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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of copyright for a nonprofit institution, having archival custody over collections of manuscripts, documents, or other unpublished works of value to scholarly research, to reproduce, without any purpose of direct or indirect commercial advantage, any such work in its collections in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,

THOMAS C. BRENNAN,

PHILIP B. WATTENBERG.

WATTENBERG & WATTENBERG,

ATTORNEYS AND COUNSELORS,
New York, N.Y., December 12, 1972.

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,

Enclosures.

20-34473-40

PHILIP B. WATTENBERG.

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 copyrighted 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. Attachment.

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").

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2. If permanently out of print, please sign the duplicate of this form, which shall constitute permission by you to us to make or procure the making of --- copies of the work(s), but only on the following conditons:

(a) The copyright notice shall be shown on all copies

(b) All copies shall be used for library use only.

(c) No recording use or performance for profit use or use other than library use shall be made of any copy unless such use shall be expressly licensed by you or an agent or organization acting on your behalf.

(d) We shall pay

but not otherwise.

for the right to copy pursuant to this permission

(e) We (do) (do not) own a copying machine.

3. If any work referred to above is unpublished and available on loan to us, please advise the terms and conditions of such loan. If not available to us, please insert an X here and return the duplicate of this form to us promptly.

4. If any work referred to above is not in your catalog, please insert an X here and return the duplicate of this form to us promptly. Very truly yours, Agreed to:

By

(name of publisher)

By

(name of library)

This form should be prepared in duplicate. Additional copies may be secured from MLA or MPA, 609 Fifth Avenue, N.Y., N.Y. 10017, 4th floor, or NMPA. 460 Park Avenue, N. Y., N.Y. 10022.

SUPPLEMENTARY JOINT STATEMENT ON S. 1361 OF THE NATIONAL ASSOCIATION OF BROADCASTING AND THE ASSOCIATION OF MAXIMUM SERVICE TELECASTERS

This Supplementary Statement is addressed to the modifications which the National Association of Broadcasters (NAB) and the Association of Maximum Service Telecasters (MST) believe should be made in the provisions of S. 1361 bearing upon cable television (CATV). It also considers some aspects of the oral and written statements made or submitted by representatives of cable interests before this Subcommittee on August 1, 1973. Finally, as indicated in the statement of NAB President Vincent T. Wasilewski at the August 1 hearing, it deals with the question of copyright liability for cable retransmission of sporting events, as to which broadcasters were not requested to testify on August 1.

In introducing S. 1361 in March of this year, Senator McClellan noted that the CATV provisions would have to be revised in the light of events that have occurred since the bill was originally drafted in 1969. Those events include, most notably, two critical developments. The first was the November 1971 Consensus Agreement (Appendix A), which broke the impasse among broadcasters, cable interests, and copyright owners over CATV copyright and other matters relating to cable television. The second was the implementation of all of the Consensus except the copyright aspects in the form of new cable regulations adopted by the Federal Communications Commission in February, 1972, which terminated the freeze on CATV development and established the conditions for expansion of CATV throughout the country. This second development provided the CATV interests, but not the broadcasters or the copyright owners, with the principal benefits promised them by the Consensus.

Although the Consensus Agreement was generally more favorable to CATV than to broadcasters or copyright owners, all the parties who accepted it compromised deeply entrenched positions as to the extent and terms of the copyright liability of cable systems and as to the regulatory conditions under which such systems should be permitted to operate. The Consensus provided that the parties would support legislation implementing its provisions relating to copyright, and the Federal Communications Commission promptly implemented the regulatory provisions in the expectation that implementation of the copyright provisions would follow.

It is clear that the Commission adopted the Consensus specifically because of the copyright provisions. It promulgated its cable regulations conforming to the Consensus only after its Chairman had solicited and received the advice of Senator McClellan, as Chairman of this Subcommittee, that FCC implementation of the regulatory provisions of the Consensus would "markedly facilitate passage of copyright legislation," and that the entire Consensus was, in his view, "in the public interest and... a reasonable compromise of the positions of the various

parties." (Appendix B). On the strength of this assurance from Senator McClellan, the Commission then concluded that its adoption of the Consensus would "markedly serve the public interest."

Having agreed to the Consensus, NAB and MST support enactment of the copyright legislation contemplated by that Agreement, although our support depends on the implementation of the entire compromise. Adhering to the spirit of the Consensus as well as to the letter, we have joined with the copyright owners in drafting revisions of Section 111 and certain other provisions of S. 1361 which would achieve this result. A copy of the Revised Text we propose is attached as Appendix C. Ever since the Consensus was agreed to, NAB and MST have tried repeatedly to induce the National Cable Television Association (NCTA), which formally accepted the Consensus on the same day as the NAB, to join them in this effort, but NCTA has consistently refused.

Our Revised Text does not afford either broadcasters or copyright owners the full protection to which we believe they are entitled. In particular, the grant of broad compulsory copyright licenses for CATV restransmission of the signals and programs of broadcasters gives cable systems an unfair competitive advantage over broadcasters and an unfair bargaining advantage in dealing with copyright owners; in effect, it also provides them with a subsidy out of the pockets of copyright owners and competing broadcasters in the form of lower fees than they would pay if they had to bargain for a license. The exemption from normal copyright liability conferred upon small cable systems, of course, is a straight subsidy payable to such systems out of the same pockets. In addition, under the compulsory license granted by the Consensus, copyright owners and broadcasters will enjoy substantially less exclusivity protection in markets below the top 50 than they could ordinarily expect vis-a-vis other broadcast stations. We are nonetheless supporting these and other unfavorable provisions of the Consensus Agreement because we solemnly undertook to do so, and because in so undertaking we were assured of comparable support from NCTA for the critical copyright protections provided elsewhere in the Consensus.

We recognize that Congress is not bound by the copyright terms of the Consensus, any more than the FCC was bound to adopt its regulatory provisions. Nonetheless, prior to the Consensus the Chairman of this Subcommittee repeatedly urged the parties to seek a compromise over the intractable copyright issues which had long delayed enactment of copyright revision legislation. The Chairman and the FCC have emphasized that the compromise actually negotiated is reasonable and in the public interest. The FCC acted in reliance on the Consensus in issuing its 1972 cable regulations. In these circumstances, failure to implement the copyright provisions of the Consensus could only encourage abuse of the legislative and administrative processes by future participants, and implementation of the copyright provisions of the Consensus is the appropriate means to serve the public interest.

THE CONSENSUS COMPROMISES

The Consensus Agreement was to have ended years of conflict over a variety of issues relating to CATV copyright liability, including such basic questions as whether cable retransmission should be given the extraordinary privilege of a compulsory copyright license and what protections should be provided for broadcast stations, with which cable competes but on which it must also rely for the bulk of the programs it supplies.

As the Court of Appeals recently held in Columbia Broadcasting Systems, Inc. v. TelePrompTer Corp., F.2d (2d Cir., Docket No. 72-1800, March 8, 1973), cable systems are subject to copyright liability under present copyright laws when they retransmit distant signals which could not be taken off the air by a local antenna without the aid of microwave relays. Except in localities where there are peculiar difficulties in receiving local signals, the importation of such distant signals via microwave is the principal service provided by CATV to its subscribers. Nonetheless, although cable systems have been spreading rapidly, they have yet to pay copyright owners anything for the programs they retransmit.

Present law aside, cable systems have in the past argued that they should be exempt from copyright liability because copyright owners are fully reimbursed by broadcasters for the use of programs retransmitted by cable. Even if this were true, it is not clear why profit-making cable systems should be given a free ride at broadcasters' expense instead of paying their share of copyright costs. But the truth is that the importation of distant signals to compete with the signals of

local broadcasters does not leave intact the revenues of either broadcasters or copyright owners. The proliferation of distant signals in a local market fragments the local audience, thus reducing the advertising revenues of local broadcasters and in consequence the amount of the copyright fees they can pay. This revenue loss is not offset by increased revenues to the broadcasters whose signals are carried by cable to distant markets, because such fragmental increases in a broadcaster's audience in the form of distant viewers cannot ordinarily be sold to advertisers. Local advertisers obviously have no interest in paying to have their messages transmitted to distant markets, and national advertisers have consistently found it uneconomic to sell in a market through retransmission of distant signals. Clear channel radio stations, for example, which can be heard at night over all or most of the United States, cannot sell their distant audiences to advertisers to any significant degree, and the scattered pockets of distant audiences gained through cable are even less appealing.1

Indeed, one of the two principal audience rating services, on which advertising rates are based, does not even attempt to report the size of distant audiences acquired through cable. Thus, it is clear that under an equitable copyright system designed to encourage program creativity, cable should pay its way like other

users.

Cable interests have also earnestly contended that even if they must pay something, they should not have to bargain for copyrights as broadcasters must do. They have argued that a cable system cannot possibly identify and then negotiate with the copyright owners of each of the multitude of programs it carries. These difficulties, it is is fair to say, have been exaggerated out of all proportion to their actual substance. The necessary information as to copyright owners can be obtained from the networks and the stations whose signals are carried. And the number of copyright owners of television programs carried by a typical cable system is in fact relatively small. The stations that are carried, the networks, several major film producers, and a relatively small number of distributors account for the great bulk of copyright program material. Nothing prevents cable systems from negotiating schedules of rates for all available combinations of programs offered by each of these owners, with the aid of a common NCTA negotiating office if necessary, and then simply determining from the schedules the amount of the fees that are due on the basis of the programs actually retransmitted. The music publishers, through ASCAP, have worked out such a solution for dealing with the difficulties they confronted in negotiating copyright licenses for countless renditions of their innumerable musical compositions. The free market has a way of generating a solution to such problems in the absence of legislative intervention.

Another issue with respect to CATV retransmission copyright liability has been the extent of the exclusivity rights which broadcasters and copyright owners may enforce against cable systems. A critical term of any copyright license is the extent to which it protects a licensee from competing displays of the same performance or work. Broadcasters and owners commonly negotiate exclusivity rights protecting the licensee against the broadcast of a licensed program by another broadcast station in the same market within a specified time of the licensee's own broadcast. It has consistently been the position of broadcasters and owners that they should be entitled to the same freedom to negotiate exclusivity rights against competing transmissions by a cable system importing a distant signal as they have against competing transmissions by other local broadcast stations. Responsible cable spokesmen, including NCTA, have generally conceded that cable systems should be subject to some exclusivity, but they have contended that the permissible degree of exclusivity should be sharply circumscribed.

These and other issues were compromised in the Consensus Agreement. The principal terms of the compromise were these:

Large cable systems would be subject to copy-right liabiilty, but small systems, i.e., independently owned systems with fewer than 3500 subscribers, would be exempt from payment of copyright fees.

1 It is possible that at some time in the future the importation of distant signals will lead in a few cases to emergence of powerful independent stations in major markets such as New York and Los Angeles, which will be so widely carried on cable systems that, like national networks. they will be able to sell a portion of their distant audiences to advertisers, and copyright owners will be able to share in their added revenues. If so, the loss of revenues to copyright owners on account of cable competition might be reduced to some extent, but there would still be a large net loss. and the consequences for most broadcasters, for local broadcasting generally, and for the public would be highly injurious.

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