purposes of the National Labor Relations Act, the members of CLGA are "not employees, but are independent contractors." 3

Composers and lyricists also appear in other economic guises. As individuals, they may own or participate in music publishing firms, or recording firms, or they may also be recording artists. It is not unusual for a single individual to participate in several aspects of the music business.

The songwriter as such does not ordinarily deal directly with the licensing of his music for recording or for other uses. In practice he assigns his property to a music publisher under an SPA contract. The compulsory license provision affects the songwriter, however, inasmuch as it affects his revenues from the property which he has assigned to the music publisher.

B. MUSIC PUBLISHERS

The major effect of the 1947 Revised Uniform Popular Songwriters Contract (SPA) is to transfer to a music publisher all the rights in a musical composition, including the right to copyright it, under detailed and specific limitations which protect the position of the songwriter. No such contract between a songwriter and a music publisher is valid without the countersignature of the SPA; when a songwriter joins the SPA he transfers to it the recording rights to all his compositions, and it is only through countersignature on his contracts that the SPA releases these rights to a music publisher. In the present state of the music business, no music publisher would purchase a musical composition without obtaining the right to record it.

To the extent that individual songwriters do not belong to SPA, they presumably must protect their rights with respect to recording of their compositions. Within SPA, it may be inferred, the use of the organization countersignature to release recording rights is a method of tightening the organization. Individual songwriters would presumably insert special provisions in their contracts with music publishers in order to cover the potentially very valuable recording right.

Many of the major music publishers are organized into the Music Publishers Protective Association (MPPA). However, some of the very large publishers, notably those controlled by the Warner Bros. motion picture interests, do not belong. Organized in 1918, the MPPA has a membership of about 50 firms.

Although the negotiations with respect to the Minimum Basic Agreement (MBA) and the Uniform Popular Songwriters Contract are carried out by representatives of the MPPA for its members, the MBA itself is a contract between SPA and each individual publisher, and the songwriters contract is between the individual composer and an individual publisher.

The music publishers arrange for the dissemination of musical compositions through various media. With the development of motion pictures, electronic recording, and radio and television broadcasting, the functions of the music publishers have expanded greatly from their earlier activities in the publication and sale of sheet music. These newer developments have shifted the major sources of publishers' and songwriters' income from sales of sheet music and minor amounts of recording and performance royalties, to greatly expanded recording

117 N.L.R.B. No. 4, Jan. 4, 1957.

and performance royalties combined with a relatively small revenue from the sales of sheet music. Between 1951 and 1955, while sheet music royalty payments fell by 44 percent in volume, the volume of mechanical royalty payments by record producers to music publishers increased by 60 percent, the synchronization payments by motion picture producers to music publishers rose by 63 percent, and the performing rights payments by users of copyrighted musical compositions to performing rights organizations increased by 96 percent.*

Closely affiliated with the MPPA is the office of Harry Fox, trustee. It is understood that Mr. Fox is the general manager of the MPPA, and also that his office acts independently in a trustee capacity for others than members of the MPPA. The Fox office issues recording licenses and collects recording fees ("mechanicals") for those music publishers he represents as trustee in this connection. The collection function fulfilled by the Fox office is understood to be conducted on a nonprofit basis for the members of the MPPA, and against a percentage fee for other publishers. In these functions of licensing and collecting, the Fox office acts not only for domestic publishers, both members and nonmembers of MPPA, but also for foreign music publishers through contracts with foreign mechanical rights organizations, notably the Bureau International de l'Edition Mechanique (BIEM), the major mechanical rights organization in Europe. In connection with its function as collection agency for the mechanicals due to publishers from recording companies, the Fox office also verifies the accuracy of such payments by examining the books of account of record producers.

In addition to the MPPA, the so-called "standard" music publishers are organized into the Music Publishers Association of the United States, which is the trade association for this group. However, there is no clear line of demarcation between "standard" and "popular" compositions. Some members of MPPA have large catalogs of standard works in addition to their popular catalogs.

The music publishing industry is made up of about a dozen outstanding large firms and several thousand smaller firms, many of which are inactive in that they may merely hold copyrights and collect royalties on them rather than actively engaging in promotional and distributive operations. In 1958 ASCAP had 1,081 publisher

members.5

6

Several of the largest music publishers are controlled by motion picture interests: MGM and 20th Century Fox, Paramount Pictures, Warner Bros., and Columbia Pictures. Successful composers and recording artists frequently have their own music publishing firms, and both NBC and CBS own at least one such publisher affiliated with ASCAP and one each affiliated with BMI."

It is primarily upon the music publisher that the direct impact of the compulsory license falls. In practice he is the holder of the copyright to musical compositions, and after his first agreement with a

Cf. memorandum prepared by MPPA to the Department of the Treasury dated Feb. 19, 1957, re H.R. 5478, a bill to amend the personal holding company provisions of the Internal Revenue Code.

5 The Billboard, Mar. 3, 1958.

Cf. hearings, Senate Committee on the Judiciary, 83d Cong., 1st sess., on S. 1106 (jukebox exemption), p. 103.

7Cf. House Judiciary Committee hearings, 1956, serial 22, pt. 2, vol. 2, "Television," pp. 4203 and 4205.

record producer for the recording of a tune anyone may record the tune upon payment of the statutory royalty. In the absence of the compulsory license, the music publisher, as owner of the copyright, would be free to negotiate for the recording of the copyrighted material. He could negotiate with whom he chose, offer an exclusive contract if he wished, ask any price he desired, and suggest such time period as he cared to; in general, he could negotiate within the framework usually applicable to business operations having to do with the assignment or licensing of property rights.

In the absence of compulsory license, it may be assumed that the music publisher would recognize his own interest to be in licensing as many recordings and at such royalty rates as would produce the largest net amount of royalties from record sales and public performances the latter particularly on radio and television-rather than being faced with the necessity of licensing all comers to record a composition at not more than the statutory royalty.

C. RECORD PRODUCERS

When a music publisher has accepted a composition from a songwriter, one of his first moves, frequently even before sheet music publication, is to attempt to have it recorded by a record producer. In recorded form a composition is immediately available for broadcast which is considered to be the major form of "exposure" to the buying public.

Record producers will consider perhaps 50 compositions before they agree to the recording of one. Having accepted a composition, a recording contract is made with the music publisher. The payment to be made for the recording privilege (mechanical royalty) is negotiated on the basis of the statutory provision in section 1(e) of the Copyright Act, that is, the compulsory license provision. In practice the "2-cent per part" limitation in the statute is a ceiling on the payment. When the 78 r.p.m. record was standard in the industry, its playing time was a definition of "part." The industry is now dominated by the EP and LP speeds, and it has developed a new rule of thumb for EP and LP records to the effect that the recording royalty shall be 14 cent per minute of playing time or fraction thereof, but not less than 2 cents per side.

However, in negotiating a recording contract, the bargaining strength of the two parties is important and in general the royalties agreed to in recording contracts are something less than the statutory rate; in fact, it is reported that, on rare ocasions, a music publisher has been willing to waive any mechanical royalty in order to get a new composition recorded by an outstanding artist. The license for use of the tune is usually issued by the Fox office and the mechanical royalty is paid to the Fox office on a quarterly basis.

Cf. Henn, Harry G., "The Compulsory License Provisions of the U.S. Copyright Law." p. 50 (study No. 5 in the present committee print); and letter from Sydney Kaye, Esq., dated Oct. 2, 1956, in the comments and views appended thereto. A schedule of royalty rates based on the manufacturer's suggested retail price, and included in the MPPA "long form" license is published in Henn. Harry G., op. cit., p. 50; and in a letter from Ernest S. Meyers, Esq., dated June 14, 1957, in the comments and views appended thereto. However. It seems that the dominance of the EP and LP speeds is such that the royalty based on the length of play of the record is generally used.

• Information from trade sources.

Although there are probably more than 1,000 record producers in existence at any one time,10 a limited number of them are active at any one time. The record industry trade association, the Record Industry Association of America (RIAA), formed in 1952, reported 53 members as of December 31, 1956.11 The functions of the RIAA are largely technical research, taxation and legislative activity, and statistical compilation.

Four or five of these producers are usually recognized as "major producers," although there is no recognized definition of a "major". Only four producers have annual gross sales of more than $10 millions,12 and several others are "semimajors" reaching for an annual gross sales figure of $10 millions.

The relationships between record producers and other parts of the music industry are highly complex and widespread. Both RCA Victor Division and the Columbia Record Co. are closely affiliated, respectively, with the NBC and CBS broadcasting interests, which in turn own music publishers. This gives these two "majors" a distinctive position in the industry in that they can offer special inducements to recording artists in the form of radio and television appearances which are considered to be of major importance both in the sale of records and in the professional advancement of recording artists in the amusement industry.

D. MOTION PICTURE PRODUCERS

Since the advent of sound motion pictures in 1929 the motion picture industry has been a large user of music. The motion picture producer negotiates with the music publisher just as a record producer negotiates, but the use of a copyrighted musical composition in a motion picture is not considered to be subject to the compulsory license provision. Although the law applicable to this situation is not clear,13 in practice the fees for such use of copyrighted music on a motion picture soundtrack are negotiated freely between the copyright owner (or his agent, the Harry Fox office) and the motion picture producer; and a single payment is usually made for both the right to use the music on the soundtrack (synchronization right) and the right to perform the music in exhibiting the motion pictures (performing right). The increasing use of theatrical motion pictures on television, and particularly the production of motion pictures specially for television use, have greatly enlarged the market for synchronization rights.

Prices paid for synchronization rights (together with the performing rights as to theatrical exhibition) vary widely. In a theatrical motion picture, some of the factors affecting the negotiation are: the total budget of the picture, the importance of the star actors, and the place which any given musical composition will have in the film.

10 "Music Performance Trust Funds, 15th Combined Reports and Statements," p. 5. reports 1,167 phonograph record producers signatory to the 1954 Phonograph Records Trust Agreement as of June 30, 1956. Of the 1,018 signatories at Dec. 31, 1955, 951 reported no sales in the last half of 1955.

11 Annual Report of the RIAA, Jan. 1, 1956–Dec. 31, 1956, p. 5.

13 Ibid., p. 5, and bylaws of the RIAA, sec. 2.

18 See Kupferman, T.R., "Rights in New Media," in Law and Contemporary Problems, vol. 19, No. 2 (1954), pp. 173-174; and Dubin, Joseph S., "Copyright Aspects of Sound Recording," in Southern California Law Review, vol. 26, No. 2 (1953), pp. 139 ff.

Fees may run from as little as $500 to as much as $20,000. In TV films, the fee for a single use of a song in a syndicated film usually runs from $250 to $500, which includes unlimited runs for several years on a worldwide basis.14

Conversely, the motion picture industry is becoming an increasingly important source of musical material for phonograph records. A good deal of original music is now composed for motion pictures, and this material, first recorded on the soundtrack of a picture, is used for further recording on disks or tapes. In practice, if original copyrighted musical material is first used on the soundtrack of a motion picture, it is not thereby considered available for recording under the compulsory license provision; the right to first production of such original musical material in the form of recordings is subject to price negotiation, and only after such right has been given to one record producer is it possible for other record producers to invoke the compulsory license provision.

Due to their interest in music the relationships of the motion picture producers ramify throughout the music business: they are major owners of music publishing houses, and are thus influential in MPPA and ASCAP; they own recording companies, and they can direct their original motion picture musical compositions, through their own music publishers, to their own recording companies, if they so desire.15 In connection with compulsory license, the motion picture companies are affected as a source of compositions for recording, and hence as composers or copyright owners. This does not minimize their influence in the music business in other capacities not directly a part of their motion picture activities.

E. RECORDING ARTISTS

A major factor in the salability of a recorded tune is the recording artist or artists. Artists who perform for recording companies include both the solo artists and "name" groups, and the instrumental accompanists. Each phonograph record producer has his "stable" of solo artists, usually under exclusive contract; the contracts with these artists are probably his most valuable asset. In some cases a very well-known artist can maintain a nonexclusive position vis-a-vis phonograph recording but this is unusual.16

The contracts between solo artists and phonograph record producers are made under the provisions of a code of fair practice negotiated between the record producers and the American Federation of Television and Radio Artists (AFTRA). This code is a minimum agreement and individual artists are free to negotiate higher wages and better conditions of employment if they are able to do so. Well

14 Information re "sink rights" taken from the Billboard, Feb. 22, 1957. Such action is not always considered desirable. In 1957, RKO-Teleradio Pictures owned both RKO Music (a publisher), and RKO-Unique (a record producer), but the picture producer transferred the album recording rights to a specific soundtrack to the subsidiary music publisher (RKO Music) with instructions to negotiate their sale in the open market. "The (RKO filmusical) soundtrack album rights will be put on the open market by the publishing subsidiary," with the purpose of giving "the RKO publishing subsidiary a better bargaining position with the other disk companies." Variety, Feb. 20, 1957.

is "Bing Crosby is staying with Decca for another 3 years. However, the new pact gives the crooner the green light to do occasional groovings under other disk banners." Variety, June 6, 1956.