ample, may be built around an exceedingly difficult photographic sequence which may take months of work to capture, but may in the final product only take up a minute or two of time of the film. To permit this minute or two to be reproduced freely under the proposed exemption would very likely destroy the economic availability of such a film.

Further, the concept of exempting use of the whole of short, literary, pictorial and graphic works presents difficulties equally great in relation to audiovisual materials. For example, is a short filmstrip a short work? If so, it would very largely destroy the entire market for short filmstrips.

We trust that this subcommittee will not accept the idea of an educational exemption, if such an exemption should continue to be pressed by one or more organizations. The position taken by AECT indicates that as far as educational audiovisual materials are concerned, such an exemption has no educational rationale. To the extent that school systems wish to reproduce educational audiovisual materials in whole or in part beyond the limits of fair use, our members stand ready to discuss licensing arrangements which will permit authorized reproduction. Modern methods of reproduction for many types of audiovisual materials are such as to make such reproduction in whole or in part attractive to some school systems and our members have already entered into such licensing arrangements. In fact, only recently on June 18-19, 1973, we sponsored jointly with the Information Industry Association a conference in Washington on the licensing of copyrighted materials.

In summary, let us repeat that we think that S. 1361 is a good and workable bill, from the point of view of both the creators and the users of educational audiovisual materiais.

We appreciate this opportunity to appear before your subcommittee. My colleagues and I will be glad to elaborate on any points in our testimony which the members of the subcommittee may wish to explore further.

Senator BURDICK. Thank you very much for your statement.

Mr. ENGLER. Mr. Chairman, I wonder if I might take a moment to respond to a question that Senator McClellan raised a little while ago when he wondered what the publishers might think of the ad hoc committee's contention that the proposed educational exemption would help the growth of the audiovisual materials industry?

I would like to respond by first pointing out that the 10.8 percent annual growth cited by Dr. Wigran is indeed a healthy growth rate and is one that we enjoy because we have copyright protection. We think it vital to the public interest that any revision of the copyright law maintain that protection. We are convinced that the ad hoc committee's proposed educational exemption would deal a severe blow to this young and growing industry.

I might point out that this small industry's total revenue of $214 million represents less than one-half of one percent of the total dollars spent on education in this Nation. And I might also point out that among the 200-odd companies in this industry there are only a handful on the Fortune 500 list. The overwhelming majority are small businesses that do not have the resources to sustain the potential impact of the sweeping exemptions called for by the ad hoc committee.

We are convinced that such an exemption would inevitably lead to a serious reduction in the quality and quantity and variety of audiovisual materials available to students and teachers.

Senator BURDICK. Thank you.

[The statement of Mr. Lloyd Otterman in full follows:]

COPYRIGHT AND AUDIO-VISUAL MEDIA

My name is Lloyd Otterman and I am Chairman of the Educational Media Producers Council (EMPC) and Vice President of BFA Educational Media. I am appearing here today on behalf of EMPC and with me are David Engler, Chairman of the EMPC Copyright Committee and Robert W. Frase, economist and consultant on copyright to EMPC.

We are here to give you our views on S. 1361, the general copyright revision bill, and specifically on the issues involved in the educational use of copyrighted audio-visual materials. We support the bill as introduced and oppose amendments which would weaken the protection provided in the bill to audio-visual materials.

Before dealing specifically with the bill itself, I should like to sketch briefly the economics of producing audio-visual materials for education. This background will be helpful to the subcommittee in understanding the importance of appropriate copyright protection in order to ensure the continued development of high quality materials for educational use.

THE EDUCATIONAL AUDIO-VISUAL MATERIALS INDUSTRY

The Educational Media Producers Council (EMPC) is an organization within the National Audio-Visual Association made up of approximately 70 producers of audio-visual materials for use in schools and libraries. Our membership consists primarily of the creators of these materials, who are engaged in the various activities necessary to produce and market such audio-visual materials.

The companies belonging to our Council produce such items as motion picture films, filmstrips, slides, transparencies, and sound recordings. We estimate that our members account for approximately 80% of the annual production of these principal types of audio-visual materials for use in American education.

In 1972 total sales of educational audio-visual materials amounted to $215,000.000. This volume was produced by some 200 companies; and thus the industry is clearly one of active competition among quite small firms as compared to the great majority of industries serving a nationwide market.

The relative volume of the various products sold in 1972 is shown in the following table:

1972 Sales of Educational A-V Materials

Predominantly materials acquired by school districts and film libraries: 16mm (black and white) films_.

16mm (color) films__

Subtotal

(Millions)

$6.6

47.4

54.0

Predominantly materials acquired for use and shortage in individual schools:

It will be noted this list of products is divided into two principal categories: 16 millimeter educational films, which are comparatively lengthy and more expensive and thus are bought by school district film libraries, stored centrally, and circulated to individual schools, on demand; and other types of materials which tend to be used more often and more intensively in the individual schools and therefore are stored as well as used there. With the increasing use of materials in the educational process, and with the recent trend toward the individualization of instruction, this second category has been growing much more rapidly than the first in the last few years, increasing from 60 percent of total audio-visual sales only six years ago to 75 percent of total sales in 1972.

USE BY LEVEL OF EDUCATION

Equally important to an understanding of the educational audio-visual industry is the pattern of use at the several levels of education. The following table shows 1972 sales broken down in this way:

1972 Educational A-V Sales by Type of Institution

The percentages in these tables bring out two points quite graphically: (1) These are materials designed for instructional purposes, and have no market among consumers in general or for general entertainment.

(2) Sales tend to be concentrated in the lower end of the educational pyramid, with half of total sales to the elementary schools, 30 per cent to high schools, and 8 per cent to higher education. Public libraries account for 3 per cent and all other for 9 per cent. It is important to distinguish materials for the instruction of students at these basic levels of education from the advanced, highly sophisticated, original research published in scientific and technical journals; the kinds of considerations which come into play in discussing library photocopying of such research materials are not pertinent here.

SMALL EDITIONS

Because of the way in which audio-visual materials are used in the educational process, the number of copies produced is quite limited. As compared with textbooks, for example, which are generally provided one to a student, one or two copies of a 16 millimeter educational film may serve an entire school system of moderate size, and a single copy of a filmstrip will serve an entire school. A typical audio-visual product will customarily sell in the hundreds or low thousands, as compared with tens or hundreds of thousands of textbooks. Thus the initial investment in editorial work and production, which costs as much for one copy as for thousands, is spread over a relatively limited number of copies. In addition to the substantial initial investments necessary to the production of quality materials there must be added carrying costs for the considerable period of time over which sales are made. The combination of these factors-small editions and sales over an extended period—means that unauthorized duplication of copies has a much greater impact on the economic viability of these products than on some other types of educational materials.

THE U.S. OFFICE OF EDUCATION EXPERIENCE

The U.S. Office of Education has granted milions of dollars over the years to educational research laboratories for developing innovative and more effective teaching methods and materials. Many good products were developed, but far too few ever were disseminated through the educational community. Not until policies were developed which allowed companies with marketing expertise to distribute the materials under protection of a limited (in time) copyright, did the educational community receive the benefit of the Federal research effort.

I think this points out very clearly the need to provide incentive to produce and protection of rights for copyright holders. The Federally-funded materials which were developed and put on shelves, now have a much better chance of

being used by, and benefiting, the intended recipients-because those with the expertise necessary to make the materials available are given the incentive to deliver their maximum effort.

PROVISIONS OF 8. 1361-FAIR USE

We turn now to the actual provisions of S. 1361 as they relate to educational audio-visual materials. The bill clearly represents the culmination of years of consideration and reflects particularly the work of this subcommittee and the information it has received in hearings and in other ways. We believe that it is a good bill as it relates to our industry and will provide the necessary incentives to the continued production of quality audio-visual materials for use in the educational system.

We commend the subcommittee in particular for its proposals with respect to "fair use," and here we have specific reference to Section 107 of the bill. (The further specialized provision of Section 108 relating to reproduction by libraries and archives is for the most part not directly relevant to audio-visual educational materials.) Section 107 writes into statutory law the main principles of "fair use" as that doctrine has been interpreted by the courts in individual cases over the years, and specifically states that "fair use" is a concept applicable to all kinds of copying, including copying for purposes of education.

ENDORSEMENT OF SECTION 107 BY AECT

We are pleased that the principal professional organization of educators directly concerned with the use of audio-visual materials in the educational process has also recently come out in support of Section 107 of the bill. This was done in a statement issued by the Executive Committee of the Association for Educational Communications and Technology (AECT) on May 31, 1972. (See Attachment A.) Some of the statements made by the AECT which were of greatest interest to us were the following:

(1) "AECT endorses the criteria to be used in the determination of 'fair use' as contained in Section 107 of the proposed bill."

(2) "Further, we indorse the concepts regarding the intent of these criteria as expanded in the legislative history of the bill as it existed prior to and without regard to the original opinion in the case of Williams and Wilkins v. U.S., for that opinion substantially narrows the scope of 'fair use' and irreparably weakens that doctrine."

(3) "Concerning the use of copyrighted works in conjunction with television, AECT proposed that 'fair use,' as it has been outlined above, should apply to educational/instructional broadcast or closed-circuit transmission in a nonprofit educational institution, but not to commercial broadcasting."

(4) "Once the doctrine of 'fair use' has been established in the revised law, negotiations should be conducted between the proprietor and user prior to any use of copyrighted materials that goes beyond that doctrine."

(5) "A new copyright law that both users and producers can view as equitable depends upon the mutual understanding of each other's needs and the ability to effectively work out the differences. We will participate in the continuing dialogue with the Educational Media Producers Council and similar interest groups to establish mutually acceptable guidelines regarding the boundaries of 'fair use,' and reasonable fees to be paid for uses beyond 'fair use.'"

Since AECT has announced its intention of presenting testimony in these hearings, we will not attempt to interpret the statement, but leave that to the witnesses for that organization. We should like, however, to make reference to two points. First, the Commissioner's recommendations and opinion in the Williams and Wilkins case in the Court of Claims will certainly have been superseded by the decision and opinion of that court itself well before any general copyright revision bill is finally enacted. Second, we welcome continuation of the dialogue between AECT and EMPC relating to the use of educational A-V materials, but must point out that there would be legal difficulties in any action by EMPC in agreeing to establish "reasonable fees to be paid for uses beyond 'fair use'." We have not only been conducting a dialogue with AECT but have taken the initiative in setting up a series of meetings with other educational organizations regionally and nationally to discuss mutual problems relating to copyright. We believe these discussions have been helpful not only in clarifying general prin

ciples but in dealing with specific problems as well. We on our part pledge to continue these discussions both before and after any revision of the copyright law.

NO NEED FOR AN "EDUCATIONAL EXEMPTION"

At the time that this testimony was prepared we were unclear as to whether a broad educational exemption, to be added to the bill as it now stands, would be proposed by one or more organizations in the light of the positions taken by AECT and other groups such as the Music Educators National Conference and the National Music Council. However, as recently as April 4, 1973 the so-called Ad Hoc Committee issued a press release indicating its support for a “limited educational exemption"; and the language of such an exemption had been presented to members of this subcommittee late in 1972 and given wide general circulation. That language in our view provided far more than a "limited" exemption. Among other things it would authorize use for noncommercial teaching scholarship and research not only of "brief excerpts" from copyrighted works but also of the whole of short literary, pictorial and graphic works.

Let us take up these two concepts in order, as they would apply to educational audio-visual materials. In making these comments we have had the benefit of discussions with participants in the work of the Ad Hoc Committee seeking clarification of their proposals; but we do not here purport to be speaking for them.

The concept of "brief excerpts (which are not substantial in length in proportion to their source)" is very difficult to pin down as applied to educational A-V materials. A half hour educational nature or biological film, for example, may be built around an exceedingly difficult photographic sequence which may take months of work to capture, but may in the final product only take up a minute or two of time. To permit this minute or two to be reproduced freely under an educational exemption would very likely destroy the economic viability of such a film.

The concept of exempting use of "the whole of short, literary, pictorial and graphic works" presents difficulties equally great in relation to audio-visual materials. For example, is a short filmstrip a short work? If so it would very largely destroy the entire market for short filmstrips and they would not be produced at all by audio-visual films.

We trust that this subcommittee will not accept the idea of an educational exemption, if such an exemption should continue to be pressed by one or more organizations. The position taken by AECT indicates that as far as educational audio-visual materials are concerned, such an exemption has no educational rationale. To the extent that school systems wish to reproduce educational audiovisual materials in whole or in part beyond the limits of "fair use," our members stand ready to discuss licensing arrangements which will permit authorized reproduction. Modern methods of reproduction for many types of audio-visual materials are such as to make such reproduction in whole or in part attractive to some school systems and our members have already entered into such licensing arrangements. In fact, only recently on June 18-19, 1973, we sponsored jointly with the Information Industry Association a full dress conference in Washington on the licensing of copyrighted materials.

SUMMARY AND CONCLUSIONS

In summary let us repeat that we think that the bill which has evolved in your subcommittee as S. 1361 is a good bill and a workable bill, from the point of view both of the creators and the users of educational audio-visual materials. We urge that it not be changed as it relates to A-V materials, and that it be expeditiously reported to the Senate. It is universally recognized that revision of the 1909 copyright statute is desirable, and the sooner this is accomplished the better for all concerned.

We appreciate this opportunity to appear before your subcommittee. My colleagues and I will be glad to elaborate on any points in our testimony which the members of the subcommittee may wish to explore further.

Senator BURDICK. Next?

Mr. BRENNAN. Mr. Paul Zurkowski, Information Industries Association.