Soundexchanges Opposition to Motions for Issuance of Subpoenas

Before the UNITED STATES COPYRIGHT ROYALTY JUDGE ~+/J Washington, D.C. Ig

4 F. In the Matter of: ) Determination of Royalty Rates for Digital ) Docket No. 14-CRB-0001-WR (2016-2020) Performance in Sound Recordings and ) CRB Webcasting IV Ephemeral Recordings (Web IV) )

SOUNDEXCHANGE'S OPPOSITION TO MOTIONS FOR jsSUANCE OF SUBPOENAS

Glenn D. Pomerantz (CA Bar 112503) Kelly M. Klaus (CA Bar 161091) Anjan Choudhury (DC Bar 497271) MUNGER, TOLLES & OLSON LLP 355 S. Grand Avenue, 35th Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 [email protected] [email protected] [email protected]

Counselfor SoundExchange, Inc. TABLE OF CONTENTS

Pape

I. INTRODUCTION II. ARGUMENT...... A. The Motions Seek to Subvert Precedent, Statutory Text and History to Transform the Subpoena Power into an Unprecedented Early Discovery Tool. 1. The Judges'nterpretation ofTheir Subpoena Power Disfavors the Motions. Section 803 and its History Underscore the Reasoning in the Judges'010 Decision Interpreting the Subpoena Power...... (a) The Discovery Period — Including the Service of Subpoenas — Follows the Submission ofthe Parties'irect Cases ...... (b) The Applicable Legislative History Supports Denying the Motions (c) The Motions Concede Party Discovery is Inappropriate Now and Yet Seek to Subpoena Information &om Parties or Obtainable Through Party Discovery 10 (d) Any Other Reading Would Undermine the Voluntary Negotiation Period. 13

The Motions Fail to Demonstrate the Requisite "Substantial Impairment"

to the Resolution ofthe Proceedings. 14 The Subpoena Requests are Excessively Broad to Meet the Motions'rofessed Need.. 19 III. CONCLUSION. 19 TABLE OF AUTHORITIES

~Pa e

CASES

Intercollegiate Broad. Sys., Inc. v. Copyright Royalty Bd., 684 F.3d 1332 (D.C. Cir. 2012) ....14

SoundExchange, Inc. v. Librarian ofCongress, 571 F.3d 1220 (D.C. Cir. 2009)

STATUTES AND REGULATIONS

37 C.F.R. $ 351.9(e)

17 U.S.C. $ 802(f)(1)(a).

17 U.S.C. $ 803.. 4, 6, 7

17 U.S.C. $ 803(b).

17 U.S.C. $ 803(b)(1)

17 U.S.C. $ 803(b)(3)(B).

17 U.S.C. 5 803(b)(6)(C).

17 U.S.C. $ 803(b)(6)(C)(i)-(xi) .

17 U.S.C. $ 803(b)(6)(C)(ii)(I)

17 U.S.C. $ 803(b)(6)(C)(iv)

17 U.S.C. $ 803(b)(6)(C)(ix) .

17 U.S.C. $ 803(b)(C)(6)(ix) . ...1,2,14

17 U.S.C. $ 803(c)

Copyright Royalty Judges'uthority to Subpoena a Nonparticipant to Appear and Give Testimony or to Produce and Permit Inspection of Documents or Tangible Things, Dkt. No. RF 2009-1, 75 Fed. Reg. 13306-01 (Mar. 19, 2010) 4,5

Determination After Remand of Rates and Terms for Royalty Years 2011-2015, Dkt. No. 2009-1 CRB Webcasting III (Jan. 9, 2014) 16

11 TABLE OF AUTHORITIES

~Pa e Determination of Rates and Terms for Preexisting Subscription Services and Satellite Digital Audio Radio Services, Dkt. No. 2011-1 CRB PSS/Satellite II, 78 Fed. Reg. 23054 (Apr. 17, 2013). .16

Determination of Royalty Rates for Digital Performance in Sound Recordings and Ephemeral Recordings, Dkt. No. 14-CRB-0001-WR (2016-2020), 79 Fed. Reg. 412- 01, 413-14 (Jan. 3, 2014) . .15

Digital Performance Rights in Sound Recordings and Ephemeral Recordings, Dkt. No. 2005-1 CRB DTRA,72 Fed. Reg. 24084 (May 1, 2007) ....12

Direct Case Statement ofthe Digital Media Association and Its Member Companies America Online, Inc.; Live365; Microsoft Corporation and Yahoo!, Inc,, Dkt. No. 2005-1 CRB DTRA (Oct, 31, 2005)

Order Denying Issuance of Subpoenas for Nonparty Witnesses, In the Matter of Digital Performance Right in Sound Recordings, Dkt. No, 2009-1 CRB Webcasting III (Mar. 5, 2010),,...... „„...... ,...... ,.„,...... ,.„,....„„„...... ,.„,.....„„„..1, 2, 4, 5

Pandora's Opposition to Motion for Subpoenas, Dkt. No. 2009-1 CRB Webcasting III (Dec. 17, 2009)

Summary ofthe Joint Written Direct Statement of Radio Broadcasters, Dkt, No. 2005-1 CRB DTRA (Oct. 31, 2005) .

LEGISLATIVE MATERIAI.S

150 Coro. REc. S11422-03 (daily ed. Nov. 17, 2004) . ...7,8,10

H.R. REP. No. 108-408. ..9, 10 H.R. REP. No. 108-408.

H.R. REP. No. 108-408.

H.R. RFp. No. 108-408.

H.R. REp. No. 108-408 (2004), reprinted in 2004 U.S.C.C.A.N. 2332

OTHER AUTHORITIES

Statement of Digital Media Association on Passage of Copyright Royalty Distribution Reform Act of 2004, available athtt s://web.archive.or /web/20041129173020/ht://di media.or /.

nl I. INTRODUCTION

SoundExchange, Inc. ("SoundExchange") opposes the motions to issue subpoenas duces tecum "Motions" (the ) filed by Pandora Media, Inc. ("Pandora") and the National Association of Broadcasters "NAB"). (the The Copyright Royalty Judges ("Judges") made it clear in 2010 that,

under the controlling statute, "[s]ubpoenas are not permitted for purposes ofbuilding one or

more party's direct cases."'ut using the subpoena power to build their direct case is exactly

what the moving parties — by their own admission — seek to do here. The Motions should be denied.

The Motions seek to undo the limits that Congress established for discovery in these

proceedings. The governing statute provides for a period of focused discovery after participants

submit their direct cases. The subpoena power is a limited safety valve ifthe Judges find the

record incomplete to a degree that information missing at that juncture could "substantially impair" the resolution ofthe proceeding. 17 V.S.C. $ 803(b)(C)(6)(ix). The system is fair because ultimately all relevant information underlying each sides'conomic analyses is exchanged, just not in advance ofthe presentation ofthe parties'irect cases so that the discovery can be focused rather than speculative. Congress created this two-step procedure—

presentation ofdirect cases first, defined discovery second — intentionally and not by accident.

Numerous interested parties — including Pandora's own counsel — argued the pros and cons of having discovery akin to that used in federal court precede the submission ofparticipants'ritten

direct cases. However, Congress enacted the compromise procedure that applies in

Section 803(b)(C)(6)(ix) to make rate-setting proceedings "less expensive and more expeditious

'rder Denying Issuance of Subpoenas for Nonparty Witnesses, at 3, In the Matter of Digital Performance Right in Sound Recordings ("8'ebcasting III"), Dkt. No. 2009-1 CRB Webcasting IlI, (Mar. 5, 2010) ("Web III Subpoena Order"). and efficient." H.R. Rap. No. 108-408, at 21 (2004), reprinted in 2004 U.S.C.C.A.N. 2332,

2336. The result that Pandora and the NAB seek would undo the Congressional compromise and open up this proceeding — and future rate-setting proceedings — to wide-ranging, expensive and burdensome pre-written-direct-case discovery. That would be directly counter to the procedure that Congress enacted.

The Motions fail entirely to establish that the subpoenas must issue to avoid the

"substantial impairment" of the Judges'esolution ofthe proceeding. 17 U.S.C.

$ 803(b)(C)(6)(ix). Indeed, until the parties submit their written direct cases, "it is not possible" to assess whether a proceeding's resolution would be "substantially impaired," as the Judges previously held. Web III Subpoena Order, at 3. Pandora, which previously has not participated in rate-setting proceedings, argues that this proceeding is sui generis because the stakes are high.

But the stakes are always high for parties who participate in rate-setting proceedings. The fact that Pandora has an enormous market share does not give it the right to change the rules

Congress established when Pandora decides to participate in these proceedings.

Nor do the complaints by Pandora and the NAB about a purported "imbalance" of information justify changing the rules. Any party in any proceeding can always argue information asymmetry as the result of the procedure that Congress established. The fact of informational imbalance applies to both sides. Like Pandora and the NAB, SoundExchange also lacks necessary information at this juncture, and will have to rely on post-submission discovery for, among other things, internal documents including financial analyses, future advertising revenue prospects, the value of music curation versus the music itself, and so on. Until that discovery opportunity, Pandora and the NAB have considerable resources and information available to prepare their cases. If Pandora's and the NAB's requests meet the substantial impairment standard, then the Judges will face requests for subpoenas at the outset of every case, by every party.

In all events, Pandora's and the NAB's assertions of an "information deficit" are

overstated. As they have in the past through DiMA and the NAB, digital services and

broadcasters will combine their own shared information with public information to build their

case, as past proceedings and the declaration of Pandora's counsel (Mr. Larson) demonstrate. If

the Judges later conclude on a more complete record that there is an absence ofkey information that substantially impairs their decision, the issue ofwhether subpoenas need be issued may be revised at that time.

The parties should engage in negotiations during this period — not discovery battles by

ambush. 17 U.S.C. $ 803(b)(3)(B); Notice ofParticipants, Commencement of Voluntary

Negotiation Period, and Case (" Scheduling Order, Scheduling Order"), at 1 (Feb. 19, 2014)

("[a]ll participants shall engage directly or by counsel in good faith settlement negotiations

aimed at resolving controversies"). Pandora initially engaged in confidential settlement negotiations with SoundExchange — but now has elected to use information gathered in those discussions to support their litigation position. SoundExchange had no advance notice that Pandora or the NAB were even contemplating the Motions. Urgency did not dictate the timing of these Motions; it appears from Pandora's papers that its Motion has been in the works for

2 some time. Pandora and the NAB may not intend to participate in negotiations at this time, but other participants do. The discovery efforts the Motions seek would interfere with

2 Portions ofthe declaration of Mr. Larson, for example, refer to future events that "will" happen, when these events actually happened over a month ago. Larson Decl. $ 3(c) (referring to the Beats Music service as one that "will launch in early 2014," when the Beats Music service launched on January 21, 2014) (emphasis added). SoundExchange's ongoing negotiations with willing participants, and undermine the pmpose of

this period: to effectuate settlements. We respectfully submit that the Motions should be denied.

II. ARGUMENT

A. The Motions Seek to Subvert Precedent, Statutory Text and History to Transform the Subpoena Power into an Unprecedented Early Discovery Tool.

Issuance ofthe subpoenas the Motions request would contradict the text, interpretive

precedents, and legislative history underlying the statute governing this proceeding. 17 U.S.C. $

803.

1. The Judges'nterpretation of Their Subpoena Power Disfavors the Motions.

The Judges have interpreted the standard for granting subpoenas once before, and their

2010 decision compels the denial ofthe Motions. In the Webcasting III proceeding,

RealNetworks, joined by Live365, moved for nonparty subpoenas on Pandora, Slacker, and CBS

Interactive. Web III Subpoena Order, at 1. The Register of Copyrights ("Register") opined on

whether the subpoena power could extend to nonparties who had not submitted evidence. See

Testimony or to Produce and Permit Inspection of Documents or Tangible Things, Dkt. No. RF

2009-1, 75 Fed. Reg. 13306-01 (Mar. 19, 2010) ("Register Order"). Both the Register and the

3 In a footnote on the last page of its Motion, Pandora suggests that, if the Judges do not rule in its favor, this issue should be certified to the Register of Copyrights. Pandora Mot., at 18 n.19. Referral is not simply a second bite at the apple for parties who are unsuccessful before the Judges, and should not be contingent on whether Pandora prevails or not. And this scant footnote does not adequately meet the requirements for a formal referral request. Should the Judges, however, consider this footnote to constitute a properly placed motion for referral, SoundExchange respectfully requests the Judges provide the opportunity to respond on the question of referral. See 17 U.S.C. $ 802(f)(1)(a) ("[ajny request for a written interpretation shall be in writing and on the record, and reasonable provision shall be made to permit participants in the proceeding to comment on the material questions of substantive law in a manner that minimizes duplication and delay"). Judges concluded that the Judges could do so. Id. at 13310; Web III Subpoena Order, at 2 n.l.

The Register, however, expressly offered "no guidance" "regarding what may constitute...

substantial impairment ofresolution of the proceeding." Register Order, 75 Fed. Reg., at

13310. Only the Judges answered that question, and their answer was emphatic, direct, and

dispositive here: "[s]ubpoenas are not permitted for purposes ofbuilding one or more party'

direct cases." Web III Subpoena Order, at 3. Both the Register and the Judges referred to

Congress's guidance on the subpoena power:

Congress stated that it "does not anticipate that the use of subpoena power will become a common occurrence'nd that '[t]he CRJs are expected to exercise this power judiciously and only in those instances where they believe a subpoena is necessary to obtain information that the parties have not provided and that the judges deem necessary to make their decision."

Id. at 2.

The Judges concluded that it is "not possible" to assess whether the lack ofparticular

information would "substantially impair" the proceeding at the particular posture ofthat case—

several months farther along than the parties find themselves here. Id. at 3. "It would be the rare

instance where, at the initial stage ofthe filing of written direct statements before any testimony had been admitted into the record, that it was evident that certain testimony was so unlikely to be introduced that it was necessary to compel its production." Id. Considering Live365's argument that it required the discovery for its direct case, the Judges concluded unambiguously that

"[s]ubpoenas are not permitted for purposes of building one or more party's direct cases." Id. at

The Judges'ecision contradicts Pandora and the NAB's efforts to persuade the Judges to issue the subpoenas now. The Motions concede that the subpoenas seek to do exactly what the Judges'ecision prohibits: to aid Pandora and the NAB in "building" their "direct cases." Id.

As Pandora puts it, "[w]ithout the requested information, Pandora and other service-side participants cannot effectively prepare written direct testimony...." Pandora Mot., at 5

(emphasis added); see also NAB Mot., at 1 (substantial impairment would result "[ajbsent access

by the services to the agreements sought by Pandora and NAB in time to analyze them and

incorporate them as appropriate into their direct cases") (emphasis added). At this point in the

proceeding, the Judges and the parties are even more bereft of information to allow them to

determine "substantial impairment" than the Judges that considered the potential subpoenas in

2010. Not only has no testimony been admitted, no testimony has even yet been prepared or

filed. As it was in 2010, "it is not possible" to meet the exacting standard of "substantial

impairment" in the absence of any evidentiary record for the Judges to assess in order to

determine whether the subpoenas the Motions seek to require the Judges to serve are necessary. 2. Section 803 and its History Underscore the Reasoning in the Judges'010 Decision Interpreting the Subpoena Power.

(a) The Discovery Period — Including the Service ofSubpoenas- Follows the Submission ofthe Parties 'irect Cases

Section 803(b) defines the steps that the parties and the Judges will follow in conducting proceedings before the Judges, in chronological order, tracking the course ofthe proceedings step by step. with Beginning the proceedings'[i]nitiation," 17 U.S.C. $ 803(b)(1), this

subsection walks through each phase of the case from its inception to the which is covered in subsection (c). 17 U.S.C. ) 803(c).Judges'[djetermination," Then, the statute turns to the regulations the Judges are directed to enact to govern the next phase: hearings. 17

U.S.C. $ 803(b)(6)(C). That subsection sets the timing for the submission of written direct statements and rebuttal statements, setting a discovery schedule, defining discovery opportunities and the subpoena power, setting a post-discovery period settlement conference, and the consideration of evidence. 17 U.S.C. $ 803(b)(6)(C)(i)-(xi). Again, the statute tracks chronologically the events as they will happen. The Judges recently adopted precisely the path

laid out in Section 803(b) in issuing their scheduling order. See Scheduling Order Ex. A.

Under Section 803 (and the Judges'cheduling order), the voluntary negotiation period

precedes the submission ofwritten statements which themselves precede the discovery period.

Discovery commences only after the Judges "determine the schedule for conducting and

completing discovery," which is done after "taking into consideration the views ofthe

participants in the proceeding." 17 U.S.C. g 803(b)(6)(C)(ii)(I). Then, discovery occurs during a

60-day window. 17 U.S.C. $ 803(b)(6)(C)(iv). Particular tools for discovery are described in the

ensuing paragraphs: motions, requests for information, and the subpoena power. These

procedures are meant to be tools for conducting discovery once discovery has commenced, not

immediately upon initiation ofthe proceeding, as the Motions contend. The structure ofthe

governing regulations follows the same chronological progression. The subpoena power is

addressed within a regulation section governing the conduct ofthe hearings. 37 C.F.R. g

351.9(e). The placement ofthe subpoena power in a section dealing with the in-person hearing

further demonstrates that its exercise is not expected at the outset ofthe proceeding itself, but

rather sometime after discovery has begun. Indeed, the placement ofthe subpoena power in this

section on the conduct ofthe hearing suggests that the subpoenas are expected to issue after

discovery has concluded — when the Judges can assess substantial impairment on a more

complete record. The chronological structure anticipated in the statute, the regulation and thus the Scheduling Order would be subverted by the reliefthe Motions seek.

(b) The Applicable Legislative History Supports Denying the Motions

Congress enacted the law that created this Board and its procedures after long debate and negotiation among multiple stakeholders. 150 CONG. RHC. S11422-03 (daily ed. Nov. 17, 2004)

(statement of Sen. Patrick Leahy) ("Leahy Statement"). Record industry participants and webcasters alike celebrated its passage, which represented a compromise of multiple positions.

For its part, the Digital Media Association (DiMA) hailed the new law as "more efficient" and

predicted that "as a result, royalty rates will be more fair to all participants — licensors and

licensees." Statement of Digital Media Association on Passage of Copyright Royalty

Distribution Reform Act of 2004, available at

https://web.archive.org/web/20041129173020/http://digmedia.org/.

In enacting the law, proponents debated whether discovery should be expanded and, if so,

in what manner. Leahy Statement, 150 CoNG, Rzc. S11422-03. All supported the overall goal to

make rate-setting procedures "less expensive and more expeditious and efficient." H.R. REF. NO.

108-408, at 21. In the resulting compromise, discovery is "available where it is needed," but

discovery costs are kept "to a minimum." Leahy Statement, 150 CONG. REC. S11422-03. To

balance the competing interests, discovery follows the submission ofwritten direct statements

and subpoenas are issued only upon a very stringent showing. Congress heard testimony

advancing alternative procedures, including arguments in favor ofbroad discovery before

submission ofthe parties'irect cases, but rejected those arguments in favor of keeping the costs

of these proceedings in check. See id.

This procedure is fair and makes sense. The discovery period addresses any concerns

about information disparity because the parties exchange all relevant information once their

respective initial positions have been staked out. A focused period for discovery once the parties have articulated their positions allows for investigation and testing of relevant, competing

economic analyses, but prevents unfettered discovery from undermining the goal of efficient, cost-effective rate proceedings. And the subpoena power, as enacted, provides a last-resort safety valve for the Judges to employ in the event the record presented leaves key questions unanswered — sufficient to "substantially impair" the ultimate resolution ofthe case ifthey remained so.

Pandora's legal authority for its Motion consists of snippets from a House Report that was not discussing the subpoena provision that Congress actually enacted. Pandora Mot., at 6

(citing H.R. Rap. No. 108-408, at 33). Instead, the House Report Pandora cites addresses a version ofthe bill with an entirely different standard for issuing subpoenas — one much more permissive than the version Congress actually passed. In the version discussed in the House

Report, the Judges could issue subpoenas "ifthe evidence requested to be produced... is relevant and materia/." H.R. REP. No. 108-408, at 8 (emphasis added). The actual standard in the law is much more restrictive — subpoenas may be issued only upon a showing that the ultimate "resolution" ofthe case would be "substantially impaired" ifthe information is not provided. 17 U.S.C. $ 803(b)(6)(C)(ix). Legislative history describing the purpose ofa broad subpoena power that was ultimately rejected is of little value. To the contrary, Congress's enactment of a different — much narrower — provision implies that it was not ultimately persuaded by the concerns expressed in the House Report on which Pandora relies. And even in considering the broader version ofthe subpoena power currently in place, Congress stated that it believed that the subpoena power should be used "sparingly" and not "become a common occurrence," and that the Judges would exercise the power "judiciously" and only when

"necessary." H.R. RBP. No. 108-408, at 21, 33.

Pandora is well aware ofthis history because their counsel was one ofthe voices arguing in favor ofthe opposite result. As he does in Pandora's Motion, Pandora's counsel urged the statute's drafters more than ten years ago to allow discovery to take place in advance of direct testimony, complaining that the absence of discovery prior to submission ofthe written direct case "places the proverbial cart before the horse." See LeMoine Decl. Ex. A, at 25, 37-38.

Counsel complained that the absence ofbroad, civil-litigation-like discovery preceding the submission ofthe parties'irect case permitted parties to subvert the record, led to underdeveloped direct statements, and did not permit adequate preparation for cross- examination. Id. And, just as he does today, Pandora's counsel argued that "the order of magnitude" ofthe issues at stake "where you are talking industrywide important precedent" weighed in favor ofbroader discovery. Id. at 37-38; see also Ex. B, at 49-50.

The statute as enacted rejected counsel's arguments, in favor of a more restrained system in which "discovery is available where it is needed," but, at the same time ensured that "the costs of discovery will be kept to a minimum." Leahy Statement, 150 CONG. REc. S11422-03.

Because the discovery provisions were enacted as part of an effort to make rate-setting procedures "less expensive and more expeditious and efficient," that compromise should be honored as serving Congress's intended goals. Id. at 21.

(c) The Motions Concede Party Discovery is Inappropriate Now and Yet Seek to Subpoena InformationPom Parties or Obtainable Through Party Discovery

Even on their own terms, the Motions do not support the proposed subpoenas. Several of the targets ofthe proffered subpoenas are themselves participants in the proceeding. See Pandora

Mot. Exs. A, C, D (proposed subpoena to Spotify U.S.A.; Beats Music, LLC; Rhapsody

International, Inc.); NAB Mot. Exs. A-D (proposed subpoenas to Apple, Inc.; as well as three record companies that litigate through SoundExchange); Pandora Mot. to Amend Larson Decl.

Ex. J (proposed subpoena to Clear Channel). Discovery will be available from these entities as parties — rendering the subpoenas both premature and unnecessary. The Motions concede that the discovery period for parties as a statutory matter only takes place after the submission of direct cases. Pandora Mot., at 4. With that concession, the Motions cannot justify taking

10 discovery from participants through the subpoena power months before direct testimony is

submitted and the discovery period opens. The NAB, for its part, even seeks to subpoena the members of SoundExchange directly. That is pure gamesmanship that cannot be justified as an effort to obtain non-party discovery early in the process. To the contrary, it makes clear the effort to jumpstart party discovery now, rather than in the limited, circumscribed window the law provides.

Pandora presumes that the presentation of direct cases will be biased, because SoundExchange will be able to gather digital agreements to present their direct case. Perhaps because Pandora has never before participated in these proceedings, this allegation ignores past practice. Pandora is not the only participant vying against Sound Exchange — the parties from whom Pandora seeks documents will themselves produce direct statements that incorporate their information. And Pandora also does not acknowledge that webcasters often coordinate and share information in these proceedings. For example, In the Matter ofDigital Performance Rights in Sound Recordings and Ephemeral Recordings ("Webcasting II"), numerous parties coordinated on their written direct cases despite originally filing separate petitions to participate. DiMA— then represented Pandora's — by current law firm filed a written direct case for itself "and [for] its member companies American Online, Inc. [("AOL")]; Live365; Microsoft Corporation and

Yahoo!, Inc. [("Yahoo!")]," which provided one fee proposal and relied on the same set of witness testimony and evidence, including the same economist. See Direct Case Statement ofthe

Digital Media Association and Its Member Companies America Online, Inc.; Live365; Microsoft Corporation and Yahoo!, Inc., at 1, 8'ebcasting II, Dkt. No. 2005-1 CRB DTRA (Oct. 31, 2005). Similarly, an unofficial coalition ofparties including Bonneville; International Corp.;

Clear Channel Communications, Inc.; Infinity Broadcasting Corp.; the National Religious

11 Broadcasters Music License Committee; and Susquehanna Radio Corp. — represented by NAB's

counsel here — filed a "joint written direct statement" as "Broadcasters" even though they

originally filed separate petitions to participate. See Summary ofthe Joint Written Direct Statement of Radio Broadcasters, at 1, Webcasting II, Dkt. No. 2005-1 CRB DTRA (Oct. 31,

2005). That joint statement too included a joint fee proposal and allowed each individual

company to rely on the same evidence. Id. As the Judges noted, this collective "designation

was adopted by the parties." Webcasting II, Dkt. No. 2005-1 CRB DTRA,72 Fed. Reg. 24084

(May 1, 2007). Parties on both sides ofthe rate-making issue have thus worked together to

present unified direct testimony, relying on collective information to present a more complete record.

As to the non-participants, the subpoenas are thinly-veiled attempts to obtain material that as just easily could be obtained from parties during the discovery period, ifthe material is relevant at that point. Pandora and the NAB contend that the information they seek is in the possession of the members of SoundExchange, and Pandora contends that the information may be relevant to respond to SoundExchange's submission. Ifthat prognostication turns out to be correct, then the information may be obtained from the parties once the discovery window opens. To permit discovery ofnon-parties at this juncture for material that may later be obtained from parties poses potential burdens on those who have opted not to participate in the process. As Pandora itself explained years ago, when it faced a potential subpoena similar to those it attempts to persuade the Judges to serve today:

Pandora fully intended and expected that it would not participate — or be required to participate — in this voluntary proceeding.... [A party's election to participate] should not entitle them to drag Pandora back into this proceeding and force Pandora to expend substantial time and money in the litigation of issues that Pandora has already resolved pursuant to a calculus which included Pandora' decision NOT to expend monies as required to participate in this proceeding.

12 Entities like Pandora that opt into settlements and withdraw from this proceeding should not be required to endure the burdens and expense of discovery simply because their competitors want access to their analysis of the marketplace and confidential business data.

Pandora's Opp'n to Mot. for Subpoenas, at 3-4, Webcasting III, Dkt. No. 2009-1 CRB

Webcasting III (Dec. 17, 2009).

(d) Any Other Reading Would Undermine the Voluntary Negotiation Perzod

As the Judges recognized in the Scheduling Order, the voluntary negotiation period provides an opportunity for good faith settlement discussions. While participating in negotiations during the period is voluntary, that does not mean that those who elect not to participate may hurry the proceedings along at their own pace. Pandora essentially claims that its status as a significant payor ofroyalties should afford it the ability to dictate procedure. See

Pandora Mot., at 2. That is wrong. Congress and the Judges, in accordance with prior precedent, have defined the terms of the proceeding. Any other result would be unfair and prejudicial to

SoundExchange and to all of the other participants that plan to use the voluntary negotiation period as it is intended — to discuss settlement. Permitting Pandora and the NAB to commence discovery at this time would also unfairly and unduly burden the rate-making process by creating costly discovery battles where none should be necessary, and by stifling potential settlement discussions with discovery distractions. If Pandora and the NAB do not elect to participate in good faith settlement discussions, that does not mean that they can use this period for active discovery to distract SoundExchange and other participants who choose to engage in those discussions.

4 Pandora references in its Motion specific content ofprior confidential settlement discussions, in an effort to gain a tactical advantage in this matter. A party's recitation of information gathered during settlement discussions to bolster a litigation position is not consistent with good faith.

13 The NAB argues that allowing this discovery would enhance the potential for settlement

because additional information could facilitate settlement discussions'. If the NAB believes that

an exchange of information could potentially advance settlement discussions, that is the kind of

thing that parties engaged in settlement negotiations can and often do discuss. Subpoenas need

not be required to effectuate such an information exchange ifthe parties are engaged in the

settlement discussions contemplated during this period.

B. The Motions Fail to Demonstrate the Requisite "Substantial Impairment" to the Resolution of the Proceedings.

The exercise of the subpoena power would be inappropriate at this stage of the

proceedings under the statute and its precedents, in particular during the voluntary negotiation

period. But even if the Judges were writing on a clean slate, Pandora and NAB fail to meet the

"substantial[j impair[ment]" standard. 17 U.S.C. $ 803(b)(C)(6)(ix). Pandora and the NAB

argue that changed circumstances justify a departure from the statutory procedure and precedent.

Pandora Mot., at 1-5. In particular, the Motions cite three grounds for revisiting prior decisions

and statutory requirements, and finding that the resolution ofthis proceeding would be

"substantially impaired" ifthe subpoenas are not issued. Simply put: the circumstances Pandora urges the Judges to consider in determining whether the resolution ofthis proceeding would be

"substantially impaired" do not warrant reconsideration of the statutory requirements absent

Congressional action.

First, Pandora contends that the proceedings will be "substantially impaired" absent the requested discovery because "the stakes... are exceedingly high" in this rate-setting proceeding.

Pandora Mot., at 1. But rate-setting proceedings have consistently represented hi@-stakes endeavors for all of the participants. See Pandora Mot., at 1 (citing Intercollegiate Broad. Sys.,

Inc. v. Copyright Royalty Bd., 684 F.3d 1332, 1338 (D.C. Cir. 2012) ("rates can obviously mean

14 life or death for firms and even industries")); SoundExchange, Inc. v. Librarian ofCongress, 571

F.3d 1220, 1226 (D.C. Cir. 2009) (Kavanaugh, J., concurring) ("[a]s this case demonstrates,

billions of dollars and the fates of entire industries can ride on the Copyright Royalty Board's

decisions"). That has been the case since Pandora's counsel testified over ten years ago about

the significant "order of magnitude" these cases represent. LeMoine Decl. Ex. A, at 25. The fact

that this rate-setting proceeding also will be a high-stakes endeavor cannot mean that the

discovery practices set in the statute must change.

Second, Pandora points to the questions the Judges have posed in the notice commencing

these proceedings. Determination of Royalty Rates for Digital Performance in Sound

Recordings and Ephemeral Recordings ("Webcasting IV"), No. 14-CRB-0001-WR (2016-2020),

79 Fed. Reg. 412-01, 413-14 (Jan. 3, 2014). An engaged bench considering the issues and

advising the parties of their interest does not justify a shift in discovery practices. In any event, the notice specifically did not limit consideration of the questions to the direct statements, but instead stated that the parties should "consider addressing" those posed questions at any point in the proceedings — including in the "written rebuttal statements, proposed findings of fact and conclusions of law, and through their witnesses and attorneys, as appropriate." Id. at 413. At this juncture, there is no way to know whether the material Pandora seeks will be necessary nor whether it will be unavailable once the Judges are ready to render their decision. In the event there is some question that the Judges have that remains unanswered, the analysis as to whether the absence of information presents a "substantial[] impair[ment]" to the case resolution may be performed at that time.

Third, Pandora and the NAB claim that they need discovery now because they do not have access to non-public information that the record companies may not consider relevant and

15 may not incorporate in their direct statements. In this regard, all parties operate under the same purported "information deficit" Pandora and the NAB complain about in advance of submitting their direct case. That is true not only in this proceeding, but in past proceedings. As already explained, webcasters in the past have addressed this by coordinating amongst themselves to share information and present an economic model through a single economist.

For its own part, SoundExchange has several times been at precisely the same

"disadvantage" Pandora and NAB claim they suffer from here. Services often develop their direct case based on information unavailable to SoundExchange. In the recent SDARS proceeding, Sirius XM developed its benchmark analysis using direct licenses with independent labels that SoundExchange did not have. See, e.g., Determination of Rates and Terms for

Preexisting Subscription Services and Satellite Digital Audio Radio Services, Dkt. No. 2011-1

CRB PSS/Satellite II, 78 Fed. Reg. 23054, 23062 (Apr. 17, 2013). And services also manage to

develop benchmark analyses in their direct cases without the subpoena power. In SDARS, Sirius XM did precisely what Pandora complains it would be unable to do: it incorporated services'icense

information in its own affirmative benchmark analysis, including Slacker and Last.fm.

Id. at 23064. Also, in the most recent webcasting proceeding, Live365 used its own internal financial data (which obviously SoundExchange had no access to) to develop a model supporting their rate proposal. See Determination After Remand of Rates and Terms for Royalty Years

2011-2015 ("8'ebcasting III Remand"), at 18, Dkt. No. 2009-1 CRB Webcasting III (Jan. 9,

2014) (describing Fratrik model utilizing Live365's operating costs). While the Judges did not ultimately adopt Live365's model, the information deficit nonetheless left SoundExchange at precisely the same "disadvantage" Pandora and the NAB complain about here. SoundExchange would love to obtain reams ofmaterial &om Pandora (and the NAB and the companies it represents) to prepare its own direct case, including but not limited to:

Internal analyses ofprospective advertising revenue and opportunities, including

the ability to generate revenue from data collected regarding customer

preferences;

Internal analyses regarding the degree to which Internet radio cannibalizes

interactive streaming services or other channels of consumption;

Data concerning, both in total and by platform (mobile, tablet, web-based, etc.),

unique listeners, listening hours, spins/performances, minutes/station on non-

interactive services;

Information generated to determine elasticities ofusers and services (including as

referred to in Pandora's Motion);

Data concerning consumer listener influence behavior on non-interactive services,

including, but not limited to, rates of and total numbers of (a) skips; (b) user input

in station creation (e.g. "thumbs up" or "thumbs down"); (c) number of stations

created and maintained by users; and (d) plays per station.

If Pandora and NAB's subpoenas are issued, SoundExchange will have no choice but to serve its own motion requesting subpoenas issue for these and other categories of information that other parties and third-parties have access to that SoundExchange would like to supply to economists to help shape its direct case. But it would not stop there. SoundExchange would not only need to collect what data Pandora and the NAB's member companies have, but the 25-plus other participants would also have to be subpoenaed for their data and internal documents. The result

17 would be far from the efficient, less expensive process Congress anticipated, with no guarantee

of any benefit.

In any event, the Motions'epeated allegations of "prejudice" because of a lack of

information are illusory. The limited discovery Congress enacted is fair — its restraint does not

make it less so. The focused discovery period will provide more than adequate opportunity to

explore the underpinnings of each side's proffered benchmarks — as it always has. On the other

hand, an unfettered discovery period in advance of any party submitting its direct case would

more likely lead to expensive and pointless investigation ofpositions that may never be relevant

in this proceeding. The direct statements can be fairly presented in advance ofthe discovery

period, as they have in the past. Both the public record and collaborative case-building are

permissible substitutes for pretrial discovery. To support its Motion, Pandora itselfhas

submitted a declaration that attaches reams of articles about competing services, all pulled

together from the public record. And just as they have in the past, services may collaborate to

supply counsel with information they believe will be helpful to their cause. Pandora and the

NAB are employing both of these methods already. As a result, Pandora and the NAB believe they have identified precisely what information they would like to use to challenge economic analyses that have not even been submitted yet. To the extent any of that information is non- public, Pandora and the NAB are thus properly poised to obtain that information during the discovery period in order to prepare an amended statement or rebuttal statement. If, on a complete record, there remains some perceived deficiency, the Judges can assess whether that deficiency satisfies the statutory standard, and the question ofwhether any subpoenas need be issued can be revisited.

18 C. The Subpoena Requests are Excessively Broad to Meet the Motions'rofessed Need.

As explained, issuance of the subpoenas cannot satisfy the rigorous statutory standard.

But if the Judges are inclined to consider issuing them in any form, SoundExchange urges the

Judges to decline to issue them as drafted. The subpoenas seek categories of information that are unacceptably and unnecessarily broad. In particular, the subpoenas request material that exceeds what Pandora and the NAB purport to be seeking here — material that SoundExchange has access to because record companies execute agreements and receive royalty accounting from digital services.

In particular, the subpoenas'hird requests appear to seek specific subscriber and usage data sliced and presented in a manner that is not ordinarily provided to the record companies in the royalty reporting process and certainly not from every identifiable service. See Pandora Mot.

Exs A-F (subpoenas to services, Request No. 3); NAB Mot. Ex. A (subpoena to Apple, Request

No. 3). The requests themselves acknowledge as much, expressly stating that they are seeking information "to the extent" it is not included in royalty statements. That alone suggests that this

Request does not serve the goal that Pandora and the NAB claim underlies the subpoenas — to correct a perceived information deficit between the parties. Before the subpoenas are issued— which, for all the reasons discussed in this Opposition, they should not be — SoundExchange respectfully asks the Judges to order that they be significantly narrowed.

III. CONCLUSION

The statutory procedure Congress enacted works, and does not permit subpoenas to supplant the dedicated party discovery period set forth in the statute. That statutory procedure should not be upended, particularly based on the professed desires of one or two parties among thirty. The matters that Pandora and the NAB seek to have the Judges decide are best left to

19 voluntary negotiation in the first instance — and that is precisely what this period oftime is

dedicated to. Nothing Pandora or the NAB urge can satisfy the exacting standard they

themselves acknowledge applies. Because the Motions fail to show that the proceedings would

be "substantially impaired" absent the requested information, the Motions must be denied.

Respectfully submitted,

Glenn D. Pomerantz (CA Bar 112 3) Kelly M. Klaus (CA Bar 161091) Anjan Choudhury (DC Bar 497271) MUNGER, TOLLES & OLSON LLP 355 S. Grand Avenue, 35th Floor Los Angeles, CA 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 [email protected] [email protected] [email protected]

Counselfor SoundExchange, Inc.

March 18, 2014

20 Before the UNITED STATES COPYRIGHT ROYALTY JUDGES Washington, D.C.

In the Matter of: ) ) Determination of Royalty Rates for Digital ) Docket No. 14-CRB-0001-WR (2016-2020) Performance in Sound Recordings and ) CRB Webcasting IV Ephemeral Recordings (Web IV) )

DECLARATION OF MELINDA LEMOINE

I, Melinda LeMoine, under penalty ofperjury, declare as follows:

1. I am an attorney with Munger, Tolles 8'c Olson LLP, the law firm representing

SoundExchange in the above-captioned proceeding. I have personal knowledge ofthe facts

stated in this declaration and could competently testify to them if called upon to do so.

2. Attached to this declaration as Exhibit A is a true and correct copy ofthe hearings on the structure and process ofthe Copyright Arbitration Royalty Panel (CARP) before the

House ofRepresentatives Committee on the Judiciary, Subcommittee on Courts, the Internet, and Intellectual Property, which took place on June 13, 2002, available at htto://oermanent.access.zoo.eov/websites/www.iudiciarv.house.eov/media/odfs/80194.ndf (last visited March 16, 2014).

3. Attached to this declaration as Exhibit B is a true and correct copy ofthe hearings on the Copyright Royalty and Distribution Reform Act of 2003 before the House of

Representatives Committee on the Judiciary, Subcommittee on Courts, the Internet, and

Intellectual Property, which took place on April 1, 2003, available at

23047119.] htto://permanent.access.mo.eov/websites/www.iudiciarv.house.eov/media/ndfs/86183.ndf (last

visited March 16, 2014).

I declare under penalty ofperjury that the foregoing facts are true and correct. This

declaration was executed on the 16th day ofMarch, 2014 in Los Angeles, CA.

By: Melinda LeMoine

23047119.1 EXHIBIT A COPYRIGHT ARBITRATION ROYALTY PANEL (CARP) STRUCTURE AND PROCESS

HEARING BEFORE THE SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY OF THE COMMITTEE ON THE ZJDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED SEVENTH CONGRESS SECOND SESSION

JUNE 13, 2002

Serial No. 78

Printed for the use of the Committee on the Judiciary

Available via the World Wide Web: httpl/www.house.gov/judiciary

U.S. GOVERNMENT PRINTING OFFICE 80-194 PDF WASHINGTON: 2002

For sale by the Superintendent of Documents, U.S. Government Printing Os(co Internet: boo)rotors.gpo.gov Phone: toll free (866) 612-1800; DC area (202) 612-1800 Fax: (202) 612-2250 Mas: Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON THE JUDICIARY F. JAMES SENSENBRENNER, JR., WIscoNsIN, Chairman HENRY J. HYDE, Illinois JOHN CONYERS, JR., Michigan GEORGE W. GEKAS, Pennsylvania BARNEY FRANK, Massachusetts HOWARD COBLE, North Carolina HOWARD L. BERMAN, California LAMAR SMITH, Texas RICK BOUCHER, Virginia ELTON GALLEGLY, California JERROLD NADLER, New York BOB GOODLATTE, Virginia ROBERT C, SCOTT, Virginia STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina BOB BARR, Georgia ZOE LOFGREN, California WILLIAM L. JENKINS„Tennessee SHEILA JACKSON LEE, Texas CHRIS CANNON, Utah MAXINE WATERS, California LINDSEY O. GRAHAM, South Carolina MARTIN T. MEEHAN, Massachusetts SPENCER BACHUS„Alabama WII LIAM D. DELAHUNT, Massachusetts JOHN N. HOSTETTLER, Indiana ROBERT WEXLER, Florida MARK GREEN, Wisconsin TAMMY BALDWIN„Wisconsin RIC KELLER, Florida ANTHONY D. WEINER, New York DARRELL E. ISSA, California ADAM B, SCHIFF, California MELISSA A. HART, Pennsylvania JEFF FLAKE„Arizona MIKE PENCE, Indiana J. BANDY FORBES, Virginia

PHILIP'. KIRO, Chief of Staff-General Counsel PERRY H. APELEAOM, Minority Chief Counsel

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY HOWARD COBLE, North Carolina, Chairman HENRY J. HYDE, Illinois HOWARD L BERMAN, California ELTON GALLEGLY, California JOHN CONYERS, JR., Michigan BOB GOODLATTE, Virginia, Vice Chair RICK BOUCHER, Virginia WILLIAM L JENKINS, Tennessee ZOE LOFGREN, California CHRIS CANNON, Utah WILLIAM D. DELAHUNT, Massachusetts LINDSEY O. G~, South Carolina ROBERT WEXLER, Florida SPENCER BACHUS, Alabama MAXINE WATERS, California JOHN N. HOSTETTLER, Indiana MARTIN T. MEEHAN, Massachusetts RIC KELLER, Florida TAMMY BALDWIN, Wisconsin DARRELL E. ISSA, California ANTHONY D. WEINER, New York MELISSA A. HART, Pennsylvania

BLAINE MERRITT, Chief Counsel DEBRA RQSE, Counsel CIIRIS J. KATopIS, Counsel MELISSA L. MCDONALD, Full Committee Counsel ALEC FRENCH, Minority Counsel CONTENTS

JUNE 13, 2002

OPENING STATEMENT

Page The Honorable Howard Coble, a Representative in Congress From the State of North Carolina, and Chairman, Subcommittee on and Courts, the Internet, Intellectual Property ...... 1 The Honorable Howard L. Berman, a Representative in Congress From the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property...... ,...... 2 The Honorable Rick Boucher, a Representative in of Congress From the State Virginia ...... 8 The Honorable Chris Cannon, a Representative in of Congress From the State Utah 4 WITNESSES Mr. Michael J. Remington, Attorney-at-Law and Partner, Drinker Biddle & Reath, LLP Oral Testimony Prepared 7 Statement 8 Mr. Robert A. Garrett, Attorney-at-Law and Partner, Arnold & Porter Oral Testimony Prepared 15 Statement ...... ,...... -...."....-"-."--.--"- --"-""-"- 16 Mr. R. Bruce Rich, Attorney-at-Law, Weil, Gotshal & Manges, LLP Oral Testimony 22 Prepared Statement ...... 24 The Honorable Marybeth Peters, Register of Copyrights and Associate Librar- ian for Copyright Services, Copyright Office of the United States, The Library of Congress Oral Testimony...... " ...". 80 Prepared Statement 31 APPENDIX

STATEMENTS SUBMITTED FOR THE HEARING RECORD The Honorable Howard Coble, a Representative in Congress From the State of North Carolina, and Chairman, Subcommittee on Courts, the Internet, and Intellectual Property ...... 49 The Honorable Howard L. Berman, a Representative in Congress From the State of California, and Ranking Member, Subcommittee on Courts, the Internet, and Intellectual Property...... 49 The Honorable John Conyers, Jr., a Representative in Congress From the State of Michigan and Ranking Member, Committee on the Judiciary ...... 50 The Honorable Rick Boucher, a Representative in Congress From the State of Virginia 50 The Honorable Chris Cannon, a Representative in Congress From the State of Utah ...... 52 The Honorable Darrell Issa, a Representative in Congress From the State of California 53 Statement by the Intercollegiate Broadcasting System ...... 55 Statement by Mr. David Mandelbrot, Vice President, Media and Entertain- ment, Yahoo! Inc. 133 Page MATERIAL SUBMITTED FOR THE HEARING RECORD Letter from Mr. James C. May, Executive Vice President, Government Rela- tions, National Association of Broadcasters 135 Letter from James J. Popham, Vice President, Statutory License Counsel of the Motion Picture Association of America, Inc. (MPAA) ...... 138 Ms. Hilary Rosen, Chairman & Chief Executive Officer of the Recording Industry Association (RIAA)...... 144 Letter from Mr. I Fred Eoenigsberg, White & Case LLP and Mr. Marvin L. Berenson, Senior Vice President & General Counsel at Broadcast Music Inc. 154 Letter from Mr. Patrick Collins, Senior Vice President - Licensing, SESAC, Inc.and Mr. John C Beiter, General Counsel for SESAC, Inc. Loeb & Loeb LLP 163 Letter from Mr. Kevin Elose, President and Chief Executive Officer, on behalf of National Public Radio, Inc. (NPR) and its member station licensees ...,...., 165 Letter from Mr. William S. Koenig, National Basketball Association, Mr. Thomas J. Ostertag„Office of the Commissioner of Baseball, Mr. John Tortora, National Hockey League, Mr. L. Jeffrey Pash, National Football League, and Mr. Ritchie T. Thomas, counsel for National Collegiate Athletic Association . COPYRIGHT ARBITRATION ROYALTY PANEL (CARP) STRUCTURE AND PROCESS

THURSDAY, JUNE 13, 2002

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY, COMMITTEE ON THE JUDICIARY, Washington, DC. The Subcommittee met, pursuant to call, at 2:30 p,m., in Room 2141, Rayburn House Office Building, Hon. Howard Coble [Chair- man of the Subcommittee] presiding. Mr. COBLE. Good afternoon, ladies and gentlemen. The Sub- committee will come to order. The Founding Fathers understood the importance of copyright to our Nation. In keeping with this tradition, our Subcommittee has always worked to support artists by ensuring that they receive fair compensation for their creative endeavors. Our hearing today will focus on an arcane but yet important component of the present system that reimburses copyright holders for their work. By way of background, and as part of the 1976 Copyright Act amendments, Congress acknowledged the need for Government to oversee the royalty ratemaking and distribution process by creating the Copyright Royalty Tribunal, or CRT as it became known. The need for this entity was especially critical since the 76 amendments also created 8 new compulsory licenses. By 1998, Congress, the Copyright Office and ratemaking participants believed that greater efficiencies could be realized under a different system, which led to the development of our present construct, the Copyright Arbitration Royalty Panel, known to many of you all as CARP. Unfortunately, it now appears that history is repeating itself as the current structure and operation of the CARP system has generated great frustration among those parties required to participate within its statutory confines. Although some critics have criticized our efforts to develop a fair and efficient ratemaking and distribution process as disappointing, I am optimistic that we will ultimately prevail in our attempt to build a better copyright mousetrap. We have an excellent panel of witnesses today who will doubtlessly add to our individual and collective understanding or mis- understanding, hopefully understanding, of the CARP system, warts and all. I welcome all of you here today and thank them in advance for sharing their thoughts. (I) Now, as a bit of background, as you all may well know, the arbi- ters handed down the CARP decision last February, February 21st, I think. The Copyright Act, as you furthermore know, provides a 90-day period whereby the Copyright Office, which is a part of the Library of Congress, can advise and counsel with the Librarian as to his final decision of rejecting or accepting the CARP decision. The Librarian, handed down his opinion, his rejection, last month, the 21st or—21st of May, Marybeth tells me. The Copyright Act furthermore provides an additional 30 days during which time the Librarian is afforded the right to examine his thoughts along with the Copyright Office and then submit his final decision, So we expect to see that on or before 20 June. [The prepared statement of Mr. Coble follows in the Appendix] Mr. Coex,E. Having said all that, and before I recognize the distinguished gentleman from California, you saw me hand him a piece of birthday cake. The Chairman of the full Judiciary Com- mittee is having his birthday today, so Mr, Sensenbrenner shared a couple pieces with Howard and me, and I am sorry the rest of you can't have any. If you go back in the back room, there may be some left, But I am now pleased to recognize the distinguished gentleman from California Mr. Herman, Mr, BE8MAN. Thank you, Mr. Chairman. He wins the lottery, and I get a piece of birthday cake, Anyhow, thank you very much for holding this hearing on the Copyright Arbitration Royalty Panel. I am a strong supporter of marketplace solutions to copyright royalty disputes. I think copyright owners have every economic incentive to capture additional revenue by licensing their work, their works, and every right to seek the highest royalties that the market will bear. If they are too short-sighted to capitalize on opportunities for new revenue, or they fail to act rationally, as economists would say, the marketplace will punish them. Furthermore, when copyright owners have engaged in a competitive conduct, the antitrust laws have time after time proven adequate to remedy this conduct. Compulsory licenses in CARPs, on the other hand, have proven to be imperfect, unwieldy, and costly licensing mechanisms at best. I suspect that many CARP participants would have found a more- far more satisfactory outcome—I am talking about licensees and copyright owners—had they chosen to spend their money and effort negotiating a reasonable settlement in the marketplace rather than in a CARP. Compulsory licenses tend to outlive their purpose, and they may create marketplace dislocations rather than address them. For example, the cable compulsory license was created to help a struggling and entrepreneurial cable industry keep up with the broadcast industry. Today the cable license continues to exist in an era where the cable industry is able to exercise market power at least comparable to that of the relevant copyright owners. While I do not have a fondness for compulsory licenses, I recognize that we must do our best to make the ones we do have work. The CARP process was catapulted into national awareness this year because of the controversy of Webcasting CARP. The outcome of the Webcasting CARP has garnered much attention from the press and public. And I know it is, as the Chairman says, under consideration at the Copyright Office and with the Librarian of Congress. What captured our attention about the Webcasting CARP was not only the royalty rate it set, however, but the process through which it occurred. While many of the rating distributions determinations are the subject of marked disagreement among the participants, the one thing that even the strongest opponents agree upon is that the CARP process has serious flaws and warrants improvement. The expense is the biggest issue. Participants in a CARP bear not only their own substantial legal fees, but also the cost of the CARP proceeding itself. This is often millions of dollars, sometimes much more expensive than the royalty claim that the CARP is addressing. I believe Mr. Remington is going to speak particularly to the situations in which a participant had to pay tens of thousands of dollars for a CARP to determine the distribution of around $ 10 in royalties. In addition to the problems of cost, I know there are great concerns over the autonomy and independence of the arbitration body, the burden that it places upon the Copyright Office, and the overall fairness and consistency of the outcomes. Our witnesses are experienced participants in CARP proceedings and can speak to the problems they have encountered during CARP arbitration. The issue of CARP performance reform is not new in our Sub- committee. In 1998, Chairman Coble introduced legislation to reform the methods through which the royalty rate is determined. Ultimately there was not enough support to enact his reform proposals. Given today's climate, however, I believe there is sufficient impetus and sufficient interest to seriously consider changes to the arbitration process, and I anticipate an active discussion today to determine a model that most efficiently accomplishes the goals of the CARP process without unduly burdening the participants. Thank you, Mr. Chairman. Mr. COBBLE. Thank you, Mr. Herman. Mr. CQBLE. Normally I prefer opening statements to be restricted to the Ranking Member and to me, but we have two gentlemen on each side of the aisle who are very interested in this issue. And in- cidentally, folks, the small or the diminished attendance here today on the part of the Subcommittee I don't believe reflects their lack of interest. It is the fact that the final bell rang, and there are no more votes today, so they are probably going back to their respective districts. But let me now recognize the distinguished gentleman from Vir- ginia, Mr. Boucher for his opening statement. Mr. BQUGHER. Mr. Chairman, thank you very much. I appreciate your indulgence as Mr. Cannon and I contribute to the conversation here in making open statements. I also want to thank you, Mr. Chairman, for a hearing on a very timely subject. The CARP process, in my opinion, is badly broken. It should be replaced with a more efficient, more affordable and fairer system. In my view, the functions of the CARP should be transferred to a United States district court. The problems which beset the CARP are many. While the CARP process was designed to produce a streamlined procedure, the lack of appropriate discovery mechanisms has prolonged the proceedings, achieving the opposite of what was designed. The process is also too expensive. It is beyond the ability of many interested parties to afford. Having private parties pay the fees of the arbitrator is manifestly unjust to the financially less fortunate and to the nonprofit entities that have a very large interest in the proceedings of the CARP. No body of expertise is developed by the arbitrators that then could be applied to subsequent proceedings. Starting with a new arbitrator panel each time will lead to inconsistent judgments and a constant process of reinventing the wheel, and the standards which are applied are demonstrably inadequate. In the recent Webcasting decision, the concept of fairness of the payment was totally absent from the deliberation. Fairness is the standard in other proceedings. Standard, for example, is fundamental to—fairness is fundamental to the standard under section 801 for royalty payments for digital music services other than Webcasting. Fair- ness is also at the heart of the standard under section 119 for royalties that are paid by cable and satellite companies to terrestrial broadcasters for the rebroadcast of terrestrial broadcast signals. But fairness is not an element of the standard under section 114 applicable to Webcasters. However, we address the procedural problems, and as I have said earlier, I think vetting these rate-setting functions in a U.S. district court is the best approach. We also need to insert fairness of the payment as the governing standard under section 114. We must avoid a repeat of the rules like the most recent one through which a one-size-fits-all approach was adopted, where small Webcasters that measure their royalties in the tens of thousands of dollars annually were saddled with royalty fees in the range of hundreds of thousands of dollars annually. A fairness standard would have prevented that ruling that threatens to put the young and the small companies out of business. Changes must be made, and I welcome this first hearing of our Subcommittee as we explore the problem, as we hear from a panel of distinguished witnesses who I want to join with the Chairman and Ranking Member in welcoming here today and as we consider this. Thank you, Mr. Chairman. Mr. COBLE. I thank the gentleman. Mr. CQBLE. I am pleased now to recognize the distinguished gentleman from Utah, Mr. Cannon for 5 minutes. Mr. CANNQN. I thank the Chairman. I have been sitting here wondering if the average IQ has gone up or down because some people left when they could after the last vote earlier today. I thank you for calling this important hearing on the structural process of CARP, our royalty-setting panels. I will acknowledge that I was one of the many Members of the Congress who had concerns about the result created by the latest CARP panel for Web casters. I would like to remark for a moment on the governing standard by which the CARP determines the royalty rate. In addition to considering CARP structure and procedures, this Committee must also consider why there are separate rate-setting standards for the sound recording CARPs, for the Webcasters and the satellite TV CARPs, and all other CARPs including the sound recording CARPs for industries other than Webcasting. In particular the satellite TV and all other CARPs have standards that require rates based on fairness, fair market value and balancing the interest of the participants. The Webcasting CARP has only the willing buyer/willing seller language, which suggests that there is a functioning market that results in a fair price. How- ever, if the Congress and this Committee thought the market was functioning fairly in the context of any compulsory licenses, there would not be any compulsory licenses as they are needed only when a market is dysfunctional or inherently one-sided, which this one clearly is. Particularly with the nascent industry negotiating against powerful collectives representing content owners such as RIAA, ASCAP and BMI, there is no leverage on the side of the Webcasters, and in that case the willing buyer/willing seller standard seems to require the CARP to ratify the results of a single-seller marketplace that is powered by an industry collective. I mentioned my concern earlier over the recent CARP rate announced for Webcasters which has been set aside for additional review by Mr. Billington, the Librarian of Congress. It is clear to me the purpose of Congress in putting in place the compulsory license for Webcasters in the DMCA was to promote a nascent online industry up to the point it could flourish and add real diversity to the way the consumers get content delivered.. But if the mechanism we have established sets rates that would be detrimental to that goal, do we have a responsibility to reexamine the results? I think the answer is yes when Congress's expressed intent is violated. Such actions are not unprecedented. In fact, we did as much fairly recently when we deemed that the CARP for satellite broadcasting set a rate that was too high for satellite television distributors and took actions to overturn the rate. I know this will be unpopular with some in this room: There ought to be an acknowledgment today that whatever structure or process which we have for CARPs now or in the future, if the results produced are expressly against the intent of Congress and this Committee in establishing a compulsory license in the first place, then this Committee and Congress have a right and a duty to consider actions that might overturn such results. I thank the Chairman and look forward to hearing the witnesses discuss how we might improve the CARP process and structure so as to get results that are more consistent with Congress's goals and stated intent. Thank you. Mr. COBLE. I failed to mention this earlier, folks, but I want to make this clear. It is not my intent for the purpose of this hearing to influence the Copyright Office or the Librarian in their deliberations regarding the Webcasting CARP or for that matter to reverse decisions on previous CARPs. Rather, it is my hope that the Sub- committee is simply trying to determine if the current structure and performance of CARPs are fair and sound, and if not, what changes or amendments should be forthcoming. You all bear with me each time I do this. I apologize for the lengthy introductions, but for the benefit of the uninformed in who don't know the backgrounds of our witnesses, I think you need to. Our first witness is Michael J. Remington, who is a partner in the law firm of Drinker, Biddle & Reath, where he specializes in intellectual property law, tort reform, government relations and lobbying. Prior to entering private practice, Mr. Remington held high-level positions in the three branches of the Federal Govern- ment. Most impressively, for a total of 13 years he was chief counsel to our Subcommittee, most impressively to us, We guard this very jealously, Mike, as you know. In the judicial branch Mr. Remington served as a law clerk to the U.S. District Judge John W. Reynolds and Deputy Legislative Af- fairs Officer to the Judicial Conference of the United States under Chief Justice Warren Burger. In the executive branch he was a prosecutor in the Criminal Division of the U.S. Department of Jus- tice, where he specialized in criminal appeals. A former Fulbright scholar in Paris, and a Peace Corps volunteer in Africa, Mr. Remington is a graduate of the University of Wis- consin, where he received his law degree in 1973 and was admitted to practice in the State of Wisconsin and the District of Columbia. Our next witness is Mr. Robert Garrett, who is a partner in the law firm of Arnold & Porter. Mr. Garrett has focused on intellectual property and telecommunications matters since joining Arnold & Porter in 1977. He has practiced extensively before the Federal Communications Commission, the Copyright Office, the Copyright Royalty Tribunal, the Copyright Arbitration Royalty Panels and the Federal courts. He has represented sports leagues, the recording industry, municipal and foreign governments, programming producers and networks, and others in litigation, arbitration and administrative proceedings, Prior to joining Arnold & Porter, Mr. Garrett served as a law clerk to Justice John Paul Stevens, who was then a judge of the U.S. Court of Appeals for the Seventh Circuit, and as an assistant to the General Counsel Office of the Secretary of the Army. Mr. Garrett earned his J.D. degree from Northwestern Univer- sity and his B.A. From Northwestern. Mr. Garrett is admitted to practice in the States of Illinois and the District of Columbia. Our next witness is Mr. R. Bruce Rich, who is with the law form of Weil, Gotschal & Manges. He is a nationally recognized expert in intellectual property law, concentrating on issues pertaining to communications, publishing, and cable and commercial broadcasting. Mr. Rich earned his J.D. From the University of Pennsylvania and is BA magna curn laude from Dartmouth College. Mr. Rich is adjunct professor at New York law school's Media Law Institute. Our final witness today is the Honorable Marybeth Peters, who is the Register of Copyrights for the United States. Marybeth has served as Acting General Counsel of Copyright Office and as chief of both the Examining and Information and Reference Divisions. She has served as a consultant on copyright law to the World Intel- lectual Property Organization and authored the General Guide to the Copyright Act of 1976. Ms. Peters received her undergraduate degree from Rhode Island College and her law degree with honors from the George Wash- ington University Center. She is a member of the bar of the Dis- trict of Columbia. Good to have all of you with us, lady and gentlemen. We have written statements from each of you, and I ask at this time unanimous consent to submit them into the record in their entirety. Now, Marybeth has appeared before us several times, and, Mike, you are familiar with the rule. Folks, as we have previously requested, if you could confine your oral statement to 5 minutes, we don't want to muzzle anyone, but in the interest of time, because we may have a second round of questioning, when you see the red light illuminate brightly into your face, you will know that your 5 minutes have expired. You will not be keel-hauled at that point, but you should wrap up shortly. Mike, why don't we start with you. STATEMENT OF MICHAEL J. REMINGTON, ATTORNEY-AT-LAW AND PARTNER, DRINKER BIDDLE R REATH, LLP Mr. REMINGTON. Thank you, Mr. Chairman. Mr. Chairman, Mr. Ranking Minority Member, Members of the Subcommittee, I am grateful for the opportunity to testify before you about the subject of CARP structure and process. Mr, Chairman, there is no greater privilege and prestige than having worked for this Subcommittee. Last night in preparing for this hearing, I was reviewing some past Subcommittee hearings. I read the printed record for a May 1, 1985, hearing on the CRT and the Copyright Office. Mr. Chairman, you and Mr. Berman and Mr. Boucher were Members of the Subcommittee at that time. Mr. Kas- tenmeier set the tone for the hearing, "I have little doubt that the tribunal is in dire need of reform. The Subcommittee has had a classic case of a broken agency on its hands. I do not know whether the agency is broken beyond repair. I certainly hope not." History does indeed repeat itself, as you stated, Mr. Chairman, and as was stated by Mr. Boucher. I appear on my own behalf as a member of the law firm of Drink- er Biddle & Reath. I am authorized to state that my views comport with my principal client, BMI, for which I serve as counsel. This Committee is aware that BMI is a performing right organization representing hundreds of thousands of songwriters, composers and music publishers in the licensing of the public performing right in their musical works. I am experienced in and familiar with the CARP process and structure. I am also familiar with the CARP's predecessor, the CRT. It is my position and that of BMI that conditions and circumstances relating to the CARP structure and process indicate a clear need for congressional action. Any legislative reform should minimally incorporate first a structure to promote the stability and predictability of results; two, procedures for encouraging settlement and a mechanism for streamlining the resolution of small claims; and three, cost-reduction measures. First, how to create a structure to promote stability and predictability of results is a difficult problem. Tough choices must be made, and constitutional questions about the location, what branch of Government, for example, of any new structure must be considered. Any reform should eliminate the ad hoc nature of the current process. I prefer the option of a permanent panel of salaried administrative law judges supported by a professional staff, but would certainly not object to a return of the CRT model. There would be no appeal to the Librarian of Congress. A direct appeal to the D.C. Circuit would be permitted. Second, Congress should enact a mechanism for streamlining the resolution of small claims. BMI and other music claimants have experienced three such proceedings, two of which I will mention, and Mr. Berman alluded to these in his opening remarks. In the 1992 through 1994 DART distribution proceedings, two pro se individuals were awarded $ 11.03 with arbitrator costs of $ 12,000. In the 1995 through 1998 distribution proceeding, which resulted in a total award of $6.06 to the same two individuals, arbitrator costs were in excess of $21,000; that is almost 3,000 times the amount in controversy. When transaction costs repetitively so greatly exceed the amount of controversy, the CARP system is not an effective dispute resolution mechanism. As regard to small claims, the Committee should consider three amendments. Specifically you should consider a uniform filing fee analogous to the fee for Federal civil action for all claimants amounts; two, an offer of judgment mechanism analogous to rule 68 of the Federal Rules of Civil Procedure; and three, the elimination of oral hearings. Third, irrespective of whether Congress legislates these reforms, further cost-reduction measures should be adopted. Congress should require the Copyright Office or any new entity to report cost-deduction information on an annual basis. Moreover, the Office should be forced to cap by regulation the billing rates of the arbitrators if you opt for that system, because hourly rates combined with the number of hours worked could still be too costly. The office should also be empowered to cap on a case-by-case basis the cost of the entire proceeding. In my written statement I suggested several administrative improvements that would result in further cost reductions. In conclusion, despite initial optimism about the elimination of the CRT in 1993 and its replacement by the ad hoc CARPs, the new process needs legislative reform. Two former Members of this Subcommittee, both of whom became judges, the Honorable Charles Wiggins and the Honorable George Danielson, often sounded the refrain, and I am sure many of you sound the same refrain, "if it ain't broke, don't fix it." I am sure that both Judge Wiggins and Judge Danielson, and I hope the Members on the dais, would agree that the copyright royalty system is broken. Mr. Chairman, Members of the Subcommittee, I and my client, BMI, and indeed a larger group of copyright owners look forward to working with you on the reform process. Thank you. Mr. CQBLE. Thank you. [The prepared statement of Mr. Remington follows:] PREPARED STATEMENT OF MICHAEL J. REMINGTON Mr. Chairman, Mr. Ranking Minority Member, and Members of the Sub- committee, I appreciate the opportunity to testify before you on the important subject of "the Copyright Arbitration Royalty Panel i'CARP') structure and process." The functioning of all institutions of government, including the Copyright Office (the "Office") and the Library of Congress, is critically important. The fact that a governmental operation is funded through user-fees or delegates functions to non-governmental individuals, such as private arbitrators, does not signify a decreased need for legislative oversight. Vigorous program oversight is every bit as important as institutional, agency oversight. On April 12, 2002, Mr. Chairman, you wrote a letter to interested parties (including myself) requesting thoughts and opinions about the CARP structure process. As a base-line starting point for examination, you further requested a review of a Re- port of the Register of Copyrights on options to improve the process. See Options to Improve Copyright Royalty Rate Setting and Distribution Decision-Making, A Re- port of the Register of Copyrights (February 23, 1998) ("Register's Report"). You, however, specified that a Register's Report is only a template and that comments need not be restricted to the Report. My statement follows the approach you described in your letter. I appear on my own behalf but I am also authorized to state that my views comport with those of Broadcast Music„ Inc. ("BMI"), for which I serve as Washington„ D.C. counsel. In my capacity as an attorney representing BMI, which commenced in 1994, I am experienced in and familiar with the CARP structure and process. I am also familiar with the CARP's predecessor, the Copyright Royalty Tribunal ("CRT"). From 1978 to the present,, the U.S. performing right organizations (BMI, the American Society of Composers, Authors and Publishers ("ASCAP") and SESAC, Inc. ("SESAC"') I;hereinafter "PROs"]) have been active participants in rate and distribution proceedings, first before the CRT and then the ad hoc CARP system that is utilized today. Annually, in the past„ the PROs have participated as claimants to cable, satellite and DART royalty funds and, whenever necessary, participate in distribution proceedings, In the past, they have participated in rate-setting proceedings for cable, satellite, non-commercial educational broadcasting, and jukebox royalties. While the PROs have a successful history of settling compulsory license matters prior to litigation, they have occasionally been obliged to litigate distribution and rate controversies. The PROs have experienced three recent CARP royalty- distribution controversies, two in DART and one in cable (within the music category) regarding individual claimants, one section 118 rate-adjustment proceeding between BMI and ASCAP, acting individually, and the public broadcasting industry (the first after twenty years of successful settlements), and another rate-adjustment proceeding between copyright owners and satellite carriers. For the record, I was a counsel to this Subcommittee for nearly thirteen years. I served as Counsel from 1977 to 1981, Chief Counsel from 1983 until 1991 and Spe- cial Counsel from 1991 to 1992. I also previously served as a prosecutor (in the At- torney General's Honors Program) in the U.S. Department of Justice and as Deputy Legislative Affairs Officer in the Administrative Office of the U.S. Courts. I left the committee staff in early 1992 to become Director of the National Commission on Ju- dicial Discipline and Removal ("National Commission") where I served for 18 months; I recently testified before the Subcommittee on "the operations of federal judicial misconduct and recusal statutes." Currently, I am a partner in the law firm of Drinker Biddle 8: Reath LLP where I am the founding chair of the firm's intellectual property group. I am also an adjunct faculty member at two local-area law schools: Catholic University's Columbus School of Law (where I teach legislation) and George Mason University School of Law (where I teach copyright). Except for BMI's interests, my firm has no other client interests in the matters before the Sub- committee this morning. As an alumnus of this Subcommittee, I follow its activities very closely. Mr. Chair- man, and Mr. Ranking Minority Member, your captaincy of the Subcommittee has been sterling, as has been the leadership of and commitment to vigorous oversight by Chairman Sensenbrenner and the full Committee's Ranking Minority Member, Mr. Conyers. I would be remiss if I did not commend your able staffs. I. BACKGROUND Throughout its history, my client, BMI, has participated willingly in facilitating congressional oversight, recognizing that Congress needs to monitor not only how particular copyright laws are being implemented but how government programs are being administered as well. Effective oversight is very useful for government officials responsible for administering programs (such as the Register of Copyrights) because it gives them an opportunity to explain and justify their decisions and prior- ities; it also gives them the chance to hear the views, including criticisms, of the 10

public and congressional committees, which control budgets and can rewrite legislation. I am honored to sit at the witness table with the Register of Copyrights, Marybeth Peters. I know she agrees with the importance of oversight. As we shall see, she and her competent and committed lawyers and staff in the General Counsel's office have a difficult task administering a flawed statute. Furthermore, the role of the Office and that of the CARPs, and the Librarian have in recent years become increasingly more difficult. Congress has created new compulsory licenses in complicated and complex areas, delegating issues of first impression to the Office and the CARPs. As manifested in the recent webcasting proceeding, the responsibility of an initial rate-setting can be much more onerous than a rate adjustment of a previously-established rate. It is my position that conditions and circumstances relating to the CARP structure and process indicate the need for legislative action. A mere oversight hearing will identify problems, but not resolve them. Some history is in order. In 1993, Congress replaced the CRT, an independent agency with Presidential-appointed commissioners situated within the legislative branch that was created in the Copyright Revision Act of 1976, with ad hoc CARPs within the Library of Congress. See the Copyright Royalty Tribunal Reform Act of 1993, Pub. L. No. 103— 198, 107 Stat. 2304 (1993). Today, whenever there is a controversy on the distribution of compulsory copyright royalties or the adjustment of copyright royalty rates, the Librarian is authorized to convene a three-person CARP. Administrative responsibilities prior to the declaration of a controversy are assigned to the Copyright Office. I believe that this is the first oversight hearing conducted by the Committee specifically on the operations of the CARP structure and process. In the legislative history that accompanies the Act, this Committee evidenced the view that "ad hoc arbitration panels are better suited to handle the functions of the Tribunal.... Testimony of witnesses before both Houses on the proposal supports this conclusion." H.R. Rep. No. 103—286, at 11 (1993). In light of clear statutory text and consistent legislative history, one court found that the CARP system was created by Congress and implemented by the Office to facilitate "expeditious and informal settlement of claims at the administrative level and to discourage resort to formal, protracted and costly judicial processes of resolving disputes." National Ass'n ofBroadcasters v. Librarian of Congress, 146 F. 3d 907, 920 (D.C. Cir. 1998). Unfortunately, the CARP system has not fulfilled the policy promises of informal, expeditious and inexpensive dispute resolution of royalty controversies. The Copy- right Office itself, which sits at the vortex of the CARP system, recognizes that the system has suffered from "major problems." See Register's Report at 11. In retrospect, it was probably an error for the Congress to have abolished the CRT rather than modifying or altering it. Few dispute that the CARP system has proved to be just the opposite: that is, time-consuming, formal and very expensive. It has not promoted stability and predictability of results. The CARP system does not discourage resort to the costly, formal and protracted process. Settlements are often hard to achieve. The system should be reformed by Congress, sooner rather than later. Key members of the legislative branch seem to agree. Mr. Chairman, in 1998, shortly after issuance of the Register's Report, you introduced legislation to replace the ad hoc CARP system with a permanent Copyright Royalty Adjudication Board composed of full-time chief administrative copyright judges, and such part-time administrative copyright judges as the Librarian upon the recommendation of the Register, finds necessary. See H.R. 3210, 105th Cong., 2d Sess. (1998). Companion legislation was introduced in the Senate by Senators Hatch, Leahy, and Kohl. See S. 1720, 105th Cong., 2d Sess. (1998). Mr. Chairman, on April 12, 2002, you took the further step (described above) of writing a letter to interested parties soliciting views about the CARP structure and process. In my view, any legislative reforms should minimally incorporate: (1) a structure to promote the stability and predictability of results; (2) procedures for encouraging settlement of small claims and a mechanism for streamlining the resolution of small claims; and (3) cost-reduction measures.

II. CONGRESS SHOULD CREATE A STRUCTURE TO PROMOTE THE STABILITY AND PREDICTABILITY OF RESULTS. The nature of ad hoc arbitration panels inevitably leads to a lack of stability in decision-making and a decrease in the predictability of results, thereby eroding confidence in the process. What to do to reform the process is a difficult problem. Tough choices must be made and constitutional questions about the location (what branch of government) of any new structure must be considered. Any reform should elimi- 11

nate the ad hoc nature of the process either through a standing cadre of administrative copyright judges on salary equipped with a professional staff, a return to the CRT model (with Presidential appointments and advice and consent of the Senate), or appointment of a permanent, salaried administrative copyright judge (with part- time, salaried colleagues) supported by a professional staff. Continuity among decision-makers and a certain degree of institutional memory are essential. As a general proposition, decision-makers should have expertise (or the ability to acquire knowledge through staff) in applicable law, regulations, precedents and subject matter, and in conducting adjudicatory proceedings. I prefer a replacement of the CARP system. But if the current system is maintained, the pool of potential CARP members should be — expanded. And if the pool is expanded particularly to include qualified non-lawyers—each party should be permitted a specified number of peremptory challenges (to be determined on a case- by-case basis prior to selection) to proposed panel members as is standard practice in other arbitral fora. Such a rule would reduce the potential for prejudice and continue to ensure that panels consist of qualified, impartial members, The Register's Report sets forth five options for reform, Notwithstanding whatever option is selected by the Congress, the Register recommends that the CARP system should include eleven features. See Register's Report at 11-12. I agree with some of these features, to wit: ~ the statutory requirement that CARP panelists have arbitration experience should be deleted; ~ the word "adjudicator" can be substituted for "arbitrator" wherever mentioned in the law; ~ individuals not associated with an arbitration association, but who meet the qualifications, should be permitted to put their own names into nomination; ~ the Office should be statutorily authorized to cap, by regulation, the billing rate of arbitrators„"and ~ authorize the assessment of CARP costs on any party that fails to negotiate a settlement in good faith (akin to Rule 68, Federal Rules of Civil Procedure). All of these items address the salutary goals of promoting stability, expeditious decision-making, and decreased costs. They, however, may not go far enough. For example, cost-caps on the billing rates of arbitrators would not, standing alone, can the overall costs of a proceeding. The Office's authority to cap costs should be broa~lened to cover the entire proceeding. Three of the Register's other recommended features are not objectionable: i Extend the current time limit from 180 days to 270 days per proceeding; ~ Extend the current time limit to review CARP decisions from 60 days to 90 days; and ~ Provide by law a procedure to petition the CARP for i'econsideration decision. of its Nevertheless, careful heed should be taken to avoid the unintended consequences of delaying expeditious decision-making and escalating costs. Stated c(ifferently, a minimalist, approach to CARP reform, even if the Register's features were implemented, would, in my opinion, still be doomed to failure. More radical surgery is required. That radical surgery should remedy two structural lems in the current statute. prob- First, the Copyright Office is placed in the schizophrenic situation of being the intake agency (a clerk of court, of sorts) and the appellate court (as advisor to the Librarian) for CARP decisions. Such dual responsibility is extremely rare in the United States and the Office clearly has struggled with balancing its two roles. For example, in fear of tainting future appellate decisions, the Office often bucks threshold questions to a CARP, refusing to decide them at the stage of the process when they should be decided. Congress should either eliminate the Office's intake role or remove its appellate responsibilities. Second, in the U.S. justice system, minimal standards of due process dictate one appeal of right, with a second discretionary appeal (as a safety check on the initial appeal). This was the practice under the CRT's statute, and it basically is the practice adopted by the caselaw of the D.C. Circuit (which is the appropriate circuit for judicial review of copyright arbitration royalty appeals). After determining the appellate role of the Librarian of Congress (and the advisory role of the Copyright Of- fice), this Committee should follow the justice-system standards that have been used over the years for the U.S. magistrate, bankruptcy court, and Article tems. I court sys- 12

III. CONGRESS SHOULD ENACT PROCEDURES FOR ENCOURAGING SETTLEMENT OF SMALL CLAIMS& AND A MECHANISM FOR STREAMLINING THE RESOLUTION OF SMALL CLAIMS. The statutory mandate prescribing allocation of CARP costs in a "distribution proceeding in proportion to the royalty funds awarded to each party" has had the unfortunate effect of allowing those with small claims to infiate their claims and force litigation at the expense of other parties. Abuses of the process have occurred and the Office has consistently found that it lacks authority either to prevent these abuses or to expedite decision-making. Arbitrator costs alone far exceed the amount- in-controversy. For example; ~ the costs of the arbitrators in the 1992—94 Digital Audio Recording Tech- nology ('DART") distribution proceeding, which resulted in an award of $ 11.03 to two individual claimants were more than $ 12,000 (more than one thousand times the amount-in-controversy); ~ the costs of the arbitrators in the 1995—98 DART distribution proceeding, which resulted in a total award of $6.06 to the same two individual claimants ($5.04 to one and $ 1.02 to the second) were in excess of $21,000 (almost three thousand times the amount-in-controversy); and ~ in the 1991 Cable Distribution Proceeding (Phase II), the arbitrators awarded $63.74 to an individual claimant, yet the costs of the arbitrators were more than five hundred times that amount. To make it worse from a cost-perspective, all of these matters, after final disposition by the Librarian of Congress, were appealed to the U.S. Court of Appeals for the District of Columbia. The appeal in the second matter was withdrawn; the appeals in the first and third matters necessitated the preparation of a record on appeal and the submission of briefs by the U.S. Department of Justice and the parties. Both appeals were summarily denied. One went even farther because it was sub- 'ected to a petition for certiorari in the U.S. Supreme Court and a petition for re- hearing before the Court. And, all three proceedings were "paper" proceedings before the respective CARPs designed to reduce arbitrator costs. The PROs were not the only institutional parties forced to bear these costs. Additionally, it should be noted that said costs do not include outside attorneys'ees, in-house attorneys'ees and staff time, Copyright Office cost deductions from the funds and costs to the U.S. De- partment of Justice. In the two DART proceedings, the PROs were part of a "settling party" team that also included the National Music Publishers'ssociation, the Songwriters Guild of America, the Gospel Music Coalition, and Copyright Manage- ment, Inc., with costs borne by their respective individual members and affiliates. In the cable proceeding, the PROs acted together. When transaction costs so greatly exceed the amount-in-controversy, the CARP system is not an efficient and effective dispute-resolution device. In all three proceedings, the individuals rejected repeated attempts to settle for reasonable amounts. Neither the Office nor the arbitrators paid more than lipservice to settlement—neither took an active role (similar to that performed by U.S. district court judges or U.S. magistrate judges) to encourage settlements. Claimants with small claims have been able to use existing CARP rules to prolong CARP proceedings and derail settlements at virtually no cost to themselves, but at substantial cost to all other interested parties. In these circumstances, it is abundantly clear that the CARP system has not met the expectations of its congressional sponsors or the parties who are compelled to litigate their royalty distribution disputes within the confines of this system. Several of the reforms (paxticularly those related to small claims) discussed in the Register's Report would foster the goal of settling claims at the administrative level, minimizing costs and encouraging expeditious and efficient resolution of disputes. To achieve these goals, statutory changes are necessary. Otherwise, the Register would already have implemented the proposed changes as regulations. The Committee should consider three amendments to the Copyright Act to cure statutory defects and misuses of the rules, while at the same time giving due rec- ognition to the rights of those with small, albeit valid, claims to participate in CARP proceedings. The intent of these proposals is to create an incentive for all parties to engage in meaningful settlement discussions prior to commencement of CARP proceedings. The amendments are not designed to injure or threat unfairly small claimants. Specifically, I propose that there be: (1) a uniform filing fee (analogous to the filing fee for a federal civil action) for all claimants; (2) an offer of judgment mechanism analogous to Rule 68 of the Federal Rules of Civil Procedure applicable to small claims; and (3) the elimination of oral hearings in small claims proceedings. A. Establishment of a Filing Fee. I propose that all parties in a copyright arbitration royalty distribution or rate proceeding pay a filing fee at the time of filing a notice of intent to participate. The filing fee would be identical to that required for all litigants filing civil actions in federal district courts {currently 8150.00). See 28 U.S.C. g 1914. Because the filing fee wouM be pegged to a notice of intent to participate, a single fee would be paid for each notice filed. The Office now requires a single notice of intent for both Phase I and II proceedings with respect to cable and satellite distributions; therefore, only one filing fee would be ceeding. paid for each pro- Establishment of a filing fee wouM ensure that all parties share a base-level burden of the costs of the proceeding. The filing fee would'e paid before the commencement of a proceeding because such filing fee could very well exceed the ultimate amount of any award, as it would have in the case of the DART and cable ceedings discussed above. pro- Moreover, payment of a filing fee—which would be added to the relevant fund or subfund—could help defray the administrative costs incurred nection by the Office in con- with these proceedings. As stated above, the administrative costs of some proceedings are disproportionately high compared with the funds in controversy. A filing fee would result in a more reasonable relationship between administrative costs and the amount of the funds in controversy. Finally, payment of a reasonable filing fee all to by paities who file a notice of intent participate in a royalty distribution or rate adjustment proceeding would discourage the filing of frivolous claims and create an incentive for all parties, regardless of the size of their claims, to engage, early in This on, ineaningful settlement discussions. is particularly true with regard to those asserting small claims, who have little or no incentive to engage in significant settlement statute discussions under the current and CARP regulations. I would be happy to assist in the drafting process. B. Offers of Judgment to Small Claimants. An offer ofjudgment procedure—similar to that found in Rule 68 of the Federal Rules — settlements of Civil Procedure to encourage and to avoid protracted arbitration proceedings should be enacted. Such a procedure would apply only in small claims matters where the amount-in-controversy is $15,000 or less (per annual fund) and where the costs of the arbitration may well significantly exceed the ainount-in-controversy. Rule 68 has the force of statutory law, having been Court proposed by the U.S. Supreme and permitted to go into effect by the Congress. Application of its concepts to small claims in copyright arbitration distribution the proceedings would encourage settlement of small claims, and would promote the imposition of sanctions in instances of abuse. I would be pleased to assist in the drafting process. C. Elimination of Oro/ Hearings in Small Claims achieved Proceedings. Cost savings were in the three small claims proceedings mentioned above because they were all adjudicated on the basis of paper (not oral) were incurred proceedings. But unnecessary costs due to the current unwillingness of the Copyright Office (or lack of authority therein) to grant motions to proceed on decision paper documents, deferring this to an as yet unconstituted CARP where the motion is later subjected to oral arguments. Cases involving small claims {defined statutorily) should automatically be subjected to a paper proceeding. In matters where fact no genuine issues of material exist, the Office should be statutorily authorized to make a summary judgment decision based on facts not in dispute, applicable law and precedents, CARP is empanelled. before the

1V. CONGRESS SHOULD ENACT OTHER COST-REDUCTION MEASURES. Creation of a permanent structure with salaried government with a employees, along small claims process, would inevitably save substantial costs in comparison to the current CARP system with no decrease in the quality of decision-making. Ir- respective of whether Congress legislates these reforms, further cost-reduction measures can and shouM be adopted. Under current law, the Library of Congress and the Office costs may deduct reasonable from royalty fees deposited or collected. Such deductions are generally made before royalties are distributed to any copyright claimants. These Sec 17 U.S.C. f 802(h). deductions, which are significant, are not readily ascertainable by the uublic or to the responsible appropriation and authorization committees in the legislative branch. All that is known is that costs are paid by no copyright owners. The fact that costs are at taxpayer expense does not signify the absence of a need for fiscal accountability. As in the business world, the system would benefit from transparent, sound and consistent accounting practices. Questions could be answered: Are inquiries posed to the Copyright Office by the general public deducted Are from royalty funds? congressional inquiries? Are user costs increasing or decreasing'? Does the Office have a mechanism to prevent abuses on its time and resources? Let me make it clear that there is no evidence of waste or abuse in the Office*s accounting practices. 14

However, if Congress required that the Office (or any new entity) report cost-deduction information on an annual basis to the House and Senate Judiciary Committees, good government (including cost savings) would be served. Through your oversight power, the House and Senate Judiciary Committees could then monitor the costs being shouldered by authors and copyright owners. Without cost data, your ability to assess the functioning of the CARP process is hobbled. Copyright owners should know how costly is a system for which they pay. The administrative head of the CARP process should know how important are fiscal responsibilities. Moreover, as discussed above, to further reduce costs, the Office should be authorized to cap, by regulation, the billing rates of arbitrators. Currently, there is a wide disparity in these rates. The Office has not allowed arbitrators to be stricken on the basis of high-hourly rates. Authorization of a cap on rates, if responsibly implemented by the Office, could solve this problem. Because hourly rates (combined with the number of hours worked) could still be too costly, the Office should also be empowered to cap on a case-by-case basis the costs of an entire proceeding. V. ADMINISTRATIVE IMPROVEMENTS COULD BE IMPLEMENTED. Several improvements could ordinarily be made to the CARP process though amendments to Office rules and regulations. As a group for the past five years, copyright owners have made numerous proposals to the Office that have not been implemented. The Committee should either consider enactment of these proposals as legislative changes or strongly encourage the Office to take immediate regulatory action (within a designated time-period with a report back to the Congress): A. Public Records. Contemporaneous notice of CARP decisions through publication in the Federal Register is necessary. The Office has made laudable improvements to its website; these improvements should be expanded to the CARP process. B. Settlement Period. A formal settlement time-period (with adequate time and notice to the parties of the names and addresses or other participants) before the filing of written direct cases should be required. C. Precedential Rulings. Rulings of the Librarian and the CARPs are to be accorded precedential effect in subsequent proceedings. The Office should establish a repository readily available to the public electronically and at the Library of Con- gress, which collects all rulings of the Librarian and the CARPs. D. Summary Judgment Authority. If there are no genuine issues of material fact in dispute, the Office should be entitled to make a decision disposing of the matter prior to an adjudication by a CARP. A final word about judicial education. The Office should avail itself ofjudicial education programs that are provided to administrators and judges in the judicial branch of government, and ALJs in the executive branch. Admittedly, it is rare for legislative branch official to cross-fertilize with their counterparts in the other two branches. But, I am confident that a letter from Mr. of you, Chairman, to the Director the Federal Judicial Center, for example, would suffice to admit Copyright Office officials to appropriate educational sessions at the Center. CONCLUSION Mr. Chairman and Mr. Ranking Member, I again commend you for your leadership on intellectual property issues, and copyright law in general, including the process in which certain copyright royalties are distributed and royalty rates established. Despite initial optimism after the elimination of the CRT in 1993 and its replacement by the ad hoc CARPs, the new process has proven to be flawed and in dire need of legislative improvements. Two former Members of this Subcommittee, both of whom became judges (the Honorable Charles Wiggins and the Honorable George Danielson) often sounded the refrain: "If it ain't broke, don't fix it." I am sure that both would conclude, after these hearings, that the CARP system is broken. In sum, Congress should: ~ replace the ad hoc nature of the CARP process with a permanent panel of salaried administrative law judges supported by a professional staff; ~ create a small claims process; ~ further reduce costs and add fiscal accountability to the process; ~ promote various administrative improvements; and ~ continue to exercise vigorous oversight. I look forward to working with you on effectuating these improvements. Mr. COBLE. Mr. Garrett. 15 STATEMENT OF ROBERT A. GARRETT, ATTORNEY-AT-LAW AND PARTNER, ARNOLD R PORTER Mr. GAaaErr. Mr. Chairman, Members of the Subcommittee, let me thank you for inviting me to testify this afternoon. It is an honor to appear before you and the Subcommittee as well as to be on a panel with the Register of Copyrights and my colleagues. Let me summarize my statement with three points. First I believe that all parties here share common objectives, and they want a system that produces consistent results, they want a system that produces credible results, but I believe most importantly they also want a system that produces results at an affordable cost. This is a concern that everyone shares regardless of whether it is a copyright owner or a copyright user, a small party or a large party. The existing system, I believe, is too costly. It is a system that is not affordable for all parties. As you consider the different options and different alternatives before you, I ask that you put foremost in your consideration issues of cost, trying to make this process one that is more affordable, one that is less costly to all of the participants. Secondly, Mr. Chairman, you have wisely entitled these hearings as CARP structure and process. I believe the terms "structure" and "process" encompass the principal issues that are before you. But in my view, the most important issues here are those that relate to structure and not to process, and the changes that should be made here are changes that go to process and not to structure. When these issues have arisen in the past, the primary focus has been on structure and trying to determine which decisionmaking body is the best and most suited for resolving copyright royalty allocations or copyright royalty ratemaking. The thought is that if you simply get the right body, the right decisionmaking body, that the problems are going to go away, and I don't believe that that is the case, Mr. Chairman. I believe that the problems here, particularly the problems of cost, are ones that relate more to process. I believe that your specific focus here should be on trying to improve that process. Thirdly, there are several different process issues that I believe should be addressed. My written statement highlights two of them, two that I consider to be the most important at least. These are the issues that concern the system of evidentiary hearings as well as discovery before the existing CARPs. I think without a doubt the two principal cost concerns, the two principal costs of the current system, are the evidentiary hearings and discovery. I believe that one should either eliminate or severely restrict the scope of the evidentiary hearings. They are not necessary, they are very costly, and I don't think that they produce markedly different results from a paper proceeding. It is frequently done by administrative agencies in the United States using a paper record, and I would recommend that example as well here, With respect to discovery, I believe that that, too, should be eliminated. We have a very different form of discovery in the CARP proceedings, the hybrid form, and it is not the Federal Rules of Civil Procedure type of discovery. It is a limited form of discovery, which is nevertheless one that is very costly, one that breeds uncertainty, and I think that the results of the cases, the results of 16 the different proceedings before the CARPs, would not be materi- ally different if one did eliminate discovery. Let me just say in conclusion, Mr. Chairman, that there are a number of difficult issues here. I believe that you have done exactly the right thing by asking those who are affected by this process to give their views. I know that my colleagues have views that some— that they probably share generally, and some have different views. And I look forward to working with you and the Subcommittee in resolving these different issues. Mr. COBLE. Thank you, Mr. Garrett. [The prepared statement of Mr. Garrett follows:]

PREPARED STATEMENT OF ROBERT ALAN GARRETT Mr. Chairman and members of the Subcommittee, my name is Bob Garrett and I am a partner in the law firm of Arnold & Porter in Washington, D.C. Thank you for inviting me to testify as part of your oversight hearing on "The CARP (Copyright Arbitration Royalty Panel) Structure and Process." During the past twenty-five years, I have represented professional and collegiate sports interests and the recording industry in several proceedings before CARPs and their predecessor, the Copy- right Royalty Tribunal ("CRT"). However, I am not testifying today on behalf of these clients. The views I express are my own and do not necessarily reflect the views of any other party. I am here to offer my perspective, based upon my experience, concerning the CARP structure and process. Before I do so, I believe it is useful to discuss briefly (1) the nature and history of the CARP system; and (2) the policy objectives that you may wish to consider in assessing that system. 1. NATURE AND HISTORY OF THE CARP SYSTEM Twenty years ago, in November of 1982, the CRT issued a decision in which it set the royalty rate that cable systems must pay when they retransmit certain copyrighted television programming. Ted Turner of Turner Broadcasting, a vocal critic of the CRT and its rate decision, testified before Congress that "this CRT decision puts us out of business" because the rate is too high; "they have knocked us out, and I didn't even go talk to them because I didn't figure that they would put us out." Cable Copyright and Signal Carriage Act of 1982: Joint Hearing on H.R. 5949 Before the Comm. on Commerce, Science, and Transp. and the Comm. on the Judici- ary, 97th Cong. 114 (1982). Senator Long of Louisiana interjected, "Please excuse me, but who is this CRT?" Mr. Turner responded: That is a good question.... I had never met anybody on it. It is a group. I knew they existed, but I didn't know they did anything.... [Then they released their decision] on my 44th birthday, 2 'eeks ago, and I was in shock. Id. at 114—15. More recently, the question being asked is, "Who is this CARP?" The simple answer is that nine years ago, in the Copyright Royalty Tribunal Reform Act of 1993, Congress chose to replace the CRT with a system that relies upon multiple ad hoc panels of arbitrators called "CARPs"—the acronym for "Copyright Arbitration Roy- alty Panels." The purpose of CARPs is twofold: (1) to determine royalty rates and terms for the use of copyrighted works pursuant to compulsory licenses in Sections 111, 112, 114, 115, 116, 118 and 119 of the Copyright Act; and (2) to allocate among copyright owners compulsory licensing royalties collected pursuant to Sections 111, 116, 119 and 1003 of the Copyright Act. As you know, Mr. Chairman, these compulsory or "statutory" licensing provisions generally compel copyright owners to license certain uses of their works to different parties who pay the prescribed royalty and comply with other statutory and regulatory conditions. Each CARP consists of three private attorneys who are nominated by professional arbitration associations and appointed by the Librarian of Congress after consultation with the Register of Copyrights and input from the affected parties. A CARP normally conducts a trial-like evidentiary hearing in which interested parties present evidence and argument and cross-examine witnesses. These hearings can be quite extensive; for example, the most recent CARP, that involving the royalty to be paid by webcasters when they transmit sound recordings over the Internet, consumed 40 days of evidentiary hearings and generated almost 15,000 pages of transcript as well as thousands of additional pages of written testimony and exhibits. Following the evidentiary hearings, the CARP issues a written report in which it 17 recommends, based upon the record before it and relevant precedent, a royalty rate or royalty allocation. The Register of Copyrights reviews the CARP's report and makes a recommendation as to whether the Librarian of Congress should adopt or should modify that report. If the Librarian rejects the CARP report in whole or in part, he must reach his own decision with the advice of the Register. Parties may seek judicial review of the Librarian's decision in the U.S. Court of Appeals for the District of Columbia Circuit. See generally 17 U.S.C. 8 801 & 802. As long as compulsory licenses exist, it will be necessary for either Congress or some other body, like a CARP, to determine the amount of compulsory licensing royalties that copyright owners are entitled to receive. There is, of course, nothing novel about this concept. The 1710 Statute of Anne—from which copyright law in the United States is a direct descendant—authorized several different government officials, including the Archbishop of Canterbury and the Lord Keeper of the Great Seal, to resolve disputes over whether the cost of a particular book was "too high and unreasonable" and to set prices that "according to the best of their judgments ... shall seem just and reasonable." 8 Anne C. 19, $ 4 (1710), reprinted in 8 Nimmer on Copyright, App. 7-7 to 7—9 (2002). Likewise, the Great State of North Carolina, following the Articles of Confederation, empowered local courts to determine the price of copyrighted books, maps and charts—in cases where the author or publisher "set an unreasonable price on the same, regard being had to the probable labour, expence, and risk of such author and publisher." Laws of the State of North Carolina, ch. 26, sec. II (1785), reprinted in 8 Nimmer on Copyright, App. 7- 33 (2002). Sce generally Korman & Koenigsberg, The First Proceeding Before the Copyright Royalty Tribunal: ASCAP and the Public Broadcasters, 1 Comm. & the Law 15, 17-18 (1979). The CARP system may thus be viewed as merely the most current mechanism by which government-set prices replace market-set prices for the right to use intellectual property in the United States. 2. POLICY OBJECTIVES Over the years there has been considerable debate concerning the appropriate structure and process for setting copyright royalty rates and allocating copyright royalties. As discussed below, that debate has produced a number of different ideas as to the most appropriate structure and process. It also has identified the principal policy objectives that the affected parties believe should be achieved in determining that structure and process. Briefly-stated, there are three such objectives—those that relate to Cost, to Consistency and to Credibility: ~ Cost—copyright owners and copyright users alike are understandably concerned about the costs of rate-setting and royalty allocation proceedings. These costs can be quite substantial. They take the form of, among other things, attorney fees, expert witness fees, consultant fees, arbitrator fees, Copyright Office costs, out-of-pocket expenses and time lost from running businesses and producing copyrighted works. These costs have the effect of both decreasing the compulsory licensing royalties that copyright owners receive and increasing the amounts that copyright users must pay for the compulsory license—a result that is inherently antithetical to a principal purpose of compulsory licensing, i.e., the reduction of transaction costs. The parties affected by compulsory licensing seek a system of ratemaking and royalty allocation that minimizes their costs as much as possible. ~ Consistency—the parties also seek a system that fosters predictability and continuity. It is generally accepted that voluntary settlements among affected parties to royalty disputes are preferable to having those disputes resolved through litigation and government intervention. Procedural and substantive consistency are necessary to provide the parties with the greatest possible degree of certainty in assessing litigation risks and considering prospects for settlement. Such consistency promotes settlement and reduces cost. ~ Credibility—the parties also seek a system with a decision-making process that they believe is legitimate; they want to feel that the decision-makers understand the issues involved in the cases being decided and that those cases are decided in a timely and professional manner. The objective here is to ensure that the system is not only fair and reasonable, but that the affected parties also perceive it as fair and reasonable. While there may be general agreement as to the principal policy objectives, the parties do not always agree on whether or to what extent particular structures or procedures achieve those objectives. Moreover, it is not possible to achieve all these objectives equally in determining the most appropriate structure and process of copyright rate-setting and royalty allocation. When choosing among particular structural and procedural alternatives, it may be necessary to make trade-offs. A particular procedure, such as requiring full-blown federal court discovery, may enhance at least perceptions as to the credibility of the decision-making process. But that procedure may also come at a financial cost and a time-delay that is unacceptable to all or some of the parties. Each party, and ultimately the Copyright Office and Congress, must prioritize the above objectives in assessing each oF the relevant structural and process options.

3. STRUCTURAL OPTIONS When Parliament enacted the Statute of Anne in 1710, it apparently had a difficult time deciding who should be responsible for resolving disputes over the price of copyrighted books. Accordingly, it gave that responsibility to several different persons. Individuals who thought the market price was too high could choose to seek relief (1) in a judicial forum (from the Chancellor and the Lord Chief Justices); (2) in an administrative or quasi-administrative forum (from the Lord Chief Baron of the Exchequer, the Archbishop of Canterbury and the Lord Keeper of the Great Seal of Britain); or (3) from private bodies with official sanction (Vice-Chancellors of the Universities). Sce 8 Anne C. 19, (4 (1710}; Korman &k Koenigsberg, supra at 18. There also has been no shortage of ideas here in the United States as to the most appropriate structure for setting compulsory licensing royalty rates and allocating compulsory licensing royalties. a. Proposals Leading to CRT Creation The CRT had its origins in a 1969 Senate bill that coinprehensively revised the Copyright Act of 1909 and provided for various compulsory licenses. That bill en- trusted royalty ratemaking and distribution responsibilities to a body it named the "Copyright Royalty Tribunal." The Tribunal, as envisioned by the Senate bill, was very different than the CRT that eventually emerged in the Copyright Act of 1976. Under the Senate version, the Tribunal consisted of ad hoc arbitration panels created by the Register of Copyrights from lists of arbitrators supplied by the American Arbitration Association or similar organizations—in short, a structure similar to the current CARP system. The Senate ultimately approved this structure, along with provisions that subjected Tribunal rate decisions to Congressional veto and limited judicial review of Tribunal decisions to cases of corruption, fraud, partiality or other prejudicial misconduct. See CRT Reform and Compulsory Licenses, 1985: Hearings on H.R. 2752 and H.R. 2784 Before the Subcomm. on Courts, Civil Liberties, and the Admin. of Justice of the House Comm. on the Judiciary, 99th Cong. 84—85 (1985) (Statement of Donald Curran, Associate Librarian of Congress and Acting Register of Copyrights) ("Curran Statement"}. The House changed that structure, in part out of concerns over whether it was constitutional for an employee in the Legislative Branch, the Register, to appoint Tribunal members who perform executive branch functions. That concern was heightened by the then recent decision in Buckley v. Valeo, 424 U.S. 1 (1976). There the Supreme Court held that persons exercising executive branch functions must be appointed in accordance with Article H, Section 2, Clause 2 of the Constitution, which requires appointments by the President, the courts or "heads of departments." The copyright revision bill that the House passed in 1976 established a permanent "Copyright Royalty Cominission," consisting of three members appointed by the President for staggered terms of five years. The House bill also expanded judicial review, and it eliminated the legislative veto of the Commission's rate determinations. According to the House Report accompanying the copyright revision legislation, such determinations "were not appropriate subjects for regular review by Con- gress." H. Rep. No. 94-1476 at 179 (1976). The conferees generally acceded to the House version—except that they renamed the Commission the "Copyright Royalty Tribunal;" and they expanded the number of commissioners to five appointed by the President (and confirmed by the Senate) for staggered seven-year terms. (The number of CRT commissioners was reduced to three in 1990). The CRT became an independent agency in the legislative branch that received administrative support &om the Library of Congress but had its decisions reviewed directly by the federal court of appeals. Sce Conf. Rep. No. 94-1733 at 81—82 (1976). b. Proposals Leading to CRT Abolition Although Congress considered significantly different structures for royalty rate setting and royalty allocation before creating the CRT in the 1976 Act, the affected parties apparently paid little attention to this issue. Tom Brennan, the first CRT Chairman (who also served as chief counsel to the Senate Subcommittee on Patents, Trademarks and Copyrights during its consideration of that, legislation) observed: 19

Seldom has an entirely new agency of the federal government been created with so little study, and such limited input and analysis by the private interests most directly involved. Brennan, The Copyright Royalty Tribunal—An American Perspective, 34 J. Copy- right Soc'y 148 (1986). In the years following its creation, however, the CRT received considerably more attention. Upset by a 1982 CRT rate decision, the cable industry called for the abolition of the CRT. Certain CRT commissioners, as they were leaving the Tribunal, also called for its abolition. Concerns were expressed over whether the workload required several full-time commissioners and whether political appointees, particularly those with no copyright or communications industry experience, were best qualified for making decisions as to copyright rate determinations and royalty distributions. During the 1980's and early 1990's Congress considered a host of different and generally conflicting proposals as to the structure that should be established for royalty rate-setting and distribution. These proposals included the following- 'liminate the compulsory licenses and allow market negotiations, thereby ob- viating the need for any ratesetting and royalty allocation mechanism; ~ Place the CRT in the Copyright Office; ~ Transfer the CRT's responsibilities to the Copyright Office; ~ Place the CRT in the Department of Commerce and vest authority to appoint Tribunal members in the Secretary of Commerce; ~ Place the CRT in a regulatory agency such as the FCC or FTC, which would assign fact-finding responsibilities to ALJs; ~ Vest authority to appoint CRT members in a federal court; ~ Reconstitute the CRT as an independent agency in the executive, legislative or judicial branch; ~ Reconstitute the CRT as a part-time commission of experts in communications or copyright law who oversee ad hoc arbitration panels; ~ Transfer the CRT's responsibilities to a federal court or to a newly created copyright court, which could make use of special masters (similar to the ASCAP and BMI rate courts); ~ Adopt a system of private arbitration (similar to that in some European countries) where collective bargaining units would have the authority to bind all affected parties, with judicial or administrative review or compulsory arbitration only where the bargaining units are unable to agree; ~ Implement a 1981 GAO suggestion of making CRT membership part-time, with Presidentially-appointed members meeting at the call of the Register of Copyrights; ~ Retain the CRT with only one full-time commissioner and two part-time commissioners who would utilize ALJs to conduct fact-finding and to render initial decisions; ~ Set royalty rates in the law with an objective self-adjusting mechanism; ~ Require private arbitration under the rules of the American Arbitration Asso- ciation before arbitrators selected for a term of three years; and ~ Transfer the CRT's responsibilities to panels of ALJs, appointed for terms of several years, that would operate within the Copyright Office. In 1993 Congress concluded that there was insufficient work to justify a full-time agency. See H.R. Rep. No. 103—286, at 9 (1993). It thus enacted the Copyright Roy- alty Tribunal Reform Act of 1993, which abolished the CRT and replaced it with the CARP system. As discussed above, the CARP system is comparable to the one that the Senate had originally approved during its consideration of the Copyright Act of 1976. One major difference was that the 1993 law contemplated review of CARP decisions by the Register and Librarian prior to judicial review, while the Senate version, as also noted above, provided for legislative veto and limited judicial review. c. Proposals For CARP Reform The debate over the proper structure for royalty rate-setting and distribution did not end with the Copyright Royalty Tribunal Reform Act of 1993. In 1996 Senator Hatch introduced a bill that would have replaced the CARPs with single ALJs in a newly-created U.S. Intellectual Property Organization ("USIPO"). The USIPO would have consisted of the Copyright Office and the Patent and Trademark Office. 20

Under Senator Hatch's bill, an ALJ's decision could be appealed to the Commis- sioner of the USIPO and then to the U.S. Court of Appeals for the Federal Circuit. In mid-1997 a CARP recommended a royalty rate that the satellite carrier industry considered too high. Accordingly, the satellite carriers urged Congress to reform the CARP process. In early 1998 the Copyright Office presented Congress with five options for doing so. Those options, which were comparable to some of the options that had been discussed during the debates over CRT reform, were: (1) Retain the CARPs but make certain improvements in the CARP system; (2) Replace the CARPs with ALJs; (3) Replace the CARPs with non-ALJ presiding judges; replace the CARPs with a Copyright Royalty Adjudication Board ("CRAB"); and replace the CARPs with a new, independent regulatory agency. See U.S. Copyright Office, Options to Improve Copyright Royalty Rate Setting And Distribution Decision-Making (Feb. 23, 1998) ("1998 Register Report"); Hearing Be- fore the Subcomm. On Courts and Intellectual Property of the House Comm. on the Judiciary, 105th Cong. 14 (1998) (Prepared Statement of Hon. Marybeth Peters, Register of Copyrights) ("1998 Register Statement"). The Register concluded that the CARP system (a) is too expensive because of the high costs of the arbitrators; (b) lacks stability and predictability of results; and (c) places a burden on the Copyright Office and the Library of Congress. 1998 Register Report at ii. "Our experience with this system over the past few years," said the Register, "has persuaded us that it is burdensome, costly, and inefficient." 1998 Reg- ister Statement at 14. The Register thus recommended that Congress replace the CARPs with CRABs. The CRAB approach was embodied in your bill, Mr. Chairman, HR 3210, which you introduced on February 12, 1998; that bill was reported favorably by this Sub- committee on March 18, 1998. HR 3210 would have established a Copyright Royalty Adjudication Board ("CRAB") within the Copyright Office. The CRAB would consist of one full-time chief administrative copyright judge ("ACJ") and two to four part- time ACJs, all of whom would be appointed by the Librarian upon the recommendation of the Register. The chief ACJ, who would be appointed for a term of five years, would be an attorney with experience in handling administrative hearings or court trials and demonstrated knowledge of copyright law. The other ACJs, who would be appointed for different terms of up to five years, would need expertise in the business and economics of industries affected by the CRAB. Under HR 3210, the CRABs would conduct proceedings in accordance with rules to be adopted by the Librarian upon the recommendation of the Register and in consultation with the CRAB. The final decisions of the CRAB would be subject to review by the U.S. Court of Appeals for the Federal Circuit, rather than (as is the case with the CARPs) review by the Register, Librarian and U.S. Court of Appeals for the District of Columbia Circuit. The Register, however, would have the right to submit her position to the CRAB on any matter before the CRAB, as well as to seek reconsideration of any initial decision rendered by the CRAB. 4. PROCESS PROPOSALS As the above suggests, there have been a number of thoughtful and creative proposals over the years concerning the most appropriate structure for copyright royalty ratemaking and allocation. Each of the proposed structures has its advantages and disadvantages, as well as its supporters and detractors. While reasonable arguments can be made for choosing one structure over another, I do not believe that simply changing the structure, once again, will effectively deal with the problems that exist in the current CARP system; nor will such a change achieve the objectives that the affected parties wish to achieve in a system of copyright royalty ratemaking and allocation. The real focus, I believe, should be on process rather than structure. Simply moving from CARPs to CRABs or some other structure will not address the very serious cost issues that exist under either system; another move to an entirely new structure (nine years after abandoning the original structure) will also generate new problems of consistency and credibility. Several of the copyright owner counsel who regularly practice before CARPs have begun discussion on how best to improve the CARP process. What has emerged from these discussions to date is that there are a variety of process issues that must be addressed. The issues involve matters such as the implementation of settlements negotiated by parties to proceedings, the treatment of confidential material in CARP proceedings, the role of the Copyright Office in providing continuity among various CARP proceedings, time limits, qualifications of decision-makers, small claims, frivo- 21 ious claims and offers of judgment. I would like to highlight two additional issues that I believe are among the most important issues to be addressed. ~ Evidentiary Hearings. The single largest cost to clients involved in a CARP proceeding is, typically, the evidentiary hearing. As noted above, the most recent CAPRP proceeding involved 40 days of adversarial evidentiary hearings and generated almost 15,000 pages of transcript; while the issues in that case were particularly complex, the likelihood is that future royalty ratemaking and distribution proceedings also will require the significant time commitments associated with evidentiary hearings. The amount of time that must be devoted to preparing for, participating in and analyzing (for purposes of briefing) such evidentiary hearings has been and likely will continue to be enormous. It is my personal view that serious consideration must now be given either to eliminating these hearings entirely or to permitting them only in the exceptional case where good cause is shown. I further believe that the results of the copyright royalty ratemaking and allocation proceedings would not be markedly different if they were resolved entirely or primarily on the basis of written submissions. There are alternative measures that could achieve some cost savings without eliminating evidentiary hearings altogether. For instance, arbitrators could request limited evidentiary hearings solely on issues or witness testimony that they identify after review of the written cases„or argument from counsel on a limited set of issues. Evidentiary hearings could also be confined to direct cases alone; under the current system, evidentiary hearings are conducted on rebuttal cases as well. In addition, hearing time could be reduced by eliminating oral direct testimony and only allowing cross-examination of all witnesses. While each of these proposals, if adopted, would help reduce costs and should be considered, they would not be as cost effective as eliminating evidentiary hearings altogether. ~ Discovery. Discovery is another major cost of participation in CARP proceedings. We currently have a hybrid system that may be the worst of all worlds, On the one hand„ the rules do not provide for the type and breadth of discovery normally permitted in federal civil litigation. See H.R. Rep. No. 108-286, at 18 (1998) (noting Committee's contemplation that CARPs would not strictly adhere to the Federal Rules of Civil Procedure or Evidence). There are no depositions or interrogatories and the parties are entitled only to documents "underlying" particular statements made in written testimony rather than all relevant documentation. Moreover, given the existing timetables for dealing with discovery requests, there is very limited opportunity to make productive use out of the discovery that is available. These limitations are designed to hold down costs and to expedite the proceedings. On the other hand, the Copyiight Office has gradually expanded its view of underlying documents and thus the scope of discovery. Even where the Copyright Of- fice denies a discovery request, a CARP (which may consist of arbitrators more accustomed to the rules prevailing in federal civil court litigation) can effectively reverse that ruling and order the production of documents. While the CARPs (like the Copyright Office) have no subpoena authority, they do have the power to strike and to weigh testimony; thus, it is rare that parties do not comply with CARP orders directing additional discovery—although the CARP may have a more difficult time obtaining information from third parties. The result is that the nature of discovery in CARP proceedings has become increasingly more uncertain and with that uncertainty has come increasing costs. In my view, this hybrid system is becoming much too costly and uncertain, and serious consideration should be given to eliminating discovery altogether. As an alternative to the current system, I believe the parties should be permitted to choose how much underlying documentation should accompany (or be produced in connection with) their written testimony, and the amount of support provided for the statements in the testimony would go to the weight afforded that testimony. If a party chooses not to provide documentation plainly relevant to particular testimony, less weight or perhaps no weight would be given to the assertions made in that testimony; conversely, the more "back-up" that is provided for particular testimony, the greater the weight that would be accorded that testimony. To be sure, replacing the formal hybrid discovery process that currently exists with a voluntary process with incentives for full disclosure would be a significant step—and one that may be viewed as undermining to some degree the credibility of CARP proceedings. But the Government already renders major decisions, producing significant economic and personal consequences, without the benefit of the type of discovery available under the current Copyright Office/CARP rules. On balance, I do not believe that any added benefits of such discovery warrant the costs and uncertainties associated with it. My colleagues who practice before the CARPs will surely have their own views concerning the need for evidentiary hearings and discovery. I urge you to consider those views as well as the views that we all have concerning the other process issues. My hope is that we can reach a consensus as to how these issues should best be resolved because it is in the best interests of all of us and all of our clients to do So.

CONCLUSION Seventeen years ago, during the debates on CRT reform, the then-Associate Li- brarian of Congress and Acting Register of Copyrights, Donald Curran, aptly observed: "Because the compulsory licenses represent a difficult compromise between copyright owners and copyright users, it is doubtful that any administrative body can make all parties happy." Curran Statement at 88 n. 11. I believe that observation holds true today as well. Regardless of which body you choose to decide compulsory licensing rate and allocation issues, it is doubtful that that body will make all parties happy; indeed, the nature of the system is such that all parties will generally be unhappy. I do not believe that the overriding objectives of cost, consistency and credibility will be well-served if the structure of the decision-making body is changed each time that parties express disappointment with a particular result. At the same time, I believe it is important to continually focus on ways to improve the process of royalty rate-setting and allocation—in particular, to find ways to reduce the substantial costs of this process. Mr. Chairman and members of the Subcommittee, thank you for your time and attention. I look forward to providing you with whatever assistance I can in addressing these difficult issues. Mr. CoBI,E. Mr. Rich. STATEMENT OF R. BRUCE RICH, ATTORNEY-AT-LAW, WEIL, GOTSHAL 4 MANGES, LLP Mr. RICH. Thank you, Mr. Chairman, Mr. Ranking Member, Members of the Subcommittee. Thank you for the opportunity to testify before you today. I appear in my capacity as a partner in the law firm of Weil, Gotshal k Manges LLP, two of whose principal offices are located New York City and Washington, D.C. For more than two decades my firm and I have represented a diverse array of media clients, each of whoin are significant users of copyrighted music and work through the thicket of music license issues that present themselves in securing necessary copyright rights from the music performing rights organizations, ASCAP, BMI, as well as from the recording industry. I have litigated so-called rate court cases under the ASCAP and BMI consent decrees and served as counsel for a variety of media entities in two CARP rate adjustment proceedings, including the most recent Webcast proceeding. I should make clear that the views I express today, while shaped by my experience in representing clients in these various areas, are my own and do not necessarily reflect those of my clients. I share the concerns expressed by each of the other witnesses today that despite the efforts of the Members of this Subcommittee and of the Copyright Office to create a CARP process that facili- tates informal, expeditious, inexpensive, but also fair dispute resolution, the current CARP structure suffers from serious shortcomings which have had quite the opposite effect. In particular I agree with the views expressed by Mr. Remington in his written testimony that the CARP structure is in need of radical surgery, and the goals expressed, although not the recommendations proposed, by Mr. Garrett, that any CARP reform must seek to reduce costs, foster consistency and increase credibility of the decisions. My written testimony identifies seven procedural issues which I urge the Subcommittee and the Copyright Office to address. First, at least in rate adjustment cases, the overly formalistic rules per- 23 taining to case development and presentation need reform. In particular, parties should be entitled to conduct meaningful discovery, subject to supervision, to prevent abuse prior to having to commit to their trial positions. Discovery and hearings should be conducted in accordance with the Federal Rules of Civil Procedure and the Federal Rules of Evidence. As things stand now, cases are underdiscovered and overtried. Moreover, the current lack of meaningful discovery coupled with the absence of more rigorous rules of evidence currently allow parties to withhold key impeaching documents, blockade access to critical evidence, and load the record instead with unsupportable and ordinarily inadmissible hearsay. Second, arbitrator fees and hearing costs have grown exorbitant. The $ 1.2 million in arbitrator fees charged in the recently concluded section 112, 114 Webcasting proceeding, coupled with the individual legal fees borne by each of the participants, made the process inordinately expensive and prevented many companies from participating in the proceedings. This had the not-incidental effect of forcing those companies which did participate to shoulder for entire industries standing to benefit—to shoulder the burden for entire industries standing to benefit from the statutory license. Third, the current system tends to generate decisions that neither build meaningfully on prior precedent, nor establish the kinds of first principles that typify decisions by Federal courts. This creates a lack of predictability that serves no one's interests. Fourth, case adjudicators must be afforded subpoena power. Fifth, the use of three adjudicators is unnecessary and inefficient. One highly skilled and trained jurist whose decision is appealable once to an appropriate reviewing court would be far superior. Sixth, the 180-day time limit for conducting CARP proceedings no matter what their complexity is unworkable. Deadlines are good, but they need to be sensible and extendable as necessary for good cause shown. Finally, the time between the section 112 and 114 CARP cycles should be extended from their current 2-year cycles where they overlap ludicrously to a period of 5 years. As explained more fully in my written testimony, I believe, consistent with Mr. Boucher, that, subject to a constitutional analysis, the identified problems can best be remedied by transferring the authority to conduct CARP ratemaking procedures to a Federal district court. Experience with the ASCAP, BMI rate courts in the Southern District of New York, which essentially entail the same search for a hypothetical willing buyer/willing seller rate as is the object of many CARP rate-setting proceedings, has shown that particularized copyright-oriented expertise, even if it did repose in the CARP panels, which it doesn', is not as important as other skill sets. Rate determinations aiming to replicate competitive market behavior more intensively require a facility with macroeconomics and the basic principles of antitrust, the ability to assimilate facts concerning multiple media marketplaces, the ability to evaluate complex statistical and economic data put forth by the parties'x- perts, and the ability to sift through and properly evaluate record evidence, including making judgments about issues such as witness 24 credibility. Each of these functions, I would suggest to the panel, is well suited to Federal judicial determination. In conclusion, I would like to thank the Subcommittee for its continued oversight of these important matters and offer whatever assistance you and the Copyright Office might deem appropriate in addressing these important issues. Mr. COBLE. Thank you, Mr. Rich. [The prepared statement of Mr. Rich follows:]

PREPARED STATEMENT OF R. BRUGE RIGH Mr. Chairman, Members of the Subcommittee, thank you for the opportunity to testify before you today. I appear today in my capacity as a partner in the law firm of Weil, Gotshal & Manges LLP. Over the past 24 years, my Firm and I have represented a diverse array of broadcast and cable television, radio broadcasting, background music, new media and webcasting entities in their music license relation- ships with the music performing rights organizations and, more recently, with the recording industry. That representation has embraced antitrust counseling and litigation; the rendering of copyright advice; participation in individual and industrywide negotiations over license fees and terms; prosecution of so-called "rate court" cases under the auspices of the ASCAP and BMI government consent decrees; and serving as counsel for various clients in two CARP rate adjustment proceedings. That background has afforded me, as both an intellectual property and antitrust practitioner, with a broad perspective on the workings of the music licensing marketplace. Particularly in respect of performance rights licensing (whether of music works or sound recordings), I have become intimately familiar with the structure and degree of competitiveness of these music markets; the challenge facing large users of copyrighted material in procuring the necessary performance rights on fair, reasonable, and competitive terms; the operations of the various compulsory license mechanisms that have been instituted as admittedly imperfect substitutes for markets that would not function competitively without them; and the efficacy of the compulsory license procedures that implement those mechanisms. Of particular relevance to today's hearing, in respect of music performance rights licensing, our law firm has represented the ABC and CBS Television Networks, Showtime/The Movie Channel and numerous additional cable television networks, the nation's commercial local television broadcasters, the commercial radio industry, as well as the background music entities Muzak and DMX/AEI, in rate court proceedings conducted in the Federal District Court for the Southern District of New York, as well as in appeals to the United States Court of Appeals for the Second Circuit from such proceedings. Those proceedings fundamentally have entailed the determination of "reasonable," i.e., competitive-market-approximating, license fees for public performances of musical works licensed by one or another of ASCAP and BMI, as well as, in some instances, the determination of the forms such licenses should take. In 1998, our Firm and I represented the Public Broadcasting Service ("PBS"), Na- tional Public Radio ('NPR"), and the stations on whose behalf they sought rates in the CARP rate adjustment proceedings for the noncommercial educational broadcasting compulsory license available pursuant to Section 118 of the Copyright Act. See Adjustment of the Rates for Noncommercial Educational Broadcasting Compul- sory License, Docket No. 96—6, CARP NCBRA. More recently, our Firm represented various FCC-licensed broadcasters, as well as some twenty webcasters, in the CARP to set rates and terms for certain uses of sound recordings pursuant to Sections 112 and 114 of the Copyright Act—a proceeding which is still in its appellate phase. In this same proceeding, we also represented DMX Music, Inc., the background music service provider, with respect to its use of ephemeral recordings subject to the g 112 license. See Digital Performance Right in Sound Recordings and Ephemeral Record- ings, Docket No. 2000—9, CARP DTRA 1&2 ("$ 112/114 Proceeding"). Although my views on issues pertinent to today's hearings clearly have been shaped by my experience in representing clients in these various fora, I appear today solely on my own behalf, and the views which I offer through this testimony are solely personal ones. My testimony today (1) outlines the major procedural shortcomings inherent in the CARP process as it is currently constituted; (2) suggests that, subject to a Con- stitutional analysis, serious consideration be given to transferring the rate-setting and distribution functions currently carried out by CARP Panels to a court of law; and (3) comments briefly upon the governing standards for rate-setting under g 112, 114 and 118 of the Copyright Act. PROCEDURAL SHORTCOMINGS IN THE CARP PROCESS Despite the commendable efforts of the Panels convened to hear these proceedings and the Copyright Office attorneys and staff who oversee and facilitate the CARP process, the CARP structure suffers from serious shortcomings which render the proceedings inordinately expensive, inefficient, and burdensome, and which frequently lead to rulings that are substantively flawed. Although a principal motiva- tion for establishing an arbitration process to conduct rate-setting and distribution functions was to streamline the litigation process in order to achieve efficiencies over what one would expect in a courtroom context, experience has demonstrated quite the opposite effect. Case Development and Presentation The CARP process, as currently structured, imposes formalistic rules regarding the manner and timing of presentation of cases and the discovery that may be had, accompanied by a virtual absence of rules of evidence. In combination, these features create a frenetic litigation environment in which cases are underdiscovered and overtried. Manner and Timing of Presentation of Cases. Parties are required, at the very outset of the proceedings, and prior to any discovery, simultaneously to submit and exchange in written form the direct testimony of each of their witnesses—lay and expert alike—together with every trial exhibit to be utilized. This places the proverbial cart before the horse—effectively locking in the parties'rial positions before anyone has knowledge of anyone else's factual, economic and legal arguments. The salutary effects of permitting discovery prior to requiring parties to commit to trial positions, in terms of narrowing and focusing what is to be tried, are thereby lost. What is more, during the ensuing hearing phase, material deviation from the written direct cases is prohibited, so that neither side's witnesses—most notably, their experts—are permitted to respond on the stand to the other parties'ritten direct cases. For all of their prolixity, the parties'overning cases are like ships passing in the night. Issue is not truly joined until the rebuttal phase of the proceedings, which, instead of being devoted to those few issues that normally remain open following presentation of cases in chief, entails further voluminous filings in order to respond to the other side's direct testimony. This is followed by yet another round of hearings in which many of the same expert and fact witnesses are recalled to the stand to respond to that which they were prohibited from testifying about in their initial testimony. The inefficiency and undue expense of such a process is manifest. Discovery and Evidence. CARP discovery, such as it is, is truncated and carried on under unrealistically short deadlines. Parties to the CARP are not subject to normal rules of discovery such as those found in the Federal Rules of Civil Procedure. The CARP process does not allow for depositions, requests for admission, interrogatories or any other means by which the parties can test the assertions made by their opponents prior to the presentation of hearing testimony. Instead, parties are required to produce solely those documents which "underlie" their written direct or rebuttal testimony or exhibits. 37 C.F.R. )251.45. While this is, no doubt, intended to achieve the laudable goal of reducing expense and alleviating undue burdens on the parties, these constraints measurably distort and disrupt the litigation process. The truncated discovery process deprives the parties of the opportunity, prior to trial cross-examination, to test the assertions made by their opponents. Whereas the presumption underlying the Federal Rules of Civil Procedure is to shed light on the parties'espective positions and thereby reduce surprise and promote the narrowing of issues for trial, the present CARP discovery rules have the opposite—and per- verse—effect of blockading access to relevant evidence, enhancing the element of surprise, and broadening the scope of what is presented (and cross-examined upon) at trial. Once again, this is, in the end, costly and wasteful—especially taking account (as I do below) of the arbitration fees incurred with each hour of hearing time. I am of course aware of the potential for open-ended discovery to spawn abuse and itself become inordinately expensive. The solution, I would submit, is to have the supervising jurist (in my proposal below, a federal judge, or his designee) carefully control the discovery process and curtail abuse. The CARP hearings themselves lack predictable structure and suffer from the absence of more rigorous rules of evidence. Although all witnesses proffer testimony in written form in advance of their appearances, whether a given witness will re- hash his or her testimony on direct examination, merely summarize it in a few min- 26

utes, or proceed directly to cross-examination is generally a matter for ad hoc determination, witness by witness, by examining counsel. More problematic is the absence of meaningful rules of evidence, such as the Fed- eral Rules of Evidence, to control, and make predictable, exactly what evidence will be admissible. By way of example, in the 1998 PBS/NPR CARP, in which I served as counsel, hundreds of hearsay documents (website postings, newspaper articles, and the like) were admitted into the record "for what they were worth." I would suggest they were worth very little. But they occupied inordinate time, motion practice, and photocopy expense to contend with. With generally sophisticated counsel and well-funded parties, there is little reason inordinately to relax rules of admissibility designed to create a trustworthy record. This is especially true where, as here, there is so little opportunity to engage in meaningful discovery of matters pertaining to your adversary s case. As matters now stand, key impeaching documents residing in the parties'iles will safely remain there, immune from disclosure, while the parties are free to lard the record with what should be inadmissible hearsay. Finally, the cramped discovery rules virtually require, in certain instances, seat- of-the-pants cross-examinations violating the most cardinal rule of cross-examination: don't ask any question to which you do not already know the answer. The consequence is not merely the risk of eliciting testimony your client would sooner not have; it is also a prolongation of the process in a fashion that cumulatively wears on counsel and the Panel alike. Especially in a trial of the magnitude of the just- concluded g 112/114 Proceeding, the impact of such practice on the overall length of the hearings can be significant. Costs The arbitrator fees and hearing costs which must be borne by any party wishing to participate in a CARP proceeding can be astronomical. Although the Copyright Royalty Tribunal ("CRT") was abolished, in part, in order to reduce the expenses associated with maintaining a full-time body of adjudicators who were called upon to hear cases only on a part-time basis, the hourly fees and out of pocket costs charged by the arbitrators empanelled by the CARP process have proven to be far costlier. For example, the $ 112/114 Proceeding generated more than $ 1.2 million in arbitrator fees. Add to this the individual legal expenses associated with a proceeding which consumed 41 hearing days, involved the testimony of 75 witnesses (49 on direct and 26 in rebuttal testimony), generated a transcript approaching 15,000 pages and many thousands of pages of exhibits and elicited the submission of over 1000 pages of post-hearing briefs by the parties, and it becomes clear that participation in the compulsory license rate-setting process is available only to the well-funded. This presents a double-edged problem. A major "free-rider" burden is placed on those companies which, for whatever reason, feel compelled to participate in the rate-setting process. These companies end up shouldering the burden for entire industries standing to benefit from the statutory licenses. From the perspective of companies which cannot, for financial or other reasons, participate in the CARP process, these entities (which are no less entitled to the statutory license) must either rely upon the records developed by the participating parties or resort to voluntary negotiations with the copyright owners on terms they may otherwise find objectionable. Lack of Precedential Value Because CARP panelists are chosen to participate in a particular case and, potentially, may never participate in another CARP proceeding, there is no expectation that the panelists will develop any expertise in the subject matter or rate-setting tasks at hand that will benefit future proceedings. Decisions rendered on this basis tend to focus on reaching a bottom-line result in the given proceeding rather than on explicating a thorough and complete analysis of the relevant standards and establishing (and building on existing) industry precedent. In contrast to the typical body of federal jurisprudence, where "first principles" tend to guide the resolution of cases, CARP decisions have a sui generis quality which deprives this growing body of decisions of coherence and affords future litigants little guidance as to the potential outcome of their cases. These consequences are further magnified by the fact that, in certain contexts, the rate-setting proceedings recur on a two-year cycle, which further promotes narrow decision-making. IVo Subpoena Power The problems associated with the lack of normal discovery rules are magnified by the fact that the Panel has no subpoena power over third parties even if those parties possess information critical to the proceeding. A case in point is the just-concluded $ 112/114 Proceeding, in which the linchpin of the recording industry's case 27

was 26 license agreements reached between the Recording Industry Association of America and various webcasters. While the Panel and the user-parties to the proceeding were interested in securing testimony from as many of these 26 entities as possible, the absence of subpoena power left the Panel with no recourse but to "invite" these parties to testify voluntarily. Not surprisingly, while a handful agreed, most did not. Inefficiency ofProceedings The use of three arbitrators to render decisions injects further inefficiencies into the CARP process. First, the use of multiple arbitrators exponentially increases the cost of the proceedings based on hourly fees charged alone. Much hearing time is devoted to bench conferences among Panel members deliberating on evidentiary rulings and the like. Further, the decisions a CARP Panel is tasked with rendering do not benefit from the inevitable "split-the-baby" compromise that tends to result from resort to multiple fact-finders. This is perhaps best evidenced by the fact that virtually every CARP Panel merits ruling is appealed by virtually every party. It appears that no one ever perceives that the Panels have reached fair and equitable results. Inflexible Statutory Deadlines and Procedures The statutorily-imposed 180-day timeframe for conducting CARP proceedings, without regard to their complexity, is wholly unrealistic. Particularly in a proceeding like the $ 112/114 Proceeding, which involved four separate communities of copyright users, participation of a variety of copyright owners, and required rates and terms to be set for two separate statutory licenses for two separate statutory periods, the process affords little opportunity for meaningful development of record facts, even less time for briefing, and equally little time for due deliberation by the CARP Panel. Expedience is a desirable objective—but not at the expense of adequate hearing preparation and considered decision-making. Moreover, the inflexible nature of the regulations governing the conduct of the proceeding actually prevented certain of the parties to the $ 112/114 Proceeding from fulfilling the terms of a voluntary settlement which would have eliminated the need to set rates for an entire class of copyright users and thus would have substantially reduced the costs and burdens imposed on the parties and the arbitrators, not to mention the Copyright Office itself. Too Frequent Statutory Cycles for Rate-Setting The statutorily imposed two-year cycles for setting rates and terms for the $ 112 and )114 licenses are too frequent. While the two-year cycle for rate-setting for these licenses may reflect solicitude for the need to readjust rates in new and rapidly-evolving industries, experience in the f 112/114 Proceeding demonstrates that this cycle is too short, particularly if there is a delay in convening a CARP for a given cycle. Indeed, the delay in convening the )112/114 Proceeding resulted not only in two cycles of proceedings being arbitrated together, but also in the statutorily mandated "voluntary negotiation period" for the upcoming proceeding overlap- ping with a hotly-contested rate-setting proceeding for the previous cycle. The time between cycles should be extended to a five-year period.

TRANSFER OF CARP RATESETTING AND DISTRIBUTION FUNCTIONS TO A COURT The efficacy of the operation and structure of the CARP and of the CRT which preceded it has been debated innumerable times by this Subcommittee and its pred- ecessors since the concept of a rate-setting and distribution body to administer the compulsory licenses under the Copyright Act was first conceived. See Copyright Of- fice Oversight Hearing Before the House Judiciary Subc. on Courts and Intellectual Property, 105th Cong. (July 23, 1998) (statement of Marybeth Peters, Register of Copyright, U.S. Copyright Office); Copyright Compulsory License Improvement Act, H.R. 3210, 105th Cong. $ 7 (1998) (approved by Subcommittee on Courts and Intel- lectual Property March 18, 1998) (establishing the Copyright Royalty Adjudication Board within the Copyright Office, which would consist of administrative copyright judges); Copyright Clarifications Act of 1996, H.R. 1861, 104th Cong. g 11 (1996) (approved by Subcommittee on Courts and Intellectual Property on Dec. 13, 1995 and House Judiciary Committee on March 12, 1996) (clarifying the authority of the Li- brarian of Congress to make procedural and evidentiary rulings with respect to a CARP proceeding and authorizing (1) payments to arbitrators and other costs to come from the royalty pool in distribution proceedings and (2) in ratemaking proceedings, dividing such costs 50—50 between copyright owners and users unless otherwise determined by the arbitrators); Copyright Royalty Tribunal Reform Act of 1993 $ 2, 17 U.S.C. )$ 801, 808 (1993) (replacing the Copyright Royalty Tribunal 28

with Copyright Arbitration Royalty Panels); Copyright Royalty Tribunal Reform and Miscellaneous Pay Act of 1989, Pub. L. No. 101-319 (1990) (reducing the number of commissioners on the Copyright Royalty Tribunal), CRT Reform and Compulsory Licenses Hearings Before the House Judiciary Subc. on Courts, Civil Liberties, and the Administration of Justice, 99th Cong. (1985) (redesignating the Copyright Roy- alty Tribunal as the Copyright Royalty Court and transferring such body to the control of the judicial branch). In reviewing this legislative history in the light of my own experiences participating in the CARP process and litigating rate-setting cases before the ASCAP and BMI "rate courts" in the Southern District of New York, I have become convinced that the main responsibilities with which a CARP is tasked—namely, rate-making and distribution of royalties—do not principally involve matters which require the particularized, copyright-oriented agency expertise of the Library of Congress. In- stead, these tasks require a facility with macroeconomics and with basic principles of antitrust law, the ability to assimilate facts concerning multiple media marketplaces, the ability to evaluate complex statistical and economic data put forth by the parties'xperts, and the ability to sift through and properly evaluate record evidence, including making judgments on issues such as witness credibility. Experience in the rate court context—which essentially entails the same search for a hypothetical free market, "willing buyer/willing seller" — rate as is the object of many CARP proceedings has shown that all of these functions are well suited to federal judicial determination. Indeed, were determinations of statutory license fees reposed in the federal courts, virtually all of the procedural flaws inherent in the existing CARP process would be remedied or, at the least, ameliorated. For instance, a trained jurist (whether a district court judge, a magistrate judge or a special master), working within federal rules of discovery and evidence, would supervise discovery, receive evidence, conduct hearings and, where appropriate, invoke summary procedures such as trials on paper records or summary judgment disposition. To keep such proceedings focused and manageable, it could be stipulated that the proceedings must be concluded within a specified period of time (subject to relaxation by the court for good cause). The trial court decision would be subject to review pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. Admittedly, transferring the rate-making and royalty distribution functions of CARP Panels to a federal district court requires careful consideration of Constitu- tional issues which are beyond the scope of this testimony. For instance, when such proposals have been considered by this Subcommittee in the past, questions have been raised, but not resolved, as to whether, because rate-making is not a judicial function, Article III judges may be tasked with conducting non-Article III functions. There is nevertheless precedent for resolving rate disputes in district courts. I have already adverted to the ASCAP and BMI rate court experience. In addition, )513 of the Copyright Act allows individual proprietors of certain establishments categories of business to resolve rate disputes with performing rights societies by bringing such matters before a district court located in the etor's federal circuit in which the propri- establishment is located. To be sure, there are consent decree structures in place that contemplate such judicial rate-setting in the ASCAP/BMI setting. Such precedents and procedures, and the experience thereunder, nevertheless provide useful starting points for consideration of how an analogous rate court could function in lieu of the present CARP procedures. Without conducting a thorough analysis of the matter, it appears at first blush that a number of steps could be taken to limit Constitutional concerns. For instance, one might consider retaining within the Copyright Office the existence authority to certify the of a rate dispute (e.g., upon the close of the voluntary negotiation period) and allowing the Copyright Office to issue a certification of dispute notice which would allow the parties to seek resolution of the case or controversy in the federal courts when voluntary resolutions are not possible. I would encourage the Sub- committee to solicit the advice of the Congressional Research Service as to whether any potential Constitutional issues could be overcome; assuming that to be the case, I commend to the Subcommittee serious consideration of transferring dispute resolution authority in the rate-setting and royalty distribution context courts. to the federal Alternatively, the Register of Copyrights has previously suggested establishing a permanent Board to conduct rate-making and distribution proceedings which would be housed within the Copyright Office. Under the Register's formulation, membership on the Board would be established upon recommendation of the Register of Copyrights. Such a Board could presumably also be housed within another agency, such as the Department of Commerce, in which the Patent and Trademark ("PTO") resides. Office 29

There would seem to be arguments in favor and against such an approach. As the Copyright Office noted in 1998, establishing a Board within the Copyright Office (or another agency) would raise the stature of the decision makers and would result in final agency decisions that could be appealed directly to the courts, thus removing the intermediate appellate review which currently occurs within the Copyright Of- fice. See Copyright Office Report, supra note 1, at 56. Additionally, the appointment of a permanent Board could potentially reduce costs to parties participating in the rate-setting process, especially those of three expensive arbitrators, thereby encouraging wider participation and a fuller factual record on which to base decisions. Costs would further be reduced by the elimination of the review by the Register of Copyrights and the Librarian. A major shortcoming of establishing a permanent Board within an agency is that such a Board might be viewed to be too political. Furthermore, the efficacy of such a Board would be greatly dependent upon the procedures established to govern the orderly presentation of cases. At a minimum, any such Board should be invested with subpoena power, and rate-setting disputes should be subject to the Federal Rules of Civil Procedure.

A FEW COMMENTS ON THE SUBSTANTIVE TESTS EMBODIED IN SECTIONS 112, 114 AND 118 OF THE ACT Insofar as the Subcommittee is interested in the proper administration of the statutory licenses available under the Copyright Act, a few comments are in order regarding the substantive statutory standards themselves. I am most familiar with the application of the standards contained in @112, 114 and 118 of the Act, and therefore confine my comments to those provisions. Pursuant to $ 114, CARP Panels are charged with establishing "rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." See 17 U.S.C. $ 114(f)(2)(B) (2001). The f 118 standard, incorporated by reference in $ 801(b) of the Act (detailing the operation of CARP Panels), calls for the determination of "reasonable terms and rates of royalty payments." In reaching these determinations in each case the Panels "may"—but are not required to—give weight to voluntary license agreements reached in lieu of resort to the statutory license. See f 112(e)(4); f 114(f)(2)(B); $ 118(b)(3). Practice under these provisions has spawned lively controversy as to their intended meaning. This is not the forum either to relitigate the various parties'er- spectives, nor, at least for now, definitively to resolve the issue. Nevertheless, I have considerable concern over the potential misapplication of these provisions to, in effect, rubber stamp selective agreements reached by large and powerful collectives representing copyright owners (whether ASCAP or BMI, in relation to musical works performance rights, or the RIAA in relation to digital transmissions of sound recordings). With respect to each of these statutory directives, it would seem plain that the purpose of the exercise is to determine the fees that would have resulted from dealings between willing buyers and willing sellers in a competitive market (i.e., a market undistorted by the concentration of bargaining power in the hands of a collective society or major industry trade association). Yet, strenuous arguments have been made (and rejected in the ASCAP rate court setting) that dispositive weight ought to be given to such license agreements as copyright owners'ollective agents may have been able to reach with one or more third parties. While I do not suggest that statutory ratemaking is an easy task, unless it is recognized that the core statutory objective is to approximate the value a marketplace untainted by undue market power possessed by copyright owner collectives would produce, no amount of fine- tuning or refinement of the ratemaking process will generate an economic result true to the spirit and intent of these statutory license provisions. I thank the Members of the Subcommittee for their attention to these important matters and for the opportunity to share my views with you. I would be pleased to answer questions and elaborate further on this testimony now or later for the record. Mr. COBLE. Ms. Peters. 30 STATEMENT OF MARYBETH PETERS, REGISTER OF COPY- RIGHTS AND ASSOCIATE LIBRARIAN FOR COPYRIGHT SERV- ICES, COPYRIGHT OFFICE OF THE UNITED STATES, THE LI- BRARY OF CONGRESS Ms. PETERs. Mr. Chairman, Mr. Ranking Member, distinguished Members of the Subcommittee, I appreciate the opportunity to testify on the structure and process of the Copyright Arbitration Roy- alty Panel System. As you know, today's hearing is to consider how effective the CARP process has been and how it could be improved. We have had almost 9 years of experience in working with this process, and I think we have a little bit to add to the dialogue. I think, as you know, ad hoc Copyright Arbitration Royalty Panel deals with statutory licenses which are exceptions to the general rule in copyright law that the owner of a copyrighted work has exclusive rights which enable him to determine how his work is to be used. A statutory license allows certain uses of certain copyrighted works under terms and conditions that are specified in the law. In 1976, the Copyright Act increased the number of statutory licenses to four, and provided for the adjustment of rates at specified times, and provided a mechanism to settle disputes about the allocation of royalties that were paid into the Copyright Office. A new administrative body having responsibility for adjusting statutory rates and for resolving disputes among the claimants to the royalty pools for cable retransmissions and performances of music on jukeboxes was created. Initially the proposal was a three- member panel that would reside in the Copyright Office. Each time there was a controversy over a distribution of royalties or there was a need to adjust royalty rates, the Register would convene the panel. However, the Supreme Court in its decision in Buckley v. Valeo, who dealt with the issue of the constitutionality of the methods of appointing members to a legislative branch agency, led to constitutional concerns over the plan to have the Register, an employee of the legislative branch, appoint the members of the new tribunal. Wishing to avoid any constitutional question, Congress basically chose to create an independent regulatory agency, the Copyright Royalty Tribunal, whose members would be appointed by the Presi- dent with the advice and consent of the Senate. CRT came into existence in November 1977. It was abolished in December 1993. During those years the role of the CRT expanded because two compulsory licenses were added to the workload. How- ever, like the CARPs, there were criticisms almost from the beginning with regard to the tribunah The major concerns seemed to be that there wasn't enough work to keep three senior-level Govern- ment employees busy. From time to time there was also criticism concerning the lack of expertise of some of the Commissioners, Congress reduced the number of Commissioners from five to three in 1990, and in 1992 it established an ad hoc arbitration panel to adjust the satellite carrier rates, thereby undercutting the CRT's jurisdiction. It got rid of the CRT in 1993, and the CARP system was created, in the words of the House Judiciary Com- mittee, because the workload of the CRT was episodic and not sufficient to justify three full-time, highly paid Commissioners. From the beginning to the present day, the office has done its best to make the present system work. However, from the very beginning the office was aware of problems, and as the years passed, and new statutory and increasingly complex licenses were created, our list of shortcomings has grown. Of course, we have also heard the complaints of the parties to the various proceedings. Two of the shortcomings make it clear that you simply can't fix the system. It is broken, Let me hit those two. The first is expertise. Statutory licenses are generally complex. The CARP process is complex. The amount of money in a number of these proceedings is considerable. It has been difficult to find arbitrators who have any familiarity with copyright law let alone the complex statutory licenses and the unique CARP procedures, Of the 10 CARP reports which the Librarian has reviewed, only three have been accepted. Several which were rejected required considerable effort to make a recommendation to the Librarian on which you could base a final order. The second is lack of predictability or consistency in results. Each panel is selected for one case. Its decision is for that case. The panelists then go on to other things, and then the next case, a new panel is convened. So expertise in the adjudicator and consistency of results are crucial. That is why the system is broken. There is another shortcoming which probably could be fixed in the present system, and that is cost. This has been an issue from the very beginning, the arbitrator's rates are high. Some of the proceedings are long, complex. Other proceedings involve only small amounts. Either end of this is a problem. There have been a number of helpful suggestions on how to address this issue. This is a most important issue. In some cases the costs preclude people from participating in this. Others copyright owners pay substantial amounts when the ainount in controversy is extremely small. In conclusion, I believe that there should be reform, but there is no consensus on what that reform should consist of. I totally agree with Bob Garrett; it is important to first look at the process. First with the CRT and then with the CARP, the emphasis was on the system; in other words, the body that would oversee the proceedings. But Congress needs to decide the appropriate process and then determine the structure. The office would be pleased to work with the Subcommittee to achieve a system that provides the necessary expertise, produces consistent results, is efficient, fair, and basically reduces costs. Thank you. Mr. GOBI,E. Thank you, Ms. Peters. [The prepared statement of Ms. Peters follows:j

PREPARED STATEMENT OF MARYBETH PETERs Thank you, Mr. Chairman. I am pleased to appear today before the Subcommittee and offer testimony on the structure and process of the Copyright Arbitration Roy- alty Panels (CARPs). As you are aware, the CARPs have been operating under the auspices of the Copyright OI6ce and the Library of Congress since the Congress eliminated the Copyright Royalty Tribunal in 1998. Today's hearing is to consider how effective the CARP process has been to this point and, as you will hear from other members of today's witness panel, ways in which it can be improved. I am dividing my comments into three sections. First, I will give an overview of how the statutory licenses of the Copyright Act have been administered since 1978. Second, I will discuss certain shortcomings of the existing CARP system that have been identified since 1993, and third I will offer some suggestions as to how royalty distribution and rate adjustment proceedings could be conducted in ways that might eliminate many of the shortcomings of the current system. OVERVIEW OF COPYRIGHT STATUTORY LICENSE ROYALTY DISTRIBUTION AND RATEMAIGNG The history of the Copyright Office's and Library of Congress's involvement in the setting and adjusting oi'oyalty rates and making royalty distributions to copyright owners is linked to the history and evolution of the statutory licenses in the copyright law. The general rule in copyright law is that the owner of a copyrighted work has the exclusive right to determine how that work is to be used. Anyone other than the owner wishing to use a copyrighted work must either obtain the owner's permission, be eligible for a statutory license, or qualify for free use under an exception. A statutory license allows certain uses of certain copyrighted works provided that the user pays the royalties and observes the terms that are set forth in the law. 1. The 1909 Copyright Act There was only one compulsory license in the 1909 Copyright Act. What is generally referred to as the 'mechanical license" which allowed a person to make a sound recording of a song that had been recorded and copies of that recording had been distributed to the public in the United States, so long as that person paid the owner of the musical composition 2 cents per copy. The royalty rate was set by statute and was not subject to change. The 2 cents rate lasted from 1909 to 1978. Because the rate was set by statute, and because the user paid the owner directly, there was no need for a government agency either to set the mechanical rate or to engage in a distribution of the mechanical royalties. 2. The 1976 Copyright Act At the time it was draRing the 1976 Copyright Act, Congress realized that the mechanical license was fiawed because a statutorily-set, never-changing royalty rate was infiexible and did not provide fair compensation. Furthermore, Congress was planning to add more statutory licenses to the law. These new statutory licenses would be in the areas of cable retransmissions of over-the-air broadcast signals, jukebox performances of music, and the use of published musical works and published pictorial, graphic and sculptural works by noncommercial educational broadcasters. Congress saw that there was a need for an administrative body that would be able to adjust the rates of these statutory licenses periodically. In addition, Con- gress saw a need for an administrative body to act as the distributor of the royalties collected from users in situations where there were many copyright owner claimants to the same funds and there were controversies as to how much each claimant was entitled to receive. The new administrative body would have responsibility for adjusting the cable, jukebox, mechanical, and noncommercial educational broadcasting royalty rates, and for distributing the cable and jukebox royalties to the proper claimants. Cable and jukebox royalties would be deposited with the Copyright Office, subject to the distribution decisions of this new administrative body. Although the Senate and House copyright subcommittees agreed that they needed to create a new administrative body, they were not sure of the structure for the new body. At first, the Senate bill created a tribunal composed of a three-member panel that would reside within the Copyright Office. The members would be appointed by the Register of Copyrights from the membership of the American Arbitration Association or a similar organization. The Register would convene the panel each time a controversy was found to exist concerning the distribution of royalties or the adjustment of royalty rates. While the Congress was considering the proposed Senate version for the new administrative body, the Supreme Court handed down its decision in Buckley v. Valeo, 424 U.S. 1 (1976). In Buckley, the Court considered, inter alia, the constitutionality of the method of appointing members to the Federal Election Commission ("FEC"), an agency residing in the legislative branch. The law establishing the FEC provided that the President pro tempore of the Senate and the Speaker of the House would appoint a majority of members of the FEC. The Supreme Court ruled that this was unconstitutional because some of the FEC's functions were executive branch functions and consequently persons exercising those functions "must be appointed in accordance with article II, sec. 2, clause 2 of the Constitution, the Appointments Clause." 424 U.S. at 126. The Appointments Clause states that the President shall nominate, with the Senate's advice and consent, all "Officers of the United States," but the Congress may vest the appointment of inferior officers as it deems proper. When the Buckley opinion was issued, some of the members of Congress expressed constitutional concerns over the plan to have the Register of Copyrights, an employee of the legislative branch, appoint members of the new tribunal. Wishing to avoid placing the new structure under a constitutional cloud, the members of the subcommittees of both houses chose instead to create a completely independent regulatory agency, the Copyright Royalty Tribunal, whose members would be appointed by the President with the advice and consent of the Senate. 3. The Copyright Royalty Tribunal, 1977—1993 The Copyright Royalty Tribunal existed from November, 1977 to December, 1993. Its jurisdiction changed during those years. In 1988, Congress created a new statutory license to govern retransmission of over-the-air television signals to home satellite dish owners. Also, in 1988, Congress moved to eliminate the jukebox compulsory license in order to comply with the Berne Convention and by 1990, there were sufficient private license agreements to allow for the elimination of the jukebox compulsory license from the Copyright Act and the Tribunal's jurisdiction.i In 1992, Congress created a statutory royalty obligation for the manufacture and importation of digital audio recording technology (DART). Even with these new responsibilities, critics of the Tribunal believed that there was insufFicient work. In 1990, Congress reduced the number of Commissioners from five to three, after concluding that three Commissioneis were sufficient to handle the workload. Copyright Royalty Tribunal Reform and Miscellaneous Pay Act of 1989, Pub.L.No. 101-819, 104 Stat. 290 (1990), Also, Congress dure established a proce- for adjusting the satellite carrier statutory license rates in 1992 by an ad hoc arbitration panel, thereby undercutting the Tribunal's otherwise exclusive jurisdiction over royalty rate adjustment and distribution proceedings. 4. The Copyright Royalty Tribunal Reform Act of 1993 In 1993, Congress passed the Copyright "with Royalty Tribunal Reform Act, observing that 15 years'xperience, a clear record of the Tribunal's workload has been established. That workload is episodic and not sufficient to justify three full-time highly paid Commissioners." H.R. Rep. No. 103-286, at 9 (1993). The House Subcommittee recalled that the original proposal for a government body to oversee the statutory licenses was for ad hoc arbitration panels convened by the Register of Copyrights. Id. The Subcommittee noted that the one experience with arbitrators setting royalty rates, the 1992 adjustment of the satellite carrier compulsory license rates, was positive. Id. at 11. Therefore, the Subcommittee believed that creating what was — — originally proposed in 1976 ad hoc arbitration panels would avoid the apparent waste of having full-time Commissioners perform part-time work. The Subcommittee also believed that placing ad hoc arbitration panels under the supervision of the Register of Copyrights and the Librarian of Con- gress made "good sense," citing the fact that "the Copyright Office and the Library of Congress already have considerable involvement in the administration of the compulsory licenses and in the work of the Tribunal." Id. ment" This "considerable involve- referred to the Copyright Office's Licensing Division which receives the payment of cable, satellite and DART royalties, and the Register's Office which, through the Register, the General Counsel and the stafi'of the General Counsel, promulgates regulations related to the statutory licenses. The remaining concern was whether establishing arbitration panels in the Library of Congress was constitutional. Congressman William Hughes, the chairman of the House Subcommittee, asked the Congressional Research Service ("CRS") for its advice. CRS stated that the panels would be constitutional if the person ultimately responsible for the panels'ecision was a presidential appointee or someone who owed his or her appointment to a presidential appointee. Therefore, the panels could be established under supervision of the Librarian of Congress, a presidential appointee, or the Register of Copyrights, a person owing his or her dential appointment to a presi- appointee. Letter from CRS to the Honorable William Hughes, February 17, 1993, at 9—10. Although the House Subcommittee received CRS'pinion that either the Register or the Librarian could be the supervising official, the House Subcommittee chose to make the Librarian the supervising official. There is no record was as to why this choice made. There is also nothing in the record to suggest that Congress saw any added value in an additional layer of review. The only concern voiced was that a presidential appointee, or someone who answers to a presidential appointee, needed to be placed at the head of the CARP system to satisfy the Supreme Courtls in Buckley v. Valeo. ruling 'A contingent jurisdiction over public performances by means ofjukeboxes remains if private jukebox licenses expire aud no new license agreements are reached. 5. The Current CARP System As discussed above, the current CARP system consists of ad hoc arbitration panels that recommend the royalty rates and distribution of royalty fees collected under certain of the statutory licenses and set some of the terms and conditions of some of the statutory licenses. Each CARP is selected for a particular proceeding (examples: a rate adjustment for the cable statutory license; a distribution of DART funds) and has up to 180 days to deliver its recommendation for the rate adjustment or distribution, as the case may be. The highlights of the CARP system are as follows: Voluntary Negotiation Period: Once it is determined that a controversy exists as to the adjustment of royalty rates or the distribution of royalty fees, as the case may be, the Office designates a period for voluntary negotiation among the parties to resolve their differences. Those parties unable to reach an agreement during this period proceed to a CARP Direct Cases and Discovery: Every participant in a CARP proceeding must submit a written direct case. The written direct case is the principal piece of evidence put forward by a participating party in that it sets forth all the evidence and reasons as to what the party believes the rates or distribution should be. The Office then conducts a limited discovery period during which parties may request from each other documentation that supports the assertions they make in their written direct cases. Selection of the Arbitrators: Once the discovery phase is concluded and the proceeding is ready for hearing, the Librarian selects two arbitrators from a list of designated arbitrators whose names are obtained from arbitration associations who then select a third arbitrator from the list to serve as their chair- person. If the two arbitrators cannot agree, then the Librarian selects the chair- person (which has never happened). Testimony and Heanngsi Once the arbitrators begin their 180 period, they consider all the testimony submitted by the parties in their written direct cases. Oral hearings of the written direct cases are typically conducted (although they are not required), and the parties often submit rebuttal testimony. At the conclusion of the hearings, the parties submit their proposed findings of fact and conclusions of law vrherein they argue to the CARP how it should rule. Often, the CARP will permit oral argument on the proposed findings of fact and conclusions of law. The CARP Report: At the conclusion of the 180-day period and after considering the evidence and testimony presented, the CARP delivers its written recommendation to the Librarian of Congress as to what the royalty rates or the distribution should be. In making the recommendation, the CARP must articu- late the reasons for its recommendations and the evidence that supports its conclusions. Review of the CARP Report: Upon receipt of the CARP report, the Librarian is given 90 days in which to either accept the determination of the CARP or to reject it. The Librarian may reject the recommendation only if he or she determines that it is arbitrary or contrary to the provisions of the Copyright Act. The Register of Copyrights is directed to advise the Librarian on his or her decision. If the Librarian rejects the CARP's recommendation, there is an additional 30 days for the Librarian to issue a final order setting forth the rate adjustment or distribution, as the case may be. Appeal of the Librarian's Order: Any party with an interest in the royalty rates or distribution determined by the Librarian may appeal the decision within 30 days of its publication in the Federal Register. Appeal must be made in the United States Court of Appeals for the District of Columbia Circuit. Since the abolition of the Copyright Royalty Tribunal in 1993, the Copyright Of- fice and the Library have conducted nine full proceedings that have resulted in delivery of CARP reports. Numerous other proceedings have settled at various stages, and the Office has several more proceedings currently pending. Six of the Librar- ian's decisions were appealed and in each instance the Librarian's determination was upheld.s

sin one rate adjustment proceeding under 17 U.S.C. 114, the Court of Appeals remanded for further findings a small portion of the Librarian's decision concerning the terms of payment of royalty fees. 35

SHORTCOMINGS OF THE CARP SYSTE1VI Mr. Chairman, you will undoubtedly hear testimony from the other witnesses on today's panel as to the shortcomings and complaints of the current CARP system. In this section, I highlight some of the difFiculties we have observed in the near decade of administering the system. L Costs. The arbitrators selected to serve on a particular CARP must, of course, be paid. Arbitrators are typically compensated at between $200 and $400 an hour for their work which, in a hotly contested proceeding involving many parties and large amounts of testimony, can add up to considerable sums. In the case of a royalty distribution proceeding, the arbitrators are paid from the royalty funds to be distributed. In the case of a royalty adjustment proceeding where there are no royalties collected by the Copyright Office, the participants must pay the arbitrators out of their own pockets. There is no question that in some rate adjustment proceedings, some interested parties cannot afford the cost of participating. While the Copyright Office has considered allowing these parties to participate free of charge, this would certainly draw objections from the participants in the proceeding who would foot the bill. On an institutional scale, CARP proceedings are also very costly. They require considerable amounts of time of Copyright Office and Library personnel who must conduct various phases of the proceedings, such as discovery relating to the written direct cases and review of the CARPs'ecisions. In the recent CARP rate-setting proceeding for webcasting, the cost of the arbitrators alone exceeded the entire annual budget of the Copyright Royalty Tribunal in its last year of existence. 2. Lack of Stability and Predictability ofResults Each panel of arbitrators is selected for one particular case. The decisions they make are for the purpose of deciding that one case and not for establishing lasting recedent. Furthermore, although the Librarian attempts to select arbitrators who ave served well on previous panels, the individuals almost always vary from one panel to the next. Parties who are dissatisfied with one panel are tempted to return and try a different panel. Therefore, there is a lack of stability and predictability in the process, and a lack of reliable precedent upon which the parties can base the settlement of their differences. 3. Institutional Expertise Although copyright rate setting or adjustment and distribution proceedings often involve considerable amounts of money, the fact remains that the statutory licenses and the CARP system occupy an esoteric area of the law. We have found it very difficult to find arbitrators that have any familiarity with copyright law, let alone the complex statutory licenses in that law and the unique procedures of the CARPs. Those that do have some copyright law experience typically cannot be selected due to a financial or other conflict of interest. The result is that we are forced to select arbitrators that, while bright and capable, lack knowledge and understanding of the workings and details of the copyright laws and the CARP system. This lack of expertise puts a considerable burden upon the Register and the Librarian to correct errors and oversights made by CARPs during the course of the proceeding, a burden which is exacerbated by the short review period granted the Register and the Li- brarian by the statute. Of the nine CARP reports which the Librarian has reviewed, only three have been acceptable. Several of the rejected reports have required considerable effort in preparing a final order Because of the ad koc nature of the CARPs, there is no institutional expertise on any given panel. As one frequent attorney participant in the CARP process recently informed the Office, the most scary day of a CARP proceeding is the first day when one encounters the level of competence of panel members that can be expected for the next six months. RECOMMENDATIONS Mr. Chairman, it is clear that the CARP system is far from perfect. I do believe, however, that the decision making produced by the current system is superior to that produced by the Copyright Royalty Tribunal during its tenure. I do not dispar- age the work of the Tribunal as they did, in most circumstances, the best they could with the resources available. But I do think that a simple return to the Tribunal system would be a mistake. Attached to this written statement is a report prepared four years ago by the Copyright Office at the request of this Subcommittee. The report offers five different 36

options to improve the manner in which copyright license royalty fees and rates are resolved. The options are: Reforming the Current System: The Copyright Office proposed eleven amendments to the Copyright Act to address the CARP's most serious flaws. They include making the Register the supervising official; lengthening the time of each proceeding; expanding the use of paper proceedings to reduce the costs of hearings; reducing the number of arbitrators for small claims or having small claims resolved by staff; and capping the arbitrators'ees. Replacing Arbitrators ivith Administrative Law Judges: Under this option, administrative law judges supplied by the Office of Personnel Management would handle the royalty ratemaking and distribution cases within the Of- fice. Copyright Replacing Arbitrators with Presiding Officers: Under this option, arbitrators would be replaced with presiding officers who, while not administrative law judges, would perform the same functions. The precise features of this system would be established by Congress as a stand-alone system administered by the Register and not the Office of Personnel Management. Creating a Board Within the Copyright Office: Under this option, a Board would be established within the Copyright Office that would take on more authority than presiding officers, be more autonomous, and render final agency decisions. Creating an Independent Regulatory Agency: Under this option, a new independent regulatory agency, similar to the Copyright Royalty Tribunal but with some improvements, would be created. The attached report discusses fully the strengths and weaknesses of each of options. the five In 1998, Mr. Chairman, you introduced H.R. 3210, the "Copyright Compulsory Li- cense Improvement Act." The bill would have amended chapter 8 of the Copyright Act to establish a Copyright Royalty Adjudication Board ("CRAB"l consisting of one full-time chief administrative copyright judge and up to four part-time administrative copyright judges selected by the Librarian of Congress. The iudges would serve five year terms and be compensated at a government salary level. The Board, while within the Copyright Office, would be wholly independent and would have full authority to determine all statutory license rates and royalty distributions. The Copy- right Office, however, could present formally its views to the Board on any matter, which the Board could accept or reject. Appeal of final Board decisions would be to the United States Court of Appeals for the Federal Circuit. Although I have concerns about some aspects of the proposals contained in H.R. 3210, it was a positive first step in addressing the issues. The Copyright Office would be pleased and interested in working with the Subcommittee, and with the parties for reform of the current system to produce a better model. In reforming the CARPs, there are several key elements that need to be addressed. First, the best way to produce well-reasoned decisions is to create a system that permits the Copyright Office and the Library to hire full-time employees who are well-versed and experienced in the copyright law, the complexities of the statutory licenses, and who are experienced at conducting administrative proceedings. As discussed above, while we have hired capable arbitrators in CARP proceedings, it has been impossible to find arbitrators who are intimate with the details of the copyright law, the statutory licenses and the distribution/rate adjustment process. Hav- ing the same full-time decision makers who adjudicate all rate adjustment and distribution proceedings will not only raise the level of institutional expertise, but will produce balanced and stable results. Placing those decision makers in the agency with expertise in copyright and the statutory licenses will ensure that their decisions are well-reasoned. Second, although the responsibilities of rate making and royalty distribution has risen in recent years due to an increase of compulsory licenses in the Copyright Act, we recognize that there are still periods of inactivity where no proceedings are being conducted. One of the criticisms of the Copyright Royalty Tribunal was that Com- missioners were still compensated during such periods thereby effectively being paid for little or no work. Consideration should be given to whether the Register should have discretion to assign additional copyright work to the Copyright Office-based decision makers during these periods of inactivity. Third, a new system should permit the Register a substantive role during the process to address important policy and substantive matters that might arise during a rate adjustment or royalty distribution. Whether the role is one of having input into the decision, as was proposed in H.R. 3210, or one of being the final decision maker is an issue that should be explored. 37 Finally, there is the matter of costs. Hiring full-time employees at government salaries to serve as decision makers will certainly reduce the overall cost of proceedings to the parties, but there remains the question of the source of their funding. Under the current system, for those compulsory licenses for which the Copy- right Office collects royalties, the costs of the arbitrators in distribution proceedings are paid for out of the royalty pool. This is an appropriate system that should be retained since those benefitting from the distribution are paying for the cost of the proceeding. However, in those circumstances where the Office does not collect royalties, such as the recent webcasting CARP proceeding, the parties currently pay the costs of the arbitrators. One of the objections to such a payment scheme is that it raises a bar to participation for those who cannot afford to pay the arbitrators. Therefore, I recommend that the salaries of the decision makers in rate adjustments in the new system, where no royalty fees are collected by the Office, be paid from appropriated funds. This would require an additional appropriation for that purpose. The Copyright Office looks forward to working with the Subcommittee and the interested parties on this important matter. Thank you, Mr. Chairman. Mr. COBLE. Thank you all for complying in the time frame. We impose the 5-minutes rule against ourselves as well. So I will start. One criticism of the CARP system is that each panel is comprised of a new set of participants, which results in an absence of stability and predictability as well as reliable precedent. Ms. Pe- ters, do you agree with this assessment? Ms. PETERS. Yes. Mr. COBLE. Does anyone disagree with their assessment? Mr. Rich, some critics have observed that the rules of the CARP system are not comparable to the Federal Rules of Evidence, thereby producing a frenetic litigation environment there, which panelists render decisions without access to critical information. And you touched on this somewhat in your testimony. For example, panelists and the Copyright Office cannot issue subpoenas under CARP rules. How could we fix this aspect of the CARP system? Mr. RICH. My broader recommendation, Mr. Chairman, has been that we move closer to, if not adopt totally, a model of discovery that is closer to the Federal rules. I think this came home to roost in the most recent CARP. This is not for purposes of assessing substantive outcome, but anecdotally I think it is useful in identifying the issue. One of the parties main positions in the case was dependent on agreements that the industry, the record industry, had reached with third parties, nonparties to the proceeding. They had settled voluntarily, so they were not before the CARP panel. It was obvious since this was the underpinning of the case presented by the record industry that learning everything one could learn about the circumstances of those agreements would be useful. And the panel felt it in its bones every bit as much as the other side of the case did, yet the lack of subpoena power, for example, and the lack of more robust discovery tools really made it a voluntary exercise. The panel could at most invite these 26 folks to come on into New York—come on into Washington at their own expense, be subjected to what has to be regarded as a generally unpleasant experience of being examined and cross-examined. Not surprisingly, Mr. Chairman, very few did. That is just an example of how we don't get at the root—at issue joinder—that these complicated proceedings, I am talking about now a very large and complicated proceeding, at least, mandate. I would be the first to suggest that you may want a scaling down of discovery and of the commensurate burden as the consequences, 88 as the order of magnitude of cases decline. But where you are talking industrywide important precedent, major record labels, major companies and even nascent companies hoping to get a foothold, it seems to me we ought not to spare in our use of additional tools to get to the facts and get at what we elusively call the truth. Mr. COBLE. Mr. Garrett, I have a two-part question for you. Some of the proposals submitted to our Subcommittee would increase the scope of discovery and the length of the discovery period. Would this truly eliminate the cost of participating in a rate-setting'? And, B, if these proposals were adopted, but the resulting CARP structure remained outside the jurisdiction of the Federal courts, wouldn't the resulting delays force the effective copyright owners to wait perhaps even longer to be compensated for the use of their works? Mr. GARRETT. Mr. Chairman, I believe that expanding the scope of discovery, expanding the scope of discovery procedures and mechanisms available to parties will necessarily have the effect of increasing the cost of participation in these proceedings. I don' think that is an objective that we want to achieve here. As a truly theoretical technical matter, I mean, I certainly understand what it says here, but let's move toward a system that is more comparable to those in the Federal courts. But I don't believe that we have that luxury for the kinds of decisions that are being made here. I don't think that that kind of luxury is one that is necessarily inherent in ratemaking proceedings. With respect to the way I approach the issue, Mr. Chairman, I believe that the cost consideration is the most important consideration here, and if you were going to have that as your principal objective, then you cannot move toward putting these kinds of matters either within the jurisdiction of the Federal courts or else expanding the scope and types of discovery. Mr. COBLE. Thank you, sir. Mr. Remington I will get to you later. The red light has not appeared, but the clock did not activate. I am sure my 5 minutes have elapsed. Mr. Berman. Mr. BERMAN. Thank you, Mr. Chairman. This is not a balanced panel in the sense of people defending the present structure and process versus people criticizing it. If I wanted to have a balanced panel here today, where would I have gone to find the people who would defend the present structure and process? There is no one? Okay. All right. So something has got to change is the consensus of the people who participate in the process. Mr. Rich, why don't you take the first shot at defending your suggestion for change; that is, moving to a rate court. Mr. Boucher has suggested that. Mr. Garrett has said if you want to cut costs and simplify the process, going to a rate court is not the way to do it. What is your response to that? Mr. RtcH. Mr. Berman, as I understand Mr. Garrett's proposal, at least at the extreme it would apparently entail putting in some untested affidavits of parties, not having any discovery beneath those, and then not having the benefit of any hearing or cross-examination to test it even at a trial setting. I think it would, frankly, make a farce—with all due respect to a lawyer I respect a lot— I think it would make a farce of any serious effort to find—whether under a willing buyer/willing seller test or fairness or reasonable- ness standard to get at what markets that these compulsory license systems are trying to replicate would accomplish. More directly to your question, sir, I have been through about four ASCAP rate court trial experiences now, and they have ranged from sloppy and endless and quite expensive, candidly, to extremely efficient and extremely well run. In one example, this was Mr. BERMAN. You have been to four. Mr. RICH. ASCAP rate-setting processes, excuse me, representing a variety of clients. Mr. BERMAN. You have watched the rate court work? Mr. RiCH. I have experienced it firsthand. One example is, and a favorable example that I mention to the Committee by way of structural possibility, Judge William Connor in New York, who is the supervising judge in senior status for the ASCAP consent decree, oversaw a case involving the ABC and CBS television networks involving a fee dispute covering a comparable period of years to what a typical CARP proceeding entails, from the beginning through discovery, carefully controlled by Judge Connor. He didn' let it get out of hand, brought it to trial in about a year's time, and his decision was not appealed. In other words, it went start to finish: we gave the client a budget in that case, anticipating a short track; we were kept on a short track by the judge; we kept on the budget, and it worked. We had the Federal Rules of Civil Proce- dure. We had the benefits of one experienced judge, very commer- cially savvy. There was the benefit of a developing body of precedent in terms of music performance rights, licensing traditions. We had, again, the protections of ample discovery and subpoena power control by the court. We had Federal Rules of Evidence, so we knew what could come in and what couldn', and we had a very efficient process, I think, with a very bright judge who got to a very sane result. And while, as usual, some people were happier with the result than others, I think there was a sense that the matter proceeded fairly. And so as I compare that experience and contrast it with my CARP experiences where all of it just bulges at the seams, and where nothing seems to work right, you run around frenetically, as was indicated, and you don't get discovery. This seems to be a better process. Mr. HERMAN. One short follow-up question before I—were you or your client among the people who were more happy with the final decision than others? Mr. RICH. In that particular case, yes, although there have been other cases where the answer in the rate court has been no. Mr. HERMAN. Now, you had a chance to defend your suggestion and attack his suggestion. Would you like to defend your suggestion, Mr. Garrett, against his attack, with all due respect for your high regard for him? Mr. GARRETT. I have been defending myself against attacks from Mr. Rich now for 2 years; I have been accustomed to that. As a litigator, I see a great deal of merit in what Mr. Rich says. 40 As a litigator, one wants to have as much discovery as possible. One wants to be able to know in advance as much information as is possible. It is a very scary moment in these CARP proceedings when you walk up to a witness, an expert witness or a fact witness, and realize that is the first time that you are really going to hear anything that that witness has had to say. We don't have depositions. But I have been doing that for 25 years in these proceedings, and it is my belief that we would be just as well off without having any of the limited form of discovery that we do have. And when you balance that against the considerations of cost- Mr. BERNARD. What about the fact that now you are not going to hear and be able to cross-examine that witness under your suggestion; you are just going to be able to read his affidavit and file a counter-affidavit? Mr. GAaaETT. I think my suggestion goes beyond that, Congress- man Berman. But I think that, first of all, it is important to understand that those rules will apply equally to both sides. Both sides are going to have as little or as much discovery, or as little or as much right to discovery. There is an equalization factor there that I think comes into play. I also think that those who participate in these proceedings and simply do nothing but put in an affidavit and say, if you adopt this royalty rate you are going to put us out of business, that affidavits like that will be given if little credibility, little weight by the arbitrators, whoever is going to make the decision in that case. I think people—in order to put forth a compelling, credible case, they are going to have to engage in voluntary discovery. They are going to have to put in more than an affidavit saying, you are going to put me out of business. They are going to have to turn over their financial documents either as part of their direct case or testimony or some other kind of discovery. I would use a carrot, as opposed to a stick, here; and I think it is useful because it does achieve the—what I believe to be the primary objective, which should be the primary objective of cutting costs so that all parties can participate in an affordable process. Mr. BEHlvrAN. Thank you, Mr. Chairman. And I think my time has expired. Mr. COHLE. Mr. Cannon. Mr. CANNON. Thank you, Mr. Chairman. And I would like to thank the panel for the very enlightening testimony we have had thus far. And while we have my favorite witness, Ms. Peters here, if you wouldn't mind, I would like to ask a question about a related matter on instrumental music and ask you to clarify two points with regard to your DMCA, section 104, report that was issued last August. Footnote 434 of the 104 report states that you would favor repeal of section 112(e) of the Copyright Act and the adoption of an appropriately crafted, ephemeral recording exemption that would essentially permit on-line music services to make server copies of sound recordings and compositions that facilitate authorized uses of those works without permission from or obligation to the copyright owner. 41 After the hearing in response to my written follow-up question, you reiterated that as you stated in the report, you would favor repeal of 112(e) and adoption of an ephemeral recording exemption. Do you still favor those statutory changes and would you recommend that this Subcommittee consider them? Ms. PETERS. With regard to the 104 report, it really wasn't in the scope of the 104 report, so it wasn't really a formal recommendation. What we said in the footnote we do stand by. We would favor replacing the statutory license in 112(e) with an exemption. What we said and we stand by is, we don't see any justification for the imposition of a royalty obligation under statutory license to make copies that have no independent economic value and are solely to enable another use that is permitted under a separate compulsory license. But in the 104 report, we have two recommendations of things that we believe in that don't become part of the formal recommendation, because we thought they were out of scope. Mr. CANNON. That is that the scope of your report, but still within the scope of what this Committee probably needs to do. The 104 report also concludes that public performances incidental to licensed music downloads shall result in no performance right liability. Again, in response to one of my written follow-up questions, you stated that it would be appropriate for Congress to enact legislation precluding any liability arising from the assertion of a copyright owner's public performance right with respect to any technical performance that may take place as a necessary byprod- uct of an authorized download so long as no audible performance actually takes place simultaneously with the download. Again, for clarification, do you still support legislation that would make this statutory change as you stated in the 104 report? Ms. PETERS. Again, it is the same thing as before. It wasn't within the scope of the report, so not part of the formal recommendations; but we stand by our analysis and what we said. Mr. CANNON. Thank you. I understand your office is working with Chairman Coble's staff and Mr. Berman's staff to develop legislation that reflects the copyright officer's recommendations associated with the 104 report and recognizing the scope of the report and our obligations here. And I look forward to reviewing these provisions in that draft bill, and thank you very much for here. being And Mr. Chairman, I yield back. Mr. COBLE. Thank you. Mr. Cannon, unless I missed something, you weren't charting a CARP course, were you? What you—and I am not admonishing you for that, but was I missing something? Mr. CANNON. No, sir. This is slightly peripheral to the testimony that has happened thus far today. But the ever-capable Ms. Peters was very much with these issues, and I appreciate that information. Mr. COBLE. The gentleman from Virginia. Mr. BOUCHER. Thank you, Mr. Chairman. I want to join with others in thanking this panel for illuminating our Subcommittee today on questions relating to the CARP proceedings. I think that in response to Mr. Berman's questions, we have rather thoroughly covered the terrain of the potential of using the U.S. District Court in the alternative to CARPs. That is a subject in which I have some interest and intend to have further discussions concerning, but I believe we have given this panel an adequate opportunity to express its views on that question. I think we have also covered, in response to Mr. Herman's questions, rather thoroughly the potential need and. the pros and cons on moving to more advanced discovery. I happen to think that that would be salutary. I understand Mr. Garrett does not think so. And that also, I think, is a fruitful subject for further conversation. I am going to take the time of these questions today to focus on the standards. There are three standards that have come to my attention that are applied by CARPs: Section 801 applied to music distribution services, digital music distribution services other than Webcasting, and the concept of fairness of the payment is inherent in that standard; The section 119 standard relating to the payments that are made by cable and satellite retransmitters for terrestrial television re- broadcasting, and the concept of fairness of the payment is inherent in that standard; Applied recently by the CARP was the section 114 standard that applies only to Webcasters, and the concept of fairness of the payment is not present in the standards that were applied in that decision. A result was reached., which I, frankly, find very troubling. I think Mr. Billington also found it troubling. I think he took the step of setting that decision aside, and we are awaiting his decision on his more thorough consideration of the matter. But what troubles me greatly is that in setting this rate, the consequence of the rate to the new and emerging and young and perhaps struggling Webcasters who are just getting on their feet and who measure their revenues in the tens of thousands of dollars per year was not considered. By having a one-size-fits-all approach and setting a rate of 14 cents per song played that applies to everybody, no matter what their revenues, the young companies and the small companies were severely threatened. They would have royalties alone measuring in the hundreds of thousands of dollars annually, and that strikes me as fundamentally unfair. I think an element of what we ought to be doing as we evaluate this overall subject is to consider whether or not the standards that are being applied by the CARPs are reasonable and fair. Now, I don't know whether you came today prepared to respond to this question or not, but I would like your opinion on the question of whether or not the standards are adequate. And specifically, do you believe that in making general revisions with regard to the CARP that we ought to be inserting the element of fairness of the payment in this section 114 standard as it is currently found in the other two standards? And who would like to respond? Mr. Rich. Mr. RIGH. I would be glad to take a stab at it, Mr. Boucher. First observation, and a spin on what Ms. Peters and Mr. Gar- rett suggested, while process is important, I think if process doesn' lead to—isn't buttressed by a substantive standard that makes sense—the process is wasteful and the efforts of this Subcommittee 43 therefore would be wasted; and I don't think anybody wants to see that. I think this is a more complicated issue than the 112, 114 setting, as follows. You have a willing-buyer and willing-seller standard which is subject to various interpretations as to what it means. But one interpretation which doesn't strike me as a bad one is, it means if you had a freely competitive marketplace and you saw what even nascent Webcasters would spend in that marketplace, if you could approximate what would come out of that process and you are asking a panel to do it, it wouldn't be so bad. I think where this has gone off the rails potentially is that there is, for example, in section 114(e) of the act an antitrust exemption which was designed to encourage negotiated resolutions by allowing collective negotiations to occur, whether through trade organizations like the RIAA or, for that matter, through collectives like ASCAP and BMI. And the result is that, acting on that statutory authority and that antitrust exemption, the collectives went out and did and tried to do what you would expect they would do, which was to obtain license fees at the best rates they could obtain from, as it turned out, a variety of generally small—with one or two exceptions—Webcasters, and then came into the CARP process and said, "Here they are„you should accept these as market approximating.'" The problem is, they were the fruits of the antitrust exemption; they did reflect the product of market power, And, therefore„ to as- sume, as I think the panel slipped into error, that simply because these were, quote, "willing buyers" and "willing sellers" in the sense that literally deals were struck, there must be some kernel of arms-length, fair result in it, I think led to the problem. And I think if you are dealing with new industries, with a particularly inherent imbalance in power, unless there is a clearer vision of what "willing buyer," "willing seller" means, than I think this panel understood, I would favor a return to something closer to the 801(b) standard—which, after all, the record industry itself benefits from in other compulsory license settings like 115, where they get the benefit of the 801(b) standard as a, quote, "user. Why not have that as a level playing field for everyone, which explicitly recognizes the nascent nature of industries the need to encourage new players and. the like, and inject back the element of fairness, if you will? Mr. BOUCHER. Mr. Garrett, I know you want to respond to this. Mr. COBLE. Mr. Garrett, move along quickly because the 5 minutes have elapsed and we are going to start a second round. Mr. GARRETT. The standard that is in 114 is the same standard that is in 119. Both statutes use the term a "willing buyer, willing seller." both statutes use the term "willing buyer, willing seller." . The term "willing buyer willing seller" has historically meant in our jurisprudence a fair market value standard—119 has fair market value; 114 has fair market value. And in my view, I see no reason, no justification, for requiring the licensing of copyrighted works at anything less than fair market value. Fair market value has an inherent concept of fairness in it, and I think it was one that was considered during the recent CARP proceeding. Mr. COBLE. We will start a second round now. 44 Mr. Remington, I believe that we all agree that participation should not be limited to just, quote, "the big players," close quote. There are those who would argue that participation in CARP is cost prohibitive for individuals and small entities. That said, I am also informed that individuals with small claims have invoked existing CARP rules to prolong proceedings and derail settlements at virtually no cost to themselves, but substantial costs to other parties. Could we correct this inequity by splitting CARP fees among parties in proportion to their participation rather than on a pro rata basis? And if not, what would you suggest? Mr, REMINGTQN. Thank you, Mr. Chairman. I would suggest, as I stated in my written statement, that there be a much lower-cost, more expeditious system which for the $6 or $ 10 claim obviously wouldn't come in under that cost that would be a sheer impossibility—but paper proceeding, summary judgment, aggressive pursuit of settlement not only by the parties, but by the people who—like a U.S. Magistrate would do, or a Federal district judge—by the person or entity that controls the process, We are not arguing that individuals should not have access to this process, They should. If they are a bona fide songwriter and composer, under the DART statute they have access to that process. But it is downright silly to allow people to expend tens of thousands of dollars in pursuit of a claim under $ 10 where the Copy- right Office doesn't even have authority to cut a check to pay off that amount of money. Mr. CoBxz. I concur. CARP assists in the distribution of proceeds under a compulsory license must prescribe rates and terms that are representative of those that would have been negotiated in the marketplace, again between a willing buyer and a willing seller. Having said that, A, since the CARP represents the failure of marketplace negotiations, how do you all determine marketplace standards by which a rate may be set, A? And, B, if the same static rate is revived in subsequent CARPs, why should any CARP be convened? Ms. Peters, why don't you start if you are comfortable starting? Ms. Pzvzas. It is better that they start. Mr. CoaLz. Who wants to put their oar in the water initially' All right, Mr. Garrett. Mr. GARRET. Mr. Chairman, again the notion of willing buyer, willing seller is one that is fundamentally ingrained in our system of American jurisprudence here. The question, what is appropriate value, that is how fair market is defined; it is willing buyer, willing seller. So the issue of how you in any particular case define or come up with a willing-buyer or willing-seller rate is one that has been confronted over and over again in a wide variety of contexts. If you are talking about emi- nent domain cases or talking about these CARP proceedings or Government compulsory licensing of patents and copyrights, it is a standard that has been applied over and over again. Having said that, the recent Webcaster proceedings is a good example of where one can spend hours and hours and tens of thousands of pages arguing about what does a willing-buyer, willing- seller rate mean in the context of any particular situation. 45 But that same kind of thing goes on in other cases, as well, when you have to determine fair market value; and I believe that that is an appropriate standard here for judging the value of copyrighted works. If you are going to compel—and we are talking about compulsory licenses here—if you are going to compel copyright owners to license their works to different types of technologies, at the very least they should be entitled to fair market value for the use of their works. Mr. CORLE. Does anyone want to add to that? Mr. REMINGTON. To the extent it is obviously your prerogative to create compulsory licenses; but to the extent that you set subsidy rates at lower than fair market value, you are transferring wealth from one group of people to another in our society, And that is one of the problems in several of the compulsory licenses that do not have the willing buyer, willing seller, standard.. Now, in the political sense, many people would like those types of compulsory licenses because they get a rate that is under what they would pay in the marketplace. You just have to be careful and be knowledgeable of that fact. Mr, CojsLE. Ms, Peters, I let you off early, I am going to impose on you ag81n. Ms, PETERS. That is good because the terms and conditions are what we are actually really considering right now in the Webcasting proceeding, so it would be inappropriate to answer. Mr. GOBI.E. That is why I was quick to recognize that. Would eliminating all statutory licenses resolve the litany of problems which have been broached today? Ms. PETERS. I would say hallelujah; and the answer is, yes, it would. But my knowledge of where we are going: I think we are more likely to see more, not less; and more complex, not less complex. So it would be great because we wouldn't have to deal with what to do about the failure of the CARP system. But I think you are going to have to come and deal with it. Mr. CGREE. I see that annoying red light looking at me now, so I recognize the gentleman from California. Mr. BERMAN. Thank you, Mr. Chairman. Just taking off on what Mr. Rich said earlier in criticizing the willing-buyer, willing-seller standard, you talked about this example of taking some agreements between the RIAA, and I guess, what, individual DEMA members. Mr. RICH. Individual Webcasters. Mr. HERMAN. Individual Webcasters, and that becoming a rate. But I am told that, in fact, the CARP throughout 25 of the 26 agreements reached during that process and only left the agreement between YAHOO and—not exactly a small Webcaster—and the RIAA and then said, but even so, that rate would not be the appropriate rate and reduce that. Mr. Garrett, am I right about that? Mr. GARRETT. I think you have it right, Mr. Berman. Mr. BERMAN. So it wasn't looking at 25 unbalanced negotiations in that sense and then concluding that is the willing-buyer, willing- 46 seller rate derived from sort of a nonmarketplace situation because of the antitrust exemption? Well, anyhow, I guess, Mr. Remington and Ms. Peters, you hadn't spoken yet on the issue of court versus continued administrative or arbitration process. Do you have any thoughts on that? Mr. REMINGTON. Yes, I do. I think, fortuitously, this is the Courts Subcommittee, so this decision could not be made in a better environment. But Bruce Rich, being a good lawyer, did recognize a deep-seated constitutional question which he said he hadn't analyzed. I would hazard a guess that this is of very dubious constitutionality because there is no case or controversy. You would have to create a cause of action of sorts in order to invoke the litigation process and the powers of the Federal judiciary. In the BMI or ASCAP rate court context, there is a case or controversy which emanates from the administration of the consent decrees. Second, I agree with Bob Garrett that everything that has been criticized about the defects in the CARP process, primarily costs would be exacerbated in this process; this would be more expensive and slower. Third—and I grabbed my long-range plan for the Federal courts—the Federal judiciary from a policy perspective, as you well know, vigorously opposes the creation of specialized courts unless there is a huge societal problem at hand, something akin to maybe even to homeland security. But to create a court for copyright arbitration royalty proceedings, as a policy matter, I don't think would receive the approval of the Judicial Conference. Ms. PETERS. I am not a constitutional scholar, so I accept Mike's questions. I really don't have a preference one way or the other. Maybe that is not true; there is a question that is raised- Mr. BERMAN. Your life would be easier. Ms. PETERS. Right, absolutely, and I am trying to make that happen. A couple of countries actually have judges involved in their tribunal-type proceedings, but it is not the same as giving it to the district court. In Australia and Canada, they really have one judge who is—part of his duty for a certain period of time is to be like the equivalent of "chairman of the proceedings," if any are necessary, and then deal with stable members, who are named, whether they are from an agency like the copyright office or their equivalent of ALJs. But it does bring the adjudicator knowledge of the courts. Now, I don't know how that kind of a system plays in with regard to our constitutional requirements. But I know that the countries that have that system seem to like that system. Mr. BERMAN. Well, I think that does it, Mr. Chairman, for me. Thank you. Mr. COBLE. Thank you, Mr. Herman. Mr. Remington, I cut you off when Mr. Boucher's time expired. I will now recognize you for that comment, or have you made it? Mr. REMINGTON. I just wanted to make a clarification. I thought I heard twice that BMI and ASCAP were part of the proceedings, and they were not. For the record, we were not part of the recent webcasting proceeding. 47 Mr. COBLE. Okay. Let me put this to you, Ms. Peters, in conclusion. It has been suggested today—let me say good-bye to Howard before he leaves. Ms. Peters, it has been suggested here today that a possible, quote, "fix," close quote, of the CARP structure and process is going directly to the Federal court system. How would you, as Madam Register—speaking for the copyright office, how would you feel, in essence, not having to deal with the CARP system anymore? Ms. PETERs. Let me put it this way- Mr. COBLE. Strike that. How would you feel about not dealing with the CARP system, A and B? What do you think about going directly to the court system? Ms. PETERS. I am not sure about going directly to the court system. I probably don't support that. With regard to dealing with the CARP system, I think the system that is in place right now and the work that is done by the copyright office in the review of what the panels do is not necessary, that there is a better structure. I am not opposing it remaining at the Copyright Office. I am just saying it has got to work better and it has got to meet the criticisms and the shortcomings that we have identified. We are not opposed to having it at the Copyright Office if that is where—when you address all of these issues, that is where the consensus seems to coalesce. Mr. COBLE. Well, ladies and gentlemen, lady and gentlemen, we thank you all and thank those in the audience for having expressed your interest by your continued presence here. And let me conclude by thinking aloud. If it is the consensus that we enact a bill to change the CARP system and if everyone agrees just, to some extent, to that point, it may well be helpful—again, thinking aloud—if the Copyright Of- fice and/or our Subcommittee conducted round tables or discussions or jaw-boning with interested parties on the subject in advance of possible legislative action. I don't see that that could do any harm. Ms. PETERS. We would be delighted to do that. Mr. COBLE. I didn't hear you. Ms. PETERS. We are doing very good at round tables. Mr. COBLE. It may end up wasting time, but we always do from time to time. But you all think about that and so will I. In conclusion, does anyone have any nagging ideas you want to bounce off before we drop the hook? Well, again, we appreciate, folks, your testimony and your presence today. This concludes the oversight hearing on CARP, the Copyright Arbitration Royalty Panel structure and process. The record will remain open for 1 week, so if you have additional information or if anyone has additional information, the record will be open for 1 week. Thank you again for your cooperation and attendance; and the Subcommittee stands adjourned. [Whereupon, at 4 p.m., the Subcommittee was adjourned.] STATMENTS SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT OF THE HONORABLE HOWARD COBLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH CAROLINA Good afternoon. The Subcommittee will come to order. The Founding Founders understood the importance of copyright to our nation. In keeping with this tradition, our Subcommittee has always worked to support artists by ensuring that they receive fair compensation for their creative endeavors. Our hearing today will focus on an arcane but important component of the present system that reimburses copyright holders for their work. By way of background, and as part of the 1976 Copyright Act Amendments, Congress acknowledged the need for government to oversee the royalty rate-making and distribution process by creating the Copyright Royalty Tribunal, or CRT. The need for this entity was especially critical since the '76 Amendments also created three new compulsory licenses. By 1993, Congress, the Copyright Office, and rate-making participants believed that greater efficiencies could be realized under a different system, which led to the development of our present construct, the Copyright Arbitration Royalty Panel, or CARP. Unfortunately, it now appears that history is repeating itself, as the current structure and operation of the CARP system has generated great frustration among those parties required to participate within its statutory confines. Although some critics have characterized our efforts to develop a fair and efficient rate-making and distribution process as "disappointing," I am optimistic that we will ultimately prevail in our attempt to build a better copyright mousetrap. We have an excellent panel of witnesses today who will doubtlessly add to our individual and collective understanding of the CARP system, warts and all. I welcome them here today and thank them in advance of sharing their thoughts. I now turn to the Ranking Member, Mr. Berman, for his statement.

PREPARED STATEMENT OF THE HONORABLE HOWARD L. BERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Chairman, Thank you for holding this hearing on the Copyright Arbitration Royalty Panel. I am a strong supporter of marketplace solutions to copyright royalty disputes. Copyright owners have every economic incentive to capture additional revenue by licensing their works, and have every right to seek the highest royalties the market will bear. If they are too short-sighted to capitalize on opportunities for new revenue—or fail to act rationally, as economists would say—the marketplace will punish them. Furthermore, when copyright owners have engaged in anti-competitive conduct, the antitrust laws have, time after time, proven adequate to remedy this conduct. Compulsory licenses and CARPs, on the other hand, have proven to be imperfect, unwieldy and costly licensing mechanisms, at best. I suspect that many CARP participants, both licensees and copyright owners, would have found a far more satisfactory outcome had they chosen to spend their money and effort negotiating a reasonable settlement in the marketplace rather than in a CARP. Furthermore, compulsory licenses tend to outlive their purpose, and thus may create marketplace dislocations rather than address them. For example, the cable compulsory license was created to help a struggling and entrepreneurial cable industry compete with the broadcast industry. Today, the cable license continues to exist in an era where the (49) 50 cable industry is able to exercise market power at least comparable to that of the relevant copyright owners. While I do not have a fondness for compulsory licenses, I recognize that we must do our best to make the ones we do have work. The CARP process was catapulted into national awareness this year because of the controversial webcasting CARP, which determined the royalty rate for internet radio. The outcome of the webcasting CARP—which still is under consideration by the Librarian of Congress and the Copyright Office—has garnered much attention from the press and the public. What captured our attention about the webcasting CARP was not only the royalty rate it set, however, but the process through which it occurred. While many of the rate and distribution determinations are the subject of marked disagreement among the participants, the one thing that even the strongest opponents agree upon is that the CARP process has serious flaws and warrants improvement. In particular, the overwhelming problem that is repeatedly voiced is the expense of the proceedings. Participants in a CARP bear not only their own substantial legal fees, but also the cost of the CARP proceeding itself. This is often millions of dollars—sometimes much more expensive than the royalty claim that the CARP is addressing. For instance, I believe Mr. Remington can address particularly egregious situations in which a participant had to pay tens of thousands of dollars for a CARP to determine the distribution of around ten dollars in royalties. In addition to the problems of cost to the participants, I know there are great concerns over the autonomy and independence of the arbitration body, the burden it places upon the Copyright Office, and the overall fairness and consistency of the outcomes. I hope these are issues we can explore today, and begin to develop strategies to improve the royalty arbitration process. Our witnesses are experienced participants in CARP proceedings, and can speak to the problems they have encountered during CARP arbitration, along with potential solutions. The issue of CARP reform is not new to our subcommittee. In 1998, Chairman Coble introduced legislation to reform the methods through which the royalty rate is determined. Ultimately there was not enough support to enact his reform pro- osals. Given today's climate, however, I believe there is sufficient impetus and suf- cient interest to seriously consider changes to the arbitration process. I anticipate an active discussion today to determine a model that most efficiently accomplishes the goals of the CARP process without unduly burdening the participants.

PREPARED STATEMENT OF THE HONORABLE JOHN CONYERS, JR., A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MICHIGAN I agree we need to reform how licensing rates for copyrighted works are set. Ev- eryone agrees that the current system is too expensive, time-consuming, and inefficient. At the same time, this will be at least the third time we'e changed how the rates are set. I'm all for good government, but I feel like we'e playing Goldilocks here. The first system, the tribunal, was too bureaucratic. The second system, the panels we have now, are too unwieldy. So it seems like we have to find what's just right and that's what this hearing is for. While we are discussing we should make the changes, however, it is important that any reforms made do not affect the actual rates that are set. I say this because there have been ideas—in guise of procedural reform—that really would make it harder for content owners to receive a fair price for their work. That is something we should not do because the very incentive for the creative works that are being licensed is the financial reward promised in the copyright laws. The reforms made to the panels must be procedural in nature and no more.

PREPARED STATEMENT OF THE HONORABLE RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA Thank you Mr. Chairman for a timely hearing on the CARP process. The CARP process is badly broken. It should be replaced with a more efficient, more affordable and fairer system. In my view the functions of the CARP should be transferred to a U.S. District Court. The problems which beset the CARP are many. While the CARP process was designed to produce a streamlined procedure, the lack of appropriate discovery mechanisms has prolonged the proceedings, achieving the opposite of the intended outcome. 51

The process is too expensive. It is beyond the ability of many interested parties to afford. Having private parties pay the fees of the arbitrators is manifestly unjust to the financially less fortunate. No body of expertise is developed by the arbitrators which could be applied in subsequent proceedings. Starting with a new arbitrator panel each time will lead to inconsistent judgements and a constant process of reinventing the wheel. And the standards which are applied are demonstrably inadequate. In the recent webcasting decision, the concept of fairness of the payment was totally absent from the deliberation. Fairness is the standard under Section 801 (b) (1) proceedings for royalty payments for digital music services other than webcasting. Fairness is the standard under Section 119 (c) (8) (B) for royalties paid by cable and satellite companies to terrestrial broadcasters for terrestrial broadcast retransmissions. But fairness is not an element of the standard under Section 114 applicable to webcasters. However we address the procedural problems, and I believe vesting this rate setting function in a U.S. District Court is the best approach. We also need to invest fairness of the payment as the governing standard under all CARP proceedings. We must avoid a repeat of rulings like the most recent one, through which a one- size fits all approach was adopted, and small webcasters that measure annual revenues in the tens of thousands of dollars were saddled. with ioyalty fees in the hundreds of thousands. A fairness standard would have prevented a ruling which threatened to put the young and small companies out of business. Changes must be made, and I welcome this first hearing as we explore the problem and consider a new course. PREPARED STATEMENT OF THE HONORABLE CHRIS CANNON& A REPRESENTATIVE IN CONGRESS FROM THE STATE OF UTAH

I thank the Chairman for calling this important hearing on the structure and process of CARP royalty setting panels. I will acknowledge that I was one of many Members who had serious concerns about the result. produced by the latest CARP panel for webcasters.

I would like to remark for a moment on the governing standard by which the CARP determines the royalty rate. In addition to considering CARP structure and procedures, this Committee must also consider why there are separate rate-setting standards for the sound recording CARPs for webcasters, the satellite TV CARPs, and then all other CARPs (including the sound recording CARPs for industries other than webcasting)'?

In particular the satellite TU and "all other" CARPs have standards that require rates based on fairness, fair market value, and balancing the interests ofthe participants. The webcasting CARP has only the "willing buyer - willing seller" language, which suggests that there is a functioning market that results in a fair price.

However, ifthe Congress aud this Committee thought the market was functioning fairly, in the context of any compulsory licenses, there would not be any compulsory licenses as they are needed only when a market is dysfunctional or inherently one-sided — which this one clearly is.

Particularly with a nascent industry negotiating against powerful collectives representing content owners such as the RIAA, ASCAP, and BMI there is no leverage on the side ofthe webcasters, and in that case the "willing buyer-willing 53

seller'" standard seems to require the CARP to ratify the results of a single-seller marketplace that is powered by an industry collective.

I mentioned my concern earlier over the recent CARP rate announced for webcasters which has been set aside for additional review by Mr. Billington, the Librarian of Congress.

It is clear to me that the purpose of Congress in putting in place the compulsory license for webcasters in the DMCA was to promote a nascent online industry up to the point it could flourish and add real diversity to the way consumers get content delivered. But if the mechanism we have established sets rates that would be detrimental to that goal, do we have a responsibility to re-examine the result? I think the answer is "yes" when Congress'xpress purpose

Such actions are not unprecedented, in fact we did as much fairly recently when we deemed that the CARP for satellite broadcasting set a rate that was too high for satellite television distributors and took actions to overturn that rate.

Just so no one is surprised, (and I know this will be unpopular among some in this room) there ought to be an acknowledgment today that whatever structure or process we have for CARPs now or in the future - if the results produced are expressly against the intent of Congress and this Committee in establishing a compulsory license in the first place - then this Committee and Congress have a right and a duty to consider actions that might overturn such results.

I thank the Chairman, and I look forward to hearing the witnesses discuss how we might improve the CARP process and structure so as to get results that are more consistent with Congress'oals and stated intent.

PREPARED STATEMENT OF THE HONORABLE DARRELL ISSA, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Thank you, Chairman Coble and Ranking Member Berman, for holding this hearing on the process and structure of the CARP (Copyright Arbitration Royalty Panel). With the existence of compulsory licenses, agreements are needed in order to determine the amount of licensing royalties copyright owners are entitled to receive. Unfortunately, Congress has created a flawed process in which royalty decisions are handed down. My specific concerns are directed at the exorbitant costs for arbitrators, the restrictive discovery process and the different standards for setting rates. The CARP forces parties to participate in laborious proceedings that result often in disputed decisions and additional lawsuits. The existing CARP process can cost both parties a high price, with attorney fees, arbitrator fees, Copyright office fees and consultant fees listed as expenses. Without reform, the current model will continue to be costly for all sides. The discovery aspect of the CARP proceedings is restrictive, because the CARP has no subpoena powers. The scope of the discovery is limited to the written testimony, with access to official documents not available to shed more light on a particular issue, thereby ensuring the system in place remains ineffective and backwards, compared to a traditional court case. My last area of concern involves the Copyright Act and the three different standards for setting royalty rates. I have attached to my opening statement a side-by- side display of the three standards, which are found in Sections 801, 119 and 114 of the Copyright Act. The first of these standards requires rates to be the product of a four-factor balancing test, and requires rates to be "fair" and minimally disruptive of the relevant industries. The second standard requires the rates to represent 54 the "fair market value" of the relevant activity. The third standard, which applies only to Internet radio services, lacks a fairness requirement, and only requires the arbitrators to ratify prices that would be negotiated by willing buyers and sellers in "the marketplace." I believe we should consider the feasibility of a single standard, which could lead to providing assurances that the rates the CARP set are fair and reasonable for both the copyright owners and the user, and provide the Copyright office a basis in which to set future royalty rates. Shedding light on the problems will require greater inquiry in to what is deficient with the current system and what could be done to ensure fair decisions are rendered. Thank you again for holding this hearing. I look forward to hearing the testimony from the panel of witnesses. 55

Statement of

INTERCOLLEGIATE BROADCASTING SYSTEM

on the Copyright Arbitration Royalty Panel (CARP)

submitted to the Courts, the Internet and Intellectual Property Subcommittee ofthe House Judiciary Committee

June 13, 2002

The Intercolley'ate Broadcasting System (IBS), which was founded in 1940 to represent

the college broadcasters, submits this statement on the Copyright Arbitration Royalty Panel

(CARP)'s structure and process on behalf ofover seven-hundred-fifty such member stations, all

operating at domestic educational institutions.

The CARP arbitration process, as implemented under in the rules ofthe Copyright

Office, 37 C.F.R, Part 251 (CARP Rules ofProcedure), pursuant to Chapter 8 of the Copyright

Act, as amended, 17 U.S.C., ch. 8, is manifestly unsuitable for determining statutory license fees

for small webcasters under Sections 114 (Scope of exclusive rights in sound recordings) and 112

(Limitations on exclusive rights: Ephemeral recordings) ofthe Copyright Act, 17 U.S.C. g 114 and 112, as amended by the Digital Millennium Copyright Act of 1998, P.L. 105-304.

The unsuitability ofthe procedures under the Office's rules is demonstrated by Docket

No. 2000-9 CARP DTRA 1lk2, In re Rate SeningforDigital Performance Right in Sounds

Records andEphemeral Recordings, currently in progress. 'BS'ember stations have been effectively excluded &om participation in the arbitration proceeding by rulings ofthe Register in

i By order ofMay 5, 2002, the Librarian rejected the recommendation ofthe CARP. The Librarian's determination ofissues is due no later than June 20, 2002. 56 violation of the Fifth Amendment to the U.S. Constitution and the Regulatory Flexibility Act of

1980, P.L. 96-354, as amended. Moreover, it was barred &om filing a post-panel motion by

Section 251.55(a) of the Rules, which limits direct appeals to "parties to the proceeding." A two-page informational notice on "Webcasting Notice and Recordkeeping" recently posted on the Office's website observes that "There is no provision for public comments on the CARP report." (Attachment I hereto}.

The proceeding violates the fundamental principles ofdue process in purporting to set statutory rates to be paid by small webcasters without any practical opportunity for them to submit evidence or argumentation with respect to their distinctive situations as small entities.

This problem was recognized early on by the Copyright OEice in its order ofJanuary 18, 2001.

The effect was palpable. In its order ofFebruary 9th the Office noted that "The Library believes that some parties will continue to formally withdraw from the proceeding, while others will ultimately be dismissed for failure to comply with CARP regulations." ~O. cik at 3. The

OIHce' Announcement ofMarch 2, 2001, noted that "Submission ofamicus briefs, in lieu of written direct cases, has been proposed." ~Ocit. at/ 2 (Participation by small parties and/or nonparties); see, ~e, letter from WCPE Radio, dated January 26, 2001. But, in its procedural order ofMarch 16, 2001, the Office notes that "Many parties have filed Nofiices ofIntent to

Participate, and already a number of parties have formally withdrawn from this proceeding. The

"Finally, a review ofthe list ofparticipants in the proceeding reveals a number ofsmaller-sized firms and concerns that desire to make»se of Section 114 and 112 licenses. The Library has been contacted by several ofthese parties expressing concern over the costs associated with filing a written direct case and fully participating in the proceeding. They are particulady concerned that they will not know the extent oftheir financiai exposure for payment ofthe arbitrartom'harges until the proceeding is completed and have inquired as to whether there are ways to allow presentation oftheir views to the CARP while limiting both their cost ofparticipating and their responsibility for payment ofthe arbitrators." ~Ocit. at Library anticipates that additional parties will withdraw before the deadline for submitting

written direct cases; and some will not file cases at all, requiring their dismissal from the

proceeding." ~O. cit. at g 3. In paragraph 5 the Office rejected alternative means of

participation, ~e, briefs amicus, as not consistent with Section 251 43 ofthe CARP rules, even

though the Office had elsewhere recognized that it is "critical that the interests of al! affected ...

users" be "represented in the proceeding....." Order in Docket No. RM-2000-3B, 65 Fed. Reg.

77292, 77294 (2000).

The result was just what would be expected. Notices ofwithdrawal were filed by Ithaca

College on December 20, 2000 (attachment 3 hereto); by Anderson University on January 29,

2001 (attachment 4 hereto); by Monmouth University on February 9, 2001 (attachment 5

hereto); by the University of Southern Indiana on February 5, 2001 (attachment 6 hereto); and

by WCPE Radio on March 31, 2001 (attachment 7 hereto). In gross terms, participation was

reduced from "over 140 parties"" to less than two dozen at the end.

The OQice's ameliorative suggestion offull participation jointly in its order ofMarch 16,

2001, was unrealistic for stations whose average annual budget is $ 9000. The assessment on

parties under Section 802(c) ofthe Act, Section 25154 (a)(l) and (b) ofthe CARP rules was

"Consequently, the Library will not aHow such submissions by any persons or entities who are not full, active participants in this proceeding. We are sensitive to the concerns ofthose who cannot individually alford the cost of full participation, aud encourage them to pool their resources with those in like circumstances for the submission of one or morc joint written direct cases as permitted by the rules." Id. at 4. Order of February 9, 2001, at 3. Redacted Rcport ofthe Copyright Arbitration Royalty Panel, February 20, 2002, at catt 2. Footnote 2 notes that additional webcaster parties vvithdrew or were dismissed fmm the arbitration proceeding after it commenced. Comments ofIBS, filed April 5, 2002, in Docket No. 2002-1 at 3. IBS'nnual dues, which are less than $ 100, are constrained iu amount by the low-eud ofthe range ofstations* annual budgets. 58 reported to be $ 1,000,000, and the Office began the hearing phase by apparently accepting the

RIAA's urging that participation be limited to those who could afford full participation by " counsel "for a minimum offour days per week for a period ofone month. Order ofJanuary 18,

2001, at 1.

The CARP proceeding was not "arbitration" within any reasonable definition ofthe term in Section 801 (Copyright arbitration royalty panels: Establishment and purpose) ofthe

Copyright Act„as amended, 17 U.S.C. tj 801„where a party to be bound by the determination is effectively prevented from participating by procedural rulings. A more obvious denial of due process and stultification of the Congressional purpose is di6icult to imagine.

The Regulatory Flexibility Act applies to CARP proceedings. They are rulemaking proceedings within the meaning ofthe Administrative Procedure Act of 1947, as amended, 5

U,S.C., Part I, ch, 5. Among other things, a final regulatory flexibility analysis is required by 5

V.S.C. Ia 604. Any argument that the Copyright Office does not fall within the definition of

"agency" in the Regulatory Flexibility Act inust be rejected for the reasons set forth under Point

II in IBS'eply comments, filed in Docket No. RM 2002-1 April 26, 2002, a copy of which is attached hereto as Attachment 8. As an officer ofthe United States, see E+t~ra . v, ~ner

Resister 579 F,2d 294, 300 (4th Cir. 1978), the I.ibrarian is bound by the policy ofthe United

Brosdsa~tin k. C~ate magazine for May 27, 2002, reported that "administrative costs alone [for the 1998«2002 period] ran more than $ 1 million„not counting legal fees.... This fidl, the Copyright Oflice is supposed to hear arbitration for the next four years." (Attachment 1 hereto), ShC a~i Point VIII (Deterndnation and Assessment of Costs) of the Redacted Rcport ofthe Copyright Arbitration Royalty Panel, dated February 20, 2002. Section 2(c) ofthe APA, now 5 U S C. f 551(4), (5), specifically brings "the approval or prescription for the future of rates," etc., within the definition ofrulemaking. The APA is made applicable to "all actions taken by the Register of Copyrights under this Act..." by Section 701(e) ofthe Copyright Act, as amended, 17 U.S.C. ll 701(e). 59

States set forth in Section 2 (Congressional Pindings and Declaration ofPurpose) ofthe

Regulatory Flexibility Act, 5 U.S.C. Il 601 nt.

Further, the Recording Industry Association ofAmerica (RIAA) has insisted on

burdensome reports on use under statutory license in the collateral rulemaking proceeding,

Docket No. 2002-1, ftoti ce andRecordkeeptngfor Use ofSoundRecordings under Statutory

Ltcense, 67 Fed. Reg. 5761 (2002), currently in progress. The expense ofthe proposed

recordkeeping requirements is manifestly disproportionate to both the size ofthe small, non-

profit reporting entities and to the small amounts being distributed to various recording artists.

The proposed rules would require recordkeeping of a magnitude that is impractical for small

webcasting operations run by volunteer students to do; that burden would be imposed in order to

distribute to the average artist only pennies per year per station. The Offtce's procedures must necessarily take into account the cumulative burden both ofthe fees prescribed under Chapter 8

and ofthe economic burden ofthe recordkeeping prescribed under Chapter 7,

Here again the Olnce has so far failed to accommodate the proceeding to the smaller entities. 10 No initial regulatory Qexibility analysis (IRFA) was issued by the Office as required by Regulatory Flexibility Act of 1947, as amended. Any contention that the 1947 Act does not apply to the Office as an arm ofCongress excluded from the definition of"administrative agency" in Section 2(a) ofthe Administrative Procedure Act of 1947, now 5 U.S.C. $ 551(1)(A),

9 The disproportion is demonstrated in the reply comments ofan IBS member, the Harvard Radio Broadcasting Company, Inc., and of others in the record of Docket No. RM 2002-1. 10 To the 015ce's credit, it did conduct three informal rcundtables in the rulemaking pmceeding on May 10th, but these standing alone are nct an adequate substitute for the procedures set forth in the Regulatory Flexibility Act, as amended. The informational notice recently posted on the 06ice's website (Attachment 1) implies that some segmentation ofinterim rates snd recordkeeping requirements may be forthcoming later this month in the CARP and rulemaking proceedings. should be rejected as legally unsound." Ifthe Office is to be part ofCongress acting lhlltl ly,ltll 'Itl fth P t tCI fth C~ttihB~kt .Vl

424 U.S, I (1976), and ifit is acting administratively as part of Congress, it is violates the

separation ofpowers doctrine. Bowsher v. ~gar, 478 U.S. 714 (1986). The sounder analysis

would be that the Office was not intended to act as part ofCongress other than as specified in

Section 701(b), as amended, 17 U.S.C. $ 701(b)

Conclusion

Both the royalty arbitration proceeding and the recordkeeping rulemaking have gotten off to bad starts as far as the small webcasters are concerned. In neither case is the situation beyond retrieval by the Office. The royalty rates and the recordkeeping requirements must be made more proportionate. But, longer term, IBS submits that the Office must find a stable way to conduct its proceedings in the future so that small webcasters can practicably participate in CARP proceedings and so that the Regulatory Flexibility Act is fully complied with.

Respectfully submitted,

INTERCOLLEGIATE BROADCASTING SYSTEM, INC.

367 %indsor Kghway New Windsor, New York 12553 (845) 565-0003

II The legal analysis is set forth in the Joint Motion ofIBS and Harvard Radio, for an IFRA, filed April 5, 2002 in Docket No. RM 2002-1 and in IBS'eply filed therein on April 26, 2002, copies of which are attached hereto as Attachments 8 and 9. 61

Ofcounsel:

William Malone Miller and Van Eaton, P.L.L.C. 1155 Connecticut Avenue, tt 1000 Washington, D.C. 20036-4320 (202) 785-0600

Attachments:

Attachment 1 Webcasting Notice and Recordkesping (from Copyright Office Website) Attachment 2 Broadcastina dt Cable magazine, May 27, 2002, p. 14 Attachment 3 Withdrawal by Ithaca College, December 20, 2000 Attachment 4 Withdrawal by Anderson University, January 29, 2001 Attachment 5 Withdrawal by Monmouth University, February 9, 2001 Attachment 6 Withdrawal by University of Southern Indiana, February 5, 2001 Attachment 7 Withdrawal by WCPE Radio on Mph 31, 2001 Attachment 8 IBS'eply comments in Docket No. RM 2002-1, filed April 26, 2002 Attachment 9 Joint Motion ofIBS and Harvard Radio Broadcasting Company, filed April 5, 2002 62

Notice and Recordkeeping for Use ofSound Recordings Under Statutory License Background On February 7, 2002, the U.S. Copyright Office issued a notice of a proposed rulemaking on the requirements for giving sound recording copyright owners reasonable notice of the use of their works in connection with the Sggtlgi1215 statutory license for certain digital transmissions of public performances of sound recordings, and on the requirements for how records of such use will be kept and made available to copyright owners. Please note that this rulemaklng proceeding Is not about the rates and terms for webcasters that were recommended by the Copyright Arbitration Royalty Panel ("CARP") in its February 20, 2002 report. There is no provision for public comments on the CARP report. The comments address the proposed rulemaking on the requirements for giving sound recording copyright owners reasonable notice of the use of their works In connection with the section 114 statutory license. Comments

Interested parties submitted comments on the rulemaking by April 5. ~Re I ~om n s were due April 26. For more details, please see Federal Register notice ~6F~5~. Public Roundtable The Copyright Office conducted a public roundtable on the proposed regulations on May 10. Details of the roundtable may be found In Federal Register notice 67 FR 18148. Follow this link for a list of the three panels conducted at the roundtable and the participants in each panel. ~~rl nldc,~o, in cooperation with the International Webcasting Association, webcast the roundtable discussion, and an archived copy is available for viewing. Although the Copyright Office did not officially sponsor this webcast, we are pleased that it is available to viewers on the Internet.

An unedited transcript of the roundtable is also available. Read: ~ Panel I: Royalty Allocation Compliance with Terms of License ~ Panel III: Small Businesses Interim Regulations The Copyright Office expects to announce interim notice and recordkeeping regulations around the time that rates and terms for the section 114 and section 112 statutory licenses are announced. The interim regulations will establish transitional reporting requirements for services using the section 114 statutory license to perform sound recordings publicly by means of digital audio transmissions and the section 13.2 statutory license to make ephemeral recordings of sound recordings. After several months, these transitional reporting requirements will be replaced by final requirements that are likely to include more comprehensive reporting. 63

The interim requirements are likeiy to require each service to report the following information for a certain period of time during each calendar quarter: i. the name of the service submitting the report 2. the transmission category of the service [i.e., a single letter code identifying the nature of the service transmitting the performance, e.g., Eligible nonsubscription transmission by webcaster of over-the-air AM or FM radio broadcast, other eligible nonsubscription transmission by a webcaster, eligible nonsubscription transmission by commercial broadcaster of over-the-air AN or FM radio broadcast, eligible nonsubscriptlon transmission by non-CPB, noncommercial broadcaster, etc.] 3. for each sound recording transmitted by the service during the relevant period: A. the featured recording artist B. the sound recording title C. the name of the record album containing the sound recording, if in the possession of the service, or supplied to the service, at or before the time of the performance D. the marketing label of the sound recording, if in the possession of the service, or supplied to the service, at or before the time of the performance; and E. the total number of performances of the sound recording during the relevant reporting period.

Coovriaht ONce Halo Desk The Librarv of Conoress 07-3un-2002 64

TOP OF THE WEEK Music biz asks for radio probe Groups say consolidation's ing on legislarion to leading to reform dlc statelnen( sa&rt "For (he payola-like radio, a sraffer conamxd. tactics country formal, the same that hurt listeners The wide-rang(ng gnwps four groups control access include the Recording In- to 56% of rhc format's 28 By Page Albimak dustrtf of Anler- milbon brtcnc(s. mups representing nxunfing an(as. ica. American~Fcdemrion of The pcritioning groups fccofd com(xmks, sotlglvtllcls, nlct- Musicians, Am«rimn Feder- arc upset by payob.like G chandisers and consumer advocates ation of Tclemsion and Ra- Sen. nassau reinaotd (n- pronices in which artists wanr dlc government to tak» a hard look at dio Artisrs. Association for Wls.) is workina on a and leg(slat(ve pmposat to record companies pay radio consolidariun, hinring dfar some prac. Indcpcndclu Music, Flxufc reform radw. (ur radin.station p omotions tice; by larre group ownrts smock of(a()ola. of Music Coalirion, Just in rctum for airtime For In a statemen( delivered lo Congress Ploul Folks, Nashville Songwriter Assoria. favored a rtirtf. They riso want the FCC (o and the FCC Friday, (0 indepcndcnr (ion Intcmational, Narinnal Association oF invertiga(c how vertiod integration in radio "the indusuy groups orgcd government to Rect%ding Mcfchandlscls. Nsltlonal Fcde(a. hm forced up conccn.tick(s price and made revise the pa)oh lans to cover mdependent tion of Cnmmunir)'roadcasters, and dlc it diF(ir.ult for non a(tris(ed artists to book promotion to rarlio, to investigate the Recorriing Academy, a part of the National tours. Clear Chancel runs a concert.pmmo. impart of radto consolrdation on the music Amdemy oFRecording Arrs and Sciences. tion company, SFX Rntertoinment. community and citizens, and to work to "Today, for the mnrcmporary hit radio/ "Artists, songwrners, labris and retail- protert non.comme(cia) space on both dlc top40 formats, only four radio station em says Mike Bmcy, of thc Future of Mu- terrestrial mdio bandwidrh — and the emerg- gmups Chmcegor, Clear Channel, Ingnity sic Coalition "are united in oppos(Y(on to ing Webcosting models." and Caps(sr—control access ro 6) % of thc large brtudcasre(s'laim that consolidarion Scn. Rus(cg Peingold (D Wis.) is work- formarb dl million listeners nationwide, has improved commercial mdio." ~

yet, rhe June 20 dale gives the CARP is thrown hack industries an opporruniry ro hash out n rate on their oom, byon't Library of Congress accept radko streaming royalty rote which Congress would prefer. Two weeks sgo. Scrwte Judiciary By Paige Albiniak Q.le cents per song pcr listener Pc(era, registrar of copyrights. Commiuee Chairman Patrick a(ho broadcmrers wdl get for Internet.only radio stations. By law, Billington must issue a Leahy (D Vt.) and ranking anorhcr chance st reduc. The fees would be paid ro final decision by Junc 20; it is member Orrin Hotch (R-Utah) R ing (he (ees d(ey will pay record companies and artists, possible that decision Still pushed thc industrie to ncgtxi- to stream their signals over the who in(Y(agy wanted more but inriude ncw rates. But Bggnbson ate an independent sc(dement or That's after Intemct. the Libmry dlcn accepted tire suggested also could remand the whole possibly ace )cgislariion. of Congress rcfuscd to adopt rates. Radio bmodcasters already process back to a ncw CARP. nw House is also bw(ting inm thc rare agreed to Imt Fcbnfary pay fees to music publishers Thar would b» expensive, the act. Thc House Courts and by the Copyrigh( Arhitrarion ASCAP and Bbgl but much less sources say. Administrative costs Intcllcctual Property Submm. Royohy Pand (CAI(P). than those CARP says shou)f1 be alone last time ran more than $ 1 (nittee hm penriled in a June (3 Since Pcbruaty, radio broad. paid to rcmrd mmpanies. million, not counting legal fees. hearing to examine the CARP casters ant( Internet.only Wfb. CARP is managed by (he US. 'Hus pmceecbng covers 1998. process; in April, House Judi- casrers have been lobbying Copyright Office, part of th» 2002. This fall, the Copyright riaty Committee Cbaitman fiercely against the rate, which Ltbrary of Longnus. Librarian Oigce is supposed to heat arbi. James Senscnbrenner (R.W(s.) (~ said should bc 0.07 ccnrs of Congress James Bilgng(on (ration for rimnexr four ymw. cogened comments frnm m. per song per liuener for tradi. rejected the rate based on the While sources say m(er-mdus- vo(v(SI ponies m order to begin (iona) radio broadcasters and recommmdation of Mary Beth try negouanons aran t gomg on «mY(ng reform Icgislarion~m

14 broad(mt(ny g(ab(e/5-zfdz 65

December 14, 2000 BECEIVEP Ms. Gina Giuffreda Copyright Arbitration Royalty Panel PO Box 70977 DEC 80 24ttn South West Station GENERAL Washington, DC 20024 COUNSEL OF CQFYRfGHT

Re: Docket 2000-9 CARP DTRA 1 & 2

Dear Ms. Giuffreda,

l am confirming the discussion we had by telephone regarding my desire to be removed from the service list. Thank you. Sincerely,

Christopher M, Wheatley Manager, Radio Operations 326 Roy H. Park Hall Ithaca College Ithaca, NY 14850

(607) 274-3142 e-maih &wheatleyeithaca.edu& 66 wheatley@ithaca,edu, 10:45 AM 12/21/00, Docket No. 2000-9 CARP DTRA1 5

To: [email protected] From: Gina Giuffreda [email protected] Subject: Docket No. 2000-9 O'ARP DTRA1 8 2 Cc; Bcc: Attached:

Mr. Wheatley:

I am in receipt of your letter confirming our discussion that you would like to be removed from the service list for the reference proceeding. I have taken your name off the service list. Also, per our conversation, I sent to you a new service list via regular mai!. Please remember that you are to serve a copy of this letter on every party listed on that service list. Otherwise, you will continue to receive copies of anything filed in this case.

If you have any questions, please feel free to e-mail me or caH me at 202- 707-2699.

Sincerely,

Gina Giuffreda CARP Specialist IUIH UIUENDEIV WUIUU

ANHE OOOOIVHI RCHMIO HUNIEIN CAVMf'NCEIR & J CURDS, JR FLETCHER, HEALD HtLDRETH, P.L.C. DEOROE FEIRIIISAI PAUL 4 FEIDMAH ntORNEvs IE LAW FIWiK R. JUZO 4 MUR KP4 P AL ANDREW 6 KEAFRNO INR FLOOR. IZOO HofuH 12th SfREEI MIEIDOH 4 KRVS U A 4 MIHHM EOCENE M. LIUODH, Ah I IUICHELL LAZARUS ARLNIGIOH, UIRGIIEA 222000001 U IUUUC SUSAH A MARSHAIV EDUIUID A HARRY 0 HHltlN CAINE'HC-:":-IVEEF=-'=-' RAYMOND 4 OUIANZOH OFFICE: (Fn) 01241400 IAOILAAO R. RAUH l~ JAMES P. ALEY FAX; thnt 0124486 AUIOH J SHAPIAO WVAV IRIHUMUIAM WINHH KUHLEEN VICIORF 2 nfVAFER DWE FEB 200l

E. WARDWADNER'IMIM HCWRO IA WHSS' January 29, 200l ZHAO HIUNLU 23EN RAt 0 "JNSUL OF COPYRIGHT-"I—f~f'V

BY CERTIFIED MAIL Copyright Arbitration Royalty Panel (CARP) P.O. Box 70977, Southwest Station Washington, D.C. 20024

Rei Docket fifo. 2000-9, CARP DTRA l & 2 Withdrawal from Proceedln Dear Sir/Madam:

On behalf of Anderson University/WQME 98.7 Flvf I hereby respectfully withdraw its Notice afInfenf fo Parficipafe in CARP Proceeding, Docket IYIO. 2000-9 CARP DTRA I & 2.

Please date-stamp the attached confirmation copy, marked 'Please Stamp and Return this Copy to Fletcher, Hasid & Hildreth,'nd return it in thc self-addressed, stamped envelope provided.

Should any questions arise concerning this matter, please contact this office.

Very truly yours, FLETCHER, FIEALD & HILDRETI-I, P.LC. , V)~3) Alison J. Shapiro Counsel for Anderson University/WQME 98.7 FM

cc: All Parties on Service List Ms. Gina Giuff'rcda, Copyright Office (by fax 202-252-3423) 68

IRWIN, CAMPBELl, & TANNENWALD, P.C. ATFOENEYS AT LAW 1730 RHODE ISLAND AVENUE, N.)V. SUITE Z00 WASH IN GTON, D.C. 20034-310) IZ02) 720.0400 FAX )202) 7204334 www.wlpc.corn

ALAN C. CAMPBELL ALRIGHT (202) 720.040) Ecl. I la cccmpbcllgiccpc.com FEB 12 PPPI

GEAIERAE ( Pt)NSE February 9, 2001 D«op

Re: Docket No. 2000-9, CARP DTRA I & 2 Withdrawal from Proceeding

Dear Sir or Madam:

On behalf of Monmouth University, I hereby respectfully withdraw its Notice of Intent to in Participate CARP Proceeding, Docket No. 2000-9, CARP DTRA 1 & 2.

Please date-stamp the at(ached File Copy and return it on the self-addressed stamped envelope provided.

Should you have any questions regarding this matter, please do not hesitate to call.

Very truly yours,

Alan C. Campbell Counsel I'r Monmouth University CERTIFICATE OF SERVICE

I, Jennifer N. Reyes, hereby certify that on this 5" day of February, 2001, copies of the foregoing Withdrawal Notice have been served by!irst-class United States mail, postage pro paid upon the following

-Seth D. Grecnstcin Aaron Stone Global Media Network McDermott, Writ & Emery 400 Robson 600 Thirteenth Street, N.W. Washington, DC 20005 Vancouver, B.C. V6B2B4

Jerry Rubinstein Russell R. Hauth Mustcplex.corn, Inc. 4880 Santa Ross Road 9905 Jefferson Boulevard Suite 300 Culver City, CA 90232 Camarillo, CA 93012

Michael A. Kahn Folger Levin & Kahn Bruce G. Joseph Embarcadero Center West Wiley, Rein & Pielding 275 Battery Street, 23rd Floor 1776 K Street, N.W. San Francisco, CA 84111 Washington, DC 20006

Gregory J. Hessinger Bruce D. Sokler American Federation ofTelevision and Mintz, Levin, Cohn, Feme, Glovsy and Popeo, P.C. Radio Artists 701 Pennsylvania Avenue, N.W. 260 Madison Avenue Suite 900 New York, NY 10017 Washington, DC 20004

Arthur Levine Robert Alan Ganctt Finnegan, Henderson, Parabow, Garrett & Dunner Arnold & Porter 1300 I Street, N.W. 555 Twelith Street, N.W. Washington, DC 20005 Washington, DC 20004

Tracy Burnas Steven M. Marks HARDRADIO.COM Recording Industry Association ofAmerica, Inc. 3504 Locust Drive 1330 Connecticut Avenue, N.W. Rowleu, TX 75089 Suite 300 Washington, DC 20036 70

Patricia Polach Lynwood Spinks Bredhoff & Kaiser, P.L.L.C. VergeRadio.corn 805 Fifteenth Street, N.W, c/o Lynwood Spinks, Industry Entertainment Suite 1000 955 S. Camllo Dnve Washington, DC 20005 Los Angeles, CA 90048

Chuck Walker Laura Beth Miller Muzak LLC Brinks Hofer Gilson &. Lione 2901 Third Avenue 455 N. Cityfront Plaza Drive Suite 400 NBC Tower, Suite 3600 Seattle, WA 98121 Chicago, IL 60611-5599

Frank Pet John P. Luncan DMX, LLC Blue Tape, LLC, d/b/a Sputmk7.corn Blvd. 11400 W. Olympic Four Columbus Circle Suite 1100 Fiflh Floor 90064 Los Angeles, CA New York, NY 10019

Steven J. Plinio Michael Seltzer Manatt Phelps & Phillips, f.LP Blue Tape, LLC, d/b/a Sputnik7,corn 11355 West Olympic Boulevard 22 West 19th Street, 4th Floor Los Angeles, CA 90064 New York, NY 10011

Neal Jackson Barry I. Slotnick National Public Radio Richards & O'eill, LLP 635 Massachusetts Avenue, N.W. 885 Third Avenue Washington, DC 20001-3753 New York, NY 10022

Stefan M. Lopatkiewicz Maria Rougvie Dorsey &. Whitney, LLP iCAST 1001 Pennsylvania Avenue, N,W'. .78 Dragon Court Suite 300 South Wobum, MS 01801 Washington, DC 20004

Mary Ann Lyman Bruce A, Lehman Mungcr, Tolles & Olson LLP 201 Massachusetts Avenue, N.E. 355 South Grand Avenue Suite C-3 Thirty-Fifth Floor Washington, DC 20002 Los Angeles, CA 90071-1560 71

Kenneth M. Kaufman Barry H. Gottfried Davis Wright Tremaine LLP Shaw Pittman 1500 K Street, N.W., Suite 450 2300 N Street, N.W. Washington, DC 20005-1272 Washington, DC 20037

A Kaplan Douglas Irv Goldstein Sirius Satellite Radio Inc. 198 Main Street 1221 Avenue of the Americas Danbury, CT 06810 New York, NY 10020

Walter F. McDonough William A. O'rien Future of Music Coalition WJLS-FM 601 13th Street, N.W. 102 North Kanawha Street Suite 900 South Beckley, WV 25801 Washington, DC 20005

David W. Rahn Will Spears c/o SBR Creative Media, Inc. KWUF AM & FM 7464 Arapahoe Road P.O. Box 780 Suite B4 Pagosa Springs, CO 81147 Boulder, CO 80303

Brett D. Paradis Jim East Paradis Broadcasting of Alexandria, WOLC/Maranatha, Inc. Inc. (dba KXRA-KX92-Z99) P,O. Box 130 1312 Broadway 11890 Crisfield Lane Alexandria, MN 56308 Princess Anne, MD 21853

Jo Ann Juliano Tom Atena Dead-Air Broadcasting Co., lnc WMET 610 N. Montana Street P.O. Box 159 Dillon, MT 59725 Black Mountain, NC 28711

Earl Metzger Richard Trautschold WITZ AM/FM 319 "B" East Battlefiled P.O. Box 167 Springfield, MO 65807 Jasper, IN 47546 Michael Costanzo Joel Hanson Midcontinent Broadcasting Co. P.O. Box 90 500 S. Phil!ips Kelso, WA 98626 Sioux Falls, SD 57104

Donald F. Littman Alison J. Shapiro Radio, Inc. Educational Community Fletcher, Heald & Hildreth, P.L.C. T/A WOBO 11th Floor, 1300 North 17th Street P.O. Box 338 Arlington, VA 22209-3801 Owensville, OH 45160

Kimberly Henrie Lany Roberts KMTS Fisher Radio Regional Group, Inc. 1322 Yi Grand Avenue 1212 North Washington, Suite 307 Glenwood Springs, CO 81602 Spokane, WA 99201

Hal S. Widsten Jerry D. Sokolosky KWED-AM '09 Box 1756 2143 H/W 64N, East Court Street OK 73942 Guymon, Seguin, TX 78155

L. Sellers Richard Ron Carter Station KMRY Radio 2000 SW First Avenue, Suite 300 Road NE 1957 Blairs Ferry Portland, OR 97201 Cedar Rapids, IA 52402

A. Mark Floyd Carl Gardner wsmonline.corn Journal Broadcast Group, Inc. Entertainment Company Gaylord 720 E. Capitol Drive Drive One Gaylord Milwaukee, WI 53212 Nashville, TN 37214

J. Manning Eugene John Morris WARX Radio WSWI/University of Southern Indiana Broadcasting inc. Manning 8600 University Blvd Commonwealth Avenue 880 Evansville, IN 47712 Hagerstown, MD 21740 Charles H. Sullivan, Jr. Terry Dismore Ocean Broadcasting, LLC WCVO Radio 25 N. Kerr Avenue, Suite C 4400 Rcynoldsburg — New Albany Road Wilmington, NC 28405 New Albany, OH 43054

Maggie Martin Robert J, Hughes Iroquois County Broadcasting Corp. KXST (Sets 102) WGFA FM 94.1 5015 Shoreham Place, Suite 102 Watseka, IL 60970 San Diego, CA 92112

Edward A. Schumacher Laurence Rutter WTUZ Webcast Radio Station KNGT-FM 2424 East High Avenue P.O. Box 609 New Philadelphia, OH 44663 Jackson, CA 95642

Frank Hanzel, Jr. Thomas J. Spies Wild West Ra'dio, Inc. 2000 Indian Hills Drive 1111 West victory Sioux City, IA 51104 Way Craig, CO 81625

Eric Pietras WVKC Galesburg David A. Luyk K-245 89 Everts Avenue Box South St. Queensbury, NY 12804 2 E Knox College Galesburg, IL 61401-4999 David M. Winchester Deborah S. Proctor Albany Radio Corp. WCPE Radio (dba KWIL and/or KHPE and/or KEED) 1928 Chalks Road P.O. Box 278 P.O. Box 828 Wake Forest, 34545 Hwy. 20 NC 27588

Charles B. Cooper Joseph E. Jindra WHLC FM 104.5 (Charisma Radio KNCK Radio Corp.) P.O. Box 629 P.O Box 1889 1390 W. 11th Street Highlands, NC 28741 Concordia, KS 66901 Michael Mitchel 101 Centre, Suite R Woodward„OK 73801 VE810 p~, GENES/tL ap COuNSEL February 5, 2001 &OPYR/G//T

BY CERTIPIED hIAII Copyright Arbitration Royalty Panel (CARP) P.O. Box 70977 Southwest Station Washington, D.C. 20024

Rer Docket b/o. 2000-9, CARP DTRA 1 & 2 Withdrawal from Proceedin

Dear Sir/Madam:

On behalf oF WSWI/Uiiiversity ofSouthern indiana (a non commercial, not-for- proft I college radio station), I hereby respectfully withdraw our Nor/ce of/nien/ /o Parricipore in CARP Proceeding, Docket No. 2000-9 CARP DTRA I & 2.

Please date-stamp the attached confirntation copy, marked "Please Stamp and Return this Copy to WSWI'* and return in the self-addressed, stamped envelope provided.

Should any questions arise concemiug this maner, lease contact this ofiice.

/ohn hL Morris WSWI General Manager

Cc: All parties on service list 76

Befom the LIBRARY OF CONGRESS Washington, DC 20540

In the Mauer ol'. No. 2000-9 CARP DTRA 1&2 DIGITAL PERFORMANCE RIGHT IN SOUND RECORDINGS AND IN EPHEMERAL RECORDINGS

hPR 4 2001 WITHDRAWAL OF NOVICE OF INTENT TO PARTICIPATE GENBIAL COUNSEL OF COPYRIGHT

Educational Information Corporation, d/b/a WCPE Radio, pursuant to the Rules of the Copyright Office, hereby withdraws its Notice of Intent to Pardcipate as an individual entity in the proceedings of the Copyright Arbitration Royalty Panel (CARP) to determine the rates and terms of the statutory licenses for the perfprmance of sound recordings by eligible nonsubscription transmission services under 17 USC 0114 and the making of ephemeral recordings under 17 USC 0112.

WCPE reserves the right to Request Leave to Submit an Amicus&leading and to do so, and WCPE reserves the future option to affiliate and/or partner with another entity or entities which are actively participating in one or both of these proceedings.

WCPE also hereby re-affirms its intention to make Ephemeral recordings under Section 112 License and affirms its intention to stream on the Internet under Section 114. WCPE does not believe that its Internet transmission services are required to rely upon either or both licenses, but provides this Notice out of caution and without prejudice to, or loss or waiver of, its rights.

This is 31st day of March, 2001. Respectfully Submitted,it~ Deborah S. Proctor General Manager, WCPE President, Educational information Corporation PO Box 828 Wake Fomst, NC 27588 77

8ECFfVFO In the COPYRIGHT OFFICLi APR 26 2ntty Washington, D.C. 20540 GENERAL COUNSEL OF COPYRIGHT

) In rc ) NOTICE AND RECORDKEEPING FOR ) Docket No. RM 2002-1 USE OF SOUND RECORDINGS UNDER ) STATUTORY LICENSE )

REPLY COMMENTS OF INTERCOLLEGIATE IIROADCASTING SYSTEM

I. INTRODUCTORY STATEMEiNT

The comments ofothers filed April 5, 2002, only confirm the lntercollegiate

Broadcasting System's ("IBS") opening comments showing that in practice the Copynght

Office's ("Office") published proposol would unjustifiably and discriminatorily burden small webcasters affiliated with educational institutions. The proposal should either be rejected or modified to exclude webscasters affiliated with educational institutions.

The "slightly revised" proposal 'ffered by the Recording Industry Association of

America ("RIAA"), standing alone, does not nmterially re&hice the direct and disproportionate burden on such webcasters. This recordkeeping burden is exacerbated by the Office's conscious and deliberate exclusion of small entities from the setting of compulsory license fees by the

Order of the Register, dated March I 6, 2001. The Office is required to consider the cumulative

RIAA Coinmeuts at 32. 78

impact on smaH entities of the proposed niles and the minimum rates amved at in the concurrent

CARP proceeding.

The adverse impact of the proposed mles on webcastcrs'se of small record labels iviH

result in a diminution ofthe diversity ofmusic available to the public, by denying the labels the

public exposure necessary for the viability of such labels bectnise of the disincentive to webcast

performances created by the recordkeeping requirements.

To the extent the surviving webcasters could practicably continue to play such small

labels and report such use, RIAA's comments fail to demonstrate that its so-caHed

SoundExchange could practicably process reports of such plays and cost-effectively distribute

the sniaH pcr-label amounts ofroyalties to the large number of entities entitled to royalties from

smaH-label performances.

Neither the proposal published by the Office nor the "slight" modification thereof proposed by RIAA in its comments comports with the purposes of the Regulatory FIexibHity Act of l 9g0, 5 U.S.C. ch. as 6, amended, ("RFA"), as set forth in Section 2 thereof, 5 U.S.C. s~ 60I nt, nor would the record in this proceeding support thc adoption of either in compliance with

Section 604(a) ofthe RFA, 5 U.S.C. tj 604(a). The argument that the instant remaking proceeding is not subject to the RFA, is unsound as a matter of statutory constmction. Congress tiid not intend to exclude Office rules from application of the RFA. If the Office, in its rulemaking capacity, were to fall within the Congiessional exemption in Section 2(a) ofthe

Administrative Procedure Act ("APA*'). its exercise of rulemaking powers would conflict either with the presentation clause of the Constitution or with the Constitutional requirement for separation of powers. 79

II THE RECORDKEKPING PROPOSAL WOULD UNLAWFULLY BURDEN SMALL WEBCASTERS.

For the reasons described in the opening comments of IBS and others, the published proposal violates the public policy concerning the impact ofFederal mles on small entities, as set

doxvn by Congress in Section 2 of the RFA, as amended, 5 U.S.C. tj 601 nt. Such violation is in

no way attenuated by tlie RIAA&s "slight revision" of its original proposal. RIAA Comments at

32. Thc record in this proceeding simply provides an inadequate basis for the Office's adopting

the recordkeeping rules, as proposed, because Section 604(a) of the RFA, 5 U.S.C. tj 604(a),

requires an agency

promulgat[ing] a fmal rule under section 553 of this title [APA Section 4 (Rule making)], alter being required ... to publish a general notice ofproposed rulernaking ..., the agency shall prepare a final regulatory tlexibility analysis. Bach fma1 regulatory flexibility analysis shall contain—

(1) a succinct statement of the need for, and objectives of the rule; (2) a sinnmary of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a summary of thc assessment ofthe agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments; (3) a description of and an estimate of thc number of small entities to which the rule ivill apply or an explanation ofwhy no such estimate is available; (4) a description of the projected reporting, recordkeeping and other compliance requirements of the rule, inchiding an estimate ofthe classes of small entities which witt be subject to the requirement and the type of professional skills necessary for preparation ofthe report or record; and (5) a description of the steps the agency has taken to minimize the significant economic impact ou small entities consistent with the stated objectives of applicable statutes, including a statement ofthe factual, policy, and legal reasons for selecting the alternative adopted in the linal rules and why each one of the other significant alternatives to the rule considered by the agency ivhich affect the impact on small entities vvas rejected.

lt is clear as a textual matter that Congress inten&led rulemakings in the Office to be

subtect to the RFA. Section 701(d) of the 1976 Copyrights Act ("1976 Act"), now 17 U.S.C.

) 701(e), specifically provides that 80

all actions taken by the Register of Copyrights under this act are subject to the provisions of the Administrative Procedure Act of June 11, 1946, as amended (c. 324, 60 Stat. 237, title 5, United States Code, Chapter 5, Subchapter ]I and Chapter 7).

The Office's instant proposal to impose a recordkeeping requirement is clearly an acbon within the recordkeeping requirements provisions added to Sections 601(g) and 604(4) by Congress in

P.L. 104-121 in 1996.

Any argument that the RFA should not apply to the Office because it is not an "agency" within the meaning of Section 2(a) (agency) oftbe APA, which is incorporated by reference iu

Section 601(l) (agency) of thc RFA, 5 V.S.C. tj 601(l), must be rejected. The exclusion of "the

Congress" from the defmition of "agency" in the APA has the intent and effect only to exempt

Congress as a governmental authority from the APA. In Section 701(d) of the 1976 Act,

Congress very explicitly and deliberately intended the Office to be subject to the APA, thereby

limitingpro tanto the effect ofthe Congressional exempfion. Moreover, Section 701(d) of the

1976 Act also specifies that Section 10 (Judicial review of agency action) of the APA, now 5

U.S.C., ch. 7 (Judicial review), shall apply to "all actions taken bv the Register of Copyrights'* under the 1976 Act. The exclusion of"the Congress" from the definition of agency for the purpose of Chapter 7 in 5 U.S.C. tj 701(b)(1)(A), is essentiaffy identical vvith that in Section 2(a) ofthe APA, now 5 U.S.C. 6 551(J). Again in Section 701(d) of the RFA, Congress made it plain that the Office was not exempt from "judicial review of agency action," so the Office is included within the tenn "agency" throughout the APA.

The omission of any reference to the RFA (The Analysis of Regulatory Functions), in

Section 701(d) of the 1976 Act does not ofitself imply that Congress did not intend the Office to be subject to Ihe RFA. When Section 701(d) was enacted, the RFA had not yet even been

enacted and could not have been referred to as Chapter 6 of Title 5.

Congress cannot be taken to have intended to exempt the rulemaking function of the

Ofiice under Section 701(d) of the 1976 Act from the RFA. Otherwise, the exercise of that

quasi-legislative function by a part of "Congress" within the meaning of Section 2(a) of the

APA, would violate the presentment clause of the Constitution, Art. I, g 7, CI. 2. See INS v.

ghadha, 462 U.S. 919 (19g3). Alternatively, if deemed non-legislative, then the exercise ofthat

function by a part of "Congress" within the meaning of Section 2(a) of the APA, would violate

the separation ofpoxvers.

Congress, in enacting Section 701 of the 1976 Act and later amending it in 199g by P.L.

105-304, did not intend to so disregard the Constitutional issue. This is a case where "a page of

history is worth a voluine oflogic." New York Tmst Co. v. Bisner, 256 U.S. 345, 349 (1921)

(Holmes, 1 ). Section 701(d) of the 1976 Act was inserted in response to the challenge to Ihe

Constitutionality of wliat became the 1976 Act in the course of the House hearings on H.R. 2223.

ln testimony before Ihe House subconimittee on June 5, 1975, Professor Brylawski previewed his law journal article arguing that Constitutionally the Office."must either be transferred to the executive branch or reestablished as an independent regulatory agency under the direction of a

Register appointed by the President." See E. Folton Brylawski: 27&e Copyright Office: A cons&i&i&&lanai confro»ration, 44 Geo wash. L. Rev. I, 47 (1975). In addition chapter xY(7) of

Ihe Second Supplementary Report ofthe Register of Copyrights on the General Revision ofthe

"Copyri J&t Law Revision," Flearings before ihe Subcommittee on Coin&a, Civil Libc&ties, and thc Administration of Justice of the House Committee on thc Judiciaiy, on H.R. 2223 (Serial No. 36, Part I) at 459-67 (1975). 82

V.S. Copyright Law: 1975 Revision Bill (1975) relies on a legal memorandum ofKent Dunlap,

a staff attorney, "The Effect ofthe Constitutional Principle of Separation ofPowers on tbe

72. Mr. Dunlap's legal analysis obviously relied only on cases prior to August, 1975, in

concluding that the separation ofpowers limited the placement outside the executive branch of

only executive functions reserved to the President. Moreover, his memorandam was focussed

on, if nol limited to, quasi-judicial or adjudicatory functions.

The courts have adopted a fimctional analyiis, rather than a formal analysis, so that the

fact that the Office is part ofthe Library ofCongress is not determinative of the classification of

the Office (o the legislative department ofgovennnent. Jn rejecting Professor Brytawsld's argument under the Appointments Clause, Arl 111, Ij 2, cl 2, in BJtra Coro. v. Rinaer Resister, 579 F2d 294 (197g), the 1'ourlh Circtdt adopted a fimctional analysis in reaching Ihat result. Jt observed that

it would appear indisputable that the operations of Ihe Office of are * « * Copyright executive. Jt is irrelevant that the Office of Ihe Lilu arian of Congress is codified under Ihe legislative branch or that it receives its appropriation as a part of the legislation appropriation. The Liberian performs certam functions which may be regarded as Jegislative (J.e., Congressional Research Service) and other functions (such as the Copyright Office) which are executive or sdininistrative. Because ofits hybrid character, it could have been grouped code-wise under either Ihe legislative or executive department[a). But socb code-grouping cannot determine whether a given function « * is exactive or legislative. «The Supreme Court has properiy assumed over the decades since 1909 that the Copyright Office is an executive office «*«. ld: st 301. Thus, whether the Library of Congress or the Copyright Office is part of'Congress for the putposes of the APA Section 2(a) exemption cannot be determine en grurse, but must be determined function-by-function. Under the functional analysis, court decisions on the applicabifity of the Library of Congress at large arc irrelevant to speciiic functions ofthe Office. 83

Thc Fourth Circoit's decision appeared Io quiet the controversy until Bowsher.

Comutroller v. ~Sar 478 U.S. 714 (1986). That case rctuzaed the dialogue to tbe fundamental underpinnings ofthe separation ofpowers doctrine ~ed in the fear of"congressional usurpation ofExecutive Branch functions", i.c., "the fear that the LegisJative Branch ofthe National Government will aggrandize itselfat the expense ofthe other two branches." ld. al 727,

I quoting ~Bu v. Vcleo, 424 U S. 1 (1976). See Madison: 1 Annals of the Constitutional

Congress 380 (1 789). oit quoted by the Supreme Court.

Upon the next legislative revisitation to Ihe 1976 Act, Ibis separationof-powers concern seems to have led to the Leshy amendment, inserting new subsection in Section 107 of the 1976

Act, which became 17 U.S.C. $ 701(b). The legislative rationale is described in House

Conference Report No. 105-796 (I 998) at 77 thuslyi

The new subsection Io be added to 17 U.S.C. Sec. 701 sets forth in express statutory language lbs.fimcIions preseugy perfmmed by the Register of Copyrights under her general administrative authority under subsection 701(a). Like the Libmry ofCongress, its panmt agency, tbe Copyright Office is a hybrid entity that historically has performed both legislative and cxccutivc or administrative functions. Elan Corp v. Ringer, 579 F.2d 294 (4th Cir. 1978). Existing subsectitni 701(s) addresses some ofthe latter functions. New subsection 701(b) is intended to codify the other Irsdi tional roles ofIhe Copyright Oifice snd to confirm the Register's misting areas ofjmisdictiom

New subsection (b) seems designed to «xplicitly establish the "hybrid character" ofthe Office, EItra Coro., ~ra, at 301, by "beefing up" tbe nominal legislative functions ofthe Ofiice, thereby attempting to rationalize the Office's forrnal plscemcut in Ihc legislative deparnneut of government. Such attempted rationalization is thoroughly inconsistent with tbe functional approach utilized by tbe Fotuth Circuit and should be rejected. In light of"the command ofthe

144 Cong. Rec. S8389, S8397 (daily cd. July 16, 1998). 84

Constitution that the Congress play no direct role in the execution of the laws; Bowsber. ~su at 736, it is difficult to conceive that Congress meant to exclude the Office's rulcmaking function from the RPA.

The inclusion of Ihe Office in the Section 2(a) exemption for Congress would lead to the logically inescapable conclusion that if the Oflice's rule-making fimction is considered an act of

"the Congress," then it violates the presentment clause, aud if it is considered as an executive or administrative function it violates the separation ofpowers. iqee, aenerallv. Jiles: "Copyright

Protection in the New Millennium: Amending tbe Digital Mittcnmum Copyrighted Act to

Prevent Constitutional Challenges," 52 Admm. l.. Rev. 443 (Winter 2000). While the Office, under jurisprudential principle, lacks Ihe power to decide the Constitutionality of its own statute in this proceeding, it may avoid deciding the question by applying the RPA, as, we submit,

Congress intended, including Section 603 (initial regulatory flexibility analysis).

In applying the RFA in tliis proceeding, the Office is obliged to considered the

curuulative impact ofthe recordkeeping requirements and the minimum fee schedule that was imposed by 0te discriminatory, one-size-fits-all, procedural rules imposed by Ihe Office in

Docket No. 2000-9 CARP DTRA 1dt2. In the Register's order of March 16, 2001, the Register expressly and deliberately rejected the attempts by nmnerous small entities for a participatory role proportionate to their size. The Office began the heming phase by apparently accepdng the

RIAA's urging that participation be limited to those who could participate fully "for a minimum of four days per wack for a period of one month." Order of Ihe Register, dated January lg,2001,

at I, quoting RIAA Reply at 4 That order recognized Ihe ptubicm of small entities:

Finally, a review of the list ofparticipants in this proceeding reveals a number of smaller-sized firms and concerns that desirc to make use of the section 114 and 112 licenses. The Library has been con1acted by several ofthese parties

expressing concern over the costs associated vvith filing a svritten direct case and

fully participating in the proceeding. They areparticularly concerned that they will not know the extent of their financial exposure for payment of the arbitrators'harges until the proceeding is completed and have inipiired as to whether there are xvays 1o allow presentation of their vimvs to the CARP while limiting both their costs of participating and their responsibility for payment ofthe arbitra1ors. Suggestions have included: waiving the requiremen1 offiling v:ritten direct cases for these parties and allovving them (o file viritten pleadings (in effect amicus briefs) at those junctures of the CARP proceeding related to their concern; allowing these parties'ritten direct cases to be considered without oral hearings or testimony; and assessing the arbitrators'osts to sinaller parties at a reduced ra1e or amount.

The Library does not express any opinion as to the advisability, or pennissibi li1y. or any ofthese suggestions. However, in the intcrcst of conducting a proceeding that encourages participation and gathers the maximum amount of relevant evidence for the CARP*s consideration, vve solicit comments and proposals, if any, to address cost concerns for smaI}er-sized parties in this proceeding.

Id. at 4. But the Office did nothing to accominodate these concerns. Jn the March 16th order the

ln the January I 8, 2001, Order in this proceeding, the Library solicited conunents regarding the participation of so-caged "small parties" that do not submit written direct cases. Comments were received from Manning Broadcasting, Inc., SBR Creative Media, Inc,. WCPE-FM, and the Performing Artists'ociety ofAmerica favoring the submission of mnicrrs carne bnefs in lieu ofwritten direct cases. The RIAA opposed siich submissions.

Section 251.43(a) of the CARP rules provides that all parties to a proceeding must file a written direct case tha1 con1ains testimony sponsored by a witness oi. witnesses. The pmpose of this requirenient is to agow full examination and cross- examination of all testimony before the CARP renders its de1ermination. Full prosecution of the written direct cases is essential to compigng a complete and accurate record. In addition, it is the parties to a rate adjustment proceeding who bear the cost of the proceeding. 17 U.S C. 802(h)(l).

Participation by non-parties through submission of uniiciis briefs does not appear to be consistent with these provision. 'fhe Library has serious reservations whether it, or the CARPs, possess the authority to allow sucli submissions under the current CARP regulations. While there may be soine merit in the idea of accepting amicus briefs in CARP proceedings, the merits should bc first explored through the rulemaking process. 86

Consequently, the Library wi]]not allow such submissions by any pexsons or entities who are not full, active participants in this proceeding. We are sensitive to the concerns of those avho cannot individually afford the cost of full participation, and encourage them to pool their resources ivith those in like circumstances for thc submission ofone or more joint ivritten direct cases as permitted by the xules.

The extc]usionaxy effect of the Office's ruling in practice was acknowledged in the March 16th order, where the Office admitted that

Many parties have filed Notices of intent to Participate, and a]ready a number ofparties have formagy withdrawn from this proceeding. The Library anticipates that additional parties will withdxaw befoxe the deadline for submitting written direct cases; and some wi]]not lile cases at all, requiring their dismissal from the proceeding.

ld. at 2. Copies ofthe January 18 and March ]0, 200], orders are appended hereto.

This sort ofprocedural inf]extibi]ity contradicts the spirit, if not the letter, of the RFA.

Whether the procedmal rules that were original]y adopted for broadcast licensees are legally

defensible with respect to that class or not, they are clearly not defensible as to smaH webcasters.

The practical exclusion ofa class ofpayors from the proceeding to determine the amount oftheir

payments is p]ainly inconsistent with the Fi]]h Amendment to the Constitution. To add insult to

injury, upon inquiry, interested small entities were informed by the Office that appeals to the

Librarian were limited to parties fu]]y participating in the arbitration proceeding. Small entities

are exc]uded from appeals to the Librarian by Section 25].55 (post-pane] motions) of C.F.R.,

Title 37, wliich limits appeals to "parties" to the proceeding. As a result no direct attack on the

proceduml rulings is contemplated or perxnitted by the Office.

Be that as it may, the Office is required hi tliis proreeding to consider the cumulative

burden of the xecordkceping requirements and the disproportionately high minimum fee on small

webcasters. 87

11]. CONCLUSION

For the reasons stated in the opening comments by IBS and other small webcasters, the

Office should not adopt the one-size-fits-all reconlkeeping requirements proposed, unless webcasters affiliated with educational institutions are excluded iherefrom.

Respectfully submitted,

INTERCOLLEGIATE BROADCASTING SYSTEM, INC.

367 Windsor Highway New Windsor, New York 12553 (845 56 3

by William Malone

Miger and Yan Eaton, P3..L.C. 1155 Connecticut Avenue, fi 1000 Washington, D.C. 20036-4320 (202} 785-0600 ~ll All

April 26, 2002

Attachments— Orders in Docket No. 2000-9 CARP DTRA I &2 — January 1 g, 2001 — March 16, 2001

.I l22le nVABO] l75.DOC 88

Jn the Matter of ) ) Digital Performance Right in Sound ) Docket No. 2000-9 CARP DTTIA 1&2 Recordiiigs and Ephemeral Recordings )

IJBR/tRY OF COratGRFBS

On December 11, 2000, the Library of Congress published the schedule for CARP proceedings in the above-captioned matter. 65 FR 77393 (December I I, 2000). The schedule set the due date for written direct cases on or before February 5, 2001, with COPYRIGHT 2001. The Library has now received pleadings from OFFICE arbitration beginning on May 21, parties in the proceeding who are dissatisfied with this schedule.

A large group of parties known as tbe oWebcasler/Broadcaster Group" petitions the Library to push the schedule bark for written direct cases until March 19, 2001, and Copyrishr Musir. /rrharalion initiation of the CARP until July 16, 2001. The National Religious Broadcasters Royalty License Comrniuee and Saleni Conimunications Corp. support the peiition. The Panels Recording Inrlustry Assoriation ofAmerica ("RIAA") supports these dates and urges lhe Library to establish that July 16, 2001, is the fiim date for initiation and 'rhat July 17„2001, will be the first day of hearings on RJAA'5 case. In addition, RIAA urges the Library to seJect only those arbitialors who will be able to hear written direct cases "for a minimum irm Boa 70Yr7 four week„ for a period of one month, beginning July 16, 2001." RIAA reply 'areal of days per .n at a, Vraahinclon D.C. 20024 New Schedule

The Library has considcrcd ihe requests ofthe parties and is inclined to establish a new sChedule. Before settinp such a schedule, we make the following observations. First, Tet ep Irene. Uas proceeding should have begun well over a year ago„but for repeated requests for 1202)707.asso additional time and the RJAA petition for tu)crnaidng regarding the exemption for over- tbe-air radio broadcasts. We are noiv into the second period for rates for the section 114 Faeaimite: is t2021252-3423 and 112 licenses (2001-2002), with the first period (1998-2000) already paseed. There a need to commence this proceeding as soon as possible. Consequently, the schedule adopted today will be linal, and no f'urthcr requests for delays will be granted.

Second, it is obvious that this proceeding will be large and complex, with many hearing dates required. Scheduling such a proceeding does not depend solely upon ihe readiness of the pmties. Jn order for the proceeding to be efficient and eff'ective, considerable advance planning by the Library is required. Preparations must be made for the discovery period so that as many discovery matters as possible are resolved prior to the initiation of arbitration. In addition, qualiTied arbiirators must be identified who will be available for considerable hearing work. 89

Given these considerations, and tbe recptests ofthc parties, the Library

the new-and annotinces linal-schedule'CTION

DATE Negotiated Protective Order March 28, 2001 Filing of%ritten Direct Cases April 2, 2001 Requests for Underlying Documents April 11, 2001 Related to%ritten Direct Cases

Responses to Requests for April 18, 2001 Uitderlying Documents

Completion of Document Production April 23, 2001 Follow-up Requests for April 30, 2001 Underlying Documents

Responses to I ollow-up Requests May C, 2001 Motions Related to Document Production May 10, 200] Production ofDocuments in Response to May 14, 2001 Follow-up Requests

All Other Motions, Petitions and Objections May 16, 2001 initiation ofArbitration July 30, 2001

Additional Matters In addi tion to announcing parties'ttention a new procedural schedule, the Library calls the to the following. First, in order for the discovery period to proceed effectively, a protective order must be in place before the start of the &5-day discovery period. Parties are encouraged to negotiate the terms of a protective order for submission to the Library no later than March 28, 2001. If the Library does not receive a negotiated protective order on or belorc that it wig enter day, its own protective order governing the proceeding on the following day.

urrcaryrdrral aruutrudulurnrat r'yd January 16. 2llrt i 90

Second, the Library is aware that this proceeding involves a number ofparties that have never before participated in a CARP proceedmg. The Library therefore directs all parties to familiarize themselves with the CARP rules contained in part 251 of 37 C.I'.R. ALL I'ARTIES MUST CO)VIPLY WYITH THE CARP RULES. The rules may be accessed via the internet at tpuap hie viwbduiurtzhaihrfrpy. Any questions regarding filing procedures should be directed to Ihe CARP Specialist at the Copyright Arbitration Royally Panel (CARP), P.O. Box 70977. Somhwe t Station, Washington D.C. 20540. Telephone: (202) 707-8380. Telefax: (202) 252-3423 Improperly filed pleadings will nol be accepted.

Third, with respect to tbe CARP rules, the Library emphasizes that all parties that filed Notices ofIntent to Participate in this proceeding must submit written direct cases. 37 C.F.R. 251.43(a). It is permissible for a party to formallyjoin Ihe written direct case of another participant in geu offiling its own wrilten direct case. For parties filing their first written direct case in a CARP proceeding. it is recommended they consult written direct cases filed in prior CARP proceedings for format and organization. Copies ofthese cases are available for inspection and copying by appoinunent with the CARP Specialist at the Copyright OKce at 101 Independence Avenue, S.E, Room 403, Washington, D.C. 20554. Requests for copies may be made, for s fee', from Ihe CARP Specialist. The written direct cases are not available on the Copyiighl 08ice's webpagc.

Written direct cases must be delivered to each ofthe parties m this proceeding on or before April 2, 200). 37 C.F.R. 251.45(b)(2)(i). By this, we mean that each ofthe partie must have copies ofeveryone's ivritten direct case by 5 p.nz on April 2, 20D 1 Copies must also bc filed with the Copyright Olfice by this time. Mailing a written direct case on April 2 does not satisfy the iul, nor does defivering it ager 5 p.nc The pmpose ofthe rule is to assiue that all parties have each other's written cfirect cases by the dose of business on April 2 so that sll will have an equal amount of time to prepare their requests for underlying documents. Failure to file 0 written direct case, or to properly serve it, are grounds for disniissal ofthe party from the proceeding.

Fourth, as discussed above, this proceeding is very complex and involves the establishment ofrates and terms for two separate periods (1998 20DD and 200)-2002). In preparing their written direct cases, the parties are reininded to carefugy distinguish between iliese two periods m organ skiing and presenting their evidence. As required by 37 C.F.R. 251.43(d), each party must slate its iequested royalty rates and terms for both periods. These requests may be amended at later points in the proceeding as provided by the rules.

'ees for copies ofdocuments made by Copynght OHice stalfare as follows: charge for time spent photocopying-$65 per hour or fraction thereof. Charge per exposure-$.40 per exposure photocopied Sec 64 FR 29518, 29521 {June 1, 1999). uduuuplduul azuuludulcCiuulupd duuuuiul0,200I 91

Finally, a review ofthe list ofparticipants in this proceeding reveals a number of smaller-sized firms and concerns that desire to make use ofthe section l 14 and l l2 licenses. The Library has been contacted by several ofthese parties expressing concern over the costs associated with filing a written direct case and fully participating in the proceeding. They are particularly concerned that they wiJJ not know the extent oftheir financial exposure for payment ofthe arbitrstors charges until the proceeding is completed and have inquired as to whether there are ways to allow presentation oftheir views to the CARP while limiting both their cost ofparticipating and their responsibility for payment ofthe arbitrators. Suggestions have included: waiving the requirement of Filing written direct cases for these parties and allowing them to file written pleadings (in efFect amicus briefs) at thosejunctures of the CARP proceeding reJated to their concerns; allowing these parties'itten direct cases to be considered without oral hearings or testimony; aud assessing the arbitrators'osts to smalJer parties at a reduced rate or amount.

The Library does not express any opinion as to the advisability, or permissibility, of any ofthese suggestions. However, in the interest ofconducting a proceeding that encourages participation and gathers the maximum amount ofrelevant evidence for the CARP's consideration. we solicit comments and proposals, if any, to address cost concerns for smaller-sized parties in this proceeding.

Wherefore, the above-described schedule for this proceeding IS ADOPTKD. Comments and proposals regarding cost concerns for smaller-sized participants in this proceeding must be filed with the Copyright 08ice no later than February 3, 200l. Reply comments must be filed no later than February l2, 200l.

SO ORDERED. Maiybeth Peters Register of Copyri s

Wi& . Rob s, Ir Senio Attorn

DATED: Ianuaiy l g, 2001 92

In Ihe Matter of ) ) Digital performance in Right Sound } Docket Into. 2000-9 CARP DTRA I &2 Recordings and Ephemeral Recordings )

LlSRARY OF ORDLrR CONGRESS

The Library of Congress issues this Order to address certain matters in the above- captioned proceeding. These issues were discussed at the March 14, 2001, meeting with COFTRIG)4T the parties. OFHCE 1. New Preconrroversy Discovery Schedule, The Library is postponing the date for exchange ofwritten direct cases to facilitate entry of the protective order in this proceeding. Adjustment ofthe date for written direct cases requires adjustment ol'lhe Copyriaht remaining precontroversy dates. Tire dale for Arbitration iniliation of)he CARP, July 30, 2001, and the date for submission a Royalty of negotiated protective order, March 28, 2001, remain the pane)a same.

ACTION DAT18 Figng of Written Direct F,O. a a 70877 Cases April I I, 2001 'awe" t n Requests for Underlying ninrton Documents April I 8, 2001 D.C. 20024 Re)ated to Written Direct Cases

Responses to Requests for April 24, 2001 Underlying Documents Telephone: (202)707-8880 Completion ofDocument Production April 2Z, 2001 Faraimile: Follow-up Requests for May 4, 2001 (202)252-8428 Underlying Documents

Responses to Follotv-up Requests May 10r 2001

Motions Related to Docttment Production May 16r 2001 Production ofDocuments m Response lo May 18, 2001 Follow-up Requesls

All Other Motions, Petitions and Objections May 25, 200 I 2. Pratecrive Order. As descxibed above, the terms ofa negotiated protective order must be submitted to the Library by close of business on March 28, 2001. The Library has before it a pending motion submitted by RJAA, AFTRA and AFM to accept a proposed protective ader One ofthe provisions of the proposed protective order is a requirement that all parties io this proceeding sign a non-disclosure cerbfication for each category ofprotected materials The Library finds this provision to be useful and will include it in the protective order that ii enters on March 29,2001. However, in order to 'be enable signatures to obtained on the certification forms pxior to the exchange of the written direct cases, sufficient time is required afler March 29, 200). This is why ihe Library has postponed the schedule from April 2 to April I I for the exchange ofwritten direct cases.

Any party that has not executed a non-disclosure certification, as provided in the protective order to be issued on Ivfarch 29, 2001, by April 6, 2001, will not be entitled to receive protected materials contained in the written direct cases as filed on April I I, 2001. However, a party is not precluded from executing a non-disclosure certification after this date in accordance with provisions set forth in the Protective Order, and following such execution will be entitfed to receive copies ofpast and future protected materials.

3. Pionce oflnrenr ro File JYrryren Direct Case. Many parties have filed Notices of Jntent to Participate, and already a number ofparties have formally withdrawn from this proceeding. The Libraxy anticipates that additional parties vvill v-iihdraw before the deadline for submitting vmttcn direct cases; and some wiff not file cases at all, requiring their dismissal from the proceeding. To avoid burdeniitg the active participants jn thjs proceeding from serving written direct cases on those parties that are not, or will not be active, the Library is requiring all parties that filed a Notice oflatent to Participate and that intend to file written direct cases to submit a Notice oj'Intention to Submit a Written Direct Case no later than March 28, 2001,

A Notice ofIntention to Submit a Written Direct Case shall state the party' intention to fife a ivritten direct case on April 11, 2001, and to be an active participant in this proceeding. In addition, it shaH provide the name and address of one person (counsel, or ifnot represented by counsel, the party) on whom copies of filings and submissions should be served. The names and addresses so provided shall comprise the service list for the remainder of this proceeding.

Any party that fails io file a Notice ofIntention to Submit a Written Direct Case March by 28,2001, shall forfeit the right to receive service copies ol'the written direct cases from the parties 1 on April J, 2001. Failure to submit a Notice, however, does noi i.esult in automatic dismissal from this proceeding. A party who fails to file this notice but who, in fact, files a vvritten direct case on April I I, 200 l, wiH be added to the service hst. 'fhese parties must then be served with copies of the other parties'irect casesc'ises b 5 p.m., Friday, ApriI I 200 4, l . AB parties must then adhere to the forth in this Order. discovery schedule set

4. Service by the Copyright 0+ice. At lhe March 14, 200l, parties, servjce offihngs meeting with the and pleadings on Ihe parties was disctrssed. where one counsel It was agreed that, represented more than one party, the number served on that counsel ofcopies required to be would be worked out through individual not, however, a agreements. There was discussion un whom the Library will announcements serve copies ofthe orders, and decisions that the Library will policy issue in this proceeding. The for serving these items wiO be as follows. Library's

For those parties not represented by counsel, and for those counsel that does not represent parties represented by otherparties in this proceeding, the copy ofits orders, announcements Library wjil serve onc snd decisions. In the interests of tbe smne counsel represents two saving costs, where or more parties to Ibis proceeding, receive only one copy ofthe Library's lhst counsel will orders, announcements and decisions. will not provide additional copies. The Library

Likewise, the Office wig not serve a party directly when that by counsel, nor will the Librmy serve party is represented inore than one altorney for a orders, announcements and party with copies of its decisions. For this reason, each Hotice of'intention to parly nnist designate in ils Submit a lVritlen Direct Case a service by the Library. single attorney.for purposes of

5. Partictpatiort by small parties. In the January I 200

proceeding, the Library solicited g, l, Order m Ibis comments regarding Ihe parties" that do not submit written particitxifion ofso called "small direct cases. Conxnents were Broadcasting, received fromArtists'ociety Inc., SBR Creative Media, lnc., Msumng of WCPE-FM, and the Performing America favoring lhe sobmission of direct cases. otnicnr cttrae briefs in heu of The RJAA opposed such submissions. vrrillen

Section 25 I.43(a) ofIhe CARp file rules provides that sll parties a wriuen direct case that contains to a proceeding most purpose tes(jmotiy sponsored by a witness or ofthis requirement is to allow full witnesses. The testimony examination and cross-examination before the CARp renders its of all direct determination. Full prosecution cases is essential to compiling ofthe written a complete and accurate record. parties to a rale adjustment In addition, it is tbe proceeding who bear the cost ofthe 802(h)(1). proceeding. I7 U.S.C.

Participation by non-psrties through submission of to be consistent with these atntctts briefs does not provisions. The Library has appear the CARPs, possess the serious reservations whether authority to allow such submissions il, or regulations. V/hite there under the current CARF may be some incrit in Ihe idea of accepting om/cits briefs in 95

CARP proceedings, the merits should be first explored through the rulemaking process. Consequently, the Library will not aHow such submissions by any persons or entities who are not full, active participants in this proceeding. We are sensitive to the concerns ofthose who cannot individually afford the cost offull participation, and encourage thent to pool their resources with those in like circumstances for the submission ofone or morejoint written direct cases as permitted by the rules.

SO ORDERED.

Marybeth Peters Register ofCopyrights ,Pc. d O. Carson General Counsel DATED: March 16,200l In the COPYRIGHT OFFICE Washington, D.C. 20540

6&ERAL Cattmc "Cap%It ) In re ) NOTICE AND RECORDKEEPING FOR ) Docket No. 2002-1 USE OF SOUND RECORDINGS UNDER ) STATUTORY LICENSE )

JOINT MOTION FOR ISSUANCE OF AN INITIAL REGULATORY FLEXIBILITY ANALYSIS

Harvard Radio Broadcasting Co., Inc., and the Intercollegiate Broadcasting System, Inc.,

respectfully move the Register to issue an Initial Regulatory Flexibility Analysis (IRFA) under

the Regulatory I'lexibility Act, P.L. 95-354, as amended by the Debt Limit Act, P.L. 104-121,

Title 11 of which is known as the Small Business Regulatory Enforcement Fairness Act of 1996,

enacted into positive law as 5 U.S,C., ch. 6.

1'he public policy ofthe United States government, as declared by Congress in Section 2

(Congressional Findings and Declaration ofPurpose) ofthe Regulatory Flexibigty Act, 5 U.S.C.

I 601 nt, is to require that both governmental regulations and "informational requirements" differentiate in a meaningful way between large entities and small entities, so as "to fit regulatory and informational requireinents to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation."'ection 2(b) then "establish[esj as a principle ofregulatory

ln Section 2(a) Congress "finds and declares that— "(1) when adopting regulations to protect the health, safety and economic welfare ofthe Nation, Federal agencies should seek to achieve statutoiy goals as effectively aad efficiently as possible without imposing unnecessary burdens on the public; issuance that agencies shall endeavor ... to fit regulatory and informational requirements to the

scale of the businesses, organizations, and governmental jurisdictions*'ubject thereto.

Continuing, Section 2(b) declares that "to achieve this principle, agencies are required to solicit

and consider flexible regulatory proposals and to explain the rationale for their actions to assure

that such proposals arc given serious consideration."

l-lere, where there is such a gross disparity in the sizes of the reporting entities, a one-

size-fits-all proposal no more comports with the Congressional policy than i1 does with the letter

of the Regulatory Flexibility Act.

"(2) laws and regulations designed for application to targe scale entities have been app)ied uniformly to small busincsscs, small organizations, and small governmental jurisdictions even though the problems that gave rise to government action may not have been caused by those smaller entities; "(3) uniform Federal regulatory and reporting reqmrements have in numerous instances imposed unnecessary and disproponionatety burdensome demands including legal, accounting and consulting costs upon small businesses, small organizations, and smaN governmental jurisdictions with limited resources; "(4) the failure to recognize differences in the scale and resources ofregulated entities has in numerous instances adversely aAected competition in the marketp}ace, discouraged innovation and restricted improvements in productivity; "(5) unnecessary regulations create entry barriers in many industries anil discourage potential entrepreneurs from introducing beneficial produc1s and processes; "(6) the practice of treating all regulated businesses, organizations, and governmental jurisdictions as equivalent may lead to ineAicient use ofregulatory agency resources, enforcement problems and, in some cases, to actions inconsistent ivith the legislative intent ofhealth, safe1y, environmental and economic welfare legislation; "(7) alternative regulatory approaches which do not conflict with the stated objectives of applicable statutes may be available which minimize the significant economic impact ofrules on small businesses, small organizations, and small govemmen1al jurisdictions; "(8) the process by ivhich Federal regulations are developed and adopted should be reformed to require agencies to solicit the ideas and coinments ofsmall businesses, small organizations, and small governmental jurisdic(ions to examine 1he impam of proposed and existing rules on such entities, and to review the continued need for existing rules." 98

I. THE RULES AS PROPOSED WOULD SERIOUSLY IMPACT SMA'LL BUSINESSES.

Comments filed concurrently with this motion establish at least primafacie that the

record-keeping rules proposed in the Office's NPRM would differentially impact small business

entities. See, ~e, comments of the undersigned movants filed herein. As demonstrated in the

comments ofMovant Harvard Radio Broadcasting Company, the reporting requirements as

proposed are "not weII-suited for a large number of small entities" and are disproportionately

burdensoine on small entities. ~O. cit. at '1.

Il. AN IRFA IS REQUIRED BY STATUTE.

Section 603 (Initial regulatory flexibility analysis) ofthe Regulatory Flexibility Act, as

amended, 5 V.S.C. (j 603, requires that whenever an agency issues a notice ofproposed

rulemaking such as that published by the OAice on February 7th, "the agency shall prepare and

make available for public comment an initial regulatory flexibility analysis." Section 601

(Definitions) of the 1980 Act, 5 U.S.C. II'601, applies the requirements of the Act to al) government "authorities" falling within the scope of Section 2(a) ("agency") of the Administrative Procedure Act of 1947, now 5 U.S.C. ('I 551( I). While Section 2(a) of the APA excepted "Congress" from the applicability of the APA, Congress has since provided affirmatively that rulemaking proceedings in the Copyright Office shaB be subject to the APA.

Section 101(d) the of 1976 Ac(, P.L. 94-553, 17 U.S.C. (i 701(d), unequivocally provides:

Such IFRA "shall describe the impact ofthe proposed nde on small entities" and shall be published in the Federal Register and transmitted to the Chief Counsel for Advocacy of the Small Business Administration. The D.C. Circuit has held that the APA does not apply to labor relations ofthe Library of Congress. I F I a ~pl IUP fc .8 I 245 D 5 AppDC 586 255 F24 lddd (I9855. 99

(d) Except as provided by section 706(b) [copies of deposits] and the regulations issued thereunder, all ac1ions taken by the Register of Copyrights under this title are subject to the provi.rions ofthe tldministrative Procedure rtct....

(emphasis supplied). The intent of Congress to protect small businesses against undifferentiated

government regulations is clear. To the extent thai any inconsistency might be read into the

1946 and 1976 enactments, the latter in time would control. Otherwise the specific exception for

the Office in Section 701(d) to the copying provisions of the Freedom of Information Act, 5

U.S.C. $ $ 552 and 552a, would not have been necessary.

III. PUBLIC POLICY REQUIRES TIIE ISSUANCE OF AN IFRA.

Even ifthe Office were textually exempt from the Regulatory Flexibility Act by reason of

being part of Congress, it should act here consistently therewith in accordance with the public

policy declared in Section 2 by that Congress. At the time of its adoption of interim rules in

Docket No. 96-3 in 1998, the OOice stated that while it was

not an "agency" subject to the Regulatory Flexibility Act, 5 U.S.C. 601-612, the Register of Copyrights has considered the effect of these interim regulations on small businesses. The Register has determined that the interim regulations would not have a significant economic impact on a substantial number of small entities 1hat would require provision of special relief for smaH entities in ihe regulations, and thai the interim regulations are, to the extent consistent with the stated objectives of applicable statutes, designed to minimize any significant economic impact on small entities.

63 Fed. Reg. 34, 289, 34,295 (June 24, 1998). The 1998 statement is no1 a substitute under

Section 605(c) of the 1980 Act for an IFRA bere, because the in1eiim rules, which were the subject of the 1998 order, did not read on "eligible nonsubscription transmission services" added by the Digital Millennium Copyright Act, P.L. ] 05-304 (1998), which enlarged Section 114 subsequent to the 1996 and 1997 notices in Docket No. 93-6, 61 Fed. Reg. 22004 (May 13, 100

1996) and 62 Fed. Reg. 34035 (June 24, 1997), and the only commenters had no foreknowledge

ofthe interests or practices ofsmall webcasters in the year 2002. The Office itselfexpressly

recognized in the instant notice the time-bound nature of the record in the Docket 96-3

proceeding, when it observed that "the industry was young" in 1996-98. 67 Fed. Reg. at 5764.

The more current comments in Docket No. 2002-1 demonstrate that the rules as proposed do

threaten to place significant, disproportional, and unnecessary economic burdens on small business entities.

WHEREFORE, before acting on the NPRM published February 7, 2002, the Register

should publish, and solicit comments on, an Initial Regulatory Flexibility Analysis and should

provide Movants with such further and different reliefas may be wmranted.

Respectfblly submitted,

William isa)04

Miller and Van Eaton, P.L.LC. 1155 Connecticut Avenue, 8 1000 Washington, D.C. 20036-4320 (202) 785-0600

Attornev for Harvard Radio Broadcastina Co.. Inc. Intercolleaiate Broadcastina Svstem. Inc.

April 5, 2002 101

RATE SCHEDULE "A"

REPORT FORM ASCAP EXPERIMENTAL LICENSE AGREEMENT FOR INTERNETSITES c% SER VICES — RELEASE 4. 0

PART L ACCOUNT INFORMATION

REPORT PERIOD: THRU 12/31/

LICENSEE NAME:

POSTAL ADDRESS:

INTERNET S]TF. URL: http:// E-MAIL:

PHONE NUMBER: FACSIMILE NUMBER:

PART IJ. DEFINITIONS

(a) The terms "Internet Site or Service," "Internet Transmisslons" and "Users" are defined in subparagraphs 3(a), (b) and (c) ofthe license agreement.

(b) "Sponsor Revenue" means all payments made by or on behalf'f sponsors, advertisers, program soppliers, content providers, or others for nse of the facilities of your Internet Site or Service including, but not limited to, payments associated with syndicated selling, on-linc fianchising and associates programs. "Sponsor Revenue" also means all payments from whatever source derived upon your sale or other disposition of goods or services you received as barter for use of the facilities of your Internet Site or Service including, but not limited to, paymenis for the sale ofadvertising time or space.

(d) "User Revenue" means all payments made by or on behalf of Users to access Internet Transmissions including, but not limited to, subscriber fees, connect time charges, and any other access fees.

(e) "Internet Site/Service Revenue" includes ag specified payments and expenditures whether made directly to you or to any entity under thc same or substantially the same ownership, management or control as you, or to any other person, firm or corporation including, but not limited to, any partner or co- publishcr of your Intemct Site or Service, pursuant to an agreement or as directed or authorized by you or any ofyour agents or employees. 102

(1) "Session Value" is the value derived from the number of "Internet Site/Service Sessions" that an Internet Site or Service generates.

(g) "Internet Site/Service Session" is an individual visit and/or access to your Internet Site or Service by a User. If any such visit or access exceeds one hour in duration, each period of one hour, or portion in excess thereof, shall be treated as a single "internet Site/Service Session." For example, if a User visits or accesses your Site or Service twice in one day, once for 15 minutes and a second time for 40 minutes, that User has generated two "Internet Site/Service Sessions." lf a User visits or accesses your Site or Service for an uninterrupted period of two and a half hours, that User has generated three "Intetnet Site/Service Sessions."

PART Ill. REVENUE BASED LICENSE FEE CALCULATION FOR RATE SCHEDULE "A"

NET SPONSOR REVENUE l. Sponsor Revenue 2. Adjustment to Sponsor Revenue . 3. Net Sponsor Revenue (subtract line 2 from line I) ...

INTERNE'f SITE/SERVICE REVENUE 4. User Revenue . 5. Net Sponsor Revenue (from line 3) .. 6. Internet Site/Service Revenue (add lines 4 and 5) ...... 7. Rate Based on Revenue .. x .01615 8. Revenue Based License Fee (multiply line 6 by line Tl ...

PART IV. SESSION BASED IJCENSE FKK CALCULATION FOR RATE SCIIEDULE "A"

SESSION VALUE 9. Number of internet Site/Service Sessions 10. Rate Based on Internet Site/Service Sessions ...... x $ .00048 11. Session Based License Fee (multiply line 9 by line ]0) ...... $

PART V. LICENSE FKE CALCULATION FOR RATE SCIIEDUI.E "A"

12. l.icensee Fee (enter line 8 or line 11, whichever is greater) ...... $ 13. Minimum License Fee. $ 264 00 14. LICENSE FEE DUE (enter amount &om line 12 or line 13,whichever is greater) ...... $

PART VI. CERTIFICATION

We certify that this report is true and correct and that all books and records necessary to verify this report are now and will continue to be available for your examination in accordance with the terms of the license agreement.

Signature Date

Print Name and Title 108

RATE SCHKDULK "8"

REPORT FORJJrI ASCAP EXPERIJJIIENTAL LICENSE A GREEJt/IENT FOR INTERNET SITES & SERVICES — RELEASE 4.0

PART 1. ACCOUNT INFORMATION

REPORT PEIUOD: THRU 12/31/

LICENSEE NAME:

POSTAL ADDRESS:

INTERNET SITE URL: hup:// E-MAIL:

PHONE NUMBER; FACSIh IILE NUMBER.

PART 11. DEFINITIONS

(a) The terms "Internet Site or Service," "Internet Transmissions" and "Users" are defmed in subparagraphs 3(a), (b) and (c) of the license agrceinent.

(b) "Sponsor Revenue" means all payments made by or on behalf of sponsors, advenisers, program suppliers, content providcrs, or others for use of the facilities of your Internet Site or Service including, but not limited to, payments associated with syndicated selling, on-line fianchising and associates programs. "Sponsor Revenue" also means all payments from whatever source derived upon your sale or other disposition of goods or services you received as barter for use of the facilities of your Internet Site or Service inchding, but not limited to, payments for the sale of advertising time or space.

(c) "Adjustment to Sponsor Revenue" means advertising agency commissions not to exceed 15% actually allowed to an advertising agency that has no direct or indirect ownership or managerial connection with you or your internet Site or Service. "User (d) Revenue" means all payments made by or on behalf of Users to access internet Transmissions including, but not limited to, subscriber fees, connect time charges, and any other access fees.

(e) "Jnternet Site/Service Revenue" includes all specified payments and expenditures whether made directly to you or to any entity under thc same or substantially the same ownership, management or control as you, or to any other person, firm or corporation including, but not limited to, any partner or co- publisher of your Internet Site or Service, pursuant to an agrcernent or as directed or authorized by you or any of your agents or employees.

"Session (I) Value" is the value derived from the number of "Internet Site/Service Sessions" that an Internet Site or Service generates. 104

(g) "Internet Site/Service Session" is an individual visit and/or access to your internet Site or Service by a User. If any such visit or access exceeds one hour in duration, each period of one hour, or portion in excess thereof, shall be treated as a single "Internet Site/Service Session." For example, if a User visits or accesses your Site or Service twice in one day, once for 15 minutes and a second time for 40 minutes, that User has generated two "Internet Site/Service Sessions." If a User visits or accesses your Site or Service for an uninterrupted period of two and a half hours, that User has generated three "Internet Site/Service Sessions."

(h) "Music Session" is an "internet Site/Service Session" in which a User receives any "internet Transmission" that includes any performance(s) ofmusic.

PART III. REVENUE BASED L1CKNSK FKK CALCULATION FOR RATE SCHEDULE "IP NKTSPONSORRKVKNUK l. Sponsor Revenue 2. Adjustment to Sponsor Revenue .. 3. Net Sponsor Revenue (subtract line 2 from line I) ...,

INTERNET SITE/SERVICE REVENUE 4, User Revenue 5, Net Sponsor Revenue (from line 3) ., 6. Internet Site/Service Revemte (add lines 4 and 5) ...

VALUE ATTRIBUTABLE TO PERFORMANCES OF MUSIC 7, Number of Internet Site/Service Sessions ... 8. Number of Musk Sessions . 9, Ratio (divide line 8 by line 7) (to 3 decimals)., 10. Internet Site/Service Revenue (from hne 6)...... $ 11. Value Attributable to Performances of Music (multiply line 9 by line 10) ...... $ 12. Rate Based on Revenue... .. x .0242 13. Revenue Based License F'ee(multiply line 11 by hne 12)...... --....- $

PART IV. SESSION BASED LICENSE FKK CALCULATION FOR RATE SCIIEDULE "B" SESSION VALUE 14. Number of Internet Sile/Service Sessions (from line 7)...,. 15. Number of Music Sessions (from line 8) .. 16. Rate Based on Musie Sessions...... x $ .00073 17. Session Based l,icense Fee (multiply line 15 by line 16) ...... $ 105

PART V. LICENSE FEE CALCVLATION FOR RATE SCHEDVLE "B"

l8. Licensee Fee (enter line 13 or line I7, whichever is greater) ...... I 9. Minimum License Fee. $ 264.00 20. LICENSE FEE DVE (enter amount from line 18 or line I 9, whichever is greater) .

PART VI. CERTIFICATION

We certify that this report is true and correct and that all books and records necessary to verify this report are now and will continne to be available for your examination in accordance with the terms of the license agreement.

Signature Date

Print Name and Title 106

RATE SCHEDULE "Cts

REPORTFORI//I ASCAPEXPERIMENTAL LICENSEAGREElMENT FOR INTERlVETSITES 4 SERVICES -RELEASE 4.0

PART I. ACCOUNT INFORMATION

REPORT PERIOD: THRU 12/3 I/

LICENSEE NAME:

POSTAL ADDRESS:

INTERNET SITE URLi http//

PHONE NUMBER: FACSIMILE NUMBER'ART II. DEPINITIONS

(a) The tenne "Internet Site or Servise," "Internet Transmhuions" and "Users" are defined in subparagraphs 3(a), (b) and (c) ofthe license agreement.

(b) "Sponsor Revenue" means all payments made by or on behalf of sponsom, advertisers, program suppgers, content pmviders, or others for use of the facilities ofyour Internet Site or Service Including, but not limited to, paymems associated with syndicated selling, on-line franchising and associates pmyams. "Sponsor Revenue also means all payments from whatever source derived upon your sale or other disposition of goods or services you received as barter for usc of the facilities of yom Internet Site or Service including, but not limited to, payments for the sale ofadvertising time or space.

(o) "Adjustment to Sponsor Revenue" means advertising agency commissions not to exceed I $% actually allowed to an advertising agency that has no direct or indirect ownership or managerial connection with you or your Internet Site or Service.

(d) "User Revenue" means all payments made by or on behalf of Users to access Internet Trsnsmissions including, but aot limited to, subscriber fees, connem time charges, and any other access fees.

(e) "Internet Site/Service Revenue" includes all specified payments and expenditures whether made directly to you or to any entity under the same or substamially the same ownership, management or control as you, or to any other person, firm or cmporation including, but not limited to, any partner or co- publisher of your Internet Site or Service, pursuant to an agreement or as directed or authorized by you or any ofyour agents or employees.

(I) "Session Value" is the value derived from the number of "internet Site/Service Sessions" (hat an internet Site or Service gcneratcs. 107

(g) "internet Site/Service Session" is an individual visit and/or access to your Internet Site or Service by a User. If any such visit or access exceeds one hour in dumtion, each period of onc hoer, or portion in excess thereof, shall be treated as a single "Internet Site/Service Session." For example, if a User visits or accesscs your Site or Service twice in one day, once for 15 minutes and a second time for 40 minutes, that User hes generated two "Internet Site/Service Sessions." If a User visits or accesses your Site or Service for an unintenupted period of two end a halfboors, that User has generated three "Internet Site/Service Sessions."

(h) "Music Session" is an Internet Site/Service Session in which a User receives any Internet Trmsmission that includes any performance(s) ofmusic. "Performance (i) ofMuslP is any performance ofmusic contained in any Internet Tnmsmission.

Q) "Performance of ASCAP Music" is any Perfonnance of Music that is of a mmical work in the ASCAP mpcttoty not otherwise Iicensetl

PART IIL REVENUE BASED LICENSE FEE CALCULATION FOR RATE SCJJKDULE "C"

NET SPONSOR REVENUE l. Sponsor Revenue 2. Adjustment to Sponsor Revenue 3. Nct Sponsor Revenue (subtract line 2 from line 1) ...... INTERNET SITE/SERVICE REVENUE 4. User Revenue .. 5. Net Sponsor Revenue (from line 3) . 6. Internet Site/Service Revenue (add lines 4 and 5) ....

VALUE ATTRIBUTABLE TO PERFORMANCES OF MUSIC 7. Number of Internet Site/Service Sessions . 8. Number ofMusic Sessions 9. Ratio (divide line 8 by line '/) (to 3 decimals).... ' 10. Internet Site/Service Revenue (from line 6)... $ 11. Value Attributablc to Performances of Music (multiply line 9 by line 10) ..... 5

VALUE ATTRIBUTED TO PERFORMANCES OF ASCAP MUSIC 12. Number of Performances of Music.. 13. Number of Performances ofASCAP Music 14. Ratio (divide line 13 by linc 12) (to 3 decimals)... 15. Value Attributable to Performances ofMusic (from line I I)...... 2 16. Valae Attributable to Performances ofASCAP Music (multiply Jina 14 by line I 5) ...... $ 17. Rate Based on Revenue...... x lg. Revenne Based license Fee (multiply line 16 by line )7)...... $ PART IV. SESSION BASED LICENSE FEE CALCULATION FOR RATE SCHEDULE "C"

SESSION VALUE 19. Number of internet Site/Service Sessions (from line 7)...... 20. Number of Musie Sessions (from line 8) .. 21. Number of Performances of Music {from line 12) .. 22. Number of Performances ofASCAP Music (from line 13).. 23. Ratio (divide line 22 by line 21) (to 3 decimals). 24. Sessions Attributable to Performances ofASCAP Music (multiply linc 20 by linc 23) 25. Rate Based on Performances ofASCAP Music .00134 26. Session Based License Fee (multiply line 24 by line 25) ...

PART V. LICENSE FEE CALCULATION FOR RATE SCHEDULE "C" 27. Licensee Fee (enter line 18 or line 26, whichever is greater) ...... 8 28. Minimum License Fee ...... 8 264.00 29. LICENSE FEE DUE (enter amount from line 27 or line 28, whichever is greater) .

PART VL CERTIFICATION

We certify that this report is true and correct aud that all books and records necessary to verify this report are now and will continue to be available for your examination in accordance with Ihe terms of the license agreement.

Signature Date

Print Name and Title 109

ASCAP MUSIC USE REPORT FORMA T FOR 11VTERWET SITES dr SERVICES

Name of a Song, or Performance Title, or Recording, or the name ofo Product Text; 60 characters or First Linc of Text about the roduck If blank, assumed tobe unidcntiiicd. 2* Name(s) of Pmtured Artist(s) or Band(s) Text; 60 characters 3» Album title (optional) Text; 60 charactws

I dent sf/cation ofBroadcaster / SY cheat ter or Uniform Resource Locator Text; 80 characters (URL); or fully QualiTted Internet Addrew; or Internet ServJ ca. Notes Thi» field rm bc moved into a header. ASCAP Account Number Numeric; I J dighs

Channel Type Code Text; 2 characters Use IT for lnteraclivc — a dinKI choice/selection (listening or downloading aclivily) nf a particular song. Use Nl for Non-Interactive- a chnice/selection (listening or downloading activity) not s cific lo a rticular con . Format Code Text; 3 cltaractcrs For Inleractivc: Format Code of Song. For Non-Intcmctivc Multi-channel Intemct sites or swvicest Format Code of Channel For Non-intcracljve Sing)ca,"bonnet Internet sites or services: Fommt Code of lntemcl site

Formal Code Full Fomnt Name C Country CL Classical E Ihhnic JZ Jazz RE Reggious, Black Gospel, Contemporary Christian S Spanish UC Urban Contemporary POP Oldies, A item alive, Classic Rock, Hot AC, Standards, Contemporary Hit Radio, Easy Listening, Hol AC, Aduh Contem ra Usage Code for Song Text; 2 characters ~sa c Code ~Deter( ti n F Feature LT Logo T Theme BG Background J Jingle (commercial use) Default is F Number of Bequests for This Song Numeric; 9 digits

Server Date of Performance NmncfK; 10'1» Sdigits; YYYYMMDD Server Time of Performance Numeric; 6 digits; Default for Intctaolive Sites is 120000 HHMMSS based on a 24 hour clock )2» Duration ofPerformance Numeric; 6 digits; HHMMSS 13 Country ofOrigin ofServer (Default is US) Text; 2 characters

If the song has morc than one value for any of these fields, a separate pcr/cmwncc recoat is necessary for each ncw value. ATTACHMENT HI P O GRA GUISE l 997 Winter Orgye Period liilonday, January 6 I k JASE$ttCIIOIM Friday, January 3 h04 P TEEWGUIIKCORGY 0 »~Ikey Wadi vk t g IMN JWI IIHL~W W W ~ HA TIHWARHOI!St04CY 4 0~W»H 5 'h)4»hald ~.PMW8140 W LPI ffff I If a:~ LM$»HHM 4 ~ I \ illat dfd h d ~ 04 5 li ~ Cp I'I FAN «.AA 0~) SHMUWAA»~kw UM 54'I I 8 h' Ih tV 1 «d,S.ft JJIAHW,H NMW. T 'IIAIINHE AH y HA I M fo Ll U I OtCVHI t H'Ch NH yfH I ~'I? N.fl PO(01."1 H "J 10 A«WLIV TUI O II H W 1 HA CHWI S I' . M 'u I4 w»APJH I EWI I LIHALIALCLWW t«i yih «jr'r.' e; 8 I)44»HH I Sl«p 0 lhu0$ RH 0 MWh .V ' (AIM MA» L» OPMJHHAHM W h 14 WAH W fhkk»0 I ACALB 'WWC 'WWN 'JAUNel sk) I H 00 Ahl OH .AMOW II 4 H JLA Ill PA WW LFI GAMB~OP)AOIJ t OSd W IG VtM(LPI ! 4 Ht A 0 0 1).5 Ik GAH. Uky.H P, I 0 AH 0 4 RH 0 Wo I IEMIUI 'rip". 0 d W HHA M 8 I 1 PIA 4 MA ((I At I a 10$.5d« 51 A DNA» 0~ 0 BWH HHI Welt (0 A tMILPI I.th»WJN ll Aop«t. H~R»d 5 d d Phh 'A (L d I c LA 0»0 ~ sm $

SAI I Ci *d'wrsihi.etuh.i t y Op.HS I Kk p .Abd 0 I ht DJ ttkft Wrdh fwgty 000 p a gt Y ID AWW fkk fu ILl PVW Mi ~ MUHI math 'A nit 4 D

* MH VNSIMD IA Ip»stow Iac I 5 0 li 14d D.IIN 1 I I 'SWH M 0»IW D I fh LY.I .AW f5 04 kt tl I W 00 V I~1 lf lie A OP. 'tT t UWPHt Ik tkbpl~l ~$ 0 4 0 I 0 WWf 'MMI 0 WIHIACH 'RM 0 RARVARI HOCVJY ! I VACWOukbDAN'GI N 4 V 10) RECL I Iul H05PITAL Saturday, January 4 It c I htp JAEESPECihUM wa od fllikm'wtp L44 14yb'HMH tN ff)i~ 0 I C~EV I' 0 I(0 HIU)lltLY AT IIAK Allo Ad IV~I W 1HtTAII0TOACV,PARTI I H IHAF I.N .W~I4 5»l IAWGA CIAA(4~h 510 i.fh'Ahg Ct VHOAMA n inmmpaUba glride (o 55GO figures in the ()Ww Ut »Atl .DM .S UyclkdP AHAHLP IAAPILMA''C~ ..F dl 510M. M ydAI IH,SAH N ho Jh ka kcWWO (D I I CMI IJ -A.ulmry of music, (his volume I ' F C 001 8 I .IAMCHLHAAtpgl lhyf UWLHB briny mgUlvr y 0Dfsd»f~c )5d AD 'I ' Sd B HA 0 5 D 0 od IV 01 C U At fmd I HPV Aa 410 1 T OltALIKPJFRO,ITNCSO 151ERA tg rhe imporBnc biographical ipfomM(ion aboDI A I S I M~~ tm'B,lt tVHY hultlf ll'0 h N Sddood 041 dp ) JFHMW C N PM 0 (PI ~ LPI 0 d '1 0'I)pbn C t Hd W«AS,Mt'0 M~A10$ SHLI PH ft k '0 N.Tdlk IMW Np UWPHMH IMW I HW CAW 0 \ I« compGHB, pefformc0, muric rheo(km snd insrru. U~d I hdwdm h 4 (EHG OH Hf' HIMd LPI 0:f INMWR f4 I 'PIH 0 O M IEMD ltA0 I Tot Tmtfry CDUH)DOWN ment mdBB fmm me days of praise to I» I HAaptao HOCKEY runts the H d D~. B.IN I TIIEollcvoFATDI55GALLtD(B:1st Tuesday, January 7 bop snd pop of today. Along with ygf Nnd ~ Sunday, SW TIB JONloaMAHCE ORGY 1 January 5 8 ICI'IIHLI M WANA 4 ffdnunfDUBBUty vfydwa rhis is a refarncr work Hl' Nf l,k lif»td IM I 4 IBHI PIIH I Ii tl fffk dur no music kmr siould be vnduuc. MCMOIUALCIIORCHfahVICt I IWHGHA0 ikf«ly )I ~I 4 4 IM THH'M hd R ~J Hd'l g A~ WWA I'.AA N H b4 WW fifth IL Mhh I I. 0 MWHCAW M 'H akHWIWH 4 IO) p mi.taouptcuumoaGTPARU Ala Ar il blr. ikw OWW Ivdw ld» tkW05 fli I P THEtAGStOEGY.PAIITD R y Ah 044Mklwh W« IP h'd P Ptt IIIENhtgf HARVARDDICIIOÃARY tdi Mlfldud F OphiugiC WI,P CHHIIJ 4 FAN' kl» 4dl I I 4 OP Ck TAWS 'Cki J ~IHWH4IIMH JI~(» Rotten DY Don h(fcNAm RAMDB, 4 Mhli 4 WW~WH ) G OM(PAA WW I Ik hot IRCALtl I h I ll A p WWIRS hh C fkD a it.WA,I AHI HII . 5 4 I I:nptu I h Ikll IP (00 IA5DI I HH Arkh TW U:G kt SAWWAO GH NW 5 IJDIHF UI tkhdkd K C I Pdd S I bHP ltl hfhkWLWWHW.MMW 5 Rhhi .Ui Wd PI S 4 4 Cp 10(E LP) IHS O ~ '4A $HVWIIMHWIDG) I 4 A,D C.IIIJPk(PI SHMF~SMAAH LHS HMHNAR M W JWPVWAJHAS A C K«MI CKSR$ itckWHAWH ICIHI .5' ff«0«$ 8 I C H C Op. 0.$ KC IOMAd (Ctt RW( MA 4 BVFK ~40 440 0o Gti A LAN)h I .BL 0 d I I 1$ «A 5 I f~l Wt C »COP :J drCLAAHO kd ICRB 0 0 aw c N )' f4iw Ifd 10 wvdfhA \ Icssl W .I Sbkfll 5 0 C No)h GPIHSMLCI HMOWW (CU) i)i) Fkl I VWdgM MOIIOAYMORMNGSTIIIKE (HU d M~ COVER: ye RAN BEE B nhtrbrn Monday, January 16 1 c wtt 1 o Ltac iadc ~ 4 Wednesday, January 16 G» 'OP.I(PS»LCI 4»M tC&SI Friday, January 10 IAI 7&MJERCU&aoaorfEVOROY,PART I K Ha JA555FCCTKVM Gkrc LOall(S a(4»ww(kd tDH tl M»l .0 4«tl (9, IPiLHR&ldl JW I ltw RECUR( HOCPITAI, lol I TKLtclctl«(UKcrlttGaC1P*RTIV 44» 7»er.tAW .(44 4» VHAS H U I Ot.M(l ~)AHR&H iyd ZZitaCtkvw I ~.tll. At~(ada(M J I kw»G '(4) (GL & LH IAt CLHMCII.kECOESTWECKEND KGINS S~K» f 6 (HI(A flt41fl ~ F S 44 hc(MHIINL~ tlr ~ rwd»wl 5 ' Hd» 4 I Ad 1 S A»od fC»»I ~ t CH» h N U I '»ka»wto 4 tr I AA5 a.(4»wd or» wars .(a 5 IAHML~f ~l l~)4(',ct,ll«tl tau (4 M»t Gd' (util o~\ low (5»») P I N 7 Lfhtc Glltlll &tAAI rtl JAIM 5 A My of '(44(P) C'NHad wdr r .0 VAO 4 4 I N afl lffl)34) »I tA« tA 4 Ovid 01.3M(tl Ia l)M)L ~ 5IIRHA ll Ol IA ~tl M l)9 KAH.P 5 IA IM ~ d» O.U$ INAADAU(tp)41» .ctd VMS& 7(lt I HARYAKGIMUXY SIH( fcw44 VG (Cl N ywwoa (1.19 i RECORD HOSPITAL 4 4 Ud ft dl US»a f (0 ~ Mt 4) Cvd I 0 .«OIK»).t NPH I TKCCRIMPIHRIIHOacy t t« otl .Ol.l)«tlltlwA (V S' A4»&,4 IHAJ~ y LPI I 0 J~IVPi~O toit)S U'1 (CM Wednesday, January 8 ldt W 11 dr .0 tl G9 I &. H)9 LJD.VL)~t r Saturday, January 0 kwl I 4) Iwl fkl Gd&LM H,t I. I l)tZ5PECTRUM 06 If 01 0 . 4 1 r»4» OP)t«tdl. T P .PA »4 I .1 H6 IA 1 )NCLEONPLEISIHRORGT.P AT II At ktCOSD(lcitaAL 1» Id HNA ) 4 kaid IA I 'Pl I A.D.(5 O li t. IA)GSPCCtlcl I td -7 I ltl ld HILLt(U V*7 IMIIVAI IFHM 34(.OI 'e(1$ 4 vv .r rv racM ~44y "4 0 Jw »URJ A~N (Gd lt 4 LCCOM& 409tlt L ~.4» 6 tk» AIG I 4 ICP5) Id t CLA5$)CIL ArOUEST WSCKLLD COI'Tl!IDES I F dad rtMa«(54'Op(i(IMGR»d» tr 19$ R Fkw &y ~ k (09 F NtavlRDHQCKEY H~HCN IPWA»(td (Md»HLFI C H I Acpli(I ILG~»C (C ul a 0 ' 0 Ii)f47 14 \ PA tl ~WCIIL)l Thursday, January 16 ~01 1 TKCI )GUT TRAIN 0 )(i&MIPLI IJ 4 GW t«~t RIWN(45$ h" I I 674451 T '« 0 II» 1I Ol\ f)H 5&ld .Gl tt.

C wa&45 i 0&IHHI(CV.A»n 4 WNW»LM I A»l'I Or. IIN)la~ay kl lo 1 alt I t5$tCCfkLN

Idt THE$5RCU PSOKOFIEV Otcv. PM(TV I IO I I .0 &IMIL» il Hk V rl Ihllwwt IW(«d (0 I NI LOPtlltt lt Ply) I'l(4(cplvtllt I.t I IHN(4 '4409 0 0 01 0 il«tH\1'RU(~&,IHIRM 4 I .) D.cr14(ltl)r ~ Nd .I littd l Gt I) pl ro 4 A 14.PI C,OP.II»II )kr» I *LP) I J P P 1 swot to f 09$1()IN)(ill (4» I 7» It 'ta 4 D 11 ~ wa 61 ty» IJA9 Ttk 1 vdr(LOAil 4 O 4 I ~.fl~ f 4 N Jc St«011:5 Id .01 (t t 0 I Si E 4 0~ lit OA 6 06 I MW .Dl IM(lydkk»A kr.(GSL Sunday, January 12 S JW AC I INDI.)lh(HI S 4 PW HUM 5»d H(4»4 0 Ltl RLUL«. f rw.)9540 C N $ ( 044&UIHI.IT I» .M WA 5 Ol Nt«AG'0 &\ 6& ll Ah ~&,0!Sall I Rl fdaad A II,OP.H PH ~ LIIFS $F IA t(kd I ldltl »T I &»V 10 'Adw 5 I T V I ~IC I MW .0 ~ MEMORIALCNURCHSESVICC Op)lilt)&LG» K IHIP I IIWA yw *LD ill«pl)JIRWdki 4 P 6 ~u» I TH Ma ~P I G .Ph f HC44 4 C It 0 .OP )llltlt Nt. 4 I 16 I,I lcw f4~AN 5 I *VAHH wr 0 Pi fWPI Ot.ft«M) ) J:5 IC»d ( I .4 I ttcokowoyln(TJL N v aTCOaoa05('IT*i. 17 Thursday, January 9 Friday, January EiN II Ol *IDH ".II Al » L 'wllt I JLZJ$IKCTat'4 C N 5'4 I 4 I (OP.(llloktd 05 IP I ) Il LOI (Ml'l)$10 HLG I4 I 4 I EESFCCttUM F Dd I irH P IHE)aaCEIPROKONt OaCV.P(arVI MV 0 I »4»C CI 4 0 I«44 5» Iv tPI 'C ' l)l I THEWILLEMPIJ»aoaGY F f y OP I«'lllakV Gt I (Ad I Gl» 0 MIHirc tl L I~ah hd Op)HI &K F I W ~ IAIIVA» $) IMWO 4 IM I I I D A PH 6 5»» h N4,6d lh» P .4 Elk» Ad \ It I ~J 1 .Q 5 f ll) III.M».Q A»0d (4» I f4v»»P f«»cf »*»4' IO IM TO ~ I fwrYCOUNf60 0 Hill 4)HVA tl IllS 4 C I IyW N 'A»,hri»»VAC r 6 7 I I y HI I I \ Ottfltlalcywod Kh 9 4' t» ti C lf II Dlktcp.IDQ9(l la LI 0$ A I Tuesday, January 14 f»»a I WAII.I 4»Aa ~y.ctrl» kr fCNI 5»IA y(tA (Md»y LPJ 5 («44» OP. I(l«IHCR NHF 'l C44: ID U9 ILZZSFCCIRUM 'o iW P THIMIICCIPRDKOFllVOI(CY.PMITlh L KILO N (»4 I 44 if)HO(t HLOy.H«t)ILI P I .I) .4

9)l't I N &.(44 F'td tad AAA»ut I» I C I Iltlt I I. I Idlll THUAC 4 rOp. I«l«l.lh . I I 4 IM C I V C W I GOP I(Illa HLS~4 I .Ih 'hl Ccy.llti(41tw II.I IIICALP) HD$ . F Y» IL' (4( (I 45 64 H LH rl 'f 4! Gil S 4 tell(JA N (C MW 'V 5» at Cp)till lr.ll I l Wuhww I w .Op.GI(41.4;I I It 5 I ~I» 4 l.(40 (0 LPI ' .I 40 4 (444 Jtllyh I r .Hw 4 Iwc4 i I 5) ir fr &0,)lf)I(JAR»d Il.i'l 4 Flk' I'«tlll 1 h I I lti F C (I 0',t ~F a l

R I 0)TI.DID tw. ~ Vt .50 I UISLM WCI'y 6 Gd IC f» Tl D I ~ I PAJI M»»tcy LI«NIL«k lillt k5»el IO lt»la(C I I I ~ TMU f 4 0 \ 0& )UIHILthl I 6 I AAC 0 IL(a~f lt 4'IAIWIML 4 f4MWI .N I LI 0& GJ IG I NJ& I ' Swwk fw .709111«IN 5lled LU» rwd l(41 N511y» C .Hdl V 1» t (4 P THCTCCNOSGY 4 AtC d f 'fJ 0 )A 04 IIMI thl»yd LPI I d 5~)HIHU fit »U» 1 WHRS Af» lu» ul l9vkS' ' fw P»f I I lwhl wud 10 4 IC4641 &4 O«.colw wv MH»u Gr PA V J& J»» HAEC I ' ll tfCOAON0$ PITAL Hao *Lad AMGH (4 'V I td D hl )~lwa I f r (14 P AECOROH0$PH L TKCSOTRICllloaOY (C~ W IV lkH» M(WIM MONOAYMOIUIUIGStRIKE w,Dawns

Saturday, January 18 Tttursday, January 29 Monday, January 20 maa M L 5at JAZZ I PECTSI.'4 140 )l(KMAIADA ORGY LEOS JANACEK ORGY I dt )t(LMUL(YATHARYAID Jd I ' W4 THE 1.» I THEMttROIHH)E401 CY Ialyb NWM p»a p HWdZ Io Da~ n A '001)'Idyl(ay fh 0 ft I .I)MID»M CH F WIG (Cd \ Wl I M 0 Ib W Ht Wg .Hf 4 IWIW fit

Iat y 'mz nt VI( Ethel uraurTv( 0 fn r P I hl I I .I 14 I) OCKEC()GIOIIGY nl I't (4&.N(I 4$ kalt I II ndh f ttk!cn Idm 1( N) t&1P14 IW(drl D I II (D light ~d (NLONOIIAIIONGT J.D 5 hFW'Cd I C 14' NW ( t tdt PNA N tE 0 ly)i. MWMU ~ kfbyN I IU II It t IWA. 0 N 0 ~ C r wu GMHK (~ FWda Wd hi!Has I p I(HWW) dA«'CW ~ WW WWH T (W I PN( H( Ihhpa )I yw f j I *'I&A I a h I ,*I ( 1( I«J )P I&k LI 4 I I

GWW

P,'4 IMWW (L HGHFHUW(dgh 1hwl C 4 ha I.t I A)n Wka&C IA Aa 14'M ( ~ wM I » I ~ 'a wg ly n tf I )(054. 4 (f ""

I 0 Hs)W& dy JU IH (I (I Nlr &d C .I M LHd ta (lao&& Ic Ir ™ bPW»t t W d b dt I SUP 'ad Wl HMI&WI)H (.» p Np Np Sunday, January 19 uA D ( A IdF T HH I n I I» «Iut aw hsuzsoyrfasoumrdsr.PART( I I aw 0 I fw .(w lya AW N WGPI I li oo) MUA (G nd I 4& (WA&g I'I tl ~ tl maw(a 40 & n.l ' I)SI I I I p" I

t44y.tm tdl h I ~ tt I tp \ . M I C ul M I(WU LPI 1(:0( y Th&F0 I U! l NC P F W.W ' Cl H 4 M~ I I HT«I Wk(HP 1 4 I'I 'WF UIC &I I!N 0 tbt I!LOKIOFTIIE50(tfHCAITFIKTI) 'M P I IECIDIANANOAU(T)N F ~ W 041 d ll 4 ay& (A(4) T b» Wd ~ I )HDNUW)44 NG A 0( ~ ' IERTWIIAIAMI 4 Wll Whd d )f M» m numC ra*ahucm Tuesday, January 21 G hlhk\C da t h I 4 g a(4! HI I I(l m fmnlactflul(DDTAVI OCKEGNEM OIIGYH

GW N 0 I (I ~ Da I g I WI.(NLIV I I 'I NW M Vd Aww I' (Nrud SAGW g N; IHN5lt) dill 0 FkLV(ENP5 IN»)ft)ZR &.a .I, ap t n .0 gala II I Y t W, Hd I gn IH»WW p NWMMGIA N (H Aa I 14(LC I" ™ ,a41 ' O(LVI. d N)db 4 M 'I .A k U4 OS Ik I .WO »U)dl ctl I Potacs(RAT)M

(k)ut 'M II«IA.W I Ckd '0~III )&I )H' N pt MNN loc P Ktlt)ILPJI'SMICIC tl,d fa W M Aktvp D N I !4( Pd(V It I ~ Mt W dl(4 f . Gdk Y I LF) hd )(~0 I UW )udhhNW .d I&GO IUL D kkd I ~ dh(M f«T Vhl HGW d I INL 0 I I MW 'Nd 0 A I d M Hi(0K (0 VA I Fln 5"p». ' 4 .S I \'*0 mh DI b Odr.r ~ ICk Ck C t)t W0dudsdsY, Jlnulrr WM(ds (AWF MI MAL H (PI NOMIAYMORNLUGSTRIKE 01, . ~, AM ww' (0 rt vh mc,m HOSr IN SWIM C AWW 4 4(0 II'uhntn Yoggertcnn Wun 0.1 .IA*F hW& Pag IWullld Fat( WM(th A Ct c I I.A a (A M I c'u !I 'Wkll gAve IMI I . I)ha 2 ( 04, p f A I ~ 'TWPI Uldkl I' WNM I pal 10(d I" HI CA ada &An 51 fnscn Ch .PIC(I(L(nth.hth I v \ I I C&plll, Dtmltd a WLH 0W W ' 10 mmm CW NHIWL I ~ K~KW P' 4 I II 0 Il 44 I .* I )WU gC I 5W W IMA tlt ~ S ''Id)4& 0 I'l Pvhth) 4 * 0 Itt!00 d MPN 4 LCWH(MNACIIJLP k ww&al h Oh d O n".M . d HWW(4V C & ) a pl Wl(5(n ($ (IL IN)M &C dLWWGWLWIII ~1!N(mt l U lhhadl bhp P Sdl m

hk Lpwm Mkm C I f 9 gt gywt I The Johannes Brahms Orgy 0 I A«O«MMO i ' Hiksw%li v cty«t I! ~ Iyw( fo 4 (EMD 4 hw Vk ~ IM 9IA C 4 y 1 «itk sm 30 mw (urn«(mr I:Awy.«m Mhmd 4 N ~ I Thursday, January nw «4 wd ~ IEMO IF 4 ml 1tw v«y Imwn DNA I INES ~ II *11 MS RG7 I I no.n tl I 1 lnt( M« nil.'ldkd 7ll E 1 0 IN ~ p )la vdl~ A~ nndt).F 5 ot.n'I I I Kl'I wk nm.kIAI 5 $ (N I M dl HM:gdhk «I d I Nm '1y.n ' HMT M .0 IRM I 0 «7 Cdkl:C 1141(TI td 'ff I «011 IA tl H

Ti dim 1 I tdy Pl HO! K K If V Ik P i tL)lh kch ($ i 19tko Ik 17. yd "ow w )NIH tmo tat Hll:7 'F p H «t)N~'ldkhop.tk Intn lk Op(2 ID(l 1 lt )lrt:rico r o'ir I hdwmno I Hm N Kd hkml M gd I 'tmtl.t twfi lmm Ch Htw p Ikki ~ 4 tall . htl .W.W..Ch «o,lhkrd.t«kl

HOI Itthgpa I~012 "Il I I Im'0 rwthhh I Tap KICK IMCK 'll'I(INVgiiRGY I ~ kthn Sw«rm .01 I I M T I N 0 KW Ch (001 ltw 4 Vh hp Nlmnh cad t itf MM AF

Sunday, January 26 uris, 9*gmnhtnddkidid(4lbdnit,l 1$W Mal I MEMORMLOIDRCH5ERVICC '1«l h 'f HILVM Ml 1 m '(D«)IFMO P '.in CI41 hll 8 5 nlAIlll Idldy(41 ikdw VM in III L OHM IN Id. hy k)4m LW y THEltLIFfwEaltGRCV 14)hdfkgl hdmm ld AWCE w thd I I Kdlp Mt) $ 1 t .01,)t P I gmg )rimmed I A ~ f~ )f T I I «D 14 1 .Swm 50 WIN (9C* VAWI wl w 'm."0 'nltll r '8 .4 'MHILPI I544LF mw,Op.iknh I ly

Monday, January 27 Itl,Alki Ihh h 4 I W 5 V, I *4 p TNCIIILLWOSELLORCY tarn« H«HKW(I d(HD tll

1 I (DCI 111ALlt Ghn "0 M«« ld LF(dh D 4 kdk IA 11th luhlt Ct Owl(i 0 Oy Sl 1 1 HWNA ~ 5 H lhm Tuesday, January 28 *id 1 I 'Ml tytl) I D t,g hi 1001 I oh p K*kv«m Hockey HM:I I C KM C ml'T 1 4 ll d .H pit I I.n 4;I .N 4 ddpdhw iltn4f I ty. limn tlndkbhm«HO W I 0 lkw 1 F I MPM I\ RECokbnnofrltt( ' «id kw M$1'A 4 Cdu 8 HCmd 5 Ndlflyy in 1 nlftlk I li I On(HI ytd« tfsl I I I k' " Hl)49"llnwl tt Hwtulnwl I YESTERDAY Hn:H S g.op.tk'O«K tm MLtwh 1 HEI) ) HW(dhl 0 .I IJ Istlm C4mmfwm Il I (Avd(PI.A I Ki (DGIIP 'I I 1 4vt .11 Lld («1. MR()In« (n atl Ik wl 15 5 IN4H(4dm hlkAC 4:gww (.5 Ih 51 tl I Wd A ~Ch It«(M) RVICE, INC. .ILlt'Kl Kl ',kt,'ldltti OMCD) )Ill.oa 5 Ihcp S'I "7 MM 4 HHO PW 1 u Vdi I:K A*g DCI 9 372 Mala Ava, 4th Ffoor 73 blocks north of porta( Ecuato Yi D' 1 IOBI.W La (A w tpt Cembrldge, MA 02140 t:4 347«)203 Hht VM H \y tbpl 5 fl 0 I gml Ck H!(pts gl I'1 ltfk Q n(A~(H cw isn '4).tl Ik1d Td AMK .I 9 0 A«001 HTD I T wdAAcp.fkw Iwwhtm«p p«n D for scares. Gmheslrst nwlerisf, chamber fm p llm Tt OHM«) wo km solo carts. c'w re 1 m a(ed sf-from 4 Pm (v))$ tw NM: II \ I dtk ll 4 ID Id 911 P Mdk«dd Mwn 4 IIV bn I.l * 4 Brahma lo Jsnscgk, )rem Prokoliev (o P iver- Hmmykf « I NMOMW I M t ~ICI 4!('I N I O.OI MIC 4'I T h. ~ m 41 5 l«mgt 4 A«y I ISl'I I'7 4 I Nd ITI I t I« lftn Shk .0 my, If we Go 7't have itin stock. t. '.Mmmmd(61 4.th ««O tlmMMHI « I CI V I IHII 0:1 4 well gol it fot you lstL Mitdi'C 0 Vd tmk 0,4NT y . 11.$ 1 I'I'I '1 (hint Stw( (4 Mm IM« I C A«h ' 'DP 0 'I ld 't.dl RECOAOHOSPIT hiondFrl. 3$$130; Saf. 1 200 330 lkn p L Il 1 IICColtll 805PIT L Friday, January 32 Saturday, February 2 Wl OP ICI rW Iebs NN 're IM 6 Watoc . 'Khl Aai Kteld 'w 86 P Mwlid).A ILNI ltle RL IN e lln)ORAI(IK$ IIIMRMIOUQYDI AN TRRJORAIOISRRARMSORCYIV Im)a. Mwe ra 'D 5 4"'5 ~" m a I Nr)IJJI I.og.la'7 0~"I

4 ha I .cl sl wrlwlw'eire~5 RH 'W wra Ml [A M W .NW~.G I (A I wd .Wa KM 4140 ed N;T '4 I N klC I' HMIIPI Fw Da .I AIWIGRUkhw.ted nc I P,OI 0 Boston G 4 ~ .Ha tww.aw 6 'AbehL""0 I JAWS tsC I Ml RI G Fk i J WW ICM'l tDOI Nl .e WWO IP Kit I to I R. attn tk T'b it COAI'I ~ A 7 W ll I 46 ha W)wwal Valbo 0 OM LPI MA $ 6 Ja I ld ww. "Dl $ I MLhswpl 4 vwp 'w 4 Mchwdrw I Fla In J'.OAWS~ 4'4 T Ih I 6 D f yi ahk I CNNWI wwa lhw tn NN)5 4 1(«C raa I F l)All,M A

DkA 5 (EVI 8 W . Inl lkal ew lrklenc "A 4 J. J'84WQ *Ol Sl.lk I.S IC IDclt Worn 5 p Op.ll OIW rm laklk I I N'DI N AM lk ~ 6 k Fs'baerrfww G 44 rhhtkt~ca gea 0 D'W LFI'R I Wcaa4f IPW .CW fA RAM S d'dtlD4Llkl I .Ii hd IA R~ IA 4 LPI Symphony IS). AN lbnbi IA ltl tarn 5 I.oi IN A 6 0 I JU ~. VweidJW ( whlphrk I Dim M (0 hl .Uel (4 \I N I.I'U4d MR ol I(M PIP AMWWGIW0 I ~ ~ I t,A I I IPIFIWI .Mw (A $ .6 g I.S WI IDG) 'w A4 ~ 'KALIWOG iDGI P FW 0 Cb 4 INDI NWr5 G P WW Ra 0 ~ Gl 91,4)a .1 I IDG) alt:T .0 141 I IMA5:5~74 h Itndn,k ~ 0 h cy.a.n 1 M SGG «IT v I sana I n~ NIS 4 \I I in MOAN )45745~I II** OP,60IV I d . Fht 4 I'e.li S 0 lg. D nlc Aw il(CALM g~ Od Indi IPI Iaf:4 T 4 M 0 I)ns I IRCAI I CD)' WI~LF Chamber .Dbf 4 woke g.l Inn ltdlt 'l,n DU kiwr nl 4'0 F; S NNQWMI 0& l«n 'IK brktw wa 04 fg .R~ fA LI9 4» I HARVARD)GRSBUKURALL Ulh* wwy lo I op.llkD Itwd Pl'Ib W e .Yb NN t Uaale«l dR *OP N MWN F 0 W .Whd OWW 0 tdtn tot I RRYfnatJ Iw)„0(nl E WL1 9, MDOI 471 Pa M i Ol.rh S~. llcl 'Tl 0 Ol ( .H N .F Mwt m""Ae" 'Iaah hdprl W Na~ 'P a weald,wd WA M lrw~ I' MDG) Lat Iof Rna 41 .F " cgtwrtmpwwow 4'wmatn Sunday, February 2 Players In).7 hl f +Waeett W Dl i. I 'IL .I 'D NUJF A wg I Op.ls~w, K L 'r.lo IILUts '4'~llpsld NDI.F I LA I Ta(welt) bc I . IUDNIQ swhl 'ip I Ii UN MRMOUALClfQI(CH$ 0IVICC LG AW 'DGI 1 adl nl Kll Nd W lbe)c n 0 e Taehwa I 4 ~p I.c 74 p I 4) I D .fly.ll.hhUI r wa .Ot I Ann 480M 7 g 0 dopa)7 Jacgwgwyc 44 4 IMMI aN MUG d I 5 llwlr.ni OP.ILA LG R~ ha P THEIORARRISSRARMSOAGTV NS)rakp Qc dh )I CWOIRN IA~UU A d I WOd d bgd 4 fwwtn bi MT Mka w '0 HCN 1st ' wym' C f I 7 hwmWOMIH.!l 1.1 N)n D 'P((W\'a calllaO) lta glr~n I 0 14 I MOU .Dp Lr I pt wvwwp op.lmn*i:7 lal'Sa gQ IUJhtFU QP67 I 0 og IQ « twl sew.wwa 06 I g~„ fww .Igca IU '"Dtah I I MJ«I p laLN A»S pCp. R"At Ud 'S~ lilLG 4 PO N)wc 0 «0 Ia *C I Wa Cdb ra(kt,C I'\Lta 'v I (A I W ILT 4 4V 407M) Qwa kb wds g 'ab 400.00 'r AKv wh g hndht.C W Od (EMR M)LU I d Dla.l I IGID) 0 ld «g«l Wn .Cl I LWW (DGLD I\tl Zl ediwmop I I ~ 'I % .Op.QRGnd .M IUD bin .8 'OG(rka. I IS.BWNI fl lahl Q ~(WI.I 'l Ip) I' 4 7(7 ka 4 N)M A t Sd 6 .Phd .Dkd Wf I(DO) Ir.pl y nh 6 Peh IV d.FIWM lm 0 dty1 h Iaf I 'l ls W) ' lb lc 4d lhl WMWNSW I ICN 1 I warn .I W IA 4 LPRFW OWI LN LPI W Itna\NP n 0 'l*l IUM ) I 4ntoofLtflPln .4 0 W laha $ wlf w WF I 604)wmr I I tRCAUI at 49 rilo bk J.$ I» VCR Ol I 4 HI(I I woht!4th wa LM 5 IWWW NW) I I $ I Ucpw D tnkw 'hlw Mna caw ralO'USI la6N.F 5 0 I(WC~RIASU~ M ti T 4 .Op I '"4 I Lkl Ind 4 8 WWW'tk fig& ~ AW AM Nl a'F IGI 'tlpad Qplwaa .G fr I 'Seb .Wae«h .Wc ww llÃ kfi I ~ C 'kg IC 'I I :P4 7'k I ILO II iwhi Ll .K JORDAN HALL AT THE Hie.'4 lffll Gf Val WF Op)IS~St lk a kwww I .Ci WSFWW)'QW ' NnrSI IWI» i D,OP@We Ia 94$ GAUD M .F Ww,aw NEW ENC)AND CONSERVATORY ~ 4 p la rr l Qp 96'nw td& I Jktoari 0 Dl«t E idl001 44cwhwe 0 44"SMWQ «4 14*0.nl. 4 Q IA aa) Ntl.ye f m .Glk caCI 'PUOHIV.TI ISMAUSI 5 U.OP n Adg IWF (Dish W~lYLK "t GILBERT KAUSH, pianist 0 RAltVAADROCKFV Vdis . Tw I c '~ 166" NN.S GAN4Gild IDGI a IPI.PIWR h (A LI'L' fwa 4 W k I SAW .A~ IA NN,W I w Dp. le(Odd 5 I) fig (k Ittl I RSCORDROSHTAL I Ow,lb 4 GGtn I:N P ntl.CW 0 I kopnl.ndLDdwna g.yww SUNDAY, FEBRUARY 9, AT 3PM W Ol I ) BEETHOVENTiol B fl tf0 cl 6 it cello, 49).1 P P .0 nhbo II WW) ' wdpano.np.lf DW CI N I LCI Ik)l 'Oa ahf IPI NWG J n ih41 OA.IWLW,Ote (Lcl U'I KIRCHNERH Td No.) lthl 4 I P 0 bh I Ol .OKI)kbc IRDAG) EHDETAKQY)CH ta in i I N. MAW OWWOp nhfhd Gw M (4( I 0 0 p ol dttdnG.OD.57 ORPHEUS The Brahml Orsy I j Ip n I LUWHRBS~ flc«t I ~ (Vm+ M I Q SUNDAY. MARCH 16, AT 3 PA( a,elwwl I clndbrhlcLsfaprcplalo ol ( 0 "New Music" Pea E. Tl Bne 004 ~ Ped atf 1 Or HAYDN Paw Tno E.ff I Ha XV29 England's SpeciaHstsin Ciassical cA. a .7 Nllcww I Id It Jir 4 h FINE pin M t r vn d U I Wl 4 Pl 6 WO IWf SQkhk oar pwt My ECHUMANNO Inta E fat iorpano wE BUY, EELL Ec TRADE: Compact Discs, Records, I dim G.Op. Ac Casscttcs, Video Tapes, and Laser Discs cwr 0 Opera, lfyo I I ywwHAB' aonolnl Mar h RW ~ I wpcrhpyo ~d Wd & Memorabilia 'I U ncl pr. Film, Theater, md Music Autographs d I ~ Ldhcl WM tUIN aa Ll dn a h Atfiae w ah 0 cw Scores, Pmters, Books jk Antiques cw 0 d Ip nli wO:Pl. Dky 0 0',Ip l. Al .I twnop .pe fcc I y ww M SINGLET)CKEf PRICES. $ 5$. 5 I!. Slg 50 I lplUlfNWIWU or 4 g. (fr Ta bray! 0 J dtk gl Sy ph JW cldl I I h kd. a't Hp ~ lficy)146.1700.0 W llhcsy pl yna 6 I 8 Ofh .M .8 I,. )O .tp 72OO I 7, ZXI,7, 0 ldd wHRB,)19H raH„C WMS MA OIIW YM I 1 hl«h WHRB(i I 0 d yor lb n, 4 I I * 1 hk ly 262 COMMONWEALSH AVENUE Boston MA 02I IS y Uy An ~ lth i nk tkaB *Oflk,(617)5Wst() Ndl MONIAVMOAklncglknl Monday, ION P 17IERECOUIEDRECORDUI February 2 NWMM( a $.4ki a I Sunday, February 9 Wednesday, Februsry 12 (NAOAtibpl u OMI dl N JAZK1FtCtkibl C 145 '4 140 FIERVOOHCDNCUIT CCP)N i(Not) Ne JATZ515CIRUN p Aba t Np fo I ON MEMOEMLUIURCHSCMICE AFHONMNMNCERT fwWM II Ol MN tbyleel MMt (ANO ba p ~N Adl TRAY,MM 4 ~(NANN NMp .NWN N yy C N 1$ 4IIII«L N ~ ' NCM' Ud M 44 YN(D IPI lc' u Mw'D ITI wakgayNNll 1 nto N 1 tNHS 0 N 'ki 0 N.ul ill Cpukt I (H IA(A.D,EI Di JOAI I Mi U ()~1 ifiddla LPI SUNDAY«(NCFAIT AMAIJS C C 4 M 011 I NPD Iudal IJI N p M05ICOPTNETWgutlaYMCIMUIRY (WWOAU G ($ w N'I.tohv o ws w 1 I P 44UIVIU(tAI.INIOVA7101(1 ~PLPI F I„I f «coy)I.N.).H'1 acdl Md IOC Wia 5AIC HN 5 1(I INWB N R 0 f NO PHW(NA W ' B~hd NHMUAN,S RM 1 RISTOIUCYERIOSMANCLI 1FE,P11 1Peoh R P f PWVH 'D lh N fd 'eed NILHO(. lug (U„) cp:$ Nedb td I HNN MNA le(CIIO N 6VNAYHfCHtATTHEOPERA I I '1kb C H Jl M II N 4 I 11N C I 1AIPIL I 1 M' I df 'Fl 'I p cva(N Wi I fu (NI PIN Pl u N I P I Tww (CRf\ (ACA .If 0 SN(a,t I (N 14N R5CORD ~:M Mhbas~ SMwyO td Ltl p tiHAMLITAUOH EVIPN 'H d Sd f IN MP *Op)NON(e~ Spewye $,0 JD,E glaR yd(NIAad (RCA) N Ul MONDAYMORNWOStElka A Iyawtwf au~~.t Nl I AHIWHI Thursday, February 5 ta H ~u NN f At ywabfcwNLH IN(A ON I OIICAN T(IUR Monday, February 10 Skhaeul PU(wsdcNMM,H (oe Docazolc)71 Nyl JA156PgCUIUM Sy H Ital (Hadr A PIIPI w IAV IA F Vl 0 TU (NHW PbYE 15 I AFMWMI( COH«vgt JAZYSP$CfRt ( 0 yuwww.h C w Rtoia I M . I Ia M ANN1 7NI P VALI)VAI Lef:I Vd IN NWH (MIMI Iia AF17JINOONCONCCRY It,e pll 1N**N .Cl(AN ib lh NEICP(rtkkvbK s aN c P LIMkaw CI« 1111 MNOVI4e kbwe Id~ p IIFJIHPOTTOURNAIOVF wkbt t 0 1 ~,a o Tab NV ttPNNO IMNOI (caSIP) Od Pl up I.ll F tF 'dtWN 5NN OIMM (0 MF LPI D le " l,lk lww 'Nacdl ONHFNNNANSNINGN I ~ OM p Tot teguetv CDLWNUH()I ".™L 1001 O '«I Pkaolyl leah Oww 'y.(LI wK NLNMN I pp ) I OA ul HANwt F N MN N (DG) Vldd 4'4 Rabf 1 lw C oluua ( HA NNN $NN(k 0 C ~j ~.M HCW I ELRVTA a *Cp,lt INN LH W (SPI Hd 'NNO( «04MINNANF p Tuesdsy, February 6 o Nsk aw oa I Seatw 'l8 MN ONS WW .Dol h 4 (Nba IMIFI ~ N p TMRtCORWMMCOIUMD M oh Rdl (NMN :A .PN,S ~ 0 M~ )hoolU MNNM f«p NN I I'.11 JAZESttCTRI'M Ol,no Dpl.kl I C Vea 14y( Tl,o I) 8NNNIFN 0 S 1!Fi«WM«NNW(ltalu1 DN g ApisikooNM'(CtgT I '(V FI P ~ (hafa Cldahll, (bbadf( I sg N«aovdtwwlo,wbo 0 (ha(et Iyl OWM Vl ydayv tU 4 I 'o Lpl I CI 'h LN Mavat "tlbueb NPMA«v ye(4 b tPI 5 144$4)L1k D EbCS~IOILW EICAIJI \ Clt bh* 1 I Oaf INMYHVMUNALINNOVAYIONV *I"I 'O I al Ol LIN(l,l 1 .)Vaa Rut CI I I I Nl I'Pyle*I / Set I IP(NN ISy tWWO b INA!A I D, t CON $ JN,)LWV( up 4 0 WVHMCA LN N MO ( R '44(bhfy YM OMPoal I I N tCRR M I H«uN ffi w 1 fl c Pl

tw y goaev .Itl P.D(.lkl.l 10 M(ENLPI OHLWN«NNS(:h i' 7 l(P ji k(C1$ LPI N .Mtu C ed fi M (A PI VI NPOI'TOUIWAMEVI'U INAI M Id 1 SK I AR N«M IA Id(pl l. ~ 1C 0 I f(NO .'INW I ItNS)al ' 44M FPNN dC I 70 R esd ly Vadl if (5 A,ll 5~7 IH,)lk l Nell b alo Vyl ly TPhl Oui O'Mbt4 I C,K.IN(v C I 0 o t "I Hd (MD 'Nl N y *yd 5 a~ .INOI'I I 1(HI (NONA Nll wool 1W(i fada I~gawahej N N N N oeatdA ICI I Oil p NICIIYMUHC Vl Ni (W IA ~ I ~ 0 e VI NNI I NAIL l(R NI I 4 k ay I II PN 0 I VHF' O«.Pall,DO(La IA lb 1 I ILNNVWVN .IML Ei Ve (Kl ta(CI ONVI 0 'IV 1 gl C Ik Ai 'fe I Chef Ot 7.N I I;444(ALW EW Gk IHAI.HN Vl but aCMI SU WNL II 11 4)o IO,IN 0 Nl 1 O'Nd 0Uka I 5«0)wuf ca(011 N p OECAHTodlt 1 RMORD NOPI YAL I A I 4fbjaw ~b Pot tRCA) N NVRM( M IO ul 1 Dot(sic DINTJ H~yC CM al .id,b ed Wk K PNNRO M C .W I M BI M odWFltdC c MVNWd $ W «bid. 14 NWN UE iv Ubtbttl IU (Wl )JO p 'IWNIUCTR CEHTUkV CtgtAI CIA SHOAL 5 lf M MUIC fluau tag LOPE(5~ Gf I AF I MC WNPN lyRMD .WA OokA lOAM p 101 IVNIOYCOUNUN 1 ~(1' ~ M p CSICACOEYMtRONYOECHE67RA td teat 5WW)N 141 0 IAW 41NLS'N IHMHCKRT 11 51MA PAN PC) '.ll 11 )Wtf(RYO 101C MAN Paw OP(la(id Tuesday, February I lo NYIWUL1HMbd)llgv (0(CDC HOA lbl p L14 JAZ1518CTRUM Elt VMNNbdal b'' Rt Ol. M I $ ( Pl ~1H* LOOJLNW" lid 'T Cash in on INN Pd)tWNPN (Sbbobol ksy I Iao t kCOkoHOSFUAL Iii Ih ANERVOONCORCt1T RMNOVM NN Nb i I PNW ICONP I ihdl I wot WN 40 HfCESVI WNN I I H .It (5 INNFC («S Nl MIMMOd ~ I 4 HWNwatd U (tl v, I IN I CIAVELIHDOIICHdttHAIHCOHCUIT Friday, February 7 NNOA C w fbaa( yee lyd 1 ap lfk a4t't~.l tC your education

014 le JATZ1PR(TSUM N N HAPPEHIN'N ' 11.4 p llcosDHOSPITAL WRAT1 au hSI 7 «filf Waa 1 p AFYEANDOHCONCCNT (M EONIN 1 I h Vdl, WC4 NRMOWC Nfl N:5)ah WHLS.OA FROW TW PIN 'OA I right away Wednesdsy, February 5 ~ Mwbt OM4M 1 07)7).WI INPWO) Cle (Vok M '4 IO b '.1 N)4 L NMNPhi NC I LU Uc 5 I )AZEMPCUIU elec ht Harvard Book Store, pty top I 14( 1 NH ll RMDNN Lt 0 ANMMW Ia P AtttJIHotlN COHCEkt bal 0 «t4 0 .Oy.aD.N .~WOMPCALtl (M~ INI privz for used pgpabscb, hnd wc psy I 01. ~ I lid OSIMMU a Hy.u (tab N ISA 1 N Wiay 1 I (VMMI' hh S fPF 1 .Nwaed4.HNC ybl kl I Eak/C 5 bC(«1 kl 'OZ OA Scc Us ted I I I I O'Hl Claaall Odka~iu a(ayeo cah... !fnacdhtctyi ay m NCDRIA( jwwy t M'10(0 .Idl R 4 ct I db Eulkf 4M(' (,K NM I NC14 4 awfv isl Naww«NN p I tpdwy( 4 (g pal ~ e lett. (wsaao LM 4 M 1 Utfh in on your eduCzdon righ ahoy! I 4 1 ~ TI Sl Cd 640~ Sd Ol Wb t«(TM k'a Wt .ANN 01 Ol CHAN 'MN fe)NLHHP M5 I I C iyt 4WI gic J$(uod I,l AWOUPZH tMMaaa 01 1 N'L'4 117 .4 C 'ep Sl wt Ywa I 5PIA 1MI I hl VN SNVANI DU tDO ANI lyl C *LOP) ONNAN 1 P.e 415 1 POUITY0(101(C H NNNIU444LU 'lie YNNC p TNEI'UVHOinniltfUCUE w*hll.u Nu He DNt (NMIT ') '4NI TM 1 C 1 '*C ICH 4'Pl MM IHNRS g WUMOI W t Op N.E(l 51 (bell d NNVNNN«'I.O 5 NBOA I 'Ay I '(Euo l. I ~N N«waj H okbtaub N N I.U t HAOVAROHOLTLY I el P CLCVELANO ORCHcttsA IN CONCERT H d Yb F ILOI 0.1 5~ W RPCOIU)005l'ITAI. 1 \ 1 I I ' 1 yho NF Opi.N I.HN C 11 lhy idt 0 fb 1 lea p RECOfUlt)OSPITAL IdkVW U D.OI M.HA P Al 1 Saturday, February 8 1266 Man, hYC„CRU)bridgc Sy (4 yad (DGI I L )b LL)N D,LOI,A(4 kol JAZZSltCTROM WHRB 66.3 PM (Hsrvaid Square) ~ (61y) 661.1616 8 tC Iyl ble ~ HIVJRLI Y AT HARVARD Td 1 I hi NNMOVM .iav.lk LM'1N IAO Requests: 436 WHRB CNN5 'fiul 1 APTIRNOONUNCUIY Bank Buyiag Haurs ea SIMN (N p EVENING COHCUIT p nLNSV Pds t EHYIHMN httPB!hos,hnrverd.odul-ehrh 10:00MB00 Monday duuugh Sager«hy Thursday, February 13 Monday, fdl, nreazcoaomazcoansa February ly D 'U4KW4 lu LPI I Sunday, February JAZZSPECHIQI 5 0(fdaa U9 23. fdt 1 ArrQLVOOHCOIWQtr ll JAZZSPFCTkUH I C Vd IN.I AFIERNOONIXINCQ(t S I 0 ~by~)WW) ~ LUIS 0)NM f«h tdt Aid IN de .Of~n&DUI M.ll L ~AN 5 CNW CFI«OARI (MN Sl~shwa~hwtwbsw 8 I Ihghl 144 Z WA ID IAI MZMOUALCHIIRCNJEEYICC Sl .Cgl C WW4laa)NQ.U'd Q~ad (Cd wu fPI 41 e I JTROMtwtALUU)ovATIONS Tukr Nw I 0 B~P AG H wdaad IQ W I SaudA.5 f ~ T O'' MAMMA '4 0;nd I 74 lv ld I N d&4 (SI I M~N5d 5~I.tka N&~a~&hd Ntn'6 Na INS(P ) 0 MOA7NQ UI FAWN A khdc «IGP Ik lw t Hi ll Yfd Il'Jl S BALC ANEW udMedwd'h P 411 SUNDAYCONCERT fk)7~ Ta .0 rd I YNPA~(44 IDGI 4444 RNd.t f0~I thd (Cd lbfsl P a .41 K~41 Ad,lkdl ta(kd QGAUI M I ~ I Sy PMQC . 'IA,)44 UN Ww, 4 1 MIHICOI'THETWPAnatHCtNIUIY aa~ttau wvn .u nv 14AO IR VMF 0~:CW SDW47.(4&LII lo &NN ynaeal IHAS ~wad 4 GicA) IU I' uf H G 5 SAI P HINORICPQtFOltMANCES $ dlwu N \ Ld hl Dd.~labfuhu S 5 "1 go edwWNW:&4AN Q lo I 540 kl XQXI IEMfl A~LA Z ~wyd A Ap &WA ff IW C ~:INN fad V~Q lOCO I. 1 MWDAVN(cll&ATTIQOPtkl 5d hdu )ID fd.G I 7 Va '(wkddtC ) p RZCOROMOSPITAI 'P 4 74( I an ed 4444k AXA V uhAM &MI .Ra Q 'f.ha P (444n eh'd~ (4 Is) a~age K: I 0 I c ~ 5 JLU(,E I 0 an tee I 5 g op).a fakl 1 (PCAI 54h FNQ (444 ~c C Sllawa 0 .BNR(4w(rd 4 I I haa.l 'caftpi Thursday, February 20 euddi MONDAY NORNU GSHUXE dz NUNM su 'Jw IL'nc o "'p IAUM tnehw(cw) 'Sdl Cdk)wwt Bb (Qka& 0 I Q N Hhefa(4(HJUAUQ d(Asv& sd woc44 LPI I Al fizz sptcntlw 4 W ~ NIGHT MUSIC Jwwww(MEGAN(lwd.nahnawt tw P AITSSNOONCO(tCSRT Nlonday, February 24 F If:N 0 $ ll ~ 0 LF.C. M I JA:I nl WAUI A 4 I GAA JPH Z d4SI alhA'd 5 4 p(HMI Ckd I'oflltl I 0~ .OPW:144.0 I .H HM JAZZ YCtkoM Iud) d 440AM&t~(UN 111 5 IJU JR ) Jt .QU Q b 411 k).QU I w p Afrw(VOGVCONCIIR't Pl '4 Ld W (4 MFI taaw~w ' 0 I U~C 4A*d..op.4t WAP 5 d 5 Io w 14Dp IILI 1) do tCSSIP) gdf N OXGAN1008 n& S I . Af 7 44 e EI Qetk CLVTURT Ctun idl UOUSMDICttg c htwhr aw s 4 HV1444udl AWWkahP Spwhwad 04 H fdg p CWPACOSILONGVTOBCNE574 'ddtwnak 0 lfsl 14 &N S'-On Al AQANA5 Iabn H'I.S~ A Ml IN 4t I SPSCMLCOINHRI I7A~ N N C ~) CONCFJIT P LT'I Pbk Qd Q I'I«ll t M(444AIQNMA' D lg RAWAN wwda& WON IMI. Npa(NW Qe .N .A 4 ydS N 5 g HDAAWAHd Iul bnr«zd*VW'BWAHNXLN)WN 0 ndl IFNlp) R,su tSF kw 14' p ay .SIW I QI ') wopt Hk '4 Ikd IF hEIIR Hd I' ~ '~QI 1 dkC bt(RIOFI.I .6:Ih,A Wa Sfa Ih &CA) ff &7 dldeAHA (kd 01'I ~ AIWJCI HWAtRNQ C blh IN P U&TA ' ) thai 9 RECORDN05PlIAI, I 444 )A)ad.H 44N NH.IPH. H QNLH N dh G .I',Ag('0 dl ~~ ~'7M~)PIL lhig C I Td Vkl C W L 0 I MN 1 N 4IHMWO .C I OIH IFI hef LH UMWSWVL hd N4 Wul W I fl Pl h I IACA) I Swig WN II Ol Alk4,5414( Hd IA 8 5 I'ao lkd n'I (41 R ka(BF) lhd'P hl '.IMICM FrIday, February 14 N Q wd&N 8 d fn .0 ed Sd K~CRILPI Ml 1 W 4) I Llluatb)~ON 14 k 5 'C N d Spwk yfal Q(4( .0 04(wkw) 04 Snwf N Jl D l(LI4A 4 Ul C 1&kswdo IEMlltl 4 &hid M I Iht XXgh M Iwu~.le Ad.w I W H S44 JAZZSPECTRUM )kit 1 &DP&l QIITCOQnooeH 4' ~I4I Ski P Na .A W ~

Neacdf NAVPI J.CU H. I WlfATUMANtNIN'nd 4 s ywad 'Q OH)N& C,' N~.J deva AFrsRNooncolfcsRT ~ 11' NlnuTMIHIC 4 MWKM IL ) M S Q Dyltl l&L40&AY (hew h 5 wlf 141 llwoy.)SJK w)HCA) «0 I'5( ILK H 0 M~(A Tuesday, February 48 ell'y) Al ORGAN CI .IPWMWN.II 1AN.OPHklkaa~tiwwawa) 144 'al. 0 &4 4 'nwd tp) Tous 04 (Od) I !1 I scoTYIsu zcHGJJ Jdl IAZZEFZCD(UM M 4 '8 'ANNNO waudlll'a I Rw DALI~ I F (445A~LS Na.g~tCRB In» iflTdk). p Ap&ERNooucolfcERT JU M Snlo ' 0 I P ' lwa 4 .O.ILI~GI,I M M N& MW'l WQ 0 LP Gila M I td &5 I VI if n Yw Cdl dew aa.k N P TWENI&STH CP&ftuat CQJG I MANI.Z iddaw y~ll.f wrdo,wd K Jb I K 1 W. 4 I Kd IA I ll I 115 I NWJM I WAS~A(I 4 I '.IinlrnAUH. P c 1 0:P IW W LP) H: bw(b at 40 I Pl I CHICACG SQANONY OSCHPATRA 'l e PVA 'Pd 'NWL &HW Sfwl 70441 014 5 ( Wea4ES HA.ILI INCONCEaT ~MLNkr JPWMWN J t 4 $ . iaaih NDOI C NQ I tcp,t7ti Llwkl Iw I:Hnlw4HPA'a G I4 0 Qd ) Cldrdal N 'lbe~(4'.t~r~~tddff AM N MAN~ IAN tAa I 5)efh 5."ikn u D aagdbgnewe spwh&N z co lt .5 I I Wel Q d 7 F C N Lk&J 01 W IA' &D0 li ILR 0 Ql.twh .S~N IV wd I HAH Efkolw n Af LGE H H p aEco DH05pltkL HPW p TOPWQHrtcu(WIDOWN Nw(Q Aln('SH041)' wl'I P N tnewwf Ag Oe 44 F «Op)I.W4n s~d L :Al 4 IDG) I fekw N.w Cdl IP OF.JP;U Ik P QUDAYSFCQAL Mrat USVI y4 'IW p XARVAI900CKLT Friday, February 24 Tuesday, February 25 :tnw47&h.t&'t~ e 4 na .QQ I) H P REO&RDHOSFITAt, I fgwe4&N L lw IAZESNCTRL)u tdt JAZZgttCJRUM It CWUMNWL8 I .I'40 II. 1 WHA'I'5UAFPENltr ktg AITERNOONQRfcwr (94 (WI ICSW AMWD&5 J.N POSIRYINJOIW Idt ~ AITQINOOHQX(CERT hAK.Hkt H 'I I ~ .5 LC) Saturday, February 15 IN pe SACKANDYGAIH 04:F~V.$ .SI,O'N LS ld (NNI 0 N 0 (K4) 4 'G SWLCPK:S I EINW1.00&glnkgdl &.FAul rd 'c r B~mr 1". hks hew . ah~I I. A )wd QAAH k KN M4 «4 srgcra(91 ~:lt P ClkVQANOOIlCUZSTRA (Mll Nw Qoha ) INC(ACEKf Wu . 5 I S I pib OP.RH tw HHASHLt ATHARVA IQ Q uw (kk '~ 40& t4d 4:MNI IKWA4d ) 't 40 4 S NAA HNA' I 0 )Tea Al'NNWWBOM T Iye P AtTFAHOONCOIICCRT 5. Ul 0 '4 ')OAF) 14 AWK gl ~ ICkl LPI M toll) 4cu p IIARVAWIIIOCKZF 8 w( 444&5 47:cw S,l nll ~ I lal Pd RUYH(N9S S 'll Xbio~ knflt' T et .D.fw&GNLX Pl C IA I I T~swwll QUQPMT 4 nf&4 Iw) M AJ M 4 Ulf:s fwsd ')AAAM U 0 NA fl I IAS Ji lwi .F Ull 0~'&Hewn N lf G,O H VA4LANSthgo B~laal 1 (A5VI 1441 1 REConsnolpITAL N.AC I h~fDAO a~ad I 1 &H S .M .M I 0 N 5 NN .Opke,n 7."n 4 T Sunday, February 16 (A 5) 40 t )of HM 44 IT R Cp.).IA.UN. HAQ Qd I id Cin fo ) C 9 '7 4 Q! U PI I'6 dku N XXMW wu 5604 Wednesday, February 1 9 AM~ p I xsLop.l fnd'A,t HNJ us 0(ww ch'ww * MEMORIAI.CNURCNSFutlfe aabfwd 0 I (i N ) Ddhr &LUI C I«H NC JC I TMFNW 00 A ~p I.G. N Pl R(0 JAZZJFECfaUM . UA D Naw 0 Qd;X4A& Dduaa E edblu t &444 M I G' 6' edMkka 1 4 ICk Afmwoo«co4gar '.G C A.o .&1;0 M4 .A NNMR. awd .00 NNN Op.new IP 'I H.w NQW ~ ~ 5 SP 4~&MI !fl u ) H 1 Fakok" U) SWACAP'CdhC I A. ~ I I:4WHS F F kgl ~ SUIDAYCONCQIT f (kd Ohl I ~ Nwanaa LA 4 41 0 I .NNNOHIN) 4 ~ MUSIC Oy I MS )Wtug)ETN Cnfn:R V 1 .$ 'bw 5h A kl'N N 4',Nl POEYRYI 50)IG lf awl wl asd aaw C .I.np.)\ Ae~.r~. p KQI ede 4 hoch l«oa Uldt Qo) Il~ P SACKAI0&FORTH «H 1 HIJIGR(CPeAFOIGNNCZJ tedkra C I,LM .D *I SWH»WIDGI 'Iut N HAR *au HOCKKV G'NN,LNIWM ed kk f. 4, .s .Jw c .M I Ji 7 If CI P,w p O'LBVJL&fn&ORCUBI74 141 aha~ Cedbpw (Atv) 4 «CONCCar I SUNGAYXIGNTATtneotenA I IUD A~T~I d Ot.wfcld Q lkw y XCCORu NOSHTAL QAWA Dk AA I 0 I IA4'!*V~OI~AMP I I I ad Q 420 Ql Ua V C IAAQ I (4) 14M I I 4 ~f4~ WHNUI MONDAY( IORNS'GSTRlka Saturday, February 22 SI Ne ag~u 10'Op.l& Gw .I a e Jw 'Hwtl 1 11 H ~ kz CORD RD5tlti L 'Q g~4(44 0(J I ) ff rou Rro asked, please ssy 44 w~o as Natr™rid' I'l &AXE SPZCNHIM Tfwo WN~(44WHL& fw Nl t:Pl HILUIHLYATIMRYARD WHHB Jh hdd&Quan I M Tl Atg who fs ona of your favorlfe Efatlonel 'wuplaffwa O IENO )fw ~ Ayfeunao coucwar y loss lunula» HHall purvey. N S wal 0 AAK.HUNN. I 8 n di kw I HARYARD HOCKEY Tl y td g baffy~ 4 'e a Nay ~QNA (DGIPl 0 1 AN NZW JELZA$ 9 U biu . Pk bidiNNU I 0 bl 61 y ES Iol w RXYTRM1$ so~I Sl k I I w. Aidlgun 0 tywltrylwra I. 119

I vex Sonata No. 3 fcr Viobn and Piano: Fuotemrm, Sbaano (Bridg) Wednesday, February 26 Grieg; Norwegian Daces, Op. 35'1 BerbhoBI, Haik Ordxrtm (Angel LP) Tclcmsnn. pans Qucrtm D in s: Tindcmzsh Concam Amabile &IVtldbow) Debuwy: 71 lax~ vsn Brinura. Couangcbww 0 choax 5:00 am 3AZZ SPECTRUM Woman's koo pw AFIKRNOON CONCERT Voices of Coacgiwn Maitcum Anmekakmcntc [PhtTqx LP) Paganish Tvxnty Fow Cspriccs: Accerdo kw pw NIGHT MUSIC EXrl 33 in e Tavemcrt Missa Meta Ctuhti S aaumns,Quern«MChristophcrs. Thc S'ween pack Noctumes Op Nds. m, fitz B. and A Bxt Nocmme in E. IHI perloft) Bsh Op. 36, No. 4i C«wley (CRD) Rechms nwv: Ddg pns SCOTIlSH ECHOES TNrtcea Preladca Op. 32: Zilbcrst sin &DG) Woo Luuul wdi: Ceoo Conranotscb ff Lurodmxki, Bavmian RWio 0cdhovcnt Scam h Folk Songs 156 Sytrtihon) Oxhcsuz Ikydo: wio x Fzxtntriscs &pwgpr) CENYURY Kocchli~: Sonem for Oboe srd Ftwo. Op. 5gt Lanais, Rudisko (m gite) 7do pas CELLO Music Eaescu, Ugcti. md Sevkboqx. Mo lavetdit B Conhndmcnto di Tancredi e Clorinda; Loehrcr, Socio b by ~l Canxrit6ca di Lug no (Accord) gteo pa CHICAGOSYDIPHONY ORCHESTRA Iiaydat Ouxtct in 20 No oudquc IN CDNCERT Suing h Op 6 (Asufc) dwrh condxrz with ruad: Vtoik Cooccno; Bonacci. Bsdz, Phikanaonk Oxhwu &ASV) Cluurophr rsch hprilr Mill, t prana Wagncrt Tsnnbkxtr, Overture. "Inch. kurt Hsac" Sccristd Senex No. I in d fa Ccao wd Organ; Germgau Kmpp &K odbc) Mcndchtohn: Weywt Lobeagna. Prelude to Aa I Suing Symphony No. 7 in a poplc. Lowkw Fesuvd "Song &hchcsus (Hy 'on Dwuckt Rumtkrv to tire Ments ) Vmdi Lw: vgures rirlgetutot. Ovcsuttc HDD po RW RELEASES 'nls Cxtzkdt La Wally,"Ebtxoy Ne anmb tont~" kus pm RECORDED RECORDER lac Vi «Idit Concwo w c ffckh nicn LP) Ptxc Mateo lxccsttz ltttctmczm Unkao n;Si Fonun (7FDLP) Puccini: Saor hngclks, "Senzo axnuns" Soho: "L'dire none" Sammwtid: Sotuu in g. Op. 13, No. 4 (Philips) M pblstofek. Bcnduut Con caeno padoeno (Desto LP) Venlk La fores dd dcstino. Omsoae I ionhno: Andrea Cbealer, "La Manuaa Mony Handeg Soasta m g, Op. I. No I (PhtTms) Mwcix Airs tth Dtvtwctu (Nowrw LP) lWoo pm RECORD HOSPITAL Pwcd( Fsstsriz No. 0, Z 737 (Oitew4 yrc) Fcrint Fom Solansnl (TFD LP) Bononcini: Di crww to dr cw em No. 6 (Philips) Friday, February 28 Dtoo pns INSTRUMENTAL INNOVATIONS

Noswcslcrn Inztrunxw snd Inauenccs. Pwt I 5BN m»'AZZ SPKCrRUM Newton: Moire for Viotia with Vwtxs lnstmmnts. European. Auen. I ldo ara Wahys HAPPKNIN'ra African; Help'm &Dcuo LP) AFTERNOON CONCERT Talunizynn;A Cool Wind is Blowing: Qxyuim,rmnw &hwtct(Noncnxb) pcndcrecki: Cello Conc eno No. 2I Monghictn, Wit, Po Deb Radio N st i owl R. Shcnkw Concwto faShsr and Orcheurx Sheak r, Fm in, London Symphonr Orcbuura (Pogdd Nsgrania)

Sympbo yorchwue(A z ILP) Schulcn: Srnng Quartet No. 4 in C, D. 46: Tokyo Qowtd (RCA & lgtDO pm RECORD IIOSPITAL TaOxt Spats ia sguw, Pldaips. Talks Schokrs (Gimdl) Bccdxvcu: piano Qainlw inF Fix,op. 16t S rHtn. Vriaky. Stoltawu Rouuh, Hcoe (Sony) Thursday, February 27 Rodriyv. Ccwciwto de Arenjnev. Bxsuz Gardiacr. hioakveno Oichwtm Btlxv Pwim No. 3 from "Hsmxo i ~ Ardftciwan Lconlunh. Enx mme 5too m IAZZSPECYRUM Banque dc Metax (Csrul Grwuk) ltDD pm AFTERNOON CONCERT 634m Fshu ff, Symfhonic Study in c. Op. 6lit BsrbiroDI. Hs04 Otcheuk lbbln:SinfotitcnaonEemnimMoitfs:Hrw.oothcubag Symphony pgnt Fmuex Kxmer. Iwxn &ECM) Alfoam X: CwtIsa * Sante Mans No. 341 Enwmbk Ak trsz alonesuch) Occhcttm &BISI 'sM Bach. w.pu Duel in F. Fetch 57t w. Kuijken, Harmi (Acceno PrekofievPianosonsmytz2ind,op.14;Chio(Henno atg) Gmepwv. Ctwceno h G fw Bassoon. Suinas. and Continue: Smkh, Vusldit Obo Concmto ie C. RV 447'cetitet, gaiter. Guildhall Suing Emcmblc &RCA) lodger, English Chamber Orch erne (ASV) Llzm Comolstionv. Berenboim (DG Fswft 1mprompu fw Solo Hwp, Op. 06; Roblm (Bouon Skygnc) LP) Pskstrina'. K ~ icsha: Concerto (w Rccordcr and Small (hchcstm; Pari, Kamu, English Magniftcst Prlml Toru: Hcrrewcghc, Ensanu Vocd Kuropfen Qw ba Ord atra (RCA) dc Is Qwpclle Roysle, Easemble Orgsnum Ohrmoni ~ Mundi) Rcgmt Trio fa Violin. Viok, earl Ccoo 77lr, Vkrwa Tno Chad irk; B no Qwetct in F B t; Esku, Ponlsnd Strinf Quand k s. Op, Suing (Northaxtern) Tea in Mike Ss)vc Iracmerek Virgo; Gu tJohn's CtxMAS cats Colic y: V) ydN HARVARD Berio: Oput Numb Zoot Wunwood Wiad Quintd &Qystal LP) pm HOCKEY Dura: Conceno k B.lkt fc Izw Pima end &hchenm; Duo CnOntchhg. Hw erd t. Dxttftoutla IRM pm RECORD HOSPITAI. An gcrer. Orc hat ra ofthe vienna vo keeper (rutnsbout Lp)

HARVARD RADIO BROADCASTING CO., INC Non-Profit 389 Harvard Street, Cambridge, Massachusetts (I2I 38 Organize(ion U.S. POSTAGE POSTMASTER Address Correction Requested PA)D Boston, Mass. Permit No. 58925 120

III I ~

- PROi RAM ~ ~ O ~ GuamE

N Cl Ital SnA4tL tale@ frpone&a 14 thyme f6k hh a bl. l4 farl.

COPLAND 2000 Monday, ptfay 3 CN Of fll I dl PM~ TMI IPONM M.« I ~ bh ( L Md Ndpi . I N k SNI JAzzjpzcmlfM I fdd M Tl(zkAal!O(ljzuacv

A LOVE SUPREME: vf I I.t(m Lf(d I. ( I Nh L I ( wm Ld( ~L Ib(b I NtHRB's Summer Scbedule TJJE JOHN COLTRANE ORGY(B I NN p 1 fbkfh SMMN I I *Num I Nlb Ii M Ti If NM, P M I Id f I tmportant announcement: WHRB docs not publish thn I summer. The Guide returns in mid- Program Guide during the I m,f t I hh( September. Our schedule for the summer is jazz from early I

1 classical music till 10pm, then rock. I morning to pm, G I I kI «fe I OP Id N I -I r .1 4 ~I~C PLEASE lei your friends know about our summer I bj d Cd Nwjd(ML~ fdd 'Mfu fW f I Tuesday, umy 2 schedule aud our special summer programming. I k Lf df ! d f d dkm If MmdN wmmmt Md A TJISIOII'TCOLTIIAMSOAGTCOMTIMISS I M A ~«~454 Nil 11 IN51 Sf I CN M m i df w Ic (Ikdw t pm ih «~d b* bt at 8 CHICAGO LYRIC OPERA: I Sunday evenings pm: I ~f I C~ jbh fbwodm Mm @leod dN M kl I Cd (AM 5mmf June 1 u Verdi: Fuhlau', Bfyn Tcrfet. Kaitcn Elpalian, Lucio Gaud, Bcmadst Manes di Ni sea, inva Mul ~, Gwyn HugMs Jones, Patricia Rittcy. Brad Cfeswcg, Antonio Pappano GN d(PJ. ~ IO b O'ff if I (df MMP June 18: William Bolcom: A View from the Bridge, Kim Jujdpbjon. Catberint I Muiitano, Julidnna Rambaldi, Glcgory Turay, Timothy Nolan, Dennis I Russell Djviej I Mk I. Nfl. Ph»ufhi I M III.IN( Mk u I * N June 23: aim c Calm an; Deny ca Grzvcn Richard Leash, ianicc Waljcn, }ark of d I S. Doss, htafk McCrory. Yoai Lcvl July 2( Jolwnn Straujh Jn: Die Fledermaus; Dame Felicity Lot(. I o'p Thofdm Alleu. Rebecca Evanr, Timothy Nolan, Bona antufa Bmlonn I«p Mhmd. Sir I k .'~M, lh f idfdi O fd LNIL dif I 'Ih( mhum Joyct Cask, John Dal Carlo, Leopold Hagcr 4 'b(f ~ I f I ~f Iif.o MCN Verdi: hlkcbeth; Franz Gmndhcber, Catherine Mclii(ano, Robcno 'fI I I July 9; I I P.i(. I\N.NNC 5 Aronica, Raymond Aceto, Asher Fisch fm.w fnk.id u u Juty 16: Handd: Aldnal Rcntc Fltming, Jennifrt Larrimofa, Nat lic Dejsay, I I!m Iv Tb kd \ («Cd ubji I Kuhiccn Kuhlmann, Reekwett Bake, Robin Biitch 'Lv(per, gfcpbcn I Tbl Mm,~ hhlfwdlI Nelson »I , mf( OA, («I Morscheck. John (tku L'N d i . ~ July 23: Dodzcni( Oalult d'Amore; Ffanlr Lnpafdo, Flizzbath Fuust. Paul 4( 2f m I ~i I~c u Afb(mp Ptishlm, Manuei Lanza, Mare Kanyov&, Yvm Abel bP N n,Its t 'sddtm . mwjjhhd PMMLII Juty 30: Wagner. Tristan und holds; Bcn Hcppncr. Jane Eagien. Micheitc Dc t AP . lbs.AA C Ai S (*NL MN Mmu Alan Rent Papt. Jsmct Comelijon. Semyon Bychko I p ' idf Young, Held. Pkmff I.d I I Gbp fbf C S 'fjaj (S 4 (Sf k t AP.(f.hn tl I M NT 5.»( ~(jb at Plus two live.by-tape concert series,Tuesdays and Thursdays 8 pm I and two tvednmday broadcasts of New York Philharmonic Orchestra 5 Pif I. I I, I'1(PIIJ(d VM 5 h I I Md W I IWOMNPJ concens conducted by Kurt Masur I July 19 at 8 pm: all Copisnd, including the Clarinet Conceno I August 16 ar 8 pm; Rends Fleming in final scene from Srraust'5 Safomc I Ndiffth MASP ONCk. k ff. 4 5(d 1( and Barber'a Andromache's Farewell I I 11 kks M di« «Sp I Ih.5jfnd M LSO P I I . (I t I M h t ICI ~d' MMLP N It khd Ndl It Id M~*M.((.11(l tkh bkh(k Please join us each day for our summer broadcasts, I ~fkw t. NN~(Od * ~ If *PS(JN CI '5 W TMMII ~ t k«d I I Ld 44MIN'I tl d ~(~l k IN (C I I A IL Snip out or pholccopy this schedule and save d as a reminder. pd m I ~ Nmh IMN I bl I Im lkdu~w N MPNC I ~ h jdbk I Ak M W ifo Vb .If(" I I MM'mh I I( ff dd k' DTJ.IN'I l I AUJNNdwdk 1 W lldl INI D e«.lfilr0 HWNAIIE MJJ. IWNHWN14dkl Tbl)Cb 'I 7 I WlablD NW~I 4 Hb I) 71196hka Clb GWU. t » eupM I a 0 i kpd )cy HP GW d hll IWMV N JNQA Ii tkl D Pmu)A I Sunday, May 7 I,d IAHU H 0 Bbw»d hD IA 14 I 0 4WA U fh 4 ~lk( 0 mb . H I p W 71 71 4 IWI HVAVB I hih I. 7,19M J Cd Q U &W I 0 kdl H«1$. 17) yINGWWQd t IdU G VNct 7 NN W IN. e 744 ldl tntD*1atRSIM C .N. IB7:ItHO hdlm ~t SrN BLUFS ' H. 7D.19H:latCn Q FHM H I N Ieh &'.N D W.I9)'RA SIN alo H M .2).m,nakl41 D Cd tuasroatsoauy D 2P.1917 D q i)d (AN! '1th ll f NIPWUW I U IAV 15 a 'mmu~k S JH yP HC Him,l)OI C 0 ~ I f«d MA Hl Ice w I. 17PU(HAWI HU"LW)td WLUDJ oql. I4WH de Wadhssday, h'tsy 3 M yB.thur! Gl Ikd T f H I c 0 d kitdt k NWULW IG.HHHWAWt edl SNhl L HAHN ' Wad ICN 'nc CD Wf 5lmdf AW I MM 0 NCU ( I CH pabaf )H.IN1IH 0 NIA I 'Wnuo Audlbl taajoHNCGLTI4lptollol(COWtdtls! ill 6 ll A Wt t! H N.U6S I Cd g ~ym pfu I kl DSI \ 7 0 JP I I I I I 6 C'klfll. b I I ILHILld Cd GO 27 I 0 N 1 DWI ) CI I AWI DWIWNU I d ~ e Hi'll MSMURIALCUUACUIERVICE ~ ~ P I WWN Na (1 li et Nut AW UNU U d).C 17al ~ t~itlit ~p «L(WNth nd de I &17 P UM IN I bl IW. 4 IMH IQM VGWM I lyalmkl cd .Ll NUN I I N I Ih,I)aid Gr 0' 4 f I LttP 0 pw WW C N IP;Wl IN ~,G D lg St ley N .Iota)ill CI 0 Cd .'Gl U'Ila p INEipoutsonoYcovfuqN5 1.74* Wdr 4 V'I 1476. U.l 0 4 M bl I Pl TUCCENIENHIALJAELoaoY,PARTD V0W IIWH lmf 4 Nb! V H Id, P HWURE I kh WNP Hk I I U2'I, lab f HCd O I Nf I I ~'«p F dl . ~4 ~d1 C 44 GHN 9 '« F A I 74175kle C 9 Q S H wl l v(INN) 'f lta~ p M ..IlihMk D 5 Spf.IN5.kl CN I ' Fl lg sl.l'lies Q Hmd f/ IWO C U U NB UO * HkOI L I rl N Iy pk hf«l i H ILINIWD 14 ~ H t kn d

0 tl r HU ay (k JI.U641 HGA Q ~lodl I lkd . Id Vf«S lk 4 bd I ~&WIN~ ' ~dmd NNN l bemom Nl I I lj,lfa$ylA,Q& ti I NH«k, 0 W

MUIU5IJ CI 0 I *M'D It ca ~ DU Iq M,lmiifo Cd I IWNWN AIN *I HWWLN WUI If I C 6 Monday, May 8 df e d M4NI ~q U'LI.INhl MlN,I'Id 4WD 5 I' d I ' B AD Cd C &1 U M t D Wrddg CCHtCDUIAL JATE U CQVQflutS (rnid INI ~ tna*MEIUCAV PILNUU5ICOAGV I 2.1 I'Wrt U MC 'I !' tCVA IW . I 0 I CA 0 . I f sd I )L19 I MUAL D~ HH40 .IM)la t ' JJN Uepl t4 ~ C I 5 fH Idlbl15L N D S* Jl,labld .5 Hill,I'Hkl Cbk 0 NHU 6 HA d W f CH $ M (4' 'A I!IN ' f I I h IJLPW Ul. IWII.IMII~ tttd 0 F V H I t,ltfhJ Ge Q 4 pd ( adlN D p!0 llml IN n&0 ~MW tl 'IWL h IWB27, IN? Id CH B I bllNOD Pblt' Jl ILI)UJIH GJ C tl NW I f« I 9 F lw 'ws I aa Lan.ONEhWW Wl ON . Cb 'Ieh Saturday, Mny S lfj NWHl4I BDI 4HJN Gl D 0 I NNII THEJDHHcoLTRAHEORGYcottmUBI*HD D L f54!WC I WIAWNU 0 Nl I'JINI'AeCH II U I 7 Ml COUCLUD17 Iem I INP 1 N is *4( P I Cd HWPN dlf d. IPM I I GA k b I I I. 0&WNWH Fr(day, May 3 gJ Addml mmlOHUCGI.TAlNE ORGY COHTIHUES

19 INJ M ICNN I

I I Nl 0 I « lqg VHPN M*7 LP lgU 671 VVIVU N INN Amp67 (AU I Ar 'G Nl P LL 19S I G~ ' ro IH PW I OWIN tk YWL W Id!It.IMLHWCH ti U PY I TH) . M I,IPil.ml D I Tl a I c Nd m NN NMaN'D 0 U J IWFNL 0 1 LH I p ch No y HN WNNNPO I 0 Hdl I HM Ude IWI Sd I B U . i L .S fth icd tl I I~M(O A 7 Ullkl It I WNWP Sd« I E'Q-.k UWW77WN&u bl I . SH M JLIBI'N Cd NW d W W~ dCN bid HN \ t 0 0 W k 0 N hl yl N YWI ym bola U . ~ 0 glN D JIW! F I U.IOU:R Gl lj . 4 Nr fl 5keae I H itkr HWN,P 4 II ' le 4H I 7 $U C f 7 A T .A I ~ U M ygt.ltipl HGA f 0 . rb N I,lakld C' I4 'dd C IW.O'N * " M ..IPUrf h Gl 0 HUW U NNI 4 DI Id I 01 I I r. Jd I J C .Nl ILWHAS I N INP:AWC I WW IPNIN GIU Q HM 4 ~ U«l Snip 7 Hu Id Cd I C' IP.IP.IPI, Q EMU 7 fih I Ef I I Jd t,l I.h 0 W 14 'd(«0 g 1 I,I, IMI JNQA Q U pd I " mq F dhkhd 44M. QN I C I,IN1IH CA ' M Thursday, 4 0 U Fr BWI I 7.Hi)1 C 0 D D E li IHIAWJ I I 1.7 du May APU.INPIJ Cd Jq .Cd 'I I W Nef GAB.I9H I «CH 1 lab UHH THUJDUHCQLTRUHGRDYCQYTLYIUS s 0 pd»i ~ a N IN N .L19H'ht C 4 Gs I! I Nf «I V 1, I W .M Mda oN 'l H Nl 0 ra~ ~ I R I I d N I W p CestfmdALJAEEDCO!Ylflc'ES

ha 0 *Ast NR571 EkfTJRMAI 71 y CI 4 Pk I I CI i CtFAla Tuesday, May 9 Ik N Q hm ~ CLAt5IC I.MLNCIHTCkLUDE l Jl rHld)7.194kk Cd ID Cl y H ( ~ I k te I o ARIS NPSJMILLHIUNIM CELEUk TIGH CEHTEMDAL 1*11M CoatlHUEI I I 1 W dC IUt) admy ~ Lae r CONCERT I l Gk S,WDIPbl 10 IU I A le J 9 W N k 0»' W(bl '( H, ll?WI I,lai jd Cd 0 S f C 1'N tuRM1HACEATRoltORCV I It&IN q H IIWJ L A .WWWy N, d HW4W uj D PNI'Id Cd Q 9 Rl 41 Al Program Culdg EGS ri Tim MNiano Sq LINVI Og 0 AN'N 4 5 Se ~ 0 I W INN Mdby Tp d C tel IN) Slafk Aom MIE,P ck Liu.hs ldRolo p WG Ha!WC lkpu pngy I l re g Ihi t. HN( C A4 lf 6 II 0 HH Nplea I F PHI E Copy iSLIGTGGGbyecaarrauRsdosloadcastisgCU. 10 b f(d 9 II IU Inc. wHRB risc un le L I 'lp p Ttd program Guide U pub!!Bed 0 ILNLll Gl 0 T W l d f ycN by rb. )tsQMG RM o Bnndcastag Co., iac, ~ lkbl N PW N f Ck JINN 7 HWW 1«7 I » 4 'n dl I 3TPIUr crdgtt i,C mbndgaMAO213S. Subscrip uni 0 P lk AN J)UP. SWN I I IlkCWT k I H fade tl 1aL ta I t54 )A*Cd HUN UWA g Q d Id 6 IU 7 .A htk I Uc free au y bt obumln by wlhng lo Ibc shul c BWGH p'tktmlil I T 04 p In«f A I, FNN0A Idwtsl.Forad atitingiuonnslion,pj w«sd WHRB Sst.to(duse(bi7369t-gt38.

U3A 4 L'tawwaw'(weed Op. M, N ), a&dew 44(H IWWWCI W Ml,l'a THE FELIX MENDELSSOHN ORGY(D M&LWDI Heed ~ C~npfhte UlbbLVfd.E)& cb!d .Vdulop31Ea (Cwwj I LA ~ ae ,D .Aaww Up E 1 WeoaeeedeW.CA ftwhwwfLNFDUM L(apw ktway le Wwa w 'w. Jwkww(w tooLU Fl «DUHUI)ka 14 bi~all h (~O I (fda ) Uo lual ID& fewwhw.ophJ Iwe ) w~l we!el«keel:slwww(cw ft H f I 'l«ww wwa Cp Iaaf LVJAI'ph d "(f D K I W t I,OP w IU '5 a Isw Upaawl.o J.&wwwc a&KFA ~ I c mo 'a '1«w 14.3; I I.l ICldLFI 0 lob o .Awwsl d yad (c ) MlaS I.wdaba(Eb Lo H.tl I dl afwwwD ltJ h lp 4 aopw.lk Dtkw (CULPI HD 0 I wl I 5 iah NtN f doaw Ihwl MK hwewwa ( IDr.l'in .kp IALD ID 1 ~ WH "UWWLOPI.N Un Ur« t If .C edo W Ne IWW Uiteede M.o.sw. w I'( . Lop.r,H .&!) Iwe I ol 4&.4 .tke Ma Iv Lwl 1 F TMW ~uwa),ae,handel IC Neh& Iywwya IU C n,) el«h kao I Opdttd'II.D IA gd Lt) UM 0 N.U &I t ra(WWWOptkha HU:& 4'Aa Mdwhd(H fl,opan 4;S~, ~ W WWSJ gad 1.1 Itf:~ I A:I Gbw I& 4 15P aahdk J.DALU ilk,a I ff ltbul f44 0 ~ I I I I lpl 4 la&ii rL Mlbt t. D I I db ~ E OA5,N Haew UI 4f. Ii dh1 ~ Ipelawhda kaat I O .Dpa15 UDP Hl I wwC Op. I,H 1)!.LLG H li ~ I I al UOJLH M L Dl NH aw Iiuo'I ~,4*(bi UWW).OAILNNLP waea cwwct (Gl b ) kwr SNA Ol'dajtl t GH I &PIN I ft)btkedbeae'0 bbl I ewf a( w 'p TO WAIAWDOP&Alk hg 1, IIUTWAO NL) 5.4 (W4I,I )Hwaaow I Wsdno& dsy. h(sy h ITWW H Md k( f 0 ww Gf«jw .I Unw ked I W(WWW lnke kp 4 1(5k L I Ff Yia kaw,i L4w lrwa I)LWAW lki'( d&GPLtk4&n 1001 K A4(fww Cwa lwkbs "wcwwwe eea el '15(ar * I IDA,)l IP fkk H31 'CI wcwwf LNe Cb Ihwa bkawl Itl)N S *f 0& r,h 4 (Cll)IPf 4O Mow H I Ul .I wkailkd I & kak'I'OAW C "k(AI,PN g rt«P kao Op, 15'll''1 0 Dlowekct«E oc,kd hwd, I (D .1 u IWVLF,C raidv U srwlwllnww(na aee Ictom a awlk (c MU AWW AANAP ~ f 1 L"0cb,we~a 4 lk,l IY Ikw Lllklk I 1 g C Ial $ ad "Dp.w.N,'l,l 0 D e MM:hnAI .I Ud Cdl Ai,la oa IC I Ml Op\I lldw JedH H fleer UIP U'I N I AI WA«OP 14H laid wewffdw(ndwoylan IIAVUI .I C)DPI d IL V ILMMULLMA IDI 'w He'0, 4 Vby DW'Id P ) CP Tt ti l D I waww IH Oy ITNI l A Urg I AICS)LPI Fdd oeM H «tado lal'WP c *I'1 dw13I0 I c.www ow Lopua dlw jl wkeddkctriiwhalK IU9.5 if Ml acl Lot INDI (ICU lakin) M IG II I &.tirade WVWUI htydet a I 0 lobl) IULM ael I dhl Olk 1„1 wolw I whb I 'ddkt few aw D clw o ykuadsy h(sy11 Wbewwcwwad alklt (D,oI I NI W01$ tdr» 0 Pt WAM WUVwl YAI~HE na I IH wftk I I NM fdl Debl C I IL"a IUDNUW00 e .Gptk)NP.Ck Ibao I " 14wtpcwwe Wa 0 tl N)v s 0 ww(b I;lww ),N I d ac) t«ce I W,rwwa cur wwkfww 5 I c! Act .'trek e rcl I 141 c wf«a wow~'D kecvf wawwfop (Awdf F ~ !of .KU Wean wipl H.nwd .ID4 Ln MI Ia Ia at 0 ~ NHU liko 'Lciw» pwyw.adetcD .Mwu kar 5 11 aa r,ot.e.d hawwy.nwww IUNF I I f«ou Ed (te Lh Myr I 4 "D 4 4 da . Ot &,lbfa0 a aw fwwlr let) C, bb 'OIAU ww MI k5 W III a IVI 1 M I 0 JEW» (40*wtpf It ah I L FtKlbg J.og ILI t,at ID9'hwkh H Ihbop VI~5wy,hg ICA w IPJ

Mw S f f Vd Awdlkek'KIW .14 'daw I HH 14 )I og,a thea(bw ID I Plhk0 ITUI U afwo LI'I M) 'IWAUA'a'lhd Hl thl I Ed faadwc) 'E w 0 lrc l I 'AOFM,N a) 1, ~ 'd ) Ul I U I WHill f IAI CI fe bwpewlw Mll I Yewaslb(OP,Halo Nbwdel f 4 "Pl IAF WMWAJT I'& N I

il)r rkwb 11 c.ow H blwncA vedi M) I'SWVIW&N I 0 op IUEM,JAH&SC a H «8 40ICJI Vlwl 0 I Iwke) I 54) wi fl all a(ha 'C Ul Ihc I rf Cw LIIU Hcwkaew Alit ,r w.si .w w Le-Mna 0 H'I 5 'MW WW'Ir tk 1 D.UP.lifk,).P tM. Klg.fht .F Lea Skwk &lb k 0(FN wl ICIP 1 IJU ILT(Kda OVW I 0 lo'lw1 M IENI 15'I IU Llew,Oy IL"S wl Irkhie 4lbt race rww (c I a A Leahw(yhp I (C HM S 45&wk In tea(wwwh I a(4CAY J IU 'I kf fw It .Yd,d,o&,31 I (nw«f «IIWUICAV Ik( tall ra ("«w.o Uk Ha,l 8 S &he gS A rn (h id LH I aka(wef N A 4( p 1 cp U5. 8 MM L "Nwrdyk(yawop LII hgH,DVdoh( MU.N &N IIA I I 0 'H U$dN Ch 4 ' g.op(sf,&N 4(lr aw e(A» La Cl (" KNIA H,VA HU'C Pl I ff Cbwag Luwd HU a w)YAW I Hd H Ik dbeWJ FA 0 Ot.F. h )I do Awok M) M(75 L'Vaw If kl 1UI U,NP. '0 CL It 0'I Mt .5 (45J fwyn s dd &he .I twi Oeeh MH I gf 0 'At "Ifp.'fl,k 'DD Dka*(W I ta a beb Mh&NAMSkflW fee U.gib I, WJ kl 10 MA V INDA tp A OP ILI I*VI Wl U)S&wl fl (b .OAWAAALPIt MLI &rw ww (Ma IN (M~'hI UU fad I AND I 4 4 fatted LDI Ckw I .ah,fe M:I". l W I I I4f A,l INL b I aw IFIDM Lope.fw I.b JI C h d S feaewh «4 5 lb feha HW EM&I

Mll.u I ICI I dD II D fhl D 'Ph'4 * JN.H .S I I ICNI to t';I P,i« I HWS ~ I MdCI OIMN IG &VI IA IUIU88 )rwwyk l';N,~ ~ 0 WAtk UI Cl I IA! tC p I 15k'tkul I IU)ag&wwyN I D jane C Okw I I N I I h Ol lif fb 1'ILW'ka da Oy 1 JCc &I«J ILA tw P apd Cl H k IH bkl D I CI tGI I )Ae ONW I&5 MPWA Il'WJ ASIA Iaktha&1 ~ I«p wwl ~ UH bk W,,kdlbl HA C k I A'ACI kan www)n N N*ahadwad ) nf I aw t iefl 'Ik' opVP h I ~ IALD 4 I 8 C LUHNA 0 10 I 4 aw IC H$ "I Ic 1 I JSHL gnw'lfpww 4 a Www ).Gp I Ult'C df Vd 4(3)c CIUK & 'CWW) (eww f 'I I at~'I HK IJ W,V II,OPIA&t Mlk ka'I(cd Jtd fl .'NWW) C (In)l SwJw FAI gl, Op. 3 4 D Hcew. A IIA&kl Nt Af P 1 lkk C (,OP.VI.& (Ilia(h I Dawd a va I Uo 1 Ice*' ww"Jta I da&E,WW)MI K I I( ) w(cwl a H I)keel 1 (kl 411 Ud it) Al A UthkAA Ipl t."A M pww lal batty lk N Ik t,t HleTb t~ ~ Op I.n F I C«l HMI r.'lt INUUH a W,VH IV,op.a)d eeialwoitJ IUPC ef'VII,h 5 4th LAIAL 5 I .WUAC YWO It I I lwdol &OPS,H LIIN,D b * CL 1 OH IDOI

HIPS IFD M k lwUIPJ NI tC w ct .Ue I.l lt I kl 4 ~ LGP.SJ H « tl I.HW ATE(ef 1 I ' DHD M I FAACL al eat IFWL IU! t 45& Ib»k HI*AIM NLPI D UH 'HW hk 0 WCl ~ I II Pd N .I,y lief 0 ww* aw (kd

Fa s)A n I .Dp II.AVNAI 4 5&wvw Uat albf~g 1,0p. 4).ea& „M w Ga 417, ICAWL IP! Uf A 5 Md L WM H I Llf

F15 Wll b, «w R 'L 81 I Sc IC (h Mtl lhMA«W(HWD 8 lpk I tdel 5 .Eapk IWI Lyf M I Lwp LE.F «I LL U laf Sa I 11 I I Loplke IL I l«,l'ww,a r IU,I kCI'P 1. e M 'D 'N Swed(I «&'s ~ sr e.n r tw ta N .s ~ f'Iif I.OP W W I;b IA I ILH

IIA 0 (EN( U'I I)pea lb I' I I tH J.OPM,N D I Id

H14 C I A DNA 9 h»kaewwh1 I Ibk Iak 4 a Cw I I F-Oplhaawklykoil Ll'«D A LM (EHD 4 k ad 5 I~IP) lw:P ld C 0 I H IIH.DM 'f h .IL ep re~0 Ull yw'ar.a MI JM k Ml V,CI kaF,"I I t Ika oy.hlu I Mw.iw.n wl Ctudl It I I, N )ww Ie . sa&. &wad. theo L au IL ~ Cdld V I,wd«li NHF IN e M 4) 5 I LAC (C la( I b~(ow 10 'l.l I.k,l (Teal I I 4 .Or.l) N ka&WW T HDS l(«Y 'WP .01 I;K,A tD fngf dk )M).MW( HJ HG (Alt( N I hc IhaF dAMI«)4) 0 '6 4*K I PNd) LOI Mt 106 I C CI (a)A ! ~L)WILTUAGAO I F W &0 h C N I I 4 .OP Mnwa)WUL ANL Sunday, May 14 N 4 5 I Df C Ii &dtm404)bi~i T UICA Vt Od 1st I sy 0 dl NQE «f UAHCNALOLNIH L:G U.N MAA Nu.ohD «UN' 00 Vd tk M .It I 4 g 1 UT2 NNNU:1 0 t(CN I Uu TNtk)CNYTAIIH ORGY COHCUIDSS ~GAI041 I CW «UCh (0 hu LM Sva CUUXNNIALIALKOKCI'NCOHNVulS NU.MM I NAC 0 15).k I.VWI A UU:F ~ I* f (&N .Ila 0 ) LPI IIW AIEMOAIALCKUACH67AYICC N 7.)'VN W! Dl I.l II4w I 1)1 AIM F ui IUA"(tl 1.0) PLH I,P 4 .T G CHJ.U 4 I III« ml ~ THE MAURICE RAVEL ORCYa 0 IC MN&1 I.'d WWA If'0 I OP I .H.ht dl F t 1 ~ D Lok 'tltnn&TAU(CN NM It UN7LIN'hl I I A Mac I I tl IGd 5 pt W& D (CI i~ I *Op U.N UH5DLT pltGA ) p BWI Eg'I GW C I ILAI IMI.I \. Huwm'n KLO) H.H hmmd D ' LrO r ~.N lht MAQ 0) ND.N I .D I AH '10 I ~ H I *Op MNNPI)y Xm NU I U I I)At &N ) 001(Lm utft K I .5 4 spubwD' u (V Au a b (ALN 1 tb HC.)Lop*st on &7 )d(c ai ) Uu D M A4AM6 Lu gt Hdl I LDP.U.I x. KA A I D 4 5~ IAMU (PI 4 GW N )hwl S ~t VW PMP Uoi 'Ma)NJVNN Kt 7 II«AA 0 (UUAUAI6. I alki Akpl IMXT E)bAQ AP f 5d Q 0 41, (GU D I N (00) h C N )hhAAO 130NIL'I p LU Iu. U .D H 'gl Il Md St mll hHAOA I. (6 UA "W b fd 4 I Mi 'Ul'i )MITI 5' FNCb (kn («Sm 'Ch .DLN. Ff C N 0 t.or NOW!1H gkr LC)y a .I IDG IF) th .'M Ao«mmkd ~. )Iksut 5 Al. N Jks A 4 I luf N Nl' DFM)lk ~0 40 I (10)1~(curn) Cm I I ButdQ . Ad Nrf ) MQ'1 I.'U E d "0 LG ILN RAA .E t TI P PUA.G I ( N'IXT HMC 4 is N hm It 5 * I H LN N WPAVNVOI bLI tdh» I )o Gg) g 0 Il J IN Ml I f I f Vbl Cub autu N .~NA( F UNh ( (kp 5 tHP""I Utt I I. W~M"l)LAHMAOP N.tg I n I ~ Oy LM I I'.I P Md FM~ N N« ~ Lbkl I tkl:I th P (km (Gp Nb ISM&sml 14NHQ Up.ltaN NC &.N tmm IN1.5 IQ H I, I,cp N,I~ I 0 IDQtP! I&W g TXEPNAHTUV ORGY Ct I Ct fob! I lut 0, 0 ohal, u ) lthl .I mm,umu md &t,~ 1 WA Wr CN HU. I .S l(«MIHQ LOI M.H 00 .Ihu I g Cl N C,p hli) pk / INN hl d) I IINP Md H \ fu IIU t Lu)UM Ntu d C I Ct IGbt I IC LA 'IN ~ I I )AVE NAW Ci Op I.H 13 I kl UIQ d .1(tbf idw)DPN)E w 0 IV I 7 If U:31 ,H I (ka g. 0 H CI (t: I RKCOI(DU05t(TAL 1&1 g,kv «4 I 'N pksd* (SM (I&Uk 'T U(up II I IF* 4 k Jd UM'0 .Op.'M td; Frtday, May 12 16 hwm F&5 4146 1(PI)ful

SW JAXXSPECTAOM DAP) yf V hyul 04 .It UUI«I)dd klu NIEXhrtst)HDPHIUPIUI l(WE(II Dkut th kkf Nha 4 I« 1 I I 0 0 I Ph ft I pl bm0 0 0 0 I\ Pm m. 4 .N I Ir*l EM)I I b At 1, p 6 p

N DUU, 1 JA IJNP Kl I ).Op NJJ ya r.lkw IT h «I 4 fpluwwpm p 4 6 N ) A 41 5 ~NIt t I I I'(F UM !OP i. N I,F PAD &ut 0 ~h gt OP&SBI,H I Nh IWI H* X 5I AAI . (Pua k 4'Otwm Cmbh) \ 10 IW&.I NAI ~ .Cd .P S I Ad Cl IU) W Dt GA Ht OP Pl.l PL NA» I TNECI(15CUITCITYO)tCY Iw 'y 'H I .c .. Ls 44 ~ wwtstwhw X 5 Nl)LN d MU If i N I IQ F. ~ 60 (EHU IWLMAAC h .D GAN . A 5 H Ad N CI (M kh) IW&hu I .14 0 Mi.t As A a tin Ih 0 D IC IGOQ Itfwhw K&UEI I I'l lhwkchhwacma' IN( .4 I ACb 0 I (Nyp

(44 t Umkf Ma 0 .D 14th Iu1 'At "IH ILII I Imt 1 ',cy Cn~ IWLS '.Al b(nb&I (C \ I IN) MA .It 0 I! Mu p IWI)LA )DI .G(A,P 5m 0 ) 0 tM Pl)

0 .I E Saturday, May13

d V Vd I Op N E~ tDOLPI

Ll 1 PAI .Lp C 4 X kl N THSCXKSCKU'Cltlohc'ICONCLUOK5 54 I I. I HILISILLY TH R'I'l

I THEOLUI50AD* VAST, NO THEY C LLED YESTERDAY N,G.'MAGI IT ROCK*Us RD' GAG s Iu M I)aop nuNur mid . Y b Ql koy )1010).1 . N ~A W NVK.O U)Ea B I I ~t )0 @RVICE, INC. (MD" 01 Tnsmckvvs woaov S I I Auf 1(.M I IQ kNYI PSU LA)I 4 X N I IUKN)outilt !HI 1072 Maus.nve44(h Floor ir k~&8 .Vd VD)OI N! I IW Nll 1 (NNINI t( T H I I IUIW),MPA hC I I Ap.ot *I.I' IH ) mmop (tsmU 0 IP big 'd IC dh S f VA I 401 )OHrkum kt W Carnbdd94. MA 02140 ICdfi ) ~ II $474)202 www.yestetdayeetuice.cQm F PAAD Dt .UNlkvuPNC ! N MA(f Lpuuwl IPMIJI IQ I G OP 40)ttutr (0 40 1&J 3 t I, IM 5 g."W w H Um (G I !LOP.W.H N ITKI. Il Y«)04 I. 4 I NH d (Or sccrss, orcnes!ta rrA(eas), chamber UH tbJV .0( V45 Ltu,tu 4 6 4 F AN ms It'tw hut Ym(7 I H I.\W ~.5 ~P I«S P 4 Q Cull ~ 0 'Iu») 4 4. woes, solo pans. chere)ms(ada(-ffcrn M 0 bd R Sy 14 10 14 t&AWHI I )~It Iub .M JsenosUsohn to Rave( and Cop)snd-sf we (Cud NNNM11 )d(CA NWP I I Wd,op ) 7 PINII~ODNllbkkT JUCII I k'6 don'Itwue hmstockwbheDIII(ol you )as(. ls I 0 .Bif IRJ SAAC d nw Uhh) .I I yT I P Bdt .0 G~, V I 4 Nk hA.OI N ONNL T I NC I Ib, lpn Idonpyri. 9.5:30; 90$. 12:00 5130 IWI CAN'N AP I I'A»d I I e I TRE RECORD HOSPITAL TWENTY YEARS IP&s~m a 'a& "1 G,MAIM WN&& 0& d Fdfd&N P 4 'u N F &A!CA I g»6 T'(VENTY *1 Ud Co. APA AW& kl Wl,ndk,OI I I $N I& OF TOP GREY& Ink D ~tadm&f FNW,M a,Ss 0 1 s C AC IE40 ' ~0 Xl L ~ 4 'u Cdl AN $pgl Iad T u 1 D y '«k hg, ~ s 199( k .S y.ga& IP)dip I (Ck&&) d .I A I L dkai 44 kldl&I Id M JR IC BW V f &(W 5 S tl HDO) N)PD I t .Nt,H&IM,5&'I Loabmbfka ad ~Ld $& 1 NW 14d 8 H &lkpv ~ IWI'.m S b d am D,ldl h IFJA) ( i yb yl 41' C y Y~t L'U 1 '0 ONH O t IW45 I. S«lb .5 t.gd I IP 1 ) IA tdk I I fukd 0 LCA C~O MICA IWI MW"V«a I Llb ty ~ANN 5 51 &,N 1) WT«A'AN'*S IKCAY I I Pdl ~ «AP I Id (Cdl Ip)L)u*dda4dpdl 1N Ma Nw,i P Ak Pl tu& t(N I» 191$ A I'I H IDGI NN kpf& .f daa~&N A&11 4 A ~ 1 I 1 'DCI «4 Pdd API kl«o Li P d 19.'Iu ~ IIM 5 .I N (P d tf &dpi ll dikp U 5 « 191" &k & VMR «5 A&la Mf 0 Ad((M If&ANNA td4 tkkhad"Wp Nt lady ld P 50 ly 4 t&WNF 5 y(CA&ktff C H d Tb T~ I IINNSMLCI T .9 tN 9 DWJMW, FA LA 11,! Ukfiu Tuesday, h)ay 10 Cd&if&&hug &- Y&4 .Op«Ac Ndpd NND4db 1pd 14 A«.1,$ 1 P4kl, $ '!NP l Cia I(&N LPI kkdgl TI&10PTNENTttlRCYCONFHQIW ~.& I&I IIIAW&Y) C M(MA&If h(EMI) d I kd -ki I 4 0& Al Thuraclay, May 18 19IVS Lkk oPpdkak A lb 5 (&Hi Il'I 1 ~."C I ' I 5 (5 1 (U 1 EEcokD nostvrAL IF&1 g."J W 0 F«A I(CC I 4 n&N (4&kg)&k&4 1& THEN»AT UNIX CENT&CLAY UKQY fk\ p AEMRUHOSPITAL lia Iya IX W'' f 4 41 S Il hl lepiK LNV .M.pt 1 tP UPI I IML p (hdc Dl~u I*i yuyu Friday, May19 d 4 k.LAM (I "N 'Idlp tm &ICKURTkrn10AGYCObCWI $5 IPD.G N cUM.D .M 5 A t(ld Lw& ~yuNM,'''ldkIN) IJ&i Nl I» &kl Nd( ~LP 1 ~.444 .1 &.Ck pda (D Ibl.hl IA «fb G 1 h'lot)day, hIsy 15 d AW 19$ »M 'N CENIENNIALI*12OR YHCONCLUDIQ 1 P.l .MN V .IU Ski dal "P 4 . ' . I M"~ Gl I ~ IP N ll ,MMM Sl. If &N \ ''Cb WW THEM URICKA VSI.OAOYCOtlCLUot5 14'U,G 4 A IN& l 0 '1 b 1 ltba Il ti W d T V J 1IJI L'I 1 5 1( I&& I pl! ) .S L "La fa API Ti Lt la ~ (D g4 I IAN AC b'CN (5 I W P.t (C~ t5»kl IPI'LT 4 d IN IN&&DNA,I44 .Ma&hi SACSPV& D«M tS N

(Cdk d atydi.h f Ca y .0 .(V N '1LPI (ussr it!I I I 'At!I 00«p (Hedneodayy stay 17 4 d I 9'(a&a.u'U R t I m) 1 J th 1,0p 1 dl TNETUFtWWITYOLCYC(toylafjS so Lfw go (H~(W IW NN sywb ) c. &I4&kdw IY WNF No NT 4 F H,S I 8 Lfl UUI.F t I aab 9 H kkaol O.N Il. lmmalga 0 IV& I. t( .G«kumc c c 'suu h& 1 4 Lsasl JTAQMN GYQ.'I 1 J IVH I 1 1 C P l C NIALC U fd ulg I tl LI A I DP IE I 151.C . I«VA. Nkmf N Cyfbl ykLI 0(1O N P 9 .T ~l (&4 .Al. NL gCC Ue 4 9 w» 9 mepejjat twtu(mGRGY 1 gl ~5 y mm5:I !4 I.k 0 P «&LW N.lb I ld Ck '\ Pl LAP( Nllf N* I' 1 .I aa c fDCLPI 1 I ~4» f I R LCkka $ I IACA VAN '&A Iyjkl~:Kk&W«.ag NS &'L I ~)O \»pl 190 Ik tk 00 L(4 N f I,O .5~$ INLD I .I &ALT bdf«a& &A444 .1 U h& dig dhd Ppl C 6 P tC I ( lkl 4 All M&W D 19&CA I I.T J )&ad& u M&dp f eD (f4 w I.og I I WM ~Cled l hid k 0 I p N (00 SW 1 g. It kdl I c'. D a&'9 ICNU I'!I 1 I I 'I» 1 kpaapww pu Lop lt(MD Ifkl, 1 I paf Vd'I( ikd LM 0 NIL N 4 Ub I lka I I I4kalk k Sajurdsy, hiay 20, 2000 IVI .T \ C Ab gkk(«Vkl TN&be'l Mba &&V«(d It-& Iakkad 41d k k(E Nasal 0:00 Phf WF!. T (L CV. Jl. l i&&4M 044«(HI AH N The Church of the Advent IF& 1'Ed k Mud Dgf Cd 1 1 IL Gd M 1) &N W&YMH ad N 1 I 30 M .Scdd LM d.a Nl aYF,N y 1 4\!Sf, k$ Brimmer Strett, Boston I .5 4o kb 0 0 !&A.T.F.IDGI l MNI I ~ ! IMLCk .QN (D &0&1 115 I L(guruv Dutuoa ~ kddkkk,K I,AIN, a) !91LDI D dl Iv!1s I vi II In .1 .It 10 ) ~.& T ly Wall N 1 a!juila $5 «I F 0 LV! 1&&0 INLX Al. ib I p 1 1 F(NA LD&WANQ Std lash od otal IN) 5 L'Sl "'4 N,S I (SMU Cgasfs 1 !001 itpisa Hup 'ti I . A'.Xl 19148 I .0 A (44 a . N !d Badk 4 dl)WM tbd '(~I cp Hp lo Sf. Cf !I(a INN M d l m&mgaklN Y 11 tS PI a (p~ ht Unk.kappa Ikd I '4" kl Iat.t C hDf V IN&NI&NRCI 5M&ok tlt 01 fl Ib)o172 A'15 » La&a dl I pl Cdg C A C (EMG LW p Cotbb& tEPHISW Alltl g d, N) P C C.M I9:Lit Sd: Ihl I Wm aka OIP LAM 4.0 Pka, (kaa kaf N N 14 A C N 10dlbd oI1k) tcGLPI ~AA

ICWI 15, k ' NlfkAldf» Ottula(LSufklc,

dt IPM 'WC&I IMPS Pkd 4 &Mknm&CI JS I* I IWA(W(NN 1&I Ni 0&0 l&BSCSIW I(t 1 H I* W . 5 Ih ICE!&I)LNN, U'y&rhdpl 1 IX*$ IPM 1 Lkl Cl L "A N(MI fk~d 11 4441 C 4.1 IP('.4 Wa if(1 tl If l CWM, D ck LQ 1&4 Ipd NLCMNS Omit!, Gl 1 0 (peak Add 1"(k Y Lib(( 'a& I K (&&5& D d Vd C LO IXC g«AN I)cacu 530 and 520 HISTORIC PeltFOILMA,'ICOI t& Ipai&& It 1N c 5 I Aa I f«oi Pal~ (kd 0&1 Mlh«u.up P I AN Nl RN I M NLW I'4' &5 4 buk bl Call(6)77 $ 92a)902 1 k&d \Duad M ) a 1 kt IWAR &NWJ,LU KWI. IQ f I P fl 1 4 IWXWKdf'h IP dlkkliag tl WS I(00 (HULd hU 440L (ASV) lt I 0) I.'I WC Tnaaday, uay 23 IynA~41)0 jlW gMHQ' 0 0 In)n)il 1 ob li M !N )sop ewwlyw 4 wawl'ddcl us 0 Thursday, May 25 I cpu p.-o.pa v v 001 vnl Anny Ydt TOP Tdclrl Y Dhnv COI't(WJO tin( It)LMA wt p n HM f Itn .",40 thto kinwn dt Inl KM) Ekl' V MVM .Wdd WC ANEW 041 5 "UM hh 0 SNW W THE AARON COPLANO CENTENARY 0 0 ~ df;5 \WO 0 1 '~)HI I If M thdd 041 0 US ' OROYS IFH!0 fWAAI I 0 IM I P 'Jl Ll lg Ln hnt,a~IN 4 QM!L 1 M I d IM((dnu !1«0 O

(ynd A br( 0.0 8 IO App, il» A Y. N V II 0-I - w InitK ~ 0 4 .ibid 0 WOW AHT 0 I D nw j Itnl 0 \ I 'I 0 l ik lb adult)CACI Sooy I 9)SSUUSAbH .I .Ik*Yydh I IDC

hi I 0 (*lit.C «Ip tnl Wednssdny, Msy 24 'PkKIM I'W 0 8 CWA$ I 54 i AUMI TNKTOFTWOOYORGYCGATUIUES IOWA J I)M 4 I 9!0 0)9( 0 A M k)0 P Pnpl 19P( I Ill)FM I WWM I I I Sl Iod 5 0(H I wy 4 lb 8 k lt S,L d .Oty,tw . AC .2 I II«NW,!Al 5 I.~dl ww ul f ,l CH(wl) I Icdnl ~PNWMN 19H 5 'Idw~dMS (115 I.C Wf tpnl nu;Kib '"TMC 0 Mani . IG .Il«hwh» * I dtu 'W .WM(tXOA I '1 I I 0O! Hf I PWOd M w (4d 0 CPhdl 15 IN) .IV I D 4 Mtyni.'4 I t I I '5A !Od I LUG,(W I I (HI Wninl&a lnknubALLL 5 tEMU 8 h» MNWO I ..CA V Oah AI,OA (aCA ~O HM.L nwwtn K IGk Ch! Ld 08 1 g Lpp 0 fi 0 «,au I 'IMA ul Cdkn' 19(i I 1 (f.nw f' ( 8 lntlk p.a AL~'Ohe.Mont &In) IA sdLM D hn 100 P tntGEOAGEAftHU(LGAGY ll l(AA ITd 7!~( 4 Na in,( a w IP A AM Cn(in'( )w« I I hl Mho hU (9lr.f 4 lb( ( (K W' 0W AA!IUHD Pi91. IA d p U 11 .M I« t W St )St N,FUS 0;a Al IMR! fH 0 t OCAY I 199.( I MS !0 8 MM J dt 00)nl I (MCA f~ (09'T CA, 0 al in fl LEOSDA IRCA VI I 0:rup !Han «ia n IUM ',nub lt.ea( O HM r: Inrrufla ANIAA w I t. f AT I 4 Mh 0 I ~

401 Ju N I 1st 9 TUL'KICIPU*CKAMIGAOOYEOAGY Inta D.C .I 4 S)wwy(S lud. 0G ' ta I C I I 'LPI A 171 I * c wwo okd( P Ho K~H )HRO C NL I.W Ii Id,C . 1) 4~1k RI .I Mw dA 'U FLEAohwrnn Mw. IMMI H EUUJ I Ms . d k HD n u I 1 S I 4

Ld N t« I. I

r L& NdhIWWAMW taCAI MO tn) )HMF h 5 4 ISCA I'WWGL

Why! I I AI . V MU 4 5 N 2. M Uhu»n. I \ d Ank .(Vw5!kM IV 0 LP! h'Id&P IWII ))ALW .VII I MOGPAAN F

b 5 N &WAD IE C IS I Saturday, IM LD I I nn I I«V' wP .1 (01 OA 0)M;A .0 May 20 0 E I 190'Al 4 t 41 WMLII I LI HII(5 Uk Inu,'454S 1040 I 1 l .1 IEW I I AWI.C Adl MM IRCAI UOS S T C N ".(Uw)wl .R.L 5 w (kd Krcx V ". WA WAM I a*ERA(o aaoovcotavcooc \scl 5 Natl wwhdn (km l)104(LT) I Iw Wky( Ch it~0 I 0 c 4 .0( Lwo SML')(5"&I I M JdfRSFECWIL(4 t I.E H Al )Al I".Iu) I:Nl P IRCA) VWM tE ) II!LLE(LLYATILAV kh a,h 4 M IIACAI I'Hl. Itdya 'M lyd DWUCW f 7 P COWS 'N 4 (PI I:M h~ 15 if w H . 7 Aa«w I D I TIN tyntlllCO MUM)00 0 tnt idio N I M IAHLV Inl 5 0" ~ F I (0 5'lt tE Hw Wnl 0 It J' IM I MI JW 1&AA JUH$ i I'E I k 0(k MW(HM th);I a td 10 tE lnl'P S GS I IC(0) I'stean 4 I Pi C ( C .IM(5 1) MOO MK 'nd UtCAJ 192)'P P I IIEI S (MD) nol(M M VLWM VJ )'f lt I . I AM!MD'Colo M HC TA I OM(S HIL 1.1 ( Vd Mh In(dc t 04 5 1$ I .S,C tl (t N

Ak I .Vd A (0 Dhaut I V Ilui Sgn.d 1*AYI D hh 4A)M«L) S)d ~ U 'cn(441 0 pl kf«)l O I 9 Pd8 d IUD) Inks I.'!Au& D 'IR 0 I If I Utd(4 M t I F I Iw cw! I A Ap «04) r JO .Atk,V 8)Aw&(r&ALH rj 'od .Sn rd 5 .n IN w«ULI spad(0w I t4.(l Sd g .A I 0 ktt'L 0 ICAILFI In) M I 4 I(M )CLN(Q (Al Vd AV H IMIWI d)'Si Jhnk Ikg udod Un D ',M 1 Sunday, May 21 )M~Od It rl ti 4 D Itn f VMI MP lyna)l ~ nn Cydhu AC W MD .LK» * O)kd Id W wpl ;C 441)"V hlh THE EMWLRSU)OCKORGV NRLWA54045 I 4 IC I ' «~(!I CI ' I'N$)n C SAO I dl Vlt- MAMMMV .M IML I IHRY I W N s N'FIEA. ho uul .5 dP( g Mkwp UMI.IPH ':E hl*)l~lR )bu I.' 'l EDSG IRGI V I i 4(W!«M 4 OARS Nbl» M &It FSMIG 5 51 I RIDTGRRI-'TURORCV Lt)WA~(t dt &I, I«WI n .'AMAAI 50 IO w w L 84.8 d I IIWA Cull SgWJ JOA AV I LPI U U dt d )4I &AM f 'Hl~ 1910T t f«n Mt N 0 kkl «f . 0 !MAR T ILWALWW 0 WAI L ak Jdl INRRIGTDRALURGYCONt(NUES fd on Ak1 p HH'5 Pkg MOMdhd Pl 4 I Mldahlk Ib 'hu (5 ) «t IHNC f t wfnwwc *YM Stu TNEART1ATUM Ptlh 0 0 LS,N Friday) Msy 26 ORGY Itn.S L't ' It N I"I . M)0 nk,d IVAN WAIL); kN 108*JRDNCOPLM!DOACYCOVONUES 190)b 0 Cd ( wd ~jwwl W kl 010 I !Kl AMCW Il'MCD Mat n f SAMD. I c Cd!hug Pt dwwSr (wJ(O"JJ lw'I.H Wl Mcq I C hlk Y AP N:S (t 0 0 .Fuvl 'ddl Wpd ww H21nj WWU)tt Ihlrn 0 P I '» I 'tkCI '4 H25) 1'.'1 hi n, I 9. In I 4 fr.l f 4 1 Wt nriw 0 ~ 'Uy Id.kdr I b) It:Cnl AC lp "«ILUAMAH t 0 w HMscnlw, ILIA M M MKMOMALCKUACUNAVICE (4 '(4 MN Ad (Ol I LPI SH tl td WW (VM S 4(P) 4» 1.(k ~ kd MCbt Aylk(4 pl lwn 0 8 192 .'Whu(WN I I I Iipnw)L (Vl 19H LF n 844!CM)w(0 040 nl' dilPJ M W wh IM' 14 !Md RM OATH 0 ~ )CWWAON Ml Mwodcww M Lfl nwwn \ 4 Iw NWW I Ldw'wc I 0VMTM f I '0 P 4 Ml 0 M I Inhhnd:I (~ lt 0 0) H* cwwnd I « klyno«ylnnt I)00 TNK LMAML ffn( I M.p Yydn ~(5 0 0 RttAIUMGAOYCONOAUES Ipahhf Ot 0 I,IPJLK Ilu) LC t CkA W au 140 WF Ah( lk N Hra .tuft h OWL C udi IC05 H (Ma. dC I ' S&OWPOW jtonnay, OMC gy pl 0 Mnnjll Ib Mna gl )90 5 n 8 If '. uny 32 Od ibn 0 ~dl «In Ok(W)wtl I 'I" LJF Mkl(W Htirnl UMI)nl!S~GMTh 5 LOS) H Od ikn I M(dn TINANTtATIIMOECYCONCNDE5 14 04)~~0 Hn (MON t Rg 0 I C UMI P !op 19E.L dwwwtphwnhnr jnan)Y nn Connbutt tl rhwothnwwspdnnod (kw) IMPO A~SAN(f UW Mcntw Ql Cn I ll $ ( d n 1 I b 4 cn(w(. Adn M~I, Igni WINS,LA 1l * I.IHI& li)RP lr I Opw(CA Mb Lpw) CPI JOg&l!M( (I dO DJ lpmW I C I 14& K f U ti 1 Alg«~O V I Itmo f A «5 m:Cwwalaf Mlchaol Tllson Thomas Sunday, May 28 Saturday, June 3 I AN 10 I&$1'.0 Tho memnoat DFH(paotobar CMMMMEs IMU~AOA .I «IAU I San Francisco Symphony I THERIDTCAkLOkCV Miaal THLMRECOltDSOLGYCOECLCMS I otauaes $. & 4\? a mc I i!I I ed&«C I Jt I la MIMOMAL )ms 5&ECH UM snd RCA CIIURCH SCAVICt LVI NIL(SILLY TIMRYARO Victor REty SEAL &md Il&R« 4 I 1&,t 1 SN U k f Ol UF IEISCD! le&c pa fh h HN! I 'IOSL*NNOLVIC10 ECI»I&ID dP I ~ &lb ~ EST celeantta tho MD P CLASHCALMUIICIHth(LODE m OI'TIIRSATURDAYSOLut!ON ORGI' Dot&lb mmv E&a I & Wnae Copland Contonaryl &AI m IMCOSC RWMDCORCY

I&!41 T a 1 1 .Sdtm'1 oaf mR ip I r 7 S.IUMI Sunday, June 4 MUNUTJ Ih. Wl Pyd M $ MS &II wa Spat(~ 'I Ia f«Wo 1 huah THRSATUIU! 'n s & YSOLltlGVOACVCONCII CI 41 5) pl &c m lech& Jw tnsU15Peehoiut &f I 5I 4 (IJA 1 p(l' I JC p pmpw hh ~e Id il Iaa I I .« Id I IMI I 4 I ha!'f I'~ I IIC. Ian C~MF tb M .L d 14 1&a ~ LUts 0 sf P &oa f"sil line MEMUNIAI.CHMICI&5ERVICE I 5$.&a vapo l Ahmim '44 I U.i A«U I I .I! I F P fin& Ma M !G,H 'Ch« liar p k&coAUHospITAL Maa&WMI 1 M md a I 5 d WP P )I MM ao&a M I. Wnl P TNEAKTIIUAS(autmol(Ct )kmmLA 4a Li « H« I a: $)tp f &.M M (Ol »0IPJ tdonday, h1ay 22 I !L IN&! IVM 0 ~44 I lf V ddoa e C I lb& 111&ECHIUM P AC 145&m &&44 (5 H I tNt CHR&i DEOE ICK Ah'D n(EE DstfGN F D k 0IIUY Tl IiMRIC&imCHDHI I I LP IM &li Al di d tl gpp C lkh 04MALA MII:F G«s Sf(A I (1 I'.1did M LLCMMS9$1 N I O II \ M(PMLPJ AM 1 l«ham.t LRC Y 0 r 5 Mpll (RCA V htdM(d IP M Ma f 'd MCTMMM.&MEP It ILS .1 ah e I) Fh &IACAVIR & 4 I Isl ~m «ra si ~ ii,t .e . 49, ca 9IV( !Owl'47!D 1am&&' liM)p aw k 'Lwa.hw lp Lpl «( 4 1.1 *mk Vmcat& Smm I a~ .ti Ja l&a hf t " '1 ' Ipa N I I 4&CWMGaw S I & 4U' 5m a M MmE Jl SAUT 'E *!KCN wk(h Appateckian Spring 'k w 5&1 0 IN 19fl lh C UL:Ia lkwl ~W EI J.Hm i Uid

19 mC f Rodeo e Sm (PI.C aa lie I mmmt~N &mtl I~k HMJ Tl U Ma( 0

(Mb (D G a'sv tne Kio ket I 4 mhGN& r,

19&.o Id I T~l SP !.I &.RfECI dhd UI h& I h,same IF Mm&.tl 5 IMLMI & ' pyu Hm! . Id. W I w" 0 ct&4 a f 4 5 yfrikf performances ta!P fP (kh IP mak 5 MC mlk 3 from &ho brilliunl lew p -.VFTWsattlptlCONIIKUEI ggpm5 g IH C'ail I9M&D C 7( . ~ 'Wa(1.5 PUC 0 mm ITdh conduoor ofbelovrd, powcrfei, richly &.I Tuesday, t1a 30 M NC IM m U,f ah(UA VP I&em Orchestra fed music y 11 (S Iw!'.LII gae) 't by A meri co's rireoi aihltae cdhadp .5 earn(paLp& IMI.L n 'I ' mctormnnvoaor cmmnuss hnl Wag .~&m Y Lt I mCN tl LP) composer, Aaron Coptond. AII &4 I &i mall JMUI ~, HIU& yl « ! 4 I,o hy U~ml NIEHU

IIMI 'I I &N'I Pm 'IL ca a& w 14p&e If Ca Due in a&ores itoy ri. IUJ''kuahl awh~ ~w l I:te 9 lu& tl1 ltw C h F f M,l thJI '41 IK&al D 'I(wg IM!&b ITIMJThtei 1 lna&i 1 laid UNMMWU!IS IV ICJ t tkd I'hl I op&ma Jfm kr, gis les vpai I mp DJF dtl UU M k I&NH'D A h t &5 Ifamd ILW 19M

MCN 4 u) p NI oil Ca&4ltta& ' HI.M k 0 .IALI &af& II

HM: WI I ) Mt 1.5 MCI .Um«L1h U' d2M,U 4 Atd1 7 1 U.U IL!T 'I' (Jhw r'! 'N2&tllht I m aka f«ma I! 4 n maf U I Ak H t$ leal I ~ . Nlh Ot u hw(P a(pl 'I o him.s oynl yfednesday, 31 ILL hw U AL e Itn I i .I stay ~ ~ INd ~,edk a«p'D l&,11 (eUC!,l luL ~ L"II Cw)kdkh JN MMUM IIA'D kaat ar((ka&earn . ~ IIC ~f«d m m'ag~ 'luatotTIVJAVTURGYconrputS C f C I a!aamykS JP I(cd k& 4 LPI anal) a(tl I»S IM:4 Lnkm MM" Ih&MLJ:0 AMWVN 0 I waal I I IF&I.DI '& &L~ spam d IL Na P 4 aa .Iak ha 11&1 I."H T 'IS,C '1 ItyaLtJ S! hades .H,we &!I &Jalpi

M 5,1 I th F o&.~tat I II 44 m "PW & IT nht NI Sk 0 f H Iw M THSJACKIELOAAt&UIOAGY t. Np & ls Lm~) H Aaut Usia bal;Dlaa M N IR' Ll.l Ml I .Lathe ul hm M 1 I'nkl«( CI I &N M d ~ U ISla 1dal I ( Vam m I F la I Mltlt &MP Linis)km I tlk 44 !wa ig17 0 ht I

m I UD f«n CW4ai RCAV' ~ A& f l&adi M 4 It 'I IN&Lao&a! 14 kk Nb&'I M&ln.t I f«n (E IP& 1 ! h LL tP LP) IIo Ilk MNSI lt«&ai Eo)ow Jill( &a 191 11 f Cia»l dP 1 I mP .!bo )A&ha (~ tmMS V H7kk Ln 1 «' m» wcvaa UMc Saturday 27 BMTG Friday, June 2 )'d Hntal.cane w 4 .~ ~:H.D (m 1 tray Iahltl )mm& o LC I taa Ieh I THEJACKTEAGAEDENOROYCONCLUD1$ Itn IML"lMM THE MOTO A 11 0kC 1 CONTL&um I I I I I I wk*M U&r(D 7 lv W HIMJIILLV mcwgscoemoaov Hp)S I."Iw&H 15 I 1) .Wa THAA VAIN! Ia em Mmm Madan In I IN (urn ) Tab MOTGRkLOIICY I 74 4 U ~&h I' &mk COIULWICI lnh UIM) R~ mm~w D u P ),UIEG Ow MRTEm o n HIETOAYOI'HIPHutORC'hit'iALWISODE a fma s m IN$&TL 1 DIE 1 bd EPI Tl ma~ FA~! Iki~gmahk I& e N. e »Pa de .1 p, I ah m I 'tol A 4 d Napa,oumc ca c p «1 hma. fl 5 J& mmbupwp mw I &ap Im'4 Lk J mmhmaaa f MUVMLI& Ma'IS )! LW mmhlpaa( ED),su ' A ' aafm Spa II)$'5 l. Il I ma'IL a ITH&s m~(lk AM IGNM&41&l *Me M f~m em&NIIM 5~ IGm L(mmes&I JU IL! 11 4 ~nm sah Lmmr(wmm, g f pbb~lu& C 'Ib Dp wn 441&M f*d dmapaipl lb ' 5 Og&i' ~ a 128

1877. Song. 'Ibe Lect Chord'pro«or), Wluti Hough 1877i Incidcwsl Olypcnon) Music io Hvuy VBl (St»kcq»smk Lswkr. Penny, RTE Conccn Orchcun Tuesday, June 6 (Msrco pdo) munlght 1 878:Sc g."I outd I ncm o king"01.CockbumkKcytc.patri THETDPTWKNTVORGY CONTINUES "St. dfa[Argo LP) 7t00 em 1997 1879: Soog. Agnes'vc" (Tcnnyam);Ommerk Wcdoa(Nonheestcm) 1880: Thr Msrtyr of Aarioch Odlbnsnl Withrtconbbyd» Yummy F .Red Monkey.sndSelty Skull (cxcerpsR Kntfbt, Scshuaa am tbe Yov of 1997 NsSnnl Symphony Orchain Uey) Ghngo nd ihc n»unity defunct Stamp cccod label. 1 Slldt Odc for 'ng glacier Kkncy md Se Cold Cold Hearn, Sc opa of the Coloniri snd Indkn Et»ibit ion clung irh Bit. msdcd ~ (Teanywn)t Roddy. re vi»B to lion of Riot Cmk v iS x ambi.wide smedlcy, («ford lvu Musica singen, («fad Htgo sudknce Company of Meridsm (Sympom PHI IterA KAPPA (Sm spprox.) m) Li» from Sxnwn 1886'bc Golda Legend (seneca. afar I»ngfcllowk 7br tre. 0 c Ptd Bci ~ Kepi» Lircray xeerdses. Mvk'I ixtri«Alkn: st. with po t Hexther McHwth, Churth Chain Amltsl. Il«t 'roBi.Co mi Gstdeaerchean sal 69, snd an orator not snnouaccd st press lime Cnvm (Gtomophone lkxo pm MUSIC INTERLUDE (time Ca, Perlopbonc. HMV 781 — Pc ere approx.) 1887t (hk for the Ikying 0» 2,00 pm BACCALAUREATE(dwesppaw.) of Imperial irndtwe Foundstion tume: Smed. Liwf ky.edc d P M s Singe« xnd Co pmy of Muslckni(Symposium) omrheMcmwislChwchinikr srdysd,ihelssrdmed» 9ttte pnr graluzilng class»Elbe sdwcvcd st kexS ss Pmidcnt Ndl I undergrsdums by He «d I SSI! (On. JR 8ugivsn'1 voice «ennkri Fcr Rudemdnc snd Rsdcgae Prmtdcnt Edison eeb TOP Linda S. Wilton. 188S: Incidental Music to Jfvtrth (Shekmpcen: Beery Irving's pm TWENTY 1997 rem«ca(time sppna.) Fr««cronk Peony. RTE gritp pm 199S Cooeat Onheun (Mvco Polo) Lexdkg 189k freebee igturgk ficr Scou); Bkphsm, Hcndcaon, Evens. Te mm»dbvdcore movemenL Loant will prcval." we le ihoughL "shsnaing ibe Birnsy (78swmri):E »LRousdcvdcr.eemaM«ny,citbcnmds lt' 1spcncn vkyl md cossmung us sB in c Ord»«n liny btsxel In Sc mkc of ihe (Peal LPR parfum»nce by d» 8 mr oo Acsdcmy of Music pest purge. nothing will bc kit bw thc 1892: ll«Man Hue (Grmdy] [cx fbh«dy-mouibaf cover deconimg) demon ead o fc Dls." cmpn). Bn»dbvx, Reck Cstdac0. Flcn, Trcwr Hrutwd. «d'n» Dbbetlng Fhn- Lneb. Dsvd Htngog. Chasm Openi» So«cty (Petri IPs) Nsal fowk off tbc onsleugk. 1894t The Cldeftsia tBumsnd) (me«pa); Maarson. Nstionsl Dnrieh Svedmsa Symphony Orchettre (Jsy) Wednesday, June T 1898: Inddentsl Muric ro Ki' Arrl'wr (lrring produmionXCsrrK RTK P«my. Cw»m Otdmm, RfX Cancer Choir (bierce Polo) midnight THE TOP TWENTY ORGY 1 SPA 1998 CON)TNUES Vivaria end Mcrrle EW)sad, brik+ifhltgha)t Penny. RTE Orch. Log om 1999 189k Thc Beeutysawe(Pinem.Csv)(esccrots): Msstc«on, Sue», Thc Bnfht Eyes'Evay Dsy ad Ewry NiShe 8»cd DC Stmdmen. 14sdonsl acttcra lov cmo end mid. Sympl»ny Gtchestre (J y), Lylc, Gilben sod -mck to ikfy etc«itic«ion cnd ence us show 0» Sullivn Socmy of ehnburgh, Coeson Roaddkt, futwe. 71» Otchestn (pcsrl Lps) 8'rduolgsr Czvkey pushed pognunming is ne d'mern»a 189K. Snag. Tire Abave-ndndcd Bcgg«" (Kipsngk CottPhom llkity R00 pm 2000 Moil 78- Fad Lpk Sylwn. Wedoa or hdan» (Nonhcsstcto) 2000 lm e besdy teen suoundiog 1899; 7be Rme of i'crsfo gnmbcnd'wg re korea»i» (Hood) (c sec rpts): M em son, Su«t. tmtromhountw fusion of Btosde«L Vein. Caddy, S hap. lbe cme genes of Sc Mr, Laly Edg«Wilton, Black, Hsmson. Ruddy, Beam Smith, mconl label, end the continwd 'nne suon of D«l Higgirn, South» k Itccnvery My ls Deed Mcn s Voicer. Iknovct Band (BBC Musie Magazine) pmjecx snd Mcb.gsnsns. Our DJt wB) ireck 190k Ta Deum: 8mcdlcy. Oxford Musica 2r00 fwum paths. no Hngcn, Kidllnu on Cor»en pm CLASS DAY Erma(kford Comp yofMudclsnt(gymporiium) uvs fram Tcrtcntmay 1900 Thc Emcrau ?bene Hsrrwd Ymk ohbetvs by memben Isk (Hood) (left incomel«) (cxc~); Dsries, Suan. of Sc Clast of 2000, deem. sinmni. end Jones. McCsBeriy. gwu sparer Conan 0'8 ries. '81. Steedn»n. 14»ioiai Symphony Orchevro (Jay) Sigg pcn ELECTRONIC MUSIC DRGY(rina Fioiii Siocuaiuco iu pprox.) htonday, June 5 Slplsmpmhv. Kraft rk inDJ Knub, s look et the hb tory end range ol elcenonic acbno tiiMalglil logy snd in»remen stion is nwik RECORD tlOSPITAL trwisg wc dc»top«or uf decnonk music fn m ddm &m mnkt to live e«fy recwdcd ckssksl AMERICA D1 THEDEPRESSIONilllETHIRTIES periwmences by"dcvmnica" Dft aul producers. 8 m so sgc of povcny «d kes. sn morc dcurik end fonnsika Look to sge ofhope ndlnun«l, s fin» of an ihc WHRB aebtite This Orgy continues grim twm md dcarm n«t beeru, oF "keep tonigk. Frimy shen»oo md "bred»r,can your sunny tide up" end evcalng. Seturdsy «d 8 ndxy yuo tpve ~ dime? 11 ass on cn hen s President bc»Bdead snd \old dnp iring nvioo 0 w d» mly Sing we bove to fcv is fear itself." k wxs o ' Thursday, June 8 'I dccxde ol longing, tmving. a»rgy. end nb»urn Juho Ste I check wonlr. »be t«nb le. tnublcd, rriumphnL surging 71irdn." mudght THE ELECTIIONIC hIUSIC Though thc 193th riip c cr into thc p«L lbcit cuttwe—ert. entcria lk00 ORGY CONTIMJES film, ninenb xm hlUSICFROMHitRVARD end song-ncetvns m nmch snd bsmt m unky. Even ss d» mBlea- Musk Pcriormcd nium begim. uibv» by Hsrvad ad Rakliffe nmicism. p 1 to sc lhinics aiS cvay nfmncc to Sc Lone Slg em HARVARDCOMMKNCEMKNT Reap» fvcd Asabe. or 7lir 17 r de/oc. And thsnln to Live fmm sc»uds of T nnx«my Thcstre, Ihmam Yard. For tnnsvipr» records sml ceseloid filnx wc css sei hear snd Hsn srd ihe 34kb time, greet aiu»st ihe osscmbks fv thc vafixring of*greet its Prcadrw. pcrfonncrt snd 1slcntt of tbe oge. Frow J«k Benny ~ddrcvct by mS Andy,(romDukcgtl to Anws end (inclwf 7 one in Lsun) by vudcnv. gmutogiBieHoliday,fmmDucgg«u lognoa In)0 an INTERMISSION (time wb rc ~ sr grvrn fnwrrr. snd from Rodgers Hsn to M approx.) — vd Cole pon end sk sppcpriste tothedey. ihooenhalns d! have left thar kgecy toe»txcndnsB, «ut HSS ow ll e 'H hiiet iaplre. HARVARD ALUMNIASSOCIATJONMEETING 0 gy »It bc s doeementsty, ~ btst«7, snd s nenstgk Llvi from Tcrcemea«y Tl npprcclstion. Por ci«en ue.uxr snl Yard Hsrvs die»sicwc its'n hoen ae ai8 tear the orilpml meric end voices Commenccnnni «ldmscs for thit tv)in of thc 1930t, incfwling ~o «ri records. mge event. which Icgins nhh d» alumni siren sal tcrcce. 0 sun«y psnde. Hevent Prcrikni Nal L Rwkrnfinc snd pi lo acspn m. ctuonolof)cotly snd lopic tly, S life end culnm sf K Sen, Nobel La»ere goal spnkcr Ammyu Americs in the Grm Dcnrnsioa '\ monomat snd Lsmcue Uniwtsiiy P dr«w Eim i. »0 atdiws the mstmbly, m ill ldit» p THETOPTWKNTYORGYt1994 vhnn alumni responuutc fo Ttdny-sword, twsy jerky. hcncric. yer enc cbk" of 8»0 alongside nuns xsmbm p THE 900 CLUB ORGY Sc Penn«a Thc Armiixge 8hvds. end Cep'n Jazz during 1994. Bimc«vpoa) HARYARD RADIO BROADCASTING CO., INC. Non-Profit 389 Harvard Street Cambridge, Massachusetts 02138 Organization U.S. POSTAGE ADDRESS SERYICE REQUESTED PAID Boston, Mass. Permit No. 58925

180

C les sic a I Notes THE BOSTON GLOBE ~ FRIDAY, JANUARY tg lggg Radio orgy of Poulenc, Schoej)berg By Richard Dyer GMsE srsvr he winter schedule of Harvard radio's sea- sonal "orgies" of special programming (WHRB-FM, 95B) arrived late this year and after some interesting broadcasts in this extraordinary and beloved semi-sunna) series had already taken place, including a threeday survey of the complete works of Chopin. Fortunately two my)or anniver- sary orgies are stgl to come. JatL 26 and 27 bring a 100th-birthday party for Francis Poulenc, a broadcast survey of his complete works, supplemented, as usual, by s selection of historic recordings. The other birthday boy is Arnold Schoenberg, whose )25th will be marked by a two-day survey of his complete works (from 4 pan. Thursday to midnight Friday) — a project one can hardly imagine being undertaken by any other radio station in the wor)&L Other orgies of special interest include a tribute to forgotten Rus- sian composer Paul Juon tomorrow, a Keith Jarrett Orgy (dassicat music segments come Monday and Tues- day at 2 pm.), and a tnbute to the distinguished Hungarian violinist Jo- seph Sztgett (Jan. 23). There wi6 a)so be an orgy devoted to Frank Sinatra (Jan. 2V beginning at 6 p.m. and continuing through midnight Jan. 29) and a Noel Coward orgy (Jan. 24). An'rgy of Don)set(i operas, already underway, has been spaced throughout the schedule: Wednesday, Thursday and Jan. 31 instalhnenis provide opportunities to hear 16 more of the indefatigable composer's 65 operas. 131

Nctd'/Urg Irridet 1992 A'nlbo~o?Gmmagini Ray'5I In Boston, a Last Broadcast Bastion Falls

oR c lassnnlulnk bnrs In 4 Inc«ongd 5 I IdD7on *I in D Cd) oy" 4 8 I SSINMPN 4'l dl 4 In a city with 5 rcbcl Ihei db dlonafprDvnc Uvt, k'mslnf pl G glhlax I F:..latm d bm derfollyqvl lypn ipp«h»ci k I proc ml g, nh a renowned I pNK Itlllgll I .TACAW» Ip Irk snmml 5.71 n Ishyy rl«d lolsofsi w rd eptrlsry wan«ho ndln sssl Iedl Airharl,br la rm, fAD 7 chcri nl )'»I tor parle .NGRII, *Ihcolh h mr ha5bttn intellectual culture, c H baden a u pdn wh t I glybw diolofa bcpkc«lr M Dh dluriciCvmlunIAWII 5$ICNhl IhCtd«Nk 'P l?AW hykhM isnloMahlc.BNsrraslonmerwlo WGBH is dumbing AN»lib IDAK 5 I I Itn 41 y mlshll blnbhyi lt I »51» gi I Cnl lluatblC DIDglnl S I blCR Nl *I bo khi N .hdibC I 41l down. Whyo t Sw»8IAINNW umxa Chl C* I Dcnruxcc Aipl I gll vapmn nnlc milmmllr. 4 w«nwl u kmweanvb Dy I»U k I la k ahoaw. mob» )WThcke ACSC»nlhsln ncwltplaW fin fui dlntPllf I fib I 7 I Tlwn hxb 5 fpnbyg IW . Hl as Inc b funk el is or IhC 805 ICfl 571 OI SMINI Ddnlll, Ih sb Im 17 m a . 1»ccorrhnsl clanksrpro- pho y. hlchwcAB» cmrkawGBH pks,litibulhplmdc )Dh 17 d Hurt)«M I II mk fsdl habctA gra I g,l I p I Nhdbykr.)~ Dfnmi mt dle Ml Ihaldht si ~ DHW hhla»I IMMWS«tb Wmttdnww fol ~ Inn u At, dwl Ih N ln '5$isllhsla dni e 14 d m .Ni.i pr WIM«h 7 k. Tint.limnolihtsl Ikncccounl. 5IN I )N Hoaibmdd I euldebw . heha\litdlo tsa pits,heel Iden a I lnhalO ysb»lpnf Sih ) "D Ihtbsnomh hdahaslphll(N*n -8 gi lagbnmmla lyrlhlme wry rectal wdc I of M» \I'5 bsl IhuIMIAN I cdlhcfe)5nlm hkh I indedlaopc I ubhwl aaw"U cnquon nd h yt rs Gla n I" M fn 41 sy fnwl 511 I pptdptol flin m 40 4ulohtw Ihedi gd Ante)dhltlnan los* dx Mt G I G .Iiiik stalk rlnr comlmeloproliam"IM Ihtlr B Ib e b IMK,HSI Ib Ihe lm n old H bah p I 4 lk W bar«u tf Lnnhhm bta la»-c lkrl . Idw e d «Ndallukhcln~ldvlnhl IlndpUMIc tk Iflu4gcandcsi.wilh. NCI N I I«I lhl hn "norm 4 kai IMsfe" ci NnlbyAII cdg I mtt,MMIMP liw)y I in pngr~ 8 w h lng cab tour h i shill 5 c Um«N47 1«balsa»num) ID Immi'p d 1»n 7 bl Adinrl Nld l«15M 8 tao. betmmk.MA nc kcav r 'ts w owwx 'place.ltlol5 lwnh kwlk cnc s,lho ihp 5Uvc 5 htfkld,i Nl. Mnl mml Ibalblwnhxl f

pawl KB Nl c»4pp h I . 114. )k W Prosn»t'a Iwittr dtlnls "b5145 15 ICCr Ui

skclalsom«hl RDAe) 4vi "Sympi PI«w, I„A icon gn I gb Dw I."ANINPwPleri bthil PP I«7)dhg.'e. Em Wdc" )ceo hlghcblitau i'by 4 MWICN5 I I:An 4 hkhl t. «A,t w dwcr.n KKAIIAO IIl 1 I' Oi hc dJ Complv enlllacnensh esomeilamv D. Tlmlh 'lbl:SIW I tele f Ih it I Bt I lr li il. wllnklhtCUIICC il I »Ref '.

nc cia»Ok I rc clmhhgp au h ly lrbll 55 I ll Ital dftltpn I I ~ 4 IPMMI» p I, r b MM«l cleculhn *Ish N 1 t5»dhl alit 5 5 ~Ii INKUV111 nlht Nbicr, T,A5

p»lk din I n Ctl HlvpfvV 1 I ONNKhC hkl4niv banpngflish bhlhM),M 4 Sw

acid n calgslmenponlbhsreb I 5 a.JUNE)'Sg )his Mr D OIIIJ7)CI 51 M I 8 1 ~tsclxdti mb»spc$AUDA»Inn ct lhflorvp n,bid»« atyt n. CAM ew Ihncm Jd yownu'UBAswrt»rtwntm ~ 1 'll Bol tnll el»elm I plogts I I g I hk ~t" Irk»i g I psoICDMlhl C 5 dllblCCHNNha'ci Irl ph I rk In wl ghialw IVGBlllnnoslnn canxsccs)wrwd M:..) INIKC! k . c 5I* rs.~ d I H I dp k Haimpilibdy. 7 pdealwal d»swda of nb lk rwh te Cy. Pp C IwrACD ilhtlllCU Ild cll."1bc.l dl .Intcpxnww«I WHRBVN IhaVCCWU I CdPIOID! lib dtnl lou. Is Ilelkw ll» I rn ."wntnpnpletu auvwona,u Ih IDpersicmp I Wlhwl7 ~ 5 b Id mdylemu Ic.hchdkglh Wll Ak tbl I hisg do«I Ihtpical I aunt Ag Al tVW Nuihe loha tsp cnyswdMCSCI DHI N$. dlh I lb I r5IMI RNDMdtl ion plMlitRobaib thai l 4 cspeclcdddkn beranarcgohgiogeipae pl MJ co I ps G music lb rlslmpu Ibkl 8 I lln ann 8 wgle51ie lnl Hbe co) IvGBH. hlcl r«xhesrauanllnew 1 "IV d 'I II 4 HyP d I bit. Icttcolltlcsu icaisl cl d 4 ~ nd tthly.dfersclstac I~itin SAst ~ itp lw ar ad pcgn INDc oc iph $.wl» tll h IMOlc . I I iuhldy lstPM k)k~471 I norns «k Bui I the I I Met beat pndoxk It.ls 1»$I dy,p cdklw Mpfvbl Ikg I Ik«pwiamtwl5 feel,lhen)nsm Ighilnm lace ihegreslNnd clwclnlmmk, hkb rt ihihl gine drep Ilbd HWI gll ~ relreelobrldt fink~ma«d g. p ihh ro CI kdlhi ca i«i» I . CA$0 )Mw ) I dc INI Icp rddidsHC'J7 io451 4 cm bat Ib I WCRB.O~ I polk 4 adl mw)eh~! m dl de «ks." dlohtnb.v wp p malo».smlxl 7 d I dr«dion 5 mwsmnyb 8 kh,M «hahphy 0 lyclnul NGB)) IH5lapr In p I )~ltbd'5 h Ipnnct+wsmpposed Im ~ tkM bnl k nyn ~ tb Ic nslfol n I irk Ihwdl dt Ia h imdn *bCM I bkl A I,Caka a\1k Bl \ pkt p Bc*wcf Ibwrkn, lyd I su I Wml l,v Na:p yi SJI c I nns SIK 10 u I l. 0 132

THE BOSTON GLOBE ~ FRIDAY, JANUARY 6, 1995

.By Richard Dyer oMBE STAFF

Harvard radio station WHRB- FM (95.8) is in its- annual winter "Orgy Period." Among the orgies of special interest are a survey of the music of Paul Dukas beginmng tomorrow afternoon at 1, a celebration of the 40 seasons of the Beaux Arts Trio beginning Jan. 10 at 1 (and including many highlights from performances broadcast, live from Sand- ers Theatre over a period of 15 years), a celebration of the centen- nial of pianist Clara Haskil (beginning Jan 11 at I), an immense two- day commemoration of the centen-. nial of Paul Hindemith (beginning at 6 a.m.. on Jan. IS) and orgies devoted to Dietrich Bux&hude, Samuel Barber, Bela Bartok, Antonin Dvo- rak and, of all people one would not expect to turn up at an orgy, Dame Janet. Baker (Jan. 15, begmning at 7 a.m,), WHRB is now broadcasting from its new studios, from which it has launched a fund-raising appeal; the station would like to install a new @50,000 antenna that will improve the quality of its signal and enlarge its liMning area. In an era when other I M classical-musie stations ha've resigned 'all pretensions to quahty in their desperate search for ratings, WHRB retains unswerving commitment to individual and adven- turous programming. 133

PREPARED STATEMENT OF DAVID MANDELBROT Yahoo is a leading provider of comprehensive online products and services to consumers and businesses worldwide. Yahoo reaches more than 287 million individuals worldwide each month. Between March 2000 and August 2000, I was personally responsible on behalf of Yahoo for the negotiation and execution with representatives of the Recording In- dustry Association of America of the voluntary "Webcasting Performance and Ephemeral License Agreement" for Yahoo's public performance of sound recordings by noninteractive nonsubscription webcasting. In July 1999, Yahoo had acquired broadcast.corn inc., a publicly traded company specializing in broadcasting audio and video over the Web. Broadcast.corn was a leading aggregator of streaming audio and video, making available from its Website thousands of special events, several hundred local radio stations, local television stations and video networks, concerts, and Internet-only music channels. Over the two years following the acquisition of broadcast.corn, Yahoo integrated the broadcast.corn services into the Yahoo network. With the acquisition of broadcast.corn, Yahoo also became an aggregator of music programming created by third parties. Specifically, Yahoo offered its audience the opportunity to listen to music performances in two ways. First, radio stations transmitted their signals by phone line to Yahoo servers, which servers then originated the retransmission of those radio station signals to the Internet. Second, programmers created Internet-only channels or Internet-only programming, which was not transmitted over ordinary radio station signals and which Yahoo also made available to the public. At that time, radio retransmissions constituted approximately 90 percent of Yahoo's performances that were covered by the statutory license; Yahoo's Internet-only performances constituted the remaining 10 percent. As of the time when Yahoo completed its acquisition of broadcast.corn, Yahoo had several reasons for considering a voluntary license rather than taking advantage of the statutory license available following arbitration: First, it would enable Yahoo to offer certainty of a negotiated RIAA license to Yahoo customers. By entering into a license agreement with the RIAA, Yahoo could offer a service to our radio station and third party music programming entities by saving them the expense and burden of arbitration or independent negotiation with the RIAA. Second, Yahoo would avoid the costs of arbitration. As one of the largest Internet webcast transmission services, we would incur very high litigation costs if we were to participate in the arbitration. In addition, litigation would drain time and resources from Yahoo personnel whose efforts would bring much greater value if directed toward development and execution of our site-wide streaming media implementation. Moreover, Yahoo was aware that these arbitrations could repeat every two years. In light of these factors, Yahoo was willing to enter into a voluntary license in order to avoid these litigation burdens and costs. Yahoo ultimately decided that we would much rather invest fewer resources settling than invest more resources arbitrating. Third, Yahoo would avoid the uncertainty of the CARP rate. By negotiating a voluntary license, Yahoo could potentially quantify and control its costs. We were concerned that an unacceptably high royalty rate arrived at by the CARP could force us to stop offering particular types of content. Negotiating the fee reduced the risk of an adverse judgment inherent in any arbitration or litigation. In addition, given that radio retransmissions constituted approximately 90 percent of Yahoo's music performances, we believed that our interests were different from the other participants in the CARP; and we wanted to establish a separate and lower rate for radio retransmissions. Fourth, Yahoo wanted to build goodwill with the record labels. We believed that by settling early, we would engender goodwill with RIAA member recording companies. We hoped that this goodwill would lead to better revenue opportunities in the future. In light of these factors, our primary concern was the overall cost of the license, that is, the "effective rate" that we would pay for all performances based on our mix of radio retransmissions and Internet-only performances. Based on what we projected as the ratio of retransmissions to Internet-only transmissions, the radio retransmission fee was a much more significant factor to us. Although we were aware that our license could be used as a precedent prospec- tively, our main interest was in striking a deal that had an acceptable bottom line impact for the term of the agreement. To the extent that an arbitration resulted in lower fees going forward, we would be able to avail ourselves of that lower rate in 134 the renewal periods or following the expiration of our Agreement with RIAA. If our license was deemed to be an industry precedent and the arbitration resulted in the same rates, we would be on an even plane with our competitors, and the Internet- only rate was not of great concern to us at that time. Either way, we looked to the costs we would save by not participating in the arbitration in agreeing to our license. Not surprisingly, our interest was in doing what was best for our business and our business model. At that time, because of our mix of 90 percent radio retransmissions and 10 percent Internet-only transmissions, we were hoping to achieve a lower rate for radio retransmissions which would produce a lower effective rate and have a far greater financial impact on our business than the rate for Internet-only transmissions. The fees ultimately set by the CARP in its recent report were considerably higher than any fair market outcome or any reasonable construction of the economics of the Yahoo-RIAA Agreement. The Panel did not appropriately address the unique facts and circumstances surrounding the Yahoo-RIAA Agreement, yet the Panel explicitly used certain terms of that Agreement as a benchmark for industry rate-setting. The result is that a single specific agreement based upon the unique situation of an individual company whose business model was atypical of Internet webcasters in general, has been misapplied to set excessive rates for an entire industry. 135

MATERIAL SUBMITTED FOR THE HEARING RECORD

James C. May Executive Vice President N~~A78. Government Relations BROADCASTERS )771 N Street, NW ~ Washington, DC 20036-2800 (202) 429-5302 ~ (800) 424-8806 ~ Fax: (202) 775-2157 )[email protected]

June 21, 2002

The Honorable Howard Coble Chairman Subcommittee on Courts, the Internet and Intellectual Property House Committee on the Judiciary B-351 A Raybum House Office Building Washington, D.C. 20515

Re: CARP Refo Pro osals

Dear Mr. Chairman:

In response to your invitation at the close ofthe Subconnnittee hearing on June 13, 2002, entitled "27re CARP (Copyright Arbitration Royalty Panel) Structure and Process," the National Association of Broadcasters (NAB) provides these briefsupplemental comments regarding potential reform ofthe Copyright Arbitration Royalty Panel (CARP) system. NAB has actively participated in all cable rate adjustment and cable royalty distribution proceedings before the CARPs and the predecessor Copyright Royalty Tribunal (CRT) since the inception ofthe cable compulsory license in 1978. As a service to the U.S. commercial broadcasting industry, NAB has represented the interests of television stations as copyright owners in receiving royalties for the retransmission oftheir programs by cable operators under the Section 111 statutory license. Commercial broadcasters were awarded the third highest share of the cable royalties in the most recent CARP distribution proceeding.

NAB also participated actively in the work on accomplishing the transition &om the CRT to the CARP system, as well as in subsequent Copyright Office proceedings to improve CARP procedures. The broadcast industry has a strong interest in helping to develop a smoother and more efficient dispute resolution process that will allow the more expeditious flow ofcable royalties to the copyright owners.

We have reviewed the statements submitted on behalfofthe Copyright Office and MPAA, and the testimony presented by witnesses appearing at the June 13 Subcommittee hearing. NAB generally agrees with the position stated by all other commenting parties: the CARP system needs to be improved. Based now on practical experience with the CARPs since 1993, NAB believes that the cost and unpredictability of the process prevent the system from satisfactorily serving its original purposes.

NAB agrees that a number of the specific proposals commenters have put forth would be useful in reducing the cost and improving the predictabiTity ofthe process. We look forward to 136

The Honorable Howard Coble June 21, 2002 Page 2

working with the Subcommittee and other interested parties to help develop a workable statutory set of impmvements. At this preliminary stage, we wish to bring to the Subcommittee's attention an iinportant flaw in the current system, which has not been sufficiently addressed by other commenting parties.

In NAB's view, one ofthe greatest contributors to the cost and unpredictability ofthe CARP process relates to the cutrent statutory standards governing the scope and nature ofreview of CARP decisions by the Librarian ofCongress/Copyright Office and the court. Many factors have conspired to make the cost of litigation beibre the CARPs higher than before the CRT, including the increased levels ofarbitrator compensation and an expanding CARP discovery practice. But the cost and delay ofthe process is multiplied far more dramatically in cases where a long and costly CARP hearing results in a decision that is thrown out in its entirety. NAB believes that such a scenario, which has occurred in connection with recent cable distribution proceedings, can result in part because ofthe lack ofa sufficient focused and circumscribed statutory review standard. The Section 802(l) requirement that the Librarian adopt the CARP's decision unless he finds it "arbitrary or contrary to the applicable provisions of [Title 17]" has been understood to require a top-to-bottom review ofthe decision by tbe Copyright Office, not limited to the speciflc points as to which parties expressly request review. This leaves the Offlce and the Librarian, who do not participate in the hearing itself and who have no necessary expertise on the factual questions of, for example, the accuracy of television viewing measures or the marketplace value ofvarious television programs, in the position of feeling compelled to make a close analysis ofthe entire decision in less time and with less information than the CARp panel had to do the original job. The burden on the Office oftrying to fulflll what it sees as its responsibiTity under the vague "arbitrariness" standard is substantial, and the possibihty that the parties will end up having to start a completed proceeding over from scratch is hugely wasteful.

At the same time, the statutory standard for judicial review has been interpreted in a, way that provides little if any check on aberrant CARP decisions. The D.C. Circuit, noting the "unusual character" ofthe statutory scheme, concluded that its review, unlike conventional "arbitrary and capricious" review under the Administrative Procedure Act, was "significantly more circumscribed" and "exceptionally deferential." N 8 v Librarian f Con ess, 146 F.3d 907, 918, 924 (D.C. Cir. 1998).

NAB believes that there is ultimately no need to burden the Copyright Office with the job of scouring CARP decisions to discover arbitrary aspects and then to engage in substitute decisionmaking on the basis ofa paper record in a truncated time period. Particularly in the area of cable distribution proceedings, which have been litigated for more than twenty years now, there are few occasions on which matters ofunresolved copyright policy require the Copyright Office's expert input. Instead, the Court ofAppeals should be given the primary review task, under the same conventional standards it has applied in many other types ofcases rather than a unique standard found only in Section 802 ofthe Copyright Act.

Amendment ofthe current standards in Sections 802(f) and (g) to provide more specific guidance for Copyright Office review and to limit its responsibility to resolvingjust those 137

The Honorable Howard Cohle June 21, 2002 Page 3

questions presented the by parties, coupled with traditional APA-type review by the Court of Appeals, would make the process more expeditious and more conventionak The risk ofthe very substantial delay and cost associated with redoing the pmceeding fmm scratch would be greatl reduced. Regularizing the review process to conform more closely to a traditional administrativey agency adjudicatory pmceeding should also produce more predictable results &om the panels in the Grst place. NAB believes this effect would be further heightened by an amendment of Section 802(c) that makes the requirement that CARPs follow prior precedent more explicit, A number ofthe reform proposals presented by commenting parties involve structural changes that would necessarily result in different standards ofadministrative and/orjudicial review. But to the extent a form ofthe current CARP structure is retained, a revision ofthe statutory review standards is greatly needed.

As to other proposals that have been made by commenting parties, NAB particularly supports measures that would promote continuity. For example, a system in which the decisionmakers served staggered multi-year terms would allow the parties not to have to start &om scratch in each proceeding aud would more likely produce consistent decisions from case to case, but would ultimately permit the termination ofbiased or incompetent members. Such a system would have the potential to reduce costs, improve decisional predictability, and pmmote settlements, By the same token, NAB strongly opposes any "expertise" criterion for members other than demonstrated experience or competence in adjudicative decisionmsking. In NAB's '&dew, substantive expertise in the copyright Geld is too likely to be associated with industry experience, which raises too great a risk ofbias or prejudgment. Although a "ba'lanced" panel of experienced party arbitrators may work well in situations involving only two sides to a dispute, the cable distribution proceedings typically involve multiple parties. Introducing the risk of predisposition in favor ofonly one or two out ofthe five or six claimant parties by requiring substantive expertise is, in NAB's view, both dangerous aud unnecessary. Nor would it be appropriate to make expertise in copyright law or economics a qualiGcation criterion. The parties can and should undertake the burden of explaining copyright and economics principles in terms that are understandable and persuasive to decisionmakers who have no prior training in those fields.

We would be pleased to provide further information about our additional perspective on the CARP reform issue. We look forward to working with the Subcommittee Staff to improve the cable royalty process.

Sincerely, 138

qp+6, MCTzopr PzcTvns Assoczarzo)s OP AhEERICIL ZNC. 1600 ERE STREET, rrORTRIIEST WSSRINOIUN. D.C. 20006 (202) 206-1066, ERT. 176 FICO m02) 766-6026

J6MES J. POPHAM VICE PRESIDENT STRTUTORP I ICENSR COUNSEL

June 13, 2002

The Honorable Howard Cob le Chairman Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary United States House of Representatives Washington, D.C.

Dear IVr. Chairman:

We write in response to your request for our views concerning the current Copyright Arbitration Royalty Panel (CARP) process for resolving controversies over the setting and adjustment ofrates and the distribution ofroyalties under the statutory licenses in the Copyright Act. We are deeply grateful for this opportunity to express our views and respectfully request that our letter be included in the record of your hearings today on the CARP process. The Motion Picture Association ofAmerica (MPAA), as you know, has considerable experience with the CARP process. Since the statutory licenses for secondary transmissions ofbroadcast station signals by cable television systems and satellite carriers were enacted in 1976 and I 984, respectively, MPAA has represented the interests ofcopyright owners of television series and motion pictures in cable and satellite royalty adjustment and distribution proceedings before the old Copyright Royalty Tribunal and the more recent CARPs. In 1994, MPAA supported the dissolution ofthe CRT and the shift to the CARP regime.

MPAA applauds and supports your efforts to review and overhaul the CARP process. Regrettably, the CARP process has been a source of continuing frustration. Despite optimism that the CARPs would improve upon the disappointing record of the Copyright Royalty Tribunal, the CARP process also has shown itself to be flawed and inefficient. The process is costly, ambiguous, unpredictable, and abuse, Settlement i" open to discouraged. Enforcement of substantive rights is frustrated by lack of information. Therefore, MPAA urges the subcommittee to devise and advance a new statutory approach to resolution of royalty rate setting and distribution issues. We offer the following reflections and insights to provide guidance to the subcommittee as it pursues revision and reform ofthe CARP process. With the benefit ofhindsight, we now can see the hidden

139

The Honorable Howard Coble Page 2 June I 3, 2002 defects that have emerged in the crucible of actual experience. In our view, the problems that haveoi'oles arisen because ad hac CARPs lack expertise and experience, not only in the law and subject matter, but also in the conduct of adjudicatory proceedings. The problems are compounded by the confusion between the CARPs and the Copyright Office, and by ambiguity in the scope ofreview at the administrative and judicial levels.

We see the lack of expertise and continuity as the dominant shortcomings ofthe CARP process. Although CARPs invariably are composed of bright, capable, and well-intentioned arbitrators, their backgrounds and understanding ofthe statutory license mechanism, the interrelated rules ofthe Federal Communications Commission in the case of cable and satellite proceedings, and the affected industries typically is minimal at best, This concern casts no aspersions on the arbitrators. The statutory license mechanisms are arcane. The FCC's rules are complex. And the cable, satellite, broadcast, and program supply industries are unique and dynamic. Outside the handful of lawyers involved in CARP proceedings on behalfof copyright owners and users, several staff members at the Copyright Office, and, of course, the staff and members of committees ofjurisdiction in the Congress, few individuals have the slightest reason to develop any knowledge or expertise in these meas.

This lack of expertise not only adds to the ume and expense of CARP proceedings, but also breeds decisions that are unsound and inconsistent. Every party to a CARP proceeding must present considerable testimony about the relevant statutory framework, applicable FCC rules, and the basio workings ofthe industries involved. Only after laying this extensive groundwork can a party proceed to evidence present directly pertinent to the seminal issues in the proceeding. And they can even then only hope- vainly in tnost instances — that the arbitrators have been able to grasp and retain suQicient knowledge to evaluate the evidence in the proper statutory, regulatory, and marketplace context, The result has been a number of CARP decisions that have suffered remand or rejection by the Copyright Office. Lack of continuity similarly contributes to the weakness ofthe CARP process. With a new panel convened for every proceeding, consistency is elusive. Arbitrators forced to make a decision based on a snapshot of evidence from a single proceeding lack the perspective aud insight necessary to make sound, well-informed decisions. Furthermore, arbitrators'reconceived notions and particular piques of interest often inform not only their decisions, but also their conduct ofthe proceedings. The same issues (and typically similar armys ofevidence) will be viewed through different prisms ofpreconception and limited knowledge.

Thc want of expertise and contimtity affects not only tbe substantive aspects of CARP decisions, but also the sound conduct ofproceedings. With little or no experience or expertise in presiding over evidentiary proceedings, and CARP hearings in particular, arbitrators'ontrol over proceedings is uneven and inconsistenh Discovery practice and rules ofevidence become unpredictable to parties and their counsel. And because a CARP hardly qualifies as an "expert agency," proceedings before a CARP more resemble ajury trial with the CARP serving as judge and jury. Thus, procedural inconsistency and irregularity plague the CARP practice. 140

The Honorable Howard Coble Page 3 June 13, 2002

The problems faced by ad hoc CARPs are compounded by the confusion of roles between the CARPs and the Copyright Office, and by ambiguity in the scope of review at the administrative and judicial levels. Many preliminary matters are handled by the Copyright Office staff Or the Copyright Office may leave issues involving discovery or admission of evidence to the CARP. Later the same Copyright Office staff is responsible for reviewing the CARP decision, including issues previously decided by the Office and/or Copyright issues passed on to the CARP. Indeed, the Copyright Office may completely reject a CARP decision — as it has done on several recent occasions — and make its own decision based on the record compiled by the CARP. CARP proceedings are neither fish nor fowl. They are neither true binding arbitrations subject to great deference, nor true administrative hearings, subject to more limited deference. All of this lack ofpotential for sound, consistent decision making and procedures only discourages settlement. Whereas settlements ought be encouraged, they should not be motivated by the fear of an enormously costly process that portends an arbitrary decision. Indeed, parties looking fortvard to a proceeding that promises a sound result will be more likely to settle on reasonable terms. However, a CARP process that offers the prospect that less reasonable positions ndght be embraced is an open invitation to litigate for parties with demands that assault the boundaries of a just and reasonable result. Another major, but unforeseeable disappointment in the CARP process is high cost, In our experience, CARPs offer little value for the substantial expense burden placed on parties to CARP proceedings. Parties incur enormous legal and expert witness fees and bear the cost of the CARP itself. Costs routinely run into the migions of dollars in major distribution proceedings and amount to little less even in more limited proceedings. In light of the inability of the CARP process to deliver sound, consistent decisions, the value ofthe CARP process is far from commensurate with the costs borne by the parties. Finally, as MPAA has discovered recently, abuse ofthe process invites no sanction. In a recent case, the Copyright Office granted a waiver ofthe rules to a party that failed to list the individual claimants that comprised its joint claim, as specifically required by the rules. The waiver permitted a party claiming to represent over 60 pmgrams from 16 copyright owners to participate in a CARP proceeding. After the CARP made its decision, the Copyright Office then ruled that the party legitimately represented only one of the 16 individual claimants and for only eight to 10 programs. This led to an otherwise unnecessary CARP proceeding that cost copyright owners well over a halfmillion dollars and thereby denied them full compensation for the use of their works. Because CARP costs are apporti oned pro rata based on the share ofroyalties received, MPAA, not the party with the overstated, but ultimately de minimis claim, likely will bear over 99 per cent oF the cost of the CARP. Similarly, gapa in information collection from licensees further Rostrate the goals of fair, efficient decision making and adequate enforcement of substantive rights. For example, current cable statement of account fonna do not include information on ultimate ownership or on contiguous systems. In this age of consolidation, such information might be especially helpful in monitoring compliance with the cable statutory license. The Honorable Howard Coble Page 4 June I 3, 2002

Thus, MPAA respectfully submits that the CARP process suffers now demonstrable flaws that commend its demise.

In devising a new pmcess to replace the CARPs, the subconunittee ought focus on solutions to the particular deficiencies in the CARP pmcess. Generally speaking, decision-makers should have expertise (or ability to acquire expertise) in applicable law and subject matter aud experience in conducting adjudicatory pmceedings. Continuity among decision-makers and staffalso is essential. The procedures must be unambiguous and efficien with clearly detlned roles and scope ofreview. An efficient, expedited process for small claims is desirable, as are procedures enabling prompt dismissal of frivolous claims and imposing penalties for abuse. Finally, they should provide for enhanced collection and availability of information iioin statutory hcensees.

Many means exist to achieve these goals. We offer some illustrations: ~ Expertise and Continuity. CARPs should be replaced by a permanent decision making body. Alternatives include an independent agency like the CRT or a division or board in the Copyright Oflice. In either case, expert professional staff (e.g., law, economics, statistics, and technology) should be retained to assure continuity and expertise. This would be especially desirable ifthe ultimate decision-makers werc appointed for limited terms. For example, a new regime might include a professionally staffed statutory license division in the Copyright Office with authority to conduct and revievv proceedings and make a recommendation to the Librarian of Congress ("Librarian"). ~ Procedural Regularity. Ifthe new regime includes evidentiary hearings, administrative lawjudges should (ALJs) be employed to conduct the hearings. Thus, once the Copyright Office determined that a controversy existed, the matter could be handed over to an ALJ. The ALJ would establish a hearing schedule, supervise discovery, rule on preliminary inotions, conduct a hearing (if necessary), and prepare written findings and conclusions, htcluding a recommended decision on all pertinent issues. The ALys decision would replace the CARP recommendation and like the CARP recommendation would be subject to review and revision by the Librarian. The ALJ could be given authority to conduct pre-hearing conferences to narmw the issues, limit the presentation oflive testimony to material matters in dispute, and promote settlement. This would work well with an experienced and knowledgeable ALJ charged with compiling a record and an expert review panel that would not need a baseline education for every proceeding. ~ Reduced Burdens: Actual hearings also might be limited to cross-examination on written direct cases. This would pare hearing time and costs considerably. It also locks parties into their cases from the outset. Similarly, presentation ofevidence oould be limited to prescribed issues based on the relevant criteria for decision. Presentation ofevidence on extraneous matters might be permitted only upon some type ofprimafacie shoxviug ofrelevance. Similarly, discovery rules could be revised to allow more extensive supervision by the ALJ. Discovery outside the normal range of issues would have to bejustified by the party seeking to adduce the additional evidence. Additionally, the ALJ might be granted some very limited subpoena power to compel testimony and 142

The Honorable Howard Coble Page 5 June 13, 2002

document production in exceptional circumstances. Such subpoena power must be accompanied by limitations designed to assure that it is not used to engage in fishing expeditions or gratuitous quests for sensitive proprietary mformation. The major benefits ofmore extensive discovery include promotion ofsettlements before hearing and more efficient conduct ofhearings (e.g., cross- examination does not become a high-risk, time-consuming fishing expedition), Enhanced discovery also might permit submission of "summary judgment motions." It also inight enable an ALJ to refine and limit the issues to be tried at a hearing (as is done in federal court). In the alternative, the entire adjudicatory process could be replaced with a paper proceeding more akin to a rule making. Cases would be submitted in writing. No oral or evidentiary proceedings would be required. No discovery would be allowed. Assuming that the Copyright Office would remain the forum for the pmceeding, the register and professional staffmight be empowered to call for oral arguments or evidentiary proceedings ifneeded to illuminate material, contested issues more fully. For example, the least burdensome alternative in the case ofroyalty distribution proceedings would involve setting the distribution shares by statute or rule, subject to adjustments every few (l.e., 3 - 5) years via paper rulemaking proceedings. The desire to reduce costs and maximize theflow ofroyalties to copyright owners highly recommends this approach. ~ Costs. The costs of a permanent agency or staff could be deducted Irom the overall royalty pool. These costs would be ongoing instead of sporadic and would be incurred even ifno controversies were litigated. However, costs could be shifted to actual litigants via a hearing fee that would be assessed against parties to litigated controversies. The hearing fee could be an ante that must be paid in advance as a condition ofprosecuting a claim through a hearing. Such fees could vary according to the dimensions ofthe controversy. For exmnple, fees for a full-blown Phase I hearing would be set quite high, while fees for Phase II proceedings would be less. Nonetheless, the fees should be set high enough to deter frivolous claims. Of course, such a fee — imposed only after parties failed to resolve the controversy on their own — also would promote settlements. This also assures that the costs on the fallfully beneficiaries ofthe royalties and any litigation they elect to pursue, rather than on the US. Treasury. ~ Small Claims. Soine sort of "small claims" process might be established (with even lower fees) just to assure that legitimate small claimants in Phase II proceedings are not Irozen out ofthe pmcess- and to lower the cost to major claimants faced with litigating against very small claimants. Thus, for example, any claim valued by the claimant at less than, for example, $100,000.00 would be eligible for a summary small claims process that might consist ofa paper only proceeding or some other abbreviated hearing process. ~ Prevention of Abuse. Fraudulent or other claims that could not be substantiated would be subject to dismissaL

~ Enhanced Information. Some useful, but minor modifications to current information collection requirements may be in order. For example, statements of account submitted by cable systems and satellite carriers should be enhanced to pmvide adequate information for enforcement purposes. Cable systems and satellite carriers should file multiple copies (or electronically) to permit 143

The Honomble Howard Coble Page 6 June 13, 2002

immediate public access. Furthermore, for cable systems, additional information should be required, including head-end location, listing of all communities served by the head-end, full ownership (parent-subsidiary) information, listing of co-oivned facilities in contiguous communities, and FCC ID number. These are only examples of fresh approaches to resolving the rate adjustment and royalty distribution issues that arise under the current statutory licenses. MPAA looks forward to working the subcommittee and subcommittee staffto tlesh out more specific proposals for replacement or reform of the CARP process. We, of corn'se, would be happy to respond to any questions you may have and provide any additional information you may require.

Once, again, we thank you for this opportunity to offer our views. Very truly yours, 144

June 7, 2002

The Honorable Howard Coble Chairman Subcommittee on Courts, the Internet, and Intellectual Property Committee on the Judiciary U.S. House of Representatives B351-A Rayburn House Office Building Washinlpon, D.C. 20515

Re: CARP Reform

Dear Mr. Chairman:

Thank you for inviting us to comment on your review of the CopyTight Arbitration Royalty Panel ("CARP") process. We appreciate the opportunity to participate in a process that has significant ramifications for the rights of sound recording copyright owners.

As a participant in numerous CARP proceedings (and the predecessor proceedings of the Copyright Royalty Tribunal ("CRT")) for more than three decades, the Recording Indushy Association of America ("RLkV') and its member companies are intimately familiar with arbitration proceedings that establish royalty rates to be paid by entities availing themselves of a statutory license. RIAA's member companies both receive statutory royalties established through CARP proceedings (under Sections 112 and 114 of the Copyright Act) and pay statutory royalties established through such proceedings (under Section 115 of the Copyright Act).

The titles governing CARP proceedings differ significantly from litigation in federal and state courts. CARP proceedings combine fundamental parts of our adversarial system such as cross-examination with what were intended to be more streamlined procedures. These procedures attempt to balance concerns such as limiting time and costs while ensuring that parties have an adequate opportunity to present their case and challenge the cases of opposing parties. The recent "Webcaster CARP" highlighted the tension in achieving these objectives and raised a number of questions generally about how CARP proceedings should be conducted in the future. It is safe to say that none ofthe parties expected the proceeding to be as costly and resource- consuming as it turned out to be. The parties spent $ 1.3 million in arbitrators fees alone, and incurred substantially more costs for counsel and expert witnesses. 145

Honorable Howard Coble Iune 7, 2002 Page2 of 10

RIAA believes that any discussion about reforming the CARP process should focus first on whether regulatory fixes may be implemented to the existing process that address the concerns of interested parties. As discussed in detail below, a number of issues regarding the scope and conduct ofthe proceedings have arisen in recent years. These issues include whether CARP proceedings can be streamlined to save costs, the scope of discovery, the resolution ofpre-hearing legal and other matters, procedures for encouraging settlement among the parties, and many others. These are complex issues that require considered discussion and analysis. ln our view, only after interested parties have the opportunity to address these issues can we turn to addressing what changes, if any, are necessary to the structure of the current system. We suNlest that the Copyright Ofiice conduct a rulemaking proceeding to permit interested to parties discuss the myriad issues that have been raised, with the goal of resolving as many of those issues as possible through regulation, We believe that ofthese many issues can and should be resolved through regulations governing the nature of CARP proceeding, thereby narrowing any issues that may require legislative consideration and action. It would be premature to discuss legislative remedies on structural reform without a complete understanding of how CARP proceedings should be conducted, especially vvhere legislation may ultimately be unnecessary. Below we highlight some of the issues that should be considered. These issues are meant to be examples, and not exhaustive of those we believe should be discussed. We also have not taken a position on a number ofthese issues as we believe further consideration is required. These examples underscore the complexity of'ssues facing all ofus in determining appropriate changes or reform to the CARP process. I. Division ofResconsibilities

As a threshold matter, RIAA recommends that the Copyright Office investigate the appropriate division ofresponsibilities between arbitrators and the Copyright Office and/or the Librarian. The current allocation ofresponsibilities between the Copyright Ofilce and the arbitration panels results in parties frequently having to incur expenses to argue issues in two forums. This increases the costs to the parties and causes inconsistent rulings to be issued in the different forums. The questions to be asked in determining the appropriate division ofresponsibilities should include the following First, should the Copyright Office narrow matters in dispute among the parties to an arbitration and present only disputed issues to the arbitral body? Because parties to an arbitration do not necessarily know all of the issues that may be raised during a proceeding, they are forced to prepare comprehensive written direct cases involving numerous witnesses and hundreds ofpages of filings that fill multiple volumes. This is all done in an effort to anticipate the myriad number of issues that may be raised during 146

Honorable Howard Coble June 7, 2002 Page 3 of 10

the proceeding. Parties will also frequently submit with their direct cases extensive background information to educate arbitrators.

Only follov dng the submission of direct cases are parties able to discern the material issues in the arbitration. But because ofthe requirement that parties are bound by the filings in their direct cases and must make the authors ofwritten direct testimony available for cross-examination, all parties to the arbitration are required to incur the time and expense ofpresenting live witness testimony when such testimony may not be relevant for a final determination. This increases the fees paid to the arbitrators, outside counsel and expert witnesses.

One possible solution to this problem that should be considered is to have the Copyright Office review the initial filings ofthe parties and then determine, through consultation with the parties, the material issues in dispute. Only those issues in dispute would then be presented to the arbitrators saving all parties significant time and expense. Although CARPs are currently given the authority to limit the number ofwitnesses to preclude the presentation of cumulative evidence, 37 C.F.R. $ 251.47(i), the Copyright Office could seek to limit initially the number ofissues presented to the CARP while still granting the arbitrators the right to further limit the presentation of evidence.

Second, should the Librarian ofCongress/Copyright Office oversee all discovery motions and motions involving legal issues rather than have some ofthese issues resolved by the arbitrators7 The resolution of discovery and legal motions is currently handled in a bifurcated manner. Parties aiu initially given the opportunity to file prehearing motions on discovery and objections with the Librarian of Conyess as well as other motions on questions oflaw. Id. $ 251.45(b)(2)(i). Parties are then given an opportunity to raise discovery issues with the arbitration panel or to raise separate legal

arguments before the arbitrators. See id. Ia 251.45(c). This bifurcated process occasionally results in parties receiving a ruling from the Copyright Office that is then overturned by the arbitration panel, which causes uncertainty in the arbitration and increases the costs oflitigation, as there is an incentive for parties to re-litigate before the arbitrators issues previously decided by the Copyright Office.

For example, in the Webcaster CARP proceeding the Copyright Office ruled on certain discovery motions ofthe parties that were then re-litigated before the arbitrators. Whereas the Copyright Office's rulings were consistent with extant regulations and prior precedent (ofboth the Office and preceding CARPs and the CRT), the arbitrators reversed certain decisions ofthe Copyright Office and granted an unprecedented amount ofnew discovery. This decision increased by hundreds ofthousands of dollars the costs to the parties and created uncertainty for future CARP proceedings.

The inconsistent discovery rulings in the Webcaster CARP proceeding have increased the uncertainty for participants in CARP proceedings and may have a 147

Honorable Howard Coble June 7, 2002 Page4ofl0

significant, negative impact on the way royalty fee distribution proceediings and rate adjustment proceedings are litigated in the future. In fact, parties in all future CARP proceedings will now have an incentive to re-litigate every discovery matter decided by the Copyright OI5ce if there is a beliefthat a more favorable ruling may be obtained from the arbitrators.

There are also occasions where the Copyright Office hss refused to rule on a discovery issue that has been raised by a party, instead leaving the issue for resolution by the arbitmtors. This situation creates uncertainty for the parties due to the ad hoc nature ofthe arbitration panels. Rather than having institutional knowledge ofhow CARP discovery issues have been handled in the past, arbitrators, more accustomed to the practices in federal court, may expand CARP discovery rulings (as happened in the Webcaster CARP) under traditional notions of civil procedure. But this expansion of discovery creates uncertainty and increases costs.

By conducting a rulemalcing on the proper division of issues to be resolved by the Copyright Ot5ce on the one hand and an arbitration panel on the other hand, rehuilations should be implemented that give parties more consistent rulings on issues at reasonable costs. For example, the Copyright Office should seek public comment on whether all discovery issues should be handled solely by the Copyright Office in order to provide clear and consistent rulings to all parties across all proceedings. The arbitrators would then sit solely as a body to weigh the evidence presented by the parties, much as a jury hears cases without generally having an opportunity to require parties to present additional evidence.

IL Scone ofDiscoverv

A related issue is the appropriate scope of discovery in CARP proceedings. As noted above. CARP proceedings are not governed by the Federal Rules of Civil Procedure or similar rules. Rather, discovery was intentionally limited to save the litigants time and money by requiring parties to only disclose documents that "underlie" specific statements. While there is ample Copyright Office precedent on what documents are subject to discovery under this standard, parties unfamiliar with CARP proceedings are frequently frustrated by their inability to discover information that would normally be available in federal court litigation,

The Copyright Oflice should determine whether the parties mvolved in CARP proceedings believe it is appropriate to expand the scope of discovery. For example, should additional discovery be permitted? Might depositions ofwitnesses be appropriate? Should such depositions be limited in number and time'? Should additional documents be produced? Should interrogatories be required? 148

Honorable Howard Coble June 7, 2002 Page 5 of 10

On the one hand, additional discovery will provide the parties more information for their own cases as well as to test opposing witnesses on cross-examination. But while such a change would pmvide parties with access to more information, it would come at a substantial cost. Legal fees would likely increase significantly as well as the cost for producing discoverable documents, which could number in the hundreds ofthousands of pages. Moreover, these costs could be incurred even ifthere is little money at issue in a rate adjustment or royalty distribution proceeding.

III. Facilitation ofVoluntatv Settlements

One of the significant problems with current CARP regulations is the disincentive for voluntary settlements and the obstacles that exist in those instances when some — but not all — ofthe parties to a multi-party arbitration reach a settlement after the commencement ofan arbitration proceeding. The Copyright Office should explore reforms that would provide incentives for parties to settle disputes short of arbitration, thus implementing Congressional intent that negotiated agreements be encouraged and litigation be a last resort. Some of the issues that could be investigated by the Copyright Office include the following:

First should the Copyright Office implement regulations that require statutory licensees to pay royalties pending the final determination of a rate adjustment proceeding? In the case ofeligible nonsubscription services and new subscription services operating under the Section 114 statutory license, 17 U.S.C. tt 114, no payments to copyright owners are required to be made until the Librarian of Congress finally determines a rate or copyright owners and users negotiate a rate. Therefore, services are and have been able to operate with, what is in effe1, an interest free loan fmm copyright owners and performers. Webcastets, for example. have been able to operate since October 1998 without having to pay any royalties while they have had lo pay for all other inputs for their business (e.g., rent. salaries, bandwidth, taxes, etc.l. In fact. many webcasters operated for several years and then closed down befote paying any royalties, thus denymg copyright owners and artists any compensation for the use of their recol dtligs.

As webcasters were permitted to develop business models that did not take account of the cost for their businesses'rincipal input — the cost ofsound recordings — a mindset has developed that copyright owners and performers should be last in line to be compensated. This mindset skews the market, and further leads to the misperception that businesses cannot be sustained once royalties become due.'n fact, there is no reason

's financial information distributed by webcaWn lobbying on Capitol Hill indicated, webcasters'otal — expenses exclusive ofsound recording royalties — are aheady frequently rnultiples of their revenues. 149

Honorable Howard Coble June 7, 2002 Page6of10

why sound recording copyright owners and performers should be paid only after all other business inputs have been paid for.

Because services may operate without paying any statutory royalties until niter a CARP proceeding has been completed — which can take several years — there is a tremendous incentive for services to await the outcome of a CARP proceeding. This is particularly true where the alternative is to negotiate a voluntary settlement that would accelerate the date for the commencement ofpayment of statutory royalties. The Copyright Office should explore adopting regulations that require the payment ofinterim royalties or the posting ofa bond to operate under a statutory license pending a final determination on statutory rates. By requiring some payments or the posting of a bond as of the commencement ofoperation, there would no longer be as strong an incentive for services to refuse to negotiate and await the outcome of arbitration.

Second, what regulations need to be implemented to give effect to negotiated settlements that are entered into following the commencement of an arbitration proceeding'! There are currently no Copyright Office regulations that address how settlements can be implemented following the commencement of an arbitration,

In fact, the absence of such regulations posed an obstacle to certain parties in the Webcaster CARP that were negotiating a settlement after the close ofhearings. That settlement did not take place because procedures were not in place to address such an event. While the Copyright Office did an admirable job trying to accommodate the parties'equest to implement the settlement under existing rules, it concluded that the parties'equest had to be rejected because "existing regulations make... [no] express provision for negotiation and settlement of generally applicable royalty rates after a CARP has been empanelled. Although the 0%ce agreed that it would be desirable to implement a mechanism that would permit adoption of a settlement after the CARP has convened, it expressed a reluctance to engage in ad hoc decisionmaking that would depart from existing procedures in the midst of a CARP to address the unique circumstances of the parties'equest to implement their partial settlement." ~ Copyright OKce Order in Doclret No. 2000-9 CARP DTRA Jdt2 (Jan. 7, 2002).

If Copyright Office regulations had been in effect at the time the contingent settlement agreement in the Webcaster CARP had been negotiated, then certain parties in that proceeding might have voluntarily settled their dispute and removed contentious issues from the sr'bitration. In the absence ofprocedural safeguards that were satisfactory to all parties, however, that contingent settlement agreement could not be implemented and the settling parties incurred substantial additional fees (including legal fees and arbitrators'ees) in having their dispute resolved by the arbitrators.

The Copyright Office should adopt regulations that would facilitate voluntary settlements reached after the commencement of an arbitration. The rulemaking should 150

Honorable Howard Coble June 7, 2002 Page 7 of 10

not be undertaken contemporaneously with and under the pressure of an ongoing proceeding, but should give parties sufficient time to explore the numerous safeguards that may be required to permit the settlement of some issues with some, but not all, parties involved in a multi-party arbitration without such settlement being used against a settling party on any remaining issues.

Third, should the Copyright Office adopt regulations similar to the provisions of Rule 68 of the Federal Rules of Civil Procedurep Rule 68 provides in part that where a party dufending against a claim makes an offer of settlement that is rejected by an adverse party and where thejudgment finally obtained by the adverse party is not more favorable than the offer of settlement, then the adverse party must pay the costs incurred by the offering party aiter the making ofthe offer.

With respect to CARP proceedings, the adoption of a Rule 68-type regulation could provide a powerful incentive for parties to both make and accept good faith offers of settlement. In most arbitration proceedings, the arbitrators seek to enter a decision that falls between the proposals of adverse parties. Rarely does either side receive all that it seeks. In rate adjustment proceedings, statutory licensees seek to establish as low a royalty rate as possible while statutory licensors seek to establish the highest royalty rate possible. Both sides understand that arbitrators are likely to establish a rate somewhere between these two positions. If, however, parties could make offers of settlement that, if rejected, would not be admissible in the proceeding but which could save a party substantial legal costs if more favorable than a final determination, then parties would have a tremendous incentive to make concessions in their rate requests.

The mechanics ofhow one would determine whether an offer ofsettlement was more favorable than a final determination could require extensive investigation. For example, a party could propose a settlement based upon one metric (e.g., a percentage of revenues) and a CARP could adopt a final rate decision based upon. another metric (e.g., a per performance rate). Tn such an instance, either the Copyright Office or the CARP would need to determine whether an offer ofsettlement was more favorable than the final determination, as a straight-up comparison between the offer and the final determination might not be possible. The regulations for comparing rates based upon different metrics would need to be addressed in a rulemaking.

IV. Cost Control Mechanisms

Numerous parties are concerned with the escalating costs of CARP proceedings. As parties to the proceedings pay for the arbitrators, experts and outside counsel generally on an hourly basis, the costs to the parties chmb as srbitrations become more complex and contentious. As has been widely reported, the Webcaster CARP sat for over 40 days of hearings and heard from more than 50 witnesses. Each day the three arbitrators were paid their hourly rates and muhple attorneys attended the hearings for 151

Honorable Howard Coble June 7, 2002 Page 8 ot'10

each side. Lawyers were also working back in their offices during 'hearing daysarbitrators'ime drafting briefs, reviewing documents or preparing witnesses. The total cost for the exceeded one million dollars while each sides'osts for its own counsel and experts amounted to several million dollars more in expenses. The Copyright Office should explore avenues that might bring these costs under control, such as:

First, is it possible to hire arbitrators on a contract basis that pays them a fixed wage for the duration of the proceeding regardless of the hours worked? Many of the arbitrators that have been recommended over the past few years have hourly billing rates that exceed $300 per hour, with more experienced arbitrators billing at hourly rates closer to $400. At these rates, and with a complex proceeding occupying numerous hearing days with a voluminous record, the costs for the arbitration panel alone easily exceed one million dollars for six months work — more than the salary of the Chief Justice of the United States Supreme Court.

Second, do all arbitration proceedings need to involve live witness testimony? Copyright Office regulations do permit paper proceedings but only in limited circumstances. See 37 C.F.R. & 25L41(b). The Copyright Office should explore whether certain proceedings should always be conducted through paper pleadings (e.g.„royalty distidbution proceedings for less than a set amount) or whether there are mechanisms that can be implemented that encourage paper proceedings in other situations. Likewise, there may be more limited mechanisms, such as the waiver of direct oral testimony, that would be appropriate under certain circumstances.

Third, does the Copyright Office need to adopt special regulations that permit small entities to participate in an arbitration proceeding in some limited way, such as through the use of amicus briefs? This issue has taken on gi eater significance following the panel's decision in the Webcaster CARP, when numerous small webcasters complained that they were excluded fiom the arbitration process by the RJAA. This claim is false.

Shortly before the filing of direct cases in the Webcaster CARP proceeding there ivas the possibility that the Copyright Office might permit some patties to participate in a manner inconsistent with existing regulations. Copyright Office regulations in effect at the commencement of the Webcaster CARP proceeding and still in effect today require all parties participating in a CARP proceeding to file a written direct case that contains testimony sponsored by a witness or witnesses, and where such witnesses are required to testify under an oath or affirmation and be subject to cross examination. bee 37 C.F.R. tJ 251.47. Some parties sought to participate in the proceeding without submitting written testimony sponsored by a v;itness who would be subject to cross examination. Concerns were raised that if some parties were permitted to participate in the Webcaster CARP through the filing of uinicus briefs without filing a direct case that contained the testimony sponsored by a witness that was made available for cross examination, then 152

Honorable Howard Cable June 7, 2002 Page 9 of 10

there was the possibility that such participation could give rise to appeals that would prejudice the entire proceeding afler the expenditure ofmillions ofdollars. The Copyright Ofllce recognized this problem when it ruled that:

Participation by non-parties through submission of antfcus briefs does not appear to be consistent with these provisions. The Library has serious reservations whether it, or the CARPs, possess the authority to allow such submissions under the current CARP regulations. While there may be some merit in the idea of accepting airucus briefs in CARP proceedings, the merits should be first explored through the rulemaking process.

Copyright Office Order in Docket No. 2000-9 CARP DTRA 180 (Mar. 16, 2001). As such, it was the lack of procedural regulations that precluded independent record companies, performers and small webcasters from participating in the proceedings as aniicus participants.

V. Confidential Material

The greater complexity of the proceedings, combined with the increasing trend toward voluntary or compelled production of confidential information, has led to questions about how much inFotmation should be made availab'le on the public record. Providing detailed information generally permits arbitrators to better understand the businesses and markets at issue in CARP pmceedings, and therefore results in more inFormed decisions. However, the increase in the amount ofmaterials marked confidential appears to be in conflict with the Copyright Office's preference for having as much information available on the public record. The Copyright Office has required parties to engage in cumbersome and costly procedures that will inevitably deter the submission of confidential materials in future pmceedings. We beheve the Copyright

'maller webcsstem could have participated in the Webcaster CARP proceeding in larger webcasteis would have agreed. At the commencement ofthe Webcaster CARP proceeding, the parties to the proceeding had to agree on how the three arbitrators would be paid for their services. AB the parties agreed that copyright owners and performers would pay 50% of the arbitrators'ees aud the webcssters aud bmadcssters uxruld pay 50% ofthe arbiuators'ees. Therefore, for any service (be it a webcsster or a broadcaster) that wanted to panicipate in the CARP proceeding, it would only have to pay some ponion of the 50% that was allocated to the services. (Record labels aod performers were responsl»le for allocating their own share of arbitrator expenses). The larger services, such as Clear Channel, MTV and AOI could have permitted smaller webcasters to participate in the CARP proceeding without being liable for any portion of the services'0% shue ofarbiuators'ees or to have limited their liability to some de rsisdstur amount. We do not know whether smaller webcssters aud broadcasters that did not participate in the Webcaster CARP proceeding ever discussed with the Digital Media Association ("DiMA") or the services participating in the arbiuation the possil&ility of sumller webcastets participating without liability for the arbitrstors'ees. But such nou-participation could not be attributed to the actions ofthe record industry. 153

Honorable Howard Coble June 7, 2002 Page 70 of 10

Office should review the rules governing the treatment ofmaterials designated as confidential in light ofthese competing concerns. Conclusion

Rather than seeking legislative fixes at the present time, R7AA encourages the Subcommittee on Courts, the Internet, and Intellectual Property to invite the Copyright Office to conduct a rulenmking in order to resolve the above and other issues. Once these difficult issues have been resolved, structural reform ofthe CARP process, ifnecessary. can be reviewed. Thank you again for the opportunity to comment on this important issue. Please do not hesitate to contact us ifyou have any questions. Sincerely,

Hilary Rosen

Chairman & ChiefExecutive 0%car cc: The Honorable Howard Herman Marybeth Peters, Register of Copyrights 154

I, Fred Koenigsberg White & Case LLP 1155 Avenue ofthe Americas New York, NY 10036

Marvin L. Berenson Senior Vice President & General Counsel Broadcast Music, Inc. 320 West 57 Street New York, NY 10019

June 20, 2002

The Honorable Howard Coble Chairman Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary United States House ofRepresentatives Washington, D.C.

Re: CARP Reform ommen s of ASCAP and BMI

The United States performing xight organizations ("PROs"), The American Society of Composers, Authoxs and Publishers ("ASCAP'') and Broadcast Music, Inc, ("BMI") write in response to your request for our views with regard to the Copyright Arbitration Royalty Panel ("CARP") system for rate setting and royalty distribution pursuant to the Copyright Act's compulsory licenses.

We appreciate your expression of interest and willingness to address these issues and welcome the opportunity to participate in this most important pmcess.

L Introduction.

A. ~Standin .

ASCAP and BMI together represent hundreds ofthousands of American songwriters, composexs„ lyricists and music publishers who create and own the copyrights to millions of musical works. On their behalf, we license the non-dramatic public performances oftheir musical works and distribute the license fees paid by the users for such performances in the foxm ofroyalties. In addition, through affiliation agreements with PROs in other countries, we license the works ofthousands of foreign writers and publishers. Accordingly, we strive to ensure that the writers and publishers we represent are fairly compensated for the use oftheir works. 155

The Honorable Howard Coble June 20, 2002

A portion ofthe royalties to which writers and publishers receive come fmm the copyright law's compulsory licenses. These royalties include fees co'llected pursuant to the Section 111 cable retransmission license, the Section 119 satellite retransmission license, the Section 118 noncommercial broadcasting license and the Section 1001 et seq., Digital Audio Home Recording ("DART") royalty.

ASCAP and BMI have both had considerable experience with the compulsory license system. From the very beginnings ofthe 1976 Copyright Act's compulsory license rate adjustment and distribution mechanisms, we prepared and presented cases before the Copyright Royalty Tribunal ("CRT"). We similarly prepared and presented numerous cases before CARPs when they succeeded the CRT as the law's rate adjustment and royalty distribution mechanism. We have participated in and contributed to the legislative processes that created both the CRT in 1976 and the CARP system in 1993. And, we have been key participants in CARP reform proposals in the late 1990s, which ultimately led to your introduction in 199g of H.R. 3210. Accordingly, we hope that our views will assist your Subcommittee in reforming the CARP structure and process. B. B~kd.

Finding an acceptable process by which the rates for these compulsory licenses are set, and royalties distributed, has been a challenge. The 1976 Copyright Act, which established many the of compulsory licenses, created the CRT to set rates and distribute royalties. The CRT consisted offive members (reduced to three in 1990) appointed by the President, and acted as an independent agency in the legislative branch, receiving some administrative support fium the Librarian of Congress. Its decisions constituted final agency action and were appealable directly to the D.C. Circuit.

In 1993 Congress abolished the CRT, determiniug that the compulsory license proceeding workload was insufficient to maintain a separate agency with three full-time commissioners. See H.R. Rep. No. 103-286 (1993). The Copyright Royalty Tribunal Reform Act of 1993 replaced the CRT with the CARPs, ad hoc arbitration panels convened by the Register of Copyrights upon the commencement of a compulsory license controversy. The CARPs acted under the supervision of the Register and Librarian of Congress. The CARPs did not have final agency authority; rather, upon conducting an arbitration, their decision would be inerely a "recommendation" given to the Librarian of Congress (within a prescribed 180 day period), in whom final decisionmaking power rested. The Librarian's ultimate decision could be appealed to the D.C. Circuit.

The CARP process has been severely criticized nearly since its inception. Despite the assumption that ad hoc bodies comprised of arbitrators that charge per hour would lower cosco the CARP ts system has been inefficient and costly, draining the royalties from the pockets creators and of copyright owners. Moreover, due to the ad hoc nature of the CARPs, the parties left without are any decisional consistency or institutional memory. There is no stability aud predictability of results. Ilach CARP enters a proceeding without any experience in the matters The Honorable Howard Coble June 20, 2002

before it. While the law, facts, and economic and business terms and principles associated with compulsory licenses repeat, for the most part, from proceeding to proceeding, each CARP is required to be educated from the start in many of these, sometimes basic, matters. This not only increases the costs to the creators and copyright owners who bear the burden ofreeducating each inexperienced panel, but leaves the parties vrithout any ability to predict rationaUy how a future CARP will decide a matter, thus impeding settlement of controversies.

In 1998, the Copyright Office recommended the CARP's demise in its Report and testimony before your Subcommittee. See U.S. Copyright Office, Options to Improve Copyright Royalty Rate Setting andDistribution Decision-Making (Feb. 23, 1998); Statement ofHon. Marybeth Peters, Hearing Before the Subcomm. On Courts and Intellectual Property ofthe House Comm, On the Judiciary, 105 Cong. 14 (1998). In its stead, the Copyright Office and interested parties, including ASCAP and BMI, recommended the establishment ofa permanent Copyright Royalty Adjudication Board ("CRAB") within the Copyright Office. The CRAB would consist of one full-time administmtive judge, an attorney with experience in handling administrative hearings and copyright law, and two to four part-time administrativejudges, each ofwhom would have experience in the areas affected by compulsory licenses. All judges would be appointed by the Librarian upon the Register's recommendation.

We agree in principle with (although not necessarily with the specific details of) the recommendation ofthe Register. As will be discussed in greater detail below, we believe that the myriad ofproblems inherent in the current CARP process will best be remedied by the creation ofa permanent body of experieuced decisionmakers, acting independently from the Copyright Office. This approach reestablishes the benefits of the CRT — that of a permanent experienced body, affording a stable, consistent and predictable process. Indeed, in our opinion the most consistently sound and predictable ratemaking and royalty distribution decisions that have been handed down to date came fmm the CRT that sat during the 1980s. During this period, parties appeared before a permanent decisionmaking body that was experienced in the details surrounding the compulsory licenses and used what was learned in past proceedings to establish continuity in future proceedings. Not surprisingly, during such period, because of the reliability of CRT precedent, the parties were able to settle many controversies. As a result, the cost benefits and speed ofresolving compulsory license controversies were at their highest.

II. Princi les of Reform.

Below, we set out our major concerns and suggestions for remedy ofthe present CARP system. These include issues of (A) Cost; (B); Consistency, Continuity and Transparency; (C) Procedural Efficiency; and (D) Small Claims.

A. Cost.

Despite hopes that the CARP system would serve as a more efficient system, it has in fact increased costs to the parties to the detriment ofhundreds of thousands of creators and copyright owners. First, CARP arbitrator fees are astronomical. Each arbitrator charges upwards of $400 157

The Honorable Howard Cable June 20, 2002

per hour, plus expenses, which in a complex proceeding involving many parties (as in the case for many compulsory proceedings) can total over $ 1,000,000. In a distribution proceeding the fees are paid out of the royalty fund itself. In a ratemaking proceeding, the parties must pay the fees directly. In either event, fees come from the pockets of the creators and copyright owners.

Moreover, as the Copyright Office administers the CARP system, institutional administrative costs run high. Creators and copyright owners pay for time spent by Copyright Office personnel on compulsory license matters. Much like a ]aw firm, time spent by Copyright Office personnel is logged and charged to the funds to be distributed. Such time includes prehearing and discovery motion practice, research, CARP report review and any other matters involving the proceeding at hand. However, unlike CARP arbitrator fees that are easily accountable, it is difficult for creators and copyright owners to get a full accounting of costs charged to the royalty funds by the Copyright Office. We are aware, however, that such costs can be quite high.

Finally, long, complex and contentious proceedings require partioipating parties to expend great suins on attorneys fees, expert fees aud other litigation expenses. This is particularly so in an ad hoc system where each successive CARP must be re-schooled in the basics of the applicable laws and industries.

These extraordinary costs and fees are, for the most part, borne by the parties on a pro rata basis, which leads to abuse of the process by both deep pocketed parties and small individual claimants alike. Large parties in $ 100 million plus distribution proceedings can better bear the costs of such proceedings, and use the arbitrary, inconsistent nature of the ad hac process against smaller claimant groups. Small individual claimants with claims to a negligible percentage of the royalty pool (as discussed 'below, often for less than .01%) trap larger claimants into an arbitration for which the larger parties bear the entire cost. In both cases, settlement is rarely reached, and parties are forced to bear an unnecessary significant litigation cost.

We believe that a permanent salaried adjudicating body with full responsibility for the entire compulsory license controversy process — duties now split between the Copyright Office and the CARP — would mitigate the costs to creators and copyright owners. It is clear that the "unnecessary" expenses attributed to the CRT were not "unnecessary" at all; to the contrary, they were quite fair and reasonable compared to the costs associ ated with current CARP practice. Arguments that paying a salary to full-time members for "part-time" work is inefficient are misplaced. Members of a permanent adjudicating body are paid.a salary for being available for assigned work. Reasonable payment for such availability is a bargain. Indeed, such a body— whether a group of full-time judges with staff, or one full-time judge with part-time judges available as needed with staff— would replace the current dual CARP/Copyright Office functioning at a bargain price. While costs related to distribution proceedings could be deducted from the royalty pool and costs related to ratemaking proceedings could be paid directly by the claimants, the amount would be far less than what is deducted &om copyright owners today. This would be more so when purely administrative costs unrelated to actual proceedings are paid through appropriation. 158

The Honorable Howard Coble June 20, 2002

B. Consistenc Continui and Trans arenc

Perhaps the greatest flaw of the current CARP model is the inherent lack of stability and predictability in what is an ud hoc process, Bach panel is brought in with little or no knowledge or understanding ofthe basic principles ofthe compulsory licenses, the basics ofcopyright law or the basic economic and business principles involved in ratemaking and distribution proceedings. The parties are forced to educate each CARP, at significant expense, before they can even begin to present their substantive cases.

Moreover, as each CARP convenes anew, there is no continuity with past proceedings. Compulsory license proceedings generally present similar, ifnot identical, issues, with similar evidence. A CARP without benefit ofpast experience looks at its proceeding in a vacuum. Previous CARP decisions are, for the most part, available to the arbitrators, but they lack value for an inexperienced panel without any understanding ofthe evidence.

Similarly, parties are forced to present their cases unsure as to what each new CARP will find relevant. The breadth ofpermitted discovery is cloudy at best, and each new CARP decides discovery issues diffetently. As a result, parties spend an mordinate amount oftime and money preparing cases with often extraneous documents and evidence. Additionally, past decisions of the CARP and the Copyright Office are frequently unavailable to parties. Only those parties who have spent years before the CRT and CARP, and have managed to create a collection oforders, have any idea as to the general nature of compulsory license practice and precedent. It is of utmost importance that all decisions aud orders be readily available to future parties.

This leaves claimant parties in a precarious position. Parties cannot predict how any future CARP will view or decide an issue. The manner by which one CARP looks to value a particular license rate or distribution share will have little or no bearing on how the next panel will make what is substantially the same valuation. Indeed, the inexperience of the CARP leads to poorly reasoned and drafted reports, evidencing a lack ofunderstanding of the issues at hand. That, in turn, leads, in many cases, to the Librarian ofCongress'ejection ofthe CARP report. As a result, parties have difficulties negotiating settlements when they have no means by which to measure their cases.

A permanent adjudicative body, such as the CRT or CRAB, would remedy this problem. Indeed, as mentioned above, during the tenure ofthe CRT in the 1980s, parties were able to settle many oftheir controversies. This no doubt was due, in large part, to the parties'bility to predict the course ofthe CRT*s decisionmaking. Controversies that necessitated the resolution ofexact issues with nearly exact evidence were simply not relitigated. That, we believe, would be the case with a permanent body. Settlements would be encouraged. And, to the extent that a case would be litigated, parties would have an understanding of the type of case, including the approach and evidence, that would find favor with the decisionmakers.

The adjudicative body should be one that has an understanding ofcopyright law and the basic functioning and principles ofthe industries affected by the compulsory licenses. The chief The Honorable Howard Cable June 20, 2002

adjudicator should have experience as ajudge . The rest ofthe adjudicators should preferably be judges. At the minimum they should be attorneys. The appointment or selection process should bc immune &om political interference as much as possibkx In this way, the parties can have the confidence ofstability and predictability that is cuzrently lacking.

C. Procedural Efficienc

While the CARP was created to "promote efficiencies," it has done just the opposite. Compulsory license claims aud controversies are handled by apatchwork of Copyright Office, as "administrator," and CARP functions. Claims are initially filed with the Copyright Office and the Office resolves all precontmversy issues. Once a controversy is announced, and a CARP is convened, the Copyright Office is responsible for receipt and determination ofissues surrounding the submissions of direct cases. The Copyright Office has jurisdiction over discovery. Parties are given the opportunity to file prehearing motions on discovery and on questions oflawregardingthe case athand. See 37C.F.R. tj251.45(bX2)(i). Inmanycases, the Office defers resolution ofthese motions to the CARP. The CARP hears all witnesses and zules on motions concerning evidence admission. Psrhes, however, may also raise discovery issues or questions of law before the CARP. See 37 C.F.R. 1)251.45(c), The same bifurcation exists with regard to rebuttal cases. Finally, the CARP writes its zepozt, but the report is ultimately reviewed by the Copyright Office and Librarian of Congress.

This bifurcated process causes confusion, inefficiency and unpredictability. The Copyright Office, which in essence acts as the first level ofappeal, often bumps issues it should decide to the CARP, perhaps for fear ofimpmpriety or the beliefthat it does not have the requisite authority to decide the issues raised. Sometimes, after the Office decides an issue, a CARP will then overturn the decision with a contrary ruling, creating uncertainty for the parties. Tlris leads to unnecessary and duphcative motion practice, increasing costs to the litigants.

More importantly, as the CARP lacks the experience ofthe Copyright Oflice on copyright and compulsory license matters, it is the Office and Librarian of Congress that actually acts as arbitrator offact and law in many cases. The CARP report is, in essence, merely a reconnnendation that the Librarian can approve, modify or reject. Due to the lack of sophistication and experience ofmost CARPs, that report is &equently modified or, as has occurred recently, fiatly rejected, When the report is rejected and sent back for further CARP proceedings (before an entirely new CARP!), the cost spiral of a CARP proceeding exceeds the most aggressive of cost projections.

Our recommcn.dation is to rzxtuire the permanent body to handle all aspects ofthe compulsory license process. Direct cases should be submitted to the adjudicative body. All discovery and prehearing motions should likewise be resolved by tbe judges. From start to finish, one perinanent adjudicative body wiII hear and resolve every aspect ofthe proceeding. The Copyright Office will be removed &om the process. The adjudicative body's opinion should be appealable directly to the D.C. Circuit, which has a history of and experience in hearing such appeals. In this way, parties will be comfortable with the decisionmaking process, which will be simplified. Duplicative and uncertain resolution ofissues will be a relic of the past. An active, 160

The Honorable Howard Coble June 20, 2002

experienced adjudicative body with the power to control the entire litigation will create a more efficient docket. Settlements between the parties will be encouraged. Indeed, we would recommend that, unlike past practice, the judges call for settlement discussions before, and during, the course ofthe proceeding. Such encouragement of settlement is severely lacking.

Efficiencies should be likewise built into the new system. While a permanent adjudicative body, including staff, should handle the entire process, it should be done in an efficient manner. Staffmaybe used to resolve and handle much, ifnot, all administrative matters. (When the CRT functioned efficiently, admhistrafive matters were efficiently handled its by single general counsel.) While it is imperative that a full three-adjudicator body resolve all legal decisions, it may be that pretrial issues and settlement conferences may only require the efforts ofoue judge.

D. Small Claims.

Any copyright owner who meets the statutory requirements has the right to file a claim for compulsory license royalties, The filing of a claim, however, does not mean that the claimant has a substantive claim to any fimds. Under the CARP system, a party need only state a dollar or percentage amount in its direct case to compel a proceeding, Because the law requires that CARP costs be allocated in a distribution pmceeding in proportion to the actual funds awarded to each party, «claimant with a small claim has no incentive to settle, The cost of the case will home be by the larger parties who are forced to CARP arbitration by a claimant with an insignificant claim. Abuses of the process by small claimants have occurred and are not rare.

For example, in the recent 1995-1998 DART proceeding, two individual claimants refused to settle and litigated before a CARP (such claimants had previously litigated the ] 992- 1994 DART proceeding over the same exact issues). The other parties to the proceeding, including ASCAP and BMI, offered the individual claimants thefull amount oftheir claims in settlement. The individual claimants refused, even though they were offered thefull amount oF their written claim, citing nothing more than general mjustice in the world as an excuse to litigate. Of course, these litigants knew that, because their claim was negligible in amount- lees than . 01% the total — of fundat tssue they would not be footing the bill for the litigation. The other parties were forced to pay tens of thousand of dollars in costs and fees for a final award to the individual claimants totaling six dollars for four cumulative royalty funds! The total expense to the owners copyright became magnified when time spent by the Copyright Ofiice personnel on matters, such as prehearing motions, was added and billed directly to DART royalty pooL This example only highlights the difficulties posed by small claimants. Individuals with insignificant claims — have cost ASCAP and BMI and the creators and copyright owners we represent — an inordinate amount in fees and expenses over the years, for the determination of awards amounting to dollars, and sometimes only pennies (which the Copyright Office will not even pay due to the small size of the award). Claimants with insignificant claims refuse to settle on "principle," at times appealing the decision of the Librarian to the Court ofAppeals and once even to the Supreme Court, of course unsuccessfully. All the while, the creators and copyright owners we represent, are picking up the tab. The Honorable Howard Coble June 20, 2002

These problems have been communicated to the Copyright Office for years. Register's Indeed, the Report discusses many reforms related to small claims that would foster settling claims at the administrative level, minimizing costs to other parties. However, these changes must be made through Congressional action; the Copyright Office has not been able to implement changes on the regulatory level.

We have pmposed a number ofchanges in this regard that would encourage settlement and pmmote efficiency for all parties. Our proposals are merely examples', we are confident numerous that procedures are available to improve efficiencies and reduce costs. Those reforms include:

Establishment of'a (I) Filing Fee. All claimants who file a notice ofintent to participate would be required to file a fee, such as currently done in federal district court (entities that represent many individual claimants would pay only one filing fee). The fee would ensure that all claimants share in the basic burden ofa proceeding. Frivolous claims would be discouraged and settlements would be encouraged.

(2) Offers ofJudgment. An offer ofjudgment procedure for small amounts in contmversy, such as Rule 68 oftbe Federal Rules ofCivil Procedure, would encourage settlements.

Written (3) Cases. Current CARP practice permits the resolution of cases on written pleading alone, but only upon motion and under narrow circumstanc'es. We suggest the requirement ofpaper proceedings in small claims cases.

(4) Settlement Conferences. Required settlement conferences supervised by full-time salaried staffwould further encourage settlement and reduce costs to the parties.

IK. Comments on Other Pro peals.

We have read with interest the testimony ofRobert Alan Garrett and R, Bruce witnesses who Rich, appearedbefore your Subcommittee at the June 13 hearing.'e have few comments to make. only a

First, as to Mr. Garrett's testimony, we note at the outset that'we have worked with Mr. Garrett for many years — indeed, since the establishment of the CRT — and hold him in the highest esteem. We cannot, however, agree with his suggestion that discovery be curtailed. To do so would leave the parties with no way to test the claims ofother claimants before the actual hearing. Similarly, we cannot agree that virtually all proceedings should be on paper. These

i We adopt the testimony ofMichael J. Remington, a witness at the June 13 hearing. The Honorable Howard Coble June 20, 2002

matters involve significant sums ofmoney, and our experience is that triers of fact benefit fiom live testimony (both direct and on cross-exainination) in assessing claims. Mr. Rich's suggestion that full-blown federal court pmceedings analogous to the ASCAP and BivtI "rate courts*'hich operate under the consent decrees which govern those PROs is, we think, misplaced. His desire for full-blown discovery (the other side ofthe coin fiom Mr. Garrett's suggestion) is, to us, a desire for a "Lawyers'ull Employinent Act."

IV. Conclusion.

The CARP system has failed. It is inefficient and costly. The ad hoc nature has left parties without the confidence ofstability and predictabihty. Settlements are discouraged. In our opinion, a new system is requh'edi a system that takes the positive from CRT days past; that employs a continuous permanent body that builds on its expertise; and that has full control ofthe entire process.

Mr. Chairman, we are grateful for this opporuunty to submit our thoughts on these issues. We hope to work with you, your Subcommittee, the Copyright Office and all other interested parties to create a system that works.

Please do not hesitate to contact us ifyou have any questions.

Sincerely,

On behalfofASCAP L Fred Koenigsberg Counsel to ASCAP White k Case LLP 1155 Aveniie of the Americas New York, NY 10036 212-819-8806 (Telephone) [email protected] (Bmail)

On behalfofBM1 Senior Vice President and General Counsel Broadcast Music, Inc. 320 W. 57 Street New York, NY 10019 212-830-2533 (Telephone) [email protected] (Email) 168

June 20, 2002

The Honorable Howard Coble, Chairman Subcommittee on Courts The Internet and Intellectual Property Committee on The Judiciary United States House ofRepresentatives B-351A Rayburn House Office Building Washington, D.C. 20515

RKi CARP Reform Comments of SESAC, Inc. Dear Mr. Chairman:

United States performing rights organization SESAC, Inc. ("SESAC") is writing to respond to your recent request for its views concerning the Copyright Arbitration Royalty Panel ("CARP") process in respect to the compulsory license provisions of the Copyright Act. SESAC appreciates the opportunity to provide its thoughts and opinions about the process. SESAC was founded in 1930 and is the second oldest ofthe United States performing rights organizations ("PROs"). SESAC represents thousands of American songwriters, composers, lyricists and music publishers and more than a quarter million musical compositions. As do the other two United States PROs, the American Society ofAuthors, Composers and Publishers ("ASCAP") and Broadcast Music, Inc. ("BMI"), SESAC licenses the non-dramatic public performance of such compositions and distributes to its affiliates the license fees paid by music users. Like the other PKOs, SESAC has had considerable experience with the compulsory license system from the inception ofthe 1976 Copyright Act's compulsory license provisions, having participated in proceedings before the Copyright Royalty Tribunal ("CRT") and before CARPs. SESAC also has participated in the legislative process that initially created the CRT and subsequently created the CARP system, and has been a key participant in previous CARP reform proposals. SESAC agrees, to a significant degree, with the comments contemporaneously submitted to you by ASCAP and BMI, and incorporates them by reference here. Specifically, SESAC agrees that (1) the present CARP system 164

is inefFicient and costly, and should be reformed; (2) such reform should address the major concerns ofcost; consistency, continuity and transparency in decision making; and procedural ediciency; and (3) the present CARP panels should be replaced by a permanent salaried adjudicating body within the Copyright Office, with full responsibility for the entire compulsory license dispute resolution process and an understanding ofthe functioning ofaffected industries and copyright law generally. SESAC also is in agreement with ASCAP and BMI concerning the inefficiency ofthe present CARP system in dealing with resolution ofde minimis claims. SESAC, however, believes that it is important to clarify what is meant by the term "small claims" in this discussion. Although a claim by SESAC to participate in any given Phase I or Phase 2 proceeding might be viewed as "small" relative to those ofASCAP, BMI, or other claimants, given their respective sizes, SESAC's claims on behalfofits thousands ofaf61iated songwriters and music publishers invariably represents substantial sums ofmoney and are unrelated to the de minimis claims (referred to as "small claim") concerns expressed by ASCAP and BMI for which they propose procedural remedies. In this regard, the examples set forth in the comments ofASCAP and BMI, noting awards ofafew dollars or even pennies to individual claimants in light ofthe exyeuditure oftens ofthousands ofdollars to litigate such claims, are more instructive than discussing a given percentage ofroyalty funds at issue to identify what constitutes minimis a ~d claim. Moreover, SESAC believes that the specific procedural remedies recommended by others concerning (1) an offer ofjudgment procedure similar to Rule 68 ofthe Federal Rules of Civil Procedure, and (2) mandatory paper proceeding, should be limited strictly to de minimis claims. In sum, we de mmimis agree that truly claimants should not be permitted to hold hostage the process of distributing millions ofdollars in compulsory license fees; however, parties having claims for substantial doHars, which may be characterized by others as "small claims" or "smaller claims" relative to those ofsignificantly larger dollar claimants, should not be disadvantaged in the dispute resolution process to the benefit og and subordinate to, those oflarger claimantL

SESAC greatly appreciates the opportunity to submit these comments with an end toward creating a compulsory license dispute resolution effective system that is and cost efficient. Please do not hesitate to contact us ifwe can answer any questions for you. Sincerely, s/Patrick Collins Patrick Collins Senior Vice President - Licensing SESAC, Inc. 55 Music Square East Nashville, TN 37203

s/John C. Beiter John C. Beiter, Esq. General Counsel for SESAC, Inc. Loeb & Loeb LLP 45 Music Square West Nashville, TN 37203 165

national Pnhac Radios Telephone: 202.513.2DDD a35 szassachosatts nse, Nw pacslndle: 202.513.3320 Washlnnton, 00 20001-3753 httpsvsens.opccev

Juoe 2002 /fiick 19,

The Honorable Howard Coble Subcommittee on Courts, tha Internet, and Intellectual Property Committee on the Judiciaxy U.S. House ofReprescntativcs Washington, DC 20515

Dctu Chaimum Coble:

I am wnting in 1'esponse to your retluest for NPR's views on the Copyright Arbitration Royalty Panel ("CARP") slxucture and process. I am submitting these comments on behalfof National public Radio, Inc. ('NFRa) and its member statian licensees. please include this statement in the recozd ofthe hesnng concerning CARP slzucture snd pxo cess that you chaired on June 13, 2002.

Interest ofNPR 2nd Its Member Stations

NPR is a non-profit cozporation that produces snd distributes noncommercial educational programming through moxc lhsn 600 public radio stations nationwide, In addition to producing encl distributing award winch'rus, includingAll Things ConsideresP, Morning Edition . Toit OfThe Nation, snd Psrfarmance Today, NPR is a membership organization compxised of approximately 280 noncommercial educational radio station licensees, which, in rum, are significant producexs ofnews, informational, and culnual pzo~ NPR and its members participate in thc current CARP process in three ways. First, Section 118 ofthe Copyright Act (the aAct") pzovides foz the compulsoxy licensing of nondramatic musical works, among other designated categories of copyrighted works, in tile event public bxoadcasthzg entities and the performing rights societies axe unable to negotiate voluutmy agrecmcnts. Second, Section 111 ofthe Act pmvides for the compulsory licensing of broadcast retransmssions, including ofpublic mdio station uansmissions, by cable systems. Third, NPR and its memhexs participated in the recent CARP to determine the xatcs end terms for the distribution of sound zecordings over the httemet Thus, NPR and its zuembcrs participate in rate setting procedures as users of copyrighted works in the case of Sections 118 snd 114 ofthe Act and in cable royalty distzibution proceedings as copyright ovmers in the case of Section 1 11 ofthc Acr

Cougxess adopted thc compulsory license sct forth iu Section 118 in zecognition ofthe important role that public bmadaasters play, the unique aspects oftheir use ofropyxight«d works, and thc limited financisl and administrative xesouxces available to negotiate individual 166

The Hcnmebte Xtawect Cable Jaue 19, 2002 Peas 2

Bcenses with copyxight ovmers. As explained in the Ielpslative history to the 1976 Copyxight Acti

|The House Judiciary Committee] is also awsxe that public broadcasting may encounter pxoblems not contronted by commercial broadcasting enterprises, due to such factozs as the special nature ofprograxuming, repeated use ofpxogzams, and, of couxse, limited financial resources. Thus, the Committee determined that the nature ofpublic bioadcasth does warrant special treatment in cextain areas.

KR. Rep. No. 1476, 94th Cong., 2d Sess. at 117 (1976). Section 118 eddresdcd public broadcasters'eed for access to "copyrighted inatexials at reasonable royalties and without administiafivcly cumbersome and costly 'cleaxsnce,'mblems that would hxqiair thc vitality of their operations." Id,

Section '1 14 provides a statutory license for a certain kinds of digital trsnsmissions of sound recordings, although it is not exclusive to public radio. After psxticipating in the direct and xebuttal phases ofthe proceeding, NPR reached a private settlement withthe RIAA snd Souudexchangc. While not cuxxently before the Committee, thcrc are elements of Section 114 itselfthat might benefit &om legislative attention. For instance, the statutory term for Section 114 licenses is two years; the statutory texm for Section I 1 g liccnscs is five ycsxs. The relatively short tenn ofrights under Section 114 poses a particular hardship for public radio in light ofthe large financial costs, discussed inixs

With respect to Section 111, NPR and its participating member stations have filed aud successfuQy litigated or settled a joint claim for cable royalties each year since the compulsoxy license wae first established, Although it is not the primary source ofdistribution for public radio, thc availability ofpublic xadio stations on cable television serves the pubBc interest. Cable is an ixuporiant source of distxibution ofpublic radio pro~ to (a) audiences witMn the local service area of a pubfic radio station who, because of difficult terrain or other conditions, cable cannot xcceivc the local public xadio station's signal or rcceivc a better quality signal 6om thm over the air, snd (b) audiences in ~y rural areas which rcceivc service &om a nearby pubUc radio station, but which are outside ofthe station's local service area.

Among the categories of copyrighted wozks used in the course of distant cable of broadcast sigasls, public radio proguuxunng txaditionally has g~ a ~ssions — under- relatively small award — approximately $200,000 to $300,000 each claim year. In an resouiced industry like public zadio, however, every dollar is critical to maintaining and NPR's cbxhu is &x improving the sezvices we provide to the American people. At the same time, works. fiom de minimis, and copyright owners should bc compensated for thc usc oftheir

Problems with the Current S stem

National Pubic.Radio (NPR) agxees with the Copyxight Office's assessment of the set forth pmblems associated with the current copyright arbitration royalty panel (CARP) process Ttro Hocorabio Howard Cable Jace 19, 2002 Page 9

in its report entitled OPTIOM To IMPKOVE COPYRIGHT ROYALTY RATE SETTJNO AND DigTMEUTJ& iw DgctstoN-MAzoNo, published Februaxy 23, 1998, and has additional obsexvations.

Exeersioe Cost. A given rate-setting or royalty distnbutlon proceeding can take yesxs to reach its conclusion, snd each proceeding involves discovery, fact finding, briefing, and the empanelling ofthree sxbitiatoxs, each coxnpeusated at arete of seveml hundred dollars per hour In the cuzzent system, the cost ofa pzocccdiug is borne entizely by the participants. For smaller claimants, such as NPR inthe case ofthe Section 111 cable compulsoxy license, htigating a given year's claim proceeding can substantially exode„ ifnot exceed. the claimant's awarrL Likewise, arete setting proceeding, such as the Sectioxi 118 end 114 compulsory licenses for musical and cextain other works can mcrease the cost ofthc hcense fees by double digit percentages. Moreover, arbitrators often lack basic knowledge ofboth rmderlying copyright law and the industxies involved in the pzocccding. The parties can spend subsbmtial amounts oftime educating panel membexs on undisputed matters.

Lack of'Predr'crodri7irJr Each panel ofaxbitratozs is chosen for a particular case, and, as noted above, the arbitrators for a paxticrrlax pmccediug typkslly have no copyright or other xeleraant experience withthe affected industries As a xesuit, each CARP de~ision is unique and may not be reconcilable with other CARP decisions. Nor is it necessarily xeQective ofthe underlying conditions in the aKcctcd industries. 13ecausc ofthe lack of predictability, interested psxties are morc likely to litigate than to settle claims.

Prexenrrrrxon of Cixxas, DircaverJr aridStandards efEviderrce Unlike any other legal proceeding NPR has participated in, parties in a CARP must present fully developed cases simultaneously, without benefit ofdiscovery, and ore uot allowed to reSne theories or exhibits as the case proceeds through the direct case phase. There sre myriad ways parties may compute fair market value for the rights at issue, and whhout the benefit ofpxior discovery, positions sre staked out without zefcrence to another pazty*s staxthrg pohrz. Thc lack ofa substantive discovexy process further frustrates the task ofdetermining the proper xsxe. Parties simply pmducc the documents they say support their case. Whether the data or materials produced to suppoxt aparty's case are actually relevant to the facts at issue in the CARP procccding- zclcvaut market, simiilaxly rdtuated patties, ctc. — can be quite difficult to glean fmm the available documents. Moreover, documents that mxiercut a party's case are not subject to disclosrue through a meazungful discovery pmcess. There is no usc of interrogatories, depositions, or zcqucsts for admissions, which could help stxeamline the number ofissues m contention aud pzovide meaningful testing ofan opponent's case, prior to rzoss exsmiuaticm. Properly managed and meaxungfg discovery would assist, not hinder, the f'act ~s task. It should also reduce tile costs ofpattlcipaiion.

The problems htlsuent in the current scope ofrhscovcry axc magnified by thc lack of xigozous rules of evidence. such as the Federal Rules ofEvidence. In two xecent proceedings in which public radio was a pazticipant, thc zecozd in the case wss littered viith heszsay evidence. In a proceeding in which. each party controls the record it presents to the Panel, a strict application ofthe xules ofevidence is sorely needed. 168

The Honorable Howard Cotso Jooo 19, 2002 rage 4

Thc Need for a Pe em Rate-Scain aad Clauns Distribution Bod

To pmvide a xatc-setting and claims distribution mechanism that produces xeasoaably predictable results without excessive cost and in a timely and tcanspazent fashion, NPR supports the creation ofa peimaneat professional body as an independent agency . NPR is considering thc merits ofa rate court-like mechanism but requixes additional time to study the issue.

The advantages of an independent sgenoy include the establishment ofa professional staffthat can develop the expertise in copyxight as it pertains to the indusixies affected by existing sad any new compulsoxy licenses and cxeate aud refine appropriate and tcausparent administrative procedmes. Thc ability to render final agency decisions, combined with a permanent exismnce and a pxofessional staff, should also result io, more predictable, rational decisions. Just as important, because voluataxy settlements depend oa su alignment of cxpcctafions regarding the probable outaome ofa given proceeding, predictable and rational deciYion coskmg will significantly improve the prosperts for voluntaxy settlexaeats, thexeby reducing the costs to the parties and to the decision maker,

NPR also believes that Congress should fund the cost of any new rate-setting and. claims distribution body through a fedcxal appropriation. NPR sad its member stations are non-profit or state supported organizations. Many of our member stations ace affihated with educational institutions aad serve the dual pmpose of educating students aad providing free high quality educational pmgcammmg. Public zadio piogranrnu~ is unlike pmgramming found in the commercial sphere because it is highly pxoduced and much ofit appeals to sxcudlec audiences. The administriuive costs of CARP proceedings divert needed fimds fmm pmgramming

A rationale and pzedictable decision uiaking process is paxticularly impoxtsnt to newly emerging media such as the Intenicc. A single CARP decision, such as the Panel's decision iu the Section 114 pcoceedmg, could significantly disxupt Web based activities. Similarly, an existing iadustcy can be disrupted by uapxedictablc or irrational decisions Given the importance ofthe content iudustzies to the domestic Uuited States economy and the balaace of United States trade worldwide, establishing aud maiatsining a mechanism to assure the rational and predictable liceasing of content subject to compulsory licensing is very much in the pubfic interest.

Congress should also explicitly recognize the special burdens borne by smaller copyxight claimants, for whom the cost offitigatiag a royalty clean may make it difficult or prohibitive to coQect compensation they sre rightfully due. The legislation should contain a pxovision directing thc Copyright Office to develop pzoceduxes to allow small claimants to recover copyxight royalties in a cost-effective xnanner, while protecting against abuses. Proceduxes to be developed by the Copyxight Office for royalty distribution pxocecdiags could include such measures as summsiyjudgment provisions, offers ofjudgment, requixed settlement conferences, or other measuxes developed by the Office with thc input ofthe affected parties aud the copyright commumty. 169

The Honorable Howard Coble Joae 19, 2002 Page 5

ln conclusion, thank you, for inviting NPR to submit its views and those of its member stations on the important subject ofCARP rcfoxm. As you pursue your ovex'sight responsibilities in this matter and consider possible legislative refoxm, M'R would appxeciate the oppoxtunity to woxk with you aud your staff,

Best regards,

Kevin Klo so President and. ChiefBxrecutive Oflicer cct Congressman Howard Barxxom Member 170

June 28, 2002

The Honorable Howard Coble Chaiiman Subcommittee on Courts, the Internet and Intellectual Property Committee on the Judiciary United States House ofRepresentatives Washington, D.C. 20515-6216

Re: CARP Structure and Process

Dear Mr. Chaiiman:

Thank you for requesting our views concerning the existing system for setting cop)sight royalty rates and allocating copyright royalties pursuant to the compulsoiy licensing provisions of the Cop&wight Act. We respectfully request that you include this letter in the record ofyour oversight hearing on the "CARP (Copyright Arbitration Royalty Panel) Structure and Process."

We represent the copyright owners of sports programming presented by teams from Major League Baseball, the National Basketball Association. the National Hockey League, the National Football League and the National Collegiate Athletic Association. During the past twenty-five years, we have participated in numerous copyright ratemaking and royalty allocation proceedings before the Cop)sight Arbitration Royalty Panels ("CARP"), Copyright Office and CopyTight Royalty Tribunal ("CRT") involving the Section 111 cable television compulsoiy license and the Section 119 satellite carrier compulsory license.

We agree with the view expressed by several parties that the current system for setting copyright royalty rates and allocating copyright royalties should be improved and strengthened. In particular, ive agree that that system has become much too costly— thereby frustrating one Congressional objective underlying the Section 111 and 119 compulsory licenses, namely, that of minimizing transaction costs. The costs are not to limited CARP arbitrator fees; they include attorney fees, fees of testifying experts and other witnesses, consultant fees, and Copyright Office fees and disbursements that routinely total millions of dollars for a single proceeding. The most recent CARP proceeding, involving Internet transinissions of sound recordings under the Section 114 license, consumed over 40 days of evidentiary hearings and generated a record that consists of more than 15.000 pages of transcripts, thousands ofpages of exhibits and more than 1,000 pages ofpost-hearing briefs. Although we were not involved in that The Hon. Howard Cable June 28, 2002 Page 2

proceeding, it demonstrated that unless steps are taken to simplify the existing process, the substantial costs associated with CARP pmceedings ofthis nature will become the norm rather than the exception.

There are several aspects ofthe current CARP system that geneiute substantial costs — including the nature and scope of discovery, the routine use of full-blown evidentiary hearings, and various other policies and practices of the Copytdght Office and the CARPs. While we agtee that CARP procedures inust be changed to reduce costs, we disagree with the position, espoused by some, that the CARPs should be abolished in favor of a new decision-making body. In particular, we strongly oppose transferring the copyright ratemaking and royalty allocation responsibilities now shared by CARPs and the Register of Copyrights to a federal court coinparable to the ASCAP "Rate Court." We have three principal concerns with the proposals to create a new decision-making body.

Pirst, the creation of a new decision-making body would stand as a substanfial obstacle to the continued voluntary settlement of Section ! 11 and I I 9 proceedings and would serve only to encourage litigation of disputes that are now being resolved outside the CARP process. In 1995 the major copyright owner groups litigated before the first CARP the allocation of the 1990-92 cable royalties. After a lengthy and costly proceeding, the CARP issued its recommended allocations, which were affirmed in all material respects by the Copyright Office, Librarian ofCongress and the U.S. Court of Appeals. None of the parties, including the sports interests, fully agreed with the CARP allocations and the reasoning that supported those allocations. However, in the seven years since the CARP decision was released, no party has chosen to re-litigate those allocations. The major claimant groups have. in fact, voluntarily agreed to settle not only the 1993, 1994, 1995, 1996 and 1997 cable royalty allocafions; they also have agreed to settle all of the satellite royalty allocation proceedings through the year 1998. While controversies currently exist for subsequent years, a change to a new decision-making body ivill almost certainly guarantee costly and protracted litigation over some or all of these years. Unceixainty as to whether or to what extent a new administrative body or a court might alter the CARP's past approach to decision-mating — which was perceived, rightly or wrongly, as being criticized by Congress — will only encourage disappointed parties to relitigate issues that previously were regarded as settled and thereby impose new litigation costs on all parties.

Second, the creation ofa new decision-ming body would eliminate the costs of hiring private arbitrators, but it would not address the other aspects of the current system that lead to unacceptably high costs — such as the nature and scope of discovery in CARP proceedings, the routine use of full-blown evidentiary hearings and various other policies and practices of the Copyright Office and the CARPs. To the contrary vesting a federal court v ith jurisdiction over copyright ratemaking and royalty allocations will only serve to exacerbate those costs. As expensive as CARP proceedings are, they are not as 172

The Hon. Howard Coble June 28, 2002 Page 3

expensive as they would be if subject to the full panoply of the Federal Rules of Civil Procedure and Federal Rules of Evidence. The focus here should be on changing procedures that lead to unacceptably high costs, and not on establishing new decision- making bodies that will increase costs.

Third, the creation of a new decision-making body would cause further delays in resolving disputes. Resolution would need to await not only the selection ofthe new decisionmakers but also the completion ofproceedings to implement authorizing legislation. If ratemaking and royalty allocation responsibilities were transferred to a federal court, additional delays would likely follow. The ASCAP Rate Court. for example, has routinely issued rate determinations many years after the years in which use was made of the copyrighted works. See, e.g., United States v. ASCAP (In re Capital Cities/ABC Inc), 831 F. Supp. 137 (S.D,N.Y. 1993) (setting fees in 1993 for a period extending back to 1986); United States v. ASCAP (In r e Bttffalo Broadcasting Co), 1993 WL 60687 (S.D.N.Y. Mar. I, 1993) (setting fees in 1993 for a period extending back to 1978): United States v. ASCAP (In re Fbx Broadcasting Co.), 870 F. Supp. 1211 (S. D N Y. 1995) (resolving fee dispute in 1995 for a period extending back to 1986); United States v. ASCAP (In re Salem Media ofCalifornia, Inc.), 981 F. Supp. 199 (S.D.N.Y. 1997) (setting fees in 1997 for a period extending back to 1983).

ln short, we believe that the procedures followed by the CARPs and Copyright Office in royalty ratemaking and allocation proceedings should be closely examined and changed in order to reduce the substantial costs now imposed by that process. We look forward to svorking closely with you, your Su'bcommittee and staff and the Copyrig'ht Office to achieve this objective. However, we do not believe that the CARPs should be abolished and replaced with a new decision-making body, In particular, we strongly oppose vesting a federal court with jurisdiction to set copyrig'ht royalty rates and to afiocate copyright royalties under the Section 111 and 119 compulsory licenses.

Sincerely,

William S. Koenig Thomas J. Ostertag National Basketball Association Office of the Commissioner ofBaseball 645 5 Avenue 245 Park Avenue New York, New York 10022 New York, New York 10167 Phone: (212) 407-8345 Phone: (212) 931-7800 173

The Hon. Howard Coble June 28, 2002 Page 4

John Tortora L. Jeffrey Pash National Hockey League National Football League 1251 Avenue of the Americas 280 Park Avenue New York, New York 10020 New York, New York 10017 Phone: (212) 789-2000 Phone: (212) 450-2033

Ritchie T. Thomas counsel for National Collegiate Athletic Association Squire, Sanders r, Dempsey L.L.P. 1201 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Phone: (202) 626-6600 EXHIBIT 8 COPYRIGHT ROYALTY AND DISTRIBUTION REFORM ACT OF 200$

HEARING BEFORE THE SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY OF THE COMMITTEE ON THE JUDICIARY HOUSE OF REPRESENTATIVES ONE HUNDRED EIGHTH CONGRESS FIRST SESSION

ON H.R. 1417

APRIL I, 2003

Serial No. 7

Printed for the use of the Committee on the Judiciary

Available via the World Wide Web: httpJtwww.house.govfjudiciary

U.S. GOVE~ PRINTING OFFICE WASHINGTON: 2008

For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstoragpo.gov Phone: toll free (855) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2260 Maih Stop SSOP, Washington, DC 20402-0001 COMMITTEE ON THE JUDICIARY F. JAMES SENSENBRENNER, JR., Wisconsin, Chairman HENRY J. HYDE, Illinois JOHN CONYERS, JR., Michigan HOWARD COBLE, North Carolina HOWARD L. BERMAN, California LAMAR SMITH, Texas RICK BOUCHER, Virginia L&'LTON GALLEGLY, California JERROLD NADLER, New York BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California CHRIS CANNON, Utah SHEILA JACKSON LEE, Texas SPENCER BACHUS, Alabama MAXINE WATERS, California JOHN N. HOSTETTLER, Indiana MARTIN T. MEEHAN, Massachusetts MARK GREL&'N, Wisconsin WILLIAM D. DELAHUNT, Massachusetts RIC KELLER, Florida ROBERT WEXLER, Florida MELISSA A. HART, Pennsylvania TAMMY BALDWIN, Wisconsin JEFF FLAKE, Arizona ANTHONY D. WEINER, New York MIKE PENCE, Indiana ADAM B. SCHIFF, California J. RANDY FORBES, Virginia LINDA T. SANCHEZ, California STEVE KING, Iowa JOHN R. CARTER, Texas TOM FEENEY, Florida MARSHA BLACKBURN, Tennessee

PHtLLP G. KucO, Chief of StaffGeneral Counsel PERRY H. APELBAtnvt, Minority Chief Counsel

SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY SMITH, Texas, Chairman HENRY J. HYDE, Illinois HOWARD L. BERMAN, California ELTON GALLEGLY, California JOHN CONYERS, JR., Michigan BOB GOODLATTE, Virginia RICK BOUCHER, Virginia WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California SPENCER BACHUS, Alabama MAXINE WATERS, California MARK GREEN, Wisconsin MARTIN T. MEEHAN, Massachusetts RIC KELLER, Florida WILLIAM D. DELAHUNT, Massachusetts MELISSA A. HART, Pennsylvania ROBERT WEXLER, Florida MIKE PENCE, Indiana TAMMY BALDWIN, Wisconsin J. RANDY FORBES, Virginia ANTHONY D. WEINER, New York JOHN R. CARTER, Texas

BLAtNE MEBRtTr, Chief Counsel DEBRA RosE, Counsel MELISSA L. McDONALD, Full Committee Counsel ALEC FRENCH, Minority Counsel

Page Letter From Benjamin F.P. Ivins, Esq., Senior Associate General Counsel Intellectual, Property and International Legal Affairs, National Association of Broadcasters 65 Letter From Patrick Collins, Senior Vice President—Licensing, SESAC, Inc., and John C. Baiter, Esq., General Counsel for SESAC, Inc., Loeb 5 Loeb LLP...... 69 Prepared Statement of Ann E. Chaitovitz, National Director of Sound Record- ings, American Federation of Television and Radio Artists (AFTRA) ...... 78 Prepared Statement of the Intercollegiate Broadcasting System, Inc. and Har- vard Radio Broadcasting Co., Inc. 74 Consensus Comments of Parties to Cable and Satellite Royalty Distribution Proceedings on H.IL 1417 77 Prepared Statement of Collegiate Broadcasters, Inc. 84 Letter From James Cannings, Copyright Owner, Publisher, Songwriter, Our Own Performance Society, Inc. (OOPS) 98 COPYRIGHT ROYALTY AND DISTRIBUTION REFORM ACT OF 2003

TUESDAY, APRIL I, 2008 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COURTS, THE INTERNET, AND INTELLECTUAL PROPERTY, COMMITTEE ON THE JUDICIARY, Washington, DC. The Subcommittee met, pursuant to notice, at 2:02 p.m. in Room 2141, Rayburn House Office Building, Hon. Lamar Smith [Chair- man of the Subcommittee] presiding. Mr. SMITH. The Subcommittee on Courts, the Internet and Intel- lectual Property will come to order. The reason I'm a little anxious to start is because we'e expecting a series of votes about 3:30 to 3:40 and we'e hopeful—that is to say the Ranking Member and I are hopeful that if we proceed expeditiously we might be able to conclude the hearing by the time the votes are called. I will recognize myself for an opening statement and will give a brief version of the opening statement that without objection I'l make a part of the record, as I will the Ranking Member's and other Members', as well. The purpose of today's hearing is to discuss a bill, H.R. 1417, the Copyright Royalty and Distribution Reform Act, which reforms the rate-making and royalty distribution system for compulsory and statutory licenses currently known as the Copyright Arbitration Royalty Panel or CARP. This process distribute billions of dollars among the participants in an even-handed manner. In doing so, it helps copyright content owners and users in the digital age. When a CARP makes a decision it directly affects the livelihoods of songwriters, artists, record labels, webcasters, broadcasters, the sports industry, the movie industry, the cable industry, and the satellite industry. In setting rates, the CARP has the responsibility of deciding the worth of a content-owner's intellectual property. The CARP decides how much of that value a person or entity is entitled to receive. Last year the Subcommittee conducted an oversight hearing and hosted a roundtable discussion on this subject. The most frequently made comments about the CARP process included the following: CARP decisions are unpredictable and inconsistent, CARP arbitrators lack appropriate expertise to render decisions and often reflect a content or user bias, CARPs are unnecessary expensive and many CARP claims are frivolous. Well, the bill before us today addresses these concerns. The legislation gives authority to oversee rate-making and distribution pro- (I) ceedings to a copyright judge who is appointed by the Librarian of Congress and assisted by two professional staffers. The Copyright Office aids the judge but only in an administrative and advisory capacity. These and other provisions in the legislation will make the system operate, we trust, more efficiently and responsively. All the witnesses here today have personal experience dealing with these issues and we very much welcome their input and their testimony in just a minute. [The prepared statement of Mr. Smith follows:]

PREPARED STATEMENT OF THE HONORABLE LAMAR SMITH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS& AND CHAIRMAN& SUBCOMMITTEE ON COURTS& THE INTERNET& AND INTELLECTUAL PROPERTY The purpose of today's hearing is to discuss a bill that reforms the rate-making and royalty distribution system for compulsory and statutory licenses currently known as the Copyright Arbitration Royalty Panel, or CARP. The CARP system consists of three member ad hoc arbitration panels that are selected for a particular proceeding. Each CARP delivers its recommendation for a rate adjustment or distribution to the Librarian of Congress who upon the recommendation of the Register makes a final determination. This process distributes billions of dollars among the participants in a fair and even-handed manner. In doing so, it helps copyright content owners and users in the digital age. When a CARP makes a decision, it directly affects the livelihoods of songwriters, artists, record labels, web-casters, broadcasters, the sports industry, the movie industry, the cable industry, and the satellite industry. Maintaining a marketplace environment depends upon supply and demand. In setting rates, the CARP has the responsibility of deciding the worth of a content owner's intellectual property. The CARP decides how much of that value a person or entity is entitled to receive. For more than 20 years, Congress has struggled to develop the appropriate mechanism to govern the copyright royalty rate-making and distribution process. In 1976, it created the Copyright Royalty Tribunal. Ten years ago, in response to concerns voiced by the Copyright Office and individuals affected by the work of the Tribunals, Congress abolished the CRT and created the present organization, the CARP. Last year the Subcommittee conducted an oversight hearing and hosted a roundtable discussion on this subject. The most frequent comments about the CARP process included the following: ~ CARP decisions are unpredictable and inconsistent. ~ CARP arbitrators lack appropriate expertise to render decisions, and often re- fiect a "content" or "user" bias. ~ CARPs are unnecessarily expensive. ~ And many CARP claims are frivolous. The bill before us today addresses these concerns. The legislation gives authority to oversee rate-making and distribution proceedings to a "Copyright Judge" who is appointed by the Librarian of Congress and assisted by two professional staffers. The Copyright Office aids the Judge, but only in an administrative and advisory capacity. These and other provisions in the legislation make the system operate more efficiently and responsively. Today's witnesses have personal experience with CARPs so we look forward to their testimony. Mr. SMITH. The Ranking Member from California, Mr. Herman, is recognized for his opening statement. Mr. BERMAN. Thank you very much, Mr. Chairman. In order to help you expedite this process I'l skip all compliments and other comments. I can include my whole statement in the record. Mr. SMITH. Without objection it will be included. Mr. BERMAN. Compliments will be included there. I think H.R. 1417 sets an excellent starting point for CARP reform, While it will likely require some significant revisions, its basic structure is sound and as a result, I was pleased to cosponsor it with you. Introduction of this legislation demonstrates the seriousness of our intent to fix the CARP process. While we may not have achieved perfection in drafting, I believe introducing it was necessary to get the ball rolling. Now that it has been introduced, I think we should allow a full and fair opportunity for the public to comment on it. It gets into the most complicated and arcane areas of copyright law. The public should be given some time to digest this 42-page complexity and formulate opinions. The testimony of our witnesses today demonstrates that H.R. 1417 embodies the appropriate approach to CARP reform but will require much tinkering. Each witness has proposed a myriad of changes that after consideration, this Subcommittee may find salutary. After giving the public an appropriate opportunity to comment, this Subcommittee should move a perfected version of H.R. 1417 with all due haste. Each passing day increases the probability of new rate-settings and distributions occurring under the current flawed process. I want to make just one other point, Mr. Chairman, and that is it's my understanding, and I think it's our intention that in whatever form it passes, that the CARP reform bill will be limited to reformation of the CARP process. This is not being viewed, I would hope, as a vehicle for substantive changes in either compulsory license laws or other copyright changes. We'e sticking in this bill with CARP reforms of the process. If we start getting into these other issues, that will bog it all down then we'l leave an unwieldy and Qawed process in existence and I think it would be a terrible mistake to do that. So with that, Mr. Chairman, I thank you for taking on this task and yield back my time. [The prepared statement of Mr. Berman follows:

PREPARED STATEMENT OF THE HONORABLE HOWARD L. HERMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA Mr. Chairman: I want to commend you for making CARP reform the subject of our first legislative hearing this Congress. As we learned at a hearing last summer, there is near unanimity that the CARP process is broken. It is this Subcommittee's responsibility to fix it, and to do so as soon as possible. I also commend you for driving ahead with the draking and introduction of H.R. 1417, and thank you for consulting me in the process. I believe the framework the bill sets out provides an excellent starting point for CARP reform. While H.R. 1417 will likely require significant revisions, its basic structure is sound. As a result, I was pleased to co-sponsor it with you. Introduction of this legislation enables us to focus ourselves, our colleagues, and interested parties on the difficult work ahead. It also demonstrates the seriousness of our intent to fix the CARP process. Thus, while we may not have achieved perfection in draRing, I believe introduction of H.R. 1417 was necessary to get the ball rolling. Now that H.R. 1417 has been introduced, I think we should allow a full and fair opportunity for the public to comment on it. This legislation delves into the most complicated and arcane areas of copyright law; in fact, I think the copyright compulsory licenses challenge the U.S. Tax Code for the title of most unreadable provisions of U.S. law. The public should be given some time to digest this 42-page complexity and formulate opinions. The testimony of our witnesses today demonstrates, I believe, that H.R. 1417 embodies the appropriate approach to CARP reform, but will require much tinkering. Each witness has proposed myriad changes that, after consideration, this Sub- committee may find salutary. I am sure that other members of the public, given the opportunity to comment, will have salutary suggestions of their own. After giving the public an appropriate opportunity to comment, this Subcommittee should move a perfected version of H.R. 1417 with all due haste. Each passing day increases the probability of new rate-settings and distributions occurring under the current, flawed process. Members of the public should be warned that, if they want their comments to be taken seriously, they should be circumspect in their breadth. Mr. Chairman, it is my understanding that, in whatever form it passes, a CARP reform bill will be limited to reformation of the CARP process. Reformation of the CARP process is, as I stated, a near-unanimous priority for all those involved in CARPs—whether licensees, licensors, or the Copyright Office itself. The unanimity of support for reform of the CARP process gives a bill thus limited a real chance of passage in a reasonable time frame. However, any attempt to delve into the substance of the copyright compulsory licenses will, undoubtedly, bog down a CARP reform bill. When it comes to issues relating to the substance of compulsory licenses, there is no unanimity, only fractious debate. It would be a real pity if a bill supported by all failed to pass because some tried to use it as a vehicle for controversial amendments. Yet, I have no doubt that such failure would be the result. In fact, I will do my best to ensure that this is the result. I will support this bill and the CARP reform effort only so long as it remains focused on process. Mr. Chairman, let me explain my intractability on this point. I joined you in your good faith effort to craR a bill that is limited to process, reflects sound public policy, and benefits all CARP participants equally. I will interpret any attempt to add controversial, substantive amendments as an affront to this good faith effort. Once again, I commend you for tackling this difficult and important issue. I yield back the balance of my time. Mr. SMITH. Thank you, Mr. Berman. And I do concur with your comments. Let me introduce our witnesses today. Our first witness is the Honorable Marybeth Peters, Register of Copyrights for the United States. She has also served as acting general counsel of the Copy- right Office and as chief of both the Examining and Information and Reference Divisions. Ms. Peters received her undergraduate degree from Rhode Island College and her law degree with honors from the George Wash- ington University Law Center. Our next witness is Robert Garrett, who is a partner with the law firm of Arnold R Porter. He has represented sports leagues, the recording industry, municipal and foreign governments, programming producers and networks, and others in litigation, arbitration and administrative proceedings. Mr. Garrett earned both his B.A. and his J.D. from Northwestern University. The next witness is Bruce Rich, who is a senior partner with the law firm of Weil, Gotshal R Manges. He has concentrated on issues pertaining to communications, publishing, and cable and commercial broadcasting. Mr. Rich earned his J.D. from the University of Pennsylvania and his A.B. magna curn laude from Dartmouth College. Mr. Rich also is an adjunct professor at New York Law School's Media Law Institute. Our last witness is Michael J. Remington, a partner in the law firm of Drinker, Biddle R Reath, where he specializes in intellectual property law, court reform and Government relations. Most impressively, of course, for a total of 13 years he was chief counsel of this Subcommittee. A former Fulbright Scholar and Peace Corps volunteer, Mr. Rem- ington is a graduate of the University of Wisconsin, where he also received his law degree. Again we welcome you all and we will begin with Ms. Peters. And if you will try to adhere strictly to our 5-minute limit on testimony. Ms. Peters? STATEMENT OF MARYBETH PETERS, REGISTER OF COPY- RIGHTS AND ASSOCIATE LIBRARIAN FOR COPYRIGHT SERV- ICES, COPYRIGHT OFFICE OF THE UNITED STATES, THE LI- BRARY OF CONGRESS Ms. PETERS. Thank you. Mr. Chairman, Mr. Berman, Members of the Subcommittee, I appreciate the opportunity to appear before you to testify again on the important issue of reform of the Copy- right Arbitration Panel system. As you know the CARPs have been operating under the auspices of the Copyright Office in the Library of Congress since Congress eliminated the Copyright Royalty Tri- bunal in 1993. H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2008, would create a new process aimed at reducing cost and promoting stability and administrative efficiency. In my testimony last June I discussed the existing CARP system and identified three serious shortcomings, all of which you identified, too, Mr. Chairman. First, the CARPs are very costly to the participants and to the Copyright OfFice and the Library of Con- gress. Second, because of the ad hoc nature of the CARPs, there is lack of stability and predictability in the process. Although the Librar- ian attempts to select arbitrators who have performed competently on previous panels, the individuals almost always vary from one panel to the next. Parties who are dissatisfied with one panel are tempted to return and try another. As a result, there is a lack of reliable precedent upon which the parties can base settlements. Because of a lack of institutional expertise among the members of the CARP panels, there is a considerable burden on the Register and the Librarian, who must correct oversights and errors made by the CARPs during the course of the proceeding. H.R. 1417 addresses these concerns. To reduce costs, the salaries of the copyright royalty judge and his staff would be paid from appropriated funds. Their fixed salaries would eliminate the large hourly fees of the arbitrators and the same judge and professional staff would handle all distributions and rate proceedings. I do have some concerns regarding the mechanics of the bill' process for recoupment of cost to the Copyright Office and to the Library, particularly the provisions regarding collection of fees from participants. I believe the costs of the process for determining rates and terms should be paid out of appropriated funds; that is, from new funds that would have to be added to the Library of Con- gress budget. The 5-year term served by the copyright royalty judge would promote institutional stability and permit participants to gain familiarity with the decision-maker, leading to reliable results and promoting settlements, I do have a few recommendations. Many proceedings before the CARPs involve complex issues and require institutional expertise also with regard to interpretation of copyright law. The bill vests the copyright royalty judge with the authority to resolve these complex matters and permits him to consult with the Register to assist in the decision-making process. However, in decisions involving interpretation of copyright law, it is essential that the copyright royalty judge consult with the Register. The Copyright Office has had a long history of administering that law, and I believe we have performed that task responsibly and well. It would be unfortunate if a copyright royalty judge based in the Library of Congress did not take advantage of the expertise of the Office on matters of interpretation of copyright law. It could also create uncertainty and confusion if the Register and the royalty judge in performing their respective duties reached different conclusions on the same question. I have four additional recommendations. First, before a decision of a copyright royalty judge is appealed, parties should have an opportunity to seek reconsideration from the royalty judge. Second, the copyright royalty judge should be given continuing jurisdiction over copyright royalty proceedings after his decision has been rendered in order to clarify that there is authority to deal with unanticipated matters that need to be addressed immediately. Third, when a rate adjustment proceeding is not concluded until sometime after a previous royalty rate has expired, users of the statutory license should continue to pay copyright owners at the recently expired rate, subject, of course, to adjustment once the new rate has been set. Fourth, Mr. Garrett and Mr. Rich in their written statements recommend the inclusion of subpoena power; I concur. Finally, there may be many complicated procedural issues involved in determining rates and terms and distributing royalties which involve careful thought and attention. This was not done in the CRT Reform Act of 1993. We would be most pleased to work with you, your staff, and the interested parties to ensure that H.R. 1417 avoids such pitfalls so that the new system is efficient, fair, and effective. Thank you. [The prepared statement of Ms. Peters follows:]

PREPARED STATEMENT OF MARYBETH PETERS Mr. Chairman, Mr. Berman and distinguished members of the Subcommittee, I appreciate the opportunity to appear before you to testify once again on the important issue of reform of the Copyright Arbitration Royalty Panel ("CARP") process. As you know, the CARPs have been operating under the auspices of the Copyright Office and the Library of Congress since the Congress eliminated the Copyright Roy- alty Tribunal late in 1993. Your bill, Mr. Chairman, H.R. 1417, the "Copyright Roy- alty and Distribution Act of 2003," would make significant changes to the CARP process to reduce costs, promote stability and the administrative efficiency of the copyright royalty distribution and rate adjustment system. In my testimony before this Subcommittee on June 13 of last year I provided a history of the statutory license royalty distribution and rate adjustment process under the Copyright Royalty Tribunal and the CARPs and identified three serious shortcomings of the existing system. First, there is no question that the CARPs are very costly both to the participants in a proceeding and on an institutional scale. Arbitrators are typically compensated at between $200 and $400 an hour for their work which, in hotly contested proceedings that involve many parties and large amounts of testimony (such as the recent rate setting proceeding for webcasting music over the Internet), can add up to considerable sums. In the case of a royalty rate adjustment proceeding, the arbitrators must be paid by the parties out of their own pockets. There is no question that in some rate adjustment proceedings, some interested parties conclude that they cannot afford the cost of participating. In the recent webcasting proceeding that I just mentioned, the cost of the arbitrators alone exceeded the entire annual budget of the Copyright Royalty Tribunal in its last of existence. year Likewise, on an institutional scale, CARP proceedings are costly. They require considerable amounts of time of Copyright Office and Library personnel who must conduct various phases of the proceeding, such as discovery of the parties'ases and review of the CARP's decision. Second, because of the ad hoc nature of the CARPs, there is a lack of stability and predictability in the process. Although the Librarian attempts to select arbitrators who have served well on previous panels, the individuals almost always vary from one panel to the next. Parties who are dissatisfied with one panel are tempted to return and try another panel. As a result, there is a lack of reliable precedent upon which the parties can base the settlement of their differences. Third, there is a considerable lack of institutional expertise on the CARP panels. We have found it very difficult to find arbitrators who have sufficient familiarity with copyright law, let alone the complex statutory licenses in the law and the unique procedures for royalty distributions and rate adjustments. This lack of expertise among the arbitrators places a considerable burden on the Register and the Li- brarian to correct oversights and errors made by the CARPs during the course of a proceeding—a burden which is exacerbated by the short review period granted the Register and the Librarian by the statute. The "Copyright Royalty and Distribution Act of 2003" addresses these concerns of cost, stability and institutional expertise. To reduce costs, the salaries of the Copyright Royalty Judge, along with two full-time professional staff members, would be paid for from appropriated funds. Their fixed salaries would eliminate the large per-hour arbitrator fees of the current system, and the Copyright Royalty Judge and professional staff would handle all distribution and rate adjustments, as opposed to the one-CARP-per-proceeding approach of the existing law. The Copyright Office and the Library are also permitted to recoup their administrative costs under the bill as well. I do have some concerns regarding the mechanics of the cost recoupment process provided in the bill, particularly the provisions regarding direct fee collection from the participants. Let me reemphasize what I said when I appeared before this Subcommittee last June: I believe that the costs of the process for determining rates and terms should be paid for out of appropriated funds, and not out of the pockets of the parties who participate in the rate- setting process. Someone who has a stake in the determination of rates and terms for a statutory license should not be deterred from participating simply because he or she cannot afford his or her share of the decision-maker's costs. The five-year term served by the Copyright Royalty Judge would promote institutional stability and permit participants to gain familiarity with the decisionmaker, thereby creating reliable results and promoting settlements. The bill does not make clear the status of the two professional staff members assisting the Judge. We believe that their status should be clarified, and we recommend that these staff members not have limited term appointments. The five-year term served by the Copyright Royalty Judge would also permit him or her to develop further his or her expertise with the copyright law in general and the statutory licenses in particular. Many proceedings before the CARPs, particularly rate adjustment proceedings, involve complex issues that require institutional expertise and interpretation of the copyright law, something that the CARPs are ill prepared to handle. The bill vests the Copyright Royalty Judge with the authority to resolve these complex matters and permits him or her to consult with the Reg- ister to assist in the decisionmaking process. I fully endorse the consultation process between the Register and the Copyright Royalty Judge when it comes to matters of statutory interpretation and copyright law policy. In fact, I believe that it is essential that in making any decisions involving interpretation of the copyright law, the Copyright Royalty Judge should consult with the Register. The Copyright Office has a long history of administering the copyright law. I believe we have performed that task responsibly and well. It would be unfortunate if a Copyright Royalty Judge based in the Library of Congress did not take advantage of the expertise of the Copyright Office on matters of interpretation of copyright law, and it could also create uncertainty and confusion if the Register and the Copyright Royalty Judge, in performing their respective responsibilities, reached different conclusions on the same questions. Other matters that should be addressed include: ~ Under the current CARP system, there is no opportunity for parties dissatisfied with the CARP's determination to ask the CARP to reconsider its decision. Instead, dissatisfied parties must raise their concerns with the Register and the Librarian. It would make sense to let the CARP, in the first instance, consider those objections—especially in cases where a party asserts the CARP has overlooked or misapprehended particular facts or points of law. The same should be true with respect to the Copyright Royalty Judge. Parties should have an opportunity to ask the Copyright Royalty Judge to reconsider some or all of his or her determination before going to the Court of Appeals. The current draft does not appear to allow for this. ~ Under current law, it is unclear whether the Librarian of Congress has the power to correct errors in his rate determinations or to address unanticipated issues and problems that became apparent only after he has rendered his decision on rates and terms. Similarly, it is unclear whether the Copyright Roy- alty and Distribution Act of 2003 would give the Copyright Royalty Judge the power to address such issues once he or she has made a determination on rates and terms or distribution. The Copyright Royalty Judge should expressly be given continuing jurisdiction over such matters aRer his or her decision has been rendered, in order to clarify that there is authority to deal with unanticipated matters that ought to be addressed immediately; otherwise, the problem cannot be addressed until the next regularly scheduled proceeding five years later. ~ Currently, section 802(g) of the Copyright Act provides that when a rate adjustment proceeding is not concluded until some time after a previous royalty rate has expired, the new adjusted rate is effective retroactively to the date on which the old rate expired. But there is another gap in the law that needs to be addressed: Although the new rate is effective as of the date the old rate expired, there nevertheless may be a period of several months or more pending the new rate determination during which copyright owners and licensees do not know what the new rate is. For example, last year's determination of rates and terms for webcasters covered the period from October 28, 1998 through December 31, 2002. Since January 1, we have had no statutory rate for webcasters. As a result, I understand that webcasters have taken the position that until the new rate is set, they are not required to make any payments for uses made since January 1. Serious consideration should be given to providing that in such cases, licensees should pay copyright owners at the recently expired rate. Once the new rate is set, and assuming that it is different from the old rate, adjustments can be made in the form of additional payments or refunds, as the case may be. We have a number of additional comments relating to the bill, generally of a more technical nature. We will provide those comments to your staff. As we have learned to our regret following enactment of the Copyright Royalty Tribunal Reform Act of 1993, reform of the system for determining rates and terms of the statutory licenses and for distributing statutory royalties is a process which requires careful thought and attention to complicated procedural issues. I look forward to working with you, your staff, and with the interested parties to ensure that the current legislation is more successful. Thank you, Mr. Chairman.

SUMMARY OF TESTIMONY ~ In her testimony on June 13 of last year before this Subcommittee, the Register of Copyrights identified three serious shortcomings of the current Copyright Arbi- tration Royalty Panel ("CARP") system that distributes royalties and adjusts royalty fees for the statutory licenses of the Copyright Act. The first shortcoming is the considerable cost to participants in a CARP proceeding to pay for three arbitrators, as well as the cost to the Copyright Office and the Library of Congress to prepare proceedings for hearing and for reviewing the CARPs'ecisions. The second shortcoming is the lack of stable precedent and predictable decisionmaking due to the ad hoc nature of the CARP system. The third shortcoming is the dif- ficulty in obtaining arbitrators with knowledge of copyright law in general and the statutory licenses in particular. ~ H.R. 1417, the "Copyright Royalty and Distribution Act of 2003" addresses these three shortcomings. A full-time Copyright Royalty Judge, and two full-time professional staff, will be paid for from appropriated funds, and the Copyright Office and the Library of Congress will be allowed to recoup their costs. The Register believes that all costs associated with the work of the Copyright Royalty Judge should be paid from from appropriated funds, and she has concerns about the mechanism for cost recoupment but looks forward to working with the Committee to address these concerns. ~ The proposed framework in the "Copyright Royalty and Distribution Act of 2003" would likely provide stability to the decisionmaking process and promote settlements. ~ The Copyright Royalty Judge would make royalty distributions and rate adjustments that involve questions of copyright law interpretation and policy. To avoid inconsistent decisions and interpretations between the Copyright Royalty Judge and the Copyright OAice, the Copyright Royalty Judge should be required to consult the Register on such issues. ~ The Copyright Royalty Judge should be afforded the opportunity to correct, amend, and reconsider his or her determination after it is issued. ~ When royalty rates for certain statutory licenses expire, users of those licenses should continue to pay copyright owners at the old rates until new rates have been determined by a decision of the Copyright Royalty Judge. Mr. SMITH. Thank you, Ms, Peters. Mr, Garrett' STATEMENT OF ROBERT A. GARRETT, ATTORNEY-AT-LAW AND PARTNER, ARNOLD tk PORTER Mr. GARRETT, Thank you Mr, Chairman, Mr, Herman, Members of the Subcommittee. I very much appreciate the opportunity to testify this afternoon on H,R. 1417. As you noted, Mr. Chairman, I have represented the professional and collegiate sports leagues in copyright royalty arbitration proceedings for a number of years. These leagues include Major League Baseball, the NBA, NFL, NHL, NCAA. My testimony today is presented on their behalf. H.R. 1417 reflects a great deal of careful thought about the problems that confront the royalty distribution and rate-setting process. Overall, we believe that the bill provides a good vehicle for addressing these problems. The sports leagues, however, have concerns with certain aspects of the bill which are discussed more fully in my written statement. Let me focus on two principal areas of concern—structure and cost. First as to structure, the leagues are concerned about the particular decision-making structure that the bill adopts. The bill contemplates that a single copyright royalty judge will decide all royalty distribution and rate-setting proceedings and we do not believe that any single individual should have that responsibility or authority. In our view, a significant strength of the existing system is that a panel of three individuals, rather than one single person, must decide the difficult issues that are often involved in copyright royalty proceedings. These proceedings typically generate enormous records that just as often support a wide range of results. There is a great deal of latitude that is accorded to the decision-makers in arriving in a final determination. We believe it is bene6cial to have a panel of three decision-makers who can evaluate the evidence and then reach a determination that they collectively consider to be fair and reasonable. In our judgment, the interaction of at least three decision-makers helps produce a better and more credible result. And furthermore, given the number and timing of royalty proceedings, having more than one decision-maker may be a practical necessity. Second as to cost, sports leagues believe that a principal objective of this legislation should be to reduce the cost of copyright royalty 10 proceedings as much as possible. While the bill represents a positive step forward in this regard, it does not in our judgment go far enough. For example, under the current system there is in effect a presumption that the parties are entitled to formal evidentiary proceedings. These evidentiary proceedings, these hearings which have typically lasted anywhere from six to 8 weeks in distribution cases, are extremely costly to the parties. H.R. 1417 recognizes the problems associated with having hearings in all cases and recommends the use of paper proceedings, at least in cases involving small royalty claims. The leagues certainly support that concept. However, they do not believe that paper proceedings should be limited to cases involving small claims. If there is to be any meaningful reduction in cost arising from this legislation, the rate of circumstances where paper proceedings are permitted must be broadened beyond small claims. Another major cost of the copyright royalty proceedings is discovery. It's not clear exactly how the bill deals with the substantial issues that the sports leagues and other parties have raised regarding discovery. The language in the bill is a bit unclear and raises several questions that are discussed in my written statement. A principal concern is that the bill may expand the scope and nature of discovery and thereby drive up the cost of the proceedings even more without bringing any significant benefit to the process. Finally, Mr. Chairman, you should be aware that counsel representing all of the parties involved in the cable and satellite royalty distribution proceedings have met to discuss H.R. 1417. These parties include the Motion Picture Association, the National Asso- ciation of Broadcasters, PBS, NPR, the performing rights organizations, copyright owners of religious programming and copyright owners of Canadian programming. There is a broad consensus among these parties as to various provisions in the bill. For example, I believe that the parties are unanimous in their support for a decision-making body that consists of three individuals, rather than one copyright royalty judge. They also support specific measures that will help reduce costs and promote voluntary settlements, which we believe should be another principal goal of the legislation, We expect to submit to the Subcommittee our specific recommendations before the record closes. We hope that you and the Subcommittee will take those recommendations into account during your deliberations on H,R. 1417. Thank you, Mr. Chairman. [The prepared statement of Mr. Garrett follows:]

PREPARED STATEMENT OF ROBERT ALAN GARRETT Mr. Chairman and members of the Subcommittee, thank you for the opportunity to testify concerning H.R. 1417, the "Copyright Royalty and Distribution Act of 2003" ("CRDA"). That bill seeks to improve the system by which Copyright Arbitra- tion Royalty Panels ("CARP") set compulsory licensing royalty rates and distribute compulsory licensing royalties. I am submitting this statement on behalf of the Joint Sports Claimants ("JSC"), which consists of Major League Baseball, the National Basketball Association, the Women's National Basketball Association, the National Football League, the Na- tional Hockey League and the National Collegiate Athletic Association. As the representative of copyright owners of professional and collegiate sports telecasts, JSC has participated in numerous copyright royalty proceedings during the past twenty- five years before CARPs, their predecessor, the Copyright Royalty Tribunal ("CRT"), and the Copyright Office. These proceedings have involved the setting of royalty 11

rates and the distribution of royalties under the compulsory licenses established by Section 111 of the Copyright Act (the cable compulsory license) and Section 119 of the Copyright Act (the satellite carrier compulsory license). Virtually all parties who have been involved in CARP proceedings, including JSC, recognize that the existing system needs improvement. The process is too costly and generally leads to results that are perceived by many as inconsistent and lacking in credibility. JSC appreciates the substantial efforts of the Subcommittee and its staff in drafting legislation that provides an excellent vehicle to address these problems. Several provisions of the CRDA, if enacted, will help establish a better and more efficient process for dividing copyright royalties and setting royalty rates. However, other provisions of the bill will not achieve that result and will, in fact, have the opposite effect. We have had only a short time to consider the provisions in the CRDA. Our review of the bill continues as we also discuss its provisions with other affected parties who are interested in developing consensus views on CARP-reform legislation. The purpose of my testimony today is to describe JSC's principal concerns with the CRDA. I believe that several of these concerns are shared by other parties who, like JSC, have been involved for many years in the Section 111 and Section 119 royalty distribution and rate-setting proceedings. However, as noted above, I am submitting this statement solely on behalf of the professional and collegiate sports leagues that comprise the Joint Sports Claimants. A. THE SINGLE COPYRIGHT ROYALTY JUDGE Under the existing system, the Librarian of Congress (with the advice of the Copyright Office) presides over the pre-hearing process, which involves ruling on various procedural and substantive issues including those related to discovery, scheduling and the interpretation of the Copyright Act. During this pre-hearing phase, the Librarian (again with the advice of the Copyright Office) also selects two private arbitrators who in turn choose a third arbitrator. The three-person CARP anel then conducts the evidentiary hearings and submits recommended royalty al- ocations or royalty rates to the Librarian. The Librarian (with the advice of the Copyright Office) reviews the CARP's final report to determine whether the CARP has acted arbitrarily or contrary to law. The Librarian's final determination may be appealed to the United States Court of Appeals for the District of Columbia Circuit. The CRDA would replace the CARP system with one where a single Copyright Royalty Judge ("CRJ"), appointed by the Librarian for a five-year term and assisted by a professional staff of two persons, decides all royalty rate setting and distribution matters. The CRJ's final decision allocating royalties or setting rates would be reviewed only by the D.C. Circuit. The bill authorizes the CRJ to "consult" with the Register of Copyrights "in making any rulings" but otherwise removes both the Li- brarian and the Register from the process of allocating royalties and setting rates. JSC is concerned that the rather dramatic change in the structure of copyright royalty allocations and rate-setting, as contemplated by the CRDA, will inevitably lead to more, rather than less, litigation. Thus, it is not a change that JSC can support. While we agree that the CARP process requires some significant improvements, we do not believe that the CARP structure should be scrapped in its entirety. JSC's specific concerns with the creation of a new decision-making body are set forth in its letter to the Subcommittee dated June 28, 2002 (a copy of which is provided at Attachment A). If, however, it is determined that we must again start with an entirely new decision-making body, as we were required to do in 1993 when the CARP system replaced the CRT, we would urge that, at the very least, you not adopt a structure that authorizes a single CRJ to decide all royalty distribution and rate setting cases. A significant strength of the existing system is that a panel of three individuals (rather than any one single person) is charged with the responsibility of receiving all the evidence and deciding the o(ten very difficult issues of how to allocate a multi-million dollar royalty fund among many competing claimants or to set royalty rates that will impact thousands of copyright owners and users. These proceedings typically generate enormous records that just as typically support a wide range of results. It is beneficial, we believe, to have more than one individual decide such cases; the interaction of at least three decision-makers who have the opportunity to consider and to debate the many issues involved in royalty allocation and rate-setting proceedings helps produce a more reasoned, supportable and credible result. There may be instances where a single judge is appropriate, such as in resolving discovery disputes or disputes that involve relatively small amounts of royalties. However, JSC does not believe that a single CRJ should routinely decide all copyright royalty distribution and rate setting cases. As a general matter, a panel of 12 three should resolve such cases—particularly if, as the CRDA contemplates, there will no longer be any intermediate review of the initial decision royalty allocation or rate-setting decision. If there is concern with maintaining a permanent body of three full-time CRJs who decide all cases, consideration might be given to the tem- porary appointment of two additional administrative law judges ("ALJ"), from a pool of designated ALJs, to serve with the full-time CRJ in particular cases. The parties involved in the Section 111 and 119 royalty allocation proceedings had recommended a similar approach during the debates over the Copyright Royalty Tri- bunal Reform Act of 1998. The Register of Copyrights also had identified a similar approach as a possible option in her February 28, 1998 report to Congress, entitled "Options to Improve Copyright Royalty Rate Setting and Distribution Decision-Mak- ing." B. ROLE OF THE COPYRIGHT OFFICE Under the current system, the Register of Copyrights generally has the authority and responsibility to interpret the Copyright Act provisions that affect compulsory licensing proceedings. Interested parties also have the right to seek such interpretations from the Register and to have the Register's views included in a written record, The Register's interpretations are then subject to review by the federal courts. See, e.g., Cablevision Sys. Dev. Co. v. Motion Picture Ass'n of America, Inc., 886 F.2d 599, 602 (D.C. Cir. 1988); Satellite Broad, and Communications Ass'n of America v. Oman, 17 I'".3d 344, 847 (11th Cir,1994), cert. denied, 513 U.S. 823 (1994). The CRDA appears to contemplate that the CRJ would have the authority and responsibility to render any necessary interpretations of the Copyright Act—although the CRJ could, if he or she chose„"consult" with the Register. Given the historic familiarity of the Register with the various compulsory licenses and the Copy- right Act provisions that relate to those licenses, JSC believes that consultation with the Register on issues involving the proper interpretation of the Copyright Act should be the rule rather than the exception, We recognize that in certain circumstances it may not be practical to obtain the Register's views, such as where an issue arises close to the statutory deadline for completing a proceeding. Gen- erally, however, the Register's views on the proper meaning of the Copyright Act should be sought. In addition, any consultation between the CRJ and the Register on such issues should be placed on the written record so that all parties to a proceeding are aware of the advice that has been sought and rendered. The CRDA also appears to permit consultation with the Register in connection with "rulings" that do not involve the interpretation of the Copyright Act. We question whether consultation on such matters is necessary or appropriate. In any event, if the legislation does permit the CRJ to contact the Register on issues unrelated to the proper interpretation of the Copyright Act, we believe that such contacts should be placed on the written record and disclosed to all parties. C. THE COSTS OF DISCOVERY AND EVIDENTIARY HEARINGS Under the current system, the CARPs normally conduct evidentiary hearings where witnesses present live testimony and. are subject to cross-examination; two rounds of hearings are usually held—one for direct cases and one for rebuttal cases. These hearings often are quite time-consuming and represent perhaps the most significant cost to the parties. For example, the pending cable royalty distribution proceeding (involving the years 1998—99) is scheduled to have 36 direct case witnesses testify over seven weeks; the rebuttal hearing is scheduled to occupy an additional two weeks. The last litigated cable royalty distribution proceeding (involving the 1990—92 royalty funds) consumed over 300 hours of hearings and generated a record of more than 12,000 pages. The CRDA specifically authorizes the use of paper proceedings in cases where very small amounts of royalties are at stake. JSC certainly supports that concept. However, JSC believes that paper proceedings should be utilized more frequently in all compulsory licensing royalty proceedings and that Congress should encourage a broadening of the circumstances where paper proceedings are appropriate. Elimi- nating one or both phases of evidentiary hearings from proceedings and substituting a paper proceeding—or at least reducing the instances where the decision-maker is required to hear live testimony from all witnesses—would yield substantial cost savings to all affected parties and thus help achieve what should be a primary objective of this legislation. A principal concern JSC has with the CRDA is that it not only fails to encourage the use of paper proceedings in a broad range of circumstances; as currently drafted, the CRDA appears to permit the use of paper proceedings in fewer cases than those permitted by the existing Copyright Office CARP regulations. JSC also believes that issues concerning the use of paper proceedings are intimately related to the issues concerning the proper scope and method of discovery in copyright royalty proceedings.i If paper proceedings become more frequent, it may be appropriate to expand modestly the discovery process (in terms of the scope of discovery and the types of discovery tools). If, however, the current full-blown evidentiary hearings continue, expanding the nature and scope of discovery would drive up the costs of the proceedings even more, without bringing any significant benefit to the process. It is not entirely clear how the CRDA deals with the substantial issues that JSC and other parties have raised regarding discovery. The bill states only that "discovery" shall be permitted "for a period of 60 days" and that "[fjinal witness lists for the proceedings shall not be required until the end of the discovery period." This language raises several questions, including: (1) whether written testimony will continue to be filed prior to discovery or whether testimony must now be filed on the 60th day of the discovery period; (2) if the former, whether discovery is limited to obtaining documents underlying the written testimony (as is currently the rule) or whether the scope and nature of discovery would be broadened, thereby increasing the costs of the discovery process; and (3) if the latter, whether the parties may obtain discovery of any sort on the written testimony. D. FUNDING OF COPYRIGHT ROYALTY PROCEEDINGS Our understanding is that, under the current system, the Copyright Office de- ducts the costs of copyright royalty rate proceedings unrelated to Section 111 and 119 (such as those conducted pursuant to Sections 112, 114 and 118) from the Sec- tion 111 and 119 funds. JSC has substantial doubts as to whether the existing provisions of the Copyright Act authorize such deductions; there certainly is no policy justification for using the Section ill and 119 royalties to pay for the administration of completely different compulsory licenses that involve an entirely distinct group of copyright owners and users. The CRDA would prohibit this practice by adding language to Section 803(e)(1)(A) of the Copyright Act which permits the Librar- ian to deduct the costs of a proceeding "from not more than 1 percent of the royalty fees deposited or collected under this title that relate to that proceeding." JSC strongly supports the proposed Section 803(e)(1)(A) insofar as it prohibits the Li- brarian from using Section 111 and 119 royalties to fund proceedings involving other compulsory licenses. E. ENCOURAGING PARTIAL DISTRIBUTIONS Under the current law, the Copyright Office may distribute Section 111 and 119 royalties that are not in controversy prior to the time that distribution proceedings are final. These "partial distributions" are particularly important to copyright owners because there often is a lengthy period between the payment of the royalties by copyright users and the conclusion of the distribution proceedings. Each year JSC and other copyright owners have made a good faith effort to agree on the actual amounts that are in controversy and the amounts that may be distributed pending resolution of that controversy; those agreements have required each party to pay back any amounts in excess of its final royalty award. Increasingly, however, the Office has rejected these negotiated agreements and has authorized the distribution of far less than the amounts on which the parties have agreed. As a result, millions of dollars in Section 111 and 119 royalties that copyright owners have requested the Copyright Office to distribute will remain undistributed for several years. JSC be-

i Under the existing CARP procedures, parties are not entitled to the type and breadth of discovery normally permitted in federal civil litigation. There are no depositions or interrogatories and the parties are entitled only to documents "underlying" particular statements made in written testimony rather than all relevant documentation; that testimony must be exchanged prior to the time that any discovery is conducted. Moreover, given the existing timetables for dealing with discovery requests, there is very limited opportunity to make productive use of the discovery that is available. These limitations are designed to hold down costs and to expedite the proceedings. On the other hand, the Copyright Office has gradually expanded its view of underlying documents and thus the scope of discovery. Even where the Copyright Office denies a discovery request, a CARP (which may consist of arbitrators more accustomed to the rules prevailing in federal civil court litigation) can effectively reverse that ruling and order the production of documents. While the CARPs (like the Copyright Office) have no subpoena authority, they do have the power to strike and to weigh testimony; thus, it is rare that parties do not comply with CARP orders directing additional discovery—although the CARP may have a more difficult time obtaining information from third parties. The result is that the nature of discovery in CARP proceedings has become increasingly uncertain and with that uncertainty has come increasing costs. 14 lieves that the CRDA should encourage agreements among the parties to distribute the maximum amount of royalties possible pending the resolution of distribution proceedings. At a minimum, the Office (or the CRJ) should be required to grant requests for partial distributions where the parties agree on the amount that is in controversy and agree to return any possible overpayments. F. ENCOURAGEMENT OF SETTLEMENT The CRDA appears to incorporate the concept of the offer of judgment from Fed- eral Rule of Civil Procedure 68, which in effect permits parties to make pre-trial offers of settlement that may be taken into account in imposing costs. JSC supports this concept. As drafted, however, the provision in the CRDA is problematic in several ways. First, the provision appears to have no force and effect. Rule 68 permits the recovery of costs if an offer of judgment is refused and the final result is not more favorable than the offer, but there is no comparable provision in the CRDA. Second, it is not clear how the offer of judgment provision would work in multi- arty proceedings, which are typical in copyright royalty proceedings. Third, the anguage of the provision, which provides for offers to be made "up to the day on which hearings in the proceeding begin," raises a question about whether and how parties will be permitted to settle disputes after the start of a proceeding. JSC strongly believes that one of the goals of the copyright royalty arbitration process should be to discourage litigation and to encourage voluntary settlements among the parties to disputes. Existing policies and procedures, by raising bars to settlements at various points in the process, have had precisely the opposite effect. Examples include the policies and procedures dealing with confidentiality of negotiated agreements, the technical distinction between settlements arrived at before and alter the initiation of CARP proceedings, and the Office's practice of permitting those who fail to participate in a proceeding the opportunity to oppose settlements by proceeding participants and to require the initiation of new CARP proceedings. JSC strongly supports adding provisions to the CRDA to eliminate these barriers to settlement.

CONCLUSION JSC's principal recommendations concerning the CRDA may be summarized as follows: ~ The CARP structure should not be replaced with an entirely new decision- making body. Rather than effect such dramatic structural changes, we should focus on process reforms that are necessary to reduce the costs and to help ensure the consistency and credibility of decision-making. ~ If structural reform is deemed necessary, the authority to decide all copyright royalty rate-setting and royalty distribution issues should not be vested in a single Copyright Royalty Judge, as the CRDA contemplates. Such decisions should generally be made by panels consisting of the CRJ and two additional administrative law judges. ~ The CRJ generally should be required to consult with the Register of Copy- rights concerning the proper interpretation of the Copyright Act. Any consultation between the CRJ and the Register should be on the record and disclosed to all parties in the affected proceeding. ~ Paper proceedings should not be limited to cases involving small claims, as the CRDA appears to contemplate. Rather, the range of circumstances in which full or partial paper proceedings are permitted should be increased. The nature and scope of existing discovery may be expanded somewhat but only where paper proceedings are utilized. The single provision in the CRDA dealing with discovery requires clarification. ~ The CRDA provision which makes clear that the Section 111 and 119 royalty funds may not be used to defray the costs of proceedings that do not involve these funds should be retained. ~ The CRDA should be amended to ensure that copyright owners receive the maximum amount of royalties as partial distributions pending the completion of copyright royalty distribution proceedings. ~ The CRDA should be amended to better encourage voluntary settlements of copyright royalty proceedings. The provision in the CRDA that appears to adopt a Rule 68-type procedure requires clarification. In addition to the matters discussed above, there are other provisions of the CRDA that JSC believes warrant further consideration and possible amendment. JSC is prepared to work with the Subcommittee and its staff as well as other par- 15 ties involved in copyright royalty proceedings to help ensure that the decision-making process for distributing copyright royalties and setting copyright royalty rates is as cost-efficient, credible and consistent as possible. Thank you, Mr. Chairman and members of the Subcommittee, for your time and consideration. Junc 28, 2002

The Honorable Howard Coble Chairman Subcommittee an Courts, the internet and Intellectual Property, Committee on thc Judiciary United States House ofRcprescntatives Washington, D.C. 20515%216

Rc: CARP Structure and Pmeem

Thank you for rcqucsting our views concerning the existing system for setting copyright myalty mtes and allocating copyright myalties pursuant to the compulsory licensing provisions ofthe Copyright Act We respectfully request that you include this letter in thc record ofyow oversight hearing on the "CARP (Copyright Arbitration Royalty Pend) Structure snd Process."

We represent the copyright owners ofsports pmgramming presented by teams Gum Major League Baseball, thc National Basketball Association, the National Hockey League, the National Footbtdi Leaguc and the National Collegiate Athletic Association. During thc past twenty-five years, we have participated in numcmus copyright ratemeking end myalty allocation proceedings before thc Copyright Arbitration Royalty Panels ("CARP"), Copyright Officc aud Copyright Royalty Tribunal PCKP) involving the Section 111 cable television compulsory license and the Section 119 satellite camer compulsory license.

Wc agree with the view cxpresscd by several patties that the current system for setting copyright royalty rates and allocating copyright royalties should bc impmved ami strengthened. In particular, wc agree that that system hes become muchtoo costly- thcreby one Congressional objective underiying thc Section 111 and 119 compulsory~licenses, namely, that ofminimizing tr'ansaction costs. The costs are not limited to CARP arbitrator fees; they include attorney fees, fees ofteetiTying experts end other witnesses, consultant fccs, and Copyright Office face snd disbursements that routinely total miUions ofdollars for a single proceeding. The most recent CARP pmcecding, involving Intcmet transmissions ofsound recordings under the Section 114 license, consumed over 40 days ofevidentiary hearings and generated a rocord that consists ofmore than 15,000 pages oftranscripts, thousands of pages of exhibits and morc than 1.000 pages ofpost-hearing briefs. Although wc were not involved in that The Hon. Howard Coble June 28, 2002 Page 2

proceeding, it demonstrated that unless steps are takm to simplify the existing process, the substantial costs associated with CARP proceedings ofthis nature wiU become tho norm rather than the cxccption.

Thcrc are several aspects ofthe cuncnt CARP system that generate substantial costs — including the nature and scope ofdiscovery, tho mutine use offuU-blown evidentiary hearings, and various other policies and prmtices ofthe Copyright OIGee and the CARPs. While we agree that CARP procedures must be changed to reduce costs, we disagree with thc position, espoused by some, that thc CARPs should bc abolished in favor ofa new decision-making body. Iu particular, wc stmagly oppose ansfening the copyright ratcmakiug aud myatty affoeation responsibiTities now shared by CARPs and thc Register ofCopyrights to a fedrzal court comparable to the ASCII 'Rate Court." We have thrcc principal concerns with the pmposals to create a new decision-malring body.

~i the creation ofa new decision-making body would stand as a substantial obstacle to the continued voluntary settlement ofSectioa 111 and 119 p ceedings and would serve only to encourage litigation ofdisputes that are now being resolved outside thc CARp process. In 1995 the major copyright owner gmups litigated bcforc the first CARP thc allocation ofthe 1990-92 cable myaitiea Afler a lengthy and costly proceeding, thc CARP issued its rccommcnded sffocations, which werc afffrmed in afl material respects by tho Copyiight Office, fibrarian ofCongress and thc U.S. Court.of Appeals. None ofthe parties, including the sports 'ntcrests, fully agreed with thc CARP agocations and the reasoning that supporte those aflocations. However, in the seven years since the CARP decision was re!cased, no party has chosen to'ro-liYigate those allocations. 'Ihc major claimant gmups have, in fact, voluntarily agreed to settle not only the 1993, 1994, 1995, 1996 and 1997 cable myalty allocations; they also have agreed to settle all of the sategitc myelty allocation proceedings thmugh the year 1998. While contmvcrsies currcnfly exist for subscrprent yarns, a change to a new decision-m'aking bodywill almostcertainly gmuantee costly aud pmtractcd litigation over some or all of these years. U crtainty as to whcthcr or to what extent a ncw dmduistraflve body or a court might alter the CARP's past appmach to decision-making — which was perccivcd, rightly or wmngly, as being criticized by Congress — vdifl oidy cncouragc dissppohttcd parties to relifigatc ismes that previously were regarded as settled and thereby impose ucw litigation costs on ag parties.

~eco 4 the creation ofa ncw decision-making body would eliminate the costs of hiring private arbitrators, but it would not address the other aspects ofthe current system that lead to unacceptably high costs — such as the nature and scope ofdiscovery in CARP proceedings, the routine use of full-blown evidentiary hearings and various other policies and practices ofthc Copyright Office and the CARPs. To thc conuary, vesting a federal court withjurisdiction over copyright ratemaking aud royalty aUocations will only serve to exacerbate those costs. As expensive as CARP pmceedings are, they arc not as The Hon. Howard Coblc luna 28, 2002 Page 3

expensive as they would be ifsubject to the full panoply ofthe Federal Rules ofCivil Procedure and Federal Rules ofEvidence. Thc focus here should be on changing procedwes that lead to unacceptably high costs, and not on establishing new dccision- making bodies that will increase costs.

~i the creation ofa ncw decision making body would cause further delays iu resolving disputes. Resolution wauld need to await not only thc selection ofthe ncw decisiorunakcrs but also the completion ofpmcccdings to implement authoriring legislation. If atcmaking and myalty allocation responsibilities werc transferred to a federal court, additional delays would likely fallow. The ASCAP Rate Court, for example, has mutinely issued rate detcrminatious many years alter the years in which use was made ofthe copyrighted works. See, eg., Unlred States v. rfSCrfP Pn re Capital Ciries/ABC Inc), 831 F. Supp. 137 (SI).N.Y. 1993) (setting fees in 1993 for a period extending back to 1986); UnitedStarer v. ASCIP fln re Buffalo Broadeosnng Co), 1993 Wi. 60687 (S.D34.Y. Mar. 1, 1993) (setting fees in 1993 for a periad extending back to 1978); Unired Stares v. rtSCdpfln re Fax Broadcarling Ca), 870 F. Supp. 1211 (S,D24.Y. 1995) (mmtving fee dispute in 1995 for a period extending back to 1986); United Stares v. ASCIP Pn re Salern Irfedia ofCaliforntrx Ine), 981 F. Supp. 199 (S.D34.Y. 1997) (setting fees in 1997 for a period extcading back to 1983).

ln short, wc believe that the pmcedures followed by the CARPs aud Copyright Office in royalty ratemaking and allocation pmcccdings should bc closely examined and changed in order to reduce the substantial costs now imposed by that process. We look forward to working closely with you, your Subcommittee and stafi'and the Copyright Oificc to achieve this objective. However, wc do not believo that the CARPs should be abolished snd replaced with a new decision-making body. In particular, we stmngly oppose vesting a federal court withjurisdiction to sct copyright royalty rates and to allocate copyright royaMcs under the Section 111 and 119 compulsory licenses.

Sincemly,

William S. Kocnig Thomas l. Ost g National Basketball Assrciation Office ofthe Commissioner ofBaseball 6455 Avenue 245 Park Avcaue Ncw York, Ncw York 10022 New York, New York 10167 Phone: (212) 407-8345 Phone: (212) 931-7800 The Hon. Howard Cable June 28, 2002 Page 4

John ortora L Jeftrey Pash National Hockey Leaguc National Football Leaguc 1251 Avenue ofthe Americas 280 Park Avenue Ncw York, New York 10020 Ncw York, New York 10017 Phone: (212) 789-2000 Phone: (212) 450-2033

.Ritchie T. Thomas counselfor National Collegiate Athletic Association Squire, Sanders tk Demyseyl LP. 1201 Pcnnsylvama Avcnue, N.W. Washington, D.C. 20004 Phone: (202) 626-6600 20 Mr. SMITH. Thank you, Mr. Garrett. Mr. Rich? STATEMENT OF R. BRUCE RICH, ATTORNEY-AT-LAW, WEIL, GOTSHAL 4 MANGES, LLP Mr. ROUGH. Thank you. Mr. Chairman, Members of the Sub- committee, thank you for affording me the opportunity to testify before you once again on the important subject of much-needed reforms to the CARP process. In my testimony last June I outlined what I believe are the major shortcomings of the CARP process as it exists today and made a series of recommendations for reform. I'm delighted that H.R. 1417 addresses many of those concerns. This bill reflects the commendable efforts of the Chairman of the full Committee and of this Subcommittee, of other Members who have assisted the Chair- man in crafting this legislation, and of the Committee and Sub- committee staff to resolve thorny and complex issues raised by it. I appear here in my capacity as partner in the law firm of Weil, Gotshal & Manges, LLP, which has for nearly 25 years represented many, if not most of the country's largest media with respect to copyright and music license issues. This background affords me the perspectives I offer today on H.R. 1417, although I should note that the testimony is offered personally and not on behalf of any of our clients. In my judgment, H.R. 1417 offers a significantly improved framework in which to resolve royalty rate-setting and potentially, royalty distribution disputes. As you consider what clarifications and improvements can be made to H.R. 1417, I offer the following seven observations, which I explain further in my written direct testimony. First, H.R. 1417 commendably eliminates the cumbersome and inefficient three-arbitrator panel approach in favor of a single copyright royalty judge appointed by the Librarian. Such a position, aided by the professional staff also afforded by H.R. 1417, will bring much-needed efficiency and continuity to these proceedings. At the same time, I believe that the interest of finding a highly qualified individual for this position would be better served by not requiring, as H.R. 1417 currently proposes, that the individual possess copyright expertise. Such a requirement misconceives the basic issues involved in rate-setting and distribution proceedings. I would make a similar observation with respect to the proposed qualifications of the professional staff. Less may be more here in terms of preexisting subject matter expertise. Talented judges, as well as intelligent professionals, can rapidly acquire the expertise needed to perform their functions. Our Federal court system has functioned well this way for generations. Second, H.R. 1417 appropriately confers independence in the role and decision-making of the new judge. To assure such independence, the legislation should also provide that consultations between the judge and the Register, whether on matters of procedure or substance, be on the record and disclosed to all parties to the proceeding. Third, H.R. 1417 desirably addresses the exorbitant costs of CARPs by eliminating party underwriting of the hourly fees of the 21 arbitrators and placing the copyright royalty judge and the staff salaries within the appropriations for the Copyright Office. The legislation is less clear as to what types of remaining costs would be subject to assessment against the parties and how those costs should be allocated among the parties to a proceeding, matters that deserve clarification. Fourth, the stark limitations on discovery tools and time frame that govern existing proceedings led to my earlier observation that CARP proceedings had become frenetic litigation environments in which cases are underdiscovered and overtried. H.R. 1417 helpfully proposes to extend the 45-day discovery period to 60 days. Even a 60-day period may not suffice, however, particularly in complex rate adjustment proceedings. I would urge that the copyright royalty judge be given the discretion to establish a discovery period not to exceed 120 days based on the judge's assessment of the time necessary to create a meaningful prehearing record. The timing, sequencing and available tools of discovery also need clarification. The bill as drafted leaves unclear whether discovery is to precede or follow the filing of written direct cases. An expansion of discovery tools closely supervised by the judge would seem warranted. Discovery should not be limited to documents underlying an adversary's direct case but should be supplemented with limited use of depositions, requests to admit and/or interrogatories. As now acquiesced by the Register, we agree that the copyright royalty judge should be invested with subpoena power. Fifth, H.R. 1417 properly recognizes the need for greater flexibility with respect to the current 180-day period from commencing of hearings to the rendering of decision. A period of up to 1 year in the discretion of the royalty judge, as proposed, seems entirely appropriate. Six, H.R. 1417 properly streamlines the appeals process, eliminating intermediate review by the Librarian prior to review by a Federal court of appeals. I believe, however, that the proposed standard of review, based on the arbitrary and capricious standard used in relation to some Federal agency actions, is too restrictive and should be replaced with the standard governing appellate review of decisions by Federal district court judges, as found in 52(a) of the Federal Rules of Civil Procedure. And finally seventh, H.R. 1417 commendably extends the effective period of these proceedings from in some cases 2 years to a 5- year period. I thank the Members of the Subcommittee for their attention to these matters and I would be pleased to answer questions now or later for the record. [The prepared statement of Mr. Rich follows:] PREPARED STATEMENT OF R. BRUCE RICH Mr. Chairman, Members of the Subcommittee. Thank you for affording me the opportunity to testify before you once again on the important subject of much-needed reforms to the CARP process. I appear in my capacity as senior partner in the law firm of Weil, Gotshal & Manges LLP. As outlined in detail in my earlier, June 13, 2002 testimony, our Firm has for nearly twenty-five years counseled many, if not most, of the country's largest media with respect to their copyright music license requirements, especially in relation to obtaining music performing rights from the three U.S. performing rights licensing organizations, ASCAP, BMI and SESAC, as well as negotiating the treacherous legal shoals created by the Digital Millennium 22

Copyright Act (and its predecessor, the Digital Performance in Sound Recordings Act). Representative clients of the Firm in this area include the ABC, CBS and NBC Television Networks, the nation's commercial local radio and television broadcast stations, the National Association of Broadcasters, cable program services such as ESPN, MTV, Showtime, USA Networks and The Disney Channel, background music entities such as Muzak LLC and DMX MUSIC INC., and new media and webcasting entities which include AOL, RealNetworks, MTVi, and Yahoo!. In the course of our music representations, our law firm has counseled and litigated both copyright and antitrust issues; has appeared and tried leading cases in the federal courts, including in the so-called rate courts which operate under the auspices of the ASCAP and BMI antitrust consent decrees; and has litigated through trial and the appellate process two CARP rate adjustment proceedings (on behalf of the Public Broadcasting Service and National Public Radio in a 1998 proceeding under Section 118 of the Copyright Act, and on behalf of various FCC-licensed broadcasters, as well as some twenty webcasters and DMX, in the CARP to set rates and terms for certain uses of sound recordings pursuant to Sections 112 and 114 of the Copyright Act—a proceeding which is still in its last appellate phase). This deep and varied exposure to the often arcane and invariably hotly-contested world of music copyright licensing—the economic implications of which can be of enormous significance for the parties involved—has provided my colleagues and me with what I believe are useful perspectives on the legislation before this subcommittee. The views I offer through this testimony reflect that experience, although I should hasten to add that they do not necessarily reflect the views of our clients. What follows also reflects our experience with a particular subset of CARP cases—the so-called rate adjustment cases involving determinations of the license fees payable by particular users to groups of copyright owners for public performances or ephemeral uses of their works. From my discussions with those more familiar than me with the other significant area of CARP litigation—involving distributions of royalty fees among competing copyright claimants—I have concluded that there may be a need for separate sets of procedures governing these distinctive types of CARP proceedings. CARP rate adjustment proceedings under Sections 112, 114 and 118, not differently from ASCAP and BMI rate court proceedings, attempt the impossible: to come up with rates and terms for licenses which approximate those that a freely- competitive market would bring about. This delegation to courts, in the rate court setting, and to arbitrators, in the CARP setting, has been necessitated by the determination that the markets involved are not freely-competitive and would, without such judicial or arbitral mechanisms, produce unacceptable distortions in the licensing of the intellectual property rights involved. As challenging are those CARP determinations (under Sections 114(f)(1)(B), 115 and 116 of the Act) which require the weighing of the four statutory factors enumerated in Section 801(b) of the Act in arriving at rates. Our experience in such proceedings has led us to understand just how complex and multifaceted they are, and how skillful the trier of fact and judge of the legal issues presented must be. For these determinations invariably require a facility with macroeconomics and with basic principles of antitrust law; an ability to work through often opaque statutory language, such as pervades the DMCA; the ability to assimilate facts concerning multiple media marketplaces; the ability to evaluate complex statistical and economic data put forth by the parties'xperts; the ability to sift through and properly evaluate record evidence, including making judgments on issues such as witness credibility; and, ultimately, the ability to synthesize all of these elements into a cogent decision that is consistent with prior precedent (drawing distinctions or building upon it as appropriate) and that itself will offer precedential guidance. In my previous testimony, I outlined what I believe are the major shortcomings of the CARP process as it exists today, and made a series of recommendations for reform. I am delighted that H.R. 1417, the proposed Copyright Royalty and Dis- tribution Reform Act of 2003, addresses many of those concerns, although, as I will testify this morning, I believe that several aspects of the bill as it presently is drait- ed could stand clarification or improvement. I want at the outset to express my ap- preciation and admiration for the efforts of the Chairmen of the full Committee and of this Subcommittee, other Members who have assisted the Chairmen in crafting this legislation, and the Committee and Subcommittee staff in so thoughtfully tackling this thorny and complex issue. 1. Elimination of Three-Arbitrator Panels. As I previously testified, the present CARP system's reliance on three, newly-selected arbitrators for each CARP proceeding suffers serious shortcomings, among them: ~ Transient expertise and lack of continuity of decision-makers. ~ Lack of familiarity with prior precedents and, given the lack of probability of being chosen again to be an arbitrator, little incentive to craft meaningful precedent. ~ Wasteful expenditures of time in intra-arbitrator conferences on procedural and substantive issues. ~ An inevitable tendency to reach compromise decisions, reflected in the re- markable tendency of virtually every party to a CARP proceeding to appeal the arbitrators'ulings. H.R. 1417 commendably eliminates this cumbersome and inefficient approach in favor of the use of a single Copyright Royalty Judge, to be appointed for a five-year term by the Librarian of Congress. This individual, hopefully of suitably high experience, intelligence, and independence, can bring the needed efficiency and continuity to the rate-setting and distribution process. By way ofjust one example, parties to a proceeding tried to this judge will have an excellent sense of what to expect were they to try a future proceeding before him. This will promote negotiated resolutions of rate-adjustment and distribution proceedings alike in lieu of repetitive litigation. Such has been the experience in the ASCAP and BMI rate court setting, where there is a similar continuity ofjurists overseeing such cases. With respect to the qualifications of the new Copyright Royalty Judge proposed in (802(a), I believe that the interests of finding a highly-qualified individual for this position would be served by eliminating "deinonstrateil knowledge of copyright law" as a mandated prerequisite. As I have indicated, ratesetting proceedings implicate, first and foremost, issues of economics, not copyright law. The federal judges who supervise the analogous ASCAP and BMI rate courts are not possessed of special copyright expertise, although, over time, they have certainly become familiar with those areas of copyright law at issue in the cases before these courts. To require such expertise of the Copyright Royalty Judge, coupled with other appropriate requirements, such as significant litigation experience, could well make difficult identifying a highly-qualified individual &ee of perceived bias. While, for example, each of the practitioners appearing before you this morning has extensive litigation experience and possesses copyright expertise, I suspect that each of us, fairly or not, has been "branded" as reflecting the biases of the clients we have come to represent in our respective practices. These problems can be alleviated by making "demonstrated knowledge of copyright law" a potential "plus factor," but not a necessary qualification, for the Copyright Royalty Judge. I would offer a similar suggestion respecting the proposed qualifications of the professional staff to assist the Copyright Royalty Judge, found in )802(b). Rather than limit a field of potentially strong candidates by requiring "expertise in copyright law and in the business of economics of the industries implicated," it would, in my judgment, be preferable to cite such qualifications as desirable, but not mandatory. A suitably intelligent individual with a proven capacity to master complex subject areas could easily get "up to speed" in subject-matter expertise quickly; indeed, the entire process might well benefit from such initial open-mindedness. 2. Alleviation of the Exorbitant Costs of Proceedings. I also have observed, as have many others, that the costs incurred by a paity to participate in a CARP proceeding have grown exorbitant. A principal factor in those costs has been the requirement that the parties pay the hourly fees of the three arbitrators—fees that can aggregate to 41000/hour or more. The proposed legislation makes large strides in addressing this concern by covering the salaries of the Copyright Royalty Judge and her assistants under Copyright Office appropriations. At the same time, )803(e) of the bill, as drafted, is less than clear as to the types of remaining "costs" that are subject to assessment against the parties to distribution or rate-adjustment proceedings. Are the reimbursement provisions intended to apply solely to the presumably modest remaining direct costs to be incurred by the Copyright Office and the Copyright Royalty Judge and his staff in relation to a specific proceeding (e.g., photocopying, court reporters, etc)? Or is it contemplated that such costs would also include indirect costs, such as pro-rated salaries of other Copyright Office personnel devoting time to the proceeding, or even to general expenses associated with the use of government offices and hearing roomsg Also unclear is the language of $ 803(e)(1)(B), which contemplates that costs remaining after deductions froin not more than one percent of royalty fees "deposited or collected" are to be borne by the parties to the proceedings "in equal proportions." Given that many rate-adjustment and distribution proceedings are Hydra-headed affairs involving multiple parties with varying interests, the concept of cost allocation in "equal proportions" lends itself to widely varying interpretation. Either the language should be clarified as to intent, or, in a similar fashion to current practice, 24

such allocation decisions should be left to the Copyright Royalty Judge for determination on a proceeding-by-proceeding basis. 3. More Rational Discovery and Other Procedures. The stark limitations on discovery that presently accompany the CARP process, coupled with the cart-before- the-horse nature of the proceeding, arising out of the fact that the parties are required simultaneously to file written direct cases from which they cannot deviate prior to having had the opportunity to obtain discovery or otherwise ascertain the basics of the other side's case, led me previously to observe that CARP cases are, as a result, "underdiscovered and overtried." Such underdiscovery leads to potential abuses in the form of the withholding of key impeaching materials and the blockading of access to critical evidence. Cases are, as a result, overtried because: (i) trial cross-examinations that should be crisp and based on knowledge of the witness'o- sitions are instead transformed into labored, discovery-type fishing expeditions; and (ii) rebuttal cases, which should be of limited scope and duration, become the first opportunity for the parties—especially for their experts—to join issue. H.R. 1417 partially addresses these concerns. On the positive side, it extends somewhat the current 45-day discovery period to 60 days. While a step in the right direction, I believe that a 60-day period for discovery is still not a meaningful one, at least in rate-adjustment proceedings of the magnitude of certain of those we have experienced. I would not advocate a protracted or unbounded discovery process. What I do recommend is that the Copyright Royalty Judge be given the discretion- in line with the discretion that judge is to be afforded with respect to the overall timetable for concluding the litigation process—to establish a discovery period not to exceed 120 days based on the judge's assessment of the time necessary to create a meaningful pre-hearing record. As presently drafted, the legislation is ambiguous in several important respects in terms of the timing and sequencing of discovery. Section 803(b)(3)(c)(ii) prescribes that discovery is to be permitted for a period of 60 days and that final witness lists for the proceeding "shall not be required until the end of the discovery period." What is not clear from the foregoing is when the parties'ritten direct cases are to be filed in relation to the 60-day discovery period. Presently, written cases precede discovery. Arguments can be made for retaining that practice, provided that written cases can be amended to benefit from the ensuing discovery. Alternatively, discovery could precede the parties committing to their positions—as occurs in traditional court cases. The worst of all worlds is to require, as the current system does, the filing of written direct cases without the opportunity to amend them following discovery. The discovery tools to be available to litigants are not spelled out in the bill. Under current practice, only very constricted document discovery (limited to materials that "underlie" the adversary's case) is permitted, and there is no provision for depositions, requests to admit or interrogatories. An expansion of discovery tools would seem warranted, closely supervised by the Copyright Royalty Judge. One such tool, as I have previously testified, involves investing the Copyright Royalty Judge with subpoena power. Past CARP proceedings have shown that critical evidence can lie in the hands of non-parties, such as entities that have entered into assertedly "comparable" license agreements to those in issue. Under current practice, the parties and CARP panels must rely on the voluntary cooperation of such third parties in participating in the proceedings—a state of affairs that can lead- and in the past has led—to an incomplete and distorted fact record. Which leads to the important issue of who should prescribe the regulations governing the conduct of these proceedings. The bill is not entirely clear in this regard. Section 803(b)(3)(A) appears to contemplate that the Register of Copyright is to perform this role, while Sections 801(c) and 803(a) appear to confer relatively broad discretion in the Copyright Royalty Judge to "conduct proceedings" in accordance with the provisions of subchapter II of chapter 5 of the Administrative Procedure Act, and to "mak[e] any necessary procedural or evidentiary rulings" during and before commencement of the proceedings. As a general matter, the interest of sound practice rules requires both a sensi- tivity to the policy objectives underlying these proceedings and a familiarity with litigation realities. With due respect to the Copyright Office, it would seem beneficial not to place sole responsibility for developing rules of practice in such proceedings with that Agency, but, instead, to shape those rules with input from sea- soned administrative law experts, as well as judges and practitioners. One approach would be to require the Register to create an Advisory Committee comprising such expertise to promulgate the regulations. I would also suggest that two existing approaches to similar procedures be referenced as appropriate examples for regulations regarding procedures for these proceedings—the use of the Federal Rules of 25

Civil Procedure as the norm for proceedings conducted by administrative law judges, and the APA's formal proceeding provisions, in particular Section 556. 4. More Rational Rules of Evidence. Currently, what ultimately comes into the record of a CARP case is governed, not by any meaningful rules of evidence, but by the whims of the arbitrators. This can lead—and has led—to absurd and wasteful practice, especially in relation to the admission of blatant hearsay. The bill under consideration helpfully would import into hearings the hearsay rules of the Federal Rules of Evidence, which should significantly improve the quality of the evidentiary records in such cases. Whoever is charged with developing overall rules of practice could productively consider if additional aspects of the Federal Rules of Evidence should be made applicable to CARP proceedings. 5. Relaxation of the Present 180-Day Deadline for Completion of the Hearings and Issuance of a Ruling. I earlier testified that the existing 180-day deadline from commencement of the hearing phase of a CARP to the time the arbitrators must issue their decision is, at least in CARPs of consequential scope, inadequate. Among its deficiencies, the present system allows too little time for post-hearing briefing, and, more importantly, too little time for due deliberation by the Panel and careful expo- sition of its reasoning in its eventual decision. In my view, one very undesirable side effect of this condensed time frame are decisions that scarcely address key aspects of the parties'ases. The ticking deadline clock virtually forces the arbitrators to reach for simple—even simplistic—rationales for their decisions, which are justified with conclusory, at best, "reasoning" attempting to rationalize the result adopted with an often very complex hearing record. H.R. 1417 properly recognizes the need for greater flexibility by remitting to the Copyright Royalty Judge's discretion whether to expand the 180-day period to one not exceeding one year. This proposed revision does, however, contain an ambiguity that should be resolved. Under current practice, the 180-day "clock" begins to run as of the conclusion of the so-called pre-controversy period, i.e., following the submission of written direct cases and the conclusion of the 45-day discovery period and just prior to commencement of hearings. We presume the instant legislation has a similar intent. Yet, the current wording of Sections 808(c) and 804(a) leaves open an interpretation that the 180-day-to-one-year "clock" begins to run as of the date a petition requesting a determination or adjustment of a rate has been published in the Federal Register, i.e., before direct cases have been filed and any discovery has been conducted. Were this interpretation to be adopted, the intended benefits of a potentially lengthened period for the hearing/decision phase of these proceedings would be eviscerated. G. The Appeals Process Should Be Streamlined. Another inefficiency and needless expense associated with the current CARP process is the presence of a two-level appeals process: one to the Librarian of Congress, and a second to the United States Court of Appeals for the District of Columbia Circuit. As I previously suggested, an upgrading of the professionalism of the trial phase of the CARP should be accompanied by adoption of a single right of appeal directly to a federal court of appeals. The proposed legislation provides for precisely such an appellate process. I believe, however, that its proposed standard of review—based on the "arbitrary and capricious" standard used in relation to some federal agency actions—is too restrictive. Competence on the part of the new Copyright Judge is one thing; presumed infalli- bility is another. No differently than the degree of deference given to decisions by federal district judges, decisions of the Copyright Royalty Judge should be subject to the appellate review standard of Rule 52(a) of the Federal Rules of Civil Proce- dure. 7. Consultative Role of the Copyright Office. H.R. 1417 properly confers independence in the role and decision-making of the Copyright Royalty Judge. Section 801(c) of the bill at the same time provides that the Copyright Royalty Judge "may consult with the Register of Copyrights" in making any rulings—presumably, even his or her ultimate merits determination—in any proceeding. While the expertise of the Copyright Office is welcome in these proceedings, it would seem prudent to assure that any such contacts—whether on procedural or substantive issues—are on the record. For instance, the legislation could provide for the Copyright Office to file one or more briefs as amicus curiae or intervenor expressing the Copyright Office's views on issues pending in a given proceeding. If there are to be more informal communications between the Copyright Royalty Judge and the Copyright Office, those should be arranged on notice to the parties with a procedure for participation. 8. Extending the Applicable Period of Rulings. I have advocated extending the statutory periods for which the current CARP proceedings have effect, from what are as short as two-year durations to five-year periods. H.R. 1417 commendably adopts this approach, although the language of the technical amendments, as well 26

as of 6(b) (Transitional Provisions), which are apparently designed to accomplish this objective, may need some "tweaking." 9. Improved Procedures to Facilitate Settlements. An important area of procedural reform is not addressed in H.R. 1417. This relates to facilitating negotiated settlements after a rate adjustment proceeding has begun. Current CARP procedures, as they have been interpreted by the Copyright Office, provide an unwieldy and inflexible process whereby a proposed settlement reached after initiation of the CARP process may be adopted by the Librarian of Congress in lieu of a CARP determination only after the proposal either is published for public comment and no interested party files a comment opposing the negotiated rates and terms or is otherwise submitted for scrutiny to the CARP Panel. These procedures have proven to be particularly problematic where negotiations during a CARP proceeding have yielded a potential settlement involving some, but not all, of the parties to a proceeding. The requirement of publication of the proposal and/or disclosure of its terms to the CARP Panel while proceedings with other non-settling parties are still ongoing can have—and recently has had—the effect of derailing settlements. I would urge that H.R. 1417 include procedures that will facilitate settlement discussions during the pendency of the proceedings, as well as enable negotiated rates and terms in partial or complete settlement of a proceeding to be adopted without the kinds of crippling procedural conditions that now exist.

I recognize that the legislation under consideration today addresses solely procedural CARP reform. As I indicated in my prior testimony, however, even the best available process cannot cure deficiencies in the substantive statutory standards themselves, as those standards have been interpreted to date. I think it important to say a few words on this all-important subject. I am most familiar with the application of the standards contained in 5(j 112, 114 and 118 of the Act, and therefore confine my comments to those provisions. Pursu- ant to ) 114, CARP Panels are charged with establishing "rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." See 17 U.S.C. (j 114(f)(2)(B) (2001).i The f 118 standard, incorporated by reference in f 801(b) of the Act (detailing the operation of CARP Panels), calls for the determination of "reasonable terms and rates of royalty payments." In reaching these determinations in each case the Panels "may"—but are not required to—give weight to voluntary license agreements reached in lieu of resort to the statutory license. See )112(e)(4); (j114(f)(2)(B); (j 118(bX3). My experience litigating under these standards has given me, and many users intended to benefit from the statutory licensing procedures, considerable concern. The concern centers on the potential misapplication of these provisions to, in effect, rubber stamp selective agreements reached by large and powerful collectives representing copyright owners (whether ASCAP or BMI, in relation to musical works performance rights, or the RIAA in relation to digital transmissions of sound recordings). Indeed, this concern is but a part of the larger antitrust concerns that arise out of the joint licensing activities of these collectives, matters which have triggered decades of Antitrust Division review and oversight. With respect to each of these statutory directives, it would seem plain that the purpose of the exercise is to determine the fees that would have resulted from dealings between willing buyers and willing sellers in a competitive market (i.e., a market undistorted by the concentration of bargaining power in the hands of a collective society or major industry trade association). Yet, strenuous arguments have been made by these owners'ollectives that dispositive weight ought to be given to such license agreements as copyright owners'ollective agents may have been able to reach with one or more third parties. While I do not suggest that statutory ratemaking is an easy task, unless it is recognized that the core statutory objective is to approximate the value a marketplace untainted by undue market power possessed by copyright owner collectives would produce z no amount of fine-tuning or refinement of the ratemaking process will generate an economic result true to the spirit and intent of these statutory license provisions.

i — The standard embodied in $ 112 that the CARP "establish rates that most clearly represent the fees that would have been negotiated in the marketplace — between a willing buyer and a willing seller" is not substantively different. See 17 U.S.C. 5 112(e)(4). zlt may be that, in a given industry setting, there are no voluntary agreements that are not so tainted. To the extent that is the case, it is entirely appropriate to resort to comparable licensing benchmarks in other markets. 27 An alternative means of assuring that the market power of the copyright owners reflected in their marketplace dealings does not distort the proceedings is to rein- state, at least in Section 112 and 114 proceedings, the four objectives which govern f 114(f)(1)(B), 115 and 116 proceedings, as set forth in Section 801(b)(2) of the legislation. There would appear to be little rationale for affording the benefits of those statutory factors to only certain $ 114 statutory license determinations and not at all to ( 112 determinations. I thank the Members of the Subcommittee for their attention to these important matters and for the opportunity to share my views on H.IL 1417 with you. I would be pleased to answer questions and elaborate further on this testimony now or later for the record. Mr. SMITH. Thank you, Mr. Rich. Mr. Remington? STATEMENT OF MICHAEL J. REMINGTON, ATTORNEY-AT-LAW AND PARTNER, DRINKER BIDDLE 4 REATH, LLP Mr. REMINGTON. Thank you, Mr. Chairman, Mr. Ranking Minor- ity Member, Members of the Subcommittee. I appreciate the opportunity to testify on the important subject of the Copyright Royalty and Distribution Reform Act of 2003. As was observed, I previously testified at an oversight hearing on the CARP structure and process. Today's legislative hearing is con- structed on the solid foundation of that earlier hearing. If anything has changed, the need for CARP reform is exacerbated today. While I appear on my own behalf, my views do comport with those of Broadcast Music, Inc., for which I serve as Washington, D,C. counsel. I draw on my years of experience working for this Sub- committee. To sit at the witness table with the Register of Copyrights is an honor. In the wake of last year's hearing the Register stated, "the CARP system is broken," I agree with the Register. H.R. 1417 is a positive step toward fixing the broken system. Its basic structure is sound. However, it suffers from a number of drafting problems. Careful heed must be paid that it not ignite the law of unintended consequences. H.R. 1417 manifests Chief Justice Vanderbilt's adage, reiterated recently by Chief Justice Rehnquist, that judicial reform is no sport for the short-winded. Any statutory reform should incorporate a multi-judge permanent structure to promote the stability and predictability of results, procedures for encouraging settlement of all claims and a mechanism for streamlining the resolution of small claims, and cost reduction measures. In large part, H.R. 1417 meets these goals. First, H.R. 1417 creates a permanent adjudicative structure—a full-time copyright royalty judge who serves a 5-year term. Never- theless, H.R. 1417 does not go far enough. As Bob Garrett explained, the new entity should be composed of three judges who serve a minimum of 7-year terms. H.R. 1417 also cures serious defects in the current CARP system, some of which were just reiterated by Bruce Rich. It eliminates the office's intake role and removes the Librarian's appellate responsibilities by permitting a single appeal to the D.C. Circuit. Second, H.R. 1417 takes affirmative steps to streamline the resolution of small claims and to facilitate the settlement of all claims. The bill creates a $ 150 filing fee, identical to that required for all litigants who file civil actions in Federal district courts. Payment of a filing fee by all parties who file a notice of intent to participate 28 in a royalty proceeding will discourage the filing of frivolous claims and create an incentive for all parties to engage in meaningful settlement negotiations. H.R. 1417 requires that an offer of judgment procedure, similar to that found in rule 68, be implemented regulatorally. The bill should clarify that this procedure does not apply to rate adjustment proceedings. The bill's proposed language is silent as to what hap- pens if an offer of judgment is not accepted by a party and that party does not receive after litigation the level of the offer. The judge should at least have authority to impose costs incurred after the making of the initial offer. H.R. 1417 provides that cases involving small claims may be subjected to a paper proceeding. This is a salutary end. The $500 threshold is too low, however. If the paper proceeding is based on the consent of the party with the small claim, who I can assure you will not consent, it will not work. Giving a veto to a small claimant would be a step backwards. H.R. 1417 is also ambiguous about what sort of paper process is envisioned. Finally, Congress should promote cost reduction measures. I will identify two drafting problems. The first is the discovery problem that Bob Garrett alluded to. It would be a mistake and extremely costly to allow depositions and interrogatories. Second, H.R. 1417, and this may be a technical point, does not contain an authorization for appropriations. Funds should be authorized to be appropriated at least for the judges and the permanent staff. Support staff and necessary space and facilities in the Copyright Office should also be paid by appropriated funds. Almost 100 years ago Roscoe Pound spoke about the causes of popular dissatisfaction with the administration of justice, He specifically mentioned that the maladies of costs, complexity, unpredictability, defective statutes and a tendency to overlitigate transform the law into a game, a sporting event, a March Madness of sorts. Much of what Pound said applies to the current CARP system. H.R. 1417 addresses Pound's maladies. Mr. Chairman, I commend you for introducing H.R. 1417 and for holding this hearing. With several hopefully noncontroversial amendments, the Subcommittee should process this necessary piece of legislation. Thank you. [The prepared statement of Mr. Remington follows:] PREPARED STATEMENT OF MICHAEL J. REMINGTON Mr. Chairman, Mr. Ranking Minority Member, and Members of the Sub- committee, I appreciate the opportunity to testify before you on the important subject of the "Copyright Royalty and Distribution Reform Act of 2003" (H.R. 1417). During the last Congress (on June 13, 2002), I testified before the Subcommittee on the CARP structure and process.t Last year's hearing was the first oversight hearing conducted by the Committee since 1993. Today's legislative hearing is con- structed on the solid foundation of that initial hearing. My statement today is entirely consistent with my previous testimony. If anything has changed, I feel more strongly about the need for reform of the CARP system. H.R. 1417 is a positive step forward. Its basic structure is sound. However, it suffers from a small number of drafting problems and careful heed must be paid that

'See Hearing on Copyright Arbitration Royalty Panel (CARP) Structure and Process Before the Subcommittee on Courts, the Internet, and Intellectual Property of the House Committee on the Judiciary, 107th Cong., 2d Sess. (2002) (Serial No. 78) [hereinafter "House Hearing"]. 29

it not invoke the "law of unintended consequences" by making certain matters worse.z As was the case last year, I appear on my own behalf but I am also authorized to state that my views comport with those of Broadcast Music, Inc. ("BMI"), for which I serve as Washington, D.C. counsel.s In my capacity as an attorney representing BMI, which commenced in 1994, I am experienced in and familiar with the CARP structure and process. I am also familiar with the CARP's predecessor, the Copyright Royalty Tribunal ("CRT"). From the Copyright Revision Act of 1976 (effective January 1, 1978) to the present, the U.S. performing right organizations (BMI, the American Society of Composers, Authors and Publishers ("ASCAP") and SESAC, Inc. ("SESAC") [hereinafter "PROs"]) have been active participants in rate and distribution proceedings, first before the CRT and then the ad hoc CARP system. Annually, in the past, the PROs have partici)oated as claimants to cable, satellite and digital audio recording technology ('ART') royalty funds and, whenever necessary, participate in distribution proceedings. They have participated in rate-setting proceedings for cable, satellite, non-commercial educational broadcasting, and jukebox royalties. While the PROs have a successful history of settling compulsory license matters prior to litigation, they have occasionally been obliged to litigate distribution and rate controversies. Under the CARP system, the PROs have experienced four distribution controversies, one in cable (Phase I) which is ongoing, another in cable (Phase II, within the music category) regarding a single individual claimant, and two involving the distribution of DART royalties, both also involving individual claimants. The PROs have also been involved in two rate adjustment controversies: the first one being a section 118 rate-adjustment proceeding between BMI and ASCAP, acting individually, and the public broadcasting industry (the first after twenty years of successful settlements), and the second a proceeding between copyright owners and satellite carriers. For the record, I was a counsel to this Subcommittee for nearly thirteen years. I served as Counsel from 1977 to 1981, Chief Counsel from 1983 until 1991 and Spe- cial Counsel from 1991 to 1992.4 I also previously served as a prosecutor (in the At- torney General's Honors Program) in the U.S. Department of Justice and as Deputy Legislative Affairs Officer in the Administrative Office of the U.S. Courts. I left the committee staff in early 1992 to become Director of the National Commission on Ju- dicial Discipline and Removal ("National Commission") where I served for 18 months s Currently, I am a partner in the law firm of Drinker Biddle & Reath LLP where I am the founding chair of the firm's intellectual property group. I am also an adjunct faculty member at the Catholic University's Columbus School of Law (where I teach legislation) and George Mason University School of Law (copyright). Except for BMI's interests, my firm has no other client interests in the matters before the Subcommittee this morning.s As an alumnus of this Subcommittee, Mr. Chairman, congratulations on your assumption of the Subcommittee's chair. I look forward to serving under your able captaincy. Mr. Ranking Minority Member, I also look forward to your "co-captaincy" (which may not be the appropriate word but given this Subcommittee's long and consistent history of bipartisanship seems appropriate). I would be remiss if I did not mention my respect for the strong leadership of Chairman Sensenbrenner and Ranking Member Conyers, and the public service contributions of the able staffs of all the Members.

zDue to the short amount of time to review the proposed legislation, I focused on the subject of CARP reform, and not the technical amendments to the various compulsory licenses. I am informed that they track current law; at least one of them does not. sThis Committee is well aware that BMI is a performing right organization representing songwriters, composers and music publishers in the licensing of the public performing right in their musical works. «I was a counsel in 1977 when the CRT was appointed by President Jimmy Carter, in 1985 for the oversight hearing (see Copyright Royalty Tribunal and U.S. Copyright Office: Oversight Hearing Before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice of the House Committee on the Judiciary, 99th Cong., 1st Sess. (1985)) that resulted in the res- ignation of the then-Chairman of the CRT (Marianne Hall), and in 1990 for the enactment of the Copyright Royalty Tribunal Reform and Miscellaneous Pay Act of 1989, Pub. L. No. 101— 319, 104 Stat. 290, that reduced the size of the CRT from five commissioners to three. sTwo years ago, I testified before the Subcommittee on "the operations of federal judicial misconduct and recusal statutes" and the Committee's leadership should be commended for its leadership in enacting recent reforms to the judicial discipline statute. See Pub. L. 107—273, 511041 et seq, 116 Stat. 1758 (the Judicial Improvements Act of 2002). eMy firm does represent the American Council on Education, a participant in section 118 rate-adjustment proceedings, but neither in those proceedings nor on other CARP matters. 30

i. BACKGROUND To sit at the witness table with the Register of Copyrights, Marybeth Peters is an honor. She and her competent and committed lawyers and staff in the General Counsel's office have a difficult task administering a flawed (and failed) statute. During the past decade, the roles of the Office, CARPs, individual arbitrators and Librarian have become increasingly more difficult. Congress has created new compulsory licenses in complicated and complex areas, delegating issues of first impression to the Office and the CARPs. Glaring problems and dissatisfaction of the system's participants have become apparent. In the wake of last year's oversight hearing, the Register stated: "The CARP system is broken. We need to fix it or come up with a system that is more equitable and responsive to the parties."7 I agree with the Register that the CARP system is in dire need of reform. I so indicated last year. Conditions and circumstances relating to the CARP structure and process indicate a pressing need for the Subcommittee's intervention not only through oversight but legislatively. History provides a backdrop. In 1993, Congress replaced the CRT, an independent agency with three Presidential-appointed commissioners situated within the legislative branch that was created in the Copyright Revision Act of 1976, with ad hoc CARPs within the Library of Congress.s Today, whenever there is a controversy on the distribution of compulsory copyright royalties or the adjustment of copyright royalty rates, the Librarian is authorized to convene a CARP. Administrative responsibilities prior to the declaration of a controversy are assigned to the Copyright Office. In the legislative history that accompanies the 1993 Act, this Committee evidenced the view that "ad hoc arbitration panels are better suited to handle the functions of the Tribunal...."s One court later found that the CARP system was created by Congress and implemented by the Office to facilitate "expeditious and informal settlement of claims at the administrative level and to discourage resort to formal, protracted and costly judicial processes of resolving disputes." io Unfortunately, the CARP system has not fulfilled the policy promises of informal, expeditious and inexpensive dispute resolution of royalty controversies. The CARP system has proved to be just the opposite of its legislative goals. The system is time- consuming, formal and very expensive. It has neither promoted stability and predictability of results nor does it discourage resort to the costly, formal and protracted process. Settlements are all too often hard to achieve. In retrospect, it was an error for the Congress to have abolished the CRT rather than modifying or altering it. The system should be reformed by Congress, sooner rather than later. Key members of the legislative branch agree. Mr. Chairman, the preparation of the Copyright Royalty and Distribution Act of 2003 is a positive step forward that builds on the contributions of former Subcommittee Chairman (Howard Coble) who in 1998, shortly after issuance of the Register's Report, introduced legislation to replace the CARP system with a permanent Copyright Royalty Adjudication Board composed of a full- time chief administrative copyright judge, and such part-time administrative copyright judges as the Librarian upon the recommendation of the Register, finds necessary. Companion legislation was introduced in the Senate by Senators Hatch, Leahy, and Kohl.is On April 12, 2002, Chairman Coble took the further step of writing a letter to interested parties soliciting views about the CARP structure and process. After last year's hearing, Chairman Coble and Ranking Member Berman also stimulated a Copyright Office Roundtable and further requested interested parties to submit lists of proposed CARP reform items. On August 2, 2002, ASCAP, BMI and SESAC submitted such a list. See Appendix A. Mr. Chairman, the baton has been passed to you and I am thankful that you have chosen to run with it.

v Luncheon Address to the Intellectual Property Section, District of Columbia Bar Association (Dec. 9, 2002), as reported in 65 BNA PTCJ 142 (Dec. 13, 2002). Previously, the Register recognize that the system has suffered from "major problems." See Options to Improve Copyright Rov- alty Rate Setting and Distribution Decision-Making, A Report of the Register of Copyrights (Feb. 23, 1998) ("Register's Report") at 11. agee the Copyright Royalty Tribunal Reform Act of 1993, Pub. L. No. 108—198, 107 Stat. 2304 (1993); see also H.R. Rep. No. 103—286, 103rd Cong., 1st Sess. (1993). The CRT originally had five commissioners. For more background about the CRT, see Gassier, Copyright Royalty Tri- bunah Balancing the Record, 41 J. Copr. Soc'y 217 (1994). oH.R. Rep. No. 103—286, at 11 (1993). National Ass'n ofBroadcasters v. Librarian of Congress, 146 F. 3d 907, 920 (D.C. Cir. 1998). » See H.R. 3210, 105th Cong., 2d Sess. (1998). » See S. 1720, 105th Cong., 2d Sess. (1998). 31

Before sharing my recommendations, permit me to describe several CARP highlights since the last hearing, manifesting a mixed bag of successes, failures, and at least one noteworthy aberration: ~ The parties (composed of the PROs, acting individually, and the public broadcasting industry (PBS, NPR, ACE and religious broadcasters, also acting individually)) settled a section 118 rate-adjustment proceeding. Two other rate proceedings involving exclusive rights in sound recordings, one between the RIAA and pre-existing subscription services, and the other between the RIAA and pre-existing satellite services, recently settled. ~ A decision was rendered by the Librarian in the webcasting rate proceeding- the "CARP of the century so far" (to quote from the Register of Copyrights). The Office rejected the CARP's decision, and the Librarian issued a modified ruling. No one was happy. All the parties appealed to the D.C. Circuit. Sev- eral parties approached Congress and a statute was enacted further modifying at least part of the Librarian's decision. Total costs for this CARP, including attorneys fees and witness costs, were in the millions of dollars (some estimates as high as $25 million). ~ The CARP process experienced an aberration with its first proven case of per- jured testimony. In a cable distribution controversy in the program supplier category, a litigant was found to have committed perjury, pled guilty and is currently residing in a federal penitentiary. The Librarian vitiated the entire proceeding, and the matter is pending on appeal in the D.C. Circuit. ~ The PROs and several other settling parties, in a recent DART distribution proceeding, avoided a CARP when a single pro se claimant who failed to file a written direct case was dismissed by the Office. The settling parties, however, were required to prepare and file their own direct case, expending in- house costs and attorneys fees in excess of $100,000. ~ A cable distribution controversy for the years 1998—99 is ongoing, with another (for the years 2000—01) to commence thereafter. A satellite distribution controversy also awaits in the wings. Today, the CARP system is complex with a significant workload, much more than that handled by the CRT. The system, however, lacks "consumer" satisfaction, as measured by too few settlements, high costs, many appeals and frequent resort to Congress. In my view, any legislative reform should incorporate: (1) a permanent structure to promote the stability and predictability of results; (2) procedures for encouraging settlement of claims and a mechanism for streamlining the resolution of small claims; and (8) cost-reduction measures.is In large part, H.R. 1417 meets these goals.

II. CONGRESS SHOULD CREATE A PERMANENT MULTI-JUDGE STRUCTURE TO PROMOTE THE STABILITY AND PREDICTABILITY OF RESULTS. H.R. 1417 is a constructive reform because it creates — a permanent adjudicative entity a full-time Copyright Royalty Judge, who, appointed by the Librarian of Congress, serves a five-year term. However, it does not go far enough. Throughout the entire history of the CRT and the CARPs, panels of three or five adjudicators have sat. Any new permanent entity should be composed of three judges who serve a minimum of seven-year terms. While more costly, a multi-judge panel is an important part of the current system that should be preserved. The work-load—which is growing, complex and economically important to authors, copyright owners, distributors and users—justifies more than a solitary judge. H.R. 1417 provides the judge(s) with two professional staff members who must meet certain statutory criteria. I would suggest that staff members be selected based on merit. That would equip the judge(s) requisite fiexibility to appoint a General Counsel and an Administrative As- sistant. H.R. 1417 also cures two serious defects in the current CARP system. First, currently the Copyright Office is placed in the schizophrenic situation of being the intake agency (a clerk of court, of sorts) and the appellate court (as advisor to the Librarian) for CARP decisions. Such dual responsibility is extremely rare in the United States and the Office clearly has struggled with balancing its two roles. H.R. 1417 both eliminates the Office's intake role and removes the Librarian's appellate responsibilities. A consultative role is appropriately preserved for the Office. The bill 's For further information, see letter to the Honorable Howard Coble from I. Fred Koenigsberg and Marvin L. Berenson (dated June 20, 2002), reprinted in House hearing at 154. 32

should specify that any advice rendered by the Office is limited to legal issues. Sec- ond, H.R. 1417 permits a single appeal to the U.S. Court of the Appeals for the D.C. Circuit (which has developed expertise in reviewing copyright royalty appeals). In the U.S. justice system, minimal standards of due process dictate one appeal of right, with a second discretionary appeal (as a safety check on the initial appeal). This was the practice under the CRT's statute. By creating one appeal of right, the proposed legislation is on solid ground.i4

III. CONGRESS SHOULD ENACT A MECHANISM FOR STREAMLINING THE RESOLUTION OF SMALL CLAIMS AND PROCEDURES FOR ENCOURAGING SETTLEMENT OF CLAIMS. As regards small claims, under the current CARP system abuses have occurred and the Office has consistently found that it lacks authority either to prevent these abuses. Arbitrator costs alone far exceed the amount-in-controversy. In my testimony last year, I identified three egregious examples.» Permit me to add a recent experience. In a DART distribution proceeding that just terminated, the settling parties were obliged to prepare and file their written direct case, while a pro se individual did not file a case at all (before being dismissed), As stated above, overall costs (in-house and attorneys fees) to the settling parties was close to $ 100,000.00. If the case had been litigated„ the pro se litigant would have been shown to deserve less than $ 10.00. When transaction costs greatly exceed the amount-in-controversy, the CARP system is not an efficient and effective dispute-resolution device. Claimants with small claims have been able to use existing CARP rules to prolong CARP proceedings and derail settlements at virtually no cost to themselves,is but at substantial cost to all other interested parties. In these circumstances, it is abundantly clear that the CARP system has not met the expectations of its congressional sponsors or the parties who are compelled to litigate their royalty distribution disputes within the con- 6nes of this system. The Copyright Royalty and Distribution Act of 2008 addresses these problems. It contains three salutary features that will not only cure defects, but will recognize the rights of those with small, albeit valid, claims to participate in copyright royalty proceedings: (1) a uniform filing fee For all claimants (except for those who reauest a paper proceeding); (2) an offer of judgment mechanism; and (8) for small claims matters. paper proceedings A. A Filing Fee. The Copyright Royalty and Distribution Act of 2008 creates a filing fee ($150.00) that is identical to that required for all litigants actions in 6ling civil federal district courts. See 28 U.S.C. $ 1914. Because the filing fee is pegged to a "notice of intent to participate," a single fee would presumably be paid for each notice filed. Each performing right organization has always been considered to be a single joint, claimant that like others (e.g., settling parties, joint sports, program suppliers, music publishers, broadcasters, all with multiple members) files a single notice of intent to participate. This practice should be continued. Moreover, the Of- fice now requires a single notice of intent for both Phase I and II proceedings with respect to cable and satellite distributions. It would be helpful if the Committee Re- port clari6es that only one 6ling fee would be paid for each proceeding. As I testi6ed last year, payment of a reasonable 6ling fee by all parties who file a notice of intent to participate in a distribution or rate adjustment proceeding will discourage the filing of frivolous claims and create an incentive for all parties, regardless of the size of their claims, to engage, early on, in meaningful settlement discussions. This is particularly true with regard to those asserting small claims, i4 The Act adopts an "arbitrary and capricious" standard of review by the D.C. Circuit, a return to the CRT model. If there is a three-judge panel with seven year terms, this is an appropriate standard. It, however, may not be an appropriate one for a solitary judge. isFirst, the costs of the arbitrators in the 1992—94 Audio ("DART" Digital Recording Technology ) distribution proceeding, which resulted in an award of $11.03 to two individual claimants were more than $12,000 (more than one thousand times the amount-in-controversy). Sec- ond, the costs of the arbitrators in the 1995-96 DART distribution proceeding, which resulted in a total award of 6.06 $ to the same two individual claimants ($5.04 to one and $ 1.02 to the second) were in excess of $21,000 (almost three thousand times the amount-in-controversy). Third, in the 1991 Cable Distribution Proceeding (Phase II), the arbitrstors awarded $63.74 to an individual claimant, yet the costs of the arbitrators were more than five hundred times that amount.'s Small claimants no doubt realize that the allocation of costs is based on calculation of their awards in relation to CARP costs so that the net-cost allocated to them is infinitesimal (literally pennies or fractions of pennies). In the three matters discussed above, no costs were allocated to the individual claimants. This procedure does not encourage settlements; in fact, it encourages small claimants not to settle at reasonable amounts because these claimants realize that it will cost them nothing or very little to proceed. 33

who currently have little or no incentive to engage in significant settlement discussions. Moreover, the proposed legislation specifies that the filing fee—which would be added to the relevant fund or subfund—will help defray the administrative costs incurred by the Office in connection with the respective proceedings. B. Offers of Judgment. H.R. 1417 requires that an offer of judgment procedure—similar to that found in Rule 68 of the Federal Rules of Civil Procedure—be permitted. Rule 68 has the force of statutory law, having been proposed by the U.S. Supreme Court and permitted to go into effect by the Congress. Last year, I proposed that a Rule 68 process be applied to small claims (where the amount in controversy was less than $15,000.00). H.R. 1417 goes beyond that, and appropriately so. It would be helpful, however, to clarify that it does not apply to rate adjustment proceedings. In addition, the language proposed in the bill is silent as to what hap- pens if an offer of judgment is not accepted by a party and that party does not receive the level of the offer after litigation. The judge should at least have authority to impose costs incurred after the making of the offer. C. Paper Proceedings. H.R. 1417 provides that cases involving small claims (defined statutorily to be under $500.00) may be subjected to a paper proceeding. In my opinion, the $500.00 threshold is too low. Last year, I suggested $ 15,000.00. The Subcommittee should consider $10,000.00 or $5,000.00 as appropriate levels in line with small claims courts in this country's metropolitan areas. As drafted, the small claims provision is ambiguous because it appears to be based on the consent of the party with the small claim (who then will not have to pay the filing fee). Giving a veto to a small claimant (which will be exercised) would be a step backward from the current CARP system, which permits a CARP to order a paper proceeding even over the objection of a claimant. The small claims procedure should be redrafted to be mandatory for all claims under the threshold amount and so as to not waive the filing fee. H.R. 1417 is also ambiguous about what sort of process is envisioned. The paper proceeding should replicate current processes with some requirement that a small claimant make a bona fide showing. A provision should also be craited to handle claims that are clearly inflated to avoid the designated threshold. If a claim is clearly inflated, the judge should be authorized to take remedial action such as the imposition of costs. In matters where no genuine issues of material fact exist, the judge should be statutorily authorized to make a summary judgment decision based on facts not in dispute, applicable law and precedents. In the final analysis, the filing fee, offers of judgment and small claims process will operate to promote the fair settlement of claims.

IV. CONGRESS SHOULD PROMOTE OTHER COST-REDUCTION MEASURES AND SHOULD NOT UNINTENTIONALLY INFLATE COSTS. Creation of a permanent structure with a Copyright Royalty Judge(s) and salaried employees, along with a small claims process, will save substantial costs in comparison to the current CARP system with no decrease in the quality of decision-making. Nonetheless, the Subcommittee should pay careful heed not to unintentionally increase costs. A. Discovery. The Copyright Royalty and Distribution Act of 2003 extends the period for discovery from the current 45 days to 60 days. This reform is probably not necessary but, in complex cases, is supportable. H.R. 1417 should provide that "discovery shall be permitted for no more than a period of 60 days" so that the extended time-period does not become the norm in all cases. Further, any discovery should occur only aiter the filing of direct cases, as is the procedure today, and should be limited to documents underlying a direct case. The exchange of final witness lists, after discovery, as is contemplated in the proposed legislation, seems to suggest a radical change from the current procedure. H.R. 1417 also authorizes the Register of Copyrights to promulgate discovery regulations specifically to incorporate hearsay rules, but is drafted in an open-ended manner to potentially authorize the Register to promulgate regulations allowing depositions and interrogatories. If depositions and interrogatories are permitted, the new procedure will become akin to a "federal" court case which the new system is supposed to obviate. Make no mistake: a full-scale discovery model would be "gamed" by small and large claimants alike. In the spirit of reducing costs and complexity, the bill should not textually invite radical reforin to current discovery rules. B. Length of proceedings. The current length of proceedings—one year from the declaration of a controversy to completion—should not be extended. C. Salaries of the permanent copyright judge(s) and permanent staff. H.R. 1417 does not contain an authorization for appropriations, and therefore is not clear about whether the judge(s) and permanent employees will be compensated out of appropriated funds; or whether space, and facilities, and administrative staff provided by the Office to them would be supported by the taxpayer. I firmly believe that funds should be appropriated for the judge(s) and permanent staff. The appropriation, which will be reduced by the filing fees, will be minimal. This is the model used by the federal courts and previously by the CRT. In brief, this model should be replicated: public servants who engage in judging activities should be compensated by public monies. To the extent that Copyright Office continues to deduct reasonable costs from royalty fees deposited or collected, the Office should report cost-deduction information on an annual basis to the House and Senate Judiciary Committees, and perhaps the Appropriations Committee. With this information, the Committees could then monitor the costs being shouldered by authors and copyright owners. D. Partial distributions. H.R. 1417 authorizes the partial distribution of royalties not in controversy prior to a proceeding. However, H.R. 1417 indicates that partial distributions are "discretionary." Partial distributions are an essential part of the current system, and are an important tool for putting royalties in the hands of copyright owners and authors. If funds are not in controversy, pursuant to motion, those funds should be distributed.

V. ADMINISTRATIVE IMPROVEMENTS SHOULD BE IMPLEMENTED. Several improvements could ordinarily be made through amendments to Office regulations. The Copyright Royalty and Distribution Act of 2003 authorizes the Reg- ister to issue such regulations, including interim regulations to bridge from the current to the new system. Thereafter, the Copyright Royalty Judge(s) should be authorized to make, or amend, rules upon sufficient notice and public comment. A. Public Records. H.R. 1417 recognizes that contemporaneous notice of CARP decisions through publication in the Federal Register is necessary. This is a salutary reform. By regulation, the Office should establish a repository readily available to the public electronically and at the Library of Congress, which collects all rulings under the new system . B. Settlement Period. A formal settlement time-period (with adequate time and notice to the parties of the names and addresses or other participants) before the filing of written direct cases should be required. During this period, settlement conferences supervised by the Copyright Royalty Judge(s) or full-time staff would encourage settlements and reduce costs to the satisfaction of the parties. C. Precedential Rulings. Rulings of the Librarian and the CARPs are to be accorded precedential effect in subsequent proceedings. The Office should establish a repository readily available to the public electronically and at the Library of Con- gress, which collects all rulings of the Librarian and the CARPs, as well as the CRT. D. Judicial Education. One of the salutary aspects of a permanent entity is that the Copyright Royalty Judge(s) will be able to participate in judicial education programs that are provided to administrators and judges in the judicial branch of government, and to ALJs in the executive branch. CONCLUSION Mr. Chairman and Mr. Ranking Member, I thank you for your leadership on intellectual property issues, and copyright law in general. Despite initial optimism after the elimination of the CRT in 1993 and its replacement by the ad hoc CARPs, the new process has not stood the test of time. After a decade, systemic flaws—rooted in its statutory structure—have become evident. I make this conclusion with great respect for the Register, her able staff, and the individual arbitrators who operate under the CARP statute. Almost one hundred years ago, the highly-respected Roscoe Pound, who later became the Dean of the Harvard Law School, addressed the Amer- ican Bar Association on 'The Causes of Popular Dissatisfaction with the Adminis- tration of Justice."iv He specifically mentioned that the maladies of costs, complexity, unpredictability, defective statues, and a tendency to over-litigate, transform the law into a game—a sporting event. Much of what Pound said applies to the current CARP system. H.R. 1417 addresses these maladies. But it needs several curative amendments to establish a multi-judge panel and to prevent the system from becoming more complex and costly before moving forward. Thereafter, the Sub- committee should process this necessary piece of legislation to the President's desk. Thank you.

i735 F.R.D. 241 (1906). APPENDIX A LIST OF CARP REFORM ITEMS OF ASCAP, BMI and SESAC (in order of priority) Dated August 2, 2002 1. Permanent Adjudicative Body. Permanency is essential for predictable and consistent decisionmaking. Permanency fosters settlement. Decisions should be made by a body of three. The creation of this body and its staff would have to comport with constitutional requirements (e.g. no creation of a specialized Arti- cle III court, and no delegation of responsibilities to an Article III judge as no "case and controversy'* would exist). 2. Small Claim Procedures. Special statutory procedures for claims that are small in amount (such as f10,000 or less). Such procedures would include (a) offer of judgment (akin to F.R.C.P Rule 68); (b) mandatory paper proceedings; (c) filing fees (note filing fees would be applicable to aH claimants, not just small claimants); and (d) mandatory settlement conferences with adjudicators. 3. Qualification of Adjudicators. Appointment of adjudicators should not be po- liticaHy motivated and should be based on merit. Adjudicators should have prior judicial experience. Use of ALJs is recommended. Economists and other expert non-jurists would not qualify. 4. Consolidation of Duties. The adjudicators and its staff should have responsibility for aH post controversy issues and decisions, including discovery. The Copyright Office should have responsibility only for pre-controversy issues and may retain an advisory role with regard to interpretation of copyright law. 5. Filing Procedures/Promotion of Settlexnents. In ratemaking proceedings, filing fees should be paid by aH parties filing notices of intent to participate. In distribution proceedings, filing fees shaH be paid by aH claimants to the fund. Only one filing fee would be required for parties participating in both Phase I and Phase II portions of a distribution. There would only be one filing fee for entities that represent multiple claimants such as performing rights organizations, unions, program suppliers, joint sports, broadcasters, etc. Filing fees should be required that would be the same as the filing fee required for the filing of a civil action in a federal district court. Claimants should have to meet formalities associated with controversies. Untimely filing of claims should not be excused without a showing of good cause. A statutory settlement period should be established and respected for aH proceedings with active monitoring by the permanent adjudication body. 6. Timing. The current 180-day timefiame is unworkable, except possibly in small claim paper proceedings. A year from the date of filing a case in non-smaH claim proceedings is necessary. 7. Discovery. Discovery should not be expanded, particularly in distribution proceedings. Expenses would increase dramatically for what will essentially be fishing expeditions. There have been instances in the past where a small claimant desired discovery that would have cost many multiples of the claim made. Like- wise, we are concerned that large claimants should not be permitted to use ex- anded discovery as a means of "brow beating" smaH claimants into settlements ecause the cost of discovery would become financiaHy burdensome when compared to the amount of the claim. One of the policy goals underlying any reform proposal should be cost reduction. 8. Appeal. Appeal should be made directly to the U.S. Court of Appeals for the D.C. Circuit. No intervening level of review by the Librarian of Congress is necessary. 9. Public Funding. Governmental appropriation should fund core governmental functions of what is essentially a public good. 10. Transparency. The parties should have the ability to understand the operations and funding of the adjudicatory process and the Copyright Office's relationship to the process and royalty funds. AH decisions and orders of aH proceedings should be easily accessible to aH parties. Mr. SMITH. Thank you, Mr. Remington. You had me worried because you had four more pieces of paper in your hands. I'm glad you concluded in exactly the right time. Ms. Peters, in your testimony you say that the copyright royalty judge should be afforded the opportunity to correct, amend and reconsider his or her determination after it is issued. Why is that and 36 Mr. Remington, if you want to comment on that, as well, I would appreciate it. Ms. PETERS. Whatever the end result is, that's what's going to go to the appeals court. Based on our experience, we actually got some of those questions where there was an oversight or somebody really hadn't looked at something, so it really was a suggestion to avoid additional appellate litigation if, in fact, it wasn't necessary. Mr. SMITH. Okay. Maybe there's not much more to say. Do you concur with that, Mr. Remington? Mr. REMINGTON. I concur. Mr. SMITH. Okay, great. Mr. Garrett, in your testimony first of all, on page 3, you mention that the structure of copyright royalty allocations in rate-setting will inevitably lead to more rather than less litigation. I think you got into that a little bit with your oral testimony. But then you go on and make the point, as Mr. Remington did, as well, about your concern that there would be only one judge. I have to say to both of you all that I have the same kind of concern because that's putting a lot of power in one individual's hands. You don't know if there might be some bias involved and you have someone there for the long term and just one judge. Of course, it' not unusual; we see that across the country. But nevertheless, in- tuitively I'd feel better if it were a panel of three, too, but you all know the problems with that. We really can't justify three judges full-time and the concurrent expenses, and so forth. On the other hand, you did come up with the suggestion, Mr. Garrett, about having two additional administrative law judges from a pool, and so forth. The problem with that as I understand it is that these aren't copyright royalty judges. These are administrative law judges. They'e not experts. Going through that process might be a real pain. So that's a possible solution but I don't know if it's the best solution, so there's a quandary here. I sort of am sympathetic but I don't know if that is necessarily the best solution. Do you want to make any more comments on your idea of one judge versus three? Mr. Garrett. I do not know that I'e got the solution here, Mr. Chairman, but I do know that all of the parties, at least those who are involved in the cable royalty and satellite royalty distribution proceedings, feel very strongly that it ought to be three, rather than one judge for the reasons that you identified and that we ought to be looking for a way to make that approach work somehow. There's just a tremendous amount of discretion that is afforded these arbitrators. As I said in my testimony, the records are enormous. They produce a wide range of possible results. Mr. SMITH. Of course, Federal judges have a lot of discretionary power, as well. Mr. GARRETT. No question about it and that is the way most decisions in this country are made, but most decisions involving rate- setting, royalty allocations around the world are not made by single individuals. They are made by bodies that are comprised of several individuals. Mr. SMITH. I just want to say to you we'l be looking to see if there's not something we can do about it because I have the same 87 kind of reservations as you do. I don't have a perfect solution to that yet but we'l be taking a look and considering your concerns, as well as Mr. Remington's concerns, too. Mr. Rich, in your testimony, page 8, you made the suggestion that the copyright royalty judge should have subpoena power. I think that's a good idea and I think if we overlooked it, maybe that's something that we can include. But then you proposed a standard of review based on the arbitrary and capricious standard used in relation to some Federal agency actions is too restrictive. The reason we put that in there is because the current standard is just arbitrary and there's really no other jurisdiction that uses that, so that's sort of a unique standard. The arbitrary and capricious is a little bit more common, a little bit more recognizable, and maybe it's a term of art; I don't know. Do you have any other reservations? Mr. RIG'. In part, my reservation flows from your earlier col- loquy with Mr. Garrett, Mr. Chairman, which is that while I propose fairly strongly a single jurist based on the Federal judging model, assuming this is a qualified individual, it seemed to me that an appropriate check and balance on possible distorted outcomes would be a more robust standard of review. And I again look by analogy, instead of the arbitrary or arbitrary and capricious, just to a clearly erroneous-type review standard of the Federal rules. I pulled out, because I thought it might be useful for the panel, just a clause that sort of grabs the respective concepts of arbitrary and capricious as the courts think about it versus clearly erroneous. I thought it, for me, captures the meaningful difference in the standard of review. One court has written that the arbitrary or capricious standard, which is sometimes called the substantial evidence test, calls for such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. In other words, so long as the reviewing court finds that some reasonable person could do it, it stands. Clearly erroneous, on the other hand, the standard I would prefer and think would be more protective of the process and the appeal, means that the reviewing court "has a firm conviction from review of the record that a mistake has been committed." So you can have a reasonable outcome which is still clearly erroneous in the mind of a court. And again because I lean in favor of a single judge rather than three, I think an appropriate balance and check on a clearly wrong decision could use a better standard. Mr. SMITH. That's something we might take a look at and we appreciate the suggestion. Mr. Remington, my time is up. We'e mentioned a couple of things in your testimony—the idea of three judges or not, just one, and so forth. I did want to call your attention and perhaps Mr. Ber- man's attention to one sentence that you had in your written testimony that you fortunately did not use in your oral presentation, and that is you suggested to the Ranking Member, Mr. Berman, that you "looked forward to your co-captaincy." I didn't want you to give the minority any ideas but it did strike me that that was an interesting turn of phrase, but it also gave away which side you worked for when you were chief counsel. 38 Mr. REMINGTON. And I think I admitted that it might not have been the appropriate term in my written statement. Mr. SMITH. It has its uses and I'm sure that Mr. Berman wouldn't object. The gentleman from California, co-captain Berman, is recognized for his questions. Mr. BERMAN. What do you mean "co"? We did previously serve as chair and Ranking Member of a Com- mittee that had an equal number of Democrats and Republicans but it, alas, is not the case here. Thank you, Mr. Chairman. First let me indicate that Ms. Lofgren apologizes to the witnesses for—an emergency came up in her district. She is very interested in this subject and wanted to both hear your testimony and ask questions but she received some information after she got here that required her to leave to attend to this problem in her district. Why don't we just take the last issue first, this one judge versus three judges? First let me make sure I understand. I tend to think in the context of State law on these appellate review standards. You view, Mr. Rich, you view the standard in the current bill as sort of a highly deferential standard? You equated it with a substantial evidence. There's substantial evidence in the record to support what you think should be the copyright royalty judge's decision and since it's only one judge, you think that's too deferential. But are you then suggesting that an appellate court do a sort of an independent review of the record? Mr. RICH. No. Under a clearly erroneous standard, at least if an appellate court is minding its Ps and Qs, Congressman Berman, unless it develops, as I suggested, a firm conviction that the facts which were adduced were erroneous, then it must defer. It still gives substantial discretion to the trier of fact and to judgments about witness credibility. It's far from a de novo standard—I don' advocate that at all—but it is less of an almost automatic kind of "let it pass through if there's any rationale whatsoever" or an objective standard that somebody might have reached this result. That' the standard I construe to be imbedded in H.R. 1417 or close to it. I think that's giving too much discretion, at the extreme, to a single trier of fact. I just think that in our experience as trial lawyers, an appellate court, if it senses something went off the rails factually at the trial in a plenary civil proceeding, let's say, finds enough room in rule 52(a) to find a basis for reversing. Mr. BERMAN. Well, if I'm looking at a record of a decision made by in this case the copyright royalty judge and I'd have decided it differently, then don't I think he was clearly erroneous? Mr. RrCH. Not necessarily. I'e appeared in the Second Circuit in several appeals from ASCAP-type rate-making proceedings and my experience is that those panels are quite deferential to the fact record unless they find something really seriously wrong tended to occur, and I think that rule 52(a), properly construed, on issues of fact, as opposed to law, is still a quite deferential standard but not almost completely deferential, as I think the arbitrary and capricious standard would be. Mr. BERMAN. Tell me again, Mr. Remington, what do you think the standard should be? 39

Mr. REMINGTON. Well, I think the standard should be related to what kind of entity you create at the base. There is a relationship between having a solo judge who perhaps does not consult with the Copyright Office and a less deferential standard of review, but as I envision H.R. 1417, irrespective of whether it is multi-judge or single judge, with a consultation with the Copyright Office, an expert agency, it would be entitled to deference on appeal and that deference would be under section 706 of the Administrative Proce- dures Act, which is what we call arbitrary and capricious. It actually is agency action that is arbitrary and capricious, an abuse of discretion, or other wise not in accordance with law. That is the standard that was used by the CRT and actually, the current standard of review that we have for appeals from the Li- brarian is more deferential than arbitrary and capricious. It is what we call arbitrary and capricious squared because there has already been an intermediate appeal. So you are actually down- grading the standard in H.R. 1417 and I would agree with arbitrary and capacious. Mr. BERMAN. But you think it should be three judges. Mr. REMINGTON. Yes. Mr. BERMAN. And consultation with the Registrar. Mr. REMINGTON. Yes, under appropriate circumstances. Mr. BERMAN. Well, between the two of you, tell me what—Ms. Peters also talked about this issue of on issues of copyright law the Copyright Office should—I'm not sure if it's be consulted or make decisions. Are the two of you sort of suggesting the same thing here'? Mr. REMINGTON. I think so but I am not sure. There should be some standards for the consultation. It should be on the record. Parties should know about it. It shouldn't be like walking down the hall and getting a glass of water together and saying "How would you come out on this case'?" So there should be a little bit more structure in H,R. 1417 and this is an issue that the group that Mr. Garrett alluded to will be getting back to you on in terms of how we think it should be formulated. Mr. BERMAN. Could I just get Ms. Peters's answer to that? Mr. SMITH. The gentleman is recognized for an additional minute. Ms. PETERs. For the Copyright Office, I mentioned in my testimony obviously interpretation of the law and that was the key area. The other place where we think it would be appropriate is if, in fact, the copyright royalty judge was thinking about putting in place rules that affected the procedures of the Copyright Office, whether they were suggesting that a filing be with us or whatever, then it would seem appropriate before they put in place something that affected us, that they would consult with us. Mr. BERMAN. Explain the context in which interpretation of the law comes up. I mean whether the compulsory license covers that entity? Is that what you mean? Ms. PETERS. Well, it's come up even when the CRT was around and one of the ones was whether or not satellite carriers were entitled to the cable compulsory license. So it really had to do with who was eligible for that license. 40 Now it obviously affected us because we actually get the filings of the cable operators who pay the money, and the question was were satellite carriers eligible? So we actually did that ruling and the CRT was fine with it. We recently did one with regard to whether or not broadcasters had liability and were eligible for a statutory license in the webcasting and that case is still on appeal. It's those kinds of things which we think are fairly intricate and that really need not only to look at the statutory license but the whole law that we thought was appropriate for us to be involved in some way. Mr. SMITH. Thank you, Mr. Herman. The gentleman from Virginia, Mr. Forbes, is recognized for his questions. Mr. FORBES. Thank you, Mr. Chairman, and I thank all the panel members for being here. Mr. Rich, I agree with you. I think the standard of appeal should be clearly erroneous and I think that does give us a good balance. I'e wrestled with the number of judges, as well, as I think everyone on the panel is wrestling with that and the Members of the Committee. I don't like the idea of a 7-year appointment, though, because I think that exacerbates perhaps our problem a little bit over the 5 years. Does anybody on the panel have a problem with the method of appointment? Because as the Chairman mentioned here when he talked about the discretion of Federal judges, there is a check and balance at least on that appointment process; in this one there' not. Is everybody comfortable with the way a judge—if we have one judge that's going to be appointed, you don't really have too much screening process there. Anybody object to that or think we should look at that or everybody pretty comfortable with the method of appointing the judge'? Mr. RIcH. I would only offer that I think there is always potential concern there and this is not to cast aspersion at all to my left. Mr. FoaHEs. No, it has nothing to do with the person doing it. Mr. RICH. But I think there is a bit, also, of a trade-off between the notion of that and the concept of independence and what true independence connotes and I think—to the recent dialogue between the panel members and the Members about how much consultation there ought to be—I think that has to be carefully controlled, on the record, for all of the reasons—to assure both the reality and the perception that the independence is not simply something which is on paper but in truth there is persuasive ability of the agency which, after all, after 5 years would have the power of reappoint- ment. Mr. FoaHEs. Everybody else pretty much concur with that? Mr. Garrett, you mentioned about the paper proceedings ought to be extended beyond the small claims. Can you expound on that just a little bit as to your thoughts there? Mr. GARRETT. Yes, Mr. Forbes. I don't know that there is any detailed type of legislation that one can enact on this. I do think it ought to be the sense of the Subcommittee that the scope of paper proceedings be increased as much as possible, that this should be an issue that ought to be dealt with in greater detail in any rulemaking to implement this legislation. 41 My concern is that as matters stand now, there's sort of a presumption that there's going to be an evidentiary hearing where all witnesses will have to testify in all of these proceedings, be subject to cross-examination. While that is often a very useful approach, it's a very costly approach. It really is the major cost of these proceedings and I think cost is a major concern for the people who participate in these proceedings. Unless one limits the number of instances or reduces to some degree the instances in which you'e going to be holding these full-blown adversarial evidentiary hearings, the costs that the clients are most concerned with here are going to continue to escalate. Mr. FORBES. And I agree with you and maybe rulemaking is where we have to do it, but if any of you have any suggestions on how we can fine-tune that, probably this is the time to get them to us in some fashion. Everybody seems to concur with the subpoena powers; I think we all do. Any concern about abuse there or you'e pretty comfortable with it? Mr. REMINGTON. I guess I'm the lonely voice on subpoena power. I think that the more power you give a court or a judge outside the judicial branch, the more likely it is that you would run afoul of constitutional issues because article III reserves article III authority to life-time appointed Federal judges and one has to be careful not necessarily about subpoena alone but if you add contempt, subpoena, entry of final judgment, what we know of as article III powers, this court/judge in the legislative branch would be more subjected to constitutional attack. Mr. GARRETT. Mr. Forbes, I do have some concerns about the subpoena power. The Register said that I supported subpoena power. When the Register says I support something, I feel like I should support it. Ms. PETERS. If I made a mistake, correct it. Mr. GARRETT. But I do have concerns because I think there are concerns that are related to the paper proceedings. When you have subpoena power you increase the cost of these proceedings. We have functioned with these proceedings for two decades without subpoena power. I can imagine circumstances under which subpoena power would be helpful, it would be useful and maybe be appropriate, but as a general matter and particularly in the cable and satellite royalty distribution proceedings that have been going on for a number of years without, I think, any serious problems as a result of lack of subpoena power, I don't know that that is the best course and certainly not in all circumstances. Mr. FORBES. Let me just suggest I think you'e given us some good ideas of how we can get balances on this appellate standard versus the number of judges and if you have any suggestions on the subpoena power issue, please get those to us, as well. Once they leave here we have very little control over them. Thank you, Mr. Chairman. Mr. SlvuTH. Thank you, Mr. Forbes. The gentleman from Virginia, Mr. Goodlatte, is recognized for his questions. Mr. GOODLATTE. Mr. Chairman, thank you very much for holding the hearing. I don't have any questions. Mr. SMITH. The gentleman from Florida, Mr. Keller, is recognized for his questions. Mr. KELLER. Thank you, Mr. Chairman, and no questions. Mr. SMITH. The gentleman from Indiana, Mr. Pence, is recognized. Mr. PENCE. Thank you, Mr. Chairman. I just wanted to thank you for calling this hearing on the Copyright Royalty and Distribu- tion Reform. I appreciate yoiir leadership and I have no questions at this time. Mr. SMITH. Thank you all for your attendance. It turned out we expedited more quickly than I'd thought today and we'e not missing any votes. If there are no other comments or questions by anybody, let me thank—oh, the gentleman from California? Mr. HERBAL. Can I talk until the bells ring? No, Mr, 8m'. I don't want to take a chance, Mr, Berman. Do you have a question, Mr. Berman, though? Mr. BEHnnm Yes, I do. Mr. SMITH. Okay, the gentleman from California's recognized for a questloil, Mi'. BERMAN. I'm reminded of—three judges, higher standard of review, one judge, lower standard for review—it reminds me of the story of the debate in the L,A, City Council where the councilman got up and said, "Fluoridate the water? The professor from Har- vai'd says fluoridate. The pi'ofessoi'ronl Yale says dont fluoridate. I don't know what to do." I wish there was some ideological framework in which to decide this issue, For anyone on the panel, instead of requiring subpoenas and depositions, what if we just left very wide discretion to either the three-judge panel or the one-judge with the higher standard—lower standard of review? In other words, part of this is to get away from the costs and the time-consuming nature of these processes and why not let sort of the facts of the case—let the judge have the power to decide here what makes sense, rather than create sort of guaranteed processes in terms of discovery and subpoenas and live testimony versus paper? Leave it rather loose and let these expert judges—and maybe that's an argument for three; I don't know— make the decision case by case? Any of the panelists. Mr. RrcH. In my own experience, Congressman, I think it's an excellent suggestion. I think that part of the problem that everybody's experiencing is on the one hand, if your rules are so rigid as not to allow, you'e going to say it cries out for a subpoena here, where it isn't available. On the other extreme, everybody' saying give the lawyers free reign and everybody will go insane. The most effectively managed litigations I'e participated in, whether or not the Federal Rules of Civil Procedure nominally allow X depositions or whatever, the judge or supervising magistrate judge takes control exactly as you suggest, says what's this case about, here's the time frame we'e going to allot to do it, here are the discovery tools we'e going to allow, make a good cause showing, if you will, on some areas where it sounds like it's excessive or harassing, and get the process going. I don't think there is any one-size-fits-all rule that's going to fit all rate distribution proceedings and all rate adjustment proceedings. The key, I believe and I concur in, is have the flexibility and allow the experienced jurist or jurists to make a case by case judgment about the effective tools to get the best hearing record developed. Mr. BERMAN. It's only money. Mr. SMITH. Thank you, Mr. Berman. We'e been joined by the gentleman from Virginia, Mr. Boucher. I don't know if he has questions but if he does he'l be recognized to ask them. Mr. BOUCHER. Mr. Chairman, I do, but can you give me just a moment to get organized here, having just arrived? Mr. SMITH. Sure. We'l be happy to. Mr. BOUCHER. Thank you. Mr. SMITH. I'l tell you what. I'l give a premature thank you to our panelists today because this has been one of the most informative, most helpful hearings I think we'e had on any piece of legislation. You all have offered construction suggestions. We still have a couple of things to work out, particularly the one versus three and the standard, but we'l see what can be resolved to give everybody perhaps just a little bit more comfort level, or we'l figure out some approach that is maybe more acceptable to more of us. But anyway, it's been very, very helpful, I think, to all of us. In that regard, both Mr. Berman and I have introduced legislation together, so it's a good bipartisan effort on our part and we expect it to work. I should also say that we don't expect to mark up the legislation next week; we'l wait a few weeks and have some suggestions and try to iron out some of the kinks and come up with a good bill in several weeks'ime. If the gentleman from Virginia's ready he'l be recognized for questions. Mr. BOUCHER. Thank you very much, Mr. Chairman. First of all, let me compliment you and Mr. Berman for assembling the bill that is the discussion of today's hearing, which I think does represent a significant step forward from the present CARP process. The problem that I see is that it really is related to process only and it doesn't address the standard under which the royalty rate is set. The element of fairness is not made a part of the standard and the element of fairness is a part of the standard for other CARP proceedings. For satellite, for cable radio, fairness is included in the standard that is to be considered. And I wonder if any of our witnesses have any comment about whether it would be appropriate as we are making this change to also include the element of fairness in the standard for Internet radio. Mr. Rich, do you have a view? Mr. RICH. Thank you, Congressman. I briefly addressed at the back of my testimony, respectful of the focus of this particular piece of legislation, that very concern. I think that the process can get us only so far. Process can only animate a standard and can only generate results as equitable or inequitable as the standard provides. In our experience representing the webcasting community in the 112, 114 CARP, significant issues were raised about the kinds of interpretations that have been afforded the willing buyer/willing seller standard and arguably, some very consequential and I would 44 argue negative results have occurred in terms of the vitality of webcasting as a result of the interpretations that have been given by the panel there and thus far subject to appeal. I think that I have not heard a good rationale for distinguishing the fairness standard embodies in 801(b) that animates a number of these other compulsory license proceedings as distinct from the 112 and 114 proceedings. I think those proceedings would be measurably improved and the likelihood of equitable outcomes improved if the same standard was imported into those, as well. Mr. BOUCHER. Well, that is a very eloquent statement and good rationale for us to change the standard while we'e changing the process. Does anyone else want to comment and would anyone like to defend having a separate standard based on willing buyer/willing seller for Internet radio, realizing that there's really only one seller in the market and that person has the ability to set the price based on the lack of any competition from the seller's standard? rett? Mr. Gar- Mr. GARRETT. Thank you, Mr. Boucher. My experience has been in representing copyright owners for a number of years, so I approach your question from that perspective. And in my judgment, the fair market value standard that was applied in the webcaster proceeding that's also apparent in section 119, the satellite carrier compulsory license, is the appropriate standard. I think that fair market value inherently captures the notion of fairness. There's nothing unfair in my judgment about having users of copyrighted works pay fair market value. I think that should be the standard that would apply to all of the compulsory licenses. We in this country often find it necessary to appropriate real property for public uses. That's certainly accepted in our system here and when we do that, we accord the owners of that real property fair market value for what it is that has been taken in the greater public good and in my view, copyright owners should not be entitled lesser compensation. Thank you. Mr. BOUCHER. Well, Mr. Garrett, let me ask you this. Does that standard really work, though, when you only have one seller of the product? And in this case the RIAA is the only seller of the product. There are just not a sufficient number of transactions in the market from which to derive real value based on willing buyer/willing seller. How do you respond to that? Mr. GARRETT. I think it's a decision that has to be made on a case by case basis. That's what we devote 15,000 pages of record trying to establish. What is fair market value? What would the willing buyer, what would the willing seller be doing? I think it's a difficult standard to apply but courts, of course, have been applying it for years and years and years in a variety of contexts. I don't think it's just a matter of what one organization is doing. There's a lot of evidence out there to show what willing buyers and what willing sellers would do in the marketplace. Mr. BOUCHER. But not in these particularly circumstances where you have such a limited number of transactions. Mr. Rich, briefly, would you like to respond to what Mr. Garrett has said? 45 Mr. RICH. I think the problem is there's an overwhelming weight placed presently on any CARP panel to give weight to supposed marketplace evidence. No matter that it's a single buyer out there represented by a powerful collective, the statute contemplates giving weight to voluntary license agreements and this is what happened in the last CARP. It became a physical impossibility for the panel to ignore the entirety of these license agreements, even though without the aid of subpoena power, it was even, we thought, reasonably evident that these were transactions pro- foundly affected by the weight and market power of RIAA. And I think without statutory reform, that experience unfortunately, I think in terms of market outcome, is likely to replicate itself in other CARP-type proceedings. Mr. BOUCHER. Okay, Mr. Rich, Mr. Garrett, thank you very much. Mr. Chairman, it just seems to me that the basis has been made for us to give serious consideration not just to changing the process but also to changing the standard under which these rates are determined and as this measure moves the mark-up, I hope we can have further discussion about that. I see Mr. Berman is smiling. Would you like for me to yield to you, Mr. Herman? Mr. SMITH. The gentleman from Virginia is recognized for an additional minute. Mr. BOUCHER. Thank you. Mr. BERMAN. I thank the Chairman and I thank the gentleman for yielding. Staff advises me that cable license is not a fairness standard; it' if the parties haven't negotiated it, it's a cost of living increase. My guess is there are a lot of programmers who would like to move to a fairness standard from the cost of living cap in the context of the cable compulsory license. I mean this thing works many different ways. The only other point, this is the problem. We can get into fas- cinating and interesting and I think legitimate debates but the CARP process was not connected to it. If I recall correctly, it certainly wasn't connected to the most recent compulsory license that was litigated and is now on appeal. It was a process that was undertaken. My fear is if we try to get into the substantive tests of the standard, we will end up with a very interesting discussion and probably educate ourselves on the economics. By the way, there is one com- petitor to the only seller and that's call the world of piracy and in music it constitutes a certain level of competition these days to people who are trying to find the right price. But that if we get into that debate in the context of this bill, we will end up with a very interesting debate and no move forward. And even those who feel abused by the current standard can at least be abused in the future cheaper than they'e been abused in the past if we can reform this process. Cheaper and quicker. Mr. SMITH. Thank you for- Mr. BOUCHER. Reclaiming my time just briefly, I think it is unde- niable that the procedural reforms that the bill makes would be helpful to all parties concerned and would substantially reduce the cost of engaging in the royalty determination process and that is a very good element of the measure. I support that. But it would be a very simple matter to promote the notion of fairness, which would particularly benefit the smaller webcasters, if we simply made the standard exactly the same as it is both for cable radio and satellite radio, and that is found in the statute today. It' 801(b) and fairness is clearly taken into account in both cases and I would just suggest that it should be here. Mr. Chairman, you'e been very indulgent in permitting this discussion and I thank you and apologize for being tardy for the hearing. Mr. SMITH. No problem. Thank you, Mr. Boucher. I have a hunch we had an indication of future discussion by Members of this Sub- committee. Ms. Peters, before we adjourn I have a couple of written questions to submit to you. If you could get me answers back within 10 days or so so we can consider them. And also, let me ask all four witnesses today if you have any ideas on the one versus three judges and on the standards, get those ideas to us, if you will, in the next couple of weeks and we can continue to digest your suggestions. [The material referred to follows:] KS, Joust of Reyrceeatatkee Commfttgg Oil tfjg gobjgfarP gghtsbhtgtsn, Bttg20516-6216 dte«pntaritt gtsttti geant«ss

April g, 2003

Mtuy Beth Petcm Register ofCopyrights United States Copyright OfGce

As you wBI rccaB, at thc cnd ofthe Subcomminee hearing oa H.R. 1417, 1 indicated that 1 would bc submitting written questions to you which'ould like answered for the record. Please respond in writing by close ofbusiness Monday, Apnl 14.

Ms Peters:

a.) H.R, 1417 conudns, a $150 GBng fce that is pegged to the notice of intent to pardcipate in aproceeding. Pirst,do you think that ammmtis corrcct7 Second, doyou think thatjoint claimants should bc able to continue Sing one notice ofintent, and thus onc filing fcey

b.) An ongoing point ofcontention among parties interested in CARp refor, concerns tbe current standard to be used in determining rates for S ccdons 112 and 114. First, isthere a htstoricalreasonwhythesmadard fmthese licenses differs from the others7 Second, do you think that, in the spirit ofuniformity, there should be one standardy 48

Mary Beth Peters April 0, 2003 PAGETWO

Again, I would appreciate your written response to these questions by close of business Monday, April 14. You may e-mail your answers to the attention of Melissa McDonald of the Subcommitteeatmelissamcdonald@maibhousegov. Ifyouhave questions about this requcstplease contact hcr at 202-225-574 1.

%hank you for your participation at the hearing.

Chairman Subcommittee on Courts, thc lntcmet, and intellectual Property

LS/mlm 49

ANSWERS TO FOLLOWUP QUESTIONS FROM THE HONORABLE MARYBETH PETERS a. H.R. 1417 contains, a $150 filing fee that is pegged to the notice of intent to participate in a proceeding. First, do you think that amount is correct? Second, do you think that joint claimants should be able to continue filing one notice of intent, and thus one filing fee? To determine whether the $ 150 filing fee is set at the correct level, one must first ascertain the purpose for the imposition of the fee. As I understand it, there are two rationales for implementing a fee: (1) to assist in paying the costs of the statutory license rate setting and distribution process; and (2) to avoid expensive distribution proceedings caused by claimants with little actual monetary stake when the cost of those proceedings far exceeds the amount in controversy. If the purpose of the filing fee is to offset the costs of the process, the collection of a $ 150 filing fee would be woefully inadequate in most cases. In a distribution proceeding, the number of participants in a proceeding ranges from 2—8 participants and would generate very limited fees (between $300 and $ 1200) for the purpose of covering costs in these proceedings. Even in a rate setting proceeding, which typically has more participants, the numbers are not high enough to generate significant revenues. To date, the largest number of notices of intention to participate filed in any single rate setting proceeding has not exceeded 81, and even in that proceeding, only 27 parties actually participated. More telling are the recent numbers for the upcoming rate setting proceeding for webcasters. At this time, we have received 49 notices of intent from parties interested in participating in that proceeding. Had these parties paid a $ 150 filing fee, it would have generated only $7350, a relatively negligible amount in comparison with the costs of the proceeding. Under these circumstances, I do not believe that a $150 filing fee would be a significant source of funding for rate setting or distribution proceedings. In order to serve such a function, the filing fee would have to be increased to a prohibitively high amount, which would probably deter participation by parties who ought to be able to take part in the process. Because participation in the rate setting and distribution process should not depend on one's ability to pay, I have recommended that the costs of the system be paid for out of newly appropriated funds. On the other hand, requiring each party to a joint claim to pay the $150 filing fee could result in substantial revenues in some distribution proceedings. [Joint claims arise only in the context of distribution proceedings.] The greatest number of joint claimants to participate in any proceeding to date is 1,184, in the cable distribution proceeding for the year 2000. Requiring each of those joint claimants to pay a $ 150 filing fee would have yielded $177,600 ($150 x 1,184). However, the reasons to resort to a filing fee to defray costs are weaker in distribution proceedings than in rate setting proceedings, since there is a royalty pool from which costs can be deducted. Moreover, I believe that many of the individual claimants who are represented jointly in distribution proceedings have relatively small claims—some perhaps worth less than $150. Requiring those claimants, who are united in interest and representation with a number of other claimants, to pay $150 each strikes me as unfair and unnecessary. Moreover, if one were to charge a separate fee for each joint claimant, one would have to consider the situation of performing rights societies (ASCAP, BMI and SESAC), which may have tens of thousands of members. If each member of a performing rights society were to be considered a joint claimant, imposing a filing fee of $ 150 per joint claimant would be prohibitive and unfair. Under current practice, a claim filed by a performing rights society is considered a joint claim, but the society is not required to list all of its members as claimants for purposes of filing claims for the section 111 cable compulsory license or the section 119 satellite compulsory license. See 37 C.F.R. @ 252.3(b)(2), 257.3(b)(2). If a decision were made to require a separate filing fee for each joint claimant, some special provision should be made to exempt performing rights societies or to modify that requirement as applied to them. If the purpose of the fee is to deter small claimants from insisting on full distribution proceedings, perhaps for motives having little to do with ascertaining the appropriate distribution, when the amount in controversy is insignificant, the $ 150 filing fee seems reasonably calculated to meet this objective. However, there may be better means of addressing this issue, such as permitting streamlined procedures for small claims. An ongoing point of contention among parties interested in CARP reform, concerns the current, standard to be used in determining rates for Sections 112 and 114. First, is there a historical reason why the standard for these 50 licenses differs from the others? Second, do you think that, in the spirit of uniformity, there should be one standard? Over the years, Congress has created a number of statutory licenses, with various standards for determining statutory royalty rates. I believe that, in principle, the same standard should apply to the determination of royalty rates for all the statutory licenses. The Copyright Act of 1976 included four compulsory licences. For three of those four licenses, the statute itself set the rates, subject to adjustment. For example, Section 111 provides for a cable compulsory license and sets royalty rates based upon a proposal that was negotiated by the cable and motion picture industries, the two industries most affected by the new license. H.R. Rep. No.94—1476, at 90 (1976). Adjustments to these rates are done in accordance with specific standards set forth in the statute, which were for the most part the product of an agreement between cable and copyright owners. Id. at 173. Those standards, found at 17 U.S.C. g 801(b)(2), provide for adjustment of rates "to reflect (i) national monetary inflation or deflation or (ii) changes in the average rates charged cable subscribers for the basic service of providing secondary transmissions to maintain the real constant dollar level of the royalty fee per subscriber." As originally enacted, section 115, the mechanical license for making and distributing phonorecords of musical works (expanded in 1995 to include digital phonorecord deliveries), provided for a fixed rate of 2s/4 cents per musical work (or '/z cent per minute for longer recordings). Section 801(b) provided for rate adjustments by the Copyright Royalty Tribunal (CRT) based on four factors: (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 the copyright user a fair income under existing economic conditions; (C) To reflect the relative roles of the copyright owner and the copyright user in the product made available to the public with respect to relative creative contribution, technological contribution, capital investment, cost, risk, and contribution to the opening of new markets for creative expression 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. Section 116, the jukebox compulsory license, provided for a royalty of $8 per year, subject to adjustment by the CRT based on the same standards set forth in section 801(b). However, with respect to Section 118, the compulsory license regarding the use of certain copyrighted works by noncommercial broadcasters, Congress took a slightly different approach, instructing the Copyright Royalty Tribunal to set "reasonable terms and rates of royalty payments." 17 U.S.C. ( 118(b) (1978). The legislative history indicated that the CRT should set "reasonable rates" that would "assure a fair return to copyright owners without unfairly burdening public broadcasters." H.R. Rep. No.94-1476, at 118. In doing so, the rate setting body is expected "to consider both the general public interest in encouraging the growth and development of public broadcasting, and the 'promotion of science and the useful arts'hrough the encouragement of musical and artistic creation." Id. Congress formulated yet another standard for setting rates applicable to the emerging satellite industry in 1988 with the passage of the "Satellite Home Viewer Act of 1988." In this case, Congress instructed the arbitration panel responsible for setting the rates to consider three factors in addition to the four objectives used to determine rates for the licenses in sections 115 and 116. These three factors were the rates cable systems paid for the right to retransmit broadcast signals under the section 111 license, fees established under voluntary licenses filed with the Copy- right Office, and the last fee proposed by the parties. In 1992, these criteria were used to readjust the initial rates set by Congress for use of the section 119 license, but in the case of both the superstation and the network rates, the panel apparently tied the rate to the average cable cost without due consideration of the other factors. See H.R. Rep. No. 103—703, at 7 (1994). When Congress considered the reauthoriza- tion of the Satellite Home Viewer Act in 1994, it changed the standard for setting the satellite rates, indicating that the rate was to be set based on fair market value. Moreover, it made clear that cable rates would be merely one of the considerations for setting the rates and not the benchmark for setting the rates for retransmissions by satellite carriers. While fair market value is still technically the standard (see 17 U.S.C. $ 119(c)(3)(B), the Satellite Home Viewer Improvement Act of 1999 reduced the rates by 30% to 45% following the one rate adjustment proceeding under the fair market value standard. 51

In 1995, Congress again adopted the criteria set forth in section 801(b)(1) of the Copyright Act as the basis for establishing rates for the newly created statutory digital performance license, 17 U.S.C. $ 114(d), and the new statutory license for making digital phonorecord deliveries, 17 U.S.C. $ 115. The legislative history, however, does not shed much light on Congress'ationale for adopting this standard for these licenses. Subsequently, Congress amended the section 114 license in 1998 to include eligible nonsubscriphon transmissions and established a different standard for setting the rates for those transmissions, namely, "rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." 17 U.S.C. $ 114(f)92)(B). Again, the legislative history does not give any reasons for adopting the new standard and only states what the standard is and the factors that the panel should consider in making its determinations. See H.R. Rep. No 105796, at 86 (1998) and the Section-by- Section Analysis of the H.R 2281 as passed by the United States House of Rep- resentatives on August 4, 1998, Committee Print, Serial No. 6, 105th Cong., 2d Sess. at 58-59 (1998). Although, as indicated, Congress has established a variety of standards for setting and adjusting royalty rates for the various statutory licenses, it is difficult to glean any rationale for the differences in the standards, with the possible exception of the "reasonable rates and terms" standard of section 118, which may reflect a solicitude for public broadcasting, which has more limited resources, serves a public interest and "does warrant special treatment in certain areas." H.R. Rep. No.94-1476, at 117 (1976). Whether rate setting for all the statutory licenses should be subject to the same standard is a question that probably would require considerable study, and I am not in a position to express a view on that questMn today. I will note that in 1997, in my Report to Congress entitled "A Review of the Copyright Licensing Regimes Cov- ering Retransmission of Broadcast Signals," I recommended that the rates for the section 111 cable compulsory license and the section 119 satellite compulsory license be comparable, and that the section 111 rates, like the section 119 rates, be based on fair market value. However, I am not prepared to say at this time that I would recommend that all the other statutory licenses that are not currently based on fair market value be changed to a fair market value standard I believe that the debate oyer the standard for the section 112 and 114 statutory licenses is concerned primarily with the disparity between the rates within section 114. Currently, the rates for the section 114 statutory licenses for preexisting subscription services and preexisting satellite services are based on the four factors set forth in section 801(b)(1). 17 U.S.C. f 801(b)(1) (referring to "rates applicable under sections 114(fl(1)(B), 115, and 116"). In contrast, the rates for the section 114 statutory licenses for eligible nonsubscription transmissions (Le., webcasting) and new subscription services are to be the "rates and terms that most dearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller." 17 U.S.C. $ 114(f)(2XB). I see no reason why these rates for very similar kinds of activity should be based on different standards, and I would favor amendment of section 114 to provide that the same standard (whether it be the section 801(b)(1) standard or the fair market value standard) applies to all of the statutory licenses contained within section 114. Similarly, the standard for the section 112(e) statutory license, which is applicable to transmitting organizations entitled to transmit performances of sound recordings to the public under any of the section 114(f) statutory licenses, should be the same as the standard applicable to those statutory licenses. With that, let me thank all Members for their presence today. We actually had eight Members here at one time or another, another good turn-out, and we stand adjourned. [Whereupon, at 3:04 p.m., the Subcommittee was adjourned.] MATERIAL SUBMITTED FOR THE HEARING RECORD

PREPARED STATEMENT 0F THE HGNQRABLE JoHN CQNYERs& JR,& A REPREsENTATIvE IN CONGRESS FROM THE STATE OF MICHIGAN Last June, this panel appeared before us to voice its concerns with the current CARP system. People on both sides of the equation, that is the buyers and the owners, are in complete agreement that the current CARP system is very problematic and that a change in the process is in order. Based on that hearing, Chairman Smith, Ranking Member Herman, and I have introduced legislation would make substantial changes to the current system. We heard the current system, the CARP, is too costly because the copyright owners and users have to pay for the arbitrators. Our bill, H.R. 1417, creates a Copy- right Royalty Judge who would be paid by the government to carry out designated functions related to setting royalty rates and distributing royalty fees to copyright owners. This provision should significantly lower the costs to those who require these services. Another complaint was that the CARP system does not have adequate rules on how to address hearsay evidence at hearings. This bill explicitly requires that the Judge treat hearsay evidence in the same manner that it is treated in federal court. This bill also alters the terms for which certain royalty rates are in effect. Rates that are determined by the Copyright Royalty Judge will be in effect for five years. This should create some predictability and uniformity for those who rely on the Judge's determinations. Finally, parties on both sides of the debate argued. that the substantive standards that the CARP uses to set royalty rates should be changed somehow. In an effort to reach a compromise and pass a bill that does not alter any substantive rights, this bill changes only the procedure for rate settings and distributions. It does not alter the standards by which those rates are set or the funds are distributed.

PREPARED STATEMENT OF NATIONAL MUSIC PUBLISHERS ASSOCIATION On April 2, 2003, the Subcommittee held a hearing on H.R. 1417, the Copyright Royalty and Distribution Act of 2003 introduced by Subcommittee Chairman Smith with Mr. Berman and Mr. Conyers—the ranking Democrats on the Subcommittee and the full Judiciary Committee, respectively. The National Music Publishers's- sociation (NMPA) welcomes the opportunity to submit written comments in support of the Copyright Royalty and Distribution Act of 2003. NMPA works to protect and advance the interests of the music publishing industry. With more than 800 members, NMPA represents the leading companies in the industry, from those affiliated with large media companies to the industry's largest and most influential independent music publishers. The Harry Fox Agency, NMPA's licensing affiliate, provides an information source, clearinghouse, and monitoring service for licensing music copyrights and acts as licensing agent for more than 27,000 music publisher-principals, who in turn represent the interests of more than 160,000 songwriters. As indicated in NMPA's written cominents (June 20, 2002) for the hearing record on "The Copyright Arbitration Royalty Panel (CARP) Structure and Process," NMPA supports legislative reforms that promote stability and predictability of results, encourage settlement of small claims, and reduce costs. In order to meet these objectives, NMPA believes CARPs should be replaced entirely with an adjudicative body that is comprised of dedicated professional ilecision makers, preferably administrative law judges, who have experience in evaluating legal significance, applying (53) 54

precedent, and can provide institutional expertise. The Copyright Royalty and Dis- tribution Act of 2003 is a significant step in the right direction. H.R. 1417 replaces CARPs with a full-time Copyright Royalty Judge appointed for a five-year term by the Librarian of Congress and assisted by two full-time professional staff members. As indicated above, NMPA supports this type of change. Es- tablishment of a full-time dedicated Copyright Royalty Judge will instill efficiency, consistency, and credibility to copyright royalty rate setting and distribution proceedings. Copyright law is often unique, complex, and arcane—it requires familiarity with antitrust law, statutory licenses, economics, evolving distribution channels, and ever changing technology. As such, the ability to evaluate conflicting evidence, to establish and/or apply precedent, and to ensure institutional expertise is imperative—factors that are not adequately addressed by the current CARP procedures, which lead to unpredictable and costly results. In addition to providing stability to proceedings, the five-year term set forth in the bill for the Copyright Roy- alty Judge will establish familiarity of legal findings among the participants, which could encourage parties to reach settlements instead of employing lengthy and unnecessary litigation strategies. NMPA also supports the bill's efforts to reduce costs for participants, which in some cases has limited the ability of interested parties to participate. H.R. 1417 provides that the salaries of the Copyright Royalty Judge and his staff are to be paid for from appropriated funds, eliminating enormous hourly fees to arbitrators currently paid by CARP participants. Appropriated salaries coupled with administrative efficiencies of a dedicated entity will significantly reduce costs of all proceedings. Nevertheless, NMPA believes that it would be constructive to consider expanding the number of full-time Copyright Royalty Judges to more than one Judge. Even if financial limitations require one Judge per proceeding, we are confident that current and future work will justify at least two Judges. Congress has recently created new compulsory licenses and expanded the scope of current licenses. When these licenses are combined with rapidly emerging technologies and the various statutory or regulatory deadlines in each proceeding, we believe there will be enough work to keep at least two Judges busy. At least two Judges are also necessary in the event that a conflict of interest should arise with any one Copyright Royalty Judge. The bill sets forth reasonable qualifications to eliminate financials conflicts of interest by the Copyright Royalty Judge. This goal is laudable, but could have the unintended consequence of limiting the pool of qualified candidates. Given the companies that own copyrights in the United States, it would not be unusual for the judge to be called upon to rule in a proceeding involving a party to which the judge has a disqualifying interest or conflict. Appointment of more than one judge will ensure that any con- flicted proceedings could be moved to another judge, as is customary in our state and federal court systems. NMPA also has concerns that new section 804(b)(2) of the bill could statutorily change the proceeding schedule for setting digital phonorecord delivery ("DPD") rates, postponing the current rate setting schedule until 2007. Currently, the interested parties have agreed that DPD rates are to be adjusted every two years, as allowed by section 115(c)(3)(F). NMPA believes it is unnecessary to change the current DPD rate-setting regime at this time and that doing so only disrupts commercial expectations. We request that the Subcommittee correct these provisions. Finally, NMPA is not certain that the "small claims" provisions in new section 803(b)(2) will have their intended effect. It is important to minimize the time and expense of adjudicating small claims against royalty pools from which distributions must be made. We suggest clarifying that a "written pleadings only" mechanism may be requested by any interested party in response to a claim of $500 or less. NMPA appreciates the opportunity to submit written comments and looks forward to working with the Subcommittee and the full Committee, as well as other interested parties, as H.R. 1417 moves through the legislative process.

PREPARED STATEMENT OP THOMAS F. LEE On behalf of over 110,000 members of the American Federation of Musicians of the United States and Canada, I would like to thank the Chairman and distinguished members of this Subcommittee for tackling the problem of CARP reform. Recording artists—including well-known royalty artists and less well-known background artists—are, by statute, entitled to 50% of the net proceeds of Section 114 digital performance license fees. As a result, the AFM's professional recording musi- cian members, both "featured" and "non-featured," have important interests in the Copyright Arbitration Royalty Panel process. In order to represent their interests, 55 the AFM participated in the recent webcaster CARP proceeding that garnered so much public attention and resulted in such little public or party satisfaction. My comments on the Copyright Royalty and Distribution Act of 2003 reflect the interests of recording artists and the AFM's experience of the CARP process. The Copyright Royalty and Distribution Act of 2003 contains a number of extremely important positive changes. We believe that it would benefit from a few modifications, not to its fundamental structure but to details of its functioning. Again, I thank the Subcommittee for the thoughtfulness and hard work that is represented by this draft legislation. This Statement consists of initial comments regarding this complex initiative. It does not pretend to contain a comprehensive analysis of the bill. A. COST ISSUES: FUNDS FOR THE PROCESS AND LIMITS ON THE PROCESS As the AFM indicated at the Subcommittee and Copyright Office Roundtable on CARP reform held on July 29, 2002, the reduction and control of the costs of participation in ratesetting proceedings is a critical goal of any reform. Only the reduction and control of the costs of participation will protect the access of small parties and artists to the proceedings that affect their businesses and livelihoods. 1. Publicly Funded Process—the Decision-maker Like the Register of Copyrights, we understand H.R. 1417 to require that the decision-maker in CARP proceedings—the Copyright Royalty Judge—as well as two professional staff members be paid out of appropriated funds. We agree with the Reg- ister and others that this is a critical and positive change from the current system, which requires the participating parties to pay large per-hour arbitrator fees for ad hoc panels of three private arbitrators.i The obligation to pay substantial arbitrators'ees imposes a significant barrier on the participation of small and/or non-profit entities who nonetheless have legitimate interests in the proceedings and whose dissatisfaction may severely undermine the credibility of CARP decisions. Thus, the change to a publicly-funded process is of the first importance. 2. Publicly Funded Process—Other Costs For the same reason that we applaud the change to a system in which the decision-maker is paid with appropriated funds, we have concerns about the way in which Section 803(e) handles other costs of rate-setting proceedings. We echo the Register's view that the costs of proceedings should be paid for out of appropriated funds. If the costs contemplated in the statute are more than minimal, they may act as a harmful barrier to participation in rate-setting proceedings on the part of small or non-profit entities that have important interests in the proceeding but do not have funds that they can put at risk to pay extensive costs they cannot control. In this regard, we find particularly problematic the provision in Section 803(e)(1)(A) that requires costs in excess of the filing fees to be deducted from 1 percent of the royalty fees collected under the relevant license before the royalty fees are distributed to beneficiaries of the license. In rate-setting proceedings, at least, we believe that this provision creates a fundamental unfairness. If the decision- maker's costs in such proceedings must be paid by private parties rather than out of appropriated funds, then those costs should be shared relatively evenly by users of the statutory license, on the one hand, and beneficiaries of the statutory license, on the other hand. However, Section 803(e)(1)(A) does something quite different. The portion of the costs that is deducted from royalties would be paid wholly by the beneficiaries of the license, so that they bear a disproportionate share of the costs of the proceeding. For example, in a rate-setting proceeding under Section 114, the costs deducted from license revenues would be paid totally by performers and copyright owners. There is no basis for imposing that portion of the costs completely upon performers and copyright owners, and sparing licensees from sharing any part of them. Finally, the provision in Section 803(e)(1)(B) that requires any remaining costs to be borne by the parties in rate-setting proceedings "in equal proportions" also will tend to work an injustice and discourage participation by small and non-profit parties, particularly to the extent that such costs become substantial. Assuming that the decision-maker's costs are not paid from appropriated funds, and assuming further that those costs are split relatively evenly between users and beneficiaries of

i We also agree with the Register that moving the decision-making function from ad-hoc private panels to a permanent Copyright Royalty Judge will improve the stability of the process as well as the credibility and predictability of its results. Like some other commenters, however, we wonder whether one judge is sufficient or whether, instead, decisions should be reached by panels of three judges. a license, the further breakdown of cost distribution on each side should be proportional to each party's participation in the proceeding rather than on an equal or per capita basis. A small party may desire to participate by introducing very limited evidence on an issue of deep concern to it—and that party's participation may be extremely valuable to the proceeding (and to the public's perception of fairness in the proceeding). But if that party is at risk for paying a per capita share of costs that are run up by large parties with a propensity to keep expanding the litigation, it will be deterred from participating at all. 3. Keeping the Process Limited to Keep the Costs Limited The kinds of expenses that appropriately can be borne by public funds—the salaries and costs of the decision-maker and staff—are only a part of what has made recent rate-setting CARPs so expensive. Each party's own attorneys'ees and costs also can be extremely significant. That certainly was the case in the recent webcasting CARP. Were pre-trial and discovery procedures to expand and become more like those in the federal district court litigation model, that would exponentially increase the parties'itigation costs, with the inevitable consequence that small parties and artists will be deterred from participating. We do not believe that full-scale, federal district court discovery rules will enhance the credibility or sound- ness of the decisions in rate-setting proceedings. Indeed, no decision ultimately will have much credibility with individuals, small licensees, small licensors or the general public if small but significant stakeholders cannot afford to participate. Al- though H.R. 1417 is not clear about which precise changes to discovery will be imposed by new rules to be established, we are very concerned that the impetus would be to move in the direction of greater complexity—and greater cost. We think that would be destructive. Of course, settlements also reduce costs. A formal settlement period with supervised settlement conferences prior to submission of direct cases may be helpful, and procedures should be adopted to facilitate settlements even after direct cases are submitted. However, we question whether the Rule 68 offer of judgement mechanism contained in H.R. 1417 is appropriate for rate-setting proceedings with multiple parties on each side.

B. CONTINUING JURISDICTION TO ADDRESS UNANTICIPATED PROBLEMS We echo the comments of the Register that the law should be clarified to firmly establish that the Copyright Royalty Judge has the power to correct errors in the determination of rates and terms, or to address unanticipated problems that arise, during the terms of the license periods covered by his or her decisions. Particularly with regard to licenses under Section 114, technology is changing, business models are evolving, and the distribution mechanisms covered by the license terms are new. The Copyright Royalty Judge should have continuing jurisdiction so that affected parties can seek resolutions to unanticipated problems in a timely fashion. C. INTERIM PAYMENTS We also agree with the Register that H.R. 1417 should include a clarification that establishes that licensees must continue to make license payments during a new license period even if the determination of the new rate for that period still is pending. It makes no sense, and Congress cannot have intended, that licensees cease payments at the beginning of a new license period—particularly in light of the fact that Section 802(g) plainly provides that any newly adjusted rate is retroactive to the beginning of the license period. Moreover, it works a great hardship on beneficiaries of the license for payments to be suspended. In the case of licenses under Section 114, recording musicians and vocalists are entitled to 50% of the license revenue. Most of these artists have modest incomes and depend on combining many different income streams in order to make a living. They should not have to wait unduly for the license payments to which they are entitled under the statute. Nor should their collective, SoundExchange, be hampered in its ability to operate efficiently for their benefit- a disruption which is inevitable if licensees cease making license payments during interim periods while new rate determinations are pending. CONCLUSION Having a fair, expeditious and reasonably-priced mechanism for establishing license rates and distributing royalty fees is very important to recording musicians. 57

Again, I thank the Chairman and the Subcommittee for moving forward in this complicated area. The AFM will be happy to continue to participate in the process.

PREPARED STATEMENT OF THE AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS AND BROADCAST MUSIC, INC. The United States performing right organizations ("PROs")—the American Society of Composers, Authors and Publishers ("ASCAP") and Broadcast Music, Inc. ("BMI")—submit this statement for inclusion in the record of the April 1, 2003 hearing concerning H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2003. We commend the Subcommittee's interest in, and willingness to address, the virtually universal concern for the current process by which compulsory license rates are set and royalties are distributed. We previously set out our view of the major principles of reform in a letter to the former Chairman of this Subcommittee (the Honorable Howard Coble) dated June 20, 2002. We are pleased that the time and effort, spent on the analysis of the issues that were brought to the attention of the Subcommittee culminated in H,R, 1417, which is an excellent step towards solving the major problems inherent in the current Copyright Arbitration Royalty Panel ("CARP") process,i The bill contains a strong framework for a sound copyright royalty rate and distribution process, one that fosters predictable and consistent decisionmaking in an efficient cost-effective manner. We hope that these comments will assist the Subcommittee in furthering the objectives of the bill and welcome the opportunity to participate in this most important process. I. INTEREST OF THE PROS. The PROs together represent hundreds of thousands of American songwriters, composers, lyricists and music publishers, who create and own the copyrights to millions of musical works, On their behalf, we license the non-dramatic public performances of their musical works and distribute the license fees paid by users for such performances, in the form of royalties. In addition, through affiliation agreements with PROs in other countries, we license the works of hundreds of thousands of foreign writers and publishers. Accordingly, we strive to ensure that the writers and publishers we represent are fairly compensated for the use of their works. A portion of the royalties which writers and publishers receive comes from the Copyright Act's compulsory licenses. These royalties include fees collected pursuant to the Section 111 cable retransmission license, the Section 119 satellite retransmission license, the Section 118 noncommercial broadcasting license and the Chap- ter 10 Digital Audio Recording Technology ("DART") royalty. The PROs have had considerable experience with the compulsory license system. From the very beginnings of the 1976 Copyright Act's compulsory license rate adjustment and distribution mechanisms, we prepared and presented cases before the Copyright Royalty Tribunal ("CRT"). We similarly prepared and presented numerous cases before CARPs when they succeeded the CRT as the law's rate adjustment and royalty distribution mechanism. We have participated in and contributed to the legislative processes that created both the CRT in 1976 and the CARP system in 1993. And, we have been key participants in CARP reform proposals in the late 1990s which ultimately led to the Subcommittee's introduction in 1998 of H.R. 3210. We hope that our comments will assist the Subcommittee in formulating an effective legislative response.z II. COMMENTS ON H.R. 1417. In our letter of June 20, 2002 to the Subcommittee, we set out our major concerns and suggestions for remedying the present CARP system. H.R. 1417 makes great strides to address effectively each of these concerns. However, we believe that certain of the bill's provisions require refinement, as follows. A. Copyright Royalty Judges. The major deficiency of the current CARP process is its ad hoc nature. A permanent adjudicative body is essential for predictable and consistent decisionmaking.

'See Hearing on Copyright Arbitration Royalty Panel (CARP) Structure and Process Before the House Committee on the Judiciary Subcommittee on Courts, the Internet, and Intellectual Property, 107th Cong., 2d Sess. 154 (2002). s We adopt the testimony of Michael J. Remington, a witness at the April 1st hearing. 58 H.R. 1417 seeks to resolve this deficiency through the creation of a single full-time Copyright Royalty Judge ("CRJ") appointed by the Librarian of Congress, upon the recommendation of the Register of Copyrights, for a five-year term. Under H.R. 1417, the CRJ would be an attorney with ten-plus years of administrative or litigation experience and copyright law knowledge, and would have two full-time staff members, each of whom would have expertise in copyright law and economics. We agree that a full-time permanent decisionmaking body, with a professional staff, would provide the consistency, predictability and efficiency that the CARP lacks. Thus, we support the basic concept of the CRJ. However, we believe that a single CRJ could not achieve the intended benefits. Instead, we believe a panel of three CRJs is necessary, for several reasons. First, a single CRJ limits the benefits of continuity. Should the CRJ for some reason need to step down, either at the end of his or her term or prematurely, the years of knowledge and expertise that the CRJ built would be lost. We would be required to start anew with the next CRJ. This shortcoming may be cured in two ways. We believe that a longer term of seven years would achieve the maximum benefit, particularly when license periods cover at least five years and have terms staggered. More importantly, a three-judge panel, with staggered terms (initially to last three, five and seven years from the appointment of the first CRJs) would ensure continuity in decisionmaking. There would always be one judge, and usually two judges, who would retain the developed expertise and institutional memory necessary for continuity and consistency in decisionmaking for each of the rate setting and distribution proceedings. Second, a panel of three judges obviates issues of conflict. If one CRJ has a conflict, the other two can still serve. With a single CRJ, a conflict could derail the proceeding completely. The inefficient use of interim judges would then be necessary. Third, a panel ensures that proceedings continue uninterrupted. With recent legislation, the number of compulsory licenses has increased. A panel of three CRJs would ensure that multiple proceedings continue without delays. Indeed, with the inclusion of small-claim written proceeding procedures, multiple CRJs would permit increased efficiency. For example, a panel of three could hear a large ratemaking proceeding and simultaneously individual CRJs could decide written small-claim proceedings. Finally, and most importantly, the checks and balances of panels with multiple decisionmakers would lessen the possibility of biased decisions, particularly where the CRJs serve in staggered terms. There is a precedent for such a multi-judge panel in the CRT staggered panel system, which existed when that body functioned and worked well. With a larger number of CRJs, a marginally larger support staff might be necessary. However, we do not think that the entire support staff need be copyright and economic experts. We suggest that the panel rely on one general counsel, preferably one with copyright or administrative expertise, and one or two administrative assistants. Such a staff would provide the necessary legal and administrative assistance, at a very modest cost. B. Costs. We support the suggestion that the salaries of the CRJs and staff would be paid through appropriated funds rather than copyright royalties. This was the case in the early days of the CRT. But H.R. 1417 would require other proceeding costs to be paid first from filing fees and then from royalties (to a limit of 1%). This is unfair in rate proceedings, as there would be no cost to users. H.R. 1417 further would have any remaining costs in distribution proceedings paid by the parties in equal proportions. This, too, is unfair, as, for example, a party which occupied 75% of the hearing time and received 75% of the royalties would pay the same amount as a party which occupied 5% of the hearing time and received 5% of the royalties. To cure these problems, we suggest the following. All costs of the proceedings should be paid with appropriated funds, not from royalty funds and not by the parties. None of the parties—neither copyright owner claimants nor users—would have to pay such costs in a free market without compulsory licenses. Congress has concluded that there is a public good achieved by compulsory licenses. That being the case, the public should cover the costs of that public good. If the parties are to bear the costs of such proceedings, those costs should be borne equally by the sides in rate proceedings, and in proportion to allocation of royalties in distribution proceedings. But, importantly, the CRJs should be given discretion to allocate costs as the interests of justice dictate (so that, for example, a 59 small claimant who forces a litigated proceeding and receives a pittance does not escape cost-free). Finally, we would clarify that joint claimants, such as ASCAP and BMI which each file a single claim on behalf of all their respective members and affiliates, file only one fee. Moreover, in distribution proceedings, one fee would cover both phases to the proceeding. C. Procedures. 1. Decisionmahing. The current system by which decisions are first made by a CARP, then either approved or rejected by the Librarian of Congress, and finally subject to judicial review, is inefficient. The reports of inexperienced CARPs are often rejected by the Librarian, at times forcing renewed arbitration at greater cost. We support H.R. 1417's grant of independence to the CRJs, eliminating the Librar- ian's review. For maximum efficiency, the CRJs should have sole and final decision- making power, subject only to appellate judicial review. We also support the bill's limitation on interaction with the Copyright Office to consultations. However, H.R. 1417 should clearly limit such consultations to issues of law. Issues of fact should be within the sole jurisdiction of the CRJ. Furthermore, legal issues ripe for consultation should be further limited to those interpreting the statutory terms of the license—other legal issues should be within the jurisdiction of the CRJ. Finally, we do not support any type of formal certification procedure as it would inefficiently increase costs. We do believe, however, that all consultations with the Register should be on the record. 2. Regulations. We support H.R. 1417's requirement in Section 803 that the CRJ conduct proceedings in accordance with subchapter II of chapter 5 of title 5 (the "Administrative Procedures Act" or "APA"). Regulations governing proceedings should be promulgated by the Register of Copyrights pursuant to administrative rulemaking proceedings as set forth in Section 803(b)(3). Thus, authorizations such as that found in Section 803(a) whereby persons participating in proceedings "may submit relevant information and proposals to the Copyright Royalty Judge" must specifically be permissible only pursuant to the regulations promulgated for such proceedings. H.R. 1417 should clarify this requirement. Section 803(b)(3)(C) directs the Register to promulgate certain important procedural rules. We offer the following comments on those specific requirements. Evidence. The bill requires that the Federal Rules of Evidence with respect to hearsay shall apply. We disagree with this proposal. The APA is permissive with regards to evidence. Any evidence may be admitted unless it is irrelevant, immaterial or unduly repetitious. The hallmark of administrative hearings is the ability to find facts unimpeded by the stringent Federal Rules of Evidence. This practice should not change. Highly regulated evidentiary hearings will strangle and prolong what should be inexpensive, efficient proceedings. We believe that H.R. 1417 should specifically state that the APA standard should apply—evidence should be admissible unless it is irrelevant, immaterial or unduly repetitious. The CRJs will be able to accord all evidence appropriate weight, and to discount evidence that they judge unhelpful. Again, this was the standard used by the CRT, and it worked well. Finally, we believe that the CRJ should not possess a broad subpoena right. The effect of such a subpoena power would be to increase the length and expense of a proceeding. We fear that parties would unfairly take advantage of the CRJ's ability to subpoena witnesses and evidence by frequently moving the CRJ to exercise such a right and by requesting information from non-litigating parties. Discovery. Currently, discovery is quite limited, in time and scope. We support the bill's extension of the time limit for discovery to sixty days, although the Bill should clarify that discovery is limited to not more than sixty days. However, we do not support any expansion of the scope of discovery beyond what the current rules permit. Added discovery procedures, such as the use of depositions and interrogatories, would not only greatly increase the expense of proceedings, but would offer little in the way of fact-finding benefits in light of a party's ability to cross-examine witnesses at evidentiary hearings. Reducing costs to the parties should be a key goal of H.R. 1417. Expanding discovery will only raise those costs, with no concomitant benefit. Further, the scope of discovery should be limited to the current practice of discov- ering documents underlying witnesses'ritten statements. Thus, the provision in Section 803(b)(3)(C)(ii) that witness lists not be required until the end of discovery is inappropriate. Permitted discovery could only be conducted of witnesses who were already named and who provided written testimony. We suggest that the current procedure is proper: parties submit their written direct or rebuttal cases (which, by definition, include witness lists), and limited discovery relevant to those cases follows. 60

Offers of Judgment. We strongly support the bill's adoption of a required offer of judgment rule as permitted by Rule 68 of the Federal Rules of Civil Procedure particularly for small claims. The purpose of this procedure is to encourage settlement. Should the non-offering party accept the offer of judgment, the claim is settled. However, if the non-offering party fails to accept the offer, that party should suffer the costs (including attorneys'ees) associated with what would be an unnecessary proceeding should that party fail to recover more in the decision on the merits than was offered. In developing an offer of judgment procedure, the Register should consider whether attorneys fees should be part of the offer process and whether con- forming amendments to the Copyright Act would be necessary. This procedure creates an incentive for a party to accept an offer of judgment and settle the claim, for if the party does not it will bear the other parties'osts. H.R. 1417 attempts to set out this rule in Section 803(b)(3)(C)(iii). But we do not believe that the bill, as drafted, quite meets the objective. As drafted, the bill merely suggests a method for accepting an offer. It does not provide remedy for a failure to accept an offer when the offer meets or exceeds the award. We suggest a rework- ing of H.R. 1417 to follow the procedure of Rule 68 of the Federal Rules of Civil Procedure. And, in that regard, the offering party need not offer an amount that is at least as much as the claimed amount. Otherwise, parties (particularly small claimants) would infiate their claims to force an unreasonable offer of judgment. The offering party should be able to choose the offer without regard to the actual claim. Finally, the procedure should be limited to distribution proceedings. D. Small Claims. Under the current CARP system, a party in a distribution proceeding need only state a dollar or percentage amount in its direct case to compel a proceeding. Be- cause the law requires that CARP costs be allocated in a distribution proceeding in proportion to the actual funds awarded to each party, a claimant with a small claim—who typically appears pro se and so does not even incur attorneys'ees—has no incentive to settle. The cost of the case has to be borne by the larger parties who are forced to a full arbitration by a claimant with an insignificant claim. Abuses of the process by small claimants have occurred with alarming frequency. For example, in the recent 1995—1998 DART proceeding, two individual claimants refused to settle and litigated before a CARP (such claimants had previously litigated the 1992— 1994 DART proceeding over the same exact issues). The other parties to the proceeding, including ASCAP and BMI, offered the individual claimants the full amount of their claims in settlement. The individual claimants refused, even though they were offered the full amount of their written claim. Of course, these litigants knew that, because their claim was negligible in amount—less than .01% of the total fund at issue—they would not be footing the bill for the litigation. The other parties were forced to pay tens of thousand of dollars in costs and fees (including Copyright Office costs deducted from the royalty pool) for a final award to the individual claimants totaling six dollars for four cumulative royalty funds! And, with the Copyright Office moving to an on-line claim filing system (currently used with DART filings), the occurrence of small claims will surely increase. We previously proposed a number of changes in this regard that would encourage settlement and promote efficiency for all parties, including the establishment of a filing fee, requirement of settlement conferences and paper proceedings. H.R. 1417 attempts to lessen the small claimant problem by (1) the establishment of a $150 filing fee and (2) permitting the small claimant to elect an alternative written case rocedure. A small claimant (defined as one with a claim under $500) can avoid the 150 filing fee by agreeing to decide the controversy on the basis of written filings. We applaud the Subcommittee's efforts at resolving the small claimant problem. However, H.R. 1417 may unintentionally make matters worse. First, we believe that H.R. 1417 sets the small claim threshold too low. We support an increase to the small claim threshold from $500 to $5,000. In our experience, most claims of substance fall above the $5,000 threshold. Second, H.R. 1417 permits the small claimant to make the decision of whether to pay the fee or have a written proceeding. In our experience, the small claimant will rarely, if ever, elect to have its case determined on written pleadings, even if a $ 150 filing fee is involved. Sometimes the small claimant is motivated to file a claim to harass larger claimants for matters not associated with the arbitration. Ac- cordingly, the election to have a written proceeding where claims are below a set threshold should be either automatic or made possible by any interested claimant. Next, the small claims procedure should rightly be available only in distribution proceedings—it is, after all, a procedure for claims to royalties, not the setting of royalty rates. Finally, should the Subcommittee decide to keep the threshold at $500, we suggest that some consideration be given to modifying the filing fee. Because, as we suggest, H.R. 1417 should allocate costs to the parties in distribution proceedings pursuant to their shares, the small claimant could force a full-blown proceeding expending by merely $150. The claimant need only claim an amount just over $500 and for $ 150, could force an expensive evidentiary hearing, the costs of which will be borne by the other parties. For example, the arbitrators'osts in the 1992— DART 1994 proceeding which awarded a total ofjust over $ 10 to two individual claimants were more than $12,000. Similarly, in the 1995—1998 DART proceeding, the costs for the arbitrators exceeded $20,000 for a total award to the same two individual claimants in the amount of $6.06. These costs did not include Copyright Office expenses, which are deducted from the fund, and attorneys fees expended by the other claimants which can reach or exceed $100,000, particularly when the individual claimant appeals the determination to the U.S. Court of Appeals, which has occurred in a number of past proceedings. Instead, we suggest that the Subcommittee consider, among the several options we have suggested above, increasing fee the filing to $500 in all cases, with claims under that amount subject to election of paper proceedings. We also suggest that the Register, in exercising rulemaking authority, consider the possibility of sanctions being imposed for frivolous, or inflated, distribution claims. These measures would discourage parties from inflating their claims above $500 to avoid written proceedings. Finally, settlement conferences should be required for all proceedings. E. Review. We fully support the bill's requirement that appeals of the made CRJs'ecisions be directly to the U.S. Court of Appeals for the District of Columbia. We, however, have an issue with regard to the standard of review. H.R. 1417 tracks current language in the Copyright Act. However, the current "arbitrary manner" standard applies to a two-level review setting. Currently, the Librarian reviews the CARP report and must adopt the determination unless it is "arbitrary or contrary [to lawJ." The U.S. Court of Appeals for the District of Columbia Circuit then reviews the Li- brarian's decision only if it finds that the Librarian acted in an "arbitrary manner." The confusion of this double-arbitrary standard was discussed by the D.C. Circuit in iVAB v. Librarian of Congress, 146 F. 3d 907 (D.C. Cir. 1998). There, the court found that while the Librarian's standard of review tracks that of the Administra- tive Procedures Act, 5 U.S.C. 706(2)(A), the court's standard more of review was much circumscribed. Accordingly, because H.R. 1417 drops the Librarian's review, it appropriately changes the standard of review given the U.S. Court of Appeals to the standard that the Librarian currently maintains—the "arbitrary and capricious" standard of the APA. Indeed, this was the standard of review given the Court of Appeals when it was the only level of review of CRT decisions prior to 1993. We support the "arbitrary and capricious" standard over less deferential standards such as that found in appeals to Federal courts of appeal under the Federal Rules of Civil Procedure. First, the conferred decision of a three-judge we panel, which support, would lend to more sound decisions that should be given increased deference over decisions made by a single judge. Second, higher deference when is appropriate the CRJ can consult with the Copyright Office, the expert agency, on certain issues, as discussed above.

III. CRITERION FOR RATEMAEING. At the very conclusion of the April 1, 2003 hearing, Congressman Boucher suggested that scope of H.R. 1417 should be expanded to deal not only with the process and procedure of compulsory license ratemaking, but the substance of it as well. He suggested that the criterion to be applied in ratemaking ness." proceedings be one of "fair- It was unclear whether he was speaking of all ratemaking proceedings or only those under sections 112 and 114 for webcasters. He particularly objected to the "willing buyer/willing seller" criterion of the current law in those sections. With all due respect, we believe this suggestion is both a bad idea on the merits and a sure way to derail any CARP reform. Congress very criteria carefully considered the it adopted in each of the compulsory licenses and, as pointed out by the Ranking Minority Member, Howard Berman, at the hearing, those criteria vary among the different compulsory licenses. As both the Chairman and Ranking Mem- ber noted, if H.R. 1417 is not limited to process and procedure, the result will be an interesting discussion, but no legislation. 62

IV. CONCLUSION. Mr. Chairman, we applaud you and the sponsors of H.R. 1417, the Subcommittee, and its staff, for the excellent first effort at CARP Reform. With further improvements along the lines we suggest, this is legislation we can enthusiastically support. 63

LETTERS FROM JOHN S. ORLANDO ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS

April 8, 2003

The Honorable Lamar Smith Chairman Subcommittee on Courts, the Internet and Intellectual Pmperty B-351A Rayburn House Office Building U.S. House ofRepresentatives Washington, D.C. 20515

Dear Chairman Smith:

On behalfofthe National Association ofBroadcasters, I am pleased to submit our testimony regarding H.R. 141 7, The "Copyright Royalty and Distribution Reform Act of 2003," and thank you for holding the record open.

NAB looks forward to continue working with you and the entire Committee on this very important piece oflegislation. We appreciate your leadership on the issue of CARP reform.

Sincerely,

John S. Orlando

cc: Congressman Howard Barman 64

April 8, 2003

The Honorable Howard Berman Ranking Member Subcommittee on Courts, the Internet and Intellectual Property B-336 Rayburn House Office Building U.S. House ofRepresentatives Washington, D.C. 20515

Dear Congressman Barman:

On behalf ofthe National Association of Broadcasters, I am pleased to submit our testimony regarding H.R. 14'l7, The "Copyright Royalty and Distribution Reform Act of 2003," and thank you for hoMing the record open.

NAB looks forward to continue working with you and the entire Committee on this very important piece oflegislation. We appreciate your leadership on the issue of CARP reform.

Sincerely,

John S. Orlando

cc: Congressman I.amsr Smith LETTER FROM BENJAMIN F.P. IVINS, ESQ.

The Honorable Lamar Smith, Chairman The Honorable Hov;ard Berman. Ranking Minority Member House Subcommittee on Courts, the Internet and Intellectual Property

Dear Sirs:

We v;ere pleased to attend the hearing your Subcommittee held on April I, 2003. concerning H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2003. We applaud your efforts to obtain the views ofthe Register of Copyrights and other witnesses experienced in proceedings invohving the Copyright Arbitration Royalty Panels ("CARPs") on the bill, and we greatly appreciate your having offered the opportunity to interested parties to supplement the record of the hearing. NAB, on behalf of America' broadcasters, who participate in a significant majority of CARP proceedings, supports your intention to address CARP concei us through legislation. We believe that H.R. 1417 is a strong step in the right direction, and we look forward to working with you and your Staff to improve the bill and move it towards passage.

As a starting point, we agree on the need for CARP reform. Specifically, CARP proceedings are too costly, the dual role of the Copyright Office in the CARP process introduces unnecessary complication and duplication of eFFort, and many structural and procedural aspects of the CARP process create uncertainty rather than predictability. Contrary to its original intent, this f'ramework inhibits voluntary resolution of disputes, and promotes costly and excessive litigation.

NAB has participated on behalfofU.S. commercial broadcasters, as copyiight owner claimants, in all Phase I cable royalty distribution proceedings before the CARPs and their predecessor, the Copyright Royalty Tribunal. beginning with the 1978 case. We are currently engaged in the latest ofthese cases. covering the 1998-1 999 cable royalties, in which hearings are scheduled to commence before a CARP on April 24, 2004. Despite the fact that the Phase I copyright claimant parties are thus locked in a dispute with each other over substantial royalty funds, we all have participated in a series of meetings attempting to develop consensus positions with respect to numerous aspects of H.R. 1417. The copyright owner parties believe it is critical that the provisions of the bill retlect the collective expeiience of the parties who have participated for so many years in these disuibution proceedings, and hope that our consensus views will prove helpful in improving the bill and moving it forward.

Those distribution-party consensus positions are being submitted separately. We will not repeat the same points here, although they are among the most important issues regarding the provisions of the bill. In these supplemental comments, NAB wishes to point out several additional aspects of the bill that it strongly believes should also be modified.

13efore addressing our specific points, we note in general that the bill appears to make no distinction between royalty distribution and royalty ratemaking procedures. 66

There are substantial differences, however, between the putI&oses, potential impact(in terms of affected parties), and history and precedent ofthe two types of proceedings. These important differences suggest that certain processes and procedures appropriate for one may not be at all suitable for the other. For example, there has been a 25-year-plus history of cable royalty distribution proceedings among essentially the same participants, in which a substantial body ofprecedent and practice has been established. This experience contrasts sharply with the recent Section 114 proceedings designed to establish for the first time a rate for a new compulsory license, affecting potentially thousands of parties who were unable to participate in the proceeding. The scope of discovery procedures that might be appropriate for the latter type of proceeding might be neither necessary nor appropriate for the former.

Following are NAB's supplemental specific comments on the bill:

1. It is unnecessary to provide for the appointment of two full-time professional staff members to assist the Copyright Judges, as is currently provided in Section 802(b) of the bill. NAB strongly supports the distribution-party consensus proposal to appoint three Copyright Judges rather than one, and the savings resulting fiom the elimination of the professional staff may substantially offset the additional appropriations necessary to add two judges.

Moreover, there is no need for professional staffwith substantive expertise, The Judges will be more than capable ofunderstanding the economic and business issues presented in a royalty distribution case. Just like countless other judges in courts and agencies across the land, they will be provided by the parties with expert testimony and evidence that will help them understand any scientiflc or analytical issues in the particular case. It will be in the parties'trong interest to present evidence that is completely comprehensible. And the Judges will have no need for independent experts to help them test evidence they have received, since in a contested distribution case the opposing parties will do a thorough job of exposing any flaws in the testimony through their own expert witnesses and evidence. (This is unlike the situation in some administrative agencies, where the agency may be responsible, for example, for vindicating the interests of the public, who may not be represented other than through the agency's ovvn economists or professional staff ) Especially because the bill would replace the current ad hoc panel system with Judges appointed for multi-year terms, any perceived initial expertise gapa would soon dissipate, without the need for additional permanent staff. It is far more important to have two additional Judges than to have two full-time staff.

In any event, the current language of Section 802(b) regarding the required qualifications of the proposed staff appointees is highly problematic. Requiring expertise in "copyright law and in the business and economics of industries affected by the actions taken by the Copyright Royalty Judge" would invite inevitable conflicts of interest, given the wide range ofindustries whose interests are affected by CARP decisions. Moreover, the expertise literally required is not 67

legal expertise or expertise in the science of economics, but actual experience in the industries as to which the Judge would be making decisions involving substantial sums of money. These distribution cases often pit one "industry" against another. The perceived bias in a system in which the Judge's staff member was effectively required to come out of one of the industries affected by a significant decision would seriously undermine the credibility of the process.

2. The current language of Section 803(c), which potentially extends the time within which a decision must be rendered, also raises a concern. The parties generally have an interest in a defimte deadline for the completion of a case, both to limit the time spent in expensive hearings and to expedite the final decision that will result in the distribution of their royalty funds. Section 803(c) would retain the 6- month period within which cases are currently resolved (presumably measured, as currently, from the commencement of the hearing rather than the filing of direct cases), but would also allov the Judge, in the alternative, to extend the time period to a full year. There is no apparent reason, even if the Judge finds an extension "necessary," why the time should automatically be doubled rather than merely extended only as much as is actually necessary.

Moreover, it seems likely that there v;ill be far fewer occasions in which the Judges would feel an extension is necessary than may be the case under the CARP system. The Copyright Judges xvill be experienced in the particular proceedings, they will have become familiar with the parties'ases in advance ofthe hearing by managing discovery, and the three-judge structure will provide them some flexibility to share decision-writing responsibilities. Jf there is some perceived need nonetheless to extend the time, NAB suggests, instead of the current Section 803(c), that the bill set a new single time period of 7 months rather than the quantum leap from 6 months to 12 months. Alternatively, the time periods might be set in segments, such as requiring that the record must be closed within 4 months or 5 months after the hearing commences, and that the decision must be issued within 2 months after the close of the record. Limited extensions could be granted, but only upon "good cause shown" or even upon a showing of "unusual or extraordinary circumstances." In any event, the bill should not double the time it already takes to receive an initial decision in a distribution case.

3. The change proposed in Section 803(e)( l)(B) ofthe bill, modifying the current system of sharing costs in distribution proceedings, would create serious inequities. Currently, the statute proiddes that in ratemaking proceedings, the parties bear costs "in such manner and proportion as the arbitration panels shall direct," and that in distribution proceedings, the parties bear costs "in direct proportion to their share of the distribution." '17 U,S.C. ( 802(c). This cost- sharing system, which NAB believes was agreed to by all parties at the time it tvas adopted, has worked equitably for a number of years. The change in the bill, to require that excess costs of distribution proceedings be borne "by the parties to the proceedings in equal proportions," introduces a substantial and unjustified potential inequity. 68

For example, in the current cable royalty distribution proceeding, MPAA, the party historically awarded the largest single share of royalties, has proffered ten witnesses and two substantial quantitative studies, and is scheduled to consume seven days of hearings. By contrast, the Canadian Claimants, who have previously been awarded the second-smallest share {less than one percent), will present half as many witnesses and are scheduled to complete their direct case in only three hearing days. The splitung of any signit&cant costs in equal shares would work a substantial inequity on the Canadian Claimants group. for which an equal dollar amount represents a much larger share of their potential royalty award. For the entire history of the cable distribution proceedings, over 25 years, any costs ofthe CARPs and the Copyright Royalty Tribunal assessed against the parties have either been shared directly in proportion to royalty shares or been paid "off the top" and thus indirectly in proportion to royalty shares. There is no reason to change that system now. Our serious concern is that the proposed change would result in a windfall to the largest cable royalty share awardees at the expense of the smallest. NAB believes the current statutory scheme should be retained.

4. Settlements reached by some or all of the parties to a properly instituted proceeding — as to which due process considerations have been met — should be implemented, not thwarted. Recently, a number ofbroadcasters expended considerable time and effort on a proposed settlement that would have resolved a substantial portion of a CARP ratemaking proceeding, only to see those efforts evaporate because of the perceived need to prematurely divulge details of the settlement. H.R. 1417 should provide expressly for the adoption and approval of settlements among the parties in such circumstances.

Thank you again for providing us v;ith the opportunity to present our views on this important bill. We look forward to working closely with your Staff on H.R. 1417.

Respectfully submitted,

Benjamin F.P. Ivins, Esq. Senior Associate General Counsel Intellectual Property and International Legal Affairs National Association ofBroadcasters 1771 N Street, N.W. Washington. DC 20036-2891 69

LETTER FROM PATRICK COLLINS AND JOHN C. BEITER, ESQ.

i" nip 7' PARI KK CCKRNS NNKN NCE PRESIXNf UCENSINU

April 8, 2003 VIA EMAIL

The Honorable Lamer Smith CllainTiail Subcommittee on Courts, the Internet and Intellectual Property Committee of thc Judiciary United States House of Representatives Washington D.C. 20515

Re: Statement oi'SESAC, Inc. on H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2003

Dear Mr. Chairman:

The United States performing rights organization SESAC, Inc. ("SESAC") submits this statement for inclusion in the record of the April I, 2003 hearing concerning H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2003. SESAC appreciates the opportunity to provide its thoughts and opinions about the bilL

SESAC was founded in 1930 and is thc second oldest of the United States performing rights organizations ("PROs"). SESAC represents thousands of American songwriters, composers, lyricists and music publishers and more than a quarter million musical compositions. Similar to the other tEvo United States PROs, the American Society of Authors, Composers and Publishers ("ASCAP") and Broadcast Music, Inc. ("BMIN), SESAC licenses the non-dramatic public perfonnance of such copyrighted compositions within its repertory and distributes to its affiliates the license fees paid by music users.

Like the other PROs, SESAC has had considerable experience with the compulsory license system from the inception of the 1976 Copyright Act's compulsory license provisions, having participated in proceedings before the Copyright Royalty Tribunal ("CRT") and bcforc CARPs. SESAC also lies participated in the legislative process that initially created the CRT and subsequently creaied thc CARP system, and has been a key participant in previously submitted CARP reform proposals.

A SESAC, INC 55 MUSIC SCUARE EAST * NASHVIIIE, TN 37203 515-320 ~ 00S5 A FAX 515 ~ 32 I.5292 pc III FU cc c.ccN 70

The Honorable Lamer Smith April 8, 2003 Page 2

SESAC agrees, to a significant degree, with the comments contemporaneously submitted to you ASCAP and by BMI in their Joint Statement on M.R. 1 417 (as well as many of the contemporaneous Consensus Comments ofParties to Royalty Distribution Proceedings on H.R. 1417). Specifically, SESAC agrees with the other two PROs discussion concerning (1) Copyright Royalty Judges ("CIUs"), (2) the decisionmaking process, (3) the applicability of the Administrative Procedures Act, (4) the treatment of evidence, the (5) discovery process, (6) a $5,000 small claim threshold, (7) a $500 filing fee, (8) thc appropriation of funds to pay costs and, alternatively, the allocation of costs in proportion to royalty allocations in distribution proceedings, (9) judicial review of thc CRJs'ecisions, and (10) the criterion for ratemaking.

SESAC, however, submits the following additional comments, which it believes are extremely important to any reform of the present procedures"

ii) ~CIE f d t. Allh gh EEEAC g th Ih h'll'E f judgment rule should include a fee-shifling pmvision, SESAC strongly believes that such a rule should apply ~oui to sowatted "small claims." This had been the position all three of PROs from the outset. For example, in a letter to the Subcommittee dated June 20, 2002, all three PROs took the position, under the heading "Small Claims," that "[a]n offer ofjudgment procedure for small amounts in controversy, such as Rule 68 of the Federal Rules of Civil Procedure, would encourage settlements." (Emphasis added.) Moreover, on August 2, 2002, all three PROs submitted a List of CARP Reform Items in order of priority, item 2 of which, entitled "Small Claim Procedures," called for procedures such as an oifer ofjudgment "for claims that are small in amount (Emphasis added.) That list is attached as Appendix A to the Statement of Michael J. Remington before this Subcommittee dated March 27, 2003. (To the extent that ASCAP and BMI now have adopted Mr. Remington's statement, SESAC notes Mr. Remington's acknowledgcmcnt that "[l]ast year, I proposed that a Rulc 68 process be applied to small claims ....") (Emphasis added.) Others, including ASCAP and BMI, now appear to take the position that all claims, no matter how substantial, be subject to a fcc-shitting offer ofjudgment rule, stating that "[t]he purpose of this procedure is to encourage settlemenh" Except for truly de minimus claimams who have held up the process in the past, ASCAP and BMI do not suggest why the set(lemcnt process among substantial claimants is in need of additional procedural "fixes." The examples sct forth in the Statement of ASCAP and BMI, about which all three PROs have concerns, involve claims of a few dollars requiring expendiiufcs of tens of thousands of dollars to litigate. By contrast, the The Honorable Lamar Smith April 8, 2003 Page 3

history of CARP proceedings indrcates that substantial claims among thc Phase I and Phase 11 claimants are otten settled, despite the absence of a fee-shifting rule. Indeed, it is entirely unclear how or whether such a rule would work in the context of a Phase I multi-party royalty distribution proceeding.

SESAC agrees that truly de m~ini us claimants should not be permitted to hold hostage the process of distributing millions of dollars in compulsory license fees in Phase Il distribution proceedings; however, parties having claims for substantial dollars, which may be rharacterized by others as "small claims" or "smaller claims" relative to those of signibgicantly larger dollar claimants, should not be disadvantaged in thc dispute resolution process to thc bcneEt of, or subordinate to, those of larger claimants, While ASCAP and BMI cite the legitimate concern ofparties inflating their claims, the comments to Rulc 68 of the Federal Rules of Civil Procedure also address an equally serious problem: "bad faith attempts to 'lowball'pposing parties with nominal offers of judgment, thus triggering the fee-shilling provisions of Rule 68." Except in the small claim context, there is no suggestion that the settlement pmccss is "broken" and requires a fee-shilling rule. If the offer ofjudgment provision ofthe bill is to be amended to pmvide for fee-shilling, it should apply o~nl to small claims (under $5,000), which have been the concern of the parties from the outset.

(2) ~Cost . SESAC agrees with ASCAP and BMI that, to the extent not paid with appropriated funds, costs should be allocated in proportion to royalty distributions. SESAC, however, believes that giving CRJs discretion to allocate costs '"as the interests ofjustice dictate" again h ul e1imited to small claims wliich are thc subject of thc spcciiic concerns addressed in the Statement oi'ASCAp and BMI.

In sum, SESAC believes that concepts of fairness and due process to claimants who are substantial but might be vieived as "small"'elative to others in their claimant group should not be sacriiiced in the name of efgciency. SESAC appreciates the opportunity to submit this statement with an end toward creating a compulsory license dispute resolution system thai is both fair and eAicient. 72

The Honorable Lamer Smith April 8, 2003 Page 4

Sincer

Patrick Collins Senior Vice President - Licensing SESAC, Inc. 55 Music Square East Nashville TN 37203

John C. Beiter, sq. General Counsel for SESAC, Inc. Locb dr Loeb LLP 1906 Acklen Avenue Nashville TN 37212

1oamm 20140030003 uttu201 73

PREPARED STATEMENT OF ANN E. CHAITOVITZ I would like to thank the Chairman, the Ranking Minority Member, and the Members of the Subcommittee for introducing this important legislation to reform the CARP structure and process. The American Federation of Television and Radio Artists ("AFTRA") is a national labor organization representing over 75, 000 performers and newspersons that are employed in the news, entertainment, advertising and sound recording industries. AFTRA's membership includes approximately 14,000 singers, including more than 5,000 singers who have a royalty contract with a record label ("featured artists") and roughly 8,000 singers who are not signed to a royalty contract ("non-featured artists"). Under $ 114(f) of the Copyright Act, recording artists are entitled to receive 50% of the digital performance license fees, and in order to protect their interests, AFTRA participated in the recent webcaster CARP proceeding. As everyone has acknowledged, the current CARP structure does not function efficiently. H.R. 1417 is a positive step to try to address many of the problems with the current CARP structure and contains numerous important positive changes. We believe there are still a few areas which need to be modified to insure that the new procedure sufficiently addresses all parties'oncerns and permits the participation of small and/or non-profit organizations. I thank the Subcommittee again for its efforts to reform the CARP process. I submit here some initial comments on H.R. 1417. A. COST As AFTRA has advised the Subcommittee and the Copyright Office, the reduction and control of the costs of participating in both the rate setting and distribution processes must be a critical goal of any reform. Small parties, non-profit organizations and artists will only have access to these proceedings if they can afford to participate. We commend the decision to have the Copyright Royalty Judge and staff members paid out of appropriated funds. The current obligation to pay the arbitrators'ees could preclude participation of small and/or non-profit entities with legitimate interests in the proceedings, and we believe the change to a publicly funded process is critical. As we have just seen after the recent webcaster proceeding, the preclusion of small interested parties has the potential to undermine the credibility of the CARP proceeding. We believe that all of the cost of the proceedings for determining rates and terms for statutory licenses must be paid out of appropriated funds, not by the participants. Each party must bear its own attorneys'ees and costs, which can be quite significant, and any additional cost, other than a small filing fee, could have the effect of excluding the participation of small and/or non-profit organizations. Importantly, small parties, non-profit organizations and artists will also be barred from participating if they cannot control their costs and must pay for the costs resulting from larger parties'ore active and litigious participation. Section 803(e)(1)(B) of H.R. 1417 requires that all additional costs be borne by the parties in equal proportions in rate setting procedures. This provision is unfair and could prevent the participation of small and non-profit parties. Even if the decision-maker's costs are paid from appropriated funds, unless all cost are paid from appropriated funds, the other costs have the potential to become substantial and could prohibit a small party's participation if the costs are split equally between the parties regardless of their participation. A party may wish to participate on only one or two issues or to save costs by submitting a streamlined and minimal case. If that party must then share equally all costs, including costs which it does not control and which could be increased by larger parties with a different and more expansive litigation plan, it will be foreclosed from participating. For example, if the participants must pay for the decision-maker's transcripts (costs which could be substantial for a small or non-profit party in a large complicated, proceeding) and those costs are split evenly among the parties rather than proportionately based on their participation, a party whose witnesses only use 200 pages of transcript would have to pay the same transcript costs as those parties whose witnesses use up 10,000 pages of transcript. Smaller parties would, thereby, be forced to subsidize the larger parties, a result which is both unfair and poses a significant barrier to participation. Any non-appropriated costs should be split among the parties according to each party's proportional participation in the proceeding rather than on an equal or per capita basis. Section 803(e)(1)(A) requires that the excess costs may be deducted from not more than 1% of the fees collected. In a rate setting proceeding, the entire burden of that 1% then falls on the copyright owners and performers and none of the cost is borne 74

by the users/licensees, so that the copyright owners and performers pay a disproportionate share of the costs. If there are any costs that must be borne by the parties, those costs should be shared by the users of the statutory license and the recipients of the license fees.

B. SETTLEMENTS The underlying legislation providing for the compulsory licenses is intended to encourage negotiated settlements. Settlements also reduce costs. Unfortunately, the current CARP system sometimes hinders the ability of the parties to settle a proceeding. Thus, to encourage settlements, we believe that a formal settlement period with supervised settlement conferences prior to the filing of direct cases should be required. In addition, we believe that the legislation must adopt procedures to facilitate settlements after direct cases are submitted. C. CONTINUING JURISDICTION Like the Register of Copyrights, we believe that the law must clearly grant continuing jurisdiction with the Copyright Royalty Judge to correct errors in his rate and term determinations and to address unanticipated issues and problems that arise during the license period covered by his or her decision. This is particularly appropriate as the legislation extends the 2-year )114(f) license terms to 5-year terms, and circumstances may change and unforeseen problems arise during the 5- year term period.

D. CONTINUING PAYMENTS As the Register of Copyrights also notes, potential problems may arise when there is a period after the expiration of the old royalty rate and before the new rate has been determined. Even though the new rate is effective retroactively to the date on which the old rate expired, H.R. 1417 must provide that licensees continue to pay copyright owners at the recently expired rate until the new rate is set. Once the new rate is set, adjustments can be made in the form of additional funds. payments or re-

CONCLUSION The creation of an affordable, fair and expeditious procedure, where a uarty can control its own costs, is very important to recording artists. We thank the Chairman and the Subcommittee for moving forward in this thorny area and look forward to working with the Subcommittee on the legislation.

PREPARED STATEMENT OF INTERCOLLEGIATE BROADCASTING SYSTEM, INC., AND HARVARD RADIO BROADCASTING CO., INC.STATEMENT OF This statement is submitted on behalf of small, non-commercial webcasters who need relief from the compulsory license provisions of the Digital Millennium Copy- right Act of 1998 and from the inappropriate rules and procedures for Copyright Ar- bitration Royalty Panel (CARP) pursuant to Title 8 of the Copyright Act of 1977, as amended, 17 U.S.C., ch. 8. This statement is being filed by the Intercollegiate Broadcasting System, Inc., and Harvard Radio Broadcasting Co., Inc. (WHRB [FM]), parties to the appeal from the Librarian's 1998-2002 CARP decision of June 8, 2002, IBS, et al. v. James H. Billington, Librarian, D.C. Circuit No. 02—1220. IBS was founded in 1940 as a non- profit association of college broadcasters, and today its membership includes nearly eight hundred college stations and webcasting operations. Harvard Radio Broad- casting Company is an eleemosynary corporation, whose undergraduate staff oper- ates Station WHRB (FM), a commercial FM station licensed to Cambridge, Massa- chusetts, by the Federal Communications Commission. WHRB (FM) and other non- profit stations are members of IBS. These stations are by-and-large staffed by students; and many are operated by their respective parent, educational institutions as part of the curriculum for academic credit. IBS members report median annual budgets of $ 9,000, and the annual budgets of many stations are much less. The 1998—2002 CARP clearly demonstrates the weaknesses fice's of the Copyright Of- in-for-a-penny-in-for-a-pound approach to running a CARP. The Office took no prisoners in setting up the 1998—2002 CARP. It refused to apply its rules in a way that would permit the small, non-commercial webcasters to participate in an arbitration proceeding intended to set the compulsory license royalties by which they would be bound. The small webcasters pointed out that they could not pay a pro 75

rata share of the arbitration costs taxed against participating parties and could not satisfy the requirements for legal counsel for participation in the evidentiary phase of the arbitration proceeding. The Office acknowledged these points in the Register's

order of March 16, 2001, but declined to tailor its procedures to the size and financial ability of the small entities—even to the extent of allowing them to participate

in the CARP proceeding by the filing of briefs amicus. As a result the small noncommercial webcasters were forced to withdraw their notices of intent to participate.webcasters'harge On appeal, the Librarian has attempted to deflect the non-commercial that the Librarian has proceeded on a one-size-all basis by arguing that two sizes fit all. But even webcasters classified "small" under the 2002 Act include those that have gross annual revenues of hundreds of times the small annual budgets of many academically affiliated webcasters. In the 2003—04 CARP the small webcasters, and collaterally Music Choice, attempted to anticipate the Register's prior objection of inconsistency with the Office's rules by filing petitions for rulemaking with the Register. These petitions have now been denied by the Register's order of February 6th, a copy of which is attached, in which she takes the position that having a voice in a CARP proceeding is "an all or nothing proposition." Id. at 2—8. The effect of the Register's ruling is that small webcasters are bound by a compulsory arbitration proceeding in which they were effectively denied a fair opportunity to participate. This result is in accord neither with the policy of the United States, as set forth in Section 2 of the Regulatory Flexibility Act of 1980, 5 U.S.C. $ 601 nt, and the implementing executive orders thereunder nor with due process, as recognized by the courts in Devlin v. Scaradelletti, 122 S.Ct. 2005 (2002); Eltra Corp. v. Ringer, 579 F.2d 294 (4th Cir. 1978). The Register's recent order recognizes that "many entities affected by the outcome of the... D998—2000] CARP proceeding felt that they did not get to tell their story..." and supports a legislative correction. Id. at 8—10. However, her support for a legislative solution seems to be limited substantially at 12 n.5. There is some urgency to this matter, as the small, non-commercial webcasters are required to make retroactive payments under the 2002 Act that are beyond the financial means of many by June 20, 2003. The Small Webcasters Relief Act of 2002, P.L. 107—321, 116 Stat. 2780, is simply not well-tailored to the needs of the small, non-commercial webcasters, although the definition of "non-commercial webcaster" adapted from the Internal Revenue Code and added to Section 114(f)(5)(e), is appropriately drafted and need not be amended. Among the immediate problems that the small, academically affiliated webcasters face are paying the usage-based rates and the annual, non-refundable minima associated therewith.i But in addition the interim and prospective final record-keeping requirements are impractical for small, student-staffed stations to comply with, are unduly burdensome on small entities, and are disproportionate to the relatively small amounts of royalties that would be distributed in on the basis of the elaborate record-keeping requirements imposed and sought to be imposed. These record-keeping requirements contemplated by the Librarian are far in excess of those applicable to IBS'embers for performance rights under other sections of Title I of the 1977 Act. The underlying deficiency in the Library's one-size-fits-all approach is its failure to apply the provisions of the Regulatory Flexibility Act of 1980, as amended, 5 U.S.C., ch. 6 (The Analysis of Regulatory Functions), and the implementing executive orders. Its pretext is that the Copyright Office falls within the Congressional exemption in Section 2(a) (definition of "agency") of the Administrative Procedure Act of 1946, now 5 U.S.C. $ 551(1), even though that Sections 701(e) and 802(c) of the Copyright Act of 1976, as amended, 17 U.S.C. 5(701(e) and 802(c), specifically provide that the APA shall be applicable to the Office and to the CARP. In any event the Office has refused to implement the small-entity policy of the United States as enacted by Congress in Section 2 of the Regulatory Flexibility Act, 5 U.S.C. $ 601 nt. You will recall that Congress attempted to resolve the Appoint- ments Clause problem by making the Librarian a Presidential appointee. As such, he is subject to the President's constitutional duty to take care that such policies be implemented and to a duty to implement the President's executive orders. If, consistent with the Librarian's litigating position, he were considered a Congressional officer in respect of copyright matters, a serious violation of the constitutionally mandated separation of powers would result.

'The recently announced agreement between RIAA and DiMA is no help to the smaller webcasters in either regard. It would oppose a $2500 minimum on webcasters who cannot reasonably afford even the five-hundred-dollar annual fee specified by the Librarian, and the percentage figure is disproportionate to the performance royalties negotiated under Section 118. 76

IBS and WHRB (FM) urge the Subcommittee to step in legislatively via H.R. 1417 to make it clear that the Office and the Librarian act in copyright matters fully subject to the Regulatory Flexibility Act as to their procedures and their prescription of compulsory license fees for non-commercial webcasters, as defined in Section 4 of the 2002 Act, and to block any attempt to enforce the rates prescribed by the Li- brarian in the 1998—2002 CARP against such non-commercial webcasters. This could be accomplished through amendments to chapters 7 and 8 of the 1976 Act, rather than to chapter 1, amendment of which we infer the subcommittee leadership seeks to avoid in H.R. 1417, leaving the needed and more comprehensive and substantive changes in the Copyright Act to the next legislative vehicle. CONSENSUS COMMENTS OF PARTIES TO CABLE AND SATELLITE ROYALTY DISTRIBUTION PROCEEDINGS

CONSENSUS COMJ&&IK&NTS OF PARTIES TO CABLE AND SATELLITE ROYALTY DISTRIBUTION PROCEEDINGS ON H.R. 1417: THE COPYRIGHT ROYALTY AND DISTRIBUTION REFORM ACT OF 2003

This document provides comments on H.R. 1417& the Copyright Royalty and Distribution Reform Act of 2003 ("CRDA"), from the following claimant groups to copyright compulsory license royalty distribution proceedings conducted pursuant to Sections 111 and 119;

Canadian Claimants: Represents Canadian copyright ov'ners ofprogramming on Canadian signals. ~ Commercial Television Claimants: Represents United States commercial television stations, through the National Association of Broadcasters in Section 111 proceedings and the Bmadcaster Claimants Group in Section 119 proceedings. ~ Devotional Claimants: Represents copyaight owners of ceitain religious programming and programtning produced by religious entities. ~ Joint Sports Claimants: Represents Major League Baseball, the National Basketball Association, the National Collegiate Athletic Association, the National Football League, the National Hockey League, and the Women's National Basketball Association. Music Claimants: Represents the American Society of Composers, Authors and Publishers, Broadcast Music, Inc.. and SBSAC, Inc. ~ National Public Radio: Represents NPR a8iliated noncommercial educational radio stations. ~ Program Suppliers: Represents Motion Picture Association ofAmerica, lnc. (MPAA) member companies and other producers and syndicators of movies, series and specials broadcast by television stations. ~ Public Television Claimants: Represents all PBS raember stations and all other copyright owners of prog&zmming broadcast on distantly carried public television stations.

As a group, these parties have had over 25 years of experience in litigating copyright royalty disuibution proceedings before the Copyright Royalty Tribunal ("CRT"), the Copyright Arbitration Royalty Panels {"CARPs") and the Copyiight Office. The comments provided here are those to which all parties identified above have agreed. Certain individual claimant groups plan to provide the Subcommittee with additional comments. The parties submitting thesejoint comments look forward to ivorking with the Subcommittee during the mark-up process. 78

CRDA SECTION: COMMENTS:

Section 801(a) -Copyright Royalty With regard to the composition ofthe body Judge; appointment and functions (page making determinations: 2, lines 14-17). Tssue: Composition of the decision-making body. ~ There should be three demission-makers, rather than one Copyright Royalty Judge, appointed by the Librarian; and ~ One of the three decision-makers should be designated as a ChiefJudge, and such designation should rotate among thejudges.

Section 801(b)(4) -Copyright Royalty The decision-makers should be authorized Judge; appointment and functions (page to make partial distributions ofroyalty 7, lines 20-23). Issue: Partial distributions. funds prior to the final resolution of a proceeding. In any event, the decision- makers should be directed to make partial distributions in the amounts requested by the parties where all parties to the proceeding 1) join in the request, and 2) agree to reimburse with interest any partial payments that pmve to be in excess of their final adjudicated royalty share.

Section 801(c) — Rulings (page 8, lines 12- Any consultation by the decision-making 19); Section 802(f)(1) — Independence of body with the Register of Copyrights Copyright Royalty Judge, In General should be: (page 11, lines 1-10). Issue: Consultations of decision-making body with Register of ~ On the record and disclosed to all Copyrights. parties to the proceeding with an opportunity for the parties to comment on the issue raised; ~ Limited to issues raised in connection with a pmceeding and involving interpretation ofthe Copyright Act or the Copyright Offiice's rules; ~ Structured so that it does not unduly delay or interfere with the conduct oF the proceedings; and

'age and line number references refer to H.R. 1417, as introduced on March 25, 2003, which was the subject of the hearing held on April 1, 2003. 79

~ Limited to circumstances in which the decision-making body requests such consultation, after giving the parties the opportunity to comment on the request for consultation.

Section 802(a) — Qualifications of ~ The decision-makers should be free Copyright Royalty Judge (page 9, lines 3- from all conflicts of interest. rather than 9) and Section 802(h) — Standards of only financial conflicts. Conduct (page l2.lines 7-I2). Issue: Conflicts of interest ofdecision-makers and ~ The decision-makers should have qualifications of decision-makers. demonstrated experience in conducting hearings.

~ The demonstrated experience in conducting hearings should be broadened to include "other evidentiary hearings" to allow for the selection of attorneys with experience conducting private arbitrations.

~ A demonstrated knowledge of copyright Iaw should not be a requirement.

Section 802(c) — Terms (page 9, lines 18- The term of office for the three decision- 25). Issue: Length of term ofoffice for makers should be 7 years, with the initial decision-makers. terms staggered to end after the third year, fifth year and seventh year.

Section 803(a) — Proceedings of ~ As tJ 803(a) implies, prior decisions of Copyright Royalty Judges (page 13, lines the CRT and of the CARPs should be 3-8). Issue: Treatment ofprior decisions of accorded precedential value. the CRT, Copyright Office and CARPs. ~ The additional reference should be specifically to the "decisions ofthe Librarian of Congress issued pursuant to 17 U.S.C. )tJ 801(c) and 802(f) before the effective date of the Copyright Royalty and Distribution Reform Act of 2003." 80

Section S03(a) — Proceedings of Parties should be entitled to submit Copyright Royalty Judges (page 13, lines relevant information and proposals only in 8-11). Issue: Persons entitled to submit accordance with regulations promulgated relevant information and proposals. pursuant to the CRDA. Those regulations should preserve the current practices with regard to participation in CARP proceedings.

Section 803(b)(2) — Procedures — Small ~ The amount in controversy leading to Claims Proceedings (page 13, lines 13- the use of small claims procedures 22). Issue: Amount in controversy for should be increased to $5000. small claims procedures. ~ Claims made pursuant to the small claims procedures should be accompanied by an evidentiary showing supported by affidavit.

Section S03(b)(3)(C) - Proceedings of The Register of Copyrights should issue Copyright Royalty Judges — Procedures regulations that specify the circumstances — Regulations — Requiretnents (page 15, under which proceedings may be resolved lines 1-3). Issue: Resolution of on a paper record rather than through full- proceedings without conducting full-blown blown evidentiary hearings. These evidentiary hearings. circumstances should include, at a minimum: (a) proceedings where only a small amount of royalties is at issue: and (b) the circumstances identified in the Copytight Office's current regulations.

Section 803(b)(3)(C) — Proceedings of A provision for reconsideration like the one Copyright Royalty Judges — Procedures suggested by the Register of Copyrights in — Regulations — Requirements (page 15, her testimony on April I, 2003 should be lines 1-3). Issue: Provision for added to the procedural requirements. reconsideration of detetmination.

Section 803(b)(3)(C)(i) and (ii)— With respect to distribution proceedings, Procedures — Regulations— the parties arrived at the following Requirements (page 15, lines 4-11). consensus: Issues: Evidence and Discovery. ~ These two subsections should be stticken in favor ofrequiring the adoption of regulations that meet the following objectives: 1) Encourage settlement: 2) Encourage efficiency and decrease costs; and 3) Ensure the orderly conduct of objective, equitable proceedings. 81

~ There should be no statutory nstrictions on the use ofhearsay evidence in the context ofa royalty distribution proceeding. Additional restrictions will likely increase the costs ofproceedings without any resulting benefits.

~ The provisions for discovery appear to contemplate a change in the procedures for conducting distribution proceedings that will likely increase costs without leading to any measurable improvements in efticiency.

Section 803(b)(3)(C)(iii) — Procedures— ~ It is unclear how the procedure — Regulations Requirements (page 15, established by tj 803(b)(3)(C)(iii) lines 12-25). Issue: The Offer of Judgment would apply in the context of a Phase I procedure and settlement procedures multi-party proceeding such as a cable generally. royalty distribution proceeding, as opposed to a two-party Phase 11 distribution case. The Librarian should be directed to define the circumstances. ifany, under which such offers could be made in a multi-party proceeding.

~ The procedure set forth in g 803(b)(3)(C)(iii) is problematic because it lacks an enforcement mechanism. The rejection of such an "offer ofjudgment" should result in some amount of cost-shiMng if the party rejecting the offer ultimately receives an award lower than what is offered, such as in Federal Rule of Civil Procedure 68. The provision should be made more consistent with the provisions of Rule 68.

~ As it is currently drafted, tj 803(b) (3)(C) may imply that it is the sole vehicle by which parties to a proceeding may settle that proceeding, and that settlement is only appropriate befoxe the date on which the hearings

begin. Accordingly, & 803(b)(3)(C) should be clarified to indicate that it is 82

not the sole vehicle for settlement and that settlement may be reached at any time.

~ Finally, in the interest of encouraging settlement before parties have had to expend significant time and resources preparing their cases, the regulations should pmvide for a formal settlement period in advance of the preparation and filing of cases and at the conclusion ofwhich the parties shall report to the decision-makers on the status ofsuch discussions.

Section 803(c) — Decision of Copyright The parties to distribution pmceedings Royalty Judge (page 16, lines 1-9). Tssue: agree that some time limits on proceedings Duration of proceedings (including period are useful in order to decrease costs and for settlement discussions). provide for more rapid distribution of royalties.

The current provision of $ 803(c) regarding the duration of a proceeding needs to be examined more closely in light of current practices. For instance, the provision for submitting final witness lists at the completion ofthe discovery period is inconsistent with the current practice of identifying all witnesses before the discovery period begins in the context of the Sing of a direct case. Although the current version of tt 803(e) provides that CARPs shall have a 180-day period to issue their determination, that period does not include pre-hearing discovery and settlement periods. Any provision establishing the length ofa proceeding should address the various phases ofthe rate-setting and distribution process comprehensively. As drafted, the current version also limits thc Copyright Royalty Judge to the choice ofeither a six-month proceeding or a one-year proceeding, rather than providing for proceedings to fall in the range between six months and one year. Section 803(c) — Decision of Copyright Section 803(c) should exclude from the Royalty Judge (page 16, lines 17-19). record made available to the pubhc by the Issue: Availability ofrecord to the public. Librarian the portions containing confidential information subject to a duly issued protective order.

Section 803(d) — Judicial Rerdeiv (page Section 803(d) should be clarified to 16, lines 20-25). Issue: Appeals by "any provide that only theparties to a rate- aggrieved party." setting or distribution proceeding should have the right to appeal the decision- making body's determination to the D.C. Circuit.

Section 803(d) — Judicial Review (page The standard of review applied to 17, lines 18-22). Issue: Standard of review determinations made by the decision- to be applied by the DC Circuit. making body should be identical to that applied to the determinations made by federal agencies under 5 U.S.C. Ii 706.

Section 803(e) (1) — Administrative All the costs associated with royalty rate Matters - Deduction of Costs of Library and distribution determinations should be of Congress and Copyright Office from paid for with appropriated funds. The use Royalty Fees — Deduction from FiTing of appropriated funds should not be limited Fees and Royalty Fees (page 18, line 12— to the salaries of the decision-makers and page 19, line 6). Issue: Funding of royalty their staff. rate setting and distribution processes. In any event, it should be made clem that the Librarian shall not deduct the costs associated with other compulsory licenses fmm the qs 111, $ 119 or Ij 1003 funds.

The group notes that HR 1417 provides no authorization for an appropriation of funds for the payment of the decision-makers or the costs associated with ratemakings and distributions. 84

PREPARED STATEMENT OF COLLEGIATE BROADCASTERS& INC. Collegiate Broadcasters, Inc. (CBI) is a national organization representing students and educational broadcasters involved in radio, television, webcasting and other related media ventures. These comments are submitted to supplement the record of the hearings held on April 1, 2003 concerning H.R. 1417. I. INTRODUCTION When Congress enacted the Copyright Royalty Tribunal Reform Act of 1993, 17 U.S.C. ($ 801—808, the goal was to create a procedure for determining royalty distributions that would be both fair and efficient. Unfortunately, the resulting Copy- right Arbitration Royalty Panel (CARP) system has proven in practice to be neither fair nor efficient. CARP has particularly harmed the interests of small, non-commercial broadcasters and webcasters. Collegiate Broadcasters, Inc. strongly welcomes H.R. 1417, the Copyright Royalty and Distribution Reform Act of 2003. While the bill is not perfect, with the amendments suggested in these comments H.R. 1417 offers a sensible alternative to the present, flawed, CARP system. II. REPLACING THE COPYRIGHT ARBITRATION ROYALTY PANELS WITH A COPYRIGHT JUDGE WILL ALLOW DUE PROCESS BY GIVING MORE ENTITIES AN OPPORTUNITY TO BE HEARD. A. Costs

The recent arbitration setting digital transmission royalties for the period from

1998-2002, CARP DTRA 1 & 2, highlights the deficiencies of the CARP system. CBI was in the process of forming when CARP DTRA 1 started. Because the arbitrators'ubstantial fees were to be apportioned among all those who participated, small educational broadcasters/webcasters such as those now represented by CBI could not afford to participate, although they are bound by the Copyright Office and Li- brarian of Congress's determination of rates and minimum fees. The cost to participate in the webcasting CARP was at least $300,000 and, for many entities, much higher. This cost is far beyond the resources of the average educational or community station. Most CBI member college radio stations, unlike public radio stations funded by CPB, have to pay their operating costs from student fees or from their meager academic budgets. According to Intercollegiate Broadcast System's surveys, the average college station budget is about $9,000. As a result, college stations that are not funded by CPB were simply not represented in the CARP proceeding at all. This lack of representation and inability to present relevant evidence on the issue of market rate resulted in a royalty rate completely insensitive to the needs educational broadcasters. of At present, the extraordinary costs of CARP participation violate small and noncommercial entities'ight to due process. Due process includes an opportunity to be heard. Courts have held, with respect to private arbitration, that if the cost of par-

ticipating in an arbitration is so high that a party loses the opportunity to be heard,

the arbitration is procedurally invalid. H.R. 1417's provision for the Copyright Roy- alty Judge to be paid by the government addresses this problem. As noted below, CBI suggests amendments to further address the problem of unreasonablearbitrators'urly and un- redictable costs. Without the exorbitant cost of paying a portion of the legal fees, educational and other noncommercial broadcasters ought to be able to participate in the ratemakings that affect them. The cost of the proceedings should be predictable. B. Discovery Powers Should Be Expanded In general, CBI's view is that the Copyright Royalty Judge should have substantial discretion to authorize appropriate discovery, being mindful of the potential for abuse and with the goal of controlling discovery costs imposed on small and noncommercial entities. Expanded discovery powers will promote transparency and in turn more accurate and fairer royalty rates. In the recent webcasting CARP, the Recording Industry Association of America (RIAA) and the Corporation for Public Broadcasting (CPB) reached a royalty settlement agreement during the CARP process. The terms of this agreement would have been compelling evidence of the royalty rates and terms on which a willing buyer and willing seller would agree. The Panel noted that it had almost no evidence relating to noncommercial entities. However, the arbitrators did not consider the RIAA-CPB agreement because the parties agreed to keep these terms confidential. It is quite possible that other agreements that could have been relevant evidence of rates agreed to by other buyers similarly escaped the Panel's consideration because of insufficient discovery. The Panel was left with only one agreement, between 85 Yahoo!, one of the wealthiest webcasters in the entire fledgling industry during the relevant period, and RIAA. The Panel then based its willing buyer/willing seller determination on this single Yahoo! agreement. In this way, the CARP process took on the characteristics of an auction, with the digital transmission royalty rate being set by the highest bidder. As long as the copyright statute requires decisions based on the willing buyer/willing seller standard, the will of Congress cannot be realized without discovery of those rates and terms that have been actually agreed upon in the digital transmission license market and other, analogous markets. CBI recognizes that making all such agreements discoverable and admissible, regardless of the the parties'ntent, could discourage amicable settlements. Were Congress to amend the standard as proposed below, however, agreements might become critical as evidence, though still useful. C. Section 803(d), Providing Direct Appeal to the Court of Appeals, Eliminates A Costly and Time-consuming Intermediate Review. In CBI's view, the current system of two-tiered review is inefficient and needlessly increases expense for the petitioning parties and for the Copyright Office. The proposed legislation properly provides for appeal directly to the Court of Appeals for the District of Columbia Circuit.

III. PROPOSED AMENDMENTS As written, H.R. 1417 provides many needed improvements over the CARP system. However, certain changes could be made to improve the quality of the proceedings and to better protect small, educational and community broadcasters/ webcasters. A. The "Willing Buyer/Willing Seller" Standard in Section 112 (2) and 114(f)(2) Must Be C/tanged Most importantly, Congress should change the standard under which the Copy- right Royaity Judge will determine reasonable terms and rates of royalty pavments to a fairness standard. Under H.R. 1417's present language, the Copyright Royalty Judge will set royalty terms and rates pursuant to sections 112(e), 114, 116, 116, and 118 of the Copyright Act. Sections 112(e) and 114(f) (2) (B) of the Copyright Act presently provide that the rates and terms chosen are to "represent the fees that would have been negotiated in the marketplace between a willing buyer and a willing seller." CBI contends the standard should make clear that rates to be set should bear some relation to those paid for use of musical works by terrestrial radio stations, and that those rates properly could be used as a benchmark. The standard should also make it clear that the Copyright Royalty Judge should not turn the process into an auction by setting the royalty based on the highest, rate acceptable to any webcaster, but instead should adopt rates that will allow the maximum availability of diverse works to the public. The rates selected must recognize and support the public good and First Amend.ment interests served by educational and community broadcasters/ webcasters. "Willing-buyer-willing seller" has been shown to be a poor standard by which to set rates because the market for the right to digitally transmit copyrighted works is a fundamentally imperfect market. Because the compulsory license avoids the need for each copyright owner to negotiate with each copyright user, the rate cannot reflect what any one copyright owner and any one buyer would agree upon for a specific work. The compulsory license covers a wide range of different recorded works, with a correspondingly wide range of values. Recordings by artists who are already well-known and popular may command high royalty rates because these artists relying less than emerging artists on airplay to bring their work to the attention of consumers. Popular, commercial music has a high potential for supporting advertising that brings in revenue. For copyright owners who are unknown artists, or work in special genres, the promotional value of airplay warrants setting the price for the right to digitally transmit the works at close to zero. Educational and community broadcasters/webcasters significantly emphasize the work of such artists and genres. The one-size-fits-all rate does not recognize this phenomenon. Instead, the last CARP set the price for all recordings at the rate paid by a commercial webcaster intending to transmit primarily very popular music. This rate harms not only copyright users, but copyright owners who believe that webcasting has promotional value that is worth more to them than royalties. This is evidenced by the numerous artists and labels who send unsolicited tapes and CDs to college and community radio stations, seeking airplay. CBI would welcome the opportunity to present witnesses with evidence that webcasting promotes sales of their recordings. Many artists and labels have signed royalty waivers or royalty-free webcasting 86

licenses or simply donated their works to the public domain since the results of the webcasting CARP were announced. But the same transactional costs that the 114(f)(1) statutory license avoids make it inefficient for owners to negotiate separate licenses with each station. And in many cases, the artists on a recording do not own the copyrights, but still rely on Internet radio airplay to attract new listeners who buy tickets to their concerts. Given that each copyright owner has a monopoly on certain nonfungible works and there are no available substitutes for a given work, the rate set through negotiation will always favor the copyright owner. Furthermore, with the consolidation in the content and distribution industries, large copyright owners are often running their own distribution businesses, which directly compete with the small broadcasters/webcasters seeking to use the compulsory license. The advantages to the copyright owner mean that even where there is a negotiated deal, the copyright owner is still exacting a rent. If Congress'oal is to maximize technological development and the growth of educational broadcasting, royalty rates should be based on a consideration of fairness. A fairness standard rather than a willing-buyer-and-seller standard will preclude the sort of rent extraction that has forced small broadcasters to labor under rates which are completely unsustainable. B. Congress Should Amend Section 114 to Eliminate or Modify Content Restrictions The DMCA extends a number of restrictions on the performance of licensed works to broadcasters who retransmit their programming over the Internet. Content limitations imposed on Internet digital performances by extension also significantly impinge on the content of the original broadcast performance to be retransmitted. Par- ticularly in the context of educational and cultural programming, these restrictions (e.g. 17 USC $ 114(d)(2)(C)(0) seriously impair the non-commercial educational broadcasters'bility to serve the public good. Applying these restrictions to a broadcast station effectively precludes a program exploring the musical and historical legacy of a single specific artist. The radio pro- grammer's artistic and scholarly pursuits, and the audience's social and educational experiences, are therefore chilled. A program highlighting a single artist is intended to place an individual composition within the context of the artist's greater body of work. The streaming of such an artistic and informative presentation via the Inter- net, however, violates the current statute, despite the public interest served by the nature of this program. Likewise, the creation of a retrospective program at the time of an artist's passing would violate the law. The common broadcast practice of announcing upcoming musical selections is also outlawed for Internet retransmissions as a result of the DPRA and the DMCA. The current statute requires that "the transmitting entity does not cause to be published, or induce or facilitate the publication, by means of an advance program schedule or prior announcement, the titles of the specific sound recordings to be transmitted, the phonorecords embodying such sound recordings, or, other than for illustrative purposes, the names of the featured recording artists...." 17 USC ( 114(d)(2)(C)(ii). Programming practices perfected over decades of broadcast history by radio legends such as Alan Freed, Bill Randle, Robert W. Morgan, Don Steele, and Dick Purtan are now prohibited for retransmitted programming under the statute. Lawmakers have, hopefully unwittingly, removed from the Internet an element that is part of the very essence of radio—a feature that audiences have come to expect from all radio broadcasts. Other content restrictions similarly offend broadcasters'irst amendment rights, to the detriment of the listening public. The content restrictions on the Internet retransmissions of radio stations are presumably intended to protect copyright owners from unauthorized copying. But Inter- net retransmissions are not a significant threat the recording companies'etail sales because permanent copies of streamed music cannot be saved by an online listener. Therefore, these draconian measures create protections much more restrictive than are necessary, and in the process gravely impinge on legitimate artistic, educational, and cultural applications of the available technologies. Congress should amend these provisions so they will not obliterate the ability of non-commercial educational radio stations to effectively expand their public service to the Internet. C. Sections 801(c) and 802(f)(1)—Consultation with Register of Copyrights Should Be Documented and Voluntary. These sections provide that the Copyright Royalty Judge may consult with the Register of Copyrights in making rulings. CBI recognizes the expertise of the Reg- ister, particularly with regard to rulings that would implicate copyright office procedures, responsibilities and obligations. Such consultations, however, should be voluntary, as set out in the draft bill, not mandatory, as some have proposed. It would be appropriate, to ensure the Judge's independence and to provide full and open dis- 87 course, that such communications be formal and on the record, perhaps in the nature of an amicus brief, or that they provide for parties to be present or to comment on the Copyright Office's statements. D. Section 803(e)(1)(B)—Remaining Costs Should Not Be Assessed To Participants. CBI shares the concern of R. Bruce Rich that the language of Section 808(e)(1)(B) is unclear as to what kinds of costs remaining after deductions from royalty fees are to be borne by the parties in equal proportions. As noted above, college broadcasters and groups representing them, such as CBI, have extremely limited resources and must be able to predict, when they undertake to participate in rate-setting proceedings, what their costs will be. Any provision that raises the risk of unex- pected costs, out of the parties'ontrol, being assessed against them at the end of the proceeding seriously chills their ability to participate in the process. Chilling participation, in turn, deprives the fact-finder of valuable evidence. The language should be changed to clarify what costs are intended and how they are to be apportioned in multiparty proceedings, or, better yet, all costs should be borne by the copyright office, defrayed by the filing fees. E. Section 803 Should Be Amended To Make Small Claims Proceedings Available To All Non-commercial Entities Who Elect to Use Them. In addition to amending H.R. 1417 to eliminate the "willing buyer/willing seller" standard and make fairness the standard for rate setting, Congress should also expand the ability of non-commercial broadcasters to take advantage of non-adversarial systems for resolving royalty disputes. Congress should allow any non-commercial broadcaster who elects to do so to use the small claims proceedings set out in (t 803(b)(2). As written, H.R. 1417 seems to allows the use of the small claims proceedings only in certain proceedings and when a party to the proceeding asserts that the royalties in dispute are $500 or less. Basing eligibility for the small claims proceeding on a dollar amount will breed inefficiency as parties engage in pre-hearing gamesmanship to get in or out of the small claims system. Non-commercial broadcasters will reap significant savings if they are always allowed to invoke the paper-only, small claims procedure. CBI would be willing to propose specific language if the committee is receptive to this general approach. F. Congress Should Mandate Separate Proceedings For Noncommercial Entities. CBI suggests that regardless of how Congress chooses to give non-commercial broadcasters/webcasters alternative methods for dispute resolution, it should amend H.R. 1417 to instruct the Office of Copyright to bifurcate or stage rate proceedings that set rates for both commercial and non-commercial broadcasters. Commercial broadcasters and non-commercial broadcasters are differently situated in everything from their social mission to their level of funding. The large, multi-party, multi-class proceedings that include parties ranging from very large publicly-held entertainment companies to one-person startups needlessly multiply the costs for all participants, disproportionately harming noncommercial entities such as educational and community broadcasters/webcasters. If commercial and non-commercial rates are set simultaneously, uncertainty among all parties will increase and the likelihood of settlement will decrease. Unified proceedings lead to this an inefficient outcome because the commercial broadcasters will seek to extend negotiations so as to get a deal closer to the non-commercial rate. In the Small Webcaster Settlement Act of 2002 (SWSA), Congress implicitly recognized that the compulsory license rate for commercial broadcast must be set before the non-commercial license rate is established. SWSA empowered SoundExchange, the Receiving Agent designated by the CARP, to enter into royalty rate agreements with small commercial and all noncommercial webcasters. Properly, SWSA staggered the dates by which commercial and noncommercial had to enter into any such agreements. The deadline for agreement with commercial websites was December 15, 2002. The deadline for agreement with noncommercial webcasters is May 31, 2003. As with the SWSA, Congress should amend H.R. 1417 to provide for that the Copyright Office regularly hold bifurcated proceedings, with the commercial proceedings going first. The Copyright Office, however, in its haste to begin CARP DTRA 8, to expeditiously set the rates for webcasting for 2008—2004, set a schedule requiring all parties to inform the office whether or not a settlement had been reached by March 81, 2003 and requiring written direct cases by May 5, 2008. CBI had to bring this conflict to the Copyright Office's attention in a Motion to Bifurcate or Stage Proceedings. The Copyright Office and Library then recognized that "requiring submission of written direct cases before May 81, 2003 will compromise noncommercial webcasters'bility to take advantage of the period provided in the Act" and amended the precontroversy discovery schedule for noncommercial webcasters. 88

Order in Docket No. 2002— 1 CARP DTRA 3, April 10, 2003 (provided with these comments). However, the Register of Copyrights found that "the Library does not have the authority to instruct the CARP as to how it will hear and consider the evidence presented by noncommercial webcasters." Nevertheless, the Copyright Of- fice encouraged the CARP "to schedule hearings and proceedings in this docket in such a manner as to minimize, as much as possible, the costs of participation that will be borne by noncommercial webcasters." Congress could forestall such difficulties and improve fairness and efficiency by expressly mandating bifurcated, staged, or completely separate proceedings. CBI notes that this staggered approach is already taken with respect to the licenses for musical works, in 17 U.S.C. 118. Congress has recognized, in that context, the unique characteristics of non-commercial entities. These characteristics are equally important in the digital transmission context. Separating the proceedings for commercial and noncommercial entities in the musical works copyright context has also had the salutary result of encouraging settlement. CBI would be pleased to provide draft language upon the request of the Subcommittee. G. Congress Should Change The Standard of Review to "Clearly Erroneous." Congress should amend H.R. 1417 to change the standard of review of Copyright Royalty Judge decisions from "arbitrary and capricious" to a "clearly erroneous" standard. An arbitrary and capricious standard gives little room for judges to correct faulty rulings because royalty disputes produce such a large evidentiary record that there will almost invariably be the iota of evidence necessary to prevent a decision from being arbitrary and capricious, even if the reviewing court has the conviction that a mistake has been made and that the rate set is plainly wrong. Sup- porters of the arbitrary and capricious standard may claim that having a high standard of review is necessary to give gravitas to the Copyright Royalty Judge process. However, changing the standard of review will not diminish copyright users'nd copyright holders'illingness to fully engage in the procedures outlined by H.R. 1417. Pragmatically, small webcasters and educational broadcasters/ webcasters such as the ones represented by CBI barely have the wherewithal to participate in CARP under the small claims provisions, let alone pursue expensive appellate litigation. Consequently, setting a "clearly erroneous" standard of review will not cause our parties to seek an appeal of every copyright judge's decision. Further- more, H.R. 1417 already increases the independence and finality of Copyright Roy- alty Judge decisions by removing the intermediate review currently assigned to the Librarian of Congress. Because H.R. 1417 removes a layer of oversight, Congress has an obligation to enhance aggrieved parties'bility to obtain redress from harmful erroneous decisions. Therefore, CBI requests that H.R. 1417 be amended to allow judicial review of Copyright Royalty Judge decisions on a clearly erroneous basis. H. Congress Should Limit The Recordkeeping and Reporting Requirements That The Copyright Office Can Impose on Statutory Licensees. As of this writing, the Copyright Office has still not issued final regulations on the recordkeeping and reporting requirements for licensees under 112(e) and 114 for the period from 1998—2002. Proposed and interim regulations, however, threaten to cost licensees more to comply with the regulations than they will owe in royalties. These threatened regulations disproportionately affect educational and community stations, which play more diverse and often older recordings, for which less information is often available. Burdensome recordkeeping requirements threaten to drive non-commercial educational broadcasters from the Internet. Collection of some information sought to be reported is technologically impossible. Some of the information proposed to be included in the "Report of Use of Sound Re- cordings under Statutory License" is not available to streaming services, is not consistently available, or is redundant within the report itself. The proposed recordkeeping requirements are monumental when compared with the level of utilization. The cost of complying with these rules is unmistakably disproportionate to the royalty fees to be assessed. The contrast is also striking between the burden imposed by the proposed recordkeeping regulations and existing Copyright Office recordkeeping requirements applied to royalties paid by educational broadcasters to performance rights organizations (PROs). Present recordkeeping requirements for performances by educational broadcasters are based on a sampling model, whereas the proposed Internet regulations are based on a census model. Complying with the proposed recordkeeping requirements is not a simple matter of mining the requested information from an already-existing data set. Much of the information for each musical selection would need to be specifically collected in order to comply with these proposed rules. Educational stations programming typi- 89 cally represents wide ranges of musical genres. Many do not restrict playlists to a comparatively small selection of artists and styles of music, as is common practice with our commercial counterparts, but instead explore compositions from vast, diverse music libraries. Music libraries of educational radio stations are frequently comprised of literally tens of thousands of compositions on a variety of media. This programming diversity creates an additional demand, under proposed recordkeeping rules, that would discourage, if not eradicate, the ability of educational broadcasters to provide this non-subscription service through Internet retransmissions. Much of the massive recordkeeping required by these rules would have to be generated manually by a small staff of volunteer personnel, by most educational stations. Amending the statute to exempt all non-commercial educational broadcasters and webcasters or to limit the requirements would ensure equal, fair consideration under the law. IV. CONCLUSION H.R. 1417 goes a long way to improve the fairness and accuracy of determinations concerning statutory copyright royalties and licenses. The suggested amendments would improve this reform legislation, or in the alternative, could be the basis for related legislation to address defects in the current copyright act. CBI thanks the Members of the Subcommitte for their attention and would be pleased to provide additional views or proposed language now or later. 90

Jn tbe hsctrerof ) Doctcct Na. 2ggg-g CARP D'PBBS Diegtsi Pecfoymunce R!gbt in Souoii

Re aud Rpttemernt 135%~5' cordi ugs Recordings ) Bocitct vr(o.ngg1-2 CAttp DTNSRA

] COatcstecd T(tit Or»irr eddrCSSe5 fccr ~nctiaia 1» die ehiyi C.etpt ra»ed Pirtieedtng. Flat„ tire Order'sddmsse5 ajoint m utica Sled by certain parties propot(»St ttrs sad terms OOPVBKr forthc stmitti I (2 acid II I I e siatntary licenses for certain srnriccs mrd Iyr: IL,K rcrtuevti»g Inst drc prepomI be puhg shed by tim Library nader sccrioe 25153(h) of Ihe OARp inlet, 32 cby,k. second, the order sttrkesstsn maim filed cetm(n by Parties to consolid»mr)is)»~cd(ag udth e ucn proceeding to set mtcs smt tctnts 1m 8m thescmiou I lg aed I ld licenses for ncw suhsc»lpt mrtdcec Thinl, the Order tats forth a ecru ton precoctrov eisy discovery schedule for ci rteln pet ier lo this prececding covcrcdby ihehdol net Cupydllu piopoml mentiimssnhev rtrsd fomth, t)cQcdcr udrhv. 1r uicotloa Aitiimriicn s fihd byOoiicgrmv Srccdcsstcub inc. Ia h fctcete Sispumetding cs betev~commerciet nnd no- Sejrr?rr necmms rid entities .Pcnvtv msldng me a fisc ca mica I fs sr d 13rd licenses foreligible setv(ccs convtthtc notion

gotnt PrapesnI

v.O.lyric r Igr On A pl it 3, 3503, the Libntty ofCongmm rmeived a proposalto vnieil\vrt t fartheeectine joint set rates end tenne 1 lg snd I Irt statutmy Ecensc fur el igible uumnbmriptmn ume Sl cice ticusm(scions, end suhscriptlmt svrshtomun other then shnirleusts nt Ah1 rutdFM radio brcedccv& proararrrming std Ot.. Kins trcnsmissians inn+ ccrtsln by notccmmmcial erriiiics as idcnfigsd ia ihejoiut propasc1, fi'em thc Recarding Industry A sociation OI'mcrics, the Aiomicsn Fedmathm ofMusidassofthv Un(ted Sta:m endCanndtv die AineiiccnyederationufTeicvitionrcndksdieAnicis„crrd the ftigitsl hdcdrr Amocicti&u Tha Librsry m(0 soon publish iil thepcdcraI Begis«r thc tenne of tbe jnint Prannerd Pnrsturnt tc tCCIian 21lhg3(h)Ol'ihc I CARP ndet, Whish nlluna iho Lll rar(en m Avhme'stiitnp-53 propssu for adoption sert 53 ltd Ioyv lit rates end tunas. Whcmfcrv, 33'S f)RMILSD that dte prcruuttroversy dttcovciyscttcdnlc uuouaaccd lu thc OrderIni]acket No. 2(512 I CARP 3?TIIA3 (Fcbianry 6. AS)) )S VACATPJ) for services coi d Prrohnrt» ere by die joirt propostl. t3531357.-35vS htotionra Consolerh

On feinnaty 25, SOO3,tlie Dbgmi hiedia Aetneiet(nnr Aicim1CS Oagile, Iiiit 1 (iten ten! iac., Iv(ns(cNstch„ lnra and Yah os, Iac. I iled a motion mt(estring tlm Libr my coasoli dite thi 5 pracrcding wiYa the CARP pmcccdms ro asm%eh smdoii 112 msd srctiaa I te rates oad terms for aew subset(pt(crt service„ I?acket Iso. A91 2 OA'Rp (ITIIsRA. Tac joist described shove..ccvett boih p nip ate(, iionsttbscriptioo and nmv 3»hrcripuoa mnijccr, If Ihc peep»asl is sdoptcchthe motioun&eonsatid Iais mast. svhc. for:,IT Js oitttRRS33 consoIIdtmfgdtfsss!ssfw thstnremot(ento tvyfy)f?UT pRSTtsD)cF snd stay he rested (a the evem that the jmntproposei is»mt udoplrri undo ttngp becomes irccessery. . Iew Prccontrorvrsy Discovery Schedule

The bms I I '!Vcbeaster Senlemern Act of 2002rPublic'Lacr bro. I07321, amended amiico I I 5(t) itf Iim Copyriaht *et to provide, am one other tbivgr, that noncommercial webcssters lmvc untB May 3 I, 2003, to nedotmte settlements ofrates end tense for rbe smrion 112 nsd 114 licensesinternalfornoorubmiptien 5m'l asians 'Ibc Smell Vrebcsstm Sr»1cmwu 51st drfines a vnt»ncommcrcret wcbccster" m s webccster tbet ir".

(I) crcempt frotrttsantico undermctics 30t oflhe Internet Rcvcnas Code of I'56 (26 II SC. 301).'ll)has cpp iicd!o Sued faith to the Revenue Servicefor exemptioa fma tsnetian under secdoa $01 oft'e Internal Itcvcnue Code snd her . s remntemislly tease»able espvv~aicn tlat svcb «serapdoo shell he grssttss; or gB) is operated bye. Sr tear pcssesmon sr any 2»venmmctsieutihy m sutcvdbmmdremof m by thcUnitcd States or ENstrict ofCohmbin. far cxclusivclypublic purpo cs.,

7 7U.S.C g I Id(I)(3)()r)(ib The l.ibr~ rccodulrm that.rmptiYioS dr subrnis ion ofwrittea dir cot ca ice before tday 31 will csntpronritc nuncomnmrJst welmamr:" ntdlity to toke lbtt . sdvanmpc sfrhe period provided in thc dot.

VVItemfn. w IT ES ORDERED tliat t»C PreCOnttnVuasy dieecsery SClreduteatumuaeed In tbe Order in Docbetpto. 20ttv-i cARp DIRA3 (Fcbmsry 0 2003) Is YAcATKD fru mtcs and tetttt$ for dte 115e ol sound rccartliohs bi etidfclt uoutcbmripdon trcnsmirsions(17 D 2 C. hh t12 Fc i 1 0) Ibr naacoramcrcbd webrurturs.

TF LS SDI(MK8 i(INII(fey.ll tbst t1ie pmeosrrorcrsy discovery cebcduld anncunerfi In thet3rdm in I)acket No. 20M-I Cede DIRra (Pebniaiy o, 2003) IS 750$KÃBED for non ccmmereic I $vcbcasters as faÃc os'iimaof I)ATE

Vfrittco ($ircct Cmes It»so 30, 2003

Requests f'r tiodmlyinS Demunenm tuly10, 2003 Rellmed to Wrbreo Isirect Cases

Reepenteeto itei)aesle for Iuiy 15, 2007. Ijnderlying Otmmnems

Con pletion nf I)eever'cnt prorteetioc Inly 2 I, 2003

'Poiiovpup R~mts fcr Irriy 25,2003 . ticderlymp Drmum tnt s

Responses tb Sotle$v-op Ratsetts. duly 30,2003 . 92

btctiojts Re(bard tol)occmcm psndathon Attyjnt-t, 2003.

Product(on ufDcenmcuit bt Response

toyottujv-up Requetm

At(Odtcr Motions, petithms cod ()hjecrmns

(bc prcenctrdvmsytttscovury schcdjdc mmocuncd in the Feb rusty 0, 2003, Cedar jcriisins uncbmjged for drose phmes who atoner covered by thcjotnt pjropos'a) cod nsm are um jjoscommmcicl webeastetc cs dc(ised m the'Semil Webecster Sett tern cut Act. bdctuul tc Bifurcate 'eja

OaWarcts3, 2ttt8, Cu) ijut(ate'broadcasters. Icc. ("C8( ) tged a titen(on to bifmccm dus procecdmgju pcrrnit uojmotumecuiui wehcasters to p return their written direct'cases at a trier . tijou utheipsjties in this proceedingnnrlm p emit them to present their evidencd tmd lrcvc it amddemd by the CARP sspsttne)y from the other phtd os; CBI points et 3tbst allowing noncommercial wcbocstms to tile later(they propose August 3,2003) willow *uch webcasiers to ifutly negotiate setticiueats underthe terms ofthe 0mjdAVcbcnster Sett tomcat Act.

ttrhere(ote; II IS QRBERKIt tltst thcmothm te bifurcate IS liRANERD IN FART ANIIDXNIRD INVERT. 'Ihc motion is tpcoftut is 0& the Djbrmy hss cmeerlcdttm coctmvjvsydtscovmy schednle tbr noscoiumercist webcsshns enddcpcnnithsg thorn to cahmit 0 tetr nettunj direct cases at a later date(sre above). This also mesne t hei 0 jecoutnwerss discovery on their wein en direct «aces rri)l he oendnmcd sepnrueiy ('mm tits odjurpsnies )e this laocecdin0. Itcwovet, the Libyy do,s not hltve tbc scdmrily to instruct thaCARP as to liow it witt near cnd consider t'hn dvhlcncn preseutcdbyuuneemmerciel 'wehcusters, Coasmtcundyftge Ishtxy is denying Ibis inpcct ofCB('s reaiiom Ncvcrth ale is, v ecneonmgetim CAttpto mh coute hearings end procccdisgs is this dochat m suche msham ss io mluim)re. as mnctj as possible, thccosts ofpert):ipatioa that will ha home by noncommcrciat wchcasucs.

0b optbLRED

Mcrybejb Petcm RcjissrofCo

I t(olj 1i $c rA cy

DATED: Apr)) lb, 2003 93

LETTER FROM JAMES CANNINGS

4cc 2'Aa " 22c II 'Y t,xY,nano 212 642 s264! 212 242 1323 tax 212 213 216 Zm ilu r Irisj;m mi 64.. m I

April 8. 2003

H.R 1417

107a Cougress Subcornittee on Couus, tbe Internet and intellectual Pmpeuy Commiuce an the Judiciary 2 I 38 Raybum House OtBice Building Washin ton D,C. 20515432th

' Dear Ms. McDonald

'.IIn.Tiuvudbj Apri'I I, 2003 tile subcommittee on the Jiudiciary held a hearing in ret'erence to -II'R'.'rl')30:("Copyright Royalty Distribution Reform Act of 2003'"J. The said BII.L is : I,'!";'",;; ',:, ',i::;;Inr'rpifjLvejk;jo amend title 17 United States Code, to replace the Copyright Arbitration 4yatsya pieinels with a copyright Royalty Judge, 2nd for other purposea James canniogs "''.;In4teje.abibjitlest lo file his comments concerning the mid BILL. You directed him to file his cbttunenls within a week. 44 ;

. c "Ab Jjia above referenced hearing tlmre were two debated issues whici I will comment on. . ": .", Thdyaret-

I. The issue sfnumber ofJudges m the Copyright Arbitmtion Royalty Panda, 2. What the standard ofjudicial review shouldbe forthe Court ot'Appeals for the District of Columbia Circuit.

CD h E D H.R.1417

I do support the point made by Mr. Remington who suggested that the BJLL should allow for a panel of three Judges. One reason is that lhe introduced amendment seeks Io replace the Copyright Arbitration Royalty Panels, which appointexl three arbitrarors. Except for costs this system has worked. 'The other reason is that three Judges ivili create a necessary balance of power necessary for fbir hearings and as

such ccn minimize the added expense of appeals.

" ln retbrence to the second raised herein, it is my opinion the standard ofjudicial review of ",'"„lti i~",'I'iPi„'P'jljmjtjtP''jy@Jttfjijj'I'IjliijP'j" 'Sjidiijji $agtgb AdminialratiVe PrOCedure ACt f'APAm). BeCauSe 'ji t!'"".i li i.";4',::,',.', „hi A~ggis311ebliiqlgelstitatkttifsit::,"4I'fbljraly. apd.cgptjctotts.." lj is tfoubjing shpujd thjs pol . 94

be so. Precedent has showa that absent a clear statutory direcdve to the coun of review; the court becomes very creative in amving at a standard of review. See ivarianairtrsaciaiiaii of Sruadras iten v. the i ihrariaa ei a i., 146 F.3 d 907, 922 (D.C. Cir. 1998). The court states,

Where Congress has not prescribed the debuees of prooi'ivhich must he adduced by the proponent ofa rule or order to carry its burden ofpersuasion in an Adnunistrative proceeding. this court has felt at liberi to rescrlbe ihe standard. (Emphasis ndded)

Moreover, un important general purpose of the APA was to "supplant u variety of prc- existiog methods for obtaining review that differed from one agency to another." Sce (.'oasiinr v. Dept. ofTranrpmvaiiaa, 880 F.2d G03, 60G (I Cir.1989) ('en Bnuc) (Breyer, J) Sea aho t aaiiiir, 880 F.2d at 606, quoting S. Rep. No. 442 76'ong., I". Sess. 9-10 (1939) (relating to an earlier version of the legislation that became the APA) (" 'unfortunatelyf existinn statutes d[id] not provide for a uniform method and scope of judicial review'"); cf. II.R. Rep. No. 1980 794 Cong, 2d Sess. 1G (1946) ("the bill is meant to operate'cross tbe board'n accordance with its termm or not at alh Where one aaency has been able to demonstrate that it should be exempted, aII like agencies have been exempted in general terms. (See [the definitional provision now particular opemtion at 5 U.S.C. 551(l)]1. Where one agency lms shown that some panicuiar opeiation should be exempted from any particular requirement, the same tunction in all agencies has been exempted. No agency has been favored by special treatment.").

There is no doubt that H.R. 1417 embrace the APA for pmcedural purposes. The APA inrroduces the notion of agency. Section 803(a) specifically states: "The Copyright Jud e sltall conduct proceedinga in occordance with subchapter I I of chapter 5 of utle 5, for thc purpose of making dcterminatioos in canyin" out the purpose set forth in section 801." If the Copyright Judge determination is appeuled the stnndard of judicial review of thut determination must be based on whether or not according to subcirapter I I of chapter of 5 title 5 the Copyright Judge's determination is "arbitrary and capricious."

Therefore, the APA does apply to the standard ofjudicial review.

Therefore, it is respectfully requested that the language of H.R. 1417 be amended to specifically state thnt the standard ofjudicial review of "arbitrary and capricious" be that of the APA.

Tbankiag you for your cooperation in tlds matter.

Respectfully submitted

James Cannings Copyright Owner, Publisher. Songivriter Founder ofOOPS CERTIFICATE OF SERVICE

I, the undersigned, hereby certify that on March 18, 2014, I caused a copy ofthe

SOUNDEXCHANGE'S OPPOSITION TO MOTIONS FOR ISSUANCE OF

SUBPOENAS to be served by overnight mail and email to the Participants and by overnight mail to the Proposed Non-Participant Targets of Subpoenas listed below:

Participants

Cynthia Greer Patrick Donnelly Sirius XM Radio, Inc. Sirius XM Radio, Inc. 1500 Eckington Place, NE 1221 Avenue ofthe Americas Washington, DC 20002 36th Floor cvnthia.areerQsiriusxm.corn New York, NY 10020 Telephone: (202) 380-1476 patrick.donnellvssiriusxm.corn Facsimile: (202) 380-4592 Telephone: (212) 5S4-5100 Sirius XMRadio Inc. Facsimile: (212) 584-5200 Sirius XMRadio Inc.

Christopher Harrison R. Bruce Rich Pandora Media, Inc. Todd Larson charrisonsoandora.corn2101 Webster Street, Suite 1650 WEIL, GOTSHAL & MANGES LLP Oakland, CA 94612 767 Fifth Avenue New York, NY 10153 Telephone: (510) 858-3049 r.bruce.richQweil.corn Facsimile: (510) 451-4286 todd.larson&weil.corn Pandora Media, Inc. Telephone: (212) 310-8170 Facsimile: (212) 310-8007 Counselfor Pandora Media, Inc.

Mark Hansen Janet Malloy Link KELLOGG, HUBER, HANSEN, TODD, Clear Channel Communications, Inc. EVANS & FIGEL, P.L.L.C. 75 Rockefeller Plaza, 23rd Floor 1615 M Street, NW, Suite 400 New York, NY 1001S Washington, DC 20036 JanetLink clearchannel.corn Mhansen(Rkhhte.corn Telephone: (210) 832-3318 Telephone: (202) 326-7900 Facsimile: (210) 832-3122 Facsimile: (202) 326-7999 Clear Channel Communications, Inc. Counselfor Clear Channel Communications, Inc. David Golden Catherine Gellis CONSTANTINE CANNON LLP P.O. Box 2477 1301 K Street, NW, Suite 1050 East Sausalito, CA 94966 Washington, DC 20005 cathv cacounsel.corn daoldenQconstantinecannon.corn Telephone: (202) 642-2849 Telephone: (202) 204-3500 Counselfor College Broadcasters Inc. (CBI) Facsimile: (202) 204-3501 Counselfor College Broadcasters Inc. (CBI) SERVED VIA FIRST-CLASS MAIL David Rahn Brendan Collins Custom Channels.net, LLC Triton Digital, Inc. 2569 Park Lane, Suite 104 15303 Ventura Blvd., Suite 1500 Lafayette, CO 80026 Los Angeles, CA 91403 daveQcustomchannels.net brendan.collinsQtritondieital.corn Telephone: (303) 588-2824 Telephone: (S18) 528-8S67 Custom CPtannels.net, LLC Triton Digital, Inc.

Karyn Ablin Russ Hauth, Executive Director Jennifer Elgin Harv Hendrickson, Chairman WILEY REIN LLP 3003 Snelling Avenue, North 1776 K St. N.W. Saint Paul, MN 55113 Washington, DC 20006 [email protected] kablinQwilevrein.corn hphenricksonQunwsn.edu ieluinQwilevrein.corn Telephone: (651) 631-5000 Telephone: (202) 719-7000 Facsimile: 631-5086 Facsimile: (202) 719-7049 (651) Vational Religious Counselfor National Religious Broadcasters Broadcasters VonCommercial Music License VonCommercial Music License Committee Committee (NRBNMLC) (NRBNMLC)

Bruce Joseph Jane Mago, Esq. Karyn Ablin Vice President and General Counsel Michael Sturm 1771 N Street, NW WILEY REIN LLP Washington, DC 20036 1776 K Street, NW imagoQnab.org Washington, DC 20006 Telephone: (202) 429-5459 biosephQwilevrein.corn Facsimile: (202) 775-3526 kablinQwilevrein.corn Vational Association ofBroadcasters (NAB) msturmQwilevrein.corn Telephone: (202) 719-7000 Facsimile: (202) 719-7049 Counselfor National Association ofBroadcasters (NAB) Gary Greenstein Nick Krawczyk, ChiefExecutive 8'c Creative Of5cer WILSON SONSINI GOODRICH k ROSATI CMN, Inc. 1700 K Street, NW, 5th Floor 7201 Wisconsin Avenue, Suite 780 Washington, DC 20006 Bethesda, MD 20814 ameensteinSwsm.corn nickQcrvstalmedianetworks.corn Telephone: (202) 973-8849 Telephone: (240) 223-0846 Facsimile: (202) 973-8899 CMN, Inc. Counselfor CMV, Inc., 8traclrs, Inc., andFeed Media, Inc.

David Porter, ChiefExecutive Of5cer Denise Leary 8tracks, Inc. National Public Radio, Inc. 51 Sharon Street 1111 North Capital Street, NE San Francisco, CA 94114 Washington, DC 20002 dvSStracks.corn dlearv npr.ore Telephone: (415) 94S-4216 Telephone: (202) 513-2040 8tracks, Inc. Facsimile: (202) 513-3021 iVational Public Radio, Inc. (NPR)

Thomas Cheney James Duffett-Smith idobi Network LLC Jared Grusd 1941 Vermont Avenue NW Spotify USA Inc. Washington, DC 20001 45 W. 18th Street, 7th Floor tomQidobi.corn New York, NY 10011 Telephone: (202) 297-6977 iames&spotifv.corn idobi Network LLC iaredQspotifv.corn Telephone: (917) 565-3894 Facsimile: (917) 207-3543 Spotify USA Inc.

Rusty Hodge David Oxenford SomaFM.corn LLC WILKINSON BARKER KNAUER, LLP 2180 Bryant Street, Suite 208 doxenfordQwbklaw.corn2300 N Street, NW, Suite 700 San Francisco, CA 94110 Washington, DC 20037 rustvQsomafm..corn Telephone: (415) 552-7662 Telephone: (202) 383-3337 SomaFM. corn LLC Facsimile: (202) 783-5851 Counselfor Digital/y Imported Inc., AccuRadio, LLC, and Educational Media Foundation Ari Shohat Kevin Blair Digitally Imported, Inc. Brian Gantman 3457 Ringsby Court, Suite 212 Educational Media Foundation Denver, CO 80216 5700 West Oaks Boulevard ariSdi.fm Rocklin, CA 95765 Telephone: (303) 997-2202 kblairQMoveairl.corn Facsimile: (303) 997-1058 baantmanQMoveairl.corn 251-1600 Digitally Imported, Inc. Telephone: (916) Facsimile: (916) 251-1731 Educational Media Foundation

Kenneth Steinthal Lisa Widup Joseph Wetzel Apple Inc. KlNG & SPAULING LLP 1 Infinite Loop 101 Second Street, Suite 2300 Cupertino, CA 95014 San Francisco, CA 94105 lwidupSapple.com ksteinthal&3cslaw.corn Telephone: (408) 974-4954 iwetzel&3cslaw.corn Facsimile: (408) 974-9105 Telephone: (415) 318-1200 Apple Inc. Facsimile: (415) 318-1300 Counselfor Beats Music, LLC, Amazon.corn, Inc., and Rhapsody International, Inc.,

Lee Knife William Malone Digital Media Association 9117 Vendome Drive 1050 17th Street, NW West Bethesda, MD 20817 Washington, DC 20036 maloneQieee.ore [email protected] Telephone: (301) 365-1175 Telephone: (202) 639-9509 Counselfor Harvard Radio Broadcasting Co., Inc. Facsimile: (202) 639-9504 PVHRB) and Intercollegiate Broadcasting Digital Media Association (DiMA) System, Inc. (IBS)

David Israelite William Colitre Danielle Aguirre Music Reports, Inc. National Music Publishers Association 21122 Erwin Street 975 F Street, NW, Suite 375 Woodland Hills, CA 91367 Washington, DC 20004 BcolitreQMusicReports.corn disraelite nmpa.ore Telephone: (818) 558-1400 daeuirre nmpa.ori Facsimile: (818) 558-3484 Telephone: (202) 393-6672 Music Reports, Inc. Facsimile: (202) 393-6673 Vational Music Publishers Association (NMPA) George Johnson Jeff Yasuda GEO Music Group Feed Media, Inc. 23 Music Square East, Suite 204 3979 Freedom Circle, Suite 610 Nashville, TN 37203 Santa Clara, CA 95054 aeorpeQaeoreeiohnson.corn ieffQXeed.fm Telephone: (615) 242-9999 Telephone: (650) 479-4881 GEO Music Group Facsimile: (415) 449-6947 FeedMedia, Inc.

ProposedNon-Participant Targets ofSubpoenas

Google, Inc. Cricket Communications, Inc. c/o Corporation Service Company which will do c/o Corporation Service Company which will do Business in California as CSC — Lawyers Business in California as CSC — Lawyers Incorporating Service Incorporating Services 2710 Gateway Oaks Drive, Suite 150N 2710 Gateway Oaks Drive, Suite 150N Sacramento, CA 95833 Sacramento, CA 95833 Google Play All Access and I'ouTube Cricket Communications, Inc.

SERVED VIA OVERNIGHT MAIL ONLY SERVED VIA OVERNIGHT MAIL ONLY

Rdio, Inc. VEVO, LLC c/o New Season Corporate Services c/o CT Corporation System 4600 Larson Way 111 Eighth Avenue Sacramento, CA 95822 New York, NY 10011 Rdio, Inc. VEVO, LLC

SERVED VIA OVERNIGHT MAIL ONLY SERVED VIA OVERNIGHT MAIL ONLY

Slacker, Inc. Apple Inc. c/o Jack Isquith c/o C T Corporation System 16935 W. Bernardo Drive, Suite 270 818 West Seventh Street San Diego, CA 92127 Los Angeles, CA 90017 iisquithQslacker.corn Apple iTunes Radio Slacker, Inc. SERVED VIA OVERNIGHT MAII. ONLY

Karen Easton