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understating the case, "the pricing of records in other nations is more orderly." You mean cheaper.
Ms. RINGER. No. They are more expensive actually, and they do have cartels there. I think I use the word correctly. Records have traditionally been cheaper in the United States than anywhere else. But there has been all of this discounting and clubs and all of this sort of thing where to try to fix in on a price to take a percentage of is very harrowing.
Mr. DRINAN. Well you tell us to go ahead without any evidence whatsoever in my mind, and you say, at page 45, it is obviously much too late in the game for Congress to undertake the kind of thorough going review urged by the Knight report. Well, I like to think that we are going to make a judgment on some evidence, and you just say it is much too late. Why is it too late! Let us postpone this until we get some evidence.
Ms. RINGER. By postponing it, you leave the fee at 2 cents. That is a big problem, and I think that most people would agree. Most people, not the record industry, but most people would agree that this is too low.
Mr. DRInAn. Well, then you try to help us and I appreciate your testimony. You say here that you are not opposed to a 4 cents minimum rate, et cetera, but you are not opposed to something else either, but I am troubled by what you tell us here on page 46: In a typical case the individual authors of a song will divide 1 cent per record, or $1,000 for a hit record selling 100,000. Well, the record companies are making a bonanza.
And the whole point of the copyright law, as I understand it, is to enhance creativity, to reward the author or the composer. So I see frankly a deliberate frustration of the basic purpose of the copyright law as the Founding Fathers inserted it. So why should I go along with a system that does that?
Ms. Ringer. The system was established in 1909 under unfortunate circumstances. I think clearly if Aeolian had not gone around buying up copyrights, we would not be facing this problem now. But we have to look at the problem. We have got 60 years down the road, and we have got a structure that revolves around this. I am not defending it, do not misunderstand me. I do think that in fairness--this is what I was trying to suggest earlier-the subcommittee in 1966 spent quite a long time on going over this in its markup, and went deeply into the economic data that had been presented, and what we in the Copyright Office could come up with from independent sources. I know the chairman and Mr. Fuchs remember this very well, and nobody was terribly satisfied that this was a complete answer.
But Congress is not trying to give a complete answer. It is trying to provide I mean, it is not setting the rate it is trying to set the ceiling which it considered too low in the present law, and which it felt, on the basis of a real study of economic data, did not deserve to be raised more than one-half cent.
Mr. DRINAN. Well, Ms. Ringer, you conclude on page 46 that the Copyright Office believes Congress has enough information before it to enact a fair rate within this range. I do not have any information that is persuasive to me at all. What is this information we are supposed to have?
Ms. RINGER, Well, the information is very similar to what the subcommittee has in 1966, and which it was able to massage sufficiently to reach a conclusion that I think it felt was fair, using the criteria that it lạid out, which I have repeated here. And I do honestly think that * Mr. DRINAN. Except we have nothing, or virtually nothing, of what the Knight report suggested that we need.
Ms. RINGER. That is right. The Senate did not either, and the Senate is likely to pass the bill as it stands without that kind of
Mr. DRINAN. You said that “Knight's conclusions were correct," and yet we do not have anything that that report said that are essential before we can make a just judgment. And yet you say we have enough information to move forward.
Ms. RINGER. The Knight report obviously—and this is what I agree with-concluded at its base that what had been presented in the hearings was insufficient to reach a kind of definitiye conclusion as to what the rate ought to be. But there are many cases, I assume, in which Congress is presented with situations in which no definitive answer is possible. You are not called upon to make the rate here. And remember, I repeat, that you will have a royalty tribunal working on this, which I would assume would be able to do the sort of thing that Knight asked, in effect, the Senate to do. And it did not.
Mr. DRINAN. Thank you very much.
Mr. KASTENMEIER. Well, I think you have made a number of points that are correct. We have a massive amount of material on this pointthat is, 2 cents versus 3 cents-presented to us. The point I think Mr. Knight was making was that notwithstanding the fact it was so voluminous, that it was not necessarily reliable or qualitatively the sort of testimony we could necessarily reach a perfect answer from, deriving from that amount of testimony.
I do recall the parties seemed willing to use the frame of reference of 2 versus 3 as a point of their testimony. They were-although previously, of course, there was some question as to whether there ought to be a compulsory license at all, that argument had been made, but it seems that the publishers and the composers were willing to make a case for 3 cents without raising the other questions again. And the committee at that time accepted that being the context of the debate.
Whether it is now possible to reach another—whether there is enough testimony presently and historically on this subject, I am not sure that it would necessarily ever satisfy anyone; whether the ideal that Mr. Knight suggested—I hope it is possible. But I should not want to attempt to do so~or this subcommittee, knowing what it has already been exposed to on the subject over a period of a decade. I do not know that we can make perfectly informed judgments on every aspect of this very, very long bill, and very complicated bill. All we can do is the very best we can.
The gentleman from New York ?
Mr. PATTISON. I would like to follow up on this notion of a floor that was suggested by the songwriters, and I agree with you that it poses all kinds of difficulties. But I was particularly troubled when I talked to some of the songwriters about a factor that I had not thought about, and which is unfortunately not within the jurisdiction of this subcommittee; and that is the problem that occurs when a songwriter enters into a royalty arrangement with a publisher. Essentially that is a joint venture, and the publisher is given the authority to negotiate with record companies on behalf of the songwriter and itself. And you would think that normally that their interests would be identical, so that you would have no problem with that representation.
However, there comes a time--there is developed in the industry a vertical integration, and that is where we do not have the jurisdiction, whereby the songwriter frequently feels that he is being sold out by a publisher with whom he has negotiated and a publisher negotiating with the company that he essentially owns. The songwriter says that essentially we will make a good deal for one of the songwriters, the lead record perhaps, and then sort of give away the others; so that that is their argument for a floor.
Now, I think that essentially the way to solve that is to have legislation relating to-perhaps prohibiting the publisher from doing that or allowing the copyright owner or the author to pull out of that arrangement at will, and perhaps legislation relating to vertical integration. But that, it seems to me, is the only rational argument that can be made for a floor.
I would like you to comment on that,
Ms. RINGER. I have been through this same mental process. I would add to what you said, that it seems to me one of the hopeful signs of all of this is that the songwriters are speaking for themselves in this now and have become a little more activist than they have been on this issue. I am not being critical, but I think it is a good sign. And what you are describing is negotiations and relative bargaining power between songwriters and publishers. And I think that these things are changing and should change some more.
I am dubious about the desirability of the heavy hand of Government in this kind of situation. It is pretty heavy already here. I just do not see how a floor of the kind they are talking about can be established. I have talked to them, and their counsel, and they have never been able to come up with a formula.
Mr. PATTISON. In other words, it would have to be so low as to be meaningless.
Ms. RINGER. That is right. You have only got one
M. RINGER. That is right. You can always set a rate, but then this would completely restructure tiis. And I think you would end up being more unfair than fair because many of the rates would be too lov.
Mr. Pattison. Would it be appropriate to have a provision in the copyright law-and really essentially this is an ethical problem. This is like having the feeling that your lawver is selling you out. You can always fire your lawyer because he may be selling you out, because he has got three cases that are similar and he is working with the same insurance company and he trades one off against the other
Now, whenever you think that is happening, that is an unethical practice and you can always get rid of the lawyer and get another lawyer. But apparently the songwriter, when he enters into this 57-786—76-pt.
contract, when he sells his song and retains a royalty, does not retain that privilege. Could we have a provision in our statutes that would provide that the songwriter could have some mechanism for getting out of that if he feels he is being sold out?
Ms. RINGER. He certainly could. But I am doubtful as to its wisdom. I think you would need to consider a whole range of other factors that would be involved. In other words, the problem you are putting your finger on is certainly not limited to music. It covers the entire range of the copyright law and I do not think there is any doubt that many authors are getting ripped off by somebody or other in business dealings.
I would say this, that the Knight report itself, even in 1969, suggested rather strongly that there are some emperors that do not have any clothes in the music industry. And that is one of the reasons why he felt that the whole industry should be looked at independently, rather than by use of statistics, or partial statistics that they are willing to put forward. We all know that the way the music reaches us and the form of music that is available to us is quite different from that 20 years ago. There has been that radical a change that is obvious to all, and there are corresponding changes in the industry.
Mr. PATTISON. Let me follow up on this question. Would it not be possible for this to develop as a matter of practice in the music industry? In other words, could a songwriter not say in the sale of his song to a publisher that you have the right to negotiate for me. However, to the extent that you negotiate with someone with whom you are affiliated, then I have the right to approve or disapprove; could they not handle that by contract themselves? And if they can, why have they not?
Ms. RINGER. I cannot speak for them, but there are old forms and old relationships that probably outlive their time. That would be my answer.
Mr. PATTISON. Prospectively then, if I represented a songwriter would it not be prudent for me to say in his deal with the publisher that the publisher has the right to negotiate for the sale of this to recording companies? However, any deal that is made with a recording company in which the publisher has an interest, that would be subject to my prior approval, and that would essentially solve the problem. Ms. RINGER. It would solve that problem. Mr. PATTISON. Yes.
Ms. RINGER. Given a strong enough organization of songwriters or a union or something like that, I think this certainly could be done and it would solve that problem. It might create others.
Mr. PATTISON. Thank you.
I want to pursue this a bit longer. There certainly are other subjects, but this one intrigues me for the moment. I understand your testimony to recommend against legislating a floor and recommending against legislating a rate for primarily the same reason that it would interject rigidity and that would not accommodate market forces which may require less than the statutory rate or minimum. And I can understand that indeed it can create a problem where it would have a chilling effect upon creativity, simply because it would be impossible for new people to get started in attempting to sell their work.
But it seems to me that that argument is premised upon certain bases; one is that the parties are relatively equal in their bargaining power. And I think that they are not, and I take it it starts from the bottom, at the creator, and he is less powerful than his publisher. And the publisher is probably less powerful than the manufacturer.
And the second is that this estimate of the market and what it will absorb and pay for really represents a guess as to how many records will be sold in the future, and at what price.
Now would not the Hart approach accommodate those market forces! If we were to legislate a payment based upon a percent of selling price, does that not anticipate absolutely and finally what the market will do? If zero records are sold, he gets nothing; if a million are sold you get a lot. Is that not a fairer approach than trying to fix a figure which is really based upon a projection of the market by people who are in unequal bargaining positions ?
Ms. Ringer. I certainly will not argue with this in principle, and as I indicated to Jr. Drinan, I think we should, in view of your questions, take another look at the efforts to try to draft this; and a perhaps more searching look than we have so far.
The way this is handled in foreign countries—I do not think that the record industry would in any way agree upon this as a compromise at this stage. Maybe that is not of any importance, but I think if we are thinking in terms of trying to work something out here, and there are other issues that are involved in this bill besides this in which the record industry is interested obviously Mr. Drixan. Why not work out something?
Mr. Wiggins. Well, that answers your question, Father, because it would work to their economic detriment. That is why not.
Ms. RINGER. Absolutely; they would feel this would be similar to taking off the ceiling altogther; that 8 percent presumably would be substantially more than anything they would be willing to consider. I did not go into their arguments, but essentially they are saying that
Mr. Wiggins. I would not be wedded necessarily to a figure, and I recognize whatever figure we establish itself is subject to negotiation in an environment where unequal parties are dealing with each other. But just conceptually, without reference to these practical problems, it has some appeal to me as being a fairer approach, than legislating 2,212 or 3 cents.
Ms. RINGER. If a base could be established on which the percentage was computed, and you took account of all of the variables, I would certainly not disagree with you in principle.
Mr. DRINAN. Would the gentleman yield?
Mr. DRINAN. Was Senator Hart's proposed 8 percent based on some theory in this area that they should not set a fixed fee, but that would be an estimated-how did he get to the 8 percent?
Ms. RINGER. It is a common figure. I think it is the figure in England, I am not positive. But it was the proposal of the National Association of Music Publishers. I think after the 212 cents they went forward with a major project in the Senate to try to change the base to a percentage, and they went forward with 8. That was their proposal.
Mr. Drinan. Thank you for yielding.