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The performing rights organizations -- there are three in the U.S. (BMI, ASCAP, and SESAC) were formed for the purpose of licensing those commercial uses, on behalf of their writers and composers, and collecting license fees on their behalf for the use of that music. While this is not an exact science, our organization works to track, as closely as possible, the various venues of public performances in order to devise a fair system of licenses and subsequent payments of royalties to those whose works have been performed.

It would be nearly impossible for the songwriter to identify everyone who is using music in a commercial setting, and to identify each individual composition being performed in every setting. The administrative costs for both the music user and the songwriter would drive the cost of using music sky high. Hence, the performing rights organizations offer a blanket license. A flat fee paid by the music user entitles them to use any of our works (there are over three million (3,000,000] in our repertoire alone), over radio, television, CD player, or on stage, and know that they are not infringing on the rights of any of our affiliates (BMI's affiliates include over 120,000 writers and composers). The same type of licensing, I believe, holds true for ASCAP and SESAC.

It is not a perfect system, but it has worked well for the songwriter and the music user, both in the United States and worldwide. And it is a reasonable and fair method to ensure writers and composers that their works are being honored. Under the BMI consent decree, we are required to offer the same kind of license to all similarly situated users. That is, a restaurant in California which has the same music policy as a restaurant in Maine will pay the same license fee rate. The same is true for other classes of users.

During a good part of last year, under the aegis of the House Judiciary Committee, we, along with ASCAP and SESAC, met with members of interest groups that formed a coalition supporting the legislation introduced by Mr. Sensenbrenner - H.R. 789. This bill would, in effect,

exempt commercial enterprises from paying for the use of music which enhances their business, if that music is performed via radio or television. Enactment of H.R. 789 in its present form would deny songwriters and composers a large portion of their livelihood, while allowing restaurateurs the use of this property for free. Why should a songwriter be required to donate his property to other commercial enterprises? Doesn't it seem only honest to pay for the use of this musical product? Would Congress legislate that parsley growers be required to give away to restaurants their product because parsley is only incidental to the business? The answer, obviously, is “no."

Now let me return to the agreement we reached with the National Licensed Beverage Association (NLBA) that I mentioned at the outset of my remarks. Our current agreement with the NLBA includes the following exemptions for eating and drinking establishments:

Any establishment smaller than 3500 gross leasable square

feet would be exempt;

Any establishment using 6 or fewer speakers, with no more
than 4 speakers in one room, would also be exempt;

Any commercial establishment using 3 or fewer televisions of 55* screen size or smaller (with no more than 2 TVS in one room) would also be

exempt.

The Congressional Research Service conducted a study on the figures in the compromise and concluded, on the basis of size alone that about 70% of the eating and drinking establishments would be exempt under this proposal. If you add in the equipment exemptions, obviously even more establishments would be exempt.

We feel we gave a great deal in those negotiations -- expanding the current exemption size by 300%. To use an illustration that Committee Members or certainly your staff will understand, the venerable and fun Hill restaurant endearingly known as the Tune Inn would be exempt under this compromise. We reached this agreement in an effort to answer the pleas from the commercial users -- that the "small business owners needed a break. We feel the compromise reached does indeed address the needs of the small businesses.

The Committee should know that along these same lines BMI, ASCAP and SESAC attempted to negotiate a compromise with the National Restaurant Association and some other members of their coalition. Our overtures to increase the size of a commercial establishment qualifying for an exemption from licensing requirements, increase the size and types of equipment, and other offers, were unacceptable to the Restaurant Association. What was even more frustrating was the NRA feedback that we received was almost a "our way or the highway" style reply. Needless to say, we have still been unable to reach agreement with that powerful trade association.

We truly hope the Committee will not lose sight of the fact that a songwriter's creative work -- their intellectual property -- is private property and deserves the same protection as any other sort of property. Additionally, this copyright protection is not just domestic in nature. We should keep in mind our country's constant efforts to insist on intellectual property protection from our trading partners. If we begin to dismantle copyright protection in this country for this use of music, not only will we trigger reciprocal treatment from some of our trading partners, we risk violating international treaties to which the U.S. is a party. Additionally, we risk jeopardizing other sorts of intellectual property -- books, films, and computer software to name a few -- under a weakened copyright system.

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We feel that our compromise with the NLBA is just that: a compromise. I also understand that hundreds of owners and operators of small businesses from around the country have communicated to the Congress their support for this compromise -- ranging from billiard halls to bowling alleys and clubs. These are not typical NLBA members, but rather represent a cross-section of other music users who support this compromise.

In terms of the religious broadcaster issue, we ask: why should the songwriter be denied payment for use of his property when the broadcaster either accepts advertising or sells the air time to a ministry? The broadcaster is a profit-making organization. Should creators of religious music be penalized because of the fact that they are writing religious music? We don't think so.

I hope this has helped shed some light on these issues. Thank you. I welcome any questions.

NRB Advocating Fairness in

Music Licensing for
Specialty and Talk Radio

Edward G. Atsinger III, Chairman
MUSIC Russell R. Hauth, Executive Director
LICENSE
COMMITTEE

A Statement By

Stuart Epperson

On Behalf of
National Religious Broadcasters Music License Committee

At a Hearing of the
Small Business Committee
U.S. House of Representatives

May 8, 1996 at 10:00 a.m.

Madam Chairwoman and members of the Committee, on behalf of the National Religious Broadcasters Music License Committee, and over 700 radio stations we represent, I want to express our appreciation for the time you are devoting this morning to music licensing issues. As a radio station owner, and as First Vice Chairman of National Religious Broadcasters, I can personally attest to the abuses of monopoly power our members suffer at the hands of the music licensing organizations.

Our opponents at this table, ASCAP and BMI, have argued that our differences are just disputes between private parties that should be settled by the courts -- not by Congress. Nothing could be further from the truth.

The problem we face is fairly simple: ASCAP and BMI are government sanctioned monopolies, and any time the government confers that kind of power on private organizations, we believe Congress has a duty to regulate. Unfortunately, a previous lack of oversight by the Justice Department and an absence of policy direction from Congress has allowed these organizations to continue abusing music users in the broadcast industry. And it has led to court cases lasting 10 years or more over the interpretation of consent decrees written 50 years ago.

The answer is not more litigation. ASCAP alone is involved in over 500 pending cases. This is a system that is clearly broken, and Congress needs to fix

it.

H.R. 789, which was introduced by Rep. Jim Sensenbrenner and is now cosponsored by 170 of your colleagues from both sides of the aisle, addresses two problems that our members believe are critical:

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