FEE FOR PERFORMANCES BY MEANS OF JUKEBOX(ES) For purposes of this Agreement, a “jukebox” is a machine or device that is (i) employed solely for the non-dramatic performance of musical works by means of phonorecords, compact discs or similar medium and which is activated by insertion of coins, currency, tokens, or other monetary units or their equivalent; (ii) is located in an establishment making no direct or indirect charge for admission; (iii) is accompanied by a list of the titles of all musical works available for performance on the jukebox, which list is affixed to the jukebox or posted in the establishment in a prominent position where it can be readily examined by the public; (iv) affords a choice of works available for performance and permits the choice to be made by the patrons of the establishment in which it is located; and (v) for which neither a compulsory license nor a license from the Jukebox License Office nor a license from SOCIETY other than this license is in effect. For purposes of this Agreement, the term “jukebox" does not include devices commonly known as "video-jukeboxes,” or any other audio-visual devices. For performances given by means of jukebox(es), the annual license fee shall be $220 per jukebox. FEE FOR PERFORMANCES BY MEANS OF MUSIC-ON-HOLD TELEPHONE SYSTEM For performances given by means of a music-on-hold telephone system at the premises, the annual license fee shall be $164. COMPUTATION OF FEE FOR MIXED POLICIES 1. Compute fee for the higher policy for the number of days/nights that the higher policy is in effect. The higher policy is the policy which generates the highest fee for any one day/night. If the higher policy is in effect for four or more days/nights per week, stop here: Your fee is the fee for the higher policy. If the higher policy is in effect for fewer than four days/nights per week, continue with steps 2 through 6 below to complete the computation of the fee for your mixed policy. 2. Note total number of days/nights entertainment is provided. 3. Compute fee for the lower policy using the total number of days/nights entertainment is provided under both the higher and lower policies. 4. Compute fee for the lower policy using the number of days/nights the higher policy is in effect. 5. Subtract fee computed in step 4 from fee computed in step 3. 6. Add fee computed in step 1 to fee computed in step 5 for total fee. SEASONAL FEES For seasonal licensees, the fees for periods up to four months of operation are 1/2 the annual license fee; for each additional month the fee is 1/12 the annual license fee. The seasonal license fee will in no case be more than the annual license fee. FEE FOR OCCASIONAL PERFORMANCES For policies in effect for any three or fewer days/nights per month, the fee is the applicable annual fee for the highest of such policies as if such highest policy were in effect for one day/night per week. For policies in effect for any six or fewer days/nights per calendar year, the fee is 1/3 the applicable annual fee for the highest of such policies as if such highest policy were in effect for one day/night per week. ANNUAL LICENSE FEE FOR CALENDAR YEARS 1997 AND THEREAFTER The annual license fee for each calendar year commencing 1997 shall be the license fee for the preceding calendar year, adjusted in accordance with the increase in the Consumer Price Index (National, All Items) between the preceding October and the next preceding October. 12.5M 1/96 (C) The Maryland Jockey Club operates Laurel Park and Pimlico Race Course, the Maryland Thoroughbred Racetracks. It is effected by the television background music issue and the economic unfeasibility of contesting inequitable music licensing rates. The Tracks ceased daily music broadcasts in 1992 because the minimal musical use was disproportionate to per diem rates demanded by Licensing Societies. Music was played in the mornings for employees and stopped one hour before post time before most patrons arrived. The bulk of our attendance arrives after the second or third races. Licensing Socictics maintained early arriving patrons might hear copyrighted music therefore full per diem royalties were owed. They rejected an offer to pay a percentage of the daily rate proportionate to the amount of time music was played. Next came the demand for full per diem rates for "television background music." The Tracks' dining rooms and box scats have television monitors pre-tuned to closed circuit racing from Maryland and other states. The televisions can access commercial television if the patron changes channels but the televisions arc prc-tuned to racing. Commercial television access accommodates weekend patrons who do not want to miss the weekend basketball, baseball and football. LAUREL PARK Laurel Racing Assoc., Inc.. (301) 725-0400 Fax (410) 792-1877 PIMLICO RACE COURSE The Maryland Jockey Club Of Baltimore City, Inc. (410) 542-9400 Fax (410) 466-2521 The Licensing Societies theorize that a dining room or box seat patron might access commercial television and hear copyrighted music played in the background of a program or commercial. For this they demand full per diem rates. An offer to pay an adjusted per dicm rate proportionate to the dining room and box seat attendance was rejected. A very small percentage of racetrack attendance uses dining rooms and box scats. The Tracks' remedy was to litigate a rate case in New York Federal Court under a consent decree pending in that jurisdiction. Charging full per diem rates for television background music is incquitable. No one patronizes box seats and dining rooms to hear background music. It is valuclcss. No one would pay to hear it. It is a minuscule component of a television broadcast for which the performing artist was fairly compensated by the broadcaster so the artist received an appropriate value for the work. Licensing Socictics want a second payment for works already sold to television broadcasters for distribution to the public at large. A minority of patrons utilize the dining room and box seats. A small minority of that minority changc stations. A smaller minority of that minority, if any, pay attention to background music. Most patrons watch the races. Television background music is most frequently played at the beginning or end of stations breaks and in commercials. Patrons frequently use the time when the background music is playing to handicap, place or cash a bet or leave their seat for refreshments or the restroom. A secondary inequity is that the remedy for incquitable rate demands is to litigate a rate case in New York Federal District Court at a cost that exceeds the desired rate reduction. A rate case requires travel to New York, hotel accommodations for the company representative and witnesses, and retaining a member of the New York bar admitted to Federal Court. The expense of the "mcans” is equivalent to or exceeds the potential "ends.” A rational solution for rate disputes is arbitration through a local office of the American Arbitration Association. AAA maintains conveniently located offices throughout the United States with panels of arbitrators that serve several states in their region. AAA is extensively used in the commercial, labor and construction fields for a prompt, cost effective resolution. MJC and its union, the United Food & Commercial Workers Union, Local 27 use AAA two to three times a year for collective bargaining agreement disputes they cannot resolve. It usually takes 1⁄2 day. The parties pick an arbitrator from a seven to eight member panel. The arbitrator comes to the Track and is presented with concise positions by each side. The arbitrator usually pronounces a “judgment of Solomon.” I have agreed and disagreed with various results but in all cases the decision is acceptable and above all, more cost effective and expedicnt than Federal District Court litigation. Thank you for your consideration. I hope these comments illuminate the practical effect of these issues. MJC respectfully urges the Пouse to ameliorate the inequities of Television Background Music royalty fees and New York Federal District Court litigation to resolve rate disputes. 104TH CONGRESS 1ST SESSION H. R. 789 To amend title 17, United States Code, with respect to the licensing of music, and for other purposes. IN THE HOUSE OF REPRESENTATIVES Mr. SENSENBRENNER introduced the following bill; which was referred to the 1 A BILL To amend title 17, United States Code, with respect to the licensing of music, and for other purposes. Be it enacted by the Senate and House of Representa 2 tives of the United States of America in Congress assembled, 3 SECTION 1. SHORT TITLE. 4 This Act may be cited as the "Fairness in Musical 5 Licensing Act of 1995”. 6 SEC. 2. BUSINESS EXEMPTION. 7 Section 110(5) of title 17, United States Code, is 8 amended to read as follows: 9 "(5) communication by electronic device of a 10 transmission embodying a performance or display of |