a law giving me more?" The record company profits are so huge that it seems to me what the performers need is a stronger union. It seems to me, basically, a free marketplace problem. Mr. BAYLISS. The gentleman that preceded us said basically the same thing, and we would concur with that. If there is, in fact, an inequity in the system, it seems that a difficulty lies between the negotiated area between the performer, the artist, and the recording company. Mr. RAILSBACK. That isn't exactly what he said. I think what he said is that I recognize there maybe should be a benefit for the performer, but I have problems-I'm speaking for myself and then he said there may be constitutional problems, in other words. And then he pointed out Senator Ervin's statement saying that this was not an area constitutionally was meant to be protected. I think the preceding witness very candidly said there should be a difference between record companies and performers. Mr. BAYLISS. Well, again, though, I think that what we would concede to in the general text of the statements submitted on behalf of the National Radio Broadcasters Association is that, really, the performer needs the recording company and the broadcaster needs the performing artists and the record company, and they, together, in unison, need us. The business of whether we get free records and then use that talent and expose it on the air to our own personal gain-I don't think the general, major market broadcaster would have any problem with paying for records outright. Some do. Some will not accept any free records at all just to avoid any undue influence in their own mind as to what they should or should not be playing on the air. The trade-off there is, in the case of a classically strong artist with hit after hit after hit in a market the size of Los Angeles-take an Elton John record for $6, expose that on one of the dominant stations here. That could well result in a half million dollars in sales of that record in this particular marketplace. Mr. RAILSBACK. Just to be very realistic, the way these bills are drawn, and I am not a cosponsor of any of the bills, but the way that bills are drawn, the Elton Johns and the Frank Sinatras who share equally with the little guys that contribute their talent-they're not fat cats. They don't get the big royalty payments. Mr. GABBERT. We did an interesting thing which is not completed yet, but we started logging a lot of our member-stations on records played per week, and we intend to log about 200 radio stations coast to coast on the records played, numbers it plays. So far, just this morning, I was handed the results of nine stations. There are some interesting figures. You see, the FCC has limits on the amount of commercial time we can run on a station, and if Elton John bought time for us to play a record, that would basically be a 3 or 4 minute commercial, and if we assume that each record played on the station, if we were to bill the record company for exposure on that-most records today run about 4 minutes; so let's count it as 2 minutes and take an average spot cost we came up with figures like in San Diego, $169,000 in a week; or in Phoenix, $70,000, or in Los Angeles, $479,000. The total over a million for nine stations. Mr. RAILSBACK. May I just ask if you were to bill Elton John for that kind of time on a commercial basis? Mr. GABBERT. At a trade-off, assuming that 2 minutes of it would benefit us, and 2 minutes would benefit him. Mr. RAILSBACK. Do you know what Elton John would do? He would buy a radio station and play his music and capture your audience. Mr. GABBERT. That's called the free marketplace. Mr. BAYLISS. I don't know that people would want to listen to Elton John 24 hours a day. Mr. RAILSBACK. What he would do is team up with Olivia NewtonJohn, and I would tune in, too. Mr. BAYLISS. Sounds like a great idea. Mr. GABBERT. This is interesting talking about record sales which you can correlate, again, to radio play as in MCA's report on their record industry in 1977 in the fourth quarter. Three albums sold over a million copies-Elton John's Greatest Hits, Olivia Newton-John's Greatest Hits, and Lynyrd Skynyrd's Street Survivors, those were getting maximum air play at that time. So, in summary, what we're really saying is, I think it would be unfair to assess a fee to us on a performer's royalty fee when we aren't allowed to charge them for the value of what we're giving them; so I consider it a trade-off. Mr. BAYLISS. And we should point out, too, again, that for the major market broadcaster, whether it's a dime a week or $100 a week or $1.000 a week, that really isn't the issue. The issue is the principle of the thing: Should something like this be done? The real, the adverse effect, I think, while it would impose some difficulties for any broadcaster, the broadcaster who is going to feel the real heavy thrust of this is going to be the small market broadcaster, and the small market broadcaster makes up, I would say, about 75 percent of all the radio stations licensed for commercial use in thecountry where they, in essence, go out and buy the records that they play on the air, and they expose the product on the air. Then, through their licensing agreements, they pay the various licensing agenciesASCAP and BMI and SESAC-and then in the proposed legislation they would turn around and pay again. And the cost for their participation there might well mean the difference between adding a newsperson in that station. Mr. RAILSBACK. Now, where you're talking about $250 a year if you're under $100,000, or $750 a year if you have up to $200,000, between $100 and $200,000; so you're not going to add another newsperson for $250. Mr. BAYLISS. In a small market, you would be surprised what you can add for $250. Mr. GABBERT. Excuse me. I paid myself $68,000 last year, and ASCAP and SESAC fees Mr. RAILSBACK. I'm not talking about the regular copyright liability. I'm talking about the royalties that would be paid under this bill. It's $250 under $100,000 in gross receipts. You're even exempt if you're under $25,000, and then, if you go up from $100 to $200,000 it's $750. It's a total payment, as I understand it, of $750 a year. Mr. GABBERT. Wasn't it 1 percent when the gross exceeded Mr. RAILSBACK. Then if you're over $200,000, it's 1 percent of your net receipts, deducting your sales commissions. I'm not sure, by the way, if the formula is correct, but we're not talking, under the bills, about a lot of money. But the people yesterday said we're concerned about the foot in the door. Mr. GABBERT. The camel's nose in the tent. There is, I think, going back, income tax was an experiment. It was not going to hurt very much, and ASCAP and BMI fees at one time were not significant, and these things do have a way of getting out of hand. ASCAP fees were, according to Billboard magazine had a record of 270 some million dollars. It was a smash in the record. I'm a free marketplace advocate. I have trouble with the concept. It's not the money. I consider that the performers are, as I mentioned, craftsmen, and the record companies are the employers, and they should just go on strike and fight for more money. The record companies are making a lot of money; so I guess that wraps it up. Mr. KASTENMEIER. Mr. Bayliss, do you have anything separately? Mr. BAYLISS. No, I'm just chiming along saying, “Me, too.” Mr. KASTEN MEIER. All right. May I inquire, yesterday we had a number of radio representatives here, essentially, under the auspices of the NAB. As members of the National Radio Broadcasters Association, how do you differ from them in terms of either their viewpoint so their interest? Mr. GABBERT. Well, just the associations are different in the fact that we represent radio stations only. Mr. KASTEN MEIER. Exclusively? Mr. GABBERT. Exclusively. And the bulk of our membership is small operators, independent operators, and by the NAB we're considered a rebel organization, but I think on this we would concur, and, again, we have trouble with the principle of it, the concept. Mr. KASTENMEIER. But, actually, on this point you're in total agreement with them? As a matter of fact, I think only radio broadcasters were represented, and, in a couple of cases, very small stations. I asked them the question if there was anyone else in the interest other than perhaps the music operators, jukebox operators, and radio broadcasters who opposed this legislation. I don't think they indicated that they knew of any other organization, group, or interest. Do you? Mr. BAYLISS. In the form of organized opposition? No, sir. Mr. KASTENMEIER. Organized or unorganized. Mr. GABBERT. Can't think of any. Mr. BAYLISS. I'm sure that the general public is not at all aware of any of this and may have some difficulty in understanding it at all. Mr. RAILSBACK. I think you're right. Mr. KASTENMEIER. Do you think the general public, if it did understand the issue, would take sides? If so, why? What sides would they take? Mr. BAYLISS. I don't know that I can answer that question fairly. I have a pretty strong view that the general public would be more for the good old American enterprise system and overwhelmingly support us in the fact that this is a free enterprise matter and a matter between employer and employee. Mr. GABBERT. I did an editorial in San Francisco on it, and, of course, the editorial was against it, and it generated lots of bravos. And I explained the value that a radio station has to the performer and how the performer benefits, and it's a mutual trade-off." Mr. KASTEN MEIER. Did you provide equal time? Mr. GABBERT. Nobody asked for it. Mr. KASTENMEIER. I think that's all the questions I have, and I want to thank you both for appearing here this morning. Mr. GABBERT. We appreciate it. Thank you very much. Mr. KASTENMEIER. I'd like to, at this point, ask Mr. Allen, who is in the audience and was a preceding witness-he said that he hoped there would be present this morning some representatives of the California Music Merchants Association. I'm wondering if those folks have shown up yet. Mr. ALLEN. Yes, Mr. Chairman. Mr. KASTENMEIER. Would you like to introduce them? Mr. ALLEN. If I may introduce our California respresentatives, here is Mr. Gabriel Orland who is the executive vice president of California Music Merchants Association and also a member of the board of directors of our national association. He's from Glendale and operates jukeboxes throughout this area. Then there's Mr. Carl Fisher who is from Inglewood and is also an operator here and is a member of the board of directors of the California Music Merchants Association. They understand our statement and are here to support it. Mr. Orland might speak to that point. Mr. ORLAND. As a member of the California association, CMMA, which is California Music Merchants Association, we would like to oppose H.R. 6063. Mr. KASTEN MEIER. Go on record in opposition? Mr. ORLAND. Yes, sir, along with supporting our national association which I am also representing today in opposing this bill. And I hope that you gentlemen will go along with our opposition. Mr. KASTENMEIER. Your point of view was very well represented by Mr. Allen earlier, and if you have any statement you care to file with the committee, we would be pleased to have it. Mr. ORLAND. All I want to do is oppose the bill. I think it's unfair, unjust, and unconstitutional. Mr. KASTENMEIER. Well, I won't call upon you for a constitutional attack on the bill. Mr. ORLAND. Just my opinion. Mr. KASTEN MEIER. All right, Mr. Orland, thank you for appearing here today, and your presence and that of Mr. Fisher are acknowledged. Now, at this time, I would like to call on representatives of the Recording Industry Association of America. Mr. Stanley Gortikov, Mr. Alan Livingston, Mr. Stewart, Mr. Smith, Mr. Moss, Mr. Norman, indeed, the last panel in our 2-day hearing. Many of you, certainly Mr. Livingston and Mr. Gortikov, have appeared before this committee very ably in the past, and we're very pleased to say hello to you again and greet you along with your colleagues. Mr. Fitzpatrick is with you this morning? Mr. RAILSBACK. Mr. Chairman, could I just mention that Mr. Stewart. I believe, flew all the way from England for this appearance. He's been very, very active and knowledgeable, and I just wanted to mention that because Tom Mooney and I had the pleasure of meeting him in Europe. Mr. KASTENMEIER. Mr. Stewart, you are especially acknowledged, and we look forward to hearing from you. Certainly your group has had the opportunity to hear all the comments that preceded this particular hour and, in terms of this proceeding will have, so to speak, the last word. Mr. Gortikov, we'll call on you, sir. TESTIMONY OF STANLEY GORTIKOV, RECORDING INDUSTRY ASSOCIATION OF AMERICA, ACCOMPANIED BY ALAN LIVINGSTON, JERRY MOSS, JOE SMITH, STEPHEN STEWART, GENE NORMAN, AND JAMES FITZPATRICK Mr. GORTIKOV. Thank you, Mr. Chairman, members of the committee. I'm Stanley Gortikov, president of the Recording Industry Association of America whose member companies create and market about 90 percent of the prerecorded tapes and records that are sold in the United States. With me are five industry representatives. Starting on my left, Mr. Jerry Moss, president of A & M Records and chairman of the board of RIAA; Mr. Joe Smith, chairman of Elektra Asylum Records; Mr. Stephen Stewart, director general of IFPI; Mr. Alan Livingston, president of Entertainment Group of 20th Century Fox Records; and Mr. Gene Norman, president of Crescendo Records; and Mr. James Fitzpatrick of Arnold & Porter. We're the cleanup crew. We've been hearing lots of rhetoric here yesterday-broadcaster protests and disclaimers and, along the way, we might have lost sight of our focus which is what I hold in my hand here. This is a copyrighted sound recording. [Mr. Gortikov plays the recording for a few moments.] Mr. GORTIKOV. That's why we're here. I don't want to lose sight of the fact that we're here to support that copyrighted sound recording and to recognize the uniqueness of that sound recording. What you just heard was "You Light Up My Life" by Debbie Boone, a hitherto unkown recording artist who was catapulted to stardom by that record, a talented singer in a unique performance who made a good tune come alive, and, to a great measure, the reason for that was traceable to the creative input of the recording company who identified that unique talent, found the right song, put the two together, provided the correct arrangement, brought creative people together, added electronic engineering, increments that made a hit. Radio played that tune "You Light Up My Life" many, many thousands of times for a purpose-to attract audiences, to sell commercials, and to make a profit. Radio used that record, and radio still uses that record for those purposes. As we remarked this morning, radio does pay composers and publishers. The witness who just finished said $68,000 alone from that gentleman's stations, and, yes, in this case Debbie Boone isn't going to get anything. The recording company copyright owner isn't going to get anything. The background performers you just heard on the record. |