Mr. BARBA. Well, the only comment that I would make is we do have a lot of entertainment at our property and in addition to the recorded music-excuse me, the music that comes in over the television, we're required to pay for not only the payments that we make to musicians and to performers, but also we're to pay ASCAP and BMI on the room and board that they receive while they are staying at our property. Also the commissions that are paid to their agent who booked them at the property, and any technicians that were required to put on the show would also be paid. If by chance I should hire an entertainer who costs twice as much to sing the same songs I would pay twice as much to ASCAP or BMI for the same use of songs. It is this philosophy of taking what I consider to be not directly related expenses to figure out their rates and then assessing those rates indiscriminately to those who they can find to pay them.

That is to say that if we were talking about all publicly aired music in commercial establishments and the Balsams paid its per rate a share of that compared to all the time that's songs are played in commercial establishments across the country, I would have less of an argument, but I don't believe that's the case. I believe the case is that because we've been in business for 131 years, and because my partners and I have operated the hotel for 27 years, we're going to get nailed at a much higher rate than the harder

Chair MEYERS. Excuse me for 1 second, Mr. Barba. I would like to say thank you to Mr. Rule who has told us in advance that he had to leave at 12:30. I have a question for you, Mr. Rule, and I will submit it by mail. Thank you very much for being with us today.

Mr. RULE. Thank you for having me.

Chair MEYERS. All right. Mr. LaFalce. I have some other questions, I'll submit them by mail.

Mr. LAFALCE. Mr. Barba and Mr. Tavenner, you both provide live music, and at least to that extent the proposed bill would not be applicable; is that correct? What percentage of your entertainment is live music as opposed to

Mr. BARBA. A great majority.

Mr. LAFALCE. A great majority of yours is live music. So, in so far as you're personally speaking

Mr. BARBA. Except that I am also a dedicated member of my State Lodging and Restaurant Association, and I was asked by them to come and testify today, and I represent their interest.

Mr. LAFALCE. Fine. Mr. Tavenner, I know that the National Federation of Independent Business conducts frequent polls of their members. I suspect the NRA, the National Restaurant Association, does also; is that correct?

Mr. TAVENNER. Yes, sir.

Mr. LAFALCE. I wonder if you'd be willing to conduct polls of your coalition to find out how many of your establishments do have less than 3,500 gross leasable square feet, how many of them do use six or fewer speakers with no more than four speakers in one room, and how many of them do use three or fewer televisions of 55 screen size or smaller et cetera. That might be interesting data so

that we can find out amongst your membership how many would, in fact be exempt.

Mr. Epperson, I'm not sure what your problem is. You talked about the repertoire, and initially I thought it was you couldn't get a copy of the repertoire, but then, obviously, your organization has access to the Internet, CD Rom's, 800 phone numbers, et cetera. It's also my understanding that agreements have been made or offers have been made to supply you with printed copy lists for a price, which would be about $25 I'm told.

So I guess it's not your ability to access the repertoire, I guess it's the fact that there is so-called "disclaimer" on it. Is it correct that your problem is not with your ability to access it, but it's with the fact that there is a disclaimer?

Mr. EPPERSON. No. In reference to repertoire earlier was the fact that we've been talking with these licensing groups for 15 years or more. We've been led to believe that there never was a repertoire available. There's no such animal. Then 2 years ago it comes out in Congressional testimony that there's kind of been one there all along. That was what I was referring to.

Mr. LAFALCE. Just the fact that you can't access the repertoire

or

Mr. EPPERSON. No.

Mr. LAFALCE. The disclaimer?

Mr. EPPERSON. No, the disclaimer

Mr. LAFALCE. All right. What is the disclaimer? People always talk about a disclaimer, but what are you disclaiming? I mean, somebody asked me a question yesterday, how's the election going to go in November. I said, "Well, if it were held today, this is my judgment on how it looks." Now, that was a disclaimer. I didn't think there was anything wrong with it. What's the disclaimer that bothers you?

Mr. EPPERSON. If I bought a BMW and they say

Mr. LAFALCE. Let's talk about the disclaimer. What is the disclaimer on the repertoire that bothers you?

Mr. EPPERSON. The fact that if you rely on the repertoire, as I understand it, and violate the law by relying on the repertoire, then you will be sued

Mr. LAFALCE. Well, now wait a minute. Wait a minute. Can you give me any instance when someone has relied upon the repertoire and has not been able to use that reliance in-as a-it's a fairly recent addition, isn't it Marvin?

I would certainly think that if you, in fact, did rely in good faith upon a repertoire and it was within a recent origin, you'd have a good faith

Mr. EPPERSON. Will ASCAP and BMI make that commitment right now, if we rely on the repertoire, we will not be sued?

Mr. LAFALCE. To the restaurants and to the-if you're in compliance with it and if there's a reasonable period of time in which it had not elapsed, I would think so.

Mr. BERENSON. With respect to Mr. Epperson's statement, if your station has a license with BMI, now we're referring to a situation where your station is licensed; right? Certainly BMI could not sue them. Even if they were on a blanket license it wouldn't make a darn bit of difference, because they have access to everything.

If they're on a per program license, the only thing that can happen they would be charged for that particular performance. They can't get sued. They would have to pay for that performance.

Chair MEYERS. Is that a blanket religious license, or blanket license for anything in the world?

Mr. BERENSON. Basically two forms of licenses that performing rights organizations offer. A blanket license which gives access to the user everything in the repertoire, and they pay a set fee.

Then there's a per program license, which is a form of blanket license. They have access to the all of the repertoire; however, for feature use of music, and let me sum this up by saying, they have to pay-they will pay only when that feature music is performed. They don't pay for any other performances unless for future uses other than if there's an actual performance.

So, in the instance that Mr. Epperson was talking about, let's assume his station decides to perform feature music in a particular segment, and they look up in the case of BMI, and I will speak for BMI, they look up a song and it is not listed or perhaps it is listed and that songwriter went from BMI to ASCAP and we haven't been able to update it. Well, what happened is when he reported to BMI that particular song, what would happen is he would be charged. That's what will happen. No lawsuit, no threat of lawsuit. So, I don't know where this lawsuit

Mr. EPPERSON. There are severe monetary penalties for mistakes in these reports on the music that you play or do not play, or if you make mistakes on these reports which you're required to file each month, the radio station if you use a per program license. That's one problem we have with it.

If the radio station decides they are going to play absolutely no music except that which is in the public domain, such as a classical music station, absolutely no music except public domain, Beethoven and Mozart, and they make a mistake, but they rely on the repertoire to guide them. Then what happens?

Mr. LAFALCE. I didn't get my question answered. What is the disclaimer-is the disclaimer simply that this repertoire is valid as of the date of publication? That's the disclaimer?

Mr. BERENSON. Yes.

Mr. LAFALCE. Is there more to the disclaimer that you're troubled about than that, Mr. Epperson?

Mr. EPPERSON. It renders the repertoire basically as a strict point useless.

Mr. LAFALCE. That's a separate issue. The question is: What is contained within the disclaimer that bothers you, other than the fact that they say this is valid as of the date of publication. I mean, I have a number of different lists, and they're valid as of the time that input was entered into the computer. They're not valid-I mean they're not correct a day or two later. My mailing list, for example, I always get some returns, because there are changes in the addresses, people move or die. So, they're not valid as of mailing. They are valid as of the date of entry of the information.

Mr. EPPERSON. The disclaimer says, and I quote my colleague, "you cannot rely on this list as a-to be sure you haven't infringed on copyright laws."

Mr. BERENSON. What else does it say? Does it say you have the ability to call an 800 number and check? Does it say that there are other ways to check a current status of the data listed? Of course it does. It's certainly available as I testified to before.

Mr. LAFALCE. Mr. Alger, you have a

Mr. ALGER. Twenty seven of Mr. Epperson's stations are listedare licensed on a per program basis. ASCAP sent him a software system to help him do his per program licensing in October, and never heard back from him. So, I think ASCAP is making an honest effort to cooperate in any way it can.

Mr. LAFALCE. One last question. There was concern that the rates were not available to the users. If the rates are part of the contract, aren't they of necessity given either to the individual restaurateurs, or at the very least, to the restaurant associations? Where's the lack of communication come in? It's got to be part of the contract, and if the contract's with the restaurant association, is it then the responsibility of the State restaurant association or what have you to advise its member organizations; or if it's a franchise operation and the contract is with the franchisor, would it not then be incumbent on the franchisor to advise the franchisee?

Chair MEYERS. Those who want to comment would comment quickly. Mr. Zeliff has a round two, and since Mr. LaFalce got one, Mr. Zeliff deserves one.

So let's start with Mr. Tavenner, and please answer quickly because we have a vote on.

Mr. TAVENNER. Congressman, the rates are known on the rating sheet that's correct, sometimes in the market place and we want the ability to arbitrate and negotiate

Mr. LAFALCE. You said those rates were not available to you during the course of your

Mr. TAVENNER. I said that I didn't receive this in my annual mailing, which I don't. That's a true statement. I don't receiveMr. LAFALCE. But if there's a change you would have to get it, would you not?

Mr. TAVENNER. That's correct.

Mr. LAFALCE. So

Mr. TAVENNER. Or in the middle of the year if I had to make a change, that would be another example of what we're talking about.

Mr. LAFALCE. We don't have any changes, we're talking about the change in rates.

Mr. TAVENNER. Sir, if during the middle of the year I cut my music back, I want to adjust that rate, I should have that ability to do that in mid-year. I mean things change in the marketplace, that's all we're saying.

Mr. BERENSON. If Mr. Tavenner's music policy changed, when he submits his annual report there would be an adjustment. I mean, you cannot-I mean, obviously as a business person you can't say, well, I'm changing 1 month, changing it the next month, changing it the next month.

At the end of year there's basically a tabulation rate to adjust it. Mr. TAVENNER. It doesn't happen that often, that's true, but we'd still like local arbitration to be a part of this.

Mr. LAFALCE. They've agreed to local arbitration of all facts.

Mr. TAVENNER. I haven't seen that in the bill

Mr. LAFALCE. They're not in the bill, it's in the agreement.
Mr. TAVENNER. Right.

Chair MEYERS. Mr. Zeliff.

Mr. ZELIFF. Thank you. Let me ask you, Mr. Berenson, just two quick questions. Do all BMI and ASCAP members receive compensation at one time or another?

Mr. BERENSON. I would have to say, no. There are some-I can't speak for ASCAP, but I will speak for BMI, that some do not because their works are not performed.

Mr. ZELIFF. But there is a fair process, there is a system?

Mr. ALGER. At ASCAP. Whoever's music is used is compensated. Mr. ZELIFF. Can a licensee-a restaurateur, pay one of the licensing societies or do they end up usually paying more than one?

Mr. BERENSON. If the restaurateur wanted to go to the trouble to restrict themselves as to the music from one particular society, they could do so.

Mr. ZELIFF. I think what I heard Mr. Barba, and I certainly associate my comments with his, as a small business in Jackson, New Hampshire, what he's saying and what I'm trying to say, what we're trying to come up with here is what is the fair process and how can we solve this? What we're trying to figure out is what, as restaurateurs and small business owners, we need to know. What are the fees going to be and what the policy will be. If there's a serious intent here for all sides to come together. Let me just ask you in the bill, H.R. 789, is it possible to negotiate? Under H.R. 789, what percentage of your total revenues will be lost as a result of H.R. 789 passing? In other words an incidental piece. How much revenue would you lose, is it a small amount?

Mr. BERENSON. Congressman, It would be a guess on my part. I mean

Mr. ZELIFF. What would your guess be?

Mr. BERENSON. My guess would be this might have an impact in excess of 20 percent of the revenues

Mr. ZELIFF. You think it would be 20 percent? In your proposal that you tried to work out that said-you said that 70 percent of the establishments would be exempt, what do you think your lost revenue would be there?

Mr. ALGER. It would be

Mr. ZELIFF. It would be close to 20 percent?

Mr. ALGER. I think it would be sizable.

Mr. ZELIFF. More than 20 percent?

Mr. ALGER. You mean would we lose the 20 percent, with the compromise with the NLBA?

Mr. ZELIFF. I think what we're trying to say is if we eliminated all the incidental background music, you said that you'd lose about 20 percent revenue.

Mr. ALGER. Yes.

Mr. ZELIFF. I'm not going to hold you to be exact. But the second question would be is if it's 20 percent, how much would it be eliminating all incidental background music. On the proposal that you have you said getting all small properties out of the process 70 percent of the stations would be exempt, how much would that cost? Mr. BERENSON. Again