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We respectfully submit that when copyright owners make their works available to all users on a basis that insures reasonableness, there is no need for a statutory licensing system-a regulatory device that should be resorted to only when voluntary action fails to meet a public need.

Thank you, Mr. Chairman.
If there are any questions, any of us will be happy to answer them.
Senator McCLELLAN. Thank you very much.
Senator Burdick, do you have any questions?

Senator BURDICK. On page 2 you refer to the court action in 1950, and then you state, "The Federal court is available to any user who questions the reasonableness of rates quoted by ASCAP including CATV." This is a legal question.

What is your basis for appealing to the courts at that point ?

Mr. FINKELSTEIX. Oh, when you have organizations that have as many copyright owners as ASCAP has, you are going to have problems under the antitrust laws. And we each have worked out agreements with the U.S. Government that we commonly refer to as consent decrees, under which we make the repertory available on a basis agreed to by the U.S. Government and the society.

One of the provisions of that decree of 1950 is that any user who is dissatisfied with the rate quoted by ASCAP may, at the election of the user, go to the Federal court and have the reasonableness of the rate determined and have the court fix a reasonable rate.

Senator BURDICK. I am trying to get the legal basis. I cannot go to court on any other commercial transaction to say it is unreasonable or reasonable.

What is the basis of getting jurisdiction? Mr. FINKELSTEIN. Of course, copyright gives the exclusive right, but when you combine copyrights, you become subject to another law, the antitrust laws. And the courts, under the antitrust laws, may require that the copyright owners agree that their rate shall be fixed by the court in the event of disagreement.

In the case of music, collective action makes it possible to avoid all these difficulties that you have had with the other industries; but in doing that, you collide with the antitrust laws and must make some arrangement where the public can be sure that the prices quoted by this combination are reasonable.

Senator BURDICK. In other words, then, there is no question in your mind that there could be court review?

Mr. FINKELSTEIN. None whatsoever.

Mr. CIANCIMINO. Senator, I would like to make one thing clear. Mr. Finkelstein did say that we are each subject to consent decrees. However, SESAC is not subject to a consent decree. We are a small operation, and in lieu of the Federal court's availability, we have offered arbitration to the cable television operators in order to set a reasonable fee.

Senator BURDICK. Well, eventually if everything else fails, there is access to the courts even in your cases.

Mr. CIANCIMINO. I suppose there would be if an action were brought and the court does determine that we should come under the same type of supervision as ASCAP.

Senator BURDICK. That is all.
Senator McCLELLAN. Thank you very much.
[The statements referred to earlier follow:]

STATEMENT OF AMERICAN SOCIETY OF COMPOSERS, AUTHORS, AND PUBLÍSHERS

(ASCAP), BROADCAST MUSIC, INC. (BMI), AND SESAC, INC. (SESAC) BEFORE THE SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS, SENATE JUDICIARY COMMITTEE ON S. 1361

(August 1, 1973) Mr. Chairman, in accordance with the Committee's request, this statement is being submitted jointly on behalf of the three American organizations which make it possible for all users of musical works, including operators of cable television systems (CATV) to obtain licenses to perform publicly in nondramatic form, any musical composition required in their operations. These organizationsthe American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and SESAC, Inc. are well known to the Chairman and members of this Committee. Each is filing a separate statement, but all three join in this statement, following the suggestion of Counsel for this Committee, who has been most cooperative.

We shall briefly summarize the reasons supporting our position that there is no need for a statutory license for the music embodied in these three repertories because there is already adequate assurance of the availability of all music they require at fair and nondiscriminatory prices; and that if any price control is necessary it should be determined by an impartial body-the courts or arbitration. As our respective supporting statements indicate:

1. Music performed in nondramatic form is unique among copyrighted works in that it is all available to everyone including CATV on a nonexclusive basis without any problems of clearance or complicated negotiations for individual works, or fears of prices being arbitrary, unreasonable or discriminatory.

2. Music has been available to all users through this simple method of licensing for decades.

3. The assurance that prices will be fair, reasonable and nondiscriminatory is a matter of public record. In the case of ASCAP, it is embodied in a decree of the Federal Court entered in 1950 on the consent of the United States Government and ASCAP. The Federal Court is available to any user who questions the reasonableness of rates quoted by ASCAP (including CATV). Several proceedings to determine reasonable rates have been brought by broadcasters, wired music operators and others. In fact proceedings to determine reasonable rates brought by tne national broadcasting networks and by Muzak operators and others are pending at this time.

BMI and SESAC, Inc. have tendered arbitration to the CATV representatives and will continue to do so.

4. The distance of the station from which music is picked up does not raise any problems. Under the prevailing licensing system, all music is equally available to CATV whether it comes from distant sources, from local sources, or even when it is originated by the cable system itself.

5. The task of keeping records of uses and seeing that payments are apportioned among those whose works are used is undertaken by the licensing organizations; it does not present a problem to the CATV operator.

6. The music licensing organizations have met with representatives of the cable television industry and have not had any problem as to the method of licensing and the availability of all music used in nondramatic form to all CATV operators for all purposes. Figures requested by CATV to assist in reaching agreement as to rates for all their music were given to CATV by these organizations several months ago. There is every reason to believe that agreement can be reached with the CATV industry as it has been with other industries, considering all the safeguards available to CATV.

In conclusion, we urge that there is no necessity for a compulsory license for musical works if those works are available on the following basis:

(1) The works are part of a total repertory made available to cable television under a single agreement without the requirement of separate negotiations for individual works or individual uses;

(2) The works are available on a nonexclusive basis on fair and nondiscriminatory terms;

(3) The agreement makes the works available for a substantial period of time;

(4) In the event of dispute as to the reasonableness of the rates quoted, the rates can be determined by resort to a United States District Court or to arbitration.

(5) Provision is made for payment to the licensor for distribution to the parties entitled to the amounts collected so as to avoid any disputes between the licensee and individual copyright owners.

As we have previously indicated, Section 111 could be framed so as to exempt musical works from a compulsory license if they are voluntarily made available on the foregoing basis; or it could specifically require that all musical works be licensed to CATV for retransmission on the foregoing basis. If a work does not meet these requirements, it could, of course, be made bject to a compulsory license on the same basis as other material.

In sum, the music licensing organizations have tendered licenses that meet all problems of the CATV industry. These problems have been solved by a system that insures a maximum of availability and a minimum of accounting and negotiation. Equal treatment of all is assured without preference to anyone. The only item for discussion is price, and if that cannot be agreed on there is an impartial outside body-a court or arbitration-available to insure reasonableness.

It is respectfully submitted that when copyright owners make their works available to all users on a basis that insures reasonableness, there is no need for a statutory licensing system-a regulatory device that should be resorted to only when voluntary action fails to meet a public need. Respectfully submitted.

SESAC, INC.,
ALBERT F. CIANCIMINO,

General Counsel.
BROADCAST MUSIC, INC.,
EDWARD M. CRAMER,

President.
AMERICAN SOCIETY OF COMPOSERS,

AUTHORS AND PUBLISHERS,
HERMAN FINKELSTEIN,

General Counsel.

AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS,

New York, N.Y., July 26, 1973. Hon. John L. MCCLELLAN, Chairman, Subcommittee on Patents, Trade-Marks, and Copyrights, Committee

on the Judiciary, Washington, D.C. DEAR MR. CHAIRMAN : As suggested by your Committee, a joint statement is being made on behalf of all three music licensing organizations—the American Society of Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. and SESAC, Inc. with respect to the method of licensing music to cable television.

ASCAP has already furnished this Committee with a statement of its position in a letter dated January 14, 1972 (replying to a letter from Mr. Thomas C. Brennan, Counsel for the Committee) and in an accompanying statement. ('opies of that letter and statement are annexed and we respectfully request that they be made a part of the record of this hearing. What we said there with respect to S. 644 is of equal application to S. 1361.

The members of the American Society of Composers, Authors and Publishers appreciate the opportunity to present their views on cable television to this ('ommittee. Sincerely,

HERMAN FINKELSTEIN,

General Counsel. Enclosures.

AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS,

New York, N.Y., January 14, 1972. THOMAS C. BRENNAN, ESQ. Chief Counsel, Senate Subcommittee on Patents, Trade-Marks, and copyrights,

Washington, D.C. DEAR MR. BRENNAN: I am pleased to enclose the comments of the American Society of Composers, Authors and Publishers concerning the content of a modified Section 111 of S. 644 which you invited by your letter of December 15. 1971. We appreciate particularly having this opportunity to explain why music requires separate treatment in the cable section of the copyright bill, and have devoted our comments principally to this area.

As the cable television industry has recognized from the very outset music does not present the licensing problems that exist with respect to other forms of copyright material. Music does not pose questions of exclusive rights, nor are music interests desirous of limiting the importation of remote signals or of giving anyone an advantage over any competitor. Unlike other works, music is licensed in bulk; there are no problems of innumerable negotiations for separate licenses for each work or each use. Even the problem of price is solved by the opportunity, if there are any disputes as to rates, to resort to a Federal Court as in the case of ASCAP, or to arbitration in the case of the other licensing organizations.

We urge that there is no necessity for a compulsory license for musical works if those works are available on the following basis:

(1) The works are part of a total repertory made available to cable television under a single agreement without the requirement of separate negotiations for individual works or individual uses;

(2) The works are available on a non-exclusive basis on fair and non-discriminatory terms;

(3) The agreement makes the works available for a substantial period of time;

(4) In the event of dispute as to the reasonableness of the rates quoted, the rates can be determined by resort to a United States District Court or to arbitration.

(5) Provision is made for payment to the licensor for distribution to the parties entitled to the amounts collected so as to avoid any disputes between the licensee and individual copyright owners.

To the extent that these provisions are met by an organization licensing musical works to cable television, the reasons for statutory regulation disappear.

Section 111 could be framed so as to exempt musical works from a compulsory license if they are voluntarily made available on the foregoing basis; or it could specifically require that all musical works be licensed to CATV for retransmission on the foregoing basis. If a work does not meet these requirements, it could, of course, be made subject to a compulsory license on the same basis as other material.

In its comments, ASCAP has also addressed briefly the other questions raised by your letter of December 15. In sum, we feel that for copyrighted material which is subject to statutory licensing, a formula based on the gross receipts from all sources would be best. And we believe that small systems should pay copyright fees. These systems are operated for profit, and they should pay some kind of fee, although, as is usual, the rates charged would take into account their economic position.

For many years now the three music licensing organizations have stood ready to license the cable television industry. There is no dispute between the parties, and the cable industry has long recognized its obligation to pay royalties for the use of music. The parties should now be given a green light to seek voluntary agreement. Sincerely yours,

HERMAN FINKELSTEIN.

STATEMENT OF HERMAN FINKELSTEIN, GENERAL COUNSEL, AMERICAN SOCIETY OF

COMPOSERS. AUTHORS AND PUBLISHERS TO THE U.S. SENATE SUBCOMMITTEE ON PATENTS, TRADEMARKS, AND COPYRIGHTS

(January 14, 1972) By letter of December 15, 1971, Thomas C. Brennan, Chief Counsel of the Senate Subcommittee on Patents, Trade-Marks, and Copyrights, invited the American Society of Composers, Authors and Publishers (ASCAP) to submit its comments on the forthcoming modification of Section 111 of S. 644, a bill for the general revision of the copyright laws. The letter, after pointing out that the Subcommittee "has already made certain determinations concerning the basic nature of the cable television copyright provision,” requests comment on (1) the basis to he used in determining royalty rates; (2) the desirability of exemption on the basis of size; and (3) “whether any particular type of program material, such as music or professional and collegiate sports, requires separate treatment in the cable section of the copyright bill."

These comments on behalf of the 13,000 writer members and 4,000 publisher members of ASCAP will be devoted primarily to showing why music requires separate treatment.

Whereas other material used by CATV involves complicated problems of importation of distant signals, the protection of exclusive grants of rights, and the possibility of unfair competition between competing media-situations that required meetings among the CATV, broadcasting and motion picture interests to arrive at a compromise music presents no such problems. In fact, no one representing musical interests was invited to attend those meetings although I made it clear to the parties on many occasions that I was prepared to attend if invited. The reason why music has not been a problem to CATV is that long before CATV came on the scene, the men and women who founded ASCAP in 1914 had devised a system for licensing the performance of musical works on a basis that insured complete access by all media on a non-exclusive basis without the necessity of separate negotiations for individual uses, and without any complicated records or accounting of uses. There is complete assurance in advance that the user will have access to all musical works from any source; there is an assurance that the amount paid will be distributed to the persons entitled to those sums; and there is an assurance that the price charged will be reasonable. In the case of ASCAP, as will be shown, any user, including CATV, may apply to the federal court for determination of a fair rate if the parties cannot agree.

Before commenting on the specific issues raised by Mr. Brennan's letter, I would like to describe ASCAP and the role it plays in the licensing of musical compositions in the United States.

Under the ASCAP system, a single agreement licenses the non-dramatic performance of all the musical works in its repertory. Such licenses have been issued by ASCAP for many years to virtually all radio and television stations in the United States to perform any or all of its members' works.

In licensing the performance of musical works, it is customary to base the charge for a particular commercial user on the value of the music to that user in relation to the amount paid by the public to that user. Where several users benefit from a single performance, each pays in proportion to its receipts. For example, in a professional football game, music performed during half-time is viewed and heard by those in the stadium. At the same time, it may be carried by local radio and television stations in the city of one or both of the participating teams, and may even be broadcast on a national television network. It may also be retransmitted by one or more cable systems. At the present time, the professional football organization pays for the music used in entertaining the fans in the stadium during half-time; and the local stations, however small, and the national television network pay on the basis of the music's value to them in attracting audiences for their respective advertisers. The cable systems should pay on the basis of the value of the music to the particular CATV system. This will be discussed in more detail later.

Unlike other copyrighted material for which separate negotiations are necessary, in the case of music the rates paid by the broadcasting industry are reached by negotiation of a single agreement between ASCAP and an association representing the industry or the entity or entities seeking its license. There is also a mechanism to ensure that ASCAP's rates are fair and reasonable. In 1950, ASCAP agreed that the public interest would be served by having a neutral body available to determine the reasonableness of ASCAP's rates for the use of its music. That policy was embodied in a Consent Decree entered into between the United States Government and ASCAP, providing that any user who questioned the reasonableness of ASCAP's rates could have the rates reviewed by a United States Court. Since then, the broadcasting industry has resorted to the Court on many occasions; and proceedings are, in fact, now pending between television networks and ASCAP and between wired music services and ASCAP to determine what is a reasonable rate. If in the future ASCAP and the cable television industry are unable to agree on reasonable rates, the industry can, like all other users, bring the dispute to the Court for its determination,

There are two other organizations in the United States for the licensing of non-dramatic performances of music. One is Broadcast Music, Inc. (BMI), which offers to submit any question of reasonableness to arbitration. The third and smallest organization is SESAC, Inc., which is also willing to submit the reasonableness of its rates to arbitration. Thus, all the music used on radio and tele

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