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supplied).” It is the latter part of this definition which has a significant effect upon the amounts of copyright fee to be paid because many systems operate over more than one political subdivision. Thus, by the conventional industry definition, there are about 3,000 systems; but by the definition proposed by Mr. Foster, there would be about 6,000 systems—each system being split into two "systems" on the average. If the alternative definition were made operative in the bill, the effect on the amounts of copyright fee paid by the cable industry would be to reduce them by one half.
An example makes clear why this would happen. Suppose a cable system with quarterly revenues of $160,000 operated over two adjoining townships, and obtained $80,000 in revenues from each one. Under the conventional definition, this system would pay $4,000 each quarter, or 2.5% of its total gross revenues. Under the alternative definition, however, this system would be viewed as two "systems,” each with revenues of $80,000. Each of the "systems” would pay only $1,200 per quarter and together, they would pay $2,400 or only 1.5% of
7. THE EFFECT OF MODIFYING THE PROPOSED FEE SCHEDULE
The copyright fees proposed in S. 1361 vary from 1% to 5% of gross revenues in five discrete steps. The Chairman of the Subcommittee has requested that we analyze the effect upon cable system profitability of fees which are twice as high, i.e., which vary from 2% to 10%.
The average fee paid under the schedule proposed in S. 1361 would be nearly 2% of total cable revenues under current conditions. This average would approximately double to 4% of cable revenues if the fee schedule were increased to 2-10%. The effect upon profitability would be de minimis as the following excerpt from Tables E-3 to E-7 of our study demonstrates :
As may be observed, the effect of doubling the fee schedule is to reduce rates of return by less than 1 percentage point. Average returns are still far in excess of the 10–15% required to attract investor capital.
8. THE AVAILABILITY OF EVIDENCE FOR THE DETERMINATION OF COPYRIGHT FEES In his August 1 statement before the Subcommittee, Mr. Foster argued for the establishment of an initial fee schedule for compulsory copyright license for cable television systems by Congress (p 26). His major reason was that "sufficient empirical data simply does not presently exist to permit arbitrators to fairly establish an initial fee schedule" but would be available in three years when the arbitrators would convene under the proposed bill. We believe that a great deal of economic evidence presently exists or can readily be obtained, sufficient to permit arbitrators to make an informed determination as to just and reasonable fees.
The amount of financial data presently available from the cable television industry includes financial statements of hundreds of cable companies, some of them publicly held. In most cases, these companies maintain financial records by system, samples of which could be obtained under proper circumstances by an agency of the government. Some of these financial statements are available for each of more than ten years in the past. In addition, in the spring of 1972, the FCC requested detailed financial information from all cable television systems in the country (via their form 326). This included not only profit and loss statements by system, but also much other data which could be of use to the arbitrators. While this data is not in the public domain because it was obtained under conditions where individual system confidentiality is to be maintained, the FCC might be persuaded that its suitable analysis under proper auspices for the purpose of determining copyright fees would be in the public interest. In addition to the above, literally dozens of economic studies have been prepared by financial analysts and consulting companies, in particular, Rand, Mitre, and the Stanford Research Institute. These can all provide the arbitrators substantial guidance.
MUSIC EDUCATORS NATIONAL CONFERENCE,
Washington, D.C., July 25, 1973. Mr. THOMAS C. BRENNAN, C'hief Counsel, Subcommittee on Patents, Trademarks and Copyrights, U.S.
Senate, Washington, D.C. DEAR MR. BRENNAN: At the request of Leonard Feist, Executive Vice President of the National Music Publishers' Association, we are sending you the fol
lowing actions taken by the National Executive Board of the Music Educators National Conference at their recent meeting here in Washington :
"It was moved by Baird, seconded by Klotman and carried unanimously that the MENC National Executive Board establishes as the policy of the Music Educators National Conference that the Copyright Law shall be observed and that improper and unauthorized use of music and other printed materials protected under that law shall be prohibited in all Conference activities. Further, all MENC national and state affiliates are urged to adopt a similar position as official policy.
"It was moved by Benner, seconded by Baird and carried unanimously that the MENC National Executive Board directs that official MENC policy on the use of copyrighted materials be implemented in the following ways:
(1) When a director accepts an invitation to appear on a convention program he sball sign a declaration stating that he has read the MENC policy and will not use unauthorized copies of copyrighted materials.
(2) Any participant in a MENC program violating this policy position will be subject to suspension from the program.
(3) The action of the National Executive Board shall be communicated as a matter of general information to all participants in MENC-sponsored activities.”
This demonstrates the concern of our officers for educating the membership to have respect for the Copyright Law. At the same time we would like to reaffirm our interest in having new legislation w
uld make it easier for teachers to understand what they can do with copyrighted materials as they pursue their professional charge of educating children. Cordially yours,
CHARLES L. GARY,
STATEMENT ON S. 1361 ON BEHALF OF THE MUSIC EDUCATORS NATIONAL CONFERENCE
The Music Educators National Conference has followed the struggle for new copyright legislation with great interest for the past 10 years. Members of the organization testified at earlier hearings and were a part of the "summit meeting" in the office of the Register of Copyrights at which the compromise on "fair use" which led to section 107 in the present Senate Bill 1361 was reached. MENC has participated regularly in the deliberations of the Ad Hoc Committee of Educational Organizations on Copyright Legislation. At the same time it has maintained friendly relations with the music publishing industry and has acted to protect the interests of that group with the MENC membership. A recent action of the MENC National Executive Board designed to enforce obedience to the present copyright law during all MENC sponsored events has been sent to the office of the subcommittee's chairman.
It is the position of the MENC that new copyright legislation is badly needed.
Music teachers need to know what they can and cannot do with the sophisticated means of copying printed material and sound now at their disposal. They need to be able to teach in ways that will enable them to do their best job of instructing their charges but without damaging the interests of authors and composers. The compromise represented by the fair use provisions of section 107 still seems to be a workable solution and MENC specifically endorses this section :
Section 107. Limitations on exclusive rights : Fair use . . . the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by [Section 106], for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include: (1) the purpose and character of the use; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.
The Conference takes this position fully aware that the decision on the Williams and Wilkins case may have implications for the future development of the concept of "fair use". The possibility of this prompts the request for some disclaimer in the report that accompanies the bill in order that the understanding that existed when section 107 was conceived not be prejudiced. Without that some additional protection for the teacher, such as the Ad Hoc Committee's suggested limited educational exemption would be needed. In other words MENC is satisfied with the compromise worked out originally and anxious to see it made into law so that we can begin operating under it. We pledge our resources to helping music teachers understand it in the belief that it can be made to work to the benefit of students, composers, publishers and American musical culture generally.
MUSIC LIBRARY ASSOCIATION,
August 8, 1973. Mr. THOMAS C. BRENNAN, Chief Counsei, Select Committee on Patents, Trademarks and Copyright, Com.
mittee on the Judiciary, U.S. Senate, old Senate Office Building, Washing
ton, D.C. DEAR MR. BRENNAN: On behalf of the Music Library Association I should like to offer a statement on the proposed general revision of the copyright law (S. 1361) and request that tbis statement be included in the record of the hearings which were held by Senator McClellan on July 31 and August 1, 1973.
We wish to express our concurrence with the principles of the fair use provision as presented in $ 107 and $ 108 of S. 1361. We are, however, concerned! about the phrase "other than a musical work” ($ 108(d), line 28), by which librarians are prohibited from extending to users of printed music the privilege of obtaining a siugle copy of a work that is granted by that section to users of other printed materials contained in libraries. Musicologists, musicians, and music lovers should not, we believe, be denied this means of access to certain library materials which differ from other materials simply by virtue of their subject.
The copyright legislation passed by the House of Representatives in 1967 (H.R. 2512, 1st session, 90th Congress) does not contain the exclusion noted above, Circumstances relating to music in libraries and the use of such music are precisely the same now as they were during the period leading to the 1967 bill. Thus, we cannot help but observe that the phrase in the Senate bill is not in the best interests of library users.
We therefore urge that the phrase "a musical work” be deleted from S. 1361, enabling librarians to extend to users of music the rights of fair use of library materials, the same rights provided in § 108(d) to others. Sincerely yours,
JAMES W. PRUETT, President.
WATTENBERG & WATTENBERG,
ATTORNEYS AND COUNSELORS,
New York, N.Y., August 10, 1973. Mr. THOMAS C. BRENNAN, Chief Counsel, Select Committee on Patents, Trademarks and Copyright, Com
mittee on the Judiciary, U.S. Senate, Old Senate Office Building, Washington,
D.O. DEAR MR. BRENNAN: This is with reference to a letter dated August 8, 1973 to you on the stationery of Music Library Association, signed by James W. Pruett, President, urging deletion of the words, "a musical work" from Section 108 (d) of S. 1361 appearing on line 28, page 9 thereof.
I wrote you on December 12, 1972 concerning the same subject matter as it related to S. 644 and I attach a copy of said letter for your ready reference, it applies with equal force to S. 1361 and Mr. Pruett's letter.
In addition to the arguments made by me heretofore Mr. Pruett's misleading reference to H.R. 2512, 1st session, 90th Congress demands clarification. Section 108 as set forth in H.R. 2512 which was passed by the House of Representatives on April 11, 1967 and referred on April 12, 1967 to the Senate as an Act of the House of Representatives, formed the basis of S. 597 the companion bill to H.R. 2512. Section 108 of H.R. 2512 is as follows:
Limitation on exclusive rights: Reproduction of works in archival collections. Notwithstanding the provisions of section 106, it is not an infringement of copyright for a nonprofit institution, having archival custody over collections of manuscripts, documents, or other unpublished works of value to scholarly research, to reproduce, without any purpose of direct or indirect commercial advantage, any such work in its collections in facsimile copies or phonorecords for purposes of preservation and security, or for deposit for research use in any other such institution.
This section gave a limited right to libraries to reproduce for purposes of preservation and security or for deposit for research use in any other library. This indeed was a far cry from Section 108 of S. 1361, a greatly expanded provision both as to scope and application.
Whereas 108 of H.R. 2512 had been aimed at serving libraries and researchers, the new 108 is open to the public" and serves all users. In making such a sweeping expansive change the Senate Committee on the Judiciary correctly excluded from the application of Section 108 certain works which it deemed in its wisdom not properly includable to wit: "a musical work, a pictorial, graphic or sculptural work, or a motion picture or other audio-visual work”. It is clear that accessibility and freedom to reproduce these excluded works would not be essential to legitimate users of libraries and furthermore such works would be susceptible to economic destruction by unbridled copying.
As stated in my previous statement on the subject matter a musical composition is particularly vulnerable and should properly be excluded from Section 108.
At the hearings on July 31 and August 1, 1973 before this Committee the amendment to section 108 (d) recommended by the American Library Association restated the exclusions aforesaid and in the statement of the Ad Hoc Committee, Harold E. Wigren said “The Ad Hoc Committee is not asking for the right to copy an entire book or novel; a dictionary, reference book, musical score ..."
Included in the 41 organizational members of the Ad Hoc Committee are Music Educators National Conference and Music Teachers National Association. If these large music organizations do not ask freedom to copy musical scores, it serves poorly for the Music Library Association to do so and its request should be rejected. This letter is sent in multiple copies for the Subcommittee's use. Sincerely,
PHILIP B. WATTENBERG. WATTENBERG & WATTENBERG,
ATTORNEYS AND COUNSELORS,
New York, V.Y., December 12, 1972. THOMAS C. BRENNAX, Chief Counsel, Subcommittee on Patents, Trademarks and Copyrights, Committee
on the Judiciary, U.S. Senate, Washington, D.C. DEAR MR. BRENNAN: Further to my letter of October 4, 1972 there has come to our attention ARL Newsletter No. 58 which sets forth an “Amendment to Copyright Revision Bill, S. 644 recommended by the Association of Research Libraries, American Library Association, and others” respecting Section 108(d) and states that the amendment "is being submitted to the Senate Subcommittee on Patents and Copyrights by the two associations."
Music Publishers' Association of the United States, Inc. is opposed to the said amendment and accordingly submits herewith 15 copies of an opposition statement so that each member of the Subcommittee and their staffs may be supplied a copy thereof. Sincerely,
PHILIP B. WATTENBERG. Enclosures.
STATEMENT OF PHILIP B. WATTENBERG, ATTORNEY FOR MUSIC PUBLISHERS'
ASSOCIATION OF THE UNITED STATES, INC. Music Publishers' Association of the United States, Inc., a trade association consisting of 47 important publishers of educational, religious and other types of music (hereinafter referred to as "MPA") has not opposed Section 108 because it expressly excludes “a musical work” from the application of such section. This exclusion, set forth in sub-section (d) of Section 108, clearly states that “The rights of reproduction and distribution under this section apply to a copy of a work, other than a musical work. ...".
However, the subject amendment contains no such exclusion and accordingly would cause Section 108 as amended to apply to musical works, On that ground alone, MPA would oppose the subject amendment.
The exclusion of musical works from Section 108 is correct and is based upon sound reasoning which should be restated here so that such exclusion can be preserved and retained regardless of this or any other amendment to Section 108 which may be proposed :
1. A musical composition is not the type of copyright required for research and study of the serious nature involved in the Williams & Wilkins Case.
2. A musical composition is not the type of copyright that can be subdivided and dissected as is the case with medical journals, books, periodicals and compendiums of scientific writings, information and articles.
3. A musical composition in most instances when published in popular editions and arrangements for piano, various single instruments and chorus is from 2 to 6 pages in length and accordingly is easily reproduceable and vulnerable to unauthorized copying. Therefore, it requires special protection and safe-guarding.
In addition to the aforesaid grounds, the subject amendment is opposed for the following reasons :
1. Section (d) (1) would relieve the library or archives as well as the user of all responsibility to investigate the availability through commonly known trade sources of an article or other contribution to a copyrighted collection or periodical issue or "a similarly small part of any other copyrighted work”. A musical composition would be one such other copyrighted work and it is impractical to correlate a small part of a musical composition to an article or other contribution to a copyrighted collection or periodical issue. Any standard which would require a determination as to what is a “small part” of a musical composition is unrealistic.
2. Section (d) (2) would permit the library or archives to supply a copy of an entire musical composition without any requirement on the part of the user to establish to the satisfaction of the library or archives that an unused copy cannot be obtained through commonly known trade sources. Minus this, the likelihood of an investigation by the library or archives on its own initiative is reduced if not entirely eliminated. The section would be inequitable and unworkable.
3. Section (d) (3) is opposed on the grounds that it is meaningless. The library or archives should be required to reproduce on all authorized copies of copy. righted material supplied by it the same copyright notice as appears on the copyrighted work itself and a caption “Authorized Reproduction".
In any event this requirement should be added to Section 108.
MPA, along with National Music Publishers' Association and Music Library Association has long recognized the problem created by out-of-print copyrighted music for users and libraries. As a result, these organizations developed and approved a form of LIBRARY REQUISITION FOR OUT-OF-PRINT COPYRIGHTED MUSIC, copy of which is attached hereto. This form has been in use for a number of years and represents a practical approach to the problem. It is submitted that this approved method of doing business enhances the wisdom of excluding a musical work from Section 108.
LIBRARY REQUISITION FOR OUT-OF-PRINT COPYRIGHTED MUSIC This form approved by Music Library Association (“MLA"), Music Publishers' Association ("MPA") and National Music Publishers' Association (“NMPA"). To
Date --(name of publisher) We require, for library use, the work(s) entitled :
1. If in print, please send us
copies of the work(s) and bill us.