COPYRIGHT ISSUES: PERFORMANCE RIGHTS IN

SOUND RECORDINGS

TUESDAY, NOVEMBER 27, 1979

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES,

AND THE ADMINISTRATION OF JUSTICE

OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C. The subcommittee met, pursuant to notice, at 9:10 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier (chairman of the subcommittee) presiding.

Present: Representatives Kastenmeier, Danielson, Gudger, Railsback, Harris, and Sawyer

Also present: Bruce A. Lehman, chief counsel, and Thomas E. Mooney, associate counsel.

Mr. KASTENMEIER. The committee will come to order.

Today we are having the third day of hearings on the subject of copyright legislation. This morning we will focus on H.R. 997, which would provide for performance rights in sound recordings. Í would like to call our two colleagues up first, Hon. Henry Waxman, and Hon. Henry Hyde, for testimony and perhaps introductions as they see fit. Mr. Waxman.

TESTIMONY OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

Mr. WAXMAN. Thank you, Mr. Chairman. I wish to express my appreciation to you and the members of this subcommittee for convening these hearings on H.R. 997, the "Sound Recording Performance Rights Amendment." It is my hope that the record from these hearings will lead you to conclude that this measure should be reported to the full committee, and the entire House in the near future.

Many of us have worked hard to demonstrate broad-based support for this bill. That there are nearly 50 cosponsors from all political persuasions reflects the growing recognition that this legislation deserves enactment.

This bill is benefited as well from the endorsements of so many including: The Register of Copyrights, Department of Commerce, AFL-CIO, American Federation of Musicians, Recording Industry Association of America, Screen Actors Guild, American Federation of Television and Radio Artists, National Endowment for the Arts, American Bar Association, Consumer Federation of America, American Council for the Arts, and National Citizens Communication Lobby.

What we are concerned about and what this bill remedies is the most serious inequity in the Nation's copyright laws, the lack of a performance right for the use of sound recordings. Every other copyrighted work has a performance right under the law. There is no reason why the sound recordings should be treated differently. Involved is an important constitutional issue, the value of rewarding creative and artistic endeavors was explicitly recognized in article 1, section 8, but there is nothing in the nature of sound recording which should place it beyond the scope of the performance right which is an indispensable part of the protections afforded by our copyright laws.

H.R. 997 would simply establish such a performance right for sound recordings.

Under current law, the owner of a copyright is granted a number of exclusive rights with respect to a copyrighted product-rights which prohibit unauthorized use and which provide reasonable compensation when they are used. These rights have been recognized since the founding of the Nation, as essential to prevent the exploitation of creative works, without a fair return to the copyright holder for the privilege of using the product.

Those who own copyrights on plays, musical compositions, and motion pictures, for example, are legally entitled to receive a royalty when these works are used, or performed, by others. Even school children, in performing a copyrighted play in their school auditorium, must receive permission from the copyright holder to do so.

But the law does not provide for a performance right for sound recordings-and they can, and are, used by anyone, at any time, without compensation for their performance.

Sound recordings are the only copyrighted material for which a performance royalty is not paid.

And yet it is the performance by singers and musicians which bring the composer's work to life for its listeners.

Recorded music accounts for 75 percent of radio programing in commercially available time. It is this product which is used by stations to attract audiences and advertisers. It is this unrestricted use of this creative product by radio stations which form the entire basis for much of their revenues and profits. It is most unfair that they should be able to profit-without any compensation whatsoever-on the unauthorized use of copyrighted material.

There is vocal opposition, as you well know, to this measure from radio broadcasters and jukebox owners-the two interests most affected by this bill. In response to their familiar and longstanding arguments against this bill, I would urge the subcommittee to consider the following: First, the copyright payments established under this bill are exceedingly modest, and are based on advertising revenues. For the very largest radio stations in the country, they would amount to only 1 percent of such revenues. Most of the stations would pay far less-between $2,150 and $750 per year for all the records they play. In testimony on this bill last year, even the National Radio Broadcasters Association conceded that these payments could be fully recouped through a slight increase in advertising rates. It is my understanding that demand for advertising time on radio is constantly increasing.

Second, despite the claims of some that marginal stations will be forced out of business as a result of these new payments, not one economic study proving this contention has been submitted. On the contrary, the authoritative analysis of this issue, commissioned by the Register of Copyrights, concluded:

The payment of royalties is unlikely to cause serious disruption within the broadcasting industry. There are arguments aplenty to the contrary, but there is no hard evidence to support them.

Broadcasters are understandably opposed to a change in the status quo which is extraordinarily beneficial to them. But that does not justify their position.

Third, broadcasters also argue that radio airplay helps sell records. It does help sell some records. But most of the records played on the air are older ones; airplay does not help their sales. But it does help sell radio advertising.

The royalties collected under this bill will be minimal, and will not enrich performing artists or copyright holders. Under the bill, in fact, all the performers on a record will split the performers' share of the royalty equally; Frank Sinatra will receive no more or less than each musician in his ensemble.

The point of this bill, therefore, is not to provide a windfall for performing artists, but simply a fair payment by those who use their work for their profit.

Last year this subcommittee held extensive hearings on this proposal. The strongest possible record in support of this bill was developed, and it is my hope that this year the subcommittee will favorably report this bill. .

Mr. Chairman, I am going to have to leave to chair my own subcommittee, which is meeting at this time, but I wanted to mention to you that you will be hearing from a very distinguished panel, including Stanley Gortikov, president of the Recording Industry Association of America; Jack Golodner, director of the Department of Professional Employees, AFL-CIO; Victor Fuentealba, president of the American Federation of Musicians; Sanford Wolff, executive director of AFTRA; and Burns Roper from the Roper Organization. These people as a panel along with my colleague Congressman Hyde will be further illustrating the reason why we think this bill is an important bill, why it ought to be passed out of the subcommittee and passed into law.

I would be happy to answer questions if you would like me to at this point. I want to cooperate in any way I can with the subcommittee in promoting what I think is a just enactment of a needed legislative change.

Mr. KASTENMEIER. I want to compliment our colleague on his statement. I think it is an outstanding statement. We recognize your subcommittee is meeting. Your statement really in support of the bill offered by our colleague Mr. Danielson, which you cosponsored, is important, as well as your reference to the next witnesses. We thank you very much for your appearance this morning.

Mr. WAXMAN. Thank you, Mr. Chairman and members of the committee, and particularly my colleague from California, who is the sponsor of the bill.

Mr. DANIELSON. Glad to have your support this year, Henry.

Mr. WAXMAN. Thank you. I will work with you and follow your direction and leadership.

Mr. KASTENMEIER. I would like to call on our other colleague, the distinguished member of the full committee, Mr. Hyde of Illinois. TESTIMONY OF HON. HENRY J. HYDE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS

Mr. HYDE. Thank you, Mr. Chairman. I shall be very brief. I associate myself with everything Mr. Waxman said in his very excellent and comprehensive statement. I am simply here as a cosponsor along with 47 other members to express my strong support for H.R. 997. I think the legislation is overdue. I think it is fair. I think it is in the public interest. No one can fault Congress for not granting this copyright protection to the sound recording back in 1909, because back then no one could foresee that the sound recording would become as popular as it has become, but we know now, and a new situation exists that I think Congress has a responsibility to correct.

Technology, as we know, is everchanging. Without the copyright protection provided by this bill, without the performance right, changing technology could lead to a situation in which the creators of the sound recording are left with no means of being compensated for their creative output.

As we all know, a few years ago when Congress revised the copyright laws, the performance right for sound recordings was deliberately left out. This conscious omission was because many feared that broadcaster opposition to the performance right might block the entire copyright revision bill. Very wisely, this subcommittee asked the Register of Copyrights to study the question and come back with a report and legislative recommendations. The task has been completed and in the Register's impressive report each major question has been answered, and the arguments have all been refuted.

Today America's music sets the standard for the world. We are the leading creator and exporter of recorded music. Yet this country is one of the few Western nations which do not provide the protection of a performance right and royalty to the recording. As a result, those who create our sound recordings are being deprived of income from abroad, because there is no reciprocal right here. I think it is time to enact this legislation, and I appreciate the chance to appear before you.

Mr. KASTENMEIER. We thank our colleague for his appearance and for his advocacy of this bill.

Mr. HYDE. Thank you.

Mr. KASTENMEIER. Next, the chair would like to greet the following witnesses as our first panel if they will all come up. They have been referred to already by our colleague Mr. Waxman. They are well known to this subcommittee. They have all presented testimony before, and they are Mr. Stanley Gortikov, president of the Recording Industry Association of America; Mr. Jack Golodner, director, Department of Professional Employees, AFL-CIO; Mr. Victor Fuentealba, who is president of the American Federation of Musicians; and Mr. Sanford Wolff, executive secretary of AFTRA. Mr. Wolff and Mr. Golodner also briefly testified yesterday.

You are all welcome. You will proceed first, Mr. Gortikov.

PANEL OF PROPONENTS OF H.R. 997; STANLEY GORTIKOV, PRESIDENT, RECORDING INDUSTRY ASSOCIATION OF AMERICA; JACK GOLODNER, DIRECTOR, DEPARTMENT OF PROFESSIONAL EMPLOYEES, AFL-CIO; VICTOR FUENTEALBA, PRESIDENT, AMERICAN FEDERATION OF MUSICIANS; SANFORD WOLFF, EXECUTIVE SECRETARY, AMERICAN FEDERATION OF TELEVISION AND RADIO ARTISTS (AFTRA); AND BURNS W. ROPER, CHAIRMAN, THE ROPER ORGANIZATION

TESTIMONY OF STANLEY GORTIKOV

Mr. GORTIKOV. I am Stanley Gortikov, president of the Recording Industry Association of America, which is the trade association of the recording industry. Our member companies create and market about 90 percent of the records and tapes that are sold in the United States. This includes every conceivable type of musicpopular, classical, jazz, folk, rock, poetry, spoken word, and educational records. We have appeared before you many times before to discuss performance rights for all the sound recordings, and once again we are here on our annual pilgrimage.

Last year, during your hearings in Los Angeles, members of the subcommittee heard extensive testimony from key recording executives. And the members of your subcommittee also visited a recording studio to look firsthand at the recording process, and witness the creative input of those within record companies whose creative work helped vocalists and musicians create the sound recording. Music, of course, has always been popular down through the ages, but the sound recording has made it possible to physically capture that music, in the home and restaurants, discos, theaters, and for an individual to take it with him wherever he goes, whether it is in an automobile, college, beaches.

So music is our business. Mr. Fuentealba's members, Mr. Bud Wolff's members here, and our members create and market that unique music in all of its diversity.

Today we preserve that music in the form of discs and tapes, for use by the American consumer and the consumers of the world. But tomorrow we do not know how recorded music will reach your home. Technology is ever changing. And that is a major reason why we are here to ask you for full copyright protection.

You are going to hear from three outstanding union leaders, our partners in this quest. They will tell you how technology adversely affects the lives of their members and even displaces them, how radio uses the recordings of their work and does not pay them. I am going to pick up on those observations and perspectives.

I ask you to imagine, if you will, that you gentlemen only own a recording company. Let's call it the Capitol Hill Recording Co., Inc. Imagine, too, that your company's catalog includes some famous works, Sinatra's "Night and Day," Barbra Streisand's "People," Bing Crosby's "White Christmas," Jolson's "Mammy," plus all the latest new rock hits.

Now fantasize a little more with me. Pretend that I am the head of a new venture, made possible by modern technology. My firm's name actually was the brainchild of Mr. George Danielson right in