Good morning, and welcome to this morning’s hearing, "Online Entertainment: Coming Soon to a Digital Device Near You?" There have been a number of significant developments since the Committee’s hearings last year on online entertainment and copyright law.

     Among many, let me mention three: First, the Ninth Circuit has ruled that at least as a preliminary matter, Napster as we have known it cannot continue. For them, as Mr. Henley might say, it has been The End of the Innocence. Even Napster acknowledges that this is so. And in its alliance with the forward-thinking Bertelsmann, Napster has pledged to reinvent itself so that the technology and music fan community it has unleashed can work together in a way that respects copyright law and the rights of creators. It has been suggested that this new Napster can be online in June.

     Second, MP3.com has settled its litigation with the large record labels and publishers, and yet, having paid damages and been granted licenses to go forward still cannot bring its service to the public. As Ms. Morisette might question, isn’t it "Ironic"?

     And, third, but by no means least, several significant market developments have been announced that seem to put us a step closer to the "celestial jukebox." One was reported in last Friday’s Wall Street Journal that two of the five major labels, Vivendi-Universal and Sony, were moving towards launching a consumer online service called "Duet" which will bring their joint catalogs to consumers. And the second, and even more significant, announcement was yesterday’s deal between three of the big labels, AOL-TimeWarner, Bertelsmann, and EMI, and the independent music service provider, RealNetworks, to bring a subscription music service to consumers over the Internet.

     Pro-competitive marketplace solutions that provide for a significant online offering of popular music delivered to consumers through an entity not controlled by the labels has been the type of positive synergy I have long hoped to see. And I hope to learn more about the details of these developments and to hear more heartening information on this front. This Committee is here today, and will continue in the future, to monitor these and related developments in our on-going efforts to ensure that our intellectual property laws keep pace with technology.

     Technology has made our lives more convenient, but also made us more impatient. When a consumer drives up to a gas pump, she can insert her credit card, confirm that she has adequate funds in he account, he account is debited, the oil company’s account is credited, the transaction is completed, the consumer is thanked, and her tank is filled. All of this occurs within a matter of seconds, and the transfer of sensitive financial data is transferred securely and with utter precision.

     While there are significant additional challenges in the context of a product that is delivered wholly online, most consumers think similar technological advances should allow them access to the music and movies they love whenever and wherever they want it. I believe it can, and that it can do so in a way that respects the rights of those who create the works we all want to enjoy in this new way. Instant access to an infinite offering of perfectly-performed creativity on a portable device the size of a pen, or a phone, or in the car, or wherever I want it, without dragging cases of CDs, is more than a new way of delivering the same product. It is a transformation of our experience of entertainment, and poses a revolution in the businesses that have delivered it. And I do appreciate the disconcerting panic that the uncertainty of new technology might cause established businesses such as the record labels.

     But as a music lover, as one who enjoys the best that human creativity offers, I – and fans across the country – eagerly anticipate these technological transformations the future holds. That is why we are here today. As inventor Charles Kettering admonished, "we should all be concerned about the future, because we will have to spend the rest of our lives there." Artists, record labels and music fans.

     The developments I mentioned have involved primarily entertainment companies and technology companies. But as Mr. Henley has pointed out, there’s three sides to every story. Today, we may find there are even more sides than that. We have tried to broaden the discussion beyond just the business entities that mediate the primary relationship we need to keep in mind, that between the artist and the audience. We need to look to see what the future of this industry holds and how technology has and will continue to change it.

     When it comes to technology, I must admit, I try to avoid making any predictions. Whenever I am tempted, I think back to the year 1927, when H.M. Warner of Warner Brothers said, "who the hell wants to hear actors talk?" Or more recently in 1977, when Ken Olsen, the founder of Digital EquipmentCorporation, said "there is no reason anyone would want a computer in their home."

     But what I can safely predict is that we will have no choice but to embrace technology, and in order to do this properly, especially as policy-makers, we need to understand it. And that is precisely why I am pleased to have such a large distinguished group here today sharing their thinking about these matters. As many as are here, many were not able to participate because of space and time constraints. We will include in the record many statements from a number of artists and technology companies and others. Joining us today are leaders in the entertainment and technology businesses, as well as consumer advocates and some of the most distinguished creators of popular music working today. I look forward to learning from each perspective presented today.

     I will conclude by saying that some may feel about the road ahead as Woody Allen expressed it: we stand at a cross-roads, one road leading to despair and hopelessness, and the other leading to extinction, and I hope we have the wisdom to choose correctly. Well, I am optimistic that we will be able to choose the road that embraces technology, respects the creativity of artists and meets the justifiably impatient demand of consumers. With apologies to Ted Nugent, who unfortunately could not make it today, I do not believe we are riding a Terminus Eldorado. Rather I like to take the advice of Alanis Morissette, who suggested on her last album that the appropriate response to experience, even to experience we don’t particularly want, is a resounding Thank U. I believe the road ahead is very exciting. I do not know precisely where it leads, nor will I predict, but I can see some exciting possibilities. I look forward to exploring them with you today.

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