But, you get the problems of different businesses getting mixed up in one operation, or trying to separate out what is really the profit from jukebox aspects of the business.

Mr. KASTEN MEIER. Let me say that that is an important revelation, because if the criterion is profits of the jukebox industry, that is one thing. If it is, as has been alluded to by some of the other witnesses, cost of living, or erosion over a period of time and the value of a set amount, fixed at a figure, that is quite something else.

Mr. KORMAN. It is not profits in any other area, Mr. Chairman, it is the value of the right. But you see, in all other areas you have a history. The radio industry was paying at one time, the local radio stations were paying ASCAP 214 percent, from 1941 through 1958, and they came in with a committee of the NAB, and they petitioned the court to reduce the rates. And they said we have been hit, and this was in 1959, by the full impact of television, and the recession of the fifties, and they said we ought to get a rate reduction. And anyway, ASCAP is doing very well with their new television incomes. And we sat around the table and we worked out a reduction from 24 to 2% percent, and agreed on ways to resolve some of the accounting problems.

Incidentally, the history in radio has been that the rates have gone down. The ASCAP rate is now 1.725 percent, and it was not too long ago it was 24 percent. And this provision, Mr. Chairman, does not just provide for the rates to be increased. If the jukebox industry can come in and show that they are hurting, and $8 is too much, they can get the rates reduced. We think they put up such a fuss, frankly, because they are concerned that a fairminded arbitration panel would come up with a higher figure. We think they would too, and we think they should if that is what the facts justify.

Now, you say on what basis. Not profitability, but fair return compared to other things. What do ASCAP, BMI, and Sesac charge when they license a restaurant and the owner buys his records, and plays the music for the benefit of his patrons and he has to pay a license fee? And how does that relate to what he will be charged when the public pays for the music?

Mr. KASTEN MEIER. Thank you. I'm going to yield.

Mr. DRINAN. Mr. Chairman?

Mr. KASTEN MEIER. The gentleman from Massachusetts.

Mr. DRINAN. Just a point of information at this point. Would you tell us the arrangement with Muzak?

Mr. KORMAN. Muzak is a background music service which provides simultaneous performances, either over leased telephone wires or by means of a subchannel of the FM broadcast, to subscribers who pay Muzak a fee. Under one agreement we grant Muzak locally-it is a franchised operation, they have Muzak operators, let us say, in Boston and New York and so forth, and ASCAP has one agreement, and the same is true I believe for BMI and SESAC, they each have one agreement with each Muzak operator which authorizes the Muzak operator to license each subscriber. And in turn, the license fee paid for that license for the subscriber varies. They may be factories, doctors' offices, barbershops, restaurants, all kinds of users. The way the ASCAP agreement works, if it is what we call an industrial type of premises, a place that ASCAP representatives would not themselves find-an office or factory, which the public is not admitted to it, the

fee is 31⁄2 percent of what the subscriber pays to Muzak. If it is a public type of place, such as a restaurant or shop, the last agreement was $27 per year, but a special and lower rate exists for shopping centers where the first unit was $27 and additional units were $15 each. But those rates are now subject to one of these court proceedings where we have not moved for several years. We do not try to make these expensive; in fact, we try to keep them cheap, and they are cheap. We have not moved for several years, and Mr. Patterson can confirm this, he represents the Seeburg people who have a background music service, because of the case that was brought testing the question of whether the old Buck v. Jewell LaSalle Realty Co. is still good law, and the Muzak operators say that they suffer competition from the people who install their own radios, and then hook up loudspeakers and play music in that fashion. Muzak says since they (the radio users) do not have to pay and since the cable cases were decided by the Supreme Court; if they do not have to pay and Muzak does, the ASCAP fee for Muzak should be reduced. We do not agree. But prior to asking the judge to decide whether Muzak's argument is relevant, we have agreed to hold off the Muzak and Seeburg proceedings until the Supreme Court decides the case that was argued last April, 20th Century Music Co. v. Aiken.

Mr. KASTEN MEIER. The gentleman from California, Mr. Danielson. Mr. DANIELSON. I have just a few questions. As to ASCAP, BMI and SESAC, it is my understanding that these are at least similar organizations. Am I right or wrong on that?

Mr. CIANCIMINO. That is correct, Mr. Danielson.

Mr. KORMAN. That depends on what you mean by similar, but for this purpose, yes.

Mr. DANIELSON. I am not interested in splitting hairs. Some of you are not engaged in packing corned beef, but you are all engaged in licensing the performance of musical composition, is that correct? Mr. CIANCIMINO. That is correct.

Mr. KORMAN. Yes.

Mr. CHAPIN. Yes.

Mr. DANIELSON. Would the $8 per machine, and I know none of you agree with that, but I have got to have something to talk about, with the $8 per machine per year fee be payable to each of the three, ASCAP, BMI and SESAC, or is it to some of them or is there one fee to all of them, and in the latter event, which I think is probably true, because I see a nodding of a very knowledgeable head in the background, then I would like to know what kind of an arrangement do you have to divide up that fee?

Mr. KORMAN. We have never had the pleasure of having to make such an arrangement because we have never collected the fee.

Mr. DANIELSON. I will stipulate to that now, but now if you can tell me how you would do it I would appreciate it.

Mr. KORMAN. Well, if I may first, Mr. Danielson, what we would do I think is to have a survey made, on a sample basis, because there are so many performances going on all the time by so many jukeboxes, and we would try to reach an agreement among ourselves as to what share each of the three organizations is entitled to based on what is being used in the jukeboxes.

Mr. DANIELSON. I see. Can a writer of music, a performer for the record, can he belong to more than one of these three organizations?

Mr. KORMAN. You say a performer, and you are speaking of a composer or an author of lyrics at this point, not the person who performs unless he also writes the work.

Mr. DANIELSON. We had one excellent presentation from Sy Oliver, and in two and a half pages he got right down to the nuts of it. Let me ask you this: Does Mr. Oliver belong to more than one of three?

Mr. OLIVER. No. I belong to BMI.

Mr. DANIELSON. So your compositions would be handled through BMI and not through the others?

Mr. OLIVER. That is right.

Mr. CIANCIMINO. Mr. Danielson, if I may?

Mr. DANIELSON. Sure.

Mr. CIACIMINO. The writer only belongs to one of the three organizations. Each of the three organizations represents their own repertoire of music and a writer cannot belong to more than one, because then it would result in certain crossover rights, and duplication of rights. So generally if a writer is affiliated with BMI, all of the music he composes is represented under this agreement with BMI, through BMI, and the same holds true for ASCAP and SESAC.

Mr. DANIELSON. Now, if BMI had granted a license to some public place where a performance was had, that licensee could utilize the BMI family or repertoire?

Mr. CIANCIMINO. That is correct.

Mr. DANIELSON. Would that licensee probably also have a license from ASCAP?

Mr. CIANCIMINO. I think maybe I might be able to take a shortcut here, Mr. Danielson. Any user of music on a substantial basis will normally have agreements with the three performing rights organizations. This means whatever music he utilizes, he is pretty confident that this music will be covered under one of the three licenses, so that in the main he is licensed to perform just about any piece of music that is written today.

Mr. DANIELSON. Now then, in the event that a jukebox operator, because really that is the thrust of the presentation today, jukeboxes, and the event a jukebox operator were brought under the law, it would seem highly probable that he would listen to all three organizations. Mr. CIANCIMINO. Yes. The way the present bill reads he would pay his $8 into a central area; namely, the Register of Copyrights or to some other designated agency and that $8 would be for all of the music. that he would use on that box for 1 year. And the $8, as Mr. Korman alluded to before, would either be divided on a voluntary basis between the three organizations, or upon failure to reach an agreement there would probably be some kind of determination that would have to be made.

Mr. DANIELSON. But it would not be in the licensee that would determine what the allocation would be?

Mr. CIANCIMINO. That is correct.

Mr. DANIELSON. He would simply buy his three licenses?
Mr. KORMAN. One license.

Mr. CIANCIMINO. One license with the $8 being distributed among the three performing rights organizations.

Mr. DANIELSON. I see. One question only remaining. I believe in Mr. Copland's statement he said something to the effect that there were

500,000 jukeboxes in operation in 1968. And I think Mr. King's statement showed something like 750,000 in operation currently. Is that about the correct figure?

Mr. CHAPIN, Yes; so far as we know.

Mr. DANIELSON. OK. Thank you very much.

Mr. KASTEN MEIER. The gentleman from Massachusetts, Mr. Drinan. Mr. DRINAN. Thank you, Mr. Chairman.

In Mr. King's statement it is stated here that when an American song is played on a French jukebox the American composer is paid for the performance. Would somebody want to respond on how much he is paid, and how is this done?

Mr. KASTEN MEIER. I asked Mr. Chapin that.

Mr. CHAPIN. Yes. I had said that in the foreign countries the jukebox rate, and I am quoting here from an article in Variety where it says depending upon the country it ranges from $50 to $250 annually.

Mr. DRINAN. Is that then pursuant to copyright law, or international law? Tell me the mechanics of how that is done, and who establishes the rate and so forth?

Mr. CHAPIN. Well, it would be a rate between the performing rights society in that country that would be worked out by agreement with the local user.

Mr. DRINAN. Is there any usefulness in pursuing the legal machinery by which they do it and try to say that if virtually all other nations, I take it, or many nations do that, that the United States also should do it? I mean, do you people support that argument that we should internationalize copyright insofar as possible? More and more American music is being played all across the world, and can we learn something, in other words, from the example of foreign nations?

Mr. CHAPIN. Well, yes. And I think most of the people here today have pointed to this inequity where the foreign people get compensated, but there is no compensation here in the United States.

Mr. CIANCIMINO. If I might add, further, I think we also might learn, I would hope, from the situation which exists in most European countries where the fee that is negotiated is paid directly to the performing rights organization, and there is no dilution of fees through any kind of tribunal or agency that would be required to dispense it. Mr. DRINAN. Well, that fee is not set by copyright statute in the foreign country?

Mr. CIANCIMINO. No; this is done by negotiation, but in most of the countries the performing rights organizations are either to some extent controlled by the government or very heavily regulated by the government. But again, the moneys go directly from the user to the performing rights organization.

Mr. DRINAN. Thank you. Another question, anticipating the testimony later on of Russell Mawdsley of the Music Operators, he suggests something on page 6, that they oppose any fee for registration of jukeboxes. Is that a real possibility, that somebody propose that there be registration of jukeboxes?

Mr. KORMAN. That was in the bill. It is in the Senate bill I think, and they want to amend it and take it out. Their foot slipped when they were getting themselves out from within the tribunal.

Mr. DRINAN. Would you people react to it?

Mr. KORMAN. Well, what it means is that this $4 million they would pay in gets distributed after the Copyright Office takes off the cost of

administering the money, and this 50 cents as I understand it, was supposed to represent part of the handling cost. So really the question is who bears that 50 cent per machine cost, the jukebox people or the

composer.

Frankly, I had not focused on it. It seems to me that we have stayed by the $8, and I do not remember how the history of the 50 cents thing, how that got in there. Now, Mr. Chairman, I wish Mr. Finkelstein were here because he has a marvelous recall on these things, but it does make a 50 cents difference on a machine, and either the jukebox people or the composers pay it.

Father Drinan, going back to 1965, there were hearings, and on page 200 of part 1 of the hearings held by this committee there is a reference to the amounts that are paid abroad. This is a jukebox source, a Billboard article quoting Mr. Gordon, who then was the head of the Seeburg Corp., Jack Gordon, president of Seeburg Corp. This is a reprint from a story in Billboard of May 15, 1965. Mr. Gordon is quoted as saying:

Jukebox operators do pay performance royalties in other countries, with French operators shelling out up to $480 per year per machine, British operators getting hit with up to $300 per year per machine and German operators being tapped up to $300 per year per machine.

This was an article attempting to stir up support for the jukebox fight by pointing out how much it might cost if that bill went through. Compare those numbers in the hundreds of dollars with the $8 we are willing to accept. And, Mr. Chairman, in terms of your question before expressing concern about how a fair fee would be determined by an arbitrator or panel of arbitrators which could be $300 or $400 per year, and would that drive the jukebox industry out of business? I do not think that arbitrators operate that way. They would know the economic impact of the fee. And while profit as such would not be their test, they surely would not fix a fee which would drive anyone out of business. The world just does not work that way.

Mr. DRINAN. Thank you very much. I have no further questions at this time.

Mr. KASTEN MEIER. The gentleman from New York, Mr. Pattison. Mr. PATTISON. I am just interested in one aspect of this. With the radio stations each of your organizations will have an agreement with a particular radio station, is that right? And you do not charge on a per time use of the music, or do you?

Mr. KORMAN. No.

Mr. CIANOIMINO. NO.

Mr. PATTISON. It is a percentage of their gross?

Mr. KORMAN. Essentially, Mr. Pattison, it works this way: it is a net, it is a percentage of a net figure, and it works out to be for the local radio stations, ASCAP, BMI and SESAC taken together I think something like probably two to two and a half percent of their gross.

Mr. PATTISON. If they play the Tennessee Waltz all day long, it comes out the same?

Mr. KORMAN. That is right. They get the right to perform any musical composition in any of the three repertoires under their license as often as they choose. They do not have to keep records of what they are playing. They just pay the one stipulated fee.

Now, for those stations that might be mostly talk, for example, just some musical programs, there is available a form of license called a