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for the Senate subcommittee, and it seems to us, after reviewing this as carefully as we can, that the provisions that are contained on page 4 of my draft bill, which deals with the distribution and the amounts required by the different broadcast stations, if a station's gross revenues are between $25,000 and $100,000

Mr. DRINAN. I am familiar with that, and why are they so upset about the whole thing?

Mr. BIDDLE. We cannot judge their concerns, but our feeling is that this is a very small amount. One thing that I might contribute here, you may have heard already, is that those stations whose gross receipts are between $25,000 and $200,000 are, according to the information I have, 65 percent of the stations that are involved. So it seems to us a modest sum.

Mr. DRINAN. It may be they have nothing else at the moment to be concerned about. But the international dimensions of this are very intriguing and, in the paper that is to be given after your good testimony by Ms. Louise Wiener of the Commerce Department, it is very intriguing in that it tells that American performers and producers right now receive foreign royalties to the tune of $13 million per year, and that 50 foreign nations have established a right to royalties for performers and record producers.

If we did, in fact, enact this legislation and if then we would be able to join the Rome Convention, would we be giving and receiving rather substantial sums in performance royalties to foreign people?

Mr. BIDDLE. To foreign people? I don't have the answer to that, Congressman. I know that is a factor here. Maybe Mr. Wade has a comment on that.

Mr. WADE. I don't believe I have the answer either. But it would seem to me that the conclusion or the answer to that question would be a function of the marketplace, so to speak. There is a competitive factor here between cultural institutions and between nations, if you will.

What the net result would be as to how many foreign musicians as opposed to Americans

Mr. DRINAN. Let me just quote from the subsequent testimony because this shows the depths of the problem and how American artists are being affected.

It is estimated that American performers and record producers would receive a royalty income from foreign sources equal to if not greater than that which they would receive in royalties from American sources.

So the estimate I have is for openers they would receive $13 million from all of the radio and television broadcasters of America and they would receive that or more if, in fact, we joined these 50 nations, and implemented the right that artists in America have to a royalty when their performance is audited overseas.

Mr. WADE. I would say that sounds reasonable, because when you look at the situation in terms of cultural institutions, American symphony orchestras, and American dance groups are in great demand. Mr. DRINAN. The real intriguing question in the bottom of my mind is, Will you get 5 percent of the foreign royalties?

Mr. WADE. We wouldn't.

Mr. DRINAN. Why not?

Mr. WADE. Sorry, I misunderstood you.

Mr. DRINAN. The endowment would get 5 percent from the Recording Industry Association, but who will receive the foreign royalties? Wouldn't the Recording Industry Association, and wouldn't they give you the 5 percent?

Mr. WADE. It would fit in with it, yes. We had not really reflected on that, but since you mention it

Mr. DRINAN. Would you like to hire me as your assistant general counsel ?

Mr. BIDDLE. Any day, Congresssman.

Mr. WADE. Any time.

Mr. DRINAN. You have added a dimension, as I say, and I have found it very, very helpful.

Mr. WADE. I just didn't want to sound too greedy.

Mr. DRINAN. Thank you very much.

Mr. KASTENMEIER. The committee is indebted to you both, Mr. Wade and certainly you, Mr. Biddle, as Chairman of the National Endowment for the Arts for coming here today and helping edify us on this piece of legislation that is pending in Congress.

We appreciate your appearance.

Mr. BIDDLE. Thank you, Mr. Chairman, and I do greatly appreciate the privilege and honor to be here. I think this is an immensely important subect, and I am delighted you invited us.

Thank you.

Mr. WADE. Thank you.

[The prepared statement of Mr. Biddle follows:]

STATEMENT OF LIVINGSTON L. BIDDLE, JR., CHAIRMAN, NATIONAL

ENDOWMENT FOR THE ARTS

It is a pleasure to be here this morning to provide you with the views of the National Endowment for the Arts on H.R. 6063, a bill to amend the General Revision of Copyright Law by establishing performance royalty rights in sound recordings for performing artists and record producers.

Mr. Chairman, the National Foundation on the Arts and the Humanities Act of 1965, as amended, the law creating the National Endowment for the Arts, contains an eloquent Declaration of Purpose. In part, that Declaration states:

"... it is necessary and appropriate for the Federal Government to help create and sustain not only a climate of encouraging freedom of thought, imagination, and inquiry but also the material conditions facilitating the release of this creative talent," (emphasis added)

We believe the proposed legislation, if enacted, would go a long way toward helping to create adequate material conditions for performing artists and toward correcting the present inequitable situation with regard to the commercial exploitation of the creative work of performing artists and record producers. I am, of course, speaking of the commercial use of the talent and skills of performing artists and record companies whose creative efforts bring to life and preserve in sound recordings a song, a sonata or a symphony. The primary users of these recordings, i.e., radio and television broadcasters, jukebox owners, background music companies, et al., as we all know, freely utilize these efforts to their commercial benefit. Indeed, it can safely be said that without the performance creations of musicians, performing artists, and record makers, the broadcast and jukebox industries would not exist as we know them today.

The proposed legislation has been the subject of a great deal of discussion over the past few years. The Congress has been fully informed as to the merits of the proopsals, and has, as well, heard some voices in opposition. As you know, the National Endowment has joined those who support this copyright revision. Rather than go through all of the numerous arguments that have been set forth

in support of this bill, and with which we are in agreement, I would prefer to enumerate here some of those that seem most persuasive to the National Endowment for the Arts.

(1) The Copyright Office of the Library of Congress supports the principle of copyright protection for the public performance of sound recordings, finding that sound recordings are a proper subject for copyright protection under the Constitution and laws of the United States. The Register of Copyrights has recommended in her report to the Congress of January 3, 1978, that legislation be enacted to create public performance rights with respect to sound recordings. A draft bill was included in that report which was essentially a revision of the Danielson bill (H.R. 6063) presently under discussion at these hearings.

(2) Composers, song writers, and publishers, all of whom similarly enjoy copyright protection under our laws, receive performance royalties.

(3) Many nations around the world now recognize by law performance rights for performers or record makers, or both, including the United Kingdom, West Germany, Japan, Italy, Sweden, Mexico, Spain, and Israel, to name but a few. (4) An International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations was adopted in 1961. This convention, known as the Rome Convention, stated in Article 12:

"If a phonogram published for commercial purposes, or a reproduction of such phonogram is used directly for broadcasting or for any communication to the public, a single equitable remuneration shall be paid by the user to the performers, or to the producers of the phonogram, or to both."

So far the convention has been ratified by fifteen countries, including the United Kingdom, West Germany, Austria, Denmark, and Sweden. We agree with the Register of Copyrights that this international instrument was years ahead of its time and that it has much to offer to the United States and this country's creative citizens. Enactment of the proposed legislation would bring copyright protection in this country into conformity with that of the convention and thus the laws of those nations which have thus far ratified the convention.

(5) Independent studies have shown that no undue hardship would be imposed on those industries affected, since the relatively small (in terms of advertising and user revenue) additional costs of performance royalties probably would be passed on to the ultimate economic beneficiaries of the commercial use of sound recordings, i.e., advertisers, jukebox users, background music users, et al. Further, it is our understanding that such studies have shown that increased costs to the advertisers and other commercial users of sound recordings would be minimal. Numerous other observations have been set forth concerning the benefits to broadcasters stemming from the uncompensated use of sound recordings. We are in agreement with such observations.

It is true that details of implementation have yet to be completely worked out by the various groups involved in the support of this legislation. While most such details are not a proper subject of concern for the National Endowment for the Arts, I would like to make one or two comments in this regard.

First, it is my understanding that the record industry and the performing artists' unions are in agreement with the principle that all performers on a given record would share equally in the distribution of royalties derived therefrom. That is, there would be an equal distribution of fees between a solo performer and his or her supporting musicians. We heartily endorse that principle. Second, Mr. Chairman, we would favor an implementation approach which would insure substantial benefits to performing artists involved in the creation of an artistic works falling outside the commercially successfully category, i.e., the category of popular "hits". In other words, the National Endowment for the Arts would favor a distribution formula weighted in favor of symphonic, folk, operatic, or other musicians involved in the creation of artistic works which are worthy in themselves, but which by their nature do not have, at this time at least, the ability to generate mass sales. This is particularly important in view of the severe economic strain presently being felt by symphony orchestras, opera companies, and non-profit arts groups across the country. I might add that there has been some concern recently with respect to a decline in recordings of symphonic. operatic and folk music. We believe that this bill could serve to encourage more activity in this direction. We believe that the opportunity to receive performance royalties will encourage musicians through their representative associations to seek ways in which there can be more recording in these art forms.

In this connection, there is one important difference between the Copyright Office's draft bill and H.R. 6063 concerning the distribution of royalties. The

Danielson bill provides for a mandatory 50/50 split of royalty proceeds between performers and "copyright owners" (record companies). The Register of Copyright has pointed out that the bill does not come to grips with the status of performers who are employees for hire. The Register's draft bill gives at least 50 percent of the royalties to performers on a per capita basis, regardless of their employment status, but allows performers to negotiate for more (not less) than a 50 percent share. We concur with that recommendation.

Also, where other differences may exist between the two bills, the National Endowment would associate itself with the views and recommendations of the Copyright Office.

Finally, Mr. Chairman, we are most pleased that members of the Recording Industry Association have agreed to a provision in this legislation which would allocate at least 5% of any performance royalty income received by them to the National Endowment for the Arts to be used for purposes consistent with the Endowment's enabling legislation. The industry's attitude in this regard is most encouraging, as it demonstrates a beneficial kind of partnership between private industry and the Endowment's work being used for example, in this case, for the support of classical, folk, poetry, narrative, or other noncommercial recording projects, or perhaps for providing advance training opportunities for musicians wishing to further their careers.

In conclusion, Mr. Chairman, we heartily endorse the view that artists, musicians, and record companies who contribute their creative efforts to the production of copyrighted sound recordings should reasonably share in the income enjoyed by radio stations and other commercial organizations who use the recordings for profit. This legislation would be an important step toward achieving one of the Endowment's major goals: to encourage and sustain development of creative American talent by helping to insure that American artists will receive a just financial return for their creative work.

Mr. KASTEN MEIER. Next the Chair would like to call Ms. Louise Wiener, Special Assistant to the Secretary of Commerce for Cultural Resources.

We are very pleased to have you here today.

TESTIMONY OF LOUISE WIENER, SPECIAL ASSISTANT TO THE SECRETARY OF COMMERCE FOR CULTURAL RESOURCES

MS. WIENER. Thank you, sir. It is a pleasure to be here.

Mr. Chairman and members of the subcommittee, I am Louise W. Wiener, Special Assistant to the Secretary of Commerce for Cultural Resources.

I appreciate this opportunity to testify before you for the Secretary on H.R. 6063, the Performance Rights Amendment of 1977.

As you are well aware, the Register of Copyrights, in response to her congressional mandate in section 114 (d) of the General Revision of Copyright Law, Public Law No. 94-553, has prepared and released an exhaustive report on public performance rights with respect to sound recordings.

I, as a spokesperson for the Department of Commerce, applaud the Register's effort and concur with the position and legislative recommendations set forth in her report. In an addendum to that report, the Register has proposed a draft bill embodying those recommendations, entitled:

To amend the copyright law, title 17 of the United States Code, to create public performance rights with respect to sound recordings, and for other purposes. That draft bill, to be cited as "The Sound Recording Performance Rights Amendment of 1978," is essentially a revision of H.R. 6063, fondly known as the Danielson bill.

Briefly, the Register's draft bill would provide performance rights, subject to compulsory licensing, in copyrighted sound recordings, and would extend the benefits of those rights both to performers, including employees for hire, and record producers as authors of sound recordings.

The Department supports the Register's draft bill and urges its enactment.

I would like to offer some general comments as to why we feel the copyright law should be amended to provide public performance rights with respect to sound recordings and as to why we support the Register's draft bill:

1. American music composers and publishers, based on exclusive rights under U.S. copyright law, receive compensation for the public performance of their works in the United States.

Music composers and publishers from foreign nations which are signatories of the Universal Copyright Convention also receive compensation when their works are performed in the United States. Likewise, since this country is a signatory to that convention, American music composers and publishers receive royalties from signatory foreign countries for the performance of their works in those countries. American performers and record producers, however, are denied this form of compensation both here and abroad.

2. More than 50 foreign nations have established a right to royalties for their performers and record producers with respect to the public performance of sound recordings to which those performers and producers have contributed.

Under the International Convention for the Protection of Performers. Producers of Phonograms, and Broadcasting Organizations, referred to as the Rome Convention of 1961, a scheme of reciprocity exists amongst signatory foreign nations. Since our laws do not provide performance rights in this country for any performer or record producer regardless of nationality and since we have not signed the convention, American performers and record producers are generally denied compensation abroad.

As a matter of public policy, American and reciprocating foreign performers and record producers should be granted performance royalty rights in the United States. Such a grant would be equitable considering that composers and publishers already have such a right. American industry and labor should not be denied this form of income either on a national or an international basis.

It is estimated that American performers and record producers would receive a royalty income from foreign sources equal to if not greater than that which they would receive in royalties from American sources. Presently, they receive little such income from foreign sources because, as stated earlier, we do not grant performance royalty rights to foreign performers and producers, let alone to our own.

It is estimated that if we were to create a right to royalties for our own performers and producers and if we were to make that right reciprocal by signing the Rome Convention, foreign royalties to American performers and producers would be of the same magnitude as foreign royalties to American composers and publishers. In 1976 that amounted to over $13 million through ASCAP alone.

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