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PERFORMANCE RIGHTS IN SOUND RECORDINGS

MAY 24, 1978

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON COURTS, CIVIL LIBERTIES

AND THE ADMINISTRATION OF JUSTICE

OF THE COMMITTEE ON THE JUDICIARY,

Washington, D.C.

The subcommittee met, pursuant to notice, at 10:15 a.m., in room 2226, Rayburn House Office Building, Hon. Robert W. Kastenmeier [chairman of the subcommittee] presiding.

Present: Representatives Kastenmeier, Danielson, Drinan, Santini, Railsback, and Butler.

Also present: Bruce A. Lehman, counsel, and Thomas E. Mooney, associate counsel.

Mr. KASTEN MEIER. The subcommittee will be in order.

We will have other members of the committee here shortly.

This morning, inasmuch as the House is in session on an important bill, the Department of Defense authorization bill, we may expect some interruptions. But we will proceed promptly this morning. I don't anticipate this need be a long, drawn-out session.

This morning the subcommittee reconvenes for its final 2 days of hearings on H.R. 6063, introduced by our colleague, Mr. Danielson, legislation which would create a performance right in sound recordings. On March 29 and 30 the subcommittee conducted hearings in Beverly Hills, Calif., on the same issue. Those hearings, held in the geographic heart of our Nation's entertainment industry, provided an opportunity to hear from affected businesses and interest groups.

We received extensive testimony from representatives of broadcasting organizations performers' unions, the recording industry and public interest groups. In addition, we had the opportunity to visit à recording studio to see firsthand how a sound recording is made.

Today and tomorrow we will conclude our hearings with testimony from representatives of the five Government agencies with an interest in this issue: The Copyright Office, the Department of Justice, the Department of Commerce, the Department of Labor, and the National Endowment for the Arts.

Our first witness this morning is a longtime friend of the subcommittee, Miss Barbara Ringer, the Register of Copyrights.

She is accompanied by five members of her staff who were responsible for preparing the 1,200 page report on performance rights (111)

which, pursuant to section 114 of the 1976 Copyright Revision Act, was submitted to the Congress earlier this year. That report is now being printed by the Government Printing Office as a committee document and will be available for distribution within the next few weeks.

On behalf of the entire subcommittee it is a great pleasure to welcome back to the committee Miss Barbara Ringer, Register of Copyrights.

TESTIMONY OF BARBARA RINGER, U.S. REGISTER OF COPYRIGHTS
AND ASSISTANT LIBRARIAN OF CONGRESS FOR COPYRIGHT
SERVICES, ACCOMPANIED BY; JON A. BAUMGARTEN, GENERAL
COUNSEL, COPYRIGHT OFFICE; HARRIET OLER, ATTORNEY,
COPYRIGHT OFFICE; CHARLOTTE BOSTICK, ATTORNEY, COPY-
RIGHT OFFICE; RICHARD J. KATZ, ATTORNEY, COPYRIGHT
OFFICE; STEPHEN M. WERNER, ASSOCIATE, RUTTENBERG &
ASSOCIATES

MS. RINGER. Thank you very much, Mr. Chairman.
It's a pleasure for me to be here.

I am Barbara Ringer, Register of Copyrights, and since I last appeared before your subcommittee I have acquired another title. I am now Assistant Librarian of Congress for Copyright Services as well as being Register of Copyright.

[Ms. Ringer's statement follows:]

PREPARED STatement of BARBARA RINGER, REGISTER OF COPYRIGHTS AND ASSISTANT LIBRARIAN OF CONGRESS FOR COPYRIGHT SERVICES, ON PERFORMANCE RIGHTS IN SOUND RECORDINGS

Mr. Chairman, I am Barbara Ringer, Register of Copyrights and Assistant Librarian of Congress for Copyright Services. My testimony today is concerned with the issue of performance rights in sound recordings.

As you know, the Copyright Office has submitted its report on this issue, as required by § 114(d) of the 1976 Copyright Act. The purpose of this statement is to present to your Subcommittee, as briefly and succinctly as possible, a summary of that report's basic conclusions.

On the fundamental issue of public policy, the Copyright Office fully supports the principle of copyright protection for the public performance of sound recordings. We believe that arguments to the contrary can no longer be justified in the face of extensive commercial use of recordings, with resulting profits to users and harm to creators.

In my opinion there can no longer be any remaining doubt concerning the constitutional status of sound recordings as the "writings of an author." This principle was legislatively confirmed with the passage of the 1971 Sound Recording Amendment. It was upheld by the Supreme Court, and was reaffirmed by Congress in passing the 1976 Copyright Act. It is unreasonable to suggest that a work can be the "writing of an author" for some purposes, such as for protection against unauthorized duplication, and not for others, such as unauthorized public performance. To assert this argument simply confuses discretionary questions of statutory policy with the permissible scope of constitutional authority.

The constitutionality of copyright legislation was never based upon an affirmative showing of "need" on the part of the intended beneficiaries. By the same token. the adequacy of present compensation to the intended beneficiaries is irrelevant to the authority of Congress to "promote the progress of science and the useful arts." While these issues may be important to Congress in evaluating the desirability of granting certain rights or withholding others, they bear no significance to the Constitutional ability of Congress to act.

Performance rights in sound recordings would have no effect upon the First

Amendment rights of freedom of the press and freedom of speech of broadcasters and other users. The commercial use of copyrighted works, beyond the limits of "fair use," is ordinarily treated by the courts as copyright infringement, even where the users are in the news media. This is especially so where the use is primarily for entertainment purposes, or where access to the material is available through a compulsory license.

Economic arguments against a sound recording performance right have proved to be the strongest and most fervently asserted. Central among these is the claim, made chiefly by broadcasters, that the benefits to performers and record producers from the airplay of recordings-such as increased attendance at live performances, increased record sales, and increased popularity-are adequate compensation for the use of recordings. Exposure of recordings through airplay undeniably carries with it the potential for significant economic benefit. In most cases, however, the benefits remain just that-potential. Among all recordings that compete for airplay in the first instance, and also among those that actually receive it, the realization of these benefits appears to be sporadic and largely unpredictable. Where predictability does exist, it is usually closely bound up with the degree of public acceptance already achieved by a given performer. It is also argued, again by broadcasters, that the payment of performance royalties would require the curtailment of high-cost, low-return programming, such as public service productions and that, in some instances, marginal stations would be forced out of business. No concrete evidence has been offered to support these contentions, and the independent economic study commissioned by the Copyright Office indicates that, to the contrary, payment of performance royalties is unlikely to cause any serious financial upheaval within the broadcasting industry.

Rather than representing an economic windfall for performers, performance royalties will provide some measure of remuneration to recording artists based upon the use of their work. The economic study demonstrates that only a small percentage of performers who make sound recordings receive royalties, that these royalties are based upon record sales, and that they do not represent a significant source of income. It is important to emphasize here that the proposed legislation is intended to benefit all performers on a given sound recording equally, and that principal, or "star" artists will receive the same payment received by any other individual contributing to the recording. According to amounts projected from the fee schedule of the Danielson bill, record producers are also not expected to receive excessive income from performance royalties. With the preemption of state common law under the 1976 Copyright Act, protection of performance rights in sound recordings must come through federal legislation. The Copyright statute provides the most obvious and effective vehicle for this purpose. A system of compulsory licensing, with rates initially set by Congress and subject to periodic review by the Copyright Royalty Tribunal, appears to be the most desirable method of establishing these rights. This alternative is acceptable to all parties expressing support of the principle of performance rights, and would ensure continued access to sound recordings.

Both performers and record producers ordinarily contribute elements of copyrightable authorship to sound recordings. Thus, both should share in royalties generated from the public performance of these works. While the Danielson bill provides for an equal split of funds between these two groups, the draft proposal submitted by the Copyright Office would secure a minimum of fifty percent to performers and leave the remainder subject to negotiation between the parties. Additional matters for legislative consideration include the "employee for hire" position of many performers who create sound recordings, as well as the status of arrangers.

A final comment should be made concerning the International Convention for the Protection of Performers, Producers of Phonograms, and Broadcasting Organizations (known as the Rome Convention). Although the United States contributed much to the drafting of this document, originally adopted in 1961, it has never acceded to it. The Convention continues to gain acceptance throughout the world, and enactment of performance rights legislation of the kind proposed here should open the way for this country's participation.

ADDENDA TO REPORT

PERFORMANCE RIGHTS IN SOUND RECORDINGS

(The following excerpt is taken from Volume 42, No. 59 of the Federal Register for Monday, March 27, 1978 (pp. 12763-8).)

[1410-03]

LIBRARY OF CONGRESS

COPYRIGHT OFFICE

[Docket No. S77-6-D]

PERFORMANCE RIGHTS IN SOUND RECORDINGS

ADDENDA TO REPORT

On Tuesday, March 21, 1978, the FEDERAL REGISTER published a notice that addenda to the January 3, 1978 Report of the Register of Copyrights were transmitted to Congress and are available for public inspection (43 FR 11773). The following is the Register's Statement referred to in the previous notice at 43 FR 11774, preceded by the Statement's letter of transmittal. (17 U.S.C. 114.)

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On January 3, 1978, the Copyright Office submitted to Congress a Report on Performance Rights in Sound Recordings, pursuant to the mandate of section 114(d) of the 1976 Copyright Act. Pub. L. 94–553. At that time, I indicated the intention to submit four additional documents as addenda to the original Report. This is to advise you that these documents have been submitted. They include: (1) A Statement by the Register of Copyrights summarizing the position of the Copyright Office on the relevant issues, along with legislative recommendations; (2) an independently prepared historical analysis of labor union involvement in performance rights in sound recordings; (3) reply comments of the independent economic consultant who prepared the economic study included in the original Report of January 3, 1978, and submitted in response to comments on that study: and (4) a bibliography of works dealing with performance rights in sound recordings.

With the submission to Congress of the addenda described above, the Copyright Office believes it has fulfilled its responsibilities under section 114(d). The Copyright Office is prepared to furnish whatever further assistance the Congress deems necessary in this matter.

Sincerely yours,

BARBARA RINGER,

Register of Copyrights.

DANIEL J. BOORSTIN,
Librarian of Congress.

ADDENDUM TO THE REPORT OF THE REGISTER OF COPYRIGHTS ON PERFORMANCE RIGHTS IN SOUND RECORDINGS

Statement of the Register of Copyrights containing a Summary of Conclusions and Specific Legislative Recommendations.

INTRODUCTION

The Congressional mandate to the Register of Copyrights contained in section 114(d) of the new copyright statute reads as follows:

"On January 3, 1978, the Register of Copyrights, after consulting with representatives of owners of copyrighted materials, representatives of the broadcast

ing, recording, motion picture, entertainment industries, and art organizations, representatives of organized labor and performers of copyrighted materials, shall submit to the Congress a report setting forth recommendations as to whether this section should be amended to provide for performers and copyright owners of copyrighted material any performance rights in such material. The report should describe the status of such rights in foreign countries, the views of major interested parties, and specific legislative or other recommendations, if any."

On January 3, 1978, I submitted to Congress our basic documentary report, consisting of some 2,600 pages, including appendices. The basic report includes analyses of the constitutional and legal issues presented by proposals for performance rights in sound recordings, the legislative history of previous proposals to create these rights under Federal Copyright law, and testimony and written comments representing current views on the subject in this country. The basic report seeks to review and analyze foreign systems for the protection of performance rights in sound recordings, and the existing structure for international protection in this field, including the Rome Convention for the Protection of Performers. Producers of Phonograms, and Broadcasting Organizations. The basic report also includes an "economic impact analysis" of the proposals for performance royalty legislation, prepared by an independent economic consultant under contract with the Copyright Office.

After reviewing all of the material in the basic report, together with additional supplementary material,' I have prepared this statement in an effort to summarize the conclusions I have drawn from our research and analysis and to present specific recommendations for legislation. With the presentation of this statement, the Copyright Office believes that it has discharged all of its responsibilities under section 114(d).

It was understandable that enactment of section 114(d) was greeted with raised eyebrows and cynical smiles. Some of those who favored performance rights in sound recordings viewed it as a temporizing move, aimed at ducking the issue and delaying Congress' obligation to come to grips with the problem. Others, opponents of the principle of royalties for performance of sound recordings expressed derision at the idea of entrusting a full-scale study of the problem to an official who had, in testimony before both Houses of Congress, expressed a personal commitment to that principle. The Register's Report could either be looked on as a time-consuming nuisance that had to be gotten out of the way before Congress could be induced to look at the problem again, or as something that could be dismissed as worthless because the views of the official responsible for it were already fixed and her conclusions were predictable.

Neither the idea nor the drafting of section 114(d) originated with anyone in the Copyright Office. When approached with the proposed compromise that subsection (d) reflects, we accepted the responsibility and the short deadline imposed by the new subsection with two thoughts in mind:

First, we agreed with those who felt that any full-scale effort to tie enactment of performance royalty legislation directly to the bill for general revision of the copyright law would seriously impair the chances for enactment of omnibus revision. Keeping the subject of performance royalty alive but splitting it off for later Congressional consideration reduced the twin dangers of lack of time to complete work on the bill for general revision, and concerted opposition to the bill as a whole.

Second, we also agreed that, with a problem as important and hotly contested as this one, Congress should have a fuller record and more thorough research and analysis on which to base its consideration of proposed legislation. Although the deadline for the report (January 3, 1978) coincided with the date on which the Copyright Office was required to implement the whole new copyright statute, we felt that it would be possible for us to complete both jobs on time.

As I viewed the mandate in section 114(d), the important thing was to provide Congress with a body of reliable information that would help it to legislateintelligently and effectively on the subject of performance rights in sound recordings. Regarded in this way, the basic documentary report, together with the other

1 Three further addenda are being submitted to Congress currently with this statement: (1) a report, prepared by an independent legal consultant, of the history of labor union involvement with the issue of performance royalties over the past thirty years: (2) a supplementary report by the independent economic consultant; and (3) a bibliography on performance rights in sound recordings.

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