Shouldn't the market decide what fair market value is?

http://www.hollywoodreporter.com/thr/article_display.jsp?vnu_content_id=1002386071

Gawd, i hate congress, every freakin' last one of 'em. A pox on both our houses.
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Hill aims bill at sat downloads
Music biz wants compensation


By Brooks Boliek

WASHINGTON -- A bipartisan group of lawmakers introduced legislation that would require satellite radio companies to compensate the music industry for downloads, industry and congressional sources said.

The legislation, by Sens. Dianne Feinstein, D-Calif., Lindsey Graham, R-S.C., and majority leader Bill Frist, R-Tenn., is aimed at compensating copyright holders as satellite radio services become distribution services.

The PERFORM Act, or the Platform Equality and Remedies for Rights Holders in Music Act of 2006, would require satellite, cable and Internet broadcasters to pay fair market value for the performance of digital music. The bill also would require the use of readily available and cost-effective technological means to prevent music theft.

"The birth of the digital music place has been a boon for businesses and consumers. However, these new technologies and business models have become so advanced that the clear lines between a listening service and a distribution service have been blurred," Feinstein said. "I believe that the PERFORM Act would help strike a balance between fostering the development of new technologies and ensuring that songwriters and performers continue to be fairly compensated for their works."

Record industry executives want so-called "parity" among the different download platforms. They argue that the new devices XM Radio is bringing to the market that allow customers to save songs on the receivers without paying for the download rips off the copyright holder.

"Digital sales are finally replacing physical losses," RIAA chairman and CEO Mitch Bainwol said. "If someone gets a distribution right without paying for it, that blows a hole in the digital marketplace."

Warner Music Group chairman and CEO Edgar Bronfman Jr. endorsed the legislation in testimony prepared for a hearing on the issue scheduled for today.

"What's that old saying? When I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck," Bronfman said. "Well, when I see a device that permits consumers to identify the specific tracks they want from a satellite broadcast, record them and library them for future use, I call that device an iPod and I call the satellite service making that device available a download service. What is clear to everyone is that these services no longer resemble and will increasingly stray from our collective understanding of what constitutes a traditional radio service."

Bronfman called the Feinstein-Graham bill a "critical step toward ensuring that IP continues to be respected in the digital world."

The bill protects copyright holders by ensuring that "the same rules apply to all of the satellite, cable and Internet services, which avail themselves of a compulsory license under" the nation's copyright laws.

Sirius Satellite Radio has reached deals with the major record companies that compensate them for downloads on its S-50 receiver that allows customers to record content, but XM has not. A pair of devices, the Pioneer Inno and Samsung NeXus, allow customers to record programming.

XM executives contend that the devices are nothing more than a high-tech way to record radio programming, which is protected. In XM chairman Gary Parsons' prepared testimony, he said that the Feinstein-Graham bill, tentatively known as the Perform Act, will "lead to a new tax being imposed on our subscribers."

The company already pays millions in copyright royalties to the record companies, and said their push for a new royalty is a negotiating tactic designed to push those rates higher. The copyright office is currently reviewing those rates.

"The reason the recording industry is now insisting on a different standard has nothing to do with fairness," Parsons said. "XM and the record industry are in the middle of renegotiating their performance license. By changing the standard now, the recording industry hopes to stack the deck in its favor."

Bainwol denied the charge.

"Competition should be based on the offering. Their license is for a performance, not a distribution," he said. "I was struck by the power of their slogan: 'It's not a pod. It's a mother ship.' "