Testimony of PROFESSOR STEVEN S. WILDMAN

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Testimony Of

PROFESSOR STEVEN S. WILDMAN Michigan State University East Lansing, Michigan

Before the

Washington, D.C.

April 2001 TABLE OF CONTENTS Page

I. QUALIFICATIONS

II. PURPOSE OF TESTIMONY

III. SUMMARY OF CONCLUSIONS

IV. DISCUSSION ..

A. The Different Objectives

B. Reliance on Musical Work Rates.

1. Importance of Defining the Market and Considering Cost and Demand Characteristics.

2. The Different Markets For, and Cost and Demand Characteristics of, Sound Recordings and Musical Works. 10

C. Reliance on Negotiated Agreements . 13

1. Relevance of Negotiated Agreements. 15 2. Significance of the RIAA/Webcaster Agreements. 16 I ~ QUALIFICATIONS

My name is Steven S. Wildman. I am the James H. Quello Professor of

Telecommunication Studies and Director of the James H. and Mary B. Quello

Center for Telecommunication Management and Law, both at Michigan State

University.

I hold a PhD in economics from Stanford University and have had over twenty years of experience as an economist. Prior to assuming my current position in August 1999, I served on the faculties of Northwestern University

(1988-99) and the University of California, Los Angeles (UCLA) (1979-83). I also spent five years with the economic consulting firm, Economics Incorporated, in

Washington, D.C. (1983-88).

A substantial portion of my academic and consulting career has focused on economic issues in media industries. More than half of my publications and research reports, including two co-authored books, two co-edited books, and numerous articles and book chapters have dealt with these issues. I have taught several courses on media economics and have undertaken research and consulting assignments for, among others, the National Association of

Broadcasters (NAB), CBS Inc. (including the former CBS Records), Broadcast

Music Inc. (BMI) and the Recording Industry Association of America (RIAA).

My studies and other research have examined economic issues associated with, among other things, performance rights in sound recordings; competition in the radio industry and in the cable television industry; the economics of new recording technologies; royalty payments for the performance of musical works by the cable industry; the relative contributions to the commercial value of sound recordings made by different segments of the recording industry, including the recording companies, authors and composers, the artists whose performances are recorded, and publishers; the economics of international trade in recorded music; and bundling of information goods, such as computer operating systems and internet browsers. A principal focus of my work has been on the importance of investments in the content of media products in determining both the costs and demands for those products.

I have testified as an expert witness before the Copyright Royalty Tribunal

(CRT) and the Copyright Arbitration Royalty Panel (CARP). I testified for the

NAB in 1985 (before the CRT) and in 1995 (before the CARP) in proceedings to

allocate the cable compulsory licensing royalties. In 1997 I testified for RIAA

(before the CARP) in proceedings to set the compulsory licensing royalty rate that certain subscription digital audio services pay to transmit sound recordings.

My testimony in each of those proceedings considered whether particular evidence provided a reasonable estimate of market value.

My curriculum vitae is attached.

II. PURPOSE OF TESTIMONY

In 1995 Congress enacted the Digital Performance Right in Sound

Recordings Act (DPRA), which gives certain subscription audio services a compulsory license to transmit sound recordings via cable and satellite systems. In 1997 a Copyright Arbitration Royalty Panel (CARP) conducted a proceeding to establish the royalty fee for that license. The CARP in that proceeding recommended a rate equal to 5% of the services'ross receipts. The Register of

Copyrights found that the CARP had acted improperly in certain respects and increased the rate to 6.5%.

In 1998 Congress enacted the Digital Millenium Copyright Act (DMCA), which gives certain nonsubscription services (known as "webcasters") a compulsory license to stream sound recordings over the Internet. A CARP must now set a compulsory licensing fee for this license. I have been asked by RIAA to offer my opinion, as an economist, on whether the rate adopted in the DPRA

Subscription Services Proceeding is an appropriate benchmark for the rates to be adopted in the DMCA Webcaster Proceeding.

III. SUMMARY OF CONCLUSIONS

The rate adopted in the DPRA Subscription Services Proceeding does not provide an appropriate benchmark for setting the rates to be adopted in the

DMCA Webcaster Proceeding. That I would come to this conclusion should not be surprising, since both the CARP and the Register in the Subscription Services

Proceeding were quite explicit in stating that their rates were not intended to reflect the fair market value of the subscription services'ompulsory license.

Here, by contrast, the goal is to determine a fair market rate.

Even if the subscription services rate were intended to approximate a market rate, it would still not constitute a reliable benchmark due to serious

economic errors in the analysis underlying the CARP's and the Register's recommended rates. The CARP and the Register tied the subscription services'ate

to the license fees that those services pay to perform musical works. But transactions for musical works and sound recordings occur in different markets with very different cost and demand characteristics. While one would normally expect prices to differ substantially in such differing circumstances, no attempt was made by the CARP or the Register to show that prices in the markets for these two different goods would be similar.

Furthermore, the Register concluded that subscription services should pay

6.5% — less than their musical work fee — because three major record companies had agreed to accept a comparable fee from one service (Music Choice). Here,

RIAA has negotiated separate agreements with 23 webcasters concerning the rates and terms for the DMCA statutory licenses. These agreements, unlike the

Music Choice agreement, involve the same rights, in the same market, for which the CARP must set a royalty. Therefore, in setting a webcaster royalty, it is much more appropriate for the CARP to rely on the RIAA agreements than on either the Music Choice agreement or on the subscription services royalty that was based in part on that agreement.

In addition, unlike the situation in the DPRA Subscription Services

Proceeding, I understand that the RIAA agreements require the webcasters to pay sound recording fees that are greater than their musical work fees (and greater than the fee in the Music Choice agreement). This constitutes market- based evidence of the relative levels of compensation market negotiations would produce for digital performance rights for works and recordings.

IV. DISCUSSION

A. The Different Objectives

The DPRA directed the CARP to adopt a royalty for subscription services that achieves the four objectives in Section 801 of the Copyright Act:

(A) To maximize the availability of creative works to the public;

(B) To afford the copyright owner a fair return for his creative

work and copyright users a fair income under existing

economic conditions;

respect to relative creative contribution, technological

contribution, capital investment, cost, risk, and contribution to

the opening of new markets for creative expressions and

media for their communication; and

(D) To minimize any disruptive impact on the structure of the

industries involved and on generally prevailing industry

practices.

The CARP in the DPRA Subscription Services Proceeding concluded that these objectives do not require adoption of rates approximating those that would be observed in a free market." RIAA challenged this conclusion but the Register of

Copyrights agreed with the CARP.

The DMCA revised the statutory criteria to be employed by a CARP in setting a statutory rate for the webcaster statutory license. Rather than the four

Section 801 criteria that applied under the DPRA, the DMCA contained the simple directive that, if prospective buyers and sellers of digital nonsubscription performance rights cannot negotiate agreements voluntarily,

the copyright arbitration royalty panel shall establish

rates and terms that most closely represent the

rates and terms that would have been negotiated in

the marketplace between a willing buyer and a

willing seller.

This standard reflects the basic economic understanding of the process that determines the marketplace values of goods and services generally.

In short, the rate adopted in the DPRA Subscription Services Proceeding was not intended to provide fair market value. The rates to be adopted in the

" CARP Report (RIAA Exhibit No. 117 DP), paragraph 124. Register's Decision (RIAA Exhibit No. 118 DP), pages 25399-400, 25403 and 25410. 17 U.S. Code Sections 112(e)(4) 8 114 (f)(2)(B). In determining the willing buyer/willing seller rates and terms, the CARP must base its decision on the "economic, competitive and programming information" presented by the parties, including information on the relative roles of the copyright owner and webcaster and the promotional and/or displacement effects of webcasting. 17 U.S. Code Sections 112(e)(4) 8 114 (f)(2)(B). This provision also says that the CARP "may consider" voluntarily negotiated agreements. DMCA Webcaster Proceeding, however, must be those to which a willing buyer and a willing seller would agree in a free market, t.e., they must provide fair market value. For this reason alone, it would be inappropriate to use the subscription services'ate as a benchmark for setting the royalty that webcasters must pay to transmit sound recordings. The non-market rate for subscription services does not provide any useful guidance as to what the market rate would be for webcasters.

B. Reliance on Musical Work Rates

Even if the subscription services'ate were intended to be a market rate, that rate still would not provide an appropriate benchmark for setting the webcaster rates. That conclusion follows from basic economic principles and a close analysis of the rationale that the CARP and the Register of Copyrights advanced in support of the subscription services rate.

In choosing their respective rates for subscription services, both the CARP and the Register of Copyrights relied on license fees that the subscription services pay to ASCAP, BMI and SESAC (on behalf of music publishers and songwriters) for the right to perform musical works. The discussion below explains below why the economic logic implicit in that approach is analytically

The Register made a similar point when she concluded that it would be inappropriate to rely on a "rate set by the government at a level to achieve certain statutory goals" to determine the market value of the copyrighted works for which that rate had been set. Register's Decision (RIAA Exhibit No. 118 DP), page 25405. CARP Report (RIAA Exhibit No. 117 DP), paragraphs 167-169; Register's Decision (RIAA Exhibit No. 118 DP), pages 25409-25410. unsound and should not be used in this proceeding. Because the analytical approach used to support the subscription services'ate cannot be justified under basic economic principles (and indeed under principles adopted by the CARP itself), it would be inappropriate to rely upon the subscription services'ate and the musical works rate upon which it was based as benchmarks for the webcaster rates.

1. Importance of Defining the Market and Considering Cost and Demand Characteristics

Rigorous application of the economic concept of a market is required to ensure that benchmarks selected provide reliable guidance for setting rates if the objective is to approximate rates that would result from the interplay of market forces. As the term is employed by economists and antitrust authorities, two or more products are in the same market if buyers view them as sufficiently close substitutes for each other that a small increase in the price of one of the products would induce enough of that product's customers to switch to the other product(s) to render the price increase unprofitable. When substitutability creates a strong link between the prices of two goods in the same market, a market-set price for one product might be used as an index of what a market-set price for the other product would be.

When two goods are not in the same market, it is much harder to justify using the price for one product as a benchmark for setting a price for the other

"Horizontal Merger Guidelines", U.S. Department of Justice and the Federal Trade Commission (June 16, 2000), http://www.usdoi.aov/atr/public/auidelines/horiz book/toc.html.

-8- because many factors that influence price vary from market to market. Examples are elements of market structure, such as the number of firms and the concentration of market sales among them; production costs (both marginal and average); the elasticity of demand (sensitivity of sales volume to price changes); the number and identities of potential customers; and sellers'ources of income

(e.g., purchases by consumers and/or commercial buyers). Variation in any one of these or other factors may generate market outcomes so different as to invalidate any attempt to use prices in one market as a benchmark for setting prices in another market.

For this reason, anyone proposing that a price for certain products or services in one market be used to set a price in a different market has the considerable burden of demonstrating that the critical factors influencing prices are similar, if not identical, in both markets. This economic principle was recognized and applied — although inconsistently — by the CARP in the DPRA

Subscription Services Proceeding.

In that proceeding, RIAA attempted to use as a benchmark the copyright licensing fees paid by cable movie services. RIAA took the position that cable movie services and cable audio services should both pay a similar percentage of their revenues for the rights to transmit their copyrighted works. The CARP, however, rejected that position because RIAA had not shown that the audio services compete with the movie services (so they are not in the same market),

CARP Report (RIAA Exhibit No. 117 DP), paragraph 135. and, because "RIAA failed to introduce any evidence that the demand and cost characteristics of digital audio services and cable movies are alike." That is,

RIAA neither demonstrated that the movie and audio services are competitive alternatives in a common market, nor, failing that, attempted to control for variation among markets in certain price-influencing factors.

2. The Different Markets For, and Cost and Demand Characteristics of, Sound Recordings and Musical Works

In relying upon the subscription services'ayments for musical works, the

CARP and the Register committed exactly the same analytical error for which the

CARP rejected the cable movie services benchmark.

Nothing in the CARP Report nor the Register's Decision shows that musical works and sound recordings operate in the same market. In fact, they do not operate in the same market. Authors and composers, on the one hand, and recording companies and performers on the other, are suppliers of different and distinct inputs employed in creating sound recordings. Both groups were granted performance rights to ensure that each could obtain at least a portion of its contribution to the commercial value of those recordings. Authors and composers cannot be substituted for recording companies and performers in the creation of sound recordings. Nor would such a substitution work in reverse.

CARP Report (RIAA Exhibit No. 117 DP), paragraph 132. This aspect of the CARP Report was not reviewed by the Register of Copyrights. See Register's Decision (RIAA Exhibit No. 118 DP), pages 25396-97 8 25400 note 7.

-10- This should be evident from the fact that each is independently necessary to the creation of a sound recording. Thus, these different inputs must and do trade in different markets. There is no more reason to expect that these inputs should trade at similar prices than there is to expect different inputs employed in the creation of any other product or service to be similarly priced.

Because sound recordings and musical works operate in different markets, the CARP and the Register in the Subscription Services Proceeding should have been asking the same questions regarding the comparability of the different markets that the CARP raised in response to the movie services analogy. However, neither the CARP nor the Register pointed to anything that shows that the cost and demand characteristics of musical works are similar to the cost and demand characteristics of sound recordings.

There are, in fact, significant differences in the cost and demand characteristics of musical works and sound recordings. Many of these differences are apparent from a review of the testimony in this proceeding."

For example, demand differences are evident in the identities and numbers of potential buyers that sellers in each market try to reach and in the promotional strategies employed in reaching them. In marketing musical works, publishers seek mainly to influence the small number of artists best suited to recording the specific works they represent—a marketing strategy that depends

"'ee Testimony of David Altschul, Linda McLaughlin, Hilary Rosen, Paul Katz, and Charles Ciongoli.

-11- heavily on personal contacts and knowledge of players within the music industry.

By contrast, record label marketing is directed at end consumers and relies heavily on exposures generated through the mass media.

The pattern of demand over time for musical works and recordings is another important difference in the demand sides of their respective markets.

Consumer demand for those few recordings that become hits typically peaks early and falls off relatively rapidly following initial release. On the other hand, the commercial life of the musical work behind a hit recording may be extended indefinitely as it is recorded again and again, and becomes a hit again, for a succession of different artists.

The costs incurred and risks borne by the suppliers of musical works and the suppliers of sound recordings also differ in important ways:

~ A record label must cover the costs of producing,

manufacturing and distributing its sound recordings.

(Independent labels typically contract with a major for these

services.) There are no corresponding costs for publishers,

authors and composers.

The upfront, non-facilities costs that are incurred in the

process of artist discovery and development are often

substantial. Most successful artists are not immediate

successes, and record labels often incur significant costs

supporting them, promoting them, and investing in their early

recordings, before the few who break through begin to sell

-12- recordings in volumes sufficient for a record label to make a

profit. Publishers'nvestments in new authors and

composers occur on a much smaller scale.

Finally, it is worth noting that the recording business is much more complex than the music publishing business, with success being much more dependent on the coordination and timing of a diverse set of activities. Very different sets of managerial and executive skills contribute to success in these two businesses.

What this overview of the markets for musical works and sound recordings shows is that their cost and demand characteristics are quite different.

Consequently, the license fees that digital audio services pay to perform musical works are not a valid benchmark for determining the license fees that those services would pay in a free market to perform sound recordings. To the extent that the CARP and Register in the Subscription Services Proceeding relied on musical works performance fees to set a 6.5% performance fee for sound recordings, that 6.5% fee is not supported by sound economic analysis.

C. Reliance on Neaotiated Aareements

In the DPRA Subscription Services Proceeding, the services argued that the CARP should use as the benchmark a royalty contained in a 1993 agreement between one service (Music Choice) and three record companies (Warner, Sony and EMI). The CARP accepted the services'rgument."" The Register criticized

"" CARP Report (RIAA Exhibit No. 117 DP), paragraphs 155-166.

-13- the CARP's reliance on the Music Choice agreement for several reasons."

Nevertheless, the Register used the Music Choice agreement to justify a sound recording rate that is lower than the musical work rate paid by subscription services. In effect, the Register said that, because some record companies had agreed to accept less than the musical work rate from Music Choice for an unspecified economic benefit, the compulsory licensing performance royalty paid to all recording companies by each of the subscription services should be lower than the musical work rate — even though the linkage between the Music Choice agreement and the statutory royalty was tenuous at best ."

The discussion below explains why the CARP and Register's reliance upon the Music Choice agreement makes it inappropriate to use the subscription services'PRA rate as a benchmark for determining the webcasters'MCA rates. First, however, it is useful to understand why and under what conditions

"'egister's Decision (RIAA Exhibit No. 118 DP), pages 25401-03. The Register of Copyrights offered essentially four criticisms: (1) the right for which the royalty was proposed as a benchmark had not yet been created; (2) the royalty was included in but one of 11 interdependent and mutually contingent agreements entered into by the parties; (3) the Music Choice agreement included language that undermined any precedential value the royalty might otherwise have had; and (4) the record company signatories to the Music Choice agreement represented only about one-third of the industry. " Register's Decision (RIAA Exhibit No. 118 DP), page 25404 ("[T]he Register acknowledges that the value of the DCR [Music Choice] license provides minimal information as to the value of the performance right ultimately granted in the DPRSRA, although it provides some guidance for assessing the proposed rates"). See also ibid. at 25410 ("[T]he Register did take into account the negotiated value of the digital performance right in the DCR [Music Choice] license in making her determination that the statutory rate should be less than the value of the musical compositions").

-14- economists would consider negotiated agreements to be helpful in attempting to determine the rates that would prevail in a free market.

1. Relevance of Neaotlated Aareements

It is very difficult to identify all of the factors that might significantly influence the structure of a market and the ways these factors will interact with each other to determine prices. These difficulties are magnified considerably when technologies and the markets they support are new and evolving, as is the case with Internet radio services and other digital audio services.

Critical, market-influencing factors are of necessity discovered in the marketplace as the players get together, negotiate deals, and try to figure out which strategies will be most profitable in the long run. That is, market participants are forced to address in a very concrete, if often intuitive, way the ambiguities that bedevil the outside analyst. For this reason, it makes sense to assume that agreements negotiated in the market reflect, either explicitly or implicitly, those market influencing factors most important to market participants.

At the very least, such agreements reflect market participants'eliefs about these factors; and it is the beliefs of buyers and sellers that ultimately determine prices.

In other words, the complexity of real world markets makes predicting market rates difficult and highly susceptible to error. Thus, it is generally safer, and more prudent, to rely on the outcomes of actual negotiations than predictions of rates those negotiations might produce. That is the economic logic inherent in the Register's decision to rely on the Music Choice agreement in setting the

-15- subscription services'.5% rate — although the Register made a critical mistake in failing to consider differences in the rights and markets involved. As was explained above, if agreements from a different market are to be used, it is important that fundamental comparability of the two markets be established through rigorous economic analysis.

2. Significance of the RIAA/Webcaster Aareements

Subsequent to the Subscription Services Proceeding, RIAA entered into voluntary agreements with 23 webcasters. These agreements, the

RIAA/Webcaster agreements, set forth rates and terms for the DMCA webcaster statutory licenses. For at least two reasons, the RIAA/Webcaster agreements make it inappropriate to rely on the DPRA subscription services rate as a benchmark for setting the DMCA webcaster rate.

First, as discussed above, central to the Register'doption of the 6.5% rate was the fact that the Music Choice agreement contained a comparable royalty rate that was less than the musical work rate paid by the subscription services. My understanding is that the 23 RIAA/Webcaster agreements contain royalty rates that are greater than the webcaster musical work rates (and greater than the subscription services'ates). Thus, an important lynchpin of the 6.5% subscription services rate is not present here. Unlike the situation in the

Subscription Services Proceeding, here the existing agreements support sound recording rates that are higher than the musical work rate and higher than the subscription services rate.

-16- Second, the Music Choice agreement does not involve the same rights, utilized in the same market, for which the CARP must determine fair market value in this proceeding. The Music Choice agreement was negotiated and signed before Congress passed the DPRA to establish a digital performance right in sound recordings. Because a digital performance right had not yet been established, digital subscription services had a free and legal right to perform sound recordings. That is, the music was theirs for the taking with no obligation to compensate copyright owners for its use. Thus, while the royalty in the Music

Choice agreement was characterized as payment associated with the use of the three record companies'ecordings, it makes no sense to view it as payment for permission to perform recordings already available at zero cost. The Music

Choice royalty was but one of 11 mutually contingent business agreements negotiated as a package by Music Choice and the record companies. While it may have reflected compensation for some consideration of value provided by the record companies to Music Choice, whatever that consideration was, it would not have made economic sense for it to have been for a digital performance right, and there is no reason for assuming that the Music Choice royalty bears any meaningful relationship to rate to be set in this proceeding.

In contrast, the RIAA/Webcaster agreements, which were negotiated after passage of the DPRA and DMCA, do involve the same rights, utilized in the same market, as the rights for which the CARP must determine the fair market

-17- value in this proceeding." Moreover, none of the Register's criticisms of the

Music Choice agreement (see note 12 above) applies to the RIAA/Webcaster agreements. Thus, the RIAA/Webcaster agreements provide a firmer basis for setting the webcaster royalty than does the Music Choice agreement underlying the subscription services rate.

In short, the RIAA/Webcaster agreements, which obviously were not before the CARP or Register in the DPRA Subscription Services Proceeding, are very different from the Music Choice agreement, which the Register used to set the subscription services'ate. The RIAA/Webcaster agreements support a higher level of compensation, and also provide a more solid basis for rate-setting, than did the Music Choice agreement. Under these circumstances, it would be inappropriate to use the 6.5% rate adopted for subscription services as a benchmark for the webcasters'ate — even if the Register had been trying to approximate a market rate in the Subscription Services Proceeding, which she was not. The fact that the Register and the CARP in the Subscription Services

Proceeding deliberately sought to set a non-market rate, by itself, would render

" In one respect, the markets are not identical. RIAA's negotiations with webcasters occurred in the context of the DMCA provisions which give webcasters the legal right to utilize copyrighted sound recordings, even though the compulsory license royalty rates have not yet been set. Thus, prospective licensees are able to access copyrighted sound recordings while deferring payment for such access until after the CARP sets the compulsory license rates. The fact that RIAA was not able to withhold access to the rights subject to negotiation likely lowered the negotiated rates relative to those that typical arms length negotiations in a free market setting would have produced.

-18- invalid any attempt to use these rates as benchmarks for the webcaster royalty.

These difficulties, of course, are compounded by the Register's and the CARP's additional reliance on the musical works fees without attempting to identify and control for factors that might produce different market rates for musical works and sound recordings.

I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief.

bate Steven S'. Wildman

- 19- Steven S. Wildman Page 1

STEVEN S. WILDMAN Curriculum Vitae 8/2/99

Michigan State University LECG, Inc. Department of Telecommunication 1603 Orrington Avenue 409 Communication Arts & Sciences Suite 1500 East Lansing, MI Evanston, IL 60201 Tel. (517) 432-8004 Tel. (847) 475-1566 Fax (517) 432-8065 Fax (847) 475-1031 swildman msu.edu

EDUCATION

Ph.D., STANFORD UNIVERSITY, Economics, 1980.

M.A., STANFORD UNIVERSITY, Economics, 1977.

B.A., WABASH COLLEGE, Economics, 1971.

PRESENT POSITIONS LAW & ECONOMICS CONSULTING GROUP, INC. Director MICHIGAN STATE UNIVERSITY, Department ofTelecommunication. James H. Ouello Professor ofTelecommunication MICHIGAN STATE UNIVERSITY, Quello Center for Telecommunication Management & Law. Director

ACADEMIC AND PROFESSIONAL EXPERIENCE ECONOMISTS INCORPORATED, 1983 - 1988. Senior Economist

UNIVERSITY OF CALIFORNIA, Los Angeles, Department ofEconomics, 1979 - 1983. Assistant Professor

RAND CORPORATION, 1981 - 1983. Consultant

FELLOWSHIPS AND AWARDS

Van Zelst Research Professor of Communication, Northwestern University, 1996-1997 McGannon Award for Social and Ethical Relevance in Communication Policy Research for 1992. Steven S. Wildman Page 2

Ameritech Research Fellow, Northwestern University, 1990 - 1991. Ameritech Research Professorship, Northwestern University, 1989 - 1990. National Science Foundation Fellowship, 1974 - 1977

PUBLICATIONS

Books International Trade in Frlms and Television Programs, with Stephen E. Siwek, Ballinger, 1988.'ideo Economics, with Bruce M. Owen, Harvard University Press, 1992.2

Electronic Services Nenvorks: A Business and Public Policy Challenge, co-edited with Margaret E. Guerin-Calvert, Praeger Publishers, 1991.2 Making Universal Service Policy: Enhancing the Process Through Multidisciplinary Evaluation, co-edited with Barbara A. Cherry and Alan H. Hammond, IV, Lawrence Erlbaum, Publishers,

1999.'dited Journal Special Issues

SPECIAL ISSUE ON TELECOMMUNICATIONS POLICY, Industrial and Corporate Change,

vol. 4, 1995. Co-edited with David J. Teece.'PECIAL

ISSUE ON MEDIA AND MULTIMEDIA, Information Economics and Policy, vol. 10, no. 2. 1998.

Journal Articles

"Institutional Endowment as Foundation for Regulatory Performance and Regime Transitions: The Role ofthe U.S. Constitution in Telecommunications Regulation in the United States," with Barbara Cherry. Forthcoming, Telecommunication Policy.

"Media and Multimedia: The Challenge for Policy and Economic Analysis," in Information Economics and Policy, Vol. No. 1, 1998.

"Interconnection Pricing, Stranded Costs, and the Optimal Regulatory Contract", in Industrial and Corvorate Chance, vol. 6, no 4, 1997.

"Introduction: Policy and Strategy for Rapidly Changing Telecommunications Markets," with David Teece, Industrial and Corporate Change, vol. 5, no. 4 (1996). ] "The Pricing ofCustomer Access in Telecommunications," with Debra A. Aron, Industrial and

'enior author. 'qual joint author. Steven S. Wi]dman Page 3

Corporate Change, vol. 5, no. 4 (1996). z "Network Programming and Off-Network Syndication Profits: Strategic Links and Implications for Television Policy," with K. Robinson, Journal ofMedia Economics, Vol. 8, No. 2 (1995).i "Trade Liberalization and Policy for Media Industries." Canadian Journal ofCommunication, Vol. 20 (] 995). "Network Competition and the Provision of Universal Service," with John C. Panzar, Industrial and Corporate Change, Vol. 4, No. 4 (1995).2 "Funding the Public Telecommunications Infrastructure," with B. Egan, Telematics and Informatics, Fall 1994.2 "Toward a New Analytical Framework for Media Policy: Reconciling Economic and Non- Economic Perspectives," with R. Entman, Journal ofCommunication, Winter 1992. z Reprinted in part in Taking Sides: Clashing VieN s on Controversial Issues in Mass Media and Society, A. Alexander and J. Hanson (eds.), The Duskin Publishing Group, Inc., ] 993. "Selecting Advanced Television Standards for the United States. Implications for Trade in Programs and Motion Pictures," Journal ofBroadcasting and Electronic Media, Spring 1991. "The Privatization ofEuropean Television: Effects on International Markets for Programs," Columbia Journal of World Business, December 1987.i "A Note on Measuring Surplus Attributable to Differentiated Products," Journal ofIndustrial Economics, September ] 984. "Economic Consequences ofthe Informational Characteristics ofMass Media," The American Economist, Spring 1981.

Book Chapters

"Effecting a Price Squeeze Through Bundled. Pricing," with D. A. Aron, in Selected Pauers from the 26@ Annual Telecommunications Policv Research Conference (provisional title), S. Gillett and I. Vogelsang (eds.), Lawrence Erlbaum Associates, forthcoming 1999. "Unilateral and Bilateral Rules: A Framework for Increasing Competition While Meeting Universal Service Goals in Telecommunications," in Making Universal Service Policy: Enhancing the Process through Multidisciplinary Evaluation, B. Cherry, S. Wildman, and A. Hammond, IV

(eds.), Lawrence Erlbaum, Publishers, forthcoming universal Service: Definitions,1999'Conceptualizing Context, Social Process and

Politics," with B. Cherry,, in. Making Universal Service Policy: Enhancing the Process through Mulfidisciplinary Evaluation, B. Cherry, S. Wildman, and A. Hammond, IV (eds.), Lawrence Erlbaum, forthcoming 1999.'Federal Universal Service Policies," with B. A. Cherry, in Making Universal Service Policy: Enhancing the Process through Multidisciplinary Evaluation, B. Cherry, S. Wildman, and A. Hammond, IV (eds.), Lawrence Erlbaum, Publishers forthcoming 1999.2

"Towards a Better Integration of Media Economics and Media Competition Policy," in A Steven S. Wiidman Page 4

Communicafions Cornucooia: Markle Foundation Essays on information Policy, R. Noll and M. Price (eds.), Brookings Institution, 1998

"Regulatory Standards: The Effect of Broadcast Signals on Cable Television," with James N. Dertouzos, in A Communications Cornucopia: Markle Foundation Essays on Information Policy,

R. Noll and M. Price (eds.), Brookings Institution, 1998.'The

Economics of Minority Programming," with Theomary Karamanis, in A. Garmer, ed., Investinu in Diversitv: Advancinp Onnortunities for Minorities and the Media, The Aspen Institute, 1998. 'A Structure and Efficiency Approach to Reforming Access and Content Policy," with Karen D. Frazer, in C. Firestone and A. Garmer, eds., Diaital Broadcasting and the Public Interest: Reoorts and Papers of the Aspen institute Communications and Societv Program, Aspen Institute, 1998." "Interconnection Pricing and Network Competition," in Progress in Communication Science, Volume 15: Advances in Telecommunications Theory and Research,, H. Sawhney and G. A. Barnett (eds.), Ablex, 1998. "Funding the Public Telecommunications Infrastructure," with B. Egan, in Globalism and Localism

in Telecommunications, E. Noam and A. Wolfson (eds.), Elsevier, Technology, Private Networks, and Productivity," in Private1997.'Information Nehvorks and Public Objectives, E. Noam (ed.), Elcevier, 1996. "One-Way Flows and the Economics of Audiencemaking," Audiencemaking: How the Media

Create the Audience, J. S. Ettema and D. C. Whitney (eds.), Sage, 1994. } "The Economics ofTrade in Recorded Media Products in a Multilingual World: Implications for National Media Policies," with Stephen E. Siwek, in The International Market in Film and Television Programs, Eli M. Noam (ed.), Ablex, 1993.& "Investing in the Telecommunications Infrastructure: Economics and Policy Considerations," with Bruce L. Egan, in the 1992 Annual Review ofthe Institutefor Information Studies.2 "Electronic Services Networks: Functions, Structures, and Public Policy," with Margaret E. Guerin-Calvert, in Electronic Services Networks: A Business and Public Policy Challenge, Margaret E. Guerin-Calvert and Steven S. Wildman (eds.), Praeger Publishers, 1991.t "The Economics of Industry-Sponsored Search Facilitation," in Electronic Services Networks. A Business and Public Policy Challenge, Margaret E. Guerin-Calvert and Steven S. Wildman (eds.), Praeger Publishers, 1991.t "Program Competition and Diversity in the New Video Industry," with Bruce M. Owen, in Video Media Competition: Regulation, Economics, and Technology, Eli M. Noam (ed.), Columbia University Press, 1985.t

Papers in Published Conference Proceedings "The Economics ofMinority Programming," with T. Karamanis. Forthcoming in the Proceedings Steven S. Wildman Page 5

ofthe Aspen Institute Workshop on Minority Programming. Washington D. C., November 2-23, 1996.& "Communication Technology and Productivity: The Role of Education," Annual Review of Communication, National Engineering Consortium, Vol. XXXXVII (1993-94). "Controlling Occupational Radiation: Alternatives to Regulation," with L.A. Sagan and R. Squitieri, presented at the International Symposium on Occupational Radiation Exposure in Nuclear Fuel Cycle Facilities, Los Angeles, CA, June 18-22. Published in proceedings of same conference.2

"Economic Issues in Mass Communication Industries," with J. N. Rosse, J. N. Dertouzos and M.

Robinson, presented at the FTC Symposium on Media Concentration, Washington, D.C.,

l December 4-15, 1978. Published in the proceedings of same conference.'Vertical

Integration in Broadcasting: A Study ofNetwork Owned-and-Operated TV Stations," S.I.E. No. 97, Department of Economics, Stanford University, also published in the Proceedings of the FTC Symposium on Media Concentration, Washington, D.C., December 14-15, 1978.

Other Publications and Working Papers

"A Framework for Managing Telecommunications Deregulation while Meeting Universal Service Goals," with Barbara A. Cherry. Presented at the Twenty-Third Annual Telecommunications Policy Research Conference, Solomons, Maryland, October 2, 1995. "Monopolistic Competition with Two-Part Tariffs," with Nicholas Economedes, August 1995.z

Review of Television in Europe, by Eli Noam, Journal ofEconomic Literature, December 1993. "Competition in the Local Exchange: Appropriate Policies to Maintain Universal Service in Rural Areas," with John C. Panzar, September 1993. Review of The world Television Industry: An Economic Analysis, by Peter Dunnett, Journal of Communication, Winter 1992. "An Empirical Study ofBroadcast Competition to Cable," with James N. Dertouzos, July 1990.2 "A Model of Supply and Demand for Information in a Competitive Market," October 1989. "ATV Standards and Trade in Recorded Video Entertainment," paper presented at the Sixteenth Annual Telecommunications Policy Research Conference, October 30-November I, 1988, Airlie, VA, revised April 1989. "Competition, Regulation and Sources ofMarket Power in the Radio Industry," with Duncan J. Cameron, May 1982, revised October 19894 "Program Choice in a Broadband Environment," with Nancy Y. Lee, Working Paper, Center for Telecommunications and Information Studies, Columbia University, May 1989.t "Trade in Films and Television Programming," with Stephen E. Siwek, presented at Trade in Services and Uruguay Round Negotiations, London, England, July 8, 1987, and Geneva,

'oint author credited as a "with." Steven S. Wildman Page 6

Switzerland, July 18, 1987.i Review of Oligopoly Theory, by James Friedman, Journal ofEconomic Literature, March 1985. "Recruiter Incentives: Effects on Performance," Rand Cooperation Working DraA, April 1983. "Anticipated Preemption and the Determination of Initial Structure in a Growing Market," UCLA Working Paper No. 267, September 1982.

"A Spatial Model ofEntry Deterrence," S.I.E. No. 103, Department ofEconomics, Stanford University, November 1978, revised December 1980.

"Advertising, Consumer Learning and Competitive Strategies," Dissertation filed January 1980. Also published as S.I.E. paper No. 110 by Department of Economics, Stanford University, December 1979.

"A Study ofEconomic Issues in the Recording.Industry," with James N. Dertouzos. 2 Study commissioned by the National Association of Broadcasters. OTHER PROFESSIONAL ACTIVITIES

Co-convener, conference on telecommunications free trade zones, Northwestern University, March 30, 1992. Sponsored by the Annenberg Washington Program ofNorthwestern University and the Illinois Commerce Commission.

Convener, half-day conference on electronic services networks at Northwestern University, April 9, 1990.

Co-convener, day-long Washington, D.C. conference on electronic services networks sponsored by the Annenberg Washington Program, February 23, 1990. Member, Editorial Board, Journal ofMedia Economics. Member of Organizing Committee for the Nineteenth and Twentieth Annual Telecommunications Policy Research Conference, Solomon Island, MD. Member, Executive Committee, Consortium for Research in Telecommunications. Organizer, 1996 Conference on Telecommunications Policy and Strategy ofthe Consortium for Research in Telecommunications Policy, Evanston, IL, May 10,11, 1996

REFEREEING AND REVIEWING American Economic Review, referee Communication Law and Policy, referee Communication Research, referee Communication Theory, referee Information, Economics and Policy, referee International Journal ofthe Economics ofBusiness, referee Journal ofCommunication, book reviewer Journal ofInformation, Economics and Policy, referee Journal ofInternational Economics, referee Journal ofEconomic Literature, book reviewer Steven S. Wildman Page 7

Journal ofindustrial Economics, referee Journa! ofMedia Economics, editorial board, referee National Science Foundation, proposal reviewer The Rand Journal ofEconomics, referee

TESTIMONY

Written testimony on behalf of Ameritech New Media before the FCC in the matter of Implementation of Section 11 (c) of the Cable Television Consumer Protection and Competition Act of 1992: Horizontal Ownership Limits, and in Implementation of the Cable Television Consumer Protection and Competition Act of 1992: Review ofthe Commission's Cable Attribution Rules, MM Docket No. 92-264 and CS Docket No. 98-82 (August 1998). Written testimony on behalf of Optus Vision before the Australian Competition and Consumer Commission regarding the proposed merger of Australis and Foxtel. (August 1997). Testimony on behalf ofthe Recording Industry Association of America before the Copyright Arbitration Royalty Panel ofthe Copyright Office ofthe Library ofCongress in re: Determination of Statutory License Terms and Rates for Certain Digital Subscription Transmission of Sound Recordings (July 1997). Written testimony on behalf of Ameritech before the FCC in the matter ofFederal-State Joint Board on Universal Service, CC Docket No. 96-45 (December 1996). Written testimony on behalf of Telephone and Data Services, Inc. before the FCC in the matter of Federal State Joint Board on Universal Service, CC Docket No 96-45 (December 1996). Testimony on behalf ofthe Nebraska Independent Telephone Association before the Nebraska Public Service Commission in the matter of Application of AT&T Communications ofthe Midwest, Inc. For An Amendment to its Certificate of Convenience to Produce Local Exchange Telecommunications Service within the State ofNebraska, Application No. C-1298 (June 13, 1996). Testimony on behalf ofthe National Association of Broadcasters before the Copyright Office, Library of Congress in the matter of 1990, 1991, and 1992 Cable Royalty Distribution Proceedings, Docket No. 94-3 CARP-CD90-92 (December 19, 1995). Written testimony on behalf of Southwestern Bell Telephone Company before the FCC in the matter ofAmendment of Part 36 ofThe Commission's Rules and Establishment of a Joint Board, CC Docket No. 80-286 (October 5, 1995). Testimony on behalf ofAmeritech Michigan before the Michigan Public Service Commission in the Matter ofAT&T Communications ofMichigan, Inc., against Ameritech Michigan, Case No. U- 10852, (September 7, 1995). Written testimony on behalf of INTV; King World and Viacom before the FCC in Review ofthe Prime Time Access Rule, Section 73.658(k) ofthe Commission's Rules, MM Docket No. 94-123, (March 7, 1995). Testimony on behalf ofBlue Valley Telephone Company and other petitioners before the Kansas State Corporations Commission in the Matter of a General Investigation into Competition within Steven S. Wildman Page 8

the Telecommunications Industry in the State ofKansas, Docket No. 190-492-U 94-GIMT-478- GIT, (November 1994). Written testimony on behalf of Viacom International Inc. before the FCC in the matter of implementation of sections ofthe Cable Television Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket 92-266, (June 1993). Written testimony on behalf of Ameritech before the FCC in the matter of a Petition for a Declaratory Ruling and Related Waivers to Establish a New Regulatory Model for the Ameritech Region, (April 1993), Written testimony on behalf of Telephone and Data Services, Inc. before the FCC in the matter of Amendment ofthe Commission's Rules to Establish New Personal Communication Services, GEN Docket No. 90-314, ET Docket No. 92-100, (November 1992). Written testimony on behalf ofthe National Cable Television Association, Inc. before the FCC in the matter of competition, rate deregulation and the Commission's policies relating to the provision of Cable Television, MM Docket No. 89-600 (May 1990). Written testimony on behalf of the National Cable Television Association, Inc. before the FCC in the matter of competition, rate deregulation and the Commission's policies relating to the provision of Cable Television, MM Docket No. 89-600 (February 1990). Written testimony on behalf ofthe National Cable Television Association, Inc. before the FCC in the matter of Amendment ofParts 1.63 and 76 ofthe Commission's Rules to Implement the Provision ofthe Cable Communications Policy Act of 1984, MM Docket No. 84-1296, (December 1987). Testimony on behalf of paging applicant before the Massachusetts Department of Public Utilities, Docket No. 86-213 (1987). Testimony on behalfof calculator manufacturer before the International Trade Commission, Docket No. 337-TA-198 (1985). Written testimony on behalf of CBS Inc. before the FCC in its consideration of the Applications of TBS lnc. for transfer of control of CBS Inc. (1985). Testimony on behalfofthe National Association of Broadcasters before the Copyright Royalty Tribunal, Docket No. CRT 84- I -83CD (1985). Written testimony on behalf of CBS Inc. before the Federal Communications Commission in the 7- 7-7 proceedings, Gen. Docket No. 83-1009 (1984).

PERSONAL Born: December 27, 1948 Married. Exhibits Soonsored bv Steven S. Wildman

RIAA Exhibit No. 117 DP- Public Version of CARP Report dated 11/12/97

RIAA Exhibit No. 118 DP— 1997 Register's Decision