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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.

Moreover, Mr. Chairman and members of the committee:

Ir the jukebox fee is not subject to adjustment by the Copyright Royalty Tribunal, we may be sure that the cable television and record industries will als) beek 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, no composer, author or publisher would 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 esseutial that the jukebox fee, like the other statutory fees, be subject to adjustment by the Copyright Royalty Tribunal.

Thank you.
[The prepared statement of Johnny Mercer follows:]

STATEMENT OF JOHNNY MERCER, COMPOSER-AUTHOR, MADE ON BEHALF OF THE

AMERICAN SOCIETY OF COMPOSERS, AUTHORS, AND PUBLISHERS

Mr. Chairman, my name is John H. Mercer. I was born in Savannah, Georgia, and have spent most of my professional life as a songwriter in California where I now reside.

I appear before you today on behalf of ASCAP but, like Mr. Copland, I believe I speak for all creators of music, whatever their affiliation.

I am honored to appear before you today, but of course I am disappointed that this important legislation has not yet been enacted. I appeared before the Senate Copyright Subcommittee in 1967 to urge passage of a bill similar to HR. 2223. I earnestly hope that the efforts of this Subcommittee will bear fruit.

I have been fortunate in writing songs the public has liked, among them, "On The Atchison, Topeka and Santa Fe" (1946), "In the Cool, Cool, Cool of the Evening" (1951), "Moon River" (1961) and “Days of Wine and Roses" (1962), each of which won a Motion Picture Academy Award. Of course, like all other songwriters, I have written many works that have had no success. That's so common it can't even be called unfortunate. What is unfortunate is that when my songs were most popular, many jukebox operators made a good deal of money from members of the public who paid to hear them. I received nothing for those performances.

My hope is that the brilliant young writers of today-the Carole Kings, Neil Diamonds, Stevie Wonders, and John Denvers--whose works are now the raw material of the juke box industry will be more fairly treated than prior generations of songwriters.

There is, fortunately, no need to repeat in any detail the arguments made so often in the past as to why the so-called juke box exemption should be repealed. Rather, we should consider what all of the following meant when they urged its repeal:

American Bar Association
American Patent Law Association
Association of the Bar of the City of New York
Authors League of America, Inc.
California Bar Association
Copyright Office
Department of State
Federal Bar Association of New York, New Jersey and Connecticut
General Federation of Women's Clubs
Library of Congress
National Federation of Music Clubs
National Music Council

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 fers

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 Ameri. can and foreign performing rights organizations, American authors and cumposers 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 copyright 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 SS 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 Billthe 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 mechaninin 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 borden 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 pssential that the juke box fee, like the other statutory fees, be subject to adjustment by the Copyright Royalty Tribunal,

Thauk you.

[Subsequent to the hearing the following correspondence was received for the record.]

AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS,

New York, N.Y., August 6, 1975. Re Copyright Revision Legislation (H.R. 2223). Hon. ROBERT W. KASTEN MEIER, House of Representatives, Washington, D.C.

DEAR ('oxgreSSMAN KASTENMEIER: 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 d ('0., 36 F.2d 354 (7th Cir. 1929);

M. Witmark & Sons v. Pastime Amusement Co., 298 Fed. 470 (E.D.S.C. 1924) all'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. 618 (W.D.La. 1912); Harms v. Cohen, 279 Fed. 276. (E.D.Pa. 1921).

Indeed, in the l'eltin 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 mucb 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 ASOAP 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,

BERNARD KOBMAN. Enclosure.

GENERAL LICENSE AGRIVENT RESTAURANTS, TAVERNS
BICNTCLUBS AND SIVIL ESTABLISHMENTS

Agreement between AMERICAN SOKETY OF COMPOSERS, AUTHORS AND PUBLISHERS ("SOCIETY"). located at and ("LICENSER), located at

as follows 1 Grant and Term of License (a) SXIETY grants and UCENSEE accepts for a term of one year commencing

. and continuing thereafter for additional terms of one year each unless terminated by cither party as hereinafter provided, a license to perform pubirily at

(the premises"), and not elsewhere, non-dramatic renditions of the separate muskal compositions now or here. after during the term hereof in the repertory of SOCIETY, and of which Sexity shall have the nght to license such performing nghts

(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 tal or renewal term 2 Limitations on License

al This Ikonse is not assignable or transferable by operation of law or otherwise, and is hmated to the LXENSII and to the premises

(b) The broadcasting or telecasting or transmission by wire or otherwise of renditions of muskal compose tions in the Sox 11TY's repertory to persons outside of the premises is prohibited

(c) This license is limited to non-dramatic performances, and does not authorize any dramatk performances For purposes of this agreement, a dramatic performance shall include, but not be limited tothe following

(1) performance of a "dramatico-musical work“ (as hereinafter defined) in its entirety.

(u) performance of one or more musical compositions from a "dramatico-musical work“ (as hereinafter defined) accompanied by dialogue, pantomune, dance, stage action, or visual representation of the work from which the music is taken,

(m) 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, LKENSEE agrees to pay SexIETY the appluable license fee set forth in the rate schedule printed h low and made part hurcof based on LICENSEE's Operating Policy (as hereinafter defined). payable quarterly in advance on January 1, April 1. July 1 and Oktober I of cach year The term "IKINSEE Operating Policy, as used in this agreement, shall be deemed to mcan all of the factors which dctermine the ikenxc fee applicable to the premises under said rate schedule

(b) LICENSEE warrants that the Statement of LKENSEE'S Operating Policy on the reverse side of this agreeDicot is true and correct (c) Said license fee 18

Dollars ($ annually, based on the facts set forth in said Statement of LK ENSEE S Operating Policy

4 Changes in Licensee's Operating Policy

(a) LICENSEE agrces to give SOCIETY thirty days prior notice of any change in LICENSEE'S Operating Potky For purposes of this agreement, a change in LICENSET'S Operaung Policy shall be one in effet for no less than thirty days

(b) l'pon any such change in LICENSEE's Operating Policy resulting in an increase in the license fee, based on the annexed rate whedule, CHENSEE shall pay said increased license fec. 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 Pohcy resulting in a reduction of the license fee. based on the annexed rate khedule, LKENSEE shall be entitled to such reduction effective as of the initial date of such change, and to a pro roto credit for any uncarned license fccs paid in advance, provided LKENSEE has given SOXUTY thutty days prior notice of such change II LICENSEE fails to give such prior notice, any such reduction and credit shall be effective thirty days after LKENSEE gives notice of such change

(d) In the event of any such change in I KENSEE'S Operating Policy. LICENSEE shall furnssh a current Statement of LICENSEES Operating Policy and shall certity that it is true and correct

(c) | KENSEI discontinues the performance of music at the premises, IXENSTE may terminate this agree ment 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 LKENSEE a pro rata share of any uncarned froense fees pard in advance for purposes of this agreement, a discontinuance of music shall be one in etlect for no less than thirty days

5 Breach or Default

Upon any breach or default by LICENSEE of any term or condition herein contained SoxIFTY may terminate this license by pving LICENSEE thirty days notice to cure such breach of default and in the event that such breach or detault has not been cured within said thirty days, this license shall terminate on the expiration of such tharty day penod without further notice from SOCIETY In the event of such termination, Society shall refund to LKENSER any uncarned hcense 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 IN WITNESS WHEREOF, this agreement has been duly executed by SOCIETY and LICENSEr this

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