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Mr. GREENBAUM. That is a legal question, Mr. Chairman. May I answer it.

Mr. MCCLELLAN. Sure, if you know the answers.

Mr. GREENBAUM. Our position is that that would be a technical infringement, but it would be not something that would be picked up. No student is ever going to get sued for that. It is like breaking a stamp on a cigarette package. Maybe it breaks the law, but nobody gets picked up for it. If you break or pull off the tags from the furniture, maybe you break the law, but

Senator McCLELLAN. Well, he does more than that; he gets the contents. He doesn't just break off the tag and leave the contents when he goes in there and copies that.

Mr. GREENBAUM. Yes. Well, we believe that that would be a technical infringement, but that nobody would enforce it.

Senator MCCLELLAN. Obviously it would be an infringement if you copied it by photocopying it.

Mr. GREENBAUM. Yes. And you asked before what the solution would be, and perhaps the Williams & Wilkins Co., can supply a solution.

After a great deal of effort, they came up with the following plan, which we believe works, and here is the way it goes.

A regular subscriber would pay, let's say, x amount
Senator McCLELLAN. Would you call it a library subscriber?

Mr. GREENBAUM. No, no. An individual, like a doctor. I am talking about scientific medical journals. They now pay x dollars.

Senator MCCLELLAN. All right.

Mr. GREENBAUM. Now the library which is going to make photocopies for this boy or anybody else who comes into the library, would pay a plus an average of $3.65 at the time that the subscription is obtained or renewed. It would pay x dollars plus $3.65. This would enable that library license to make as many single photocopies as that library wants to make for as many patrons who want to come into that library. Now, that doesn't require any bookkeeping

Senator McCLELLAN. How do you arrive at the $3.65 figure?
Mr. GREENBAUM. That was based

Senator McCLELLAN. I mean, x may be $2 or it may be $5. How do you arrive at that? One book may sell for $10 a volume, and the other

may sell for $1.50. How are you going to arrive at $3.65 ? Mrs. ALBRECHT. The licensing fee which we are talking about here, is our average of $3.65. I think each publisher would determine its own average but certainly keeping within the reasaonable economic status of the library community. We determined a $3.65 average copying fee based on our total manufacturing costs, the number of pages published in a journal, the subscription price of that journal, and what we believe to be this particular journal's susceptibility to photocopying. We publish a broad range of journals, not all of them are certainly equal in content, and not all of them go to the same types of subscribers. Altogether our licensing fee is an average of $3.65 above the individual purchase price.

Senator McCLELLAN. I don't know whether this is actually factual or not, but you might have a book where the original cost may be $3 and then you have this $3.65 cost, which is more than the original cost of the book itself.

Mrs. ALBRECHT. I am not saying that could not happen, but it doesn't happen with our journals. Our average subscription price to a journal—this was certainly in effect before we had institutional ratesaveraged somewhere around $30 per subscription.

Senator McCLELLAN. $30 ?
Mrs. ALBRECHT. Yes.
Senator McCLELLAN. All right. Go ahead.

Mr. GREENBAUM. Mr. Chairman, I might also note if the library chooses not to photocopy, they would get a refund of that $3.65.

Senator McCLELLAN. And how would you know whether they photostat or not?

Mr. GREENBAUM. We would take their words.
Senator McCLELLAN. Just take their word for it?
Mr. GREENBAUM. We sure would. We would be willing to do that.

Senator McCLELLAN. Yes, but if they just report that we don't permit any photostating of this material, you would take their word ?

Mr. GREENBAUM. We heard the representative of the Library Association say the librarians are law-abiding people and we would expect they would pay whatever the law required them to pay.

Senator McCLELLAN. Well, I would be glad if you folks could get some understanding and agreement saying, we trust each other, like you are saying now, and then not come in here and ask us to pass a law to regulate this.

Mr. GREENBAUM. Mr. Chairman, I might add that this plan that we have proposed here is not hypothetical. This was actually put into effect and withdrawn.

Mrs. ALBRECHT. We put it into effect as a royalty licensing plan.
Senator McCLELLAN. When did you put it into effect?
Mrs. ALBRECHT. To cover our 1973 subscription rates.
Senator MCCLELLAN. 1973 ?
Mrs. ALBRECHT. Right.
Senator McCLELLAN. It is in effect now!

Mrs. ALBRECHT. This was announced to the subscribers in the middle of 1972 that we were going to do this.

Senator MCCLELLAN. And it is in effect now?

Mrs. ALBRECHT. It is not in effect as a licensing plan. It is only in effect as an institutional rate. The institutional rate does not give the library any photographing copying rights at all. It is the same fee. It is the same plan. But our original intention was to allow the libraries to make unlimited number of single photocopies by paying this extra $3.65. The libraries responded with the point which they made, that they felt that the necessity of a copying license did not exist, and they would not subscribe if we were to try and put in this $3.65 as a license to photocopy.

Senator McCLELLAN. So you have abandoned it?

Mrs. ALBRECHT. We abandoned that, but we kept the $3.65 as an institutional rate.

Senator McCLELLAN. You increased their subscription that much? Mrs. ALBRECHT. To institutions, yes.

Senator McCLELLAN. To institutions? So you got your $3.65 after all!

Mrs. ALBRECHT. Yes, but we didn't give the libraries what we wanted to give them.

Senator McCLELLAN. They would not have any objection now to your giving it to them? I mean, you got their money. Why don't you just say “thank you," and go ahead with your plans?

Mr. GREENBAUM. The reason you can't do that, Mr. Chairman, would be that it would eliminate any kind of control that you would eventually have. The technology is going to change. We all know that 15 years from now we are not going to recognize the technology that we have today

and Senator McCLELLAN. Well, I am not going to get into that business. I am just puzzled and perplexed and I guess confused like most everybody in trying to resolve this problem.

I think I have a full measure of sympathy for all interests; I mean, I would like to see the publisher and author and so forth compensated, and at the same time, I don't know how you could base it on this 5-percent rate paid by whoever gets a copy, and make this thing work. I don't know how it is going to be practical.

Mr. GREENBAUM. Well, Mr. Chairman, the system we just described works.

Senator McCLELLAN. All right. You've got thousands of books there, and someone comes in and he wants a page out of this book, and another page out of that book, and there are different authors. That's going to be a lot of bookkeeping for a nickel. I just can't figure how this is going to work.

Mr. GREENBAUM. Can I explain that?
I know I am passing the time limits-

Senator MCCLELLAN. I know, and I shouldn't have invited you to do so, because at 4 o'clock I have to go to a markup on an appropriations bill

. I just have to go, and we have to get through by then. But go ahead. If I don't ask as many questions as you think I should, please understand why.

Mr. GREENBAUM. Mr. Chairman, the blanket license that Williams & Wilkins proposed does not require anybody to pay a nickel a page. It doesn't require them to pay anything per page. You pay it once. It doesn't require any bookkeeping, nothing. It is just the way it is done.

Now there are other publishers who have not yet put this into effect. I guess they would be crazy to put it into effect considering what happened to the Williams & Wilkins Co. when we put it in. We got librarians saying they were going to boycott Williams & Wilkins. I mean, we really got a full measure of hell because of what we did.

Now, if the Williams & Wilkins plan is adopted by other publishers, then it will just be a very simple thing. The library just goes and makes the photocopies and that is it. There is no bookkeeping. Senator MCCLELLAN. All right. Thank you very much. [The prepared statement on behalf of William & Wilkins follows:]

PHOTOCOPYING AND THE SCIENTIFIC JOURNAL

(A report to the Subcommittee on Patents, Trademarks and Copyrights of the

Committee on the Judiciary United States Senate by The Williams & Wilkins Co., Publishers of Medical and Scientific Books and Periodicals July 25, 1973)

THE WILLIAMS & WILKINS' POSITION

Williams & Wilkins publishes 37 medical and scientific periodicals. It believes that the information contained in its journals should be disseminated as widely and as quickly as possible by any method now known, including photocopying, or which may become known. Williams & Wilkins has never so stated nor has any desire to interrupt or halt the process of dissemination through photocopyingbut it must be compensated for photocopying of its copyrighted materials so that the journals can remain economically viable and independent of government subsidy.

20-344-73_11

The journals involved in Williams & Wilkins v. U.S., now pending in the U.S. Court of Claims, are universally recognized as leading journals in their fields, but they have extremely limited circulations, e.g. 1,088 to 17,762, which are a function of the relatively limited market potential for the material. If Congress decides that these journals can be photocopied without reasonable compensation to the publisher many will eventually die because it is virtually impossible to increase the number of subscribers to medical and scientific journals beyond those in the discipline served by the particular journal and those relatively few libraries which have chosen to serve such specialists. However, while the number of subscribers remains static, the costs of publication continually increase. At the same time photocopying technology continues to improve, enabling copies to be made more cheaply and efficiently. If subscription prices are raised to cover costs plus a reasonable profit, the point is soon reached where, instead of subscribing, some users of the material will photocopy. And every time there is a subscription price increase and the photocopying technology improves, there is a greater incentive to photocopy. Thus, raising subscription prices does not solve the problem of providing sufficient income to cover cost because it simply encourages fewer subscriptions and more photocopying. Eventually, there will be so few subscribers and the prices will be so high that the journal will cease publication.

The only way to save private limited circulation technical journals from extinction is to broaden the income base. This can only be done by spreading the costs of publication among a greater number of users, including those who use the journal through photocopying. A photocopying license will enable subscription costs to be kept at a reasonable level and place the economic support of the journal more equitably upon those who value its use.

Libraries pay, among others, the Xerox Corporation for the copying equip. ment, the paper manufacturer for the paper, the utility companies for the electricity to run the equipment, the Post Office for stamps to mail the copies, salaries to the workers who do the copying, and to the librarians who supervise the copying. Yale University, the New York County Medical Society Library, and many other libraries charge a “transactional" charge for photocopying to cover these obvious costs. Someone has to pay for these costs and we see nothing wrong with those libraries which pass these costs on to those who request the photocopies. We also think it entirely appropriate that to these many costs there be added a fair and reasonable royalty to the publisher to ensure that the publisher can continue to make the obviously useful work available in the future.

By means of blanket licenses, clearing houses, or computer accounting a reasonable royalty for copying can be easily paid to the publisher without the need for complicated bookkeeping, interruption or interference in service. These costs can then easily be passed on to the patron who orders the photocopy. We ourselves favor a blanket license plan where the license is incorporated in the subscription price of the journal because it requires no record keeping or accounting on the part of the library.

The doctor in North Dakota or Hawaii who has to obtain a copy of a journal article from Yale University will have to pay a minimum charge of $3.50 plus, perhaps, an additional service charge to his local library. Certainly a slight extra charge by Yale to cover the copyright royalty would not be unfair or interfere with the service. The alternative would be to have no copyright royalties paid by anyone and, thus, eventually destroy the journal when photo copying becomes more and more available through microfiche, computers, lasers or who know what.

The costs of publication should be equitably divided among those who use the journals by buying printed copies and those who use it by photocopying. If only subscribers to printed copies need pay for their information libraries will cut costs by cancelling subscriptions and servicing their patrons by means of photocopies obtained from other libraries. The library, by charging the patron for the cost of the photocopies, will have serviced the patron, saved the cost of the subscription, and perhaps even received a contribution to its overhead from its charge to the patron. Williams & Wilkins has, of course, no objection to this means of information dissemination-but if it cannot receive a royalty for the copying it will have to raise its prices to those libraries who continue to subscribe and to its individual subscribers. As prices get higher, there will be more incentive to photocpy until the journal is so expensive that it is discontinued.

Furthermore, to put the burden of increased costs on the individual subscriber is, in addition to being self-defeating, simply not equitable. The number of subscribers is decreased because of photocopying. Those who do not generally photocopy, i.e. the individual subscribers, should not be required to bear the substantial increased costs per unit created by the decreased circulation which has been caused by the photocopies.

Williams & Wilkins believes that those who use the copyrighted information in its journals by photocopying should contribute to the cost of publication and that copyright is the traditional instrument for insuring this contribution while protecting the public interest in wide distribution. If a new theory, i.e. free indiscriminate and repeated photocopying, is legislated it, in tandem with the new technologies, will destroy the journals and thus create irreparable damage to the public interest.

CHRONOLOGY OF THE DEVELOPMENT OF THE LICENSING/INSTITUTIONAL RATE PLAN

Discussions of a plan to allow libraries to furnish their customers with photocopies of copyrighted articles were begun before the February 16, 1972 decision from Commissioner Davis of the Court of Claims. Above all, the plan was not to be a cumbersome administrative or economic burden upon libraries. It was to include a simple system of payment to broaden the income base required to support the journals. This will help offset the loss of income where photocopies will replace the purchase of multiple subscriptions, library and personal subscriptions. Basic ideas about a proposed plan were discussed with several libraries.

When the Davis decision was received, we had a "digest” of the opinion prepared and mailed to more than 8,000 friends and customers of the house, among them some 5,800 libraries. A covering letter (Ex. 1) attempted to allay any concerns that Williams & Wilkins had intentions of curtailing photocopying or of a high-priced and complicated royalty payment system.

Even before a Williams & Wilkins licensing plan was announced, a memorandum (Ex. 2) from L. L. Langley, Ph. D., Associate Director for Extramural Programs at the National Library of Medicine was sent to NLM's Resource Grants grantees stating, "The express purpose of this memorandum is to inform you that grant funds from the National Library of Medicine must not be used for royalty payments to publishers without prior approval from the National Library of Medicine." (This memo did not come to the attention of Williams & Wilkins until sometime after our plan was formally announced in June 1972.)

Full-page ads (Ex. 3), again stressing that we were developing a simple, workable licensing plan, were purchased for the following journals: "Bulletin of the Medical Library Association” April 1972 issue; "College and Research Libraries" April 1972 issue; "Library Journal” April 15, 1972 issue; and "American Libraries" May 1972 issue.

In June 1972, a letter was sent to our institutional customers formally announcing and describing our licensing plan (Ex. 4) as follows:

1. Beginning 1973, W&W journals would carry an institutional rate, ranging $1-$10 higher than the individual subscription rate.

2. The institutional rate would carry with it an automatic license to make single copy photocopies for patrons in the regular course of library operations.

3. This institutional rate would cover the making of single copy photocopies for the life of the volume and would permit photocopies to be made from all · previously published volumes at no additional charge. No additional payments or record keeping would be involved.

4. Multiple copies could be made upon remittance of 5€ per page per copy, but permission was not granted for copies made for interlibrary loan ase.

5. Institutions would be entitled to a refund of the license portion of the subscription rate if no copying of the journal took place.

On June 23, 1972 a personal letter was sent to each Director of the 11 Regional Medical Libraries (Ex. 5) discussing the institutional rate and announcing our intention to license these libraries, which were set up for the purpose of provid ing interlibrary loan copies, at the rate of 5¢ per page per copy.

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