STATEMENT OF THE AMUSEMENT AND MUSIC OPERATORS ASSOCIATION Good Morning, Mr. Chairman, Members of the Subcommittee. I am Elroy Wolff, representing the Amusement and Music Operators Association (AMOA). I am accompanied by AMOA's Washington representative, Mark Griffiths. We appreciate this opportunity to testify on the question of United States adherence to the Berne Convention For The Protection of Literary and Artistic Works. AMOA's 1600 members own over half of the jukeboxes in the United States. AMOA has represented its members for many years on copyright issues, and actively participated in the legislative process that led to revision of the United States Copyright Act in 1976. Subsequently, AMOA has negotiated with the performing rights organizations ASCAP, BMI and SESAC with regard to several aspects of the jukebox compulsory license provided for in Section 116 of the Copyright Act of 1976. Earlier this year, the Ad Hoc Working Group on United States Adherence to the Berne Convention delivered a Draft Preliminary Report that concludes that the US compulsory license for jukeboxes is incompatible with the Berne Convention, at least insofar as works of foreign origin are concerned. AMOA submitted comments on the Draft Report on March 31. For the convenience of the Subcommittee, a copy of AMOA's comments is attached to our prepared testimony. of particular concern to AMOA is that the consequences for our industry of US accession to Berne are unclear. We believe, as Mr. Donald Curran, then-acting Register of Copyrights stated in testimony before this subcommittee last year, that: "What is at stake in our system is the amendment of our The Nor do we believe it should happen intentionally. question of whether Berne is self-executing should not be left to the uncertainties and delays of future litigation. What the industry, copyright owners and the public need is efficiency, certainty and rpedictability. Our testimony today will focus on the state of the industry and our view of the consequences of U.S. adherence to Berne. The State of the Industry The jukebox industry is in decline. In 1976, 20,789 jukeboxes were sold in the United States. totalled just over half of that - Sales for 1983 11,818. It is estimated that today there are roughly 225,000 jukeboxes in operation in the United States, of which 50,000 60,000 are owned by the restaurant, tavern or other establishment in which they are located. In 1973, sales of 45 rpm records (of which the industry is by far the major buyer,) totalled 228 million. In 1983, only 125 million 45 rpm records were sold. Information supplied by the U.S. Copyright Office further details the downward trend in the industry. The following table shows the number of licensed jukeboxes for the years 1978 through 1985 (as of February 1986): One of the major factors explaining this decline is the rapid increase in the licensing fee from $8 per jukebox in 1978 to $50 today. Any new costs associated with licensing--which could result from U.S. accession to Berne-- would only hasten this downward trend. · AMOA strongly believes that any system that separates foreign works from works of domestic origin with respect to jukebox licensing would be unduly burdensome to all concerned, because it could require the operator to secure both a compulsory license for works of U.S. origin and negotiate a license (or licenses) for foreign works. Although it has been suggested that there are de facto compulsory licensing systems in some European countries, AMOA believes that reliance cannot be placed on mechanisms that lack a clear legal foundation. A Two-Tier System Will Not Work In short, AMOA's primary concern is that U.S. adherence to the Berne Convention could, without some modification or reservation, create a situation whereby each individual jukebox operator would be required to negotiate with each individual owner of a copyright of a work of foreign origin, if the operator wished to offer that work on his jukebox. Given the approximately 225,000 jukeboxes in operation in the United States, two results are likely. 1. If jukebox operators choose, at considerable expense, to negotiate individually with foreign copyright owners, the additional expense would almost certainly result in a reduction in the number of jukeboxes in the U.S., leading to a decline in the royalties for all copyright owners. 2. More likely, however, many U.S. jukebox owners will decide to exclude works of foreign origin on coin-operated phonorecord players in this country. Because Article 11(1) of the Berne Convention calls for copyright owners to enjoy the exclusive right of authorizing public performances of their musical works, it is unlikely that jukebox operators would wish to enter into multilateral negotiations with foreign copyright owners. Therefore, if U.S. jukeboxes were limited solely to domestic works, foreign copyright owners would be deprived of royaltypayments and professional exposure in this country. U.S. Copyright Office Legislative Proposals AMOA has not had sufficient time to study the proposals put forward last week by the U.S. Copyright Office, and would prefer not to make any conclusive statement at this time or be bound to any viewpoint on the Copyright Office's suggestions. It appears to us, however, that the mechanism proposed would add at least one more layer to a system that is already in place and working. Credit for this is due in no small measure to the voluntary agreement arrived at last year between AMOA and the performing rights societies. At this time, therefore, we are far from convinced of the utility of the Copyright Office's proposals. Conclusion AMOA believes that if U.S. copyright law is incompatible with Berne, Congress should consider carefully whether the United States should adhere to the Berne Convention at all. If Congress decides that the U.S. should adhere to Berne, the U.S. should specify in its accession document that it does not intend that any provisions of U.S. law that are incompatible with Berne be amended as a consequence of adherence. Lastly, although AMOA believes that at their current levels the compulsory license fees are too high and have produced a decline in the number of jukeboxes in operation, we also oppose any changes in U.S. law that would further hasten the decline of the industry. I thank the subcommittee, and will try to respond to any questions that you might have. The Amusement and Music Operators Association ("AMOA") submits these comments on the Draft Preliminary Report of the Ad Hoc Working Group on United States Adherence to the Berne Convention (hereinafter "Draft Report"). AMOA's 1600 members own over half of the jukeboxes in the United States. AMOA has represented its members for many years on copyright issues, and actively participated in the legislative process that led to the revision of the United States Copyright Act in 1976. Subsequently, AMOA has negotiated with the performing rights organizations with regard to several aspects of the jukebox compulsory license provided for in Section 116 of the Copyright Act of 1976. ASCAP, BMI and SESAC - As set forth in the Federal Register notice calling for comments, the purpose of the Ad Hoc Working Group on United States Adherence to the Berne Convention was "to identify those provisions of United States law that are incompatible with the Berne Convention, and that might require changes in United States law," if the United States were to accede to the Convention. 51 Fed. Reg. at 3707 (January 29, 1986). Although the Working Group draft thus refers to the need to make changes in U.S. law, the consequences of incompatibility of U.S. law with Berne are not clear. In the foreword to the Draft Report, the Working Group stated that: |