasn't until 2003 that steve jobs said there should be a download store in the form of itunes store and now we have begun to shift to a business service model. it's not really new model anymore. it's been around since 2004 and 2005 and it's more legitimate than napster and available at that time but it wasn't until spotify arrived in the u.s. in 2011 that it created this so that people could see what their friends are listening to and i think the fans and the customer base began to really be aware of that access model. so now we have moved into this era where i don't want to say everything is free but everything feels like it's free and i think part of that is spent an attempt on the music industry's part to fight piracy. take a $10 subscription fee in the form of some high-priced services and give folks all you can eat access and we are still in a phase where we don't get service. certainly prescription services are growing quickly. the number of the streams of doubled the number of streams at this point last year. this subscriber bases are up and you'll see over over the next probably two years that model to continue. >> host: in your view, what groups or who does the current system benefit the most? >> guest: i think that current system benefits because they are the ones that power. it's an unfortunate reality but perhaps a smaller artists have the power that a major public corporation does when they are initiating some of these groups are these additional services. >> guest: professor i was interested in what you had to say on the role of technology can play in the future of rights management. could you explain how that would work? >> guest: yeah and i'm not going to pretend to be an expert but i do think it's something that should be explored, so if you look at decentralize writes registry created by an ngo, having the money or royalty shared in smart contracts en bloc chain. for those of you who don't know block chain, crypto currency is like bitcoin. it's it decentralized system that allows payments to be made and verified across a computer network and with block chain music i think there's a lot of investigation about can you have what is called a smart contract that allows royalties to be paid and the hypothetical situation spotify is connected to block chain and block chain receives royalty and whether the royalty going from spotify to label or to a rights organization it goes to a writer or an artist, that split is made at the point that spotify is an offshoot of block chain. >> host: professor bargfrede recently taylor swift pull their music from one of these services. what was the situation? >> guest: i think to answer your second question first i think she accomplished elevating the issue of streaming payments to artists and songwriters and she certainly not the first person to bring this up three she very publicly made a stand against i guess what you would call free music and she pulled that music from spotify because she was opposed to this concept of their free service, there are free apps service so she wanted to be able to have her music available on spotify only aunt only in the case of the person actually had a paying subscription. spotify has two tiers right now. they have a free tier where you can listen to it all you want as long as you're willing to accept the advertisement subscription -- and there's a subscription-based service where you can listen to the music you want without the ads and she wanted to be firewall to from advertising basically. she fell the devalued music and again i certainly think she elevated the issue and made it very public. >> guest: my one concern would be some of the stories that are coming out about famous additional services that are going to impact the uptake of services and we won't have the chance to see where they can end up. the general public gets the idea that i should knew spotify because the money doesn't go to the creator. >> host: for that 10 bucks a month he spent on spotify you can listen to taylor swift 24 hours a day if you would like, correct? and as you get paid for every play? >> guest: she gets paid based on a revenue share. the first dream, what they call a first dream rate differs really each month based on the number of subscribers where the subscriber revenue tool divided by the number streams. essentially they take all the money that's broadband and paid out based on the total number of streams. so to answer your question yes. it's just that the rate is a lot lower. >> guest: there are also a number of agencies that have led efforts to for instance the department of justice is looking at the s. and bmi to decrease and the world to board his going through some of the rates proceedings for different types of music streaming and other performance venues. to what extent is that going to, with the results of those proceedings change the status quo? >> guest: well i think again on the publishing side which is where ascap and bmi stand some concern that perhaps that side if you are taking sides as well because they are overregulated. part of that review is to look at whether or not it can be a more fluid systefor licensing and there's also been a move to have more parity in the ratesetting industry and the sound recording side are you. >> host: why is it that serious, pandora, spotify and am/fm all have different ways of either not paying or paying for music? >> i think a lot of that is set up by the copyright act and a lot of it is set by the copyright royalty board so the copyright royalty board is appointed by the library of congress and they are a group of three judges and they look at copyright royalty rates and they end up listening to all that different interested parties in the end up trying to set a royalty rate that they feel fairly represents the compensation that is deserved for the performance of the music. again the copyright royalty board only gets involved in certain situations so the amount of money that a record label is able to negotiate to get paid from spotify is not touched by the copyright royalty board yet the rates that pandora pays our. again you look at kind of a fractured system where some of its regulated and some of it's not. that has been a lot of argument over the past few years. >> host: professor bargfrede in your report you reprint the office copyright recommendations and one of those is full federal protection for sound recordings made prior to every 15th, 1972 closing an unjustifiable loophole in copyright legislation. what is magic about every 15, 1972? >> guest: sound recordings that came about prior to that date currently have no federal copyright protection into basically a loophole that the legislation was enacted. i think maria and her group when they put out the copyright music licensing report earlier in the year it outlets that this is something that should be updated. it shouldn't be a difference in copyright protection for a song that was written and recorded in the 1960s versus one that was written and recorded in the 1980s. >> host: how do you see the role of the apple 400 plus authorized music services? >> guest: well i think one of the big takeaways from our report has been the technological backing of the music business not caught up in the psychological front end of the business so we have moved to an era that spotify is a technology company, not a music company but a technology company they have been -- they were started in 2008 on cutting-edge technology, and they have to report their plays in their streams to record labels of publishers that have been in existence for a long time. the standard-setting and the formats in which the digital services are required to report, there really is not a lot of standardization across-the-board there are different formats for each of the publishers in different formats to aggregate services and there have been some initiatives and the initial data exchange to set some standards for the sharing of data or the distribution of royalty data but i think that was really one of the biggest takeaways from our report which is there is a tremendous challenge of the lack of technological backing of the service. going back to my comment earlier about everything that is trackable these days i think there really needs to be a bigger movement to one of the recommendations in the report to implement better technology to track that payment from the time the music is listed on spotify in the u.s. or wherever they are using the streaming service to the writer or musician. >> host: the music industry is in transition in this digital era. this is something library of congress the department of justice and the u.s. copyright office in the u.s. congress are all involved in. allen bargfrede is the executive director of rethink music and they have come out with a new

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