Are buying in order to figure out what each cost and also i would note that on the songwriter side, Songwriters Guild featured Music Coalition that have brought up issues of transparency because arbitration might lead to issues where the artists themselves dont necessarily know what the rate is or how it was decided. I think my time is up mr. Chairman. Thank you. Senator franken. Thank you mr. Chairman for this hearing. Mr. Harris and you talked about this 150,000dollar fine that could be imposed for infringing. Have you ever paid such a fine . No sir. How many times has that fine in your experience your knowledge been imposed . Well in the context of pandora. Just in the whole ego system of this . Oh hundreds if not thousands of Copyright Infringement cases going on right now. Farah williams is involved with a lawsuit over marvin gayes estate of her blurred lines were statutory damages and willful infringement are being sought by the plaintiffs. I go back to the question, how many times has this line been imposed . The maximal 180,000 i cant give you a number. You brought that up. Yes pandora was threatened by Music Publishers by their outside counsel. I want to know how real the threat that is. Ms. Matthews in your testimony you say section 114i of the copyright act prohibits a court in setting fees for the music words for looking at fees paid by those same services to the Recording Industry for the performance of sound recordings leading to rate disparities in favor of sound recordings on the order of 12 1 and i think this is why mr. Miller is saying that in the digital area there is just an imbalance and i dont want to get into this is about pros today but it seems very ironic that in terrestrial which is what we have been living with since 1941, the performers did nothing and the Copyright Holder and the songwriters and publishers theres an imbalance for them obviously. Here we have just got the exact reverse where the performers knew very well and the songwriters get next to nothing. I mean this is why we are here whats going on in the Digital Space. Thats a big reason why think we are here. The Digital Space is nothing practically nothing. It adds up after billions of plays to a Little Something but this aint no way to will earn a living. I think if you want to use that mr. Miller, this aint no way to earn a living. [laughter] it will be demoed by the end of the week. And i would get what . Half. Would you like to know what that will equate to . I would like to know, three plays. Can i talk to the whole panel here about this issue . I know it gets into something we arent really discussing which is the right of the performer but what would it entail to try to address this where you would sort of equalize, and i know that the performers would go oh great, we have been doing radio for 70 years and now you want to equalize this. But what would that entail besides looking at these Consent Decrees . What would this all entail if anyone would want to handle that how would you sort of knowing we are going more and more into digital and this is going to kill the songwriter how would you equalize this anybody . Mr. Franken if i may you should recall that the Largest Record label in the world owns the secondlargest publisher in the world and the secondLargest Record labor label in the world owns the largest Publishing Company predicted of the day of right holders believe there was a different distribution of the royalties for 450,000 they were paying at the right holders himself wanted to distribute that money differently they are controlled by the same corporate parent and frankly im the best position to understand the relative value of the input to our service. Does that sound right to you guys . If i may. First mr. Pincus and im sorry. On a music publisher who does not share corporate parent with a Record Company and what i would say is that in one good example of where theres a free market for these two rights are rights are 50 50. They are equal. Okay. Mr. Pincus is referring to the market for audiovisual synchronization and i would also like to point out anecdotally outside of the United States oftentimes those two copyrights the copyright in the sound recording versus the copyright in the musical composition are equally valued. Our proposal would be as part of copyright reform we have platform neutral Technology Neutral laws and we let the free market decide what the allocation of value would be between those two rights. Thank you mr. Chairman. Thank you senator franken. Senator hatch is the chairman of the finance committee so we are going to let him take a few more minutes before he has to leave us. I appreciate that mr. Chairman. I am in the middle of a big hearing on taxes and all of you will be interested in that i am sure. Let me ask this. The law prohibits taking into account evidence of what other rights holders pay for the same piece of music. That doesnt make much sense to me. That is why last week together with senators whitehouse and alexander m. Corker i introduced a songwriter equity act to remove this barrier. The songwriter equity act would authorize the judge to consider rates paid to other rights holders such as performers as part of determining a fair market break. Do you believe this reform makes sense and how will that help the ratesetting process . I do believe this reform makes sense. I think its a step in the right direction. We believe he would be helpful and are actually incredibly important for a judge to be able to have all of the information about how the money flows. Okay, thank you. Mr. Harrison in your testimony expressed support for the creation of a single database with a record of all music copyright information. To enable services to identify on make catalog by catalog basis the owners of the song. This sounds like a good idea but how much would that cost and who would pay for it and who would manage the database . All excellent questions senator. I think the best answer i can give is pandora and Services Like pandora was certainly be willing to bear their share of that burden in creating such a database because its vitally important for the transparency that currently lacks in the system and so we would be more than happy to contribute to its creation. Thank you. The Consent Decree is 70 years old and its only been amended twice. In light of the significant Technological Advancements in the Music Industry over the last 70 years do you support making any modifications . Thank you senator hatch. I think we have to be a little bit more mindful of the fact that the nature of the Music Services and the Distribution Models may change. There may be modifications that could be undertaken to address those types of issues but the actual nature of the pros and the market power that they yield in this space doesnt change. The nature of the rights that they are administering does not change. So even if you have to address new technology the actual underlying problems still remain. So any of the changes that will be proposed have to keep in mind it has to be within the construct that allows and enables the market to function. If you take it outside of that construct you are going to have a difficult time having that efficient system. Ms. Matthews again can you tell me what your experience has been with the rate clerks process and how does that process impacts on writers . Since 2001 ascap has spent 86 million on court litigation. In the pandora litigation alone we discovered more than 75,000 documents. We deposed more than 35 individuals. These rates were proceeding sometimes last for years and sometimes require an appeal process to the second circuit. We think any other form of alternative resolution. Every dollar spent to good outside counsel are dollars coming out of the pockets of the songwriters. Let me go to mr. Harrison again. Compared to the 48 of revenue you pay for performances of musical works is paying 1. 7 to songwriters the amount you proposed to the Rate Court Judge is that an equitable rate for songwriters . 1. 7 that pandora proposed in the ascap rate proceedings is the rate that terrestrial radio pays to songwriters who publicly perform their works and we compete most closely with terrestrial radio fertile listeners in ad dollars soap we are going to have a distribution neutral or structure the 1. 7 of revenue would be appropriate. Mr. Chairman could i ask just one more question . I apologize to my fellow senators but ive got to get back to the income tax matter. Some songwriter groups have expressed concern over the lack of transparency and licensing deals the terms of which are often subject to nondisclosure agreements. Under these confidential arrangement songwriters who composed them dont even know the details of the agreements in which they are supposed to be paid. Do any of you have any ideas about how to address that particular problem because its a big problem as far as i can see. Anybody want to take a crack at that . One of the roles the pros play for people like me who have a hard time replicating the scalable we do is providing transparency in the market in the same way so having a pro player constructive role in administering agreements would be a very good way to handle with drawing rights. Senator hatch one of the things that pandora did last year was lodged its artists marketing platform. Admittedly its geared towards recording artists but it allows any recording artist to sign onto on to the service and see how their music is performed a number of times its perform to their audience is, where their audiences. There was nothing that would prevent us other than lack of transparency in the ownership for people who provide the same kind of disability. It may not allow the songwriter to track the dollars that come from the service into their Checking Account but it was certainly enable them to see how their music is performed on the service and whether they are getting the money they believe they deserve. Senator hatch if i might i think the one thing that ms. Matthews has opined on this and i appreciate her statement the one thing i think all of us on this panel could agree with is if the Consent Decrees or modified at all they should be modified in the way to create better transparency throughout the system both for licensees for songwriters, for the pros for that matter. We ought to know what it is we are licensing how much is being paid, by whom and to whom so that this is all public. Its all available to those who are participants in the system. I think we can all agree that transparency is really big issue and if anything comes out of this hearing it should be that. Thank you mr. Chairman. I appreciate the courtesy. Thank you chairman hatch and we wish you the best of luck with your tax i would like to thank you in the Ranking Member for raising this and thank you to the panels for being here. This is an important topic today today. In recent years georgia has played an increasingly important and prominent role in our nations Music Industry is one the move from National Nashville to atlanta theres a lot of music activity in atlanta but i think everyone agrees that the music marketplace has changed and undergone radical changes in the last few decades. Since the bmi distant decree was made in 1984 a year in which the billboard top 100 single by brian adams and boys to men. Only two of my kids know who that is. I would like to pose a policy question about those decrease. The Department Justice revised the distant decree all doj Consent Decrees would contain a sunset provision. These sunset provisions word terminate the degree degree degree within tenure status was in response to congressional action and strengthen the penalties for violations. For more than 35 years the distant decree should not be able to to terminate in under decade unless exceptional industry specific circumstances are present. The policy was in perspective but the rationale is worth considering in the context of the distant decrees we are looking at today. My question is this, i would like to get each of you to respond to this. For those witnesses who support continuation of the Consent Decrees in the present form can i get a quick description for me to be regarding the music licensing market that trumped dojs perception and for witnesses who favor the elimination of the sunset provision or amendment of the Consent Decrees do you believe the sunset presumption applies here . Today ascap is not requesting a termination of the Consent Decree. While it do think its appropriate to have some reasonable pathway to consider regular modifications to the Consent Decree possibly eventual sunset today we are only asking for a few discrete changes to save collective licensing. The hypotheticals publishers leading ascap is not a hypothetical. This will happen if we dont make these changes and its our greatest fear for the songwriter that we are running out of time. Thank you. Senator i think the key issue, what makes this exceptional and suggests that sunset is not appropriate is most of the time when the Consent Decree is entered that behavior that gave rise to the Consent Decree goes away so the Consent Decree is no longer needed. At the end needed. At the end of the day what ascap and bmi are our horizontal sales agencies. They take otherwise competing licensures aggregate them together and fix a single price for what otherwise would be competing catalogs. Unless that behavior changes that doesnt seem appropriate to do away with the protections that are provided licensees for there to be abuse of market power and super competitiveness. In the market today there are many digital Music Services that operate without the kind of regulation that Music Publishers operate under in the market is thriving and as to transparency for example my understanding is that the majority of publishing date is currently available on a voluntary basis by private actors. So i think where the market is more free in this particular area it becomes more competitive. Senator perdue thank you for the question. As mr. Harrison said these are very unusual decrees. The department of justice entered into these decrees not as it usually does, to prevent and deter anticompetitive conduct. They actually entered into these decrees to enable anti anticompetitive conduct in the construct that it could be regulated. That makes them very unique and that makes them necessary. If we are going to continue in the world and have ascap bmi csac and the large publishers that represented they can operate and collect the way they do there has to be a construct or they will engage in anticompetitive activity. In a Perfect World i think Consent Decrees could go way. What we dont want to see happen is we dont want to destabilize our collective agencies because its just too important. We would hope they find ways to modify it to give us some relief. Its just crucial to what we do now and a relationship with the pros by and large is good. My wife of 23 years as i was running these technicalities by her looking for a little bit of wisdom she says i dont know what any of that means but i do know this, the only days i circle on my calendar every year are the four days your bmi check is coming. Do whatever you got to do to keep that. Senator, i agree the Consent Decree seven in place for an unusually long time because these are unusual circumstances here and i would say i dont think anybody at this table would be happier than i would be if we found the Silver Bullet that created competition in the marketplace in may the Consent Decrees unnecessary. But that is not the world we are living in right now so especially given we have seen increasing consolidation among the publishers some of which was justified because we have the Consent Decrees as a backstop and we have this federal court case where a judge found the publishers have the opportunity to compete and they coordinated with each other that sunset think the Consent Decrees at this time would be a necessary but we should always be reevaluating as we go forward. Thank you all. Thank you mr. Chairman. I think i would like to start with mr. Dowdle in this round. Mr. Dowdle i think as has been mentioned today a distinguishing characteristic of any free market system is that two parties negotiating have the ability to walk away from a negotiation if they cant achieve a mutually agreeable outcome. And yet its been suggested that Music Services and broadcasters in particular cannot they literally cannot walk away from license negotiations with a publisher. Or the pr because they dont have total control over what music they publicly perform. Let me just ask you that question. Can a broadcaster remove a specific licensures catalog from its service . Is that possible . Theoretically possible, not practically possible and heres why. We have various types of programs that we put out over our airwaves. Some of that we produce. The amount we produce would identify the music and we are able to do that exactly. But for a very large the. Identified music. Who wants a copyright . Exactly right that if we can come to an agreement with them we can cut that music out. The programs