COMMENTS AND VIEWS SUBMITTED TO THE COPYRIGHT OFFICE ON THE COMPULSORY LICENSE PROVISIONS OF THE U.S. COPYRIGHT LAW By Herman Finkelstein SEPTEMBER 25, 1956. I have read rather carefully Harry Henn's paper on the compulsory license provisions and feel that he did a remarkable job of research and analysis. He is certainly to be congratulated on that phase of the report. There is no need in commenting on those aspects of the report with which I agree. My comments at this time will be limited to Harry's observations with respect to the practical aspects of the problem. At page 54 of his report, Harry says: "Competition in the recording industry, especially as among different types of recordings, would undoubtedly be promoted if the authorization of a recording of one type subject to compulsory licensing, as above discussed, gave rise to a compulsory license with respect not only to that particular type of recording but also to the remaining types subject to compulsory licensing." This statement assumes that the compulsory license provision promotes healthy competition in the recording industry. I think it does just the opposite. What do you suppose would happen with the American theater if all the Broadway houses could produce "My Fair Lady" on a compulsory license basis? Most of the theaters would be putting on productions of that show and thus limit the opportunity of other playrights to have their new plays presented to the public. That is just what is happening in the field of music. All the recording companies concentrate on the same numbers with the result that a song must be either a complete success or a total failure. There is nothing in between. Unless a song can be recorded today, there is no market for it. The compulsory license provision results in limiting the number of songs that can be projected at a given time. If the record manufacturers could get exclusive rights, they would be working on different compositions. This would further the purpose of the copyright law which is to encourage authorship. Unlike the situation in 1909, it would also encourage competition legitimately among record companies. Today the small record company cannot get the full benefit of a hit which it may create because immediately one of the large record companies issues a covering record by a more outstanding artist who is under contract with them. Does Mr. Henn know these facts, and, if so, does he think that, in spite of them, the compulsory license provision promotes competition and that, if anything, it should be extended rather than restricted? It seems to me that this is one of the first things that the panel should discuss on a practical level. This is the only criticism I wish to make of Harry's splendid job at this time, except to compliment him on the contribution to the copyright law represented by that part of his paper which deals with the historical and legal aspects, as distinguished from the economic aspects. Sincerely, HERMAN FINKELSTEIN. By Joseph S. Dubin SEPTEMBER 25, 1956. I have delayed forwarding my comments on the Henn compulsory license study until this date in order to have an opportunity to completely go into the matter. The subject itself has always been of extreme interest to me, and I have been wrestling with various thoughts and did not resolve them until this late date. (a) I believe the principle of the compulsory license, whether mechanical or music, must and should be retained. Its elimination, in my opinion, might give rise to the creation of a monopolistic monster, and I do not believe the fears that existed in 1909 should be brushed aside merely be cause of the passage of years. The monopoly that I speak of would affect both the creator and the manufacturer. The retention of the principle of compulsory license tends to promote free and open competition. (1) Section 1(e) should be amended to delete the following language "upon the parts of instruments serving to reproduce mechanical, musical works" wherever such language is found, and substituting therefor the following language "or other contrivances, by means of which sounds may be reproduced, and by means of which the work may be mechanically performed." The substituted language is similar to that found in section 19 of the British Copyright Act of 1911, and section 19 of the Canadian copyright law of 1921. (2) The recording should be required to be made independently, and not by duplicating one made by another manufacturer, but, if there has been a reproduction by one contrivance, coming within the proposed amended definition, anyone else should be allowed to reproduce by means of another mechanical contrivance. (3) There should be no limitation on the right of arranging incidental to recording under compulsory license. (4) I believe that the royalty rate should continue to be a flat sum per composition, but as yet I have come to no conclusion regarding the details. There should be a provision for allocation, and an equitable arrangement for a composition recorded on two sides. (5) The royalty rate should be applied not only to records manufactured in the United States, but to records sold in the United States as well. I see no reason why anyone other than the manufacturer should be liable. (6) The present provisions regarding the filing of a notice of use, etc., should be retained. (7) There should be a stricter supervision in connection with the requirements on the part of the manufacturer to account, etc. As yet I have not worked out these details. (c) I do not believe that the compulsory licensing principles should be extended to mechanical recording rights in other classes of work, but should be restricted to music. (d) I fear that if the compulsory licensing provision is eliminated, in connection with such elimination will arise the principle of statutory protection of a recording, and, a necessary step therefrom, protection under the copyright law of the performance of a performing artist. I have always maintained that the protection of the performing artist should be governed by contract only, and should not be granted by statute. I have deliberately presented my views in sketchy form, and will be happy to support them as and when requested. With kindest personal regards, I remain, Sincerely yours, By Horace S. Manges JOSEPH S. DUBIN. SEPTEMBER 27, 1956. In reply to your letter of August 15, which arrived while I was on vacation, my view is that the principle of the compulsory license should be eliminated from the copyright law. I want to take this opportunity to pay tribute to the study prepared by Harry Henn, which you were kind enough to send me. This is certainly a scholarly work of first magnitude. Sincerely yours, HORACE S. MANGES. I have read with great interest and care the illuminating study by Prof. Harry Henn on "The Compulsory License Provisions of the U.S. Copyright Law," and appreciate your invitation to comment. I feel that Harry Henn is to be complimented on this very thorough presentation of the various facets of this very difficult question. With its complete tracing of the legislative history, prior to 1909, of the compulsory 2-cent royalty provision for musical recordings, with its history of the many proposed bills since 1909 to abolish, strengthen, modify, and expend its application to other fields, as the case may be, with its comparison of the laws of other countries and under international arrangements, and an indication of how it functions under present music publishing-recording industry practices, all so thoroughly documented with footnotes, I feel that an exceedingly useful background has been given from which to focus more clearly on the conflicting points of view involved. I would gather this is the major function of these preliminary studies, rather than to present a special view, and in this respect the study has admirably fulfilled such purpose. It is on fundamental issues that this question will ultimately have to be resolved. The lack of clarity and loose language of the present law, particularly as to the types of recordings to which it is applicable, and the confusing measures of damages for users failing to abide by the provisions of section 1(e), as carefully related in the study, could easily be remedied if the principle of compulsory licensing were to continue to be accepted. The latter is, of course, our paramount problem. In his recapitulation of the major issues (pp. 57-58), Harry Henn poses three major questions. These are substantially as follows: (1) shall the principle of compulsory licensing be retained or eliminated; (2) if retained as to musical recordings, how shall it be amended (outlining a variety of considerations); and (3) shall it be extended to other rights in musical works, indeed to other classes of works, and if so, to what extent. As to questions 1 and 3 above, the study merely poses them, after a thorough historic background showing when, if at all, they have been presented in prior legislative attempts. Under question 2 the study goes into some detail as to a number of the points which will have to be resolved, were we to accept continuation of the present principle of compulsory licensing of musical recordings. Were we to do so, I don't think there would be too great a difficulty in equitably resolving the various questions put by Harry Henn, such as, for example, the types of musical recording to which the principle should be applicable, whether such types were to be restricted or interchangeable, the extent of rights of incidental arrangement, whether rates were to be flat or percentage, per composition, per unit of playing time, per side, based on the retail or the manufacturer's price, the number sold or the number manufactured, foreign sales or manufactures as well as domestic, and the appropriate administrative and damage provisions for effectively handling returns from compulsory licensees. I think there could also be considered in this regard the principle of full accessibility of the musical work to any record manufacturer, if the copyright owner does permit any recording at all, on the basis of such terms of payment and license as would be selected and set by the copyright owner with his first negotiated recording licensee, regardless of or without fixed statutory royalty rates of any kind, and to require the owner to deposit his first negotiated license with the Copyright Office for the guidance of other record manufacturers, as in certain of the Vestal bills (H.R. 17276, 69th Cong.; 13452, 70th Cong.). There might also be considered the possibility of exclusive licensing for a limited period of 6 months, a year, or two, or more, with full accessibility thereafter to other manufacturers. There might also be considered requirements for appropriate security for the payment of royalties by compulsory licensees, to counter the possibility of use of the work by irresponsible manufacturers. I am not aware of any present pressures, under question 3, to extend compulsory licensing or full accessibility to other rights in music or to other kinds of works. The major problem to my mind, at this stage, is in obtaining an answer to question 1, whether we shall retain at all the present or any form of compulsory licensing or full accessibility, in a general revision of our laws. I approach this question strictly as a member of the public, never having had a matter or a client concerned in one way or another with the problem. My personal predilection in a general way may be described as an inclination in prin |