Thomas Frank Author and Editor, The Baffler (moderator)
Wayne Crews  Vice President, Regulatory Policy, Competitive Enterprise Institute
Neil Glazer Director of Business Development and General Counsel, Madison House/SCI Ticketing
Thomas Hazlett Senior Fellow, Manhattan Institute for Policy Research
Seth Hurwitz Owner, IMP/9:30 Club
Chellie Pingree President and CEO, Common Cause
Jim Winston Executive Director, National Association of Black Owned Broadcasters

I arrived late, my apologies.

Wayne
You don't want the government to be setting the rules.  There should be no limits.  Can ideas be monopolized in a free society? No, as long as the government does not practice censorship.  As long as there are free capital scenarios, the money will flow to opportunity.  I am more concerned about a society that is complacent about the government limiting ownership.  By limiting, you are impeding the competitive response to wide-scale consolidation.  The world we live in is one that could see abundant spectrum and the potential faze out of FCC regulation.

But what about the seen consequences of consolidation?  Or will the market arrive at its own censorship.

Wayne
The issues of liberal vs conservative broadcasting should be solved in a market, not by the government.

Moderator
There is the logic that the "market" is the highest expression of human creativity and its solutions are therefore ideal.  But there are those that disagree.  When radio stations and concert companies cross promote, is it

Seth
We call it collusion.  Ticketmaster got where they got from doing a better job until they began locking up venues.  A shark will not adjust its actions according to the pain it inflicts on the the victim.  Ticketmaster will proceed cause these actions are in its best interest.  If tickets.com were first, they could have been just as powerful.  Is it up to the government to stop this?  Will competition solve this?  What happens when it doesn't?  There is a point when we might like the government to step in.  Things do get out of hand and that is when the government should take a look around.

Moderator
How does this monopoly in the culture industry?  The synergy between radio and concerts.

Seth
They own all of the amphitheaters.  The design was to control the market vertically.  Its like the claim that there were weapons of mass destruction in Iraq.  If there were, we entered to find out whether this was true.  In the concert business there are clear concerns, but the regulators seem to be waiting for some clear evidence of overtly powerful position in the marketplace.  This was not set up so a radio guy could get good tickets at concerts.  Would you rather work with a promoter with a radio station, or one without a radio station?

Neil
The lawsuit in question is Nobody in Particular against Clear Channel entertainment.  A small promoter looking to get airplay on the radio alleges that Clear Channel refused the opportunity.  There could be very clear evidence that ClearChannel controls the market.

Seth
In the concert business, there is only one piece of inventory - the one, or two shows.  Its a brief monopoly.  Now you add a monopoly that has market power beyond the inventory.

Moderator
Has the number of black-owned stations has dropped?

Jim
This total number of stations owned has not dropped, but the total distinct number of owners.  A diversity of ownership has fallen.  In Los Angeles one of my members called me.  They were not provided access to tickets for a concert promotion and bought their own tickets.  ClearChannel sued them for promoting a ClearChannel concert on a different station.  Stations are intimidated by this.  1300 TV stations, 20 are owned by african americans.  240 out of 13,000 radio stations are african-owned americans.  Our only major channel is BET, now owned by Viacom.  Do we want a singular voice in the media as a result from consolidation?  The danger is not the monopolization of ideas, it is the monopolization of frequencies.  You cannot start a new TV station or Radio stations, there are no available frequencies.

Thomas
Reminds us that the freedom of the press belong to those who own the presses.  But does diversity in ownership, ethinicly really matter.  Or is it about what is aired?

Jim
Once we agree that news can be slanted, then we can be concerned about the diversity in ownership.

Moderator
Can deregulation or market forces solve the problems we discuss on the panel?

Thom
Yes.  There is nothing automatic about the market circulating around a bliss point.  On the point of regulation.  I look at the actual practical effect of these regulations.  Chris Yoo observed federal regulations and shows the utter litany of failure of regulation.  There are policies for both localism and diversity within the media.  And they are both botched.Low power will never realize its potential because the regulators instituted burdensome local products with non-for-profit limits.  You can only own one station that cannot sell advertising - and this industry is expected to compete with ClearChannel or other consolidation.  10's of thousand new stations are simply silent because they cannot afford to broadcast.  In 1994, many compoanies wanted to broadcast radio by satellite.  seven years later, we got to see two.  The big radio players argure that these station cannot do local programming or sell advertising.  The regulators passed over the advertising limits, but imposed local limits.  It is illegal for them to include local content.  This is a perverse outcome.

Moderator
Should the FCC exist?

Thom
I would not have started it, but now that its there we might as well get rid of it.

Realities of the market have ruled out the more creative ways to communicate.  You have huge debts to pay and shareholders to please.  And now ClearChannel is rolling out its own ticketing company.  That may bring competition to the market.  But ClearChannel claims to now own the patent on InstantLive - the instant creation of CDs from a live performance.  That is frightening.  We have been able to make a market for selling tickets for smaller artists, other people should be able to act as well.

Chellie
This goes back to the 1930's.  We decided that the spectrum was so important that the government should ensure the market reflects certain objectives for local and free speech.  It is critical that government pays a role.  These are the airwaves that corporations own and they have an obligation to all of us.

Wayne
We need to have rules for the enablement of competition.  But you have to be careful setting up the government as an arbitor of media.

Thomas
Its all fine and good to look to the government to save the freedom of the airwaves.  Is another thing to look at the facts.  The Fairness doctrine had a chilling effect and suppressed free speech.  Government regulations seem to end up counter productive.  The meta questions are generations of technology ahead.  The clear development is a very more liberal situation that could blow apart the present situation.  If we over regulate, this might not happen.  In Korea, young music artists often sign with wireless carriers rather than record labels.  These carriers are in a better position to distribute media.

Joseph Gratz Law Student, University of Minnesota (moderator)
Chris Amenita Senior Vice President, ASCAP Enterprises Group
William Terry Fisher Professor of Law, Harvard Law School
Robert Kasunic Principal Legal Advisor, US Copyright Office
Jessica Litman Professor of Law, Wayne State University
Neil Netanel Professor of Law, UCLA and University of Texas
Sandy Pearlman Vice President, Media Development, Multicast Technologies

What is life like under your proposals for an Alternative Compensation System?

William Fisher
Everyone would be better off, except for lawyers.  The benefit of derivative works.  Enhance democracy for creative works.  Although seemingly more compulsory, would allow smaller artists to reach larger artists.

Demerits: complications in estimating consumption.  Cross-subsidies and related distortions (payers to not align with benefactors). Risk associated with the governments inclusions.  Ensuring respect . Leakage International.  Feasibility.

Neil
Both proposals are based on the reality that peer to peer is here to stay.  Designed to find a way for artists to be paid.  But i limit to non-commercial sharing and derivative works.  Mashups and remixes are a dynamic and wonderful thing.  As long as they are non-commercial.

Jessica
Proposals and modifications.  I also agree p2p is good and should be encouraged.  It is less expensive (huh) and distribution of revenues presently is poor.  We can fix copyright purgatory.  Terry's is an opt-in proposal.  Neil is compulsory.  Mine is opt-out.  Creators should have the right to not include their works in the system by be able to choose to add works to a larger, blanket license.  Paying directly to creators, subject to any other agreements.  There are many agreements we cannot find, and we should assume these p2p licenses are subject to traditional contractual terms.  Creators are easy to find.  Avoids entrenching the present intermediaries.

Is there a market failure
Rod
While thoughtful and important, the present system is not a market failure.  In light of present market activities, are we seeing a plethora of activity in the licensing market.  In short, there is no failure.  We cannot be certain these new proposals truly carry advantages that outweigh the disadvantages.  In theory, artists would get paid better.  Fair distribution is a serious question.

Chris
It snice to have a rational discussion about trying to fix issues with the music business.  Good intentions, but misguided.  The reality, the present system just needs some more time.  Am I, ASCAP, and unnecessary intermediary, even though we have collected and distributed royalties for years.  We try to balance the benefits to the user community and that of the music community.  We feel the compulsory scenario greatly benefits the user community, without benefitting the music community.  Many of our members embrace p2p.  I have not been able to negotiate a license with anyone from P2P.  I don't get return phone calls.  When we are ignored for trying to begin a discussion, I question their intentions.

Sandy
Impose a small sales tax (1%) on a subset of all devices sold, services offered - that tax applied  applied to 105 of the total volume = $1 billion for every one percent of tax.  Total royalties in EU and US, was ~ $3 billion.  These royalty payouts have been a diminishing payout.  We have to deal with the reality that has been dealt to us..  If we tried to tax WWinformation networks, they would fight it out.  But the consumer is less vulnerable and the ultimate benefactor of the new universe of music available through technology.  The levy on blank recordable media in Canada is raising ~35-37 million.  Extrapolating to the US, about a billion would be collected within the reasonable market sector we would consider taxable.

What compensation level should be be shooting for?  Fairness?

Terry
The goal it put creators in position they were in 2000.  $2.3 billion per year, for both the music and film industry... which translates to $5 per month, per broadband access.  Would the amount of money in this system ultimately equal to the present system?  No.  Cause the costs are lower.

Example: a nationally created archive of Brazilian music.  A partly public, partly private solution.  This is also be considered by Germany and others.

Chris
These ACS overlook the biggest players in the market and the total value of revenue they derive from the works of authors and copyright holders.  Instead, the full burden shifts to the consumer.  This does not, ultimately, seem fair.

Sandy
The longer we delay applying any solution, the more creators lose.  The tax levy, expands as the degree of connectivity and number of devices expands.  We have to monetize all of these systems.  And all of these system will co-exists with the market we see today.

Neil
I disagree with the idea that P2P is a market failure or not a wonderful thing.  But many more people are excited about music and accessing the creations of many more people.  If we can build a system under which more people get paid, its a good thing.  In terms of the amount, of the compulsory terms of the license... given the present terms, it is impossible to obtain volunteer licenses that matches the breadth of user interest.  Just cause the government establishes a license does not mean it sets the rate or collects the dollars.  Only in the failure of an agreement in the market, would the government set a rate.  Thus ASCAP et al, would sit at the table.

Rob
If the past provides any evidence, the establishment of compulsory of large licenses will not necessarily reduce legal costs or other costs.  P2P as a good thing is certainly an opinion that depends upon the eye of the beholder.  We need to consider the opportunity for artists to choose.  We should be expecting growth in terms of the revenue not collected, not just benchmark against the past.  And we need to more seriously consider the collection and distribution of these numbers.  The technology has worked around the standards established by the AHRA regarding collections from DAT tapes.  This is a big question.

Sandy
Dat was a loser technology that never took hold.  Canadians may not be happy they have to pay more for CDr media, but on the other hand many creators are happy to be receiving some money.

Chris
We work with cable compulsory licenses.  At the first bet, this was a small market.  In 1998 we were told monies were collected by the government regarding these licenses.  We have been told we will receive these monies in 2005.  Dealing with monitoring and collecting the information necessary to make legitimate payments.  Its not cheap to roll out the technology.  It may sound simple, but it is an expensive, and time-consuming process.

Sandy
But the spyware people have shown us tracking mechanisms can be built cheaply and quickly.

How would this look on the hill?

Jessica.
Before getting to committee, Terry's ideas die.  Communities and musicians need to draw the attention of their congresspeople to these issues.  Now that college kids are getting sued, copyright law is something everybody needs to know about.  But the current statues is over 200 pages and not in accessible language.  Everybody needs to understand their position.  And the law needs to be simpler.  We cannot make P2P go away by suing people every few months.  The EFF has proposed the copyright holders acquire an anti-trust exemption, collectively license to consumers and build the solution.  We need the solution to ultimately not be drawn by those who traditionally control music consumption.  The more poeple having tihs ocnversation, the more likely we will have a more sensible law.

Questions?

What about fraud.  And the limits of statistical sampling.

Chris.
AN outside agency that selects when things are sampled, so internally we cannot stuff the box.  We own our own technology for audio fingerprints.  Can people rig the system?  Yes.  Could are large part of the money goto the usual players.  Yes.

Neil
The receiver of monies are legitimate businesses who are reliable in their likelihood to payout.  Can the system be gamed, yes.  But statistical sampling can be adjusted to account for nominal levels of gaming.

P2P United chair, asks question.
This panel is the only rational conversation on this issue that has occurred in this town.  I would like to invite people to join us in asking legislators do something radical and throw out lobbyists to have an open discussion like this.  Will you join P2P united in our call, not for a new model, but for a clear discussion.

Chris
Have you ever contacted us? No.  You have never spoken to us.  You can meet me afterwards, and we can start.

John Schuch
Where is the market price clearing mechanism?  The mechanical compulsory was 2 cents for half a century.  What is the confident that the determination of fair pricing will result.

Terry
I am not terribly confident of stakeholders finding the price sweetspot without agreeing upon conditions.  IT has been proposed the whole social value of creative works be attained by economists.  But this is politically infeasible, we don't do it in any other category.  Only fairly vague criterion, to enable the survival of a creative industry.

Neil
This is a difficult question.  I point to a ten-year look ahead for the size of the market.  It is important to emphasize, that the main point is to bring relevant parties to the table.  So the fear that an agreed solution does not result can be used to encourage the discussion - in a compulsory world the government has the threat of setting the price.

Rob
Rather than the government set the rates, it is preferred that this is reached through some private, collective conversation.  While it may set only one rate, it will affect the other rates as well.  That is a major concern.

Sandy
The notion of a sweetspot is irrelevant.  All of the current systems, or those potential, will co-exist.  We have the legacy structure of payments while we may end up with additional pools of money that may add to the value of the whole market.

Kristen with the FOM coalition
What about the authentication database that needs to be built in order to find all the people that need to be paid.  At this point , there is not formal database that includes this information.  There are PRO, Copyright office and Sound Exchange.  Where is the collective database that can handle the whole market of music and music history.

Chris
We do that on a daily basis.  In the future that orgs that represent rights owners will be able to pass information back and forth.  The notion of one huge big database should worry some people.  The idea that it is spread out, is something we are working on right now.

Doesn't the copyright office have this?

Rob
We only have the records of the people that have registered.  This in not necessarily an accurate picture of the ownership market.  Other collectives are in a better position for this database.  There are still big questions in the technology of identifying what has been used/played.

Terry
There are many difficult aspects to this.  If creators can get a bunch of money from the system, they will want to make their identities known.

Neil
States Big Champagne already accurately measures this information (incorrectly: BigChampagne measures what people have in their folders).