HOME RECORDING

In approving the creation of a limited copyright in sound recordings it is the intention of the Committee that this limited copyright not grant any broader rights than are accorded to other copyright proprietors under the existing title 17. Specifically, it is not the intention of the Committee to restrain the home recording, from broadcasts or from tapes or records, of recorded performances, where the home recording is for private use and with no purpose of reproducing or otherwise capitalizing commercially on it. This practice is common and unrestrained today, and the record producers and performers would be in no different position from that of the owners of copyright in recorded musical compositions over the past 20 years.

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In the Audio Home Recording Act of 1992 (“AHRA”), Congress definitively addressed the issue of home recording of sound recordings and musical works, and in section 1008 provided an exemption for home copying. This Act was intended to be comprehensive, forward-looking legislation designed to end, once and for all, the "longstanding controversy" surrounding the home recording of prerecorded music.3 Indeed, then-President of RIAA, Jay Berman, described the bill that became the AHRA as "a generic solution that applies across the board to all forms of digital audio recording technology."4

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The lawsuit against XM raises the question of whether the recording, downloading and creating of a personal library of copyrighted music is a permitted "fair use" under copyright law. The lawsuit centers on a recently released device called the Inno, which, among other uses, allows consumers to record up to 50 hours of XM's programming. The Inno gives users the option of disaggregating songs from XM's airing, and storing them on the device for later playback. Although the songs cannot be removed from the Inno, the recording industry's suit asserts that the recording and disaggregating function equates with illegal downloading, and is therefore a copyright violation. XM has stated that the device was designed to comply with fair use principles and the AHRA. The resolution of this lawsuit could well impact the interpretation of what constitutes fair use and, thus, how any digital audio copy protection system should be designed and implemented under copyright law.

Congress Should Reject Efforts to Impose a Sound Recording Performance Right in Digital Broadcasts

As NAB has stated numerous times, nothing in the audio flag discussion is related to nor provides a basis to support a new performance right tax on broadcasters. Throughout the history of the debate over sound recording copyrights, Congress has consistently recognized that recording companies reap very significant promotional benefits from the exposure given their recordings by radio stations and that placing burdensome restrictions on performances could alter that relationship, to the detriment of both industries. For that reason, in the 1920s and for five decades following, Congress regularly considered proposals to grant copyright rights in sound recordings, but repeatedly rejected such proposals.

When Congress did first afford limited copyright protection to sound recordings in 1971, it prohibited only unauthorized reproduction and distribution of records, but did not create a sound recording performance right. During the comprehensive revision of the

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H. Rep. No. 92-487, 92d Congress, 1st Sess. at 7 (Sept. 22, 1971) (emphasis added).

3 See S. Rep. No. 102-294, 102d Cong., 2d Sess. 30, 51 (June 9, 1992).

Hearing Before the Senate Subcommittee on Communications, S. Hrg. 102-908, Serial No. J-102

43, at 111 (Oct. 29, 1991) (statement of Jason Berman, President of RIAA) (emphasis added).

Copyright Act in 1976, Congress again considered, and rejected, granting a sound recording performance right. Congress continued to refuse to provide any sound recording performance right for another twenty years. During that time, the recording industry thrived, due in large measure to the promotional value of radio performances of their records.5

It was not until the Digital Performance Rights in Sound Recordings Act of 1995 (the "DPRA") that even a limited performance right in sound recordings was granted. In granting this limited right, Congress stated it "should do nothing to change or jeopardize the mutually beneficial economic relationship between the recording and traditional broadcasting industries." Consistent with this intent, the DPRA expressly exempted from sound recording performance right liability non-subscription, non-interactive transmissions, including "non-subscription broadcast transmission[s]" transmissions made by FCC licensed radio broadcasters.'

In sum, the transition of traditional local radio stations from analog to digital presents no basis to alter fundamentally the long-standing mutually beneficial relationship between the recording and broadcasting industries by imposing a new performance right in digital broadcasts, when one does not exist in analog.

The DTV Broadcast Flag

NAB believes Congress should legislate specific authority for the FCC to re-instate its regulations implementing a broadcast flag for digital television adopted in 2003. The DTV broadcast flag mechanism was developed over many years of intense negotiations by scores of participants from a wide array of industry sectors. The purpose, concept and methodology of the DTV flag were then debated at the FCC in voluminous comments and reply comments from affected industry and consumer groups, companies and organizations. Although the D.C. Circuit Court of Appeals ultimately decided that the FCC lacked authority to impose regulations, the policy judgments explained in the agency decision remain valid and should be implemented.

Further, NAB opposes any attempt to exempt local broadcasters' news or public affairs programs from the protection of the flag. While broadcasters freely and widely distribute their news and public affairs programming, NAB believes it vitally important that broadcasters retain the right to protect their copyrighted news and public affairs programs, which typically are the main or only product of local broadcasters. Unauthorized internet redistribution could well eviscerate the program exclusivity of news or public affairs programs of stations in local markets, as well as undermine the original broadcast and its accompanying revenue by re-distributing programs across time zones, thus allowing Internet viewing before the original show is seen on local stations in western U.S. markets. Such results would wreak havoc on stations' audience ratings and threaten its continued viability.

Conclusion

The deployment of digital radio is essential for terrestrial broadcasters to better serve their listeners and to remain competitive in today's digital media marketplace. Because of the importance of a timely and successful roll out of digital radio, any system to protect digital content must not impede the transition. In addition, the issues presented by

5 See, e.g., S. Rep. No. 93-983, at 225-26 (1974) (“The financial success of recording companies and artists who contract with these companies is directly related to the volume of record sales, which, in turn, depends in great measure on the promotion efforts of broadcasters.").

'S. Rep. No. 104-129, at 15 ("1995 Senate Report"); accord, id. at 13 (Congress sought to ensure that extensions of copyright protection in favor of the recording industry did not "upset[] the longstanding business relationships among record producers and performers, music composers and publishers and broadcasters that have served all of these industries well for decades.").

17 U.S.C. § 114(d)(1)(A).

the audio flag are complicated, involve numerous stakeholders, including consumers and their right to "fair use." NAB will continue to work with RIAA to develop a consensus on digital radio copy protection. Congress should allow this industry process to continue without the adoption of premature legislative mandates.

MR. UPTON. Mr. Harris, welcome.

MR. HARRIS. Chairman Upton, Representative Markey, Representative Ferguson, and members of the subcommittee, thank you very much for having me here today to speak on the issue of protecting the value of the songs I write when they are broadcast over a digital radio service that enables consumer to keep it without buying it. First of all, let me say that I love the fact that new technologies exist that will allow consumers to listen to my music in different ways on different platforms, but please excuse me if I insist on being paid for it, even if it is consumed by you in a new and different way.

I have been fortunate enough to write nine number one songs by some of today's biggest artists. However, the number of talented young songwriters who choose to dedicate their lives to music will decrease even more than it already has with the problem of massive piracy on the Internet and now XM format. Choosing to be a professional songwriter has become a risky business.

As a professional songwriter, you are your own business. There is no health insurance or 401K. You live on royalties from the intellectual property you create. When I write a song, I get a royalty when it is performed or when it is played on radio. I also get a royalty when a consumer buys a copy of it. When you go to see a concert you pay to listen to the music. When you buy a download you pay to keep that song.

We are here today because certain digital radio services do not want to pay for music. By allowing listeners to record broadcasts and build up entire juke boxes of music on portable devices, radio services are becoming download services without paying for the download license. I am not talking about recording off the radio. Certainly, we have all done that and I have no interest in seeing that disappear, but imagine my reaction when XM offers a service that allows someone to get an entire collection of my works automatically recorded, labeled, sorted, and transferred to them in pristine, permanent, and portable digital copies without seeing a cent from the sale in return.

This is not radio. This is Napster, Rhapsody, Yahoo or any number of other digital music subscription services that pay the appropriate license for this type of distribution. Those are the services necessary to make the sales we need to survive. Those services cannot compete with others that offer the exact same service without paying the same license. This is a matter of survival for the creators of music and those who

provide legal downloads. Everyone can win in the digital world if we cooperate in creating a fair and equitable licensing system. This has been the tradition since the days of Cole Porter. A song is a commodity like any other. Attorneys are not working pro bono today. If digital radio can pay market rates for their technology, equipment, and legal services, they certainly could pay for the songs because without the songs there is no artist. Without the song there is no XM radio.

I applaud Representative Ferguson for introducing the Audio Broadcast Flag Licensing Act. This allows the songwriters to receive fair compensation for their work. We are all grateful for your insight. On behalf of everyone in the music community, I hope you will support this bill and create for all songwriters a secure digital future. Thank you. [The prepared statement of Stewart Harris follows:]

PREPARED STATEMENT OF STEWART HARRIS, SONGWRITER, ON BEHALF OF SONGWRITERS GUILD OF AMERICA

Chairman Upton, Representative Markey, Representative Ferguson, and Members of the Subcommittee, thank you very much for having me here today to speak on the issue of protecting the value of the songs I write my property -- when it is broadcast over a digital radio service that enables a consumer to keep it without buying it.

First of all, let me say that I love the fact that new technologies exist that will allow consumers to listen to my music in different ways on different platforms. But please excuse me if I insist on being paid for it even if it is consumed in a new and different way.

I have been fortunate enough to write several #1 songs recorded by some of the biggest artists. But getting there was not easy. And the number of talented young songwriters who choose to dedicate their lives to bringing their gifts to American consumers will decrease even more than it already has with the problem of massive piracy on the Internet if they do not get paid as the delivery of music evolves.

Choosing to be a professional songwriter is a risky business. As a professional songwriter you are your own small business - in fact the smallest. You pay your own health insurance and your own retirement. There is no "flex plan." What you get to live on are royalties from the use of what you create. From your property. When I write a song, I get a royalty when it is performed, or broadcast over radio. I also get royalties when a consumer keeps a copy of it. Different uses of my songs deserve separate payments. When you go see a concert you pay to listen to that performance. And when you buy a download you pay to keep that song. But you don't go to iTunes and demand a song for free because you listened to it on the radio or at a concert. Consumers get the difference. Digital radio services should get the difference too.

We are here today because certain digital radio services do not want to pay me when they offer a service that allows a consumer to keep my song instead of having to buy it. By allowing listeners to record broadcasts and build up entire jukeboxes of music on portable devices, radio services are becoming download services - but without paying the download license.

I'm not talking about casual recording off the radio. Certainly, we've all done that and I have no interest in seeing that disappear. I love it when someone runs to the radio to record one of my songs that has come on. But imagine my frustration when XM offers a service that allows someone to get an entire collection of my works, automatically recorded, labeled, sorted, and transferred to them in pristine permanent and portable

digital copies without seeing a cent from a sale in return. This is not radio; this is Napster, Rhapsody, Yahoo!, or any one of the number of other digital music subscription services that pay the appropriate license for this type of distribution. Those are the services we need to make the sales we need to survive. But those services can not compete with others that offer the exact same functionality without paying the same license.

This is a matter of fairness

to other broadcasters, to download services, and to all of us making the music for those services. This is a matter of treating platforms that offer the same services equally.

I applaud Representative Ferguson for introducing the Audio Broadcast Flag Licensing Act, that will allow consumers to continue taping of the radio, but prevent the automatic "collecting" of my songs with no payment to me. You are directly affecting my livelihood with this bill and for that I am extremely grateful.

Seems to me that if digital radio services can pay market rates for their technology and equipment, they can do the same for my music. After all, without songwriters to write the songs, what is there to deliver over all that technology?

I always explain it this way: suppose I was a general contractor and you provided me with all of the bricks I needed to build my project, and then when it came time to pay I said thanks and handed you back your invoice. You would probably punch me in the nose. While I promise there will be no punching here today, I hope you understand how I feel. I am not a lawyer like these other guys at the table. I'm just a songwriter. And all I ask is that when the lawyers for the radio services sitting here get their paychecks, they urge their companies to reward me for my work, too.

On behalf of everyone in the music community, I hope you will support this bill and secure for all songwriters a bright digital future.

Thank you.

MR. UPTON. Ms. Ziegler.

MS. ZIEGLER. Chairman Upton, Congressman Markey, and members of the subcommittee, my name is Ruth Ziegler, and I am the Deputy General Counsel of Sirius Satellite Radio.

I very much appreciate the opportunity to appear today on behalf of Sirius and its over four million subscribers. Sirius is bringing exciting technical innovation to American consumers, and at the same time we are opening enormous new opportunities for the music industries, paying the millions of dollars in royalties, and applying strong technological measures to protect their content.

Sirius takes great pride in presenting a breadth and depth of programming that is unparalleled on radio and gives our millions of listeners a way to discover and rediscover music and artists. In less than a decade, Sirius has developed infrastructure necessary to deliver a national satellite service and we now broadcast over 125 digital quality channels including 67 channels of commercial free music, plus over 60 channels of sports, news, talk, and entertainment. Unfortunately, from our perspective, it appears the music industries have declared a multifront legal assault on innovation on well-settled and congressionally recognized consumer home reporting rights and on on legislative agreements they made and Congress enacted.