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vision is covered by the licenses of only three organizations. The same ease of licensing is now available to CATV.
ASCAP also provides a mechanism for the fair distribution among its members of the copyright royalties it collects. For most active music writers, their share in these royalties is their basic livelihood. The essential rules governing ASCAP's distribution process are prescribed by the Consent Decree entered into by the United States Government and ASCAP. Both BMI and SESAC also have distribution inechanisms.
None of the problems that S. 644's system of statutory licensing is designed to meet is present in the case of music. First, there is complete access to music by any cable system regardless of who else may be licensed in the same area. Compare music with motion pictures or other types of copyrighted material licensed on an individual basis. Unlike music, the latter material is licensed on an exclusive basis in a particular area. It will presumably be licensed to the highest bidder. If it is licensed to a particular television station in a market, it is not licensed to another station or to a cable system for origination at least for many years. Conversely, if it is licensed to a cable system, it will not be made available to a television station in the same market for many years. No one can perform a motion picture unless she has secured the original film from the producer or has access to a television broadcast. Musical compositions, on the other hand, are equally and immediately available to all television and radio stations and all cable systems. Recordings and sheet music may be bought in the open market by any station or CATV operator. One cannot preempt another's use of music; nor may one would-be user of music be bargained off against another to see which will pay the higher price.
Second, there is no problem of clearance. ASCAP receives from its members the authority to grant, on a non-exclusive basis, the right to perform their works publicly for profit in non-dramatic form. Once a cable system has an ASCAP license to retransmit ASCAP's music, it has full clearance to do so.
Third, there need be no fear that cable systems will have to pay an excessive amount to ASCAP for its license. As I have described, ASCAP has a system for licensing music that provides all who seek a license an opportunity to secure a judicial determination of the reasonableness of the proferred rate. This system has been in existence for more than twenty years and has proven its worth.
Fourth, there is no need to establish a statutory mechanism for the distribution of the royalties collected by ASCAP. It already has a sound and effective inechanism, one that is now embodied in a Consent Decree.
Music of the other two organizations is available on substantially the same basis.
There is no necessity for a statutory system of licensing music which is made available to cable systems under the foregoing conditions. A system of voluntary agreement is preferable to a statutory system if the necessary safeguards are present. It permits the parties in seeking agreement to take into account the conditions existing at the time of negotiation and the peculiar facts that apply to the particular works and uses which are then under consideration. A statutory rate, in contrast, can at best reflect only the conditions existing at the time the statute was enacted; it cannot take into consideration the unique factors applicable to the works involved—that is, their general availability to cable, the basis on which they are made available to television stations and networks, and the many other factors that influence terms and price. These conditions can vary from time to time and in innumerable ways. With judicial determination or arbitration to resolve disputes as to price, there is full assurance that a party cannot misuse negotiations to refrain from agreement and that a fee or schedule of fees will ultimately be fixed.
The cable people recognize that there is no problem with music for which a statutory method of licensing is necessary.
ASCAP has offered to grant the industry a license to use its repertory without restriction as to the source of performance—that is, whether performances are originated by distant radio and television stations, are originated by local radio and television stations, are recorded on commercial phonograph records or motion pictures, or are originated by the cable television operator. There is no dispute between ASCAP and the cable industry with regard to access to its repertory and the opportunity to retransmit on cable any musical work in that repertory. Cable television operators have conceded that they should pay for the retransmission of copyrighted musical works, and ASCAP concedes that they should have an unlimited right to make such retransmissions.
Thus far we have been discussing television and CATV. There is another aspect of CATV which does not relate to other program material (such as motion pictures) and deals almost entirely with music. I refer to the retransmission of radio signals. The primary fare of radio, as I have indicated, is music, and most of it is performed by the playing of phonograph records. A cable operator may provide a music channel by playing phonograph records, much as a radio station does. If he does so, he will be acting as an originator and would require an ASCAP license in any event. A cable operator who instead establishes music channels by retransmitting radio stations that carry the kind of music he wants for his channels should not be permitted thereby to escape the same obligation to pay the same fair share of the amounts paid by the public for the enjoyment of copyrighted music that would be paid by the radio broadcaster.
In choosing the radio station to be picked up, CATV will select the stations playing the best music and having the smallest number of interruptions for commercial messages, if any. Unlike motion pictures, the smallest station can afford to play the best music. It is all available to it. If payment by CATV is not related to all sums received by the public, the author of the works used will be denied a fair return for his work.
We turn now to the question of “whether royalty rates should be determined by a single graduated formula of a percentage of the gross receipts paid by subscribers for the basic service of providing secondary transmissions, or whether the formula should provide a basic rate for carriage of local signals, with an additional charge related to the number of distant signals carried by a particular system.” To the extent that certain material may require compulsory licensing, the best formula would be one that provides for payment of a percentage of the gross receipts from all sources. ASCAP is mindful that a number of significant studies (for example, the report released in December, 1971 by the Sloan Commission on Cable Communications) have predicted that by the end of the 1970's, between 40 and 60 percent of the nation's television viewing population will be on the cable. If this is so, cable may acquire an importance now undreamed of, and sources of income attributable to the copyrighted material supplied by broadcasting which may be far greater than amounts received from subscribers.
We turn now to the question of whether “it is desirable to exempt a commercial enterprise from the payment of copyright fees exclusively on the basis of size".
The November, 1971 "compromise" reached by the broadcasting industry, the cable industry, and certain copyright owners (as set forth in Broadcasting Magazine, November 8, 1971, pages 16-17) states that the parties support legislation that establishes "liability to copyright, including the obligation to respect valid exclusivity agreements. . . . for all CATV carriage of all radio and television broadcast signals except carriage by independently owned systems now in existence with fewer than 3,500 subscribers”. Incidentally ASCAP first learned of this compromise from the trade press.
ASCAP feels that independently owned cable systems with less than 3,500 subscribers do not require an exemption. Small cable systems like large ones should pay reasonable fees for the use of copyrighted material. The rates will, of course, take their respective economic positions into consideration. There are many such systems in the United States today. They serve an important function by making a full complement of television signals available to rural areas and to small towns that are poorly served by over-the-air television. But these small systems are also commercial enterprises that operate at a profit, and there is no warrant for asking in effect that copyright owners subsidize them. Small radio and television stations pay for the use of music. Music enhances the value of cable to subscribers, and all cable systems should pay a ratable portion of their receipts for the use of copyrighted music. If the rates are reasonable and all systems are treated in a non-discriminatory way, there can be no unfairness.
STATEMENT OF BROADCAST MUSIC, INC. (BMI) BEFORE THE SENATE JUDICIARY
COMMITTEE ON S. 1361
(August 1, 1973) BMI welcomes this opportunity to express its views concerning cable television. We have chosen to limit our comments to the licensing of copyrighted music, an area in which BMI, which represents the largest number of writers and publishers of any music performing rights licensing organization in the world, has been active over the last 33 years,
It is BMI's position that the licensing of music should be treated differently from the licensing of copyrighted works which involve such problems as clearance and exclusivity, factors which are wholly absent from music licensing.
Among the points made herein are:
1. The reasons given by CATV operators for special copyright consideration lave no application whatsoever to music licensing.
II. Direct negotiation between music licensing organizations and the cable industry will more efficiently assure availability of and fair payment for the use of music than any statutory regulation.
I. A method of licensing music which meets all of the problems of CATV operators has evolved throughout the world over the course of almost a century. To see how this system functions we should look at the position of the television broadcasting stations, the primary transmitters of the performances which the CATV operators wish to retransmit.
Broadcasters have contracts with three performing rights organizations: Broadcast Music, Inc. (BMI), The American Society of Composers, Authors and Publishers (ASCAP), and Sesac, Inc. These three organizations, through their contracts with many thousands of writers and publishers and with sister performing rights organizations throughout the world, make available to broadcasters the entire repertory to which access is desired by the broadcasting stations. Under these licenses, which run for terms of years, the station may perform any composition in these repertories at any time and by any method that the broadcaster desires-live, recorded, or embodied in films. Payments in accordance with the licenses are made to the organizations involved, which in turn make royalty distributions to their affiliated writers and publishers.
We stand ready to make similar licensing available on non-discriminatory terms to every operator of a CATV system. Let us see what the availability of such licenses does to the only reasons given by the CATV operators for special copyright treatment.
CATV bases its claim to special treatment upon problems of exclusivity, clearance, the restriction of licensing for competitive reasons and an unfounded fear that CATV systems may be required to pay unreasonable copyright fees. None of these problems exist in the field of musical performing rights, where the li. censing organizations have eliminated every claim which has been raised by CATV operators. In addition, BMI and its competitors indemnify broadcasters against any copyright liability deriving from the use of their repertories and offer an established procedure for the distribution of royalties.
(a) Exclusivity is not a factor. The rights granted by BMI and its competitors to broadcasters and all other users of music are non-exclusive. Any number of users may simultaneously perform a musical work at the same time. This applies whether the music is live, recorded or filmed. It will clarify the point to consider a broadcaster who is interested in presenting a hit film, "Mary Poppins", to his viewers. He will be concerned, and rightly so, that his screening will be the only one in the region in his chosen time period. He will want assurances that his local competition will not be showing the same film, and that it will not be beamed in from some distant point. That same broadcaster, however, will face no such problems with the individual songs from "Mary Poppins”. BMI licenses permit simultaneous performances of these tunes in any number of different outlets-radio, television, night clubs, via background music services and by other users to the detriment of none. Therein lies a basic difference in the handling of these copyrighted properties.
(b) Clearance is not a factor. Virtually all of the 27,000 domestic users of BMI music have elected blanket licenses under which they can perform any number of compositions contained in the BMI repertory any number of times, at their discretion. Thus, the need to obtain permission or clearance for individual selections or uses is eliminated.
(c) BMI and the other performing rights organizations have no incentive to restrict the availability of their repertories to any CATV system. The sole function of BMI is to collect copyright fees from as many customers as possible and to distribute these fees to copyright proprietors.
(d) There is no possibility that unreasonable fees will be exacted. BMI has repeatedly expressed its willingness to arbitrate the amount of its fees if negotiations prove fruitless. As explained more fully below, BMI is willing to have a requirement for the arbitration of the fees for the retransmission of compositions in its repertory imposed by statute.
(e) In the field of music licensing, procedures for the distribution of royalties among individual copyright owners have long been in effect. We believe that it would be improper in principle and unworkable in operation to impose upon the Register of Copyrights the duty of dividing payments for all classes of copyrighted works among many thousands of individual copyright owners when the machinery for such distribution already exists. BMI has always assumed full responsibility for distributing the fees received by it to its affiliated writers and publishers.
What the CATV systems want is the right to retransmit musical material picked up from broadcasting stations. We stand ready to give them the same rights that those stations have in that same material. This should satisfy all of the needs of the CATV operators.
II. BMI seeks less rather than more regulation with respect to the use of copyrighted material by the burgeoning cable industry. It seems obvious to us that the best soltuion, not only for authors and publishers, but for CATV, is for CATV systems to have access to the musical repertories for all purposes, both retransmission and origination, on a fair basis. That solution begins with a very simple step-negotiation marked by fairmindedness and good will on the part of all participants.
BMI believes that it can successfully negotiate fair, voluntary agreements with CATV operators on a nondiscriminatory basis. It is a fundamental concept of the American free enterprise system that the fairest and most successful method of arriving at a reasonable agreement is negotiation between the parties. A departure from that tradition is not warranted with respect to the performance of music. BMI is certain that serious negotiations between music licensing organizations and CATV operators would be productive.
All performing rights organizations have sought to conclude negotiations. They have tendered court fixation or arbitration of rates of CATV operators. BMI reiterates its offer to submit the issues involved to binding arbitration if negotiation does not prove fruitful. BMI is willing and, indeed, is required by consent decree, to tender nondiscriminatory licenses to all music users. It is willing to tender CATV such licenses in form similar to that which has been acceptable to all other classes of music users.
BMI would be willing to have a requirement imposed upon it for the compulsory arbitration of the fees for the retransmission of the compositions in its repertory. A statutory provision for such arbitration, as opposed to the present proposals of the copyright revision bill, could be limited to the music performing rights organizations who are certified by the Register of Copyrights as having their repertories substantially performed by the broadcasters who constitute the primary transmitters in the United States. Indeed, BMI is ready to permit CATV systems to utilize the music licensed by it during any period of negotiation or arbitration.
In summary, BMI believes that the drastic remedies of statutory fixation of compulsory license rates, coupled with bulk payment to a government official for distribution to the individual copyright proprietors of all classes of copyrighted works is unnecessary and inappropriate insofar as the licensing of music is concerned.
The problem of payment for musical compositions utilized by CATV is not an inter-industrial conflict; it is a problem of livelihood for thousands of creative writers, the encouragement of whose activity has been constitutionally recognized as essential to the public interest. These writers are solely motivated by the desire to cooperate to the utmost with any user of their works who is ready to compensate them fairly.
COMMENTS OF BROADCAST MUSIC, INC., TO THE SUBCOMMITTEE ON PATENTS, TRADEMARKS AND COPYRIGHTS OF THE JUDICIARY COMMITTEE OF THE U.S. SENATE
(January 20, 1972) Broadcast Music, Inc. (BMI) welcomes the opportunity to respond to the letter of Thomas C. Brennan, Esq., Chief Counsel, dated December 15, 1971. It will concentrate its comments on "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."
BMI is a music performing rights licensing organization. Our copyright law specifically provides for the protection of the right publicly to perform music for profit and it is only through BMI and organizations similar to it that this right can successfully be implemented. BMI's sole function is to license to music users of every class and type the right to give non-dramatic public performances of copyrighted musical compositions for profit. Affiliated with BMI are approximately 25,000 composers and lyricists and approximately 9,000 publishers. These are all wholly independent. They convey to BMI no rights in their musical compositions, other than the performing right.
In addition to making available to music users all the works of its affiliated writers and publishers, BMI, through reciprocal contracts with more than thirty foreign performing rights organizations, makes similarly available music of the rest of the world. Almost without exception, all of BMI's licenses to approximately 27,000 music users in the United States are non-exclusive "blanket” licenses which permit the licensee to perform the entire repertory of BMI without individual clearance or permission. BMI divides all of the money it collects, except for its expenses and necessary reserves, among the writers and publishers whose works it represents.
The licensing of the right to perform non-dramatic musical compositions publicly for profit is unique. Section 111 of S. 644 was designed to meet certain specific problems which CATV operators feared would restrain the proper growth in the public interest of CATV systems. All of these problems have been solved by a system of licensing which has, for decades, operated, not only in the United States, but all over the world and which serves the needs of all of the industries which utilize musical performances for profit. No other system than the one which has been so patiently evolved can properly meet the true needs both of the writers and publishers of music and of CATV operators.
The questions which the CATV owners raised and which are inapplicable to music licensing are :
1. Unlike every other type of program material, no problems of exclusive rights are involved in music licensing. The rights granted to users of music by BMI and its competitors are non-exclusive, whether the music is live, recorded or filmed. Every user in every market may simultaneously perform the same composition. Whereas a film may be licenses to only one station or one CATV operator in a market, music licenses permit performance of a musical composition on any number of different outlets-radio, television, night clubs, background music services and other users, to the detriment of none. To give an example of how this operates, only one person in a community may have the right to show the film “BORN FREE.” The musical composition "BORN FREE,” which is incor, porated in the picture, may, however, be performed by every establishment that uses music, from skating rink to television station. This crucial and basic dif. erence is alone enough to require the separate treatment of music licensing.
2. CATV operators expressed fears about the complexity of clearing each individual musical composition or performance. This problem does not exist in music licensing. Virtually all of the 27,000 users of BMI music (and this is equally true of its two competitors) have voluntarily elected blanket licenses under which they can perform all of the musical compositions in the BMI repertory at any time and by all means without the need of separate or individual permissions or clearances.
3. CATV operators expressed the fear that their right to disseminate programs would be limited by a restriction of such right for competitive reasons. No pos. sibility of such restriction exists in the music licensing field. BMI and its competitors are organized and exist only for the purpose of licensing performing rights on a non-discriminatory basis to as many customers as possible. This is BMI's sole function and its sole economic interest. It acts on behalf of approximately 25,000 composers and lyricists and 9,000 music publishers whose only interest is to collect reasonable fees from as many people as possible.
4. CATV operators have expressed concern with respect to the difficult problem of distributing royalties among individual copyright owners. No such problem exists in music licensing. BMI and its two competitors take full responsibility for distributing the fees they collect among the individual writers and publishers involved. The broadcasting industry, for instance, makes payment to three organizations and has no problems with respect to further distribution.
5. There is no risk that unreasonable fees will be exacted. BMI's position has been and is that, if negotiation does not result in voluntary agreement, it will