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Now, if they send the book, the library should send the book they have on their shelves. If they don't, the doctor could buy the book. We would really appreciate that.
Mr. Poff. Would you say, and I guess your answer would be "no," that the first case you put would be fair use and the second would not be?
Mr. LODWICK. In the first case, we sure wouldn't holler. If we did, that doctor would get pretty mad at us—rightly so.
But somebody ought to buy, not copy, the book.
Mr. POFF. That is all I have.
Mr. St. ONGE. Thank you very much, gentlemen. In just a few minutes, I believe you have made your point. Mr. LODWICK. Thank
you. Mr. St. Onge. The next witness is Mr. George A. Hamid, Jr.
STATEMENT OF GEORGE A. HAMID, JR., VICE CHAIRMAN, MUSIC ROYALTY COMMITTEE, INTERNATIONAL ASSOCIATION OF AMUSEMENT PARKS
Mr. HAMID. My name is George Hamid, Jr. I reside in Margate City, N.J. I am vice president of the Atlantic City Steel Pier, also of Warhi Realty Corp., and a member of the International Association of Amusement Parks.
I would like to read a telegram from the president of the international association:
Executive committee voted unanimous association cooperation to music royalty committee. I appoint Joe Malec, Sr., as chairman, and George Hamid, Jr., as vice chairman. Please contact Blundred regarding your desires.
Mr. Blundred asked that I appear in behalf of the association, and also for our corporation.
I will do my best to summarize where I can, but I am deputized by the association to present this in the most effective form I can.
My purpose is to bring to your attention the degree of monopolistic power that the proposed bills on copyright will create. I should like to examine portions of the bill as they would apply to an amusement organization that uses music as background or which engages acts in the variety field whose performances entail the use of music. Most of our Nation's amusement parks would fall into that category.
The amusement operator, being essentially a small businessman, does not have the wherewithal individually or collectively to do legal battle with the gargantuan copyright organizations—the American Society of Composers, Authors & Publishers, and Broadcast Music, Inc. By their own admission, these organizations have become multimillion-dollar empires.
Quoting former BMI president, Robert J. Burton, in the December 19, 1964, issue of Billboard magazine:
Since BMI was formed, broadcasters have increased their payments for per. forming rights by over 700 percent, from under $7 million a year to over $50 million. The entire field of music has increased 60 percent more than the national
economy. Payments for performing rights, which before BMI was formed were limited to a handful of people on Tin Pan Alley and in Hollywood, are now distributed throughout all of the 50 States.
As to the monopolistic nature of these two copyright giants, I again quote President Burton in the same article:
BMI was formed with the complete approval of the Justice Department 25 years ago to combat what the Department itself recognized as a complete monopoly by ASCAP.
The only difference today is that copyright holders represent not a single monopoly, but a dual monopoly. No music user has had his ASCAP rates reduced because of BMI. On the contrary, they have been raised. But now, in addition to this fee, music users must also pay a substantial fee to BMI. The burden of monopoly was not eased by the creation of BMI, but was made more painful and more final.
In extracting language from the proposed statute, we come upon the following:
Section 106: The owner of copyright has the exclusive rights to authorize in the case of musical works to perform the copyrighted work publicly;
Section 201(d): The ownership of a copyright may be transferred in whole or in part.
Section 501: Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 117 is an infringer of the copyright. The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of sections 205(d) and 410, to institute an action for any infringement of that particular right committed while he is the owner of it.
Section 504: An infringer of copyright is liable for either the copyright owner's actual damages and any additional profits of the infringer or statutory damages. The copyright owner may elect to recover, instead of actual damages and profits, an award of statutory damages with respect to any one work in a sum of not less than $250 or more than $10,000 as the court considers just. In a case where the copyright owner sustains the burden of proving that infringement was committed willfully after service upon the infringer of a written notice to desist, the court in its discretion may increase the award of statutory damages to a sum of not more than $20,000.
Section 506: Any person who infringes a copyright willfully and for the purposes of commercial advantage shall be fined not more than $2,500 or imprisoned not more than 1 year, or both, for the first such offense, and shall be fined not more than $10,000 or imprisoned not more than 3 years, or both, for any subsequent offense.
Read collectively and in summary, this means that any establishment using music via performers or any mechanical device enhancing or reproducing the music is subject to heavy legal penalties if he does not enter into a contract with BMI and ASCĂP.' The copyright organization has the option of calling for statutory damages. While the monopolistic power of copyright organizations has been clearly demonstrated in its so-called negotiations with music users, this law will provide them with absolute tyranny of the music-using small businessman who cannot afford costly and extensive legal battles.
At this point, I call your attention to the arbitrary tactics of BMI in its lawsuit against Warhi Realty Co., Inc., and the city of Atlantic City.
Early in the spring of 1954, the Steel Pier negotiated to present a concert starring the Beatles in Atlantic City on August 30, 1964. When negotiations were finalized to rent the Convention Hall, instead of using the Steel Pier premises, Warhi Realty Co., Inc., conducted the operation of the concert. The tickets, however, read "Steel Pier Presents the Beatles.”
On July 28, 32 days before the concert, we received a letter from BMI written by George Gabriel, its vice president-exhibit B-advising us:
The BMI public performance license fee for live musical attractions as of July 1, 1964, is 1 percent of the gross box office receipts excluding taxes.
We were stunned, because the customary BMI fee for a concert was $10 per performance, with a maximum in very exceptional cases of $25.
In an effort to get by this concert, I answered BMI per exhibit C, in which I explained that the Steel Pier and the Atlantic City Convention Hall already had BMI licenses. On August 5, the regional supervisor of BMI-Eugene Colton-advised that the Steel Pier license is restricted to the Steel Pier premises and the Convention Hall is not licensed by BMI, therefore, an additional license was required by BMI per the terms of the July 28 letter-exhibit D. At this time it was apparent that the concert would gross
in excess of $65,000, but would net a mere fraction of that amount because of the high cost of presentation. One percent would mean that BMI was raising its concert rate from $10 or $25 to a sum in excess of $650, or better than 2,500 percent. On August 13 I reiterated by letter that the Steel Pier was presenting the Beatles and that I accepted the letter of August 5 as an indication that Steel Pier was licensed. See exhibit E.
On August 14 Mr. Colton wrote exhibit F-reiterating the position that a separate license was needed. This letter arrived in my absence and was so answered on August 17 by my secretary-exhibit G.
From that point on we received no further letter communications on the subject of the Beatles.
The next communication from BMI did not deal with the Beatle matter, but canceled the license for Steel Pier which was negotiated in September of 1960 and demanded that, instead of the $200 annual fee that the pier was paying:
The BMI fee is now 1 percent of the total expenditure for the services of performers and musicians employed for the various musical attractions for the
Again, it was hard to believe the contents of the letter and it was answered on November 4exhibit H-pointing out that the relative box office appeal of an attraction was not related by percentage to the music rendered and that this was not a realistic basis for a license.
Relative to the Beatles, the next communication we received was a summons on October 30 charging Warhi Realty Co., Inc., and the city of Atlantic City with 15 counts of infringement. Naturally, BMI elected the statutory damage procedure, since the most that they had asked for, even in their exorbitant license offer, was only $600-odd. Fifteen counts at the statutory minimum of $250 totaled $3,750. The summons is attached as exhibit I and a sample of the individual claims is attached as exhibit J.
Ironically, a large number of the complaints were made on behalf of John Lennon and Paul McCartney, two of the four Beatles, who had already taken out as their share of the performance receipts almost $12,000.
I immediately contacted attorneys and over the next 2 months dealt with Murray Fredericks, Esq., of Atlantic City, N.J.; Arthur H. Seidel, Esq., of 1107 Land Title Building, Philadelphia, Pa.; with Samuel Kalikman, Esq., of Camden, N.J.; and Maurice Weisberg, Esq., of 4 Penn Center Plaza, Philadelphia, Pa.
It must be borne in mind that at no time prior to instituting the lawsuit did BMI attempt to negotiate the fee for the Beatles concert. Their demands remained steady at 1 percent. Even so, our position in defense of the lawsuit was considered by all attorneys to be precarious—even hopeless.
Mr. TENZER. Is this case still pending in court? Mr. HAMID. This was settled. You will later see the reasons. I quote from various letters: November 9 from Murray Fredericks, Esq.: The statute under which this suit is brought is certainly a strong one in favor of the owner of the copyright and for which there does not appear to be many defenses if, in fact, the copyright was infringed. Ignorance is no defense, nor does there appear to be a defense to the owner of the copyright demanding an exorbitant amount for singing or playing of his song. The promoter either has to pay in the long run or see that the song is not played or sung.
I pointed out to Mr. Fredericks by telephone that the notice was served in late July at a time when the tickets for the concert had already been sold
and there had been no way to stop the performance from going on. That, in fact, if we were to desist from playing songs copyrighted by BMI and ASCAP, we would be automatically out of business.
Letter of November 12, 1964, George A. Hamid, Jr., to Arthur Seidel, Esq., in reference to the original license of Steel Pier by BMI:
I think it is important to point out that on September 21, 1960, the check was paid after the season. Negotiations had taken place throughout the season. Naturally, acts played plenty of BMI songs before this agreement was signed. Therefore, it was known to them that we were operating without a license.
Mr. Seidel's answer, in person, was that the copyright holder has the sole discretion in this matter and that if his actions give the impression that reasonableness will always prevail, this is unfortunate for the user. BMI could, at any time, stiffen its attitude, step in, and sue.
Arthur Seidel, Esq., to George A. Hamid, Jr., November 19, 1964: The case in its present posture is a garden variety copyright infringement lawsuit, and unless a defense of misuse or a violation of the antitrust laws is upheld, your position in the litigation is untenable.
Both in letter form and personal meetings, Seidel outlined the prospective cost of this litigation. The preparation of an answer raising misuse defenses would require considerable time.
It was further suggested that a community action involving several plaintiffs be taken against BMI. I was advised that both the defense and the counteraction would take years and undoubtedly go through several appeals; that the minimum cost in attorneys' fees would be $75,000 to $100,000.
Meanwhile, BMI had instituted suit in Cincinnati against the promoters of the Beatle concert and had begun preparation to do likewise in Chicago and California. Exhibit K is a letter from the Long Beach Auditorium manager.
At this point, the situation was obviously hopeless. We could not undertake such expensive litigation, and Arthur Seidel advised me to do all I could with BMI through negotiation. Seidel, through Mr. Kalikman, arranged for a time extension-exhibit L.
Meanwhile, I had met with BMI. I explained to Mr. Seidel that negotiations would be difficult, if not impossible, because I had already met with George Gabriel, vice president of BMI, and the attorney for BMI, Mr. Milton Adler. I wrote Seidel on November 20, as follows:
In the event that you are interested for your own information: I did meet with George Gabriel, the BMI representative and his attorney, Milton Adler. They were cordial but firm in their insistence that they will prevail on the 1 percent concept. At one point in the discussion, Mr. Adler stated, “If you, or anyone, is to play BMI music, you will pay a fee that BMI considers fair." I answered, "I hope you realize that the statement you made was made in front of witnesses and that you are saying that the decision as to the fee will be BMI's and BMI's alone."
Adler said, “Not only did I say it, but I'll say it again, that BMI owns the copyrights and if anyone is going to use them, they'll pay the fee that BMI considers fair."
Gentlemen, I have these in quotes because as I left the office I wrote them down as I remembered the words he used. Quoting from the same letter:
The other significant development in the meeting was his revelation that the action is just as important, insofar as the building is concerned, as it is in terms of the operator. As I see it, they have a twofold purpose:
First, to establish through the suit against the operator the 1 percent fee and, second, to establish the responsibility of the owners of the building to pay such a fee as well as the operator. I assume that the reason they would like to make the arenas and convention halls liable is because an arena will play many, many different attractions with many different promoters in the course of a year. It would be much more convenient for BMI to be able to assess the building directly than scamper after all of the various promoters.
Concert promoters from various parts of the country began to contact me. We decided that I would endeavor to settle my case and that we would all support the action in Cincinnati where we felt the costs, at least in the initial stages, might be within our capabilities and where the municipality was not involved, as it was in Atlantic City.
After lengthy and repeated negotiations in the New York office of Mr. Gabriel, we agreed to settle the Beatle suit on a flat figure. Mr. Gabriel insisted that it be $680, which would, in fact, represent 1 percent of the gross. I refused, stating that this would be a sanction of the 1-percent fee, and I would never do this. We finally settled for $575, which was 23 times the maximum fee ever charged by BMI for a concert in the past.
From my notes of November 24, I quote the following:
I refused to pay 1 percent because this was not a negotiated figure. I claimed it was imposed on me with no prior warning. Gabriel stated that he could not give warning because the policy was not put into effect until July 1 of this