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they work differently there, because there, almost a}} of the well, and
Moreover, I think that the pricing of records is more orderlr in ota countries than it is here.
The time may come when patterns in the music industry and the legal and administrative framework in which they operate make it advisable to shift from a flat rate per record to a perrentage of prie but it does seem clear that this time has not yet arrived.
So, if I may, I would like to come to the final and most de question of what the rate per record should be, assuming all of them other girens. The 1909 law provides for 2 cents; the 1.965 bill, to was supposed to be a compromise, provided for 3; the Houst": which is the bill reported by your committee, Mr. Chairman, in both 1966 and 1967 and also the bill that passed the House in 1967 prima promised at 216 cents. The Senate brought it back up to 31': 1974, and that is what is the fee in the bill you have before you.
However, this year, the Senate Judiciary committee on ( 1011 last month knocked it back to 21., cents. So our conclusions on the bar lightful question are stated on pages 40 to 46. It is a rather lorem clusion, but it is a very difficult question.
Let me read our basic position, and then try to endorse pretty mc'h the principles that your subcommittee adopted in 1967 as a war nt approaching this. Our basic position is that the roralty rate se: be a statutory rate, at the high end of a range within which the past can negotiate now and in the future for actual payment of a ratet'st reflects market valnes at that time. It should not be so high, howet.* as to make it economically impractical for record producers to innie the compulsory license if negotiations fail. This was our position in 1985, and I think it still remains our position.
You, in your reports in 1966 and 1967 also said something mph which we agree. In the significant debate over whether the statutory fee is a ceiling or a rute, there appears to be some validity to the s!:) ments on both sides. The fee is certainly a ceiling in the net! ! no higher amounts are ever paid, but the record producers may var' be right in asserting that the statutory fee establishes a base wih stereotyped variations downward that for pretical busines s is used as the rate in most written agrements. In this sense, the t'i he relatively few negotiated agreements in the real sense of the temps. but this does not necessarily mean that if the statutory marimum increased somewhat, the prevailing rate structure would immediately be increased the maximum without negotiations.
Obrionr, if you prg the fee higher, there will he negotiatina bernu eterything is at 2 vnts or below, and as far as eriting nacker tinted lieenimpa are concerned, it will remain at cents. This point has been made, but I think it needs to be made run.
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Operating on these premises, the House Judiciary Subcommittee in 1206 undertook a thorough analysis of the testimony and statistical data that had been presented to it at the 1963 hearings and that it had been able to collert on its own. It concluded that 2 cents was too low, that 3 cents would be too high. It adopted 21., cents, but not Droprily as the prevailing rate now or in the future. The 1996 and 1*7 House reports emphasized that the half-cent increase is intended merely to widen the copyright owner's bargaining range, without destroying the value of compulsory licensing to record producers.
This issue, needless to say, was immediately transmitted to the Sonate, which was having hearings at the time the House passed the bill, and the Senate engaged the Congressional Research Service of tie L brury of Congress to make a study of all of the testimony that had been presented in both Houses. And the House subcommittee's Trgone to the testimony it had heart, and 113 page report dated Jue 31), 1969, was prepared by an analyst in the Congressional Re. smarh Service, and he concluded, to paraphrase his statement, that the data was insufficient to draw a real conclusion from. Ile said this suis has attempted to evaluate whether or not the Congress has the u:formation it needs to render a final judgment on the mechanical muvalte controversy. I'nfortunately, it must be said that the findings toute remain inconclusive.
specifi, alls, he made two points directed rather pointedly at both aip. He said first, that the record industry, which opposes any inanale in the current mechanical rate ceiling, has not provided the (ongTp with a complete and meaningful picture of its financial con
on. And wrond, similarly, the music publishers and the romers they represent, who advocate an increase in the ceiling rate have demonstrates a clear reluctance to provide the ('ongres with the type of financial information that will be needed to evalunte that position.
And this, I think, was not intended in a pejorntive way. It was just # statement of huy conclusions, which I think were probably correct, He tommended additional independent factfinding, and identified two prineinl areas of inquiry that should be thoroughly exploredi befrire retinitive conclusion was reached: first, the obtaining of mprer, detinitive, nerunute information about all
a rts of the finansial characteristics of the muce recording industry, using the following mdelines, and he listed three which I have got here on page 1.), and the reflet his critiram of the value of the statistics that the record ir bustry put forth. And the wrond, obtaining full knowledge of the many important change that have taken place in the economic struc. tum of the mac publishing and wording buwie since the end of World War II, and particularly since the middle 1990, with special attention to certain economic implications which he enumerated, and that are on A 14.
I think this was in 1999 and believe it or not, the mond industry. bete hne chant salwtantially unce 1969, and you would have te gli oril. :!709
riterin. After relewing the knight report and the various pronome data mulented to it during and after 1987, the Senate sulummutter tre fringill the trivianb.l!, au rond, with the rate pepelat ?!,ente
says hime, as the RIAA claims, t por parte hare decreased because of
#th that. The fact remains tha In that are involved in maki
us are the only ones who have i ****to make up for the rise
sue of ntes under discussion in
*:13 cents. The Copyright Offic Cirmation before it to enact a by I'd that the rate's relation to true
is will be thoroughly examined 73 add, in response to Mr. Wigg nanud around in my own mind fi Sie might be some way of doi * od establishing a floor, but y .0 mense of this sort. You coul
rate, period, and provides 23 Oca bare to supersede any free 2**21entative to free negotiations, 1 2 3 4 pos-ible with this kind of co za structure the compulsory license
That there are cases where it is
Then and I have tried to document this in the paper, an effort was made in the Senate to get the rate raised, simply on the ground of inflation, that is 21. cents was a fair rate in 1967 or 1969, then certains more, just on the simple basis of inflation, would be fair today.
Apparently accepting this inflation argument, the full Senate Judiciary Committee raised the rate back up to 3 cents in 1914. ard the bill passed the Senate on September 9, 1974, with the 3 rent rate which was carried over into your bills, and it has just noir bera knocked back to 219 cents in the Senate Judiciary Committee
If I may, I would like to read from page 43. It is obviously my too late in the game for Congress to undertake the kind of thorough going review urged br the knight report. Moreover, the bine in its present form, creates a copyright rovalty tribunal which. for the future, could undertake the kind of exhaustive study Mr. Knight (10 templated, particularly if it were given subpena power.
llowever, Congress must decide now on the specific fee that the tre bunal will be reviewing later. The Copyright Office believes that time 216- 18-cent-per-minute adopted by the House of Representatives in 19967 was well thought out and fair in 1967. We take no position as to whether it is sufficient in 1975, because the copious testimony and data subinitted to the House subcommittee on September 11, 1273, 3 in sharp conflict and by itself does not provide a suflicient ba-l faut a definitive conclusion,
Let me add here, Jr. Chairman, that I am not really saving that it is impossible I am not sure I agree with Knight that you med to for our purposes, to be comfortable with a rate, to go into an enormous economic study. I think that I do not share his sense of hopelessness about being able to obtain independent data and trying to evaluate them in some way. It is a painful process, but I think it can be done. and we are starting to do this in the office now, on the basis of tryu to review what you were presented at the hearings and so forth, but this is not something that can be done easily and, as knight says the results are problematical; there is no question about it.
We are not opposed to the 3-cent, 3-cent-per-minute set in your bull, the bill now under consideration by you, either. In other wonis, ke are saving that 2 cents was, we consider, fair in 1:47. We are not saving that 3 cents is unfair in 1975. We cannot agree that the factot of intlation taken alone is automatically sutlicient to justify the in crease, but we equally cannot agree that intlation of the sort we have Sven in recent years can be discounted entirely.
Although these points have been made many times, it bears mpeat. ing that the mechanical royalty is compulsory only on the (pright owner, not the recorrimaker, that it has a ceiling but no floor, and that the real market value of mechanical rights in this country has never been established, beaune eser since thone rights were created in 1 the bargaming power has all been one way.
In a typical case at present the individual authors. I am not talk ing about the total copyright owner group, but the authors of a song will divide lant per record, which would be $1.( for a hit med song, 100.000 copies. Now, we are talking here about-I am talking about intlation, and we are talking about individual songwriter not corporations. And the impact of intlntion on them sinie 19th been real. The cost of making prorida ha* rien dramatira!!r in the last 10 years, but so have the prices of records.
Turen below 1 cent, in certain case *. 'think it would be possible
By from the songwriters w
m 200 saving that your basic en I think it argues more for
dogether rather than trying
svojo pod of my presentation, KYLIR. Do the members ha
x. I want to thank you, ) .pa lot of trouble with the * so well, was a happens that he compulsory license
1. We have passed the point Diama. Well, that is not so i
! .boot of the historical trad
I r ink of the merits. I
**ficuts or whatever. Why i llet me gap in principle !Birlit right. Thank you.
nak hat one nuust reco EXY I lip malities, ma'am, a * *** ning mail into me an
. *** mething. And I *r ring to downgrade the ce
1 unite composers as y ***** I rate no. I just will **., * what you sarisco
· Mannot argue with yo milaning not so much of
It may be true, as the RIAA claims, that corporate profits in the record industry have decreased because of inflation. I have no basis for arguing with that. The fact remains that, of the various individual human beings that are involved in making a record, the individual songwriters are the only ones who have received no increase in their remuneration to make up for the rise in their individual cost of living.
The range of rates under discussion in the two Houses at present at 21., cents and 3 cents. The Copyright Office believes that Congress has enough information before it to enact a fair rate within this range, recognizing that the rate's relation to true market value, and its effect as a ceiling will be thoroughly examined by the royalty tribunal.
I would add, in response to Mr. Wiggins' point about the floor, I have thrashed around in my own mind for a long time as to whether or not there might be some way of doing as the songwriters have suggested and establishing a floor, but you cannot have a floor in a compulsory license of this sort. You could have a compulsory license that sets a rate, period, and provides negotiations between those, but this would have to supersede any free negotiations, and as long as this is the alternative to free negotiations, you just cannot have a floor. it just is not possible with this kind of compulsory license. You would have to restructure the compulsory license very radically.
I think that there are cases where it is necessary to negotiate down, perhaps even below 1 cent, in certain cases, in order to sell your song, and I do not think it would be possible to take that right of a free negotiation away from the songwriters under this kind of compulsory license. I am not saying that your basic point, I am not saying is ill taken, but I think it argues more for doing away with compulsory licensing altogether rather than trying to restructure the present system.
This is the end of my presentation. Mr. KASTEX MEIER. Do the members have questions of Ms. Ringer at this point?
Mr. DRINAN. I want to thank you, Ms. Ringer, for this presentation. But I have a lot of trouble with the setting of this fee. And that, as you point out so well, was a happenstance of history, and you say on page 36 that the compulsory license has taken solid root in ('.S. eopyright law. We have passed the point of talking about free negotintions in this area. Well, that is not so if a majority of this subcommttre en V SO.
Aside from all of the historical tradition and the apathy in Congrees, what do you think of the merits! I have great difficulty in saying it is 2 cents or 4 cents or whatever. Why should we be in this business?
Ms Ringer. Let me say in principle I agree with you.
Mr. DRINAN. The realities, ma'am, are that there are lobbyists out there who are pouring mail into me and all the members of the committer and they want something. And I do not want to give them something that is going to downgrade the consumer and do nothing really for the authors and the composers as you say here. So I am not going to be trapped. I will vote no. I just will not come. I will delay the thing until somehow we get what you say is correct.
Ms. RINGER. I cannot argue with you in principle. In speaking of realities I am speaking not so much of the realities of lobbying as the
*g the case, the pricing of records i - Tou mean cheaper. 22 No. They are more expensive
Tra there. I think I use the word c . At been cheaper in the United Sta
s men all of this discounting ar ng where to try to fix in on a price arrowing. los. Well you tell us to go ahead
a my mind, and you say, at page D: De game for Congress to undertal *4 urged by the Knight report. W
to make a judgment on some ev Al late. Why is it too late? Let u: *** Terce. Live By postponing it, you leave th
***sem, and I think that most people w se ed industry, but most people wou
realities of the music business. I think it would send a shock ware through the music business if we took away the compulsory license immediately.
Mr. DRINAN. It would what?
Ms. RINGER. I think it would send a shock wave through the music industry.
Mr. ÞRINAN. That is what Congress is supposed to be doing. Well, on the asumption we are trapped by something that never should have been devised, why can we not at least do what you suggest on page invent a fair and more flexible approach which they do in other la tions. Then you say giving up the ghost on page 40, it seems clear, however, that this time has not yet arrived. Why not?
There are people here, the majority of the subcommittee, who have never been through this difficult area before, and I am prepared to send shock waves if that is the just thing to do.
Ms. RINGER. Let me respond by saving that in the 1963 preliminary report, preliminary draft bill, we had a section like this. And I think it would be well to look at it again and see what vou think of it. I do not think that the Hart bill was satisfactory in the sense that it spoke of the established list price which is a chimera.
Mr. DRINAN. But you would agree that the basic approach in the bill as it exists now, and in 22:23, is less fair and less Rexible than it could be.
Ms. RINGER. If you want a yes or no answer, the answer is yes
Mr. DRINAN. Thank you very much. I do. I like that type of answer I like.
Now on the question that--assuming we cannot win on those two basic issues that we have to decide how many pennies we are going to give, and that the Knight report here sets it out very clearly that we have none of the information that we need if we are going to pre tend that this is just ; and that the Knight report, 150 pages, and no one has attacked the objectivity of that. He is apparently a researcher and the industry had not heard of him over there in the Library of Congress. And he says that-and I agree totally with him--that we have none of the information that we want.
All I know is you go out there and you pay $6.95 or $8.95 for s record and you say, well, my God, why does this cost this much! And on page 43, you say, according to Mr. Knight, it says the Con grees should require disclosure of the financial records of all music publishing and record firms. And we do not have that and they do not want to give it. And the next you sav the publishing and reward ing business should give us that and they have not. And then eren the artists or the rexoriling people, or the composers, they have not viven us. So we have no knowledge, we do not know what we are doing.
And I think you admit that on the bottom of page 41. You in effet
y, and so it grs, and that means to me that Congress does not know what it is doing. That is the way it comes out to me. And you go back and forth on these things, the various economic data submitted, ard we have only fragmentary evidence which, as vou sugest, is totally in contlict which we received in the previous weeks; and that you say,
l'ora. Well, then you try to help u
101. You say here that you are not op 79. wera, but you are not opposed
otorgad by what you tell us here mo cual authors of a song will div ubongo hit record selling 100,000. We
inle point of the copyright la La murity, to reward the author
nga bente frust ration of the basic *** Foarding Fathers inserted it. So i run that does that!
un. The statem was established ir *** I think clearly if Aeolian had
****, we would not be facing thi 00; < at the problem. We have got 60 som structure that revolves around f understand me. I do think that
to angpest earlier--the subcom ***on going over this in its mark ** a that had been presented, a b rid come up with from indepe ** Mr. Fuchs remember this ve *** sond that this was a complete ans
i s not trying to give a com *** Den, it is not setting the ra
:r it monsidered too low in the se obra of a ral study of econom
y ar, one-half cent. WERK. Well, Ms. Ringer, you con P lay beliereg Congress has eno
*** nte within this range. I do