April 3, 2001
Mr. Chairman and Members of the Committee,
I am honored to be here and I thank you for the opportunity to speak today on behalf of recording artists and the Recording Artists Coalition (RAC). Recording artists have for far too long been insufficiently represented in Washington DC. The RIAA does not speak on behalf of recording artists, even though it gives the impression at times that it does. The RIAA speaks only on behalf of its membership, which is solely composed of major and independent record companies. Over the next several years, the Congress, the Copyright Office, the record companies and the Internet companies will lay the groundwork for intellectual property rules and royalty rates for the exploitation of music on the Internet. At this point, there has been little input from the recording artist community. Most, if not all, of the discussions have been between the labels and the Internet companies. Yet, the artists are the ones who create the content for distribution. There would be no need for these discussions if it were not for artists and we must be actively involved in the development of the framework, or our interests will not be protected. Artists are simply asking for a seat at the table.
As you know Mr. Chairman, RAC was at the forefront of the initiative to repeal the "work for hire" legislation that was enacted in November 1999. I would like to thank you and all the other Senators on the Committee for repealing that legislation. In the past, Copyright Law amendments have been enacted only after serious, and at times, lengthy deliberations. Generally, all interested parties were afforded an opportunity to present their views to Congress. No Copyright Law amendment has ever passed without this type of fair and democratic deliberation, except this most recent amendment.
Before passage of the amendment adding "sound recordings" to the list of works eligible for "work for hire" status, Congress heard only one viewpoint, that of the RIAA. You were told that the amendment was a technical change, when in fact it was a substantive change; one that would have deprived recording artists of the right to pass to their families and heirs the lifeblood of their careers, their sound recording copyrights. Once you recognized this surreptitious manipulation, you set out to right the wrong, and recording artists and their families will never forget your courageous and principled stand.
We are here today to discuss the digital music marketplace and what action, if any, Congress must take to meet the needs of the creators and the consumers. RAC's position is very simple. We believe that recording artists should always be paid for the exploitation of their sound recordings on the Internet, unless the recording artist makes the decision to provide his or her sound recordings free of charge to listeners.
Napster has stated in public that it intends to build a fee-based service that compensates creators. We look forward to the implementation of that service, and services like it. We recognize that, whether we like it or not, Napster has changed everything. We are listening to our fans. Millions of people have begun to experience interactive music services. They have so far been getting these services free of charge, but I agree with Napster that, with some improvements, many of its users will be willing to pay for this sort of service.
Napster and other "locker" systems have flourished because the record industry has failed to be forward thinking and has made it extremely difficult for legitimate companies to license the rights on an arm's length basis. The record industry fiddled on the sidelines while the digital revolution went on without them. The major labels should have spent their time negotiating and implementing a fair and comprehensive licensing system; one that addresses the interests of all the parties, including recording artists. While we support the copyright infringement lawsuits filed by the record industry, the lawsuits should not be used to destroy a viable and useful independent Internet distribution system. It is in the best interests of recording artists, as well as consumers, that Congress promotes an atmosphere of independent digital distribution of music. The solution resides in the marketplace and not in the courtroom. If, however, a resolution can not be reached quickly, compulsory licenses should be considered - but only as a last resort.
Under the Digital Millenium Copyright Act (DMCA), performers -- that is, recording artists, are now, for the first time ever, entitled to a public performance right. Writers of music share a public performance right with publishers. The publishers do not recoup advances against the writer's share, as it (the writer's share) is protected by an independent collection society. Payment for digital performances should follow this logic. It is vitally important that the recording artists receive digital performance royalties directly from the source without the record company recouping royalties against outstanding accounts, or by engaging in unnecessary bureaucratic disputes.
So long as the major record companies, represented by the RIAA, and the recording artists engage in public battles over these issues, as well as others, the RIAA can not act as an objective, independent body.
This single, digital, public performance royalty that is currently in force applies to very specific, non-interactive digital broadcasts only. RAC believes that Congress should examine the possibility of expanding artist performance rights to include interactive services. Music fans should be able to hear music anywhere, anytime, on demand. Many businesses have recognized that, in the wake of Napster, the competition is for interactivity. The record labels themselves have begun to develop interactive music services as well as license their catalogs to other companies. My colleagues and I are concerned that artists do not have rights to direct remuneration for interactive services. Furthermore, Congress should ensure that radio stations are not exempt from payment of digital royalties for Internet radio broadcasts. It is fundamentally unfair that broadcasters have always been exempt from paying performers a performance right for analog broadcasting; we don't want to see this inequity extended to the Internet.
In addition to Internet issues, recording artists have other serious contractual problems with the major labels. A new artist agreement is one- sided in favor of the labels. In most cases, a new artist has little leverage to negotiate favorable terms. Many artists and music attorneys believe that the "standard industry contract" is unconscionable.
The record company, in many instances, advances all or part of the costs of recording, promotion and marketing, and then recoups the costs from the artist royalty. As a result, a typical artist could sell a half million records and not see one dollar in royalties. Even if an artist is lucky enough to recoup, the label maintains ownership of the masters and the copyrights. Just as you have so insightfully observed, Mr. Chairman, it is as though you have paid off your mortgage and the bank still owns your house. One way to even this playing field would be for Congress to consider a federal seven-year term, much like the law that helped movie actors gain free agency in California. While the California law is not perfect, it provides a good model for Congress to consider.
I would like to address one more important issue. While there are many ways Congress can help the recording artist while encouraging a prosperous digital marketplace, expanding fair use is not one of them. Fair use is a delicate balance that adequately addresses the needs of the record companies, the recording artists, and the public.
No recording artist wants to limit the use of his or her music within the traditional parameters of fair use. However, by expanding the exception, Congress will effectively institutionalize free commercial distribution of music on the Internet. This is not why fair use was created. The answer for all parties involved and the public's demand for high-quality digital services, lies in the fair licensing of the music.
I thank you again for this opportunity to discuss these important issues with the Committee. Congress must continue to hear from the independent voice of recording artists. RAC is dedicated to bringing these and other issues directly affecting recording artists to your attention and to the attention of the public, as well as working with Congress to resolve these lingering problems. Recording artists must always have an independent voice as our interests are unique, vital, and at times contrary to the interests of the RIAA and the major record companies. The bottom line is that artists create the music that fuels these industries and hence it would appear obvious that our interests and concerns should be seriously considered.