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Rep. Jerry Nadler’s Statement Calling for Fair Treatment Under Copyright

June 10, 2014
 Rep. Nadler Calls for Comprehensive Update of Music Copyright Laws
WASHINGTON, D.C. – Today, Congressman Jerrold Nadler (NY-10), the Ranking Member of the House Judiciary Subcommittee on Courts, Intellectual Property and the Internet, delivered an opening statement at the hearing on “Music Licensing Under Title 17 Part One.”

“With colleagues on both sides of the aisle, I am developing legislation to address the various problems in existing law in one unified bill – a music omnibus, also known as a ‘MusicBus’ – bringing fairness and efficiency to our music licensing system, and ensuring that no particular business enjoys a special advantage against new and innovative technologies,” said Rep. Nadler. “Consumers don’t know that the button they push on their car dashboard or smartphone arbitrarily determines how much artists and songwriters will be paid, assuming they will be paid at all. We can create a better system for radio competitors, for artists and songwriters, and for fans, all of whom depend on a vital healthy market for music and music services.”

The following is the full text of Congressman Nadler’s opening statement (as prepared for delivery):

“Thank you, Mr. Chairman, for holding this hearing on ‘Music Licensing Under Title 17,’ as part of the committee’s comprehensive copyright review. This is the first of a two-part hearing, which is fitting, as these sections of the Copyright Act are in need of scrutiny.

“It is often said that if we started from scratch, nobody would write the law the way it stands today. Music copyright and licensing is a patchwork of reactions to changing technologies. From the development of player pianos and phonograph records to the advent of radio and the Internet, the law is constantly playing catch up, and quite often failing.

“Today, terrestrial, satellite and internet-based radio stations deliver music to listeners in their cars, homes, and at work.  Each of these uses of music require licenses from copyright owners for both the underlying musical work and the sound recording, with the rights to each often owned or managed by different individuals or entities.  Over time, and in an effort to help ensure equity and access in this complicated universe, Congress has created a statutory licensing scheme.  Unfortunately, the existing landscape is marred by inconsistent rules that place new technologies at a disadvantage against their competitors, and inequities that deny fair compensation to music creators.

“Under current law, for example, the rules vary for payment of royalties by Internet broadcasters, cable radio, and satellite radio providers.  Internet broadcasters, like Pandora, pay royalty rates set to reflect a ‘willing buyer’ and ‘willing seller’ model.  By contrast, the rate for cable and satellite providers is established through factors set in 1998 that pre-dated development of Internet radio, and that many believe results in a below-market royalty rate.  As a result, Pandora has fairly complained that it is at a competitive disadvantage, and creators whose works are accessed through cable or satellite receive less than when a consumer streams that same work over the Internet.

“Last Congress, I circulated draft legislation, the Interim FIRST Act, to establish parity among all digital radio services.  The Songwriter Equity Act, recently introduced by Representatives Collins and Jeffries, would similarly modernize the law to ensure that the same ‘willing buyer, willing seller’ standard governs songwriter and music publishers’ mechanical reproduction royalties.

“Other provisions of the Copyright Act prevent songwriters and publishers from providing evidence in federal rate court under consent decrees governing licensing of their works that came into existence in 1941.  The Songwriter Equity Act would remove that evidentiary ban, thus helping songwriters obtain a fair market value for their work. In the meantime, the DOJ just announced a much-needed review of the consent decrees that govern ASCAP and BMI – two of the performance rights organizations responsible for collecting and distributing royalties.

“Meanwhile, nobody is paying artists who recorded many of our culture’s greatest musical classics before 1972, like Aretha Franklin, the Byrds and the Temptations. The RESPECT Act, recently introduced by my colleagues, Representatives Holding and Conyers, would close an existing loophole in the law that has allowed digital providers to argue against paying any royalties for these great legacy artists.

“Of course, one of the most glaring inconsistencies and injustice is that our performing artists, background musicians and others rights holders of sound recordings receive absolutely no compensation when their music is played over-the-air on terrestrial – meaning AM/FM – radio. Congress required payment when sound recordings are transmitted digitally in 1995.  But we have yet to extend this basic protection to artists when their songs are played on AM/FM radio.

“This is incredibly unjust. The bottom line is that terrestrial radio profits from the intellectual property of recording artists for free.  I’m aware of no other instance in the United States where this is allowed, and it needs to be remedied. We are on a short list of countries that includes Iran, North Korea and China that do not pay performing artists when their songs are played on the radio.  And when American artists’ songs are played in Europe, or any other place that provides a sound recording right, these countries withhold performance royalties from American artists since we refuse to pay theirs.

“This Committee’s copyright review and the parallel proceedings at the Commerce Department and the Library of Congress have revealed an extraordinary and bipartisan consensus in favor of performance rights.  As Register of Copyrights Maria Pallante testified earlier this Congress, this issue is ‘ripe’ for resolution.

“Although the existing music licensing and copyright scheme can be difficult to understand, the solution is quite simple. If Congress is going to maintain compulsory licensing, then any statutory rate standard should attempt to replicate the free market to the greatest extent practicable, and the same rules should apply to everyone. The law should be platform neutral, and all music creators should be fairly compensated.  It is well past time to harmonize the rules and put an end to Congress creating arbitrary winners and losers.

“There have been several proposals to address individual inequities in the music landscape, some of which I just outlined and that I support. But if we are to rationalize the law and level the playing field, we must take a comprehensive approach.  At this year’s Grammys on the Hill event, Neil Portnow – who is here with us today – called for the industry to coalesce behind a music omnibus, or ‘MusicBus.’ His call for unity was later echoed by Republican Whip Kevin McCarthy and Democratic Leader Nancy Pelosi, who agreed that the time has come for Congress to address these issues in one package.

“I agree, and I pledge to take up their charge.  With colleagues on both sides of the aisle, I am developing legislation to address the various problems in existing law in one unified bill, bringing fairness and efficiency to our music licensing system, and ensuring that no particular business enjoys a special advantage against new and innovative technologies. Consumers don’t know that the button they push on their car dashboard or smartphone arbitrarily determines how much artists and songwriters will be paid, assuming they will be paid at all.  We can create a better system for radio competitors, for artists and songwriters, and for fans, all of whom depend on a vital healthy market for music and music services.

“We have a wide range of witnesses here today and at our second hearing scheduled for June 25th.  I look forward to their testimony, and I hope that we can all come together to pass meaningful, comprehensive reform.

“Thank you, and I yield back the balance of my time.”

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