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 $42,000. 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. 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 year-1964. I stated that is absolutely arbitrary. Gabriel said, "George, I am sorry * * it's a different ball game now. The new president insists." Meeting after meeting was held with the officials of BMI. BMI would accept no offer that was not based on a percentage. We pointed out that 1 percent of the gross to BMI would be followed by 1 percent to ASCAP and showed that 2 percent of the gross could be as high as 20 percent of the net, and, on occasions where losses were sustained, would be particularly heavy. The enclosed summary was prepared at the request of Mr. Gabriel for presentation to President Burtonexhibit M. While President Burton expressed sympathy, he would not in any way alter his insistence on a percentage formula. As a member of the International Association of Amusement Parks, I felt it incumbent to report on the developments in the music royalty field. My notes of November 27, 1964, show that following which was later transmitted by me to the association: The real peril to everyone lies in the fact that a copyright act poses a minimum penalty of $250 per infringement. In other words, if amusement park A plays 100 different BMI tunes and has not signed a license with BMI, it could be sued in any court on the basis of the minimum, which would be $25,000-$250 times 100. While all of this was going on with BMI, we received exhibit N from ASCAP. To this day this license was not signed for the Beatles' concert nor was any fee paid to ASCAP. We have met repeatedly with the representatives and asked for the names of ASCAP songs performed during the concert, and to date we have not received any. I answered Mr. Kane per exhibit O. Meetings, telephone calls, and many trips took place during the winter with a group of concert managers who were most intimately involved in the BMI suits. The only effectiveness that we had with BMI was inferring that we hoped to raise money for a countersuit under the antitrust laws. Even so, BMI, under Burton, showed virtually no concern. We explained that if BMI got its one percent now, it would seriously damage the concert field and many others, including parks. We asked what would prevent BMI from asking 2 percent in the near future? Gabriel said: We wouldn't do that *** that would be unreasonable. Our answer to this was: You have no qualms about raising the rate 2,500 percent now, but you state that out of reasonableness you would not raise it 100 percent in the future. This is not very consistent. Where this would have ended cannot be guessed because in late March President Burton died suddenly. After this, we met with Mr. Gabriel and the concert managers worked out a schedule of fees based upon the number of seats in each auditorium. This was accepted by the concert managers and is now in operation and is enclosed here as exhibit O. Actually, that was not reproduced, but I have it here. It sets up 12 categories of sizes of buildings, establishes fees per buildings in terms of the number of seats in the building. Mr. TENZER. Mr. Chairman, are you accepting that into the record? Mr. ST. ONGE. We will receive it for the file. Mr. HAMID. As we sit here, the Steel Pier has not negotiated a contract with BMI for the 1965 season. It is operating under a letter of consent dated April 7, 1965. For your information, I am including a paragraph from the National Ballroom Operators News Letter of November 17: The situation with ASCAP is not an easy one*** they are making almost impossible demands-simply wanting more money. They want to include the inside sales, claiming it is their music that brings in the customers, et cetera. We have not been idle; we have been fighting and trying to make ASCAP see reason. We are considering going into court and obtain a court order under the consent decree. In conclusion, as we sit here, I do not know what tomorrow may bring or what next year may bring. Under the statute being considered, if my mail brought a letter from BMI revoking its consent, my company would be faced with one of three alternatives: (a) Signing a BMI license no matter what its terms might contain. (b) Eliminating the use of BMI music, which would force us out of business. (c) Continue to operate using BMI music with the knowledge that we have infringed. According to section 506, I would be facing a fine of $2,500 and/or imprisonment of 1 year. These are desperate alternatives. What makes them even more desperate is the fact that we, the buyers of theatrical talent, have no control at all over the copyrighted works that are used. In many cases the artist uses works created by himself. In no other business in the world is the buyer asked to pay for the copyright used by the seller. In the purchase of a car, the purchaser is not required to pay for the patents. This is the supplier's responsibility. Yet in the case of music royalties, the supplier (the performer) is somehow relieved of the obligation to pay for the copyright costs of the material (songs) he uses. The songs are the tools of the musician's trade, yet the buyer is assumed to be responsible for the payment for these tools. For example, Paul Anka has played Steel Pier four different times. He composes his own songs, then carefully selects his material in the order that will create the most appealing act. He would not (and should not) allow the many buyers for whom he works to control the selection of his songs. Thus, if we are to employ Paul Anka and the hundreds of other acts we employ, and we are held liable for copyright fees, amusement operators cannot escape the copyright monopolies and remain in business. In conclusion, I will quote from page 137 of the supplemental report of May 1965: * copyright owner groups ** pointed out that suits against genuinely innocent infringers are quite rare. *** They maintain that $250 not represent an onerous amount, * ** does The very statements of the copyright owners thus demonstrate that the infringers, even innocent ones, are at the mercy of their benevolence. On page 134 we read: Constant reminders of the trouble that careless legislative drafting can cause for future generations arise under the provisions dealing with damages and profits ***. The report itself is quick to point out the dangers inherent in this law. Legislation created in this mighty Congress has always considered the rights as well as the jeopardy of all concerned. To place the many thousands of small amusement businessmen at the absolute mercy of the copyright monopolies will be to ultimately drive them out of business. 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. EXHIBIT B LAURENCE CANFIELD. JULY 28, 1964. Mr. GEORGE HAMID, Jr., Atlantic City, N.J. DEAR MR. HAMID: Please be advised that the BMI public performance license fee for live musical attractions as of July 1, 1964, is 1 percent of gross box office receipts from admissions, excluding all Federal, State, and local taxes, as well as bona fide ticket refunds. It is our understanding that you are sponsoring the performance of the Beatles at Convention Hall, Atlantic City, N.J., on the evening of August 30, 1964. Any performance of BMI-controlled music on that evening without our permission will be an infringement of the rights granted to copyright holders by the Federal copyright law. The repertory used by the Beatles in previous performances throughout the United States indicates that a preponderance of their material is licensed through BMI. In order that the music we control may be legally performed, we are enclosing two copies of our license agreement. Both signed copies should be mailed to this office for execution. GENTLEMEN: The Atlantic City Convention Hall is licensed for the performance of your music as is the Atlantic City Steel Pier Co., which is presenting the Beatles in Atlantic City Convention Hall. We appreciate your interest and thank you for your kind letter of July 28. Very truly yours, ATLANTIC CITY STEEL PIER, |