exempt commercial enterprises from paying for the use of music which enhances their business, if that music is performed via radio or television. Enactment of H.R. 789 in its present form would deny songwriters and composers a large portion of their livelihood, while allowing restaurateurs the use of this property for free. Why should a songwriter be required to donate his property to other commercial enterprises? Doesn't it seem only honest to pay for the use of this musical product? Would Congress legislate that parsley growers be required to give away to restaurants their product because parsley is only incidental to the business? The answer, obviously, is "no." Now let me return to the agreement we reached with the National Licensed Beverage Association (NLBA) that I mentioned at the outset of my remarks. Our current agreement with the NLBA includes the following exemptions for eating and drinking establishments: Any establishment smaller than 3500 gross leasable square feet would be exempt; Any establishment using 6 or fewer speakers, with no more than 4 speakers in one room, would also be exempt; Any commercial establishment using 3 or fewer televisions of 55" screen size or smaller (with no more than 2 TVS in one room) would also be exempt. The Congressional Research Service conducted a study on the figures in the compromise and concluded, on the basis of size alone that about 70% of the eating and drinking establishments would be exempt under this proposal. If you add in the equipment exemptions, obviously even more establishments would be exempt. We feel we gave a great deal in those negotiations - expanding the current exemption size by 300%. To use an illustration that Committee Members or certainly your staff will understand, the venerable and fun Hill restaurant endearingly known as the Tune Inn would be exempt under this compromise. We reached this agreement in an effort to answer the pleas from the commercial users -- that the "small business" owners needed a break. We feel the compromise reached does indeed address the needs of the small businesses. The Committee should know that along these same lines BMI, ASCAP and SESAC attempted to negotiate a compromise with the National Restaurant Association and some other members of their coalition. Our overtures to increase the size of a commercial establishment qualifying for an exemption from licensing requirements, increase the size and types of equipment, and other offers, were unacceptable to the Restaurant Association. What was even more frustrating was the NRA feedback that we received was almost a "our way or the highway" style reply. Needless to say, we have still been unable to reach agreement with that powerful trade association. We truly hope the Committee will not lose sight of the fact that a songwriter's creative work -- their intellectual property -- is private property and deserves the same protection as any other sort of property. Additionally, this copyright protection is not just domestic in nature. We should keep in mind our country's constant efforts to insist on intellectual property protection from our trading partners. If we begin to dismantle copyright protection in this country for this use of music, not only will we trigger reciprocal treatment from some of our trading partners, we risk violating international treaties to which the U.S. is a party. Additionally, we risk jeopardizing other sorts of intellectual property -- books, films, and computer software to name a few -- under a weakened copyright system. We feel that our compromise with the NLBA is just that: a compromise. I also understand that hundreds of owners and operators of small businesses from around the country have communicated to the Congress their support for this compromise -- ranging from billiard halls to bowling alleys and clubs. These are not typical NLBA members, but rather represent a cross-section of other music users who support this compromise. In terms of the religious broadcaster issue, we ask: why should the songwriter be denied payment for use of his property when the broadcaster either accepts advertising or sells the air time to a ministry? The broadcaster is a profit-making organization. Should creators of religious music be penalized because of the fact that they are writing religious music? We don't think so. I hope this has helped shed some light on these issues. Thank you. I welcome any questions. NRB Advocating Fairness in Music Licensing for Specialty and Talk Radio Edward G. Atsinger III, Chairman MUSIC Russell R. Hauth, Executive Director LICENSE COMMITTEE A Statement By Stuart Epperson On Behalf of National Religious Broadcasters Music License Committee At a Hearing of the Small Business Committee May 8, 1996 at 10:00 a.m. Madam Chairwoman and members of the Committee, on behalf of the National Religious Broadcasters Music License Committee, and over 700 radio stations we represent, I want to express our appreciation for the time you are devoting this morning to music licensing issues. As a radio station owner, and as First Vice Chairman of National Religious Broadcasters, I can personally attest to the abuses of monopoly power our members suffer at the hands of the music licensing organizations. Our opponents at this table, ASCAP and BMI, have argued that our differences are just disputes between private parties that should be settled by the courts -- not by Congress. Nothing could be further from the truth. The problem we face is fairly simple: ASCAP and BMI are government sanctioned monopolies, and any time the government confers that kind of power on private organizations, we believe Congress has a duty to regulate. Unfortunately, a previous lack of oversight by the Justice Department and an absence of policy direction from Congress has allowed these organizations to continue abusing music users in the broadcast industry. And it has led to court cases lasting 10 years or more over the interpretation of consent decrees written 50 years ago. The answer is not more litigation. ASCAP alone is involved in over 500 pending cases. This is a system that is clearly broken, and Congress needs to fix it. H.R. 789, which was introduced by Rep. Jim Sensenbrenner and is now cosponsored by 170 of your colleagues from both sides of the aisle, addresses two problems that our members believe are critical: The first is a requirement that the music licensing monopolies offer a per program license to radio broadcasters that is a real economic alternative to the blanket license favored by ASCAP and BMI. The other provision is a requirement that each music licensing organization provide online access to the repertoire of works for which it is authorized to collect license fees. These provisions of H.R. 789 introduce an element of fairness by allowing specialty radio broadcasters who play little copyrighted music to pay only for what they use. This is all we have asked! Furthermore, ASCAP and BMI would be prevented from suing music users for copyright infringement over songs they fail to list in their online data bases. If Congress passes H.R. 789, we will finally have a licensing system that resembles free-market competition. Radio stations will be able to manage their costs more efficiently either by choosing to playing less copyrighted music or by playing more songs from a lower-priced music licensing organization. These are the very reasons ASCAP and BMI are fighting so hard against H.R. 789 and similar bills in the Senate. Competition is apparently not in their self-interest. For over 15 years our committee has tried to negotiate these two points. For 15 years we have had absolutely no success. ASCAP and BMI refuse to budge. Let me give you an example of how the licensing system works today. Most radio stations operate under a blanket license which gives them the right to play copyrighted music whenever they choose. Specialty broadcasters represented by my organization use very little music so we try to operate under a per program license which assesses fees based on how many of our program periods contain copyrighted songs each day. Licensing fees in both cases are charged as a percentage of the station's gross revenues, except -- and this is the big problem -- the per program rate is several times higher than the blanket rate. Let me illustrate. My company owns WAVA here in the Washington, DC area. Our format is mostly Christian teaching and talk, but certain programs may feature a copyrighted song, so we have opted for ASCAP's and BMI's per program licenses. Do we pay just for the use of a particular song we play? No. ASCAP and BMI charge us a percentage of revenues attributable to the entire program period whether we play one song or 20 songs. |