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Mr. Colby. What I would point out is that, in contracts with composers, it is invariably the case that there is a schedule of royalties for all subsidiary and ancillary uses. For example, if sheet music is published, the rate, I think, is now at least 8 cents, and it is rising. In general, for all other rights, 50 percent of the revenue is paid to the composer regardless of stature. I mean the new, the young, the exciting composer on whom we take a chance because salary or flat payment is made for those services. Interestingly enough, in the music field many composers-although this does not apply, I believe, to Mr. Bernstein; but I am not asking for an answer to this-insist that they not be employees. They want to be furnished through corporations, for such benefits as they see, by being the employee of what I will call their own company.

Senator MATHIAS. I heard you making that point. I understand that. And I think it is an interesting point as one of the practices in the trade.

Let me just say in closing this panel that it is refreshing to have two witnesses here who agree at least that the problem is managing prosperity rather than dealing with adversity. That is an unusual experience for Congress in this particular moment in history.

Mr. COLBY. Then Mr. Bernstein and I have contributed something.

Senator MATHIAS. Yes, you brightened our day. Thank you, gentlemen.

Mr. COLBY. Thank you again for the honor of being here.

Senator MATHIAS. Let me say that in some respects this is a reunion for all of us who have worked a long time in the copyright field. One of those who is here is Bella Linden, who was in constant attendance in the long and protracted negotiations that led to the 1976 act. Out of her experience, I would just like to ask one question, and you can answer right from where you are.

Ms. LINDEN. Perhaps my voice will carry better if I join these gentlemen physically at the table.

Senator MATHIAS. Come join them just for a moment. I just had this one question, which goes back to the question of textbooks.

Do you think that there ought to be any changes as the bill is now structured to accommodate specialized texts? I do not refer to instructional texts because I think that is covered in the various statements that are submitted to the committee. But what about the specialized texts?

Ms. LINDEN. I am reminded that we are not here to pass the kind of general social legislation prohibiting independent contractors, which Ms. Brickman and others in their testimony appeared to urge. In other words, their intent is to abolish a concept of independent contractors in copyright law and urge that employee status be the only basis for the creation of certain kinds of works.

I must also add as a foundation that I am unfortunately reminded that the same thing has occurred over the past 20-odd years, and they were odd years. The discussion always has been as though 10 men, or in this case 110 men and women, blind ones, were asked to describe an elephant. Each held on to the portion that they knew best and described it as the whole.

The fact is that magazine publishing is not only the kind of magazine publishing that Time-Life does. The fact is that encyclopedia publishing is not only the kind of publishing that Mr. Roebling referred to.

Senator MATHIAS. I think the committee will comprehend that. We just asked them as representative witnesses.

Ms. LINDEN. Well, it is not representative, may I respectfully urge. It is illustrative of certain segments of the industry but not representative of the whole.

Your question with respect to texts, specialized texts, caused me to lay the foundation in such broad terms. Specialized texts could be works on biochemistry or could be specialized works in a reading program, in an elementary science program. There are no finite discrete works that can be covered by that kind of language.

In further response about specialized texts, Senator Mathias, it is respectfully submitted that virtually all instructional texts deal with discrete subject matter for specific age and intellectual levels and are prepared by and with specialists in the various disciplines. Thus it is fair to say that all instructional texts can be described as "specialized

The concept of the act under which we now are functioning is one of using broad strokes and permitting, not insisting but permitting, certain kinds of works that are normally and habitually created in the various areas mentioned as works for hire. The current language permits the continuation using independent contractors, people who normally work, perhaps full time as employees of universities, of music publishing companies, of other enterprises, to participate in elaborate structured, specialized text programs.

Therefore, I urge most respectfully that your committee-and I am sure it will do so under your aegis, Senator Mathias-consider that these broad words are intented to permit something, not to insist on anything. As to emotional arguments about unequal bargaining power, there will always be certain people in any economic situation who feel they are deprived. There is not a bill, may I submit, or an act or a law that is 100 percent equitable to all. But, by and large, this is an equitable provision that permits the functioning of the various segments of the intellectual property industry.

I urge most respectfully that we do not throw out the baby with the bath water because there are certain specific instances where people, admittedly not under the provisions of the proposed Cochran bill but under the general concept of unequal bargaining position, wish to insure and insulate the so-called alleged unequal bargainers, the less-equal bargainers to an absolute, unequivocal, strong bargaining position.

Senator MATHIAS. I thank you. I now understand about specialized text. [Laughter.]

Without objection, we will insert into the record the additional statements given to the committee.

[Material referred to follows:

STATEMENT OF

THE SOCIETY OF PHOTOGRAPHER AND ARTIST REPRESENTATIVES, INC.

by Edith Leonian, Chairperson, Copyright and Industry Practices

Committees, SPAR

The Society of Photographer and Artist Representatives,

Inc. (SPAR) is a professional association based in New York City,

with chapters in Atlanta and Chicago.

Our members represent an

estimated ninety per cent of the top self-employed photographers and illustrators whose work appears in national media.

One of our basic functions is to negotiate on behalf of

the visual authors we individually represent the terms of

license for reproduction of specially commissioned graphic works.

We are,

so to speak, in the "front line" of the practical

application of that part of Section 101 of the Copyright Act of

1976 addressed by Senator Cochran's proposed amendment to the

definition of "work made for hire."

In the normal practice of our industry, the compensation for commissioned artwork and photography is arrived at by negotitation based on both objective and subjective factors, among

them the amount of time involved, the degree of skill or special

ized knowledge required, the perceived status and reputation of

the creator, and the contemplated usage.

The extent of rights

granted acts almost as a multiplier of the basic range established

by the other factors for a minimal use (such as the most common

grant to magazines

one time reproduction rights.)

The introduction of the principle of divisibility of

copyright in the 1976 revision of Title 17 reflected the existing

practice of our trade, and we expected little or no dislocation

when the Act took effect in January, 1978.

We were

aware of the "work made for hire" exception to

the rule vesting copyright in the author of a work, but tended

to regard it as a business decision, not a moral question.

Licensing "all rights" generally calls for fees anywhere from

three to ten times those involved in licensing specific uses

for limited periods.

"Work made for hire" involves two rights more than "all"

rights:

1) the creator's right to otherwise terminate any

grant of license in thirty-five years;

2) authorship.

The value of the first seems somewhat remote, even to a client,

since publishers survived very handily under the old law under which they received only 28 years. Loss of the right to terminate

could make a substantial

difference to the estate of the

creator, and to the income of his or her family, however.

The value of the second right, authorship, while minimal

in monetary terms from a corporate point of view, is inestimable

from that of the true author of a work.

Since the vested "worth"

of these rights is so much gre

ter for the visual artist than

for the publisher, it seemed to us more likely that prospective

users would "settle" for "all rights." We could not help but feel that some such scenario was what Congress had in mind by

requiring a written prior agreement before an eligible work

could be considered a "work made for hire."

Those were our expectations.

What has actually happened

has been a lot less logical, and a lot more onerous.

Experience

has taught us to associate the phrase "work made for hire" with

attempts to "take" rights without adequate compensation with imposition rather than negotiation.

Point: Most of those magazines who routinely request that "work

made for hire" contracts for commissioned art or photo

graphy be signed expect to pay exactly the same for this

vast bundle of rights as they had been paying over the

years for "one time reproduction rights." Point: "Work made for hire" contracts are often presented for

signature after the terms of an assignment have been

negotiated; after the work has been executed

even

after the work has been published.

Point: Covering letters accompanying such contracts are frequently

disingenuous, indicating that signature is needed in order

that work may be published at all; that signature is merely

a formality with no effect on the grant of rights; that

signature is required before payment will be made; etc.

Point: The lower level employees of conglomerates who commission

photographs or artwork may in good faith bargain for

"work made for hire" at minimal fees based on the limited

use actually intended, their perceived inability to

negotiate with their own organization's bureaucracy and

the trust relationship they have established with their

suppliers.

Once acquired, the work then passes out of

their control and may be used in other publications, in advertising, or for purposes which would normally require

royalty arrangements such as trademarks or direct sale

to the public.

Visual work is peculiarly vulnerable to

this kind of recycling and commercial exploitation. Point: There is an assumption, however unjustified, on the part

of those who obtain "work made for hire" that ownership

of the physical art or photograph is included.

This makes

retrieval of the property at best a tough negotiation.

At worst, irreplaceable works of art are caught in the

inexorable flow of files, transferred to "dead" storage,

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Because of the mere existence of the "work made for

hire" exception, attempts are made to impose the status even

where the intended use does not qualify under the existing

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almost always after the fact on purchase orders requiring signature; on purchase orders not requiring signature; on

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