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the eight dollar ($8.00) per box fee were subject to periodic review due to the cost of living increase.

Another strong point in favor of juke box royalties is related to publishing. Many of the new, young composers are trying to set-up publishing companies and cash flow from juke box royalties would aid in developing new talent and promoting new writers.

It is evident that the juke box operators have been making profit from the use of music for many years without having to pay the creators of that music any royalty. I strongly support the moral obligation to pay monies to the gen. erators of projects when the projects are being used in money-making ventures.

TESTIMONY OF LOUIS F. (CHIP) DAVIS, COMPOSER Mr. CIANCIMINO. Mr. Chairman, I would like to briefly introduce Mr. Chip Davis, an author and composer who has been affiliated with SESAC for the last few years, and who would like to say a few words about the jukebox issue.

Mr. Davis is the composer of all of the music currently contained on the No. 1 country album today, called Wolf Creek Pass. He has written every number on that album. He has recently had three of his songs released as singles, 2 of which were among the top 10 on the country charts, and the third of which is climbing the charts at the present time.

In addition, Mr. Davis is the recipient of a Cleo Award for 1974 as an author of a regional commercial.

Gentlemen, you have heard from the distinguished Aaron Copland, and you have heard from the well versed Sy Oliver, and I now present a young and very talented author and composer, Mr. Chip Davis.

Mr. KASTENMEIER. Mr. Davis.

Mr. Davis. Mr. Chairman, members of the committee. I have been invited to testify on behalf of SESAC writers. I am a young and very new writer in the industry and even though having three country western hits, this year I still find it difficult to make a living as a writer. This makes the jukebox issue a very important one to me and also to my cowriters and colleagues.

A writer's income is derived from portions of publishing, portions of mechanical licenses, and performance royalties. In each case, the product has been performed or issued with the intent of making money, or in other words, performance for pay; and in each case a certain allotment or portion-royalty--is paid to the people who created the product.

It would seem to me that the jukebox is a valid vehicle of and for public performance for pay, and that a provision should be made on the behalf of the creators, of the product being sold on the jukeboxes, to receive payment for the use of their creations.

The 1967 agreement between the jukebox industry and performing rights societies certainly is an improvement but, in my opinion, would be more viable if the $8 per box fee were subject to periodic review due to the cost-of-living increase.

Another strong point in favor of jukebox royalties is related to publishing. Many of the new, young composers are trying to set up publishing companies and cash flow from jukebox royalties would also aid in developing new talent and promoting new writers.

It is evident that the jukebox operators have been making profit from the use of music for many years without having to pay the creators of that music any royalty. I strongly support the moral obligation to pay moneys to the generators of projects when the projects are being used in moneymaking ventures.

Mr. KISTENMEIER. Thank you, Mr. Davis.
Mr. Ciancimino.
[The prepared statement of Mr. Ciancimino follows:]

STATEMENT OF ALBERT F. CIANCIMINO, COUNSEL FOR SESAC, INC. Mr. Chairman, members of the Committee, my name is Albert F. Ciancimino, and I am a member of the New York Bar and counsel to SESAC Inc. in Vew York.

l'ntil now, you have heard from several distinguished authors and composers on what they think of Sections 116 and 801 of HIR. 2023. I have the privilege of being the only attorney testifying on behalf of the performing rights industry. As such, perhaps a brief review of the history of the jukebox issue is in order.

The ('opyright Law of 1909 does exempt jukebox operators from the payment of performance royalties. This anachronism and inequity in our existing law continues to the present day. Extensive hearings were conducted in the soth, the

und Congress, the 3rd, the 85th and the sth on the use of musical compositions on coin-operated machines. Finally, the Sith ('ongress, in 1M3, a bill was reported by the full Committee on the Judiciary of the House of Representatives to remove the jukebox exemption. However, the 88th Congress adjourned before the bill was cleared by the Rules ('ommittee for House Action. In 1937, the House did pass a bill (HR. 2312) which provided for an annual compulsory license fee of $8.00 per box. H.R. 2512 was not enacted. In subsequent considerations of the jukebox issue, the Senate created a Copyright Royalty Tribunal to review all rates fixed in the statute. However, by amendment to Section 801, the $4.00 jukebox fee was removed from the scope of the Tribunal's authority and this is where we stand today.

At this point, some questions come to mind: What makes the jukebox industry SO special? Why does such an obvious public performance for profit continue to go uncompensated to this day? Further, why does this industry nerd to have a fixed rate provided by (ongress? And further still, why should this fixed rate. of all the fixed rates in H.R. 2223, be placed beyond the scope of the Royalty Tribunal's authority? These are difficult questions for someone like (hip Davis to understand, and these are the difficult questions that we are posing to this Committee today.

There is no compelling economic necessity for having a jukebox rate frozen into the statute. The fixing of such a rate should be left to the ordinary process of bargaining in a free marketing. It is only in this way that a true value can be placed on the rights granted to jukebox operators by the performing rights organizations. This is the way it is done with almost every other industry which relies upon music, and the jukebox industry has no unique attributes which would require different treatment. The disadvantages of a statutorily fired royalty rate should be obvious. One need only be reminded that the original eight dollar rate was contained in the 1957 House of Representatives Copyright Revision Bill. If that Bill had become law, we would have had 18 years of intlationary erosion which would have reduced the value of the eight dollar fee considerably and rendered it out-moded in comparison to modern-day values and prices

However, should Congress choose to place fixed rates in the revision bill in certain areas, we see no reason to exclude the jukebox rate from the authority of the Copyright Royalty Tribunal. In Section 801, a (opyright Royalty Tribunal would be created to make determinations concerning the adjustment of certain copyright royalty rates-in particular, the rate for cable television in Sextion 111, and the rate for compulsory mechanical licensing of phonograph records in Section 113. As H.R. 2223 is presently constituted. the jukebox royalty of 8.00) per box will be the only fixed royalty rate which would not be subjert to revision by the Royalty Tribunal. We submit that there is no reason whatsoever for such special treatment to be accorded to the jukebox industry. Any arguments of economic erosion or declining business trends put forth by the jukebox industry should be left to tbe sound discretion of a Royalty Tribunal in the periodic

review of the jukebox rate. The Tribunal would relieve Congress of the burden of making the necessary studies to determine whether a periodic adjustment of the jukebox fee would be justified.

In the event, however, that Congress chooses to exclude the jukebox royalty rate from the Tribunal's authority, may we submit that the eight dollar fee per box is woefully inadequate. It was inadequate in 1957 and is even more so today. If subject to review by the Tribunal, we would be willing to adhere to the $8.00 fee agreed to in 1967 on the floor of the house. If the jukebox fee is not made part of the authority to review rates given to the Copyright Tribunal, we would urge that inflationary trends since the 1967 agreement of $8.00 per box be considered and that the fee be raised accordingly in order to reflect such trends.

In conclusion: We reiterate our longstanding opposition to the inclusion of a fixed royalty rate in the statute for the jukebox industry. However, should a fixed rate be included in the statute, with a means for review by the Copyright Royalty Tribunal, we would adhere to the $8.00 fee agreed upon in 1967. If there be no provision for review by the Copyright Royalty Tribunal, we would hope that Congress would recognize the inequity of the $8.00 fee and consider inflationary trends since 1967 in order to arrive at a more equitable statutory royalty rate. This would, to some small degree, compensate for the free use of music by jukebox operators since the 1967 compromise.

TESTIMONY OF ALBERT F. CIANCIMINO, COUNSEL FOR SESAC, INC.

Mr. CIANCIMINO. Mr. Chairman and members of the committee, I am Albert F. Ciancimino, and I am a member of the New York bar and counsel to SESAC Inc. in New York.

Until now, you have heard from several distinguished authors and composers on what they think of sections 116 and 801 of H.R. 2223. I have the privilege of being the only attorney testifying on behalf of the performing rights industry. As such, perhaps a brief review of the history of the jukebox issue is in order.

The copyright law of 1909 does exempt jukebox operators from the payment of performance royalties. This anachronism and inequity in our existing law continues to the present day. Extensive hearings were conducted in the 80th, the 82d, the 83d, the 85th, and the 86th Congress on the use of musical compositions on coin-operated machines. Finally, in the 88th Congress, in 1963, a bill was reported by the full committee on the Judiciary of the House of Representatives to remove the jukebox exemption. However, the 88th Congress adjourned before the bill was cleared by the Rules Committee for House action. In 1967, the House did pass a bill, II.R. 2512, which provided for an annual compulsory license fee of $8 per box. H.R. 2512 was not enacted. In subsequent considerations of the jukebox issue, the Senate created a Copyright Royalty Tribunal to review all rates fixed in the statute. However, by amendment to section 801, the $8 jukebox fee was removed from the scope of the tribunal's authority and this, gentlemen, is where we stand today.

At this point, some questions come to mind: What makes the jukebox industry so special? Why does such an obvious public performance for profit continue to go uncompensated to this day! Further, why does this industry need to have a fixed rate provided by Congress? And further still, why should this fixed rate, of all the fixed rates in H.R. 2223, be placed beyond the scope of the Royalty Tribunal's authority? These are difficult questions for someone like Chip Davis to understand, and these are the difficult questions that we are posing to this committee today.

There is no compelling economic necessity for having a jukebox rate frozen into the statute. The fixing of such a rate should be left to

the ordinary processes of bargaining in a free marketplace. It is only in this way that a true value can be placed on the rights granted to jukebox operators by the performing rights organizations. This is the way it is done with almost every other industry which relies upon music, and the jukebox industry has no unique attributes which would require different treatment. The disadvantages of a statutorily fixed royalty rate should be obvious. One need only be reminded that the original $8 rate was contained as far back as in the 1957 House of Representatives copyright revision bill. If that bill had become law, we would have had 18 years of inflationary erosion which would have reduced the value of the $8 fee considerably and, in fact, rendered it outmoded in comparison to modern day values and prices.

However, should ('ongress choose to place fixed rates in the revision bill in certain areas, we see no reason to exclude the jukebox rate from the authority of the Copyright Royalty Tribunal. In section 801, a Copyright Royalty Tribunal would be created to make determinations concerning the adjustment of certain copyright royalty rates-in particular, the rate for cable television in section 111, and the rate for compulsory mechanical licensing of phonograph records in section 113.

Is H.R. 22:23 is presently constituted, the jukebox royalty of $8 per box will be the only fixed royalty rate which would not be subject to revision by the Royalty Tribunal. We submit that there is no reason whatsoever, and I would like to emphasize, no reason whatsoever, for such special treatment to be accorded to the jukebox industry. Any arguments of economic erosion or declining business trends put forth by the jukebox industry should be left to the sound discretion of a Royalty Tribunal in their periodic review of the jukebox rate. The Tribunal would relieve Congress of the burden of making the necessary studies to determine whether a periodic adjustment of the jukebox fee would be justified.

In the event, however, that ('ongress chooses to exclude the jukebox royalty rate from the Tribunal's authority, and we hope this will not be the case, may we submit that the fee per box is woefully inadequate. It was inadequate in 1957 and is even more so today. If subject to review by the Tribunal, we would be willing to adhere to the in fee agreed to in 1967 on the Floor of the House. If the jukebox fee is not made part of the authority to review rates given to the ('opyright Tribunal, we would urge that intlationary trends since the 1967 agreement of $8 per box be considered and that the fee be raised accordingly in order to reflect such trends.

In conclusion, Mr. Chairman and members of the committee, we reiterate our longstanding opposition to the inclusion of a fixed royalty rate in the statute for the jukebox industry. However, should a fixed rate be included in the statute, with a means for review by the ('opyright Royalty Tribunal, we would adhere to the SS fee agreed upon in 1967. If there be no provision for review by the Copyright Royalty Tribunal, we would hope that Congress would recognize the inequity of the $8 fee and consider inflationary trends since 1967 in order to arrive at a more equitable statutory royalty rate. This would, to some small degree, compensate for the free use of music by jukebox operators since the 1967 compromise.

Thank you.
Mr. KASTEN MEIER. Thank you, Mr. Ciancimino.

On page 2, you meant rather than 1957, 18 years of inflationary erosion concerning the House copyright revision bill, you meant 1967, 8 years?

Mr. CIANCIMINO. No, I did not, Mr. Chairman. It goes as far back as 1957, and I think the first mention of $8 as the fee is contained in 1957.

Mr. KASTENMEIER. 1957?
Mr. CIANCIMINO. Yes, Mr. Chairman.

Mr. KASTENMEIER. Mr. Chapin, you mentioned that today BMI authors and other authors get a performance royalty on French jukeboxes. How is that computed, how is that arrived at, what formula do the French employ, as an example? Do you happen to know?

Mr. CHAPIN. I think it is on a per box fee, and I might add that the rates vary anywhere from $60 to $80 per box, so that we are talking about a much higher rate than is being considered here.

Mr. KASTENMEIER. Mr. Korman, if the present bill were enacted into law, by what percentage would the total revenues of authors and composers represented by the three performance rights societies be more or less increased by virtue of the $8 a box royalty, if any?

Mr. KORMAN. Mr. Chairman, that is hard to say. It appears, if you assume 500,000 jukeboxes in use, which is the number mentioned in September 1974 when the Senate was debating this question

Mr. KASTENMEIER. I am willing to assume the $4 million a year figure mentioned by Mr. Copland.

Mr. KORMAN. Well, at $4 million, the question would be what would be involved in collecting it and how much would it cost to distribute it! That is to say, if this money is to be paid to the Copyright Office, assuming it just funnels through that Office, ASCAP, BMI, and SESAC, for example, under the antitrust provisions in the section, if they can agree quickly among themselves how that should be split that would be one thing. I think ASCAP's gross revenues are approximately $80 million per year. I believe BMI, which in its statement describes itself as the world's largest performing rights society, collects about between $40 and $50 million a year. Mr. Chapin can, I am sure, furnish the figure. As to SESAC, Mr. Ciancimino knows I am sure that it is a couple of million dollars. On the arithmetic, that is $4 million added to that total of approximately $130 million. It is not a very, very large sum of money, Mr. Chairman. But this problem is a problem philosophically and it does create problems for us as we have said on the international scene. Foreign societies try to work special arrangements in their contracts with us because they say you do not collect on jukeboxes and we pay you for those uses. And frankly, Mr. Chairman, I do not know what the cost of distribution to composers and authors would be.

Mr. Mercer's statement says that we do not have current hard data, so that we really cannot propose a reasonable fee. We do not know what it ought to be. But we do think we ought to sit down with these people and find out what it should be.

It is simply incredible to me that a business which generates a half a billion dollars a year, selling nothing but performances of music, and incidentally, they do not pay anything, the record manufacturer pays the record royalty, the mechanical fee for the right to manufacture the records, that is not paid by the jukebox industry. Sure, some of the money flows to the composers because they buy the records.

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