Statement in Support of the Entertainment Industry

Press Release

By:  Brad Sherman
Date: Dec. 1, 2011
Location: Washington, DC

Congressman Brad Sherman (D -- Sherman Oaks) released a statement in support of the entertainment industry.

"This year, I became the Chair of the Entertainment Industries Caucus. The Congressional Entertainment Industries Caucus engages Members of Congress on issues important to the entertainment industry. It recognizes the great economic and cultural contribution of the entertainment sector throughout the country and serves as a forum to discuss and formulate innovative approaches to the challenges confronting the industry -- such as intellectual property protection, runaway production, and the development of new digital mediums."

Read Congressman Sherman's Full Statement:

The Performance Rights Act

As Chair of the Entertainment Industries Caucus, I have worked hard to ensure that all artists are justly compensated for their work. Unfortunately, a major loophole continues to exist in U.S. copyright law that allows broadcast radio to profit from the work of musicians played over the airwaves without providing the musicians any compensation whatsoever.

Shamefully, the United States remains the only developed nation to not protect musicians in this regard. Also, because the United States does not require U.S. radio broadcasters to compensate foreign performers when they play their sound recordings, reciprocity allows foreign broadcasters to deny paying U.S. performers when they play their works in their countries. U.S. artists lose millions in potential foreign performance royalties because of our failure to update our copyright laws.

That is why I have repeatedly joined with my colleagues to introduce the Performance Rights Act. The bill would simply ensure that musicians receive just compensation when a radio station airs their music.

I will continue working with my colleagues to make sure that musicians can rightfully earn a living from the music they create. Everyone in this country should be compensated when someone profits from their product.

Fighting Intellectual Property Piracy

Intellectual property theft remains a major threat to the entertainment industry. A 2007 study found that intellectual property piracy annually causes $12.5 billion dollars in losses to the U.S. economy as well as more than 70,000 lost jobs and $2 billion in lost wages to American workers. I have worked to protect the entertainment industry from the theft of the content it produces.
A recent success in the fight against piracy was the passage of Prioritizing Resources and Organization for Intellectual Property Act (or otherwise known as the "Pro-IP Act"), which I joined with former Judiciary Committee Chairman John Conyers and others in introducing. The bill was signed into law in 2008.

The legislation makes significant changes to numerous intellectual property statutes and programs, providing intellectual property owners and federal law enforcement officials with new tools to effectively pursue intellectual property theft. Federal enforcement agencies are also given a new coordinator to help streamline anti-counterfeiting efforts. I will continue to monitor the implementation of this law, making sure that enforcement efforts combat both hardware piracy (such as illegally copied DVDs and CDs) and internet piracy.

On an international level, it should come as no surprise that piracy in countries like Russia and China runs rampant and the governments do little to enforce intellectual property law and treaty obligations. For example, the American film industry loses out on 90% of its estimated revenue to piracy in China. However, Canada, our friendly neighbor to the north, has actually become a major center of piracy. In fact, the Organization for Economic Cooperation and Development has estimated that Canada has the highest level of online piracy in the world. I have been focused on drawing attention to the problem of piracy in Canada.

As the Chair of the Entertainment Industries Caucus, I have sent letters with Caucus members pressing the Canadian parliament to consider new comprehensive intellectual property legislation. I have also delivered this message personally to high-ranking members of the Canadian Parliament. Particularly, I have been concerned with significant loopholes in Canadian law with regard to taking down infringing websites, like peer-to-peer websites that intentionally facilitate piracy on a massive scale. Until Canada can improve its laws and their enforcement, I will continue working with my colleagues in the Entertainment Industries Caucus to pressure Canada into modernizing its intellectual property enforcement laws.

Preventing Runaway Production

I have also been working to prevent a problem known as runaway production. In our global, competitive marketplace other countries have begun offering their own incentives to the film industry causing productions conceived in the United States to be relocated out of the country (and unfortunately out of Southern California and the Valley). This outsourcing trend which began in the late 1990s costs the United States' economy up to $10 billion per year and has affected thousands of U.S. workers. This phenomenon not only impacts actors, studios and their employees, but also threatens the livelihood of small business people who may operate restaurants, dry cleaners, and hotels that depend on film and television production.

One way of combating runaway production is through tax incentives, such as the tax deduction provision in Section 181 of the Tax Code. Section 181 allows investors immediately to write off for tax purposes the first $15 million of costs associated with certain film and television productions instead of having to deduct small portions of the cost throughout a number of years. A film only qualifies for a credit if 75 percent of the total compensation of the production is compensation for services performed in the United States by actors, directors, producers, and other relevant production personnel.

The Tax Cut Compromise Bill, signed into law this past December, revived this previously expired film tax incentive, which was established in 2004. Section 181 can now be used for films produced in 2011, and can be applied retroactively to films produced in 2010. I have been a supporter of this provision since its inception, and this Congress, I will be introducing legislation to extend Section 181.

It is clearly important both culturally and economically to stop runaway production. Through inattention and lack of will, it would be tragic to let this great American industry flock to other countries -- who would be most happy to welcome it. As Ranking Member of the Subcommittee on Trade, I am particularly appreciative of former MPAA President Jack Valenti's statement that the movie industry "has a surplus balance of trade with every single country in the world . . . No other American business enterprise can make that statement." I look forward to working to keep this statement true by making the Section 181 incentive permanent.

Please be assured that I will continue to work to protect the interests of the entertainment industry.

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