I wonder when these Senators last walked into a Target or Walmart — prices are low and catalog prices are especially low. Now, as for shelf space, that’s a different matter…but politicians are usually more concered with consumer prices than consumer choice.

4:15pm And what does this mean for artists signed to EMI labels? Bronfman says the merger will result in smaller artist rosters, as was the cast with Polygram merger, Sony BMG merger and Warner restructuring. Faxon says EMI roster was “completely deciimated” under Terra Firma but has been rebuilt and Grainge will continue to rebuild. Grainge reiterates: more choice for consumers, more investment in artists. Companies fight to keep successful artists and the ones that will be successful in the future. He is “absolutely determined” to build and take artists to the next level. Azoff says rtists will be happy that EMI will enter a spending mode. Having fewer majors will embolden aritsts to take more shots with indie labels and will cause indie labels to take more risks.

4:09pm This has turned into a contest of who is first to license. Faxon says he would ask Bronfman why Warner has not licensed its music to Google. Good question. Hopefully Bronfman will get an opportuntiy to answer.

4:07pm Sohn says she has more examples of UMG not licensing first or taking an unfair pound of flesh. But she doesn’t mention too many. She mentions that UMG got $1 for every Zune sold. She mentions lawsuits, although UMG is not alone is lawsuits (other labels have sued Grooveshark, for example). Franken asks if UMG’s market power disrupts the world of digital services and innovation. Grainge says we “embrace as many digital partners and digital partners as we can.” Grainge again says that artists will leave if the company doesn’t license its music and push innovation.

4:02pm Grainge gets to comment to Sohn’s earlier comments about how UMG dealt with Deezer in France. Grainge is proud of the hundreds and hundreds of worldwide deals UMG has done. Senators don’t have many examples of services UMG has not licensed to, and they aren’t asking about them too much, so Grainge can easily point to all the deals the company has done. On Deezer, Grainge says he is “not aware of the Deezer speficis” and what went on with the service in France. He says with all the deals they’ve done in countries around the world it’s “unfair” to concentrate on just a few deals that have had problems.

3:57pm Bronfman is talking about the power of hits in digital download world but says subscripion services are more about catalog than just hits. Combining UMG’s hits with EMI’s catalog would give the post-merger company a lot of power in both download and streaming worlds, he says.

Now there’s some discussion on who gets bragging rights to being first on board with new services. Azoff points out UMG licensed to Spotify first and Warner was the last one in. Senator Franken and Sohn say, not, UMG was the third to license to Spotify.

3:53pm Senator Lee points out EMI was able to usher in the age of licensed MP3 downloads with a 10% market share. But Bronfman says a three-major market will mean the smallest major (that would be Warner) would have less influence on outcomes. He keeps coming back to this point and drives it home as often as possible.

3:49pm There’s been a lot of discussion about how a new owner — one in the music business rather than the financial services business — would benefit EMI and especially Capitol Records. Senator Lee asks that question of Faxon, who says his business is investing in aritsts and there has been a sense of instability. UMG would provide stability and give artists a sense the company is investing in their careers and connecting them with fans. It will be a “creative engine” that will benefit consumers because more good music will come out of it, Faxon says. “We’re in the innovation business.”

3:44pm Kohl asks if iTunes price increases is a sign that customers will accept higher prices in digital music. Grainge says original price was just a launch price and over time labels improved sound quality. The implication, it seems, is that price was artificially low and was bound to increase. Sohn says there is no evidence that piracy exerts any downward pressure on prices. Consumers spend over $2.5 billion in digital music — that shows a desire to buy music legally. “Piracy has absolutely on affect on prices whatsoever.”

Sohn tells Faxon that revenues have gone down because CD sales were high and points out that labels were guilty of price fixing of CDs. Getting a little testy between Faxon and Sohn.

Azoff explains how piracy impacts artists: An artist he was known for a long time used to make $400,000 a year on his catalog but now makes $68,000.

3:36pm Kohl says Graine is known to be smart and tough, and jokes that his not directly answering questions might be a sign of that smartness. Bronfman had earlier commented that nobody else on the panel was actually answering the Senators’ questions.

3:34pm Bronfman talking about the power of major labels. New digital services don’t go to Azoff and other managers. They have to go to the record labels. UMG has historically sought greater than its market share in negotiations. UMG has “at least 50” exclusionary licenses for which other labels will eventually be invited in. Market power is about the terms a label can excise as well as its decision to license or not license.

3:31pm Faxon says the question in antitrust is whether you can exercise market power, not what a company’s market share is. “The power is sitting in the consumer’s hand.”

3:29pm Does music not require normal antitrust considerations when looking at this deal? Grainge says telecom examples are not relevant because UMG doesn’t have a direct relationship with consumers. Its market is made by the artists it signs. “I wish we had Adele. But we didn’t.”

Mills: Any normal antitrust analysis is even more crucial here because labels have a monopoly on its music.

Sohn: Antitrust concerns market power, not just market share. Can’t forget that copyrights last 90 years (“that’s a monopoly on top of a monopoly”).

Azoff: We’re a unique industry. Apple was built a bit on the back of copyright. So was Sony’s Walkman. He loves that artists have real power for the first time in his 43-year career. Normal considerations of market power don’t apply.

Faxon: Labels “failed dismally” at their own online services. Consumers broke through and found the music. That is why no music company can stay away from licensing rights. “It will not have a business” if it doesn’t license music and managers and artists won’t sign on to labels that don’t license to new services.

3:22pm Franken asks Mills if a single artists can make or break a digital service. He notes that Adele is not on Spotify and wonders if that has impacted Spotify’s ability to succeed. Great question. Mills calls it an “exteme position.” Adele decided to keep most of her music off Spotify is her decision, says Mills. “No service can exist without Universal” and needs big songs by big artists, he says.

Interesting note by Mills: UMG caused higher prices and a different pricing structure when it licensed to eMusic, obviously said to give the subcommittee an example of how UMG can wield its market power.

3:19 Franken is worried labels are asking for equity in digital startups. He quotes Doug Morris, Grainge’s predecessor, saying services won’t build a business on UMG’s music without UMG’s getting a share in success.

Grainge says about Morris “I disagree with [his statement]” but notes Morris “is a great guy.” He says it is in UMG’s interest to put its music out there in as many places as possible.

Franken says he believes Deezer can’t get a deal in the U.S. What happened there and should people be skeptical about Grainge’s assertions? Sohn says the Deezer situation is worse than Franken thinks. UMG sued Deezer in France and lost. The court called UMG’s behavior “an abuse of a dominant position,” she says. She notes UMG has not licensed to Grooveshark (but who has?) or Beyond Oblivion.

3:14 Grainge says UMG has a “duty” to invest in its artists and negotiates in a free market within a free market system. Now up: Al Franken.

3:12 Sen. Lee asks Azoff how much power labels have these days. “Labels traditionally have been the last guys to get it.” He believes the industry is at a “transformational, wonderful point” that will reward creative people. “These are exciting times.” Merger will force artists to consider the independent segment even more. Having a vibrant Capitol Records will be good, too. “It’s the best of both worlds.”

But Sohn says the merger will eliminate “a maverick competitor” with many digital firsts (such as the first to license downloads for the MP3 format). These services have potential to eliminate middlemen and lower costs for consumers, and labels are afraid of that. Labels have an incentive to try to control the technology and take an equity stake in these services. History of UMG has been litigation, denying licenses and getting big licensing fees.

3:06 Kohl asks Sohn if the merger poses risk to consumers: “Absolutely.” If UMG has the ability to decide who lives and who dies in digital services, “that will raise prices for consumers and that’s not good.”

3:04 Kohl asks Bronfman about Warner wanting to buy EMI. Bronfman says Warner’s interests are about UMG getting a market-dominant position, doesn’t say anything about Warner wanting or not wanting to buy EMI.

Grainge: I would have every single artists I’ve signed and will ever sign wanting out if he didn’t invest in them and market their music. “We’re here to invest in EMI.”

3:02 Sen. Kohl asks Grainge why UMG pay $1.9 billion for EMI. Grainge: “It’s an incredibly changing landscape” with extreme competition…We would be insane not to license” and make our music available to as many services as possible.

Kohl asks Bronfman, and Bronfman says “follow the money.” UMG wants it very badly and it will get a dominant market position. “Access does not equal revenue,” he says, referring to the difference between getting music to market and consumers actually buying the music.

2:58 Gigi Sohn from Public Knowledge is now up. Imagine you’re starting a new digital business in 2011, she says. If you want to attract active music listeners, you need the top 100 songs or fans will view the service as incomplete. Every artist on her list are signed to a major (the list is a Billboard Hot 100 chart). Take away the catalog of a post-merger UMG and you’re missing a lot of those songs.

Deezer is in 200 territories but has not been able to enter the U.S. market, she says. Actually, Deezer probably could get into the U.S. but has chosen to avoid the costly U.S. launch and is concentrating on other markets intead.

2:54 Mills: Signing artists without mass market potential makes no sense for majors. He’s warning that a lot of artists won’t get a chance with a post-merger UMG. Music matters to people. It changes lives. Its personal. “You cannot substitute a Katy Perry or Lagy Gaga for an Adele.” Give UMG a chance to have greater power and they will exploit it, he says.

1:51 Bronfman is done. His prepared statement that was submitted to the committe was much shorter than what he gave today. Now Marti Millls, founder and chairman of Beggars Group, is talking about the power that would be gained from this deal. “Don’t believe them when they say independents present a countervailing force,” he says.

1:49 Bronfman warns the entertainment business has never seen as large a market share as a post-merger UMG would have. He’s talking about Steve Jobs starting iTunes in 2002, getting a deal with Warner first and then going after the remaining labels. It shows the importance competitive balance in the industry, he says. This is really the heart of today’s discussion: Can UMG determine which new services live or die? Using iTunes is a good example that every Senator is familiar with and can relate to.

2:44 Azoff Merger doesn’t mean one less company, it’s about one more choice. He sees UMG giving new life to EMI and its labels. And Azoff is already done talking. Bronfman’s prepared statement is pretty long — much longer than those of Grainge and Azoff.

2:42 Azoff: Independent labels are capturing more and more market share each year. About 40% of his artists aren’t even on labels. Some acts could go to a label but prefer to do it on their own. In case you didn’t already know, Azoff doesn’t see a problem with the merger and believes the power is with consumers and artists, not record labels. Consumers aren’t paying for $15 CDs. They’re buying tracks and streaming music. Labels are playing catch up. It’s a competitive business — between majors and majors and majors and indies.

2:38 Sorry folks, I had the page that wasn’t refreshing properly. The hearing has been going on for quite a few minutes. Roger Faxon of EMI is currently giving his prepared statement. He’s arguing the merger is needed to protect jobs, artists and innovation. On to Azoff…

2:31pm The Q&A will come after opening remarks from Senators and their music industry guests. For some highlights of some opening statements, check out this post at Billboardb.biz from earlier today.

Here’s a particularly entertaining section from Azoff’s statement: “As for the broo-ha-ha around this deal, Mr. Bronfman has been talking about combining Warner and EMI for the better part of a decade. … Warner had a chance to outbid Universal in this process – but chose to  walk away. Now, they regret their decision, and are spending millions to fight the deal. Well, I don’t think the government should step in to give them another bite at the apple – that is not how our free market economy works.”

2:27pm Still nothing, although I was told the hearing was close to starting 12 minutes. There are probably a lot of music industry jokes to insert here — something about artists never being on time and getting on stage late — but I don’t remember Live Nation or Warner Music Group being 27 minutes late on an earnings call.

1:53pm I just got word the hearing is bumped to 2pm. So check back in a few minutes.

1:48pm As long as we’ve got time to kill, this is a good chance to point readers to the transcript of the February 2009 hearing on the Live Nation/Ticketmaster merger. Azoff and Rapino were posed some tough questions, but the Department of Justice let the merger through with a few concessions.

1:45pm Because the hearing is currently 15 minutes late, viewers of the webcast are left to wait and ponder the hearing’s title: “Hearing on Universal Music Group/EMI Merger and the Future of Online Music.” So one could assume there will be little talk about shelf space in Walmart and Best Buy and a lot of talk about how the merger will help/hurt digital innovation. In fact, Edgar Bronfman Jr’s prepared remarks will get into that very topic.