subscription rate structure. Those factors which affect or limit the change in basic subscription rates and which are beyond the control of the parties may be considered to be extenuating. Any rate adjustment pursuant to this provision may be made in 1980 or in any subsequent fifth calendar year. 9. Tribunal review limited Except as specified in paragraphs 5 through 8 above, the statutory royalty rate shall not be adjusted. 10. Review of tribunal decisions Tribunal decisions will be subjected to judicial, but not congressional, review. 11. Changes in FCC rules relating to commercial substitution and simultaneous retransmission No compulsory license will be extended to any cable system which deletes originally broadcast commercials or which retransmits broadcast programming on other than a simultaneous basis (except as permitted by the present FCC rules). 12. Private negotiations The legislation will contain a provision allowing cable systems to negotiate privately with copyright owners for copyright rates below those established by, or pursuant to, the statute. Each of the undersigned, authorized by his respective association, agrees to the foregoing and further agrees to use his best efforts to effect the speedy passage of legislation embodying all the terms of such agreement by both Houses of Congress. DEAR MR. CHAIRMAN: This is written to seek your support in connection with three matters now being considered by your subcommittee in connection with general copyright revision (H.R. 2223). In brief, I hope you will support: 1. Reducing the mechanical royalty paid by record makers to the owners of music copyrights back to 2 cents where it belongs. 2. Including a performance royalty for those who create sound recordings. 3. Amending the bill to insure that state anti-piracy laws are not inadvertently preempted. Here is some background on each of these matters. First, Section 115 of the general revision bill provides for a substantial increase in the mechanical royalties paid by record makers to the owners of music copyrights. This section increases the present rate from 2 cents per tune to 3 cents per tune, or 34 cent per minute of playing time, whichever is greater. While this may sound like a modest change, it is not. In fact, the "penny" increase would result in added payments of nearly $50 million a year to the copyright holders. This could result in higher retail costs for consumer buyers of recordings, to the tune of nearly $100 million a year, if the increase were passed along through the distribution chain. The recording industry feels that it cannot absorb such a substantial increase in payments. It would wipe out much of their profit, and could cause unemploy ment. Music copyright holders seem to be doing very well under the present 2-cent rate. Overall payments, and payments per tune, have more than doubled in the last 10 years. There appears to be no economic justification for the increase established in Section 115. To support this position, the recording industry has submitted full profit and loss data. The music publishers, on the other hand, have not. The public interest is being well served at the present rate. There is no monopoly on music, and musical compositions are readily available for recording. Those were Congress' objectives in establishing the compulsory licensing system and the 2-cent rate. This position is supported by the Consumer Federation of America, the nation's largest consumer organization; the American Federation of Musicians; the American Federation of Television and Radio Artists; and the Recording Industry Association of America. Each of these organizations has communicated its views to the committee. As you may know, the Senate Judiciary Committee voted to reduce the royalties set in the Senate bill back to the 22 cents, or 1⁄2 cent per minute of playing time. This is a step in the right direction. My second request involves an omission from the general revision bill. H.R. 2223 does not provide a performance royalty for those who create sound recordings. Simple equity says it should. Mr. Danielson of California, and a number of our colleagues, have introduced separate legislation to provide for a performance right and royalty to the musicians, artists and record producers who create recordings (H.R. 5345). A sound recording is the result of the cooperative efforts of artists, musicians, composers and the record producer. Under the 1909 copyright law, the publisher/ composer is paid a performance royalty when a broadcaster plays a record containing the composer's tune. The rest of the creative team is paid nothing. As the general revision bill now stands, the sound recording is the only copyrighted creative work for which a royalty will not be paid when it is performed by others for profit. If sound recordings had been popular in 1909, this would not have happened. This inequity should be changed by this Congress. The performance royalty provision is advocated by the American Federation of Musicians, the AFL-CIO, the American Federation of Television and Radio Artists, the Council of Professional Employees, Actors' Equity, the National Endowment for the Arts, the Associated Council of the Arts, the Copyright Office, the Recording Industry Association of America, and the Section on Patent, Trademark and Copyright Law of the American Bar Association. My third point concerns the importance of amending Section 301(b) of the revision bill to insure that Congress does not inadvertently preempt the laws of 32 states, including Illinois, which now outlaw the piracy of sound recordings. As you know, federal law protects sound recordings produced after Febru ary 15, 1972. Protection of recordings issued earlier is left to the states. The Department of Justice has recommended such an amendment because of its concern that the present language could be misconstrued to preempt such state laws. This can be clarified by the inclusion of a new subsection (4) to Section 301 (b), as follows: "(4) Sound recordings fixed prior to February 15, 1972." The Senate Judiciary Committee unanimously adopted this change. My concern with these matters stems from the fact that Chicago is the base for many performing artists and working musicians, for whom recordings provide important employment opportunities. Chicago is also the home of one of our nation's major recording companies, Phonogram, Inc. The industry is also important in other parts of Illinois. There are major recording manufacturing facilities downstate, and various recording facilities, record distribution centers and sales offices in the Chicago area, in addition to the Phonogram facilities. Thank you for your consideration of these matters. If you would like further information, please call me or Tim Morgan of my staff at 225-5736. Sincerely, MARTIN A. Russo, Member of Congress. Hon. THOMAS F. RAILSBACK, CONGRESS OF THE UNITED STATES, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, DEAR TOM: Mr. William E. Scarbrough, the Vice President and General Manager of WNYR/WEZO in Rochester, has written me of his concerns regard ing measures which would result in payment of royalties to performing artists and record companies for air play of records by broadcasters. Mr. Scarbrough's letter is a good one and I wonder if it could be made a part of the Subcommittee's hearings on the subject. Very truly yours, Hon. BARBER CONABLE, Jr., Rayburn Building, Washington, D.C. BARBER B. CONABLE, Jr. MALRITE OF NEW YORK, INC., DEAR CONGRESSMAN CONABLE: Senator Hugh Scott and Representative George Danielson have introduced in the 94th Congress bills to require payment of royalties to performing artists and record companies for air play of records by broadcasters and other users. I find it unbelievable that the Senate and House of Representatives would even consider such a measure, and let there be no mistake, we oppose such legislation on the basis of principle as well as for financial reasons. Artists, composers, musicians, etc. and record companies can attribute the enormous amounts of money paid for their services by the public to, first and foremost-RADIO! The radio industry daily spends hours exposing their product to the masses and without charge to them. If there must be legislation, I suggest performers and record companies pay the broadcast industry! Talent and product without exposure have no value. Broadcasters are responsible for their success we have in effect "made them"! My personal experience over nineteen years in this business is that record companies spend very little money advertising their product. Of those monies spent, more by far is spent in print advertising than through the very medium that shapes the appeal of their product-RADIO! Why? Radio exposes the product FREE. Record companies beat a path to broadcaster's doors with new material, demonstrating its appeal, selling the broadcaster on the value and appeal of the artist. The performers send letters, make phone calls about their material and most of them are very friendly, UNTIL they become popular and are in such demand for appearances and concerts that they become untouchable, unreachable and inaccessible . . unless there is a "buck" involved. The broadcaster accepts this as part of the process even though we know they were "made" by the industry. While the broadcast industry continues to grow, radio's profit margin in particular has continued a downward slide over the past ten years. Total radio industry revenues for 1973 are estimated at 1.5 billion dollars. The record industry, on the other hand, is growing much faster; its revenues soared by 49% during the 1968-73 period and were estimated by RIAA to have reached 2.017 billion dollars by 1973. We now pay rights fees for music used on our station to ASCAP, BMI, and SESAC. To require additional compensation to recording artists and record companies from the revenues of broadcasters cannot be justified and must not be legislated. Any assumption that all broadcast revenues are derived from a service of playing musical recording is totally erroneous. At WNYR and WEZO, large amounts of time are invested in programing ingredients such as news sports, public affairs, public service announcements, weather information, special programing features about our country, individuals, the local community and area, and we must invest substantially in strong on-air personalities who identify with our community and contribute substantially to generating revenues-yet this proposed legislation assumes that all our revenues come about because of music. Adopting this principle would be an open invitation to any number of groups serving a function in the performance and recording of broadcast material to seek royalty fees. With that principle once established, I find absolutely no comfort in the fact that the proposed legislation provides for a fee schedule that would be subject to review by an arbitration panel two years after enactment. This is not a matter of legislation for a crumbling, broadbased, far-reaching industry that will "punish" the American people. This legislation will amount to legalized robbery, if enacted, and I strongly urge you to take a vigorous negative position on this preposterous record royalty legislation. Sincerely, WILLIAM E. SCARBROUGH, Vice President and General Manager, WNYR/WEZO. OCTOBER 17, 1975. Hon. ROBERT W. KASTEN MEIER, DEAR MR. CHAIRMAN: On behalf of the Ad Hoc Committee on Copyright Law Revision, a group of 41 educational organizations interested in H.R. 2223, the Copyright Reform bill, I am pleased to forward to you the attached resolution adopted by the Committee on October 15, 1975. We would welcome the opportunity to discuss the issues raised in our resolution with you or your staff. Very truly yours, SHELDON ELLIOT STEINBACH, Chairman, Ad Hoc Committee on Copyright Law Revision. RESOLUTION ADOPTED BY THE AD HOC COMMITTEE ON OCTOBER 15, 1975 The Ad Hoc Committee on Copyright Law Revision proposes to the Congress that H.R. 2223, the copyright law revision bill, and the accompanying report, should be amended as follows: (1) There should be a limited educational exemption for non-profit educational and research purposes, as already submitted to the House Subcommittee. (2) At the very least, the Ad Hoc Committee believes that the non-profit educational and scholarly community requires the following amendments and changes: (a) The Committee's report on the bill should state that, so far as nonprofit educational and scholarly uses are concerned, section 107 is not merely a statement of present law because it is the intent of the Congress that there be a different standard for non-commercial educational and scholarly uses under section 107 from the standard applied to commercial uses of such copyrighted materials. As the Register of Copyrights has recommended, the noncommercial character of non-profit educational and scholarly uses "should weigh heavily in fair use decisions." This legislative intention should be forcefully and clearly set forth in the Committee's report. A clearinghouse is not a proper requirement because it will ultimately mean the destruction of fair use. (b) In particular, the Committee's report should clearly indicate that— (i) section 107 authorizes multiple copies of excerpts and short whole works for non-profit educational and scholarly purposes, and (ii) the bill rejects any distinction between face-to-face teaching and transmissions for non-profit education and scholarship within the classroom setting. (c) The burden of proof in matters of fair use should rest, as a matter of law, on the copyright proprietor and not on the non-profit educational or scholarly user. (d) Statutory damages for innocent infringement by educators and scholars in non-profit uses should be waived mandatorily. The non-innocence of such use shall be determined only by a court. (e) Duration of copyright should be on the present basis of a limited initial term of 28 years, plus a renewal term of 28 or 48 years. In addition, the Ad Hoc Committee supports the position taken by (1) the librarians, for amending section 108, and ((2) the instructional and public broadcasters, for amending section 111 (b) and adding section 118. 57-786 76 pt. 3 52 Re: H.R. 2223. AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Hon. ROBERT W. KASTEN MEIER, DEAR CONGRESSMAN KASTEN MEIER: In the course of its hearings on H.R. 2223, your Subcommittee did not touch upon a subject that was, from 1931 until very recently, an established part of our copyright law-the obligations of establishments using background music in the form of radio broadcasts over loudspeak ers. For over four decades, on the authority of Buck v. Jewell-LaSalle Realty Co., 283 U.S. 191 (1931), ASCAP licensed establishments performing music which originated as radio broadcast transmissions when loudspeakers were used to further transmit the music to the public. This was done on an even-handed and uniform basis throughout the country. By 1973, this licensing extended to 5,150 such establishments, resulting in total gross revenues to ASCAP's members of $250,000 annually. As a matter of policy, ASCAP did not attempt to license those establishments which used only a single radio receiver apparatus of the kind commonly used in the home. It was felt that such establishments, which were generally of the "Mom and Pop" type of small business, did not use music to such commercial advantage that licensing would be warranted, even though technical infringements of copyright might be occurring. When your Subcommittee considered copyright revision legislation (H.R. 2512) in 1967, it codified both the Jewell-LaSalle decision and ASCAP's policy in Section 110 (5) of the bill, which is identical to Section 110(5) of H.R. 2223. That Section reads: "§ 110. Limitations on exclusive rights: Exemption of certain performances and displays "Notwithstanding the provisions of section 106, the following are not infringements of copyright: "(5) communication of a transmission embodying a performance or display of a work by the public reception of the transmission on a single receiving apparatus of a kind commonly used in private homes, unless : "(A) a direct charge is made to see or hear the transmission; or "(B) the transmission thus received is further transmitted to the public." Your report on the bill (H. Rep. No. 83, 90th Cong., 1st Sess., 1967) explained the genesis of this provision. It said: "MERE RECEPTION IN PUBLIC "Unlike the other clauses of section 110, clause (5) is not to any extent a counterpart of the "for profit" limitation of the present statute. It applies to performances and displays of all types of works, and its purpose is to exempt from copyright liability anyone who merely turns on, in a public place, an ordinary radio or television receiving apparatus of a kind commonly sold to members of the public for private use. The main effect of this exemption would be to allow the use of ordinary radios and television sets for the incidental entertainment of patrons in small business or professional establishments such as taverns, lunch counter, hairdressers, dry cleaner, doctors' offices, and the like. The clause has nothing to do with community antenna operations, and there is no intention to exempt performances in large commercial establishments, such as bus terminals, supermarkets, factories, or department stores, where broadcasts are transmitted to substantial audiences by means of loudspeakers covering a wide area. The exemption would also be denied in any case where the audience is charged directly to see or hear the transmission. "The basic rationale of this clause is that the secondary use of the transmission by turning on an ordinary receiver in public is so remote and minimal that no further liability should be imposed. In the vast majority of these cases no royalties are collected today, and the committee believes that the exemption should be made explicit in the statute. Some fears have been expressed that technical improvements in a 'single receiving apparatus of a kind commonly used in private homes' might some day lead to abuse of this exemption, but the committee does not feel that this remote possibility justifies making vast numbers of small business and professional people guilty of technical infringements." (at p. 48) |