I mean we can not deviate. We can not deviate or else we're going to violate our consent decree which says we have to treat similarly situated users the same. They have always been in BMI's agreements, these schedules have always been in BMI's contracts.

Mr. BARTLETT. Why do we have stories of a restaurant being in operation of your people coming in after the fact telling them that they owe this much money. There has been no contract and there has been no agreement of any fact and if they don't pay the money, their alternative is to go to court in New York. Many of our people they say it seems more like protection money that used to be paid to the Mafia then it does a fee for a legitimate service.

Mr. BERENSON. Well, I'm certainly not going to go into the Mafia because I'm not familiar with their business practices, but I will say this. I can not speak for horror stories about that. BMI, BMI's people go in, they do not try to coerce. Obviously, there is a distinct need for the establishment to take a license. Mr. Epperson was talking before about the vast number of lawsuits, the majority of these lawsuits, congressman, involve establishments that don't get a license. If you try to get a license and they refuse, you have no other recourse but to go to court to enforce your rights. We don't go around collecting. The license that BMI has with restaurants, bars, and hotels is a self assessing license. Let me explain what I mean. In order for us to determine the fee at the end of the year, the restaurateur or the hotel submits a report to BMI as to what they spend on entertainment. When that report comes in BMI either adjusts upward, downward, or it remains the same based upon prior year's activity. No one goes in and says you have to pay more money without having a contract. The person would be fired on the spot, if we knew about it.

Mr. BARTLETT. Mr. Tavenner

Mr. BERENSON. Then I have one other comment. I know my time is up, Madam Chair, I have one other comment.

Mr. TAVENNER. I think part of the point that Mr. BerensonMr. BERENSON. Thank you, sir.

Mr. TAVENNER. Mr. Berenson has failed to bring up, and we asked this earlier in our testimony, is that we want to see some type of situation where we can arbitrate. If we don't agree with what Mr. Berenson rates our room at or what Mr. Berenson says is the cost of entertainment, we have no recourse for that. Like you earlier talking about the access to repertoire, we think that's ultimately fair.

Mr. BARTLETT. That's the American way. Why can't we sit down with these people on a local level and say, "Mr. Berenson, we don't agree with what you're saying. We want to see your people in our office."

Mr. TAVENNER. Sometimes they may say, or sometimes it may go over. Right now I have one going on for 32 months where I can't get an answer period.

Mr. BARTLETT. Mr. Tavenner, I'm glad to see you here at the table. You're from our State not our district, but glad to have you here at the table.

Let me just for you all are representing the industry. Now it seems to me that what you're doing is the equivalent of you coming to me, Mr. Berenson, and saying I've got a number in my mind.

Tell me what that number is, and I say seven. You say, "Gee, no, it's not seven you owe me." Now you know not telling these people up front what they're going to have to pay for, they're not knowing the repertoire without a disclaimer. That is the equivalent of you coming in here and saying you have a number in mind if you can't guess that number then you owe me. That just fundamentally isn't the kind of fair way that business ought to be conducted in this country.

Chair MEYERS. Mr. Wamp.

Mr. WAMP. Thank you, Madam Chair. Now I know what my children must feel like and my wife and I are having an argument and they don't know why in the heck we can't resolve it, but we can't. My brother, much like Sue Kelly's situation is a musician, he's an architect, he's a small business person, he's a songwriter, and a lot of songwriters are small business people and seems like this is a family discussion. But I will say on all the fronts, my brother is overtaxed, overlitigated, and overregulated, whether he's a songwriter or small business person, we all share that.

I came out of real estate business and I've done a lot of work for Outback Steak House. Their prototype restaurants are about 4,500 square feet. The Red Lobsters are about 3,500 square feet. That's really the range of most of your national restaurateurs. My question for both the restaurant people, if 3,500 square feet is not acceptable, what is? If not, why not?

Mr. TAVENNER. Whatever would cover the majority of our members, obviously. It's not-he insists every time that we're going to pay less. That's not the problem here. We want to pay less volume. Do you understand what we're saying here? We have to pay for the song over, and over, and over again with devices and with different techniques, live music, CD players, et cetera, et cetera, and every time there's a new invention, they're going to come back and say now you got to pay for that one. Often times they're not playing at the same time. All right. So, there's not a dual use of the particular songs. So, we want to have a rating system that takes care of our members and the members of the coalition. It's not just the restaurant association. We have a broad range of members of the coalition here today asking you to look at the problems that the small retailers are having, et cetera.

Mr. WAMP. Mr. Barba, do you have an issue with that?

Mr. BARBA. Again, I would believe that the issue that we're debating today is included in this bill, it has to do with the incidental playing of radios and TV's and from my point of view it is untenable to be charging for that usage.

Mr. ALGER. That has been mentioned today. There's a small business exemption which covers truly small businesses. We've agreed to legislate access to the repertoire. We've offered to solve disputes regionally. We've agreed to a code of conduct. We don't need a legislative bill; we need "good-hearted negotiation" with the intent of solving the problem. This is what we need.

Mr. BERENSON. May I just state, it's been brought up over and over again. What can they do why can't they have regional negotiations, why can't they do local negotiations?

Let me speak for BMI. When this issue started coming up even before H.R. 789 came on the plate, we attempted to start negotia

tions with various State restaurant associations to negotiate licenses for their members in that State.

As an example, we spoke with the restaurant association in the State of New York. We said, "OK. Let's negotiate an appropriate license for all the restaurateurs in the State of New York.” Things were moving along. Then H.R. 789 hit, and then we were told no more negotiations, we're not going to negotiate anymore.

So as I said in my statement, they want to legislate at this particular point. With respect to the horror stories that were mentioned before and I'm sorry I didn't get the opportunity to respond. what Pat just said is true. BMI and ASCAP agreed to a code of conduct for employees. We requested that the restaurateurs also agree to a code of conduct. There have been instances where our representatives have gone in and have been met with, let me say, "hostile reactions." OK. Again, it's a question of education. They want us to go in and ask us to educate the user of music. So, the basis for a resolution should be there, it is there.

Mr. WAMP. Associate myself on the comments that I don't think you all need to be here. You should be able to work this out among yourselves.

Chair MEYERS. Thank you, Mr. Wamp. I'd like to ask a question. I'd like to turn to Mr. LaFalce, and then Mr. Zeliff has some concluding questions on second round.

I don't have any really good idea of what we're talking about in terms of dollars. I mean can somebody give me a typical example of a typical restaurant. I want to know-I've heard someone said it cost a $1.50 a day or a $1.10 a day or something like that. Then later he said they came in and told him he owed and additional $900. I can't put all of this together and so Mr. Tavenner first and then Mr. Berenson, and then Mr. Barba or anybody who would like to comment.

Mr. TAVENNER. I'd say my restaurant is fairly typical. It's approximately 4,800 square feet, and we have a Muzak system, and we have live entertainment only on Friday and Saturday nights. My combined fee, between BMI and ASCAP is $2,400.

So I want to know why someone else is paying $1.50 a day when I'm paying whatever that is, which is considerably more, anybody can calculate that out right here.

So where do I go? I can't go to an arbitrator; right? I can call and ask them to bring a sales rep into my area of—and that happened 32 months ago and I still haven't seen them, after numerous phone calls, et cetera.

I don't know who's paying the $1.50 a person. If they all are paying a $1.50 maybe they're not telling the truth to the agencies about how big their place is, how many seats they have et cetera, et cetera. But I don't know anybody paying a $1.50 a day. In my Montgomery County Restaurant association, I know not one person that pays a $1.50 a day. So, that's my typical example for you. Thank you.

Chair MEYERS. Mr. Berenson.

Mr. BERENSON. The gentleman to my left here, I can speak for BMI, and as I said, we have the same printed form for restaurants et cetera. If in fact that you are using a background music service, such as Muzak, and you have no other recorded music; correct?

With BMI, there's no recorded music fee. You're aware of that, we've discussed this before. So, Mr. Tavenner would only pay for live music. Our fee schedule is based upon what the annual expenditures are of that establishment for entertainment.

So I would ask Mr. Tavenner what you spend on entertainment per year, or per week, you could do it either way?

Mr. TAVENNER. I spend approximately $1,000.

Mr. BERENSON. So, $1,000 a week, which is, obviously, 52 weeks, we realize that comes up to approximately between $50,000 andfigure any less than-dollar less than $65,000 a year. The annual live music fee for BMI under those circumstances is $690 per year. That gives you an idea. If you have a smaller establishment that spends less on entertainment, as an example, the live annual music fee, the smallest category that we have is we spend less than $5,000 a year.

You may have a piano bar in the restaurant, and the piano player comes in one time a week, three times a week, and probably will not be the restaurateur will not be paying over $5,000 a year.

The annual license fee for BMI in this instance is $175 per year, and it goes up progressively to establishments that pay hundreds and hundreds of thousands of dollars per year, that is what it's based on. When

Chair MEYERS. So, you're saying then that if Mr. Tavenner pays $600 a year for his live music, then the other 18,000 or whatever the figure was that he's paying annually is for the

Mr. TAVENNER. I actually pay more than that to BMI, don't ask me exactly why, because if I may excuse myself, I appreciate you using that rate.

I don't get that. I only get a front page, and I get one page to fill out every year for BMI, one page. I don't get this. This doesn't come to me in the mail, and if I call and ask questions about it, I can't get a field representative to come see me. I don't have my local recourse. We feel that this has to be legislated. As Congressman Wamp says he doesn't feel that's necessary. For 40 years we've been trying to get this done.

Chair MEYERS. Yes. It has been a long ongoing fight. I do not know-maybe there's no role for Congress in this, but if there isn't, I think that in another 50 years you will still be having problems here.

Mr. ALGER. Madam Chair, ASCAP's schedule is given to this restaurant. He does get a copy of this. I'll leave this with you. His fee from ASCAP would be $1,750 and it's based on a schedule that's very clear, and easy to understand. It's different than BMI's because ASCAP's repertoire is larger.

Chair MEYERS. Anything that you can give the Committee for the record that would help us gain an understanding of this would be appreciated, because I think the problem seems to be one of restaurant owners don't have a really good understanding of the schedule. They're not being communicated with very well, and the fact that there is just the one court does seem terribly burdensome. If you just have one court that you can go to, there ought to be a tremendous effort at communication so there would be some understanding along the way.

Did you have a comment, Mr. Barba?

Mr. BARBA. Well, the only comment that I would make is we do have a lot of entertainment at our property and in addition to the recorded music-excuse me, the music that comes in over the television, we're required to pay for not only the payments that we make to musicians and to performers, but also we're to pay ASCAP and BMI on the room and board that they receive while they are staying at our property. Also the commissions that are paid to their agent who booked them at the property, and any technicians that were required to put on the show would also be paid. If by chance I should hire an entertainer who costs twice as much to sing the same songs I would pay twice as much to ASCAP or BMI for the same use of songs. It is this philosophy of taking what I consider to be not directly related expenses to figure out their rates and then assessing those rates indiscriminately to those who they can find to pay them.

That is to say that if we were talking about all publicly aired music in commercial establishments and the Balsams paid its per rate a share of that compared to all the time that's songs are played in commercial establishments across the country, I would have less of an argument, but I don't believe that's the case. I believe the case is that because we've been in business for 131 years, and because my partners and I have operated the hotel for 27 years, we're going to get nailed at a much higher rate than the harder

Chair MEYERS. Excuse me for 1 second, Mr. Barba. I would like to say thank you to Mr. Rule who has told us in advance that he had to leave at 12:30. I have a question for you, Mr. Rule, and I will submit it by mail. Thank you very much for being with us today.

Mr. RULE. Thank you for having me.

Chair MEYERS. All right. Mr. LaFalce. I have some other questions, I'll submit them by mail.

Mr. LAFALCE. Mr. Barba and Mr. Tavenner, you both provide live music, and at least to that extent the proposed bill would not be applicable; is that correct? What percentage of your entertainment is live music as opposed to

Mr. BARBA. A great majority.

Mr. LAFALCE. A great majority of yours is live music. So, in so far as you're personally speaking

Mr. BARBA. Except that I am also a dedicated member of my State Lodging and Restaurant Association, and I was asked by them to come and testify today, and I represent their interest.

Mr. LAFALCE. Fine. Mr. Tavenner, I know that the National Federation of Independent Business conducts frequent polls of their members. I suspect the NRA, the National Restaurant Association, does also; is that correct?

Mr. TAVENNER. Yes, sir.

Mr. LAFALCE. I wonder if you'd be willing to conduct polls of your coalition to find out how many of your establishments do have less than 3,500 gross leasable square feet, how many of them do use six or fewer speakers with no more than four speakers in one room, and how many of them do use three or fewer televisions of 55 screen size or smaller et cetera. That might be interesting data so