These disinterested parties, together with the interested ones—ASCAP, BMI, SESAC, the American Guild of Authors and Composers, and the National Music Publishers Association-all urged repeal of this unfair exemption. What we all meant, of course, is simply that the juke box industry, like all others who profit from performing music, should pay fair and reasonable license fees. Let me mention briefly two points and then turn to the real issue today First, the fact that the so-called exemption developed as a historical accident, rather than as a conscious decision of Congress applicable to the modern Juke box industry, is well-known to this Committee and is discussed in the 1906 Committee Report (H.R. Rep. No. 2237, 89th Cong., 2d Sess.). Second, it is equally well-established that, under arrangements between American and foreign performing rights organizations, American authors and com posers are paid for performances of their works on juke boxes in other countries The anomalous fact that we do not pay foreign authors and composers für vur performances of their works on juke boxes has caused friction in our interna tional copyright relations. Now that the juke box industry agrees that it should pay for its performances two questions remain: What is a fair performance fee? And should that fee be subject to periodic review and adjustment as economic conditions change' In considering what fee is fair, we recall that in 1958 the Senate Judinary Committee concluded that a fair fee would be between $19 and $20 annually per juke box. Eight years later, in 1966, the same conclusion was reached by the House Judiciary Committee. But when the House passed the General Revis-n Bill in 1967, the fee was $8. Authors and composers agreed to this much lower fee as a compromise, because they recognized the overriding public importance of general copyright revision. Last year, the Senate Judiciary Committee considered this question and encluded that a fee higher than $8 per year was warranted. Nevertheless, the Com mittee "endeavored to facilitate the progress of this (general revision] legis tion by preserving ・・・ the rate adopted by the House of Representatives.” (8. Rep. No. 93-953, 93d Cong., 2d Sess., 1974, at 152). It is important to stress that the Senate Committee stayed with the $ fee only after providing a mechanism for periodic review and adjustment. That mechanism is the Copyright Royalty Tribunal, which would be empowered to review periodically and adjust all of the compulsory license fees in the Buz the mechanical license fee, the cable television license fee and the juke box license fee. At the last moment, on the Senate floor, juke box fees were exempted from Tribunal review. We support the Senate Committee's approach. We believe a strong case e lid be made for a fee higher than $. But we would accept the $% fee, provided it were subject to periodic review and adjustment by the Copyright Royalty Tribunal. Indeed, we can see no justification otherwise for any statutory fee, and cer tainly not for a fee of only $8 for juke boxes. Fees should be arrived at by the normal bargaining process, and, if special circun stances are believed to require compulsory licenses and statutory fees, a mechanism for adjustment must be provided. Both sides should know that if they fail to reach agreement on a reasonable fee an impartial body stands ready to adjust the statutory fee on the basis of a full record. We have no hard current data on which to propose a reasonable juke box royalty fee. What we suggest is that the $× fee be accepted not because it is reasonable but because a start must be made. The parties could thereafter sit down and work out a reasonable fee on the basis of current economie conditions, Creators prosper when users prosper. We certainly have no incentive to seek fees which would drive users out of business. ASCAP and similar organizations also have obligations to the creators we represent to seek a fair rate for the valuable rights granted With the Copyright Royalty Tribunial available to adjust statutory fees to reasotiable levels as conditionis change subject always to veto by either House of Congress, we anticipate that the parties would engage in good faith negotiations and reach fair agreements, in the same way that busi ness is normally cond acted between buyers and sellers Congress surely should be wary of writing into the new Copyright Law any provision which may not only be unfair at the time of enactment, but which is bound to become unfair later as econonle conditions change. The choice is simply whether Congress wishes to continue to bear the burden of hearing repeated arguments for changes in copyright fees, or whether it would be more efficient to adjust these by the The mechanism. The latter is clearly preferable, in our view Mr Chairman, if the past is any guide, the juke box industry will continue to assert that it is an industry of small businessmen who are having a difficult time surviving The same may fairly be said of many music creators and pubEsters. And whether the operators are large or small really is irrelevant to the basic questions here. We say they should pay, we say the amount should be fair and we say it should be subject to adjustment by a simpler method than amendment of the Copyright LaW Moreover, if the juke box fee is not subject to adjustment by the Copyright Raity Tribunal, we may be sure that the cable television and record industries Will also seek the same treatment. If the point is won by one such large industry, carefully worked out compromises involving other large industries may well fil apart and much of the progress made in the spirit of compromise will be As a matter of principle, we do not favor any compulsory license permitting takers to perform our works without consulting us as to a fair price But we have tried to see the point of view of others and to cooperate in reaching a workable esti.promise in the higher interest of securing enactment of this legislation. HR 2223 is not a perfect bill but we urge its enactment with one change; it is essential that the juke box fee, like the other statutory fees, be subject to ad„l**u ent by the Copy right. Royalty Tribunal. Ihank you. [Subsequent to the hearing the following correspondence was reved for the record.] AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Re Copyright Revision Legislation (HR. 2223). DEAR CONGRESSMAN KASTENMETER. I understand that some months ago, a wiggestion was advanced that HR 2223 should be amended to exempt ballroom operators from copyright hability in those cases where the bands are engaged as independent contractors, and impose labiaty moiely upon the mAJNIC LIKTEN. ASCAP would strongly oppose any such amendment for a number of reasons First we think the many cases holding the propractor of a daner hall or similar estal (shment liable for copyright infringement are sound Performances of #.19ical cotizĝositiots by a band or orchestra occur only when a proprietor believes they will attract patrons and so et lince his revenges. This is true whether the hui kem?rs are engaged as enjoyces or under agreements designed to make 1o dependent contractors Many cases impose hability whether or not the proprietor had knowledge of the compositions to be paved or excrcised any confr dover their sclcction. He cases are reviewed in Skapien. Bernstein & Co t H1. Green Company. 316 † 24 304 (2d Cir. 1963). Ise leading enses are ་་་ Dreamland Roll Room x Shapiro Bernstein á 66.36 Þ 24 454 (7th Cir 1929); M. Witmark á bina i Partime Amusement 09, 200 Þed 4.0 (ED8C-1924) of 42 ) 24 1020 €471, Cir 1924); Bourne ↑ bouche 25% þ supp 745 (EDSC_1965), M. Witmark & Bona ↑ Tremont Norial & Athletic Club, 18% F Supp_787 (D Ms** 181 Khapiro, Bernstein & Co. Îne u Velfin, 47 F 8app/64% (W/D La 1942); Harmat Coken 2.0 Þed 276 (ED Pa 1921) Indeed. It. 11e Velton case the proprietor had stipulated in his contracts with vifchestra leaders that 19 ASCAP 1,440 be prayed and had even go so far as f-post highs in his estab, shment objecting to the performance of ASCAP musie Nevertheless he was head labie Exemption of the ballroom operators from egyright by 2.74 and impo«[*]•† of batty solely on the band wood trees,'a'e drato and very expensive charges in the way musical performances are ficursed In mats it at stem it Watial beer the virtually it juste for the win mopyrighted work to secure any patient for the part teatre of his muungen ACAP at other performing right living organizations license on an annual or in many cases a seasonal basis. It in ponng) in to do so because the same owner can be dealt with on a year to year basın. The bands emp, sed on the other hand, are often itinerant or even "pick-up" groups, constantly re-forming with new personnel, who often play in one location for only a short period and then move on to another or disband. Finding and licensing them would be mach more difficult and, of course, much more expensive than the present system ASCAP bases its license fees for performances in establishments such as bali rooms, taverns, and restaurants on objective factors, including seating capacity type and frequency of musical entertainment, admission, cover, or similar charge and drink prices. Because these factors, which constitute the estabi.shmen's "operating policy", are fairly constant and can be easily determined in the event of change ASCAP is able to keep its costs of licensing down, and consequet:13 maintain low license fees. The enclosed form of agreement shows the factors and the rates which start at only $70 per year. Under the proposed amendment, as it has been described to me, it would be necessary for ASCAP to license the bands. It would be very difficult to locate and keep track of the constant movement of all the different bands across the country. Similarly, it would be necessary to determine the operating pouy đị each establishment when a given band played, and base a license fee on the pag during the period of the band's engagement. The higher cost of licensing on this basis would have to be passed along in higher license fees. Licensing musicians would also create difficulties with the musicians' uri a the American Federation of Musicians (AFM). Article 25, Section 16 of the AFM By-Laws (1973) provides: "Leaders and members of the Federation are prohibited from assuming any responsibility for the payment of license fees for any composition they play and from assuming or attempting to assume any liability whatsoever for royalties, fees, damage suits, or any other claims arising out of the playing of copyright composition." I think the question really comes down to who is most responsible for the performance and who derives the principal benefit. Certainly, the band meme 19 derive the benefit-they are paid to play. That payment, from the owner of the establishment, is usually an amount less than the increased revenues to the owner resulting from use of music The proof of this is found in the frequent practice of "testing" use of music: if business picks up, it is kept; if it does not pick up and does not earn more than the cost of the music--it is discontinued In this sense, the use of music is "for profit” or it is not used at all Accordingly, the owner of the establishment decides whether music will be performed at all and, if it is, obtains a more significant return than the musicis Therefore we think it is fair that the owner should pay for the right to perform the music. With best wishes for a pleasant summer, Respectfully, Enclosure. BERNARD KORMAN. I GENERAL LICENSE AGREEMENT RESTAURANTS, TAVERNS, Agreement between AMERICAN SOCIETY OF COMPOSERS AUTHORS AND Publishers ("Society"), continuing thereafter for addituma, terms of one year each unless terminated by either party as hereinafter pro vided a horse to perform publicly al - the premises 1 and not elsewhere nom frymate renditum of the separate muna al compoutions now ne here ala during the term herevif in the reper any of Society, and if which Society shall have the right to forse such performung • ghos bi Ether party may we or het ing thirty days prie + the end of the initial term or any renewal term give If sad staɛ a given the agreement sha terminate on the last day of such - b) The be sad, air ing or telecasting of franum van bo wie e therwise of renditions of musical compos ne dramata perf wman es and does not authorize any dramatic performances For purposes of this agreement, a dramatic perfirmatur, sha include, but not be limited to the following (i) performance if a dramaticuh muss; al work Cas hereinafter defined) in its entirety 1) performance of one or more musa al componations from a dramatic » manual work as hereinafter ampai hd by dangat pat muni daint hagi un alt về Vilma representation of the work laum pertemance of me se more musia vuerpositions as part of a sory or pot, whether wompanied of unaus ver patard by dias gut pario mat dane slage as ne perteman da comer verme if a dramatismum a work cas here naher defined) drama avuto 3 we as wheĵ in this agreement sha de but not be stated la a munkal pera par • “> muka The term b) LAINIER warrants that the Statement of i xuwnaa a. Operating Pinay on the reverse side of this agree |