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 1966 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 composers 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 for our performances of their works on juke boxes has caused friction in our international 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 Judiciary 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 Revision 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 copy right revision. Last year, the Senate Judiciary Committee considered this question and concluded that a fee higher than $8 per year was warranted. Nevertheless, the Committee "endeavored to facilitate the progress of this [general revision] legislation by preserving *** the rate adopted by the House of Representatives." (S. Rep. No. 93-983, 93d Cong., 2d Sess., 1974, at 152). It is important to stress that the Senate Committee stayed with the $8 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 Bill— 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 could be made for a fee higher than $8. But we would accept the $8 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 certainly not for a fee of only $8 for juke boxes. Fees should be arrived at by the normal bargaining process, and, if special circumstances 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 $8 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 economic 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 reasonable levels as conditions 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 business is normally conducted 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 economic 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 fees by the Tribunal 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 publishers. 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 Royalty 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 fall apart and much of the progress made in the spirit of compromise will be lost. As a matter of principle, we do not favor any compulsory license permitting users 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 compromise in the higher interest of securing enactment of this legislation. H.R. 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 adjustment by the Copyright Royalty Tribunal. Thank you. [Subsequent to the hearing the following correspondence was received for the record.] AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS, Re Copyright Revision Legislation (H.R. 2223). Hon. ROBERT W. KASTEN MEIER, Washington, D.C. DEAR CONGRESSMAN KASTEN MEIER: I understand that some months ago, a suggestion was advanced that H.R. 2223 should be amended to exempt ballroom operators from copyright liability in those cases where the bands are engaged as "independent contractors", and impose liability solely upon the musicians. ASCAP would strongly oppose any such amendment for a number of reasons. First, we think the many cases holding the proprietor of a dance hall or similar establishment liable for copyright infringement are sound. Performances of musical compositions by a band or orchestra occur only when a proprietor believes they will attract patrons and so enhance his revenues. This is true whether the band members are engaged as employees or under agreements designed to make them "independent contractors". Many cases impose liability whether or not the proprietor had knowledge of the compositions to be played or exercised any control over their selection. The cases are reviewed in Shapiro, Bernstein & Co. v. H. L. Green Company, 316 F.2d 304 (2d Cir. 1963). The leading cases are: Dreamland Ball Room v. Shapiro, Bernstein & Co., 36 F.2d 354 (7th Cir. 1929); M. Witmark & Sons v. Pastime Amusement Co., 298 Fed. 470 (E.D.S.C. 1924) aff'd 2 F.2d 1020 (4th Cir. 1924); Bourne v. Fouche, 238 F.Supp. 745 (E.D.S.C. 1965); M. Witmark & Sons v. Tremont Social & Athletic Club, 188 F.Supp. 787 (D. Mass.1960); Shapiro, Bernstein & Co., Inc. v. Veltin, 47 F.Supp. 648 (W.D.La. 1942); Indeed, in the Veltin case, the proprietor had stipulated in his contracts with orchestra leaders that no ASCAP music be played, and had even gone so far as to post signs in his establishment objecting to the performance of ASCAP music. Nevertheless, he was held liable. Exemption of the ballroom operators from copyright liability and imposition of liability solely on the band would necessitate drastic and very expensive changes in the way musical performances are licensed. In many instances, it would become virtually impossible for the author, composer, and publisher of a copyrighted work to secure any payment for the performance of his music. ASCAP and other performing right licensing organizations license on an annual or, in many cases, a seasonal basis. It is possible to do so because the same owner can be dealt with on a year to year basis. The bands employed, 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 much more difficult and, of course, much more expensive than the present system. ASCAP bases its license fees for performances in establishments such as ballrooms, 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 establishment'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 consequently 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 policy of each establishment when a given band played, and base a license fee on the policy 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' union, 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 members 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 musicians. 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. GENERAL LICENSE AGREEMENT RESTAURANTS, TAVERNS Agreement between AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS ("SOCIETY”), located at and ("LICENSEE"), located at 1 Grant and Term of License as follows . and (a) SOCIETY grants and LICENSEE accepts for a term of one year, commencing continuing thereafter for additional terms of one year each unless terminated by either party as hereinafter provided, a license to perform publicly at ("the premises"), and not elsewhere, non-dramatic renditions of the separate musical compositions now or hereafter during the term hereof in the repertory of SOCIETY, and of which SOCIETY shall have the right to license such performing rights. (b) Either party may, on or before thirty days prior to the end of the initial term or any renewal term, give notice of termination to the other If such notice is given the agreement shall terminate on the last day of such initial or renewal term. 2 Limitations on License (a) This license is not assignable or transferable by operation of law or otherwise, and is limited to the LICENSEE and to the premises (b) The broadcasting or telecasting or transmission by wire or otherwise of renditions of musical composi tions in the SoCIETY'S repertory to persons outside of the premises is prohibited (c) This license is limited to non-dramatic performances, and does not authorize any dramatic performances For purposes of this agreement, a dramatic performance shall include, but not be limited to, the following (1) performance of a "dramatico-musical work" (as hereinafter defined) in its entirety, (11) performance of one or more musical compositions from a "dramatico-musical work" (as hereinafter defined) accompanied by dialogue, pantomime, dance, stage action or visual representation of the work from which the music is taken, (i) performance of one or more musical compositions as part of a story or plot, whether accompanied or unaccompanied by dialogue, pantomime, dance, stage action, or visual representation, (iv) performance of a concert version of a "dramatico-musical work" (as hereinafter defined) The term "dramatico-musical work as used in this agreement, shall include, but not be limited to, a musical comedy, oratorio, choral work, opera, play with music, revue, or ballet 3. License Fee (a) In consideration of the license granted herein, LICENSEE agrees to pay SOCIETY the applicable license fee set forth in the rate schedule printed below and made part hereof, based on "LICENSEE'S Operating Policy” (as hereinafter defined), payable quarterly in advance on January 1, April 1, July 1 and October 1 of each year. The term "LICENSEE's Operating Policy." as used in this agreement, shall be deemed to mean all of the factors which determine the license fee applicable to the premises under said rate schedule (b) LICENSEE warrants that the Statement of LICENSEE'S Operating Policy on the reverse side of this agree ment is true and correct. (e) Said license fee is annually, based on the facts set forth in said Statement of LICENSEES Operating Policy 4 Changes in Licensee's Operating Policy Dollars ($ (a) LICENSEE agrees to give SOCIETY thirty days prior notice of any change in LICENSEE's Operating Policy For purposes of this agreement, a change in LICENSEE'S Operating Policy shall be one in effect for no less than thirty days. (b) Upon any such change in LICENSEE'S Operating Policy resulting in an increase in the license fee, based on the annexed rate schedule, LICENSEE shall pay said increased license fee, effective as of the initial date of such change, whether or not notice of such change has been given pursuant to paragraph 4(a) of this agreement (c) Upon any such change in LICENSEE's Operating Policy resulting in a reduction of the license fee, based on the annexed rate schedule, LICENSEE shall be entitled to such reduction, effective as of the initial date of such change, and to a pro rata credit for any unearned license fees paid in advance, provided LICENSEE has given SOCIETY thirty days prior notice of such change. If LICENSEE fails to give such prior notice, any such reduction and credit shall be effective thirty days after LICENSEE gives notice of such change (d) In the event of any such change in LICENSEE'S Operating Policy, LICENSEE shall furnish a current Statement of LICENSEE'S Operating Policy and shall certify that it is true and correct (e) If LICENSEE discontinues the performance of music at the premises. LICENSEE may terminate this agreement upon thirty days prior notice, the termination to be effective at the end of such thirty day period In the event of such termination, SOCIETY shall refund to LICENSEE a pro ratu share of any unearned license fees paid in advance For purposes of this agreement, a discontinuance of music shall be one in effect for no less than thirty days. 5. Breach or Default Upon any breach or default by LICENSEE of any term or condition herein contained, SOCIETY may terminate this license by giving LICENSEE thirty days notice to cure such breach or default, and in the event that such breach or default has not been cured within said thirty days, this license shall terminate on the expiration of such thirty-day period without further notice from SOCIETY In the event of such termination, SOCIETY shall refund to LICENSEE any unearned license fees paid in advance. 6 Notices All notices required or permitted hereunder shall be given in writing by certified United States mail sent to either party at the address stated above. Each party agrees to inform the other of any change of address of IN WITNESS WHEREOF, this agreement has been duly executed by SOCIETY and Licenser this 19 AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS LICENSEE day |