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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. KASTENMEIER. 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. 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 "per program" license where the fee is also a percentage. It is a higher percentage. For ASCAP it is 8 percent of the amount paid by advertisers just for those programs containing one or more selections in the ASCAP repertoire. If they only use BMI compositions, and they have a BMI blanket license they would not pay ASCAP anything-if they had an ASCAP per program license_-on musical programs not using USCIP music.
Mr. Pattison. Then internally ASCAP, BMI and SESAC work out their arrangements with their own composers on a survey kind of basis!
Mr. KORMAN. You know that is even a tougher problem than col. lecting the money-is how you divide it up fairly.
Mr. CIANCIMINO. I would like to add that SESAC does not charge radio stations on a percentage basis. We have a flat-fee basis, and we use a station's power, their hours of operation and the market area, among other factors, and we arrive at a flat annual fee. But the license generally selected by the radio station is the blanket license, which for the one annual fee gives the station the right to perform any one or thousands of works in the SESAC repertoire. They do have available an alternate kind of licensing arrangement which we call a per-play or per-piece or per-use, but this is just not economically feasible to the user, at least they have not found it so.
Mr. Patrison. The record keeping!
Mr. CIANCIMINO. Yes. Yes. So that the cheapest and most economical method historically has been the blanket license, and for the one blanket fee they have the right to use all of the music, and then we in turn, based on chart music, and based on performances in our own three separate, individual formulas, distribute these moneys to our respective affiliates.
Mr. Pattison. So analogizing the radio station, for instance, to a jukebox why would it not be a sensible way to do it on the same basis, in other words?
Mr. KORMAN. A percentage in the case of ASCAP it would be marvelous. But it would also be expensive to operate that way. I say "marvelous" but it would depend, obviously on what the percentage was. If you worked out a fair percentage, the percentage notion has a lot of pluses. For one thing, it adjusts automatically for inflation. For another thing, if a fellow's business goes down his fees are reduced, and that is fair, you know to the extent that the value is less. The value of the license may be less to him.
Mr. Pattison. I am thinking of the difference between the jukebox in the little grill somewhere that does not get much use and the one that is being used all the time in a big operation. I am thinking of the difference of the small grill operator who gets some play Friday nights and does not get much normally, and then the other operation that has got jukeboxes, master jukebox and all kinds of boxes all over the place and really that thing works all of the time.
Mr. KORMAN. Where you have a percentage contract, a percentage license, you must have a provision for an audit, because the licensee has the information solely in his possession on which the fee is based, and you cannot afford to get into a percentage way of dealing and auditing when you are talking about very low fees. You just cannot a fford to do it. We license the average small restaurant, for example, where the fellow has his own record or tape machine, rather than subscribing to a background music service, for about $70 a vear. It used to be $60 and I think we just raised it $70. It was so since 1914. When ASCAP was formed, the original rate was $5 per month under the first licenses.
Mr. PATTISON. I have no further questions.
Mr. KASTEN MEIER. Do any of my colleagues have any further questions?
Mr. DANIELSON. I have a question. Mr. KASTENMEIER. Yes. Let me just ask whether Mr. Mann or Mr. Mazzoli have questions?
Mr. Mazzoli. Mr. Chairman, I have just a couple of fairly brief ones just to sort of fill me in. An individual who has a grill, and who buys himself a stereo set and who buys some tapes at the local discount house still has to have a contract with the three agencies; is that correct?
Mr. KORMAN. Yes. It is anomalous that if he just puts in his own things, and pays himself for all the costs involved and furnishes the music, then he needs a license under the present law. But, if he brings in a jukebox and has the public put coins in it, in which he shares he may get 40 or 50 percent of the gross taken in by the jukebox-that is not deemed to be a public performance for profit; therefore, he does not need a license.
Mr. Mazzoli. You say you do not have any figures on the amount, accurate as to the number of machines extant throughout the country!
Mr. KORMAN. I have not got any idea.
Mr. MAZZOLI. 750,000 seems very low. Now when you calculate the number of machines, would that be an individual box station or would that be a master control!
Mr. KORMAN. They were talking about the master control.
Mr. MAZZOLI. And for an artist like Neil Diamond or John Denver who write, compose, orchestrate and perform, do they belong to one of your organizations?
Mr. KORMAN. You have mentioned a number of ASCAP members.
Mr. MAZZOLI. Those names just came to mind. Can they perform music from the repertoire of BMI or SESAC?
Mr. CIANCIMINO. Yes they can. A performer can perform any piece of music he desires, and the burden is on the one in the establishment where he is performing to have the clearance. That is the primary burden. But he can perform or record anything he wishes to.
Mr. MAZZOLI. And when he creates music, it comes within the repertoire of the agency he represents? Now, if he moves-Mr. Oliver, have you ever moved from BMI, or have you been with them from the beginning of your career?
Mr. OLIVER. Yes.
Mr. Mazzoli. Do you have the privilege of moving to ASCAP or SESAC!
Mr. OLIVER. I could I suppose.
Mr. OLIVER. My music, of course, is controlled by my agents, and the details of the copyright are handled by the publisher, and I do not know the laws pertaining to the situation you suggested.
Mr. Mazzoli. Apparently it does not happen often.
Mr. CINCIMINO. Yes; it does happen quite often. Insofar as a writer terminating agreements with one organization and going to another organization, it does happen. And, in our case, our policy is that we would terminate any rights that we have in the writer, any carryover rights, and we would allow him to be represented fully by the second performing rights society.
Mr. KORMAX. ASCAP members have a right to resign at the end of every year.
Vir. MAZZOLI. And their music can stay with them?
Mr. Mazzoli. Let me ask one final question to sort of fill in the gaps here. C'sing Mr. Oliver, and perhaps Mr. Copland and Mr. Davis, you pay some amount per year to belong to the agencies?
Mr. KORMAX. $10 in ASCAP's case, per year.
Mr. Mazzoli. Is it the case, then, that anybody that works harder in the year is going to get back more in the distribution of money?
Mr. KORMAN. It is not a function of how hard you work. It is a function of how talented you are or how successful you are.
ASCAP must accept anyone to membership who applies and has had a single work either published or recorded. We must under our consent decree. The Government's theory being that you cannot possibly be a success unless you are in one of the performing rights licensing organizations or another. They have chosen to compel ASCAP to accept anyone who applies and who meets this minimal test.
Mr. CIANCIMINO. Insofar as SESAC is concerned, since we do not charge any membership fee, the worst the member can do is die.
Mr. Mazzoli. Thank you very much.
In the case of radio stations, would a single radio station acquire a license from each of the three organizations?
Mr. CIANCIMINO. That is correct, ves.
What we were contemplating, hypothetically, was in the case of a jukebox.
Mr. (ANCIMINO. It would be a different payout arrangement.
Mr. KASTENMEIER. If not, the Chair, on behalf of the committee, would like to thank our witnesses this morning. Mr. Davis, Mr. Oliver, Mr. Copland, Mr. Ciancimino, Mr. Chapin, and Mr. Korian, for their contribution in this particular area. Perhaps you will have occasion to testify on another aspect of the copyright law in the future.
Mr.('UNCIMINO. Thank you.
57 786---76 pt. 1 27
Mr. CHAPIN. Thank you, Mr. Chairman.
Mr. KASTENMEIER. Next the Chair would like to call witnesses representing the Music Operators of America and also the manufacturers of jukeboxes, the manufacturing companies. I would like to ask my colleague on the Judiciary Committee, the gentleman from South Carolina, Mr. Mann, if he would care on our behalf, to greet the president, the national president of the Music Operators of America, Fred Collins.
Mr. Mann. Mr. Collins, will you come up and bring your associates, too?
Mr. KASTENMEIER. Mr. Mawdsley and Mr. Allen and Mr. Patterson, would you all come forward ? Mr. Mann. Thank you, Mr. Chairman.
The youngest one in that crowd is Fred Collins, Jr., who, in spite of his youth, has been in the music box business for over 20 years. Ile broke his teeth on it, I think. He is a dynamic community involved man, who, because of his involvement in community activities, and associated activities of the jukebox industry, because of his interest in its ethical standards and its public image and the dignity of it, has involved himself to the point that at his young age he is now president of that organization.
He happens to be an old friend and client of mine from Greenville, S.C., and we have maintained our friendship down over the years.
He will present to the committee those who are with him and those who are to make the primary statements on behalf of the music operators.
TESTIMONY OF FRED COLLINS, JR., PRESIDENT, MUSIC OPERATORS
OF AMERICA Mr. COLLINS. Thank you, Mr. Chairman.
I would like to introduce on the far end Mr. Perry Patterson, who is counsel for the jukebox manufacturers. Next to him is Ted Nichols from Nebraska, who is the secretary of the Music Operators of America this year. And then next is Mr. Nicholas Allen, our counsel here in Washington with MOA. Next to me is the immediate past president of the Music Operators of America, and he is also the chairman of our legislative committee this year, from Massachusetts, Russ Mawdsley. On my left is Mr. Garland Garrett, the treasurer of the Music Operators of America from Wilmington, N.C.
We all do not have prepared statements, but we would be glad to answer any questions that you, Mr. Chairman, or the committee might have after Mr. Mawdsley reads our position statement. Thank you.
Mr. KASTENMEIER. Thank you.
Before getting to Mr. Mawdsley, I understand Mr. Mawdsley will make a presentation on behalf of the Music Operators of America, and perhaps aided by Mr. Allen. And then, Mr. Patterson, you have a statement, do you not? Mr. PATTERSON. I have, yes. Mr. KASTENMEIER. In which case we will hear from Mr. Patterson.
The Chair recalls that Mr. Nicholas Allen and Mr. Perry Patterson testified 10 years ago on behalf of their organizations and are well