Mr. BERENSON. May I, Mr. Chairman? BMI is similar to ASCAP. We have a special department, a research and information department, that is available by telephone, and/or to which written inquiries can be made, and BMI will answer the questions and the inquiries made as to whether certain musical composition are in the BMI repertoire. We do make that service available.

Mr. HUGHES. Do you have the capability of providing a printout? Could I access by computer today?

Mr. BERENSON. No. We do not have that capability. BMI's repertoire, similarly to ASCAP-I think ASCAP has a larger repertoire

Mr. HUGHES. Why don't we provide that capability? It seems to

me

Mr. BERENSON. Pardon me?

Mr. HUGHES. Why do we not provide that capability? It seems to me that would be rather simple to provide, state of the art.

Mr. CANDILORA. I can tell you, Mr. Chairman, that SESAC does provide a printed out listing of its repertory whenever a user requests that. We do, however, find that we have to charge them for the time that it takes to run that extensive repertoire and the paper, and most of the times when they look at what the cost will be, they decline to pay those costs to really review the repertoire. Mr. HUGHES. Your repertoire is much smaller.

Mr. CANDILORA. Yes.

Mr. HUGHES. It is a fraction of ASCAP or BMI. We do, I understand, have a practical problem in providing that, but it seems to me that is the direction we need to go.

Mr. KOENIGSBERG. Mr. Chairman, we are looking at going in exactly that direction, and your opening really should be the closing on this. Remember, from ASCAP's perspective, we don't have a choice. We have to provide that information to users, and that is why say to you, sir, we always do.

Mr. HUGHES. We will hear testimony tomorrow from radio stations about blanket versus per-program licenses. I am intrigued by SESAC's pilot project for Hispanic stations whereby the stations will be charged only for what they broadcast.

It seems to me that the existing regime of making a list of repertoire reasonably available-and you say you dispute that-and the pricing of program license has made some stations take a blanket license when they would rather take a per-program license.

Additionally, consider how you pay royalties. Your writers' or publishers' royalties are not based on actual performances, but, as I understand it, by sample surveys and formulas that are developed by your society.

If the approach that SESAC is trying were used, it seems to me radio stations could be billed only for what they broadcast, and writers and publishers could receive royalties for what was performed.

Isn't digital encoding a better way to go than the present system? Mr. BERENSON. This may be in the future, Mr. Chairman, however today, with all due respect, BMI did look into the BDS system. It is not a system which can be utilized today in BMI's estimation.

As an example, we feel that there are not enough sites to get the information. Additionally, if there was a rendition of "My Way,"

Mr. Chairman, and there were 40 different versions of "My Way" you would have to encode into the computer each of the 40 different versions. If you did not do that, you would not be able to ascertain whether that work was actually performed. This may be available in the future. With technology as it exists today, we do not feel that it is readily available and cannot be made available. Mr. HUGHES. One of the toughest jobs, but one of the most important jobs of this subcommittee is to do the balancing that a number of you have mentioned, balancing the rights of users, society, that receive those works, and the rights of the creators of them to receive rewards, their just desserts, for their creativity.

In trying to balance that, we haven't always done a very good job. I think section 110(5) is a good example of an exception that wasn't very well drafted, and it has created a wealth of litigation.

But I am intrigued by the extent to which we've carried it, the present licensing regime. All three societies license television stations and receive substantial royalties for those licenses. If a tavern has two 9-inch television sets, your position, I think, is that the section 110(5) exemption is unavailable.

Let me ask you, does that make sense to even you?

Mr. KOENIGSBERG. There are a couple of parts to your question, sir, if I may address them. One is the point that you make about television stations paying license fee.

The television license and the radio license agreement that ASCAP has—and I am sure it is true of BMI and SESAC as well— specifically excludes the additional performances that are being made by public establishments when they use those transmissions and communicate them to the public for their own benefit.

Now, does it have to be that way? We recognize, and I would hope we all recognize, that songwriters should be paid for those performances. We could, I suppose, license the television or the radio broadcasters to encompass those performances as well. They would have to pay the fees for those performances as well. And if our good friends and customers, the radio and television broadcasters, were up here and you asked them if they would be willing to pay those additional amounts, I don't know what their answer would be, but I could make a guess. They might say, "We are not benefiting from it; the establishment is benefiting from it, let them pay for it."

The second question about the two 9-inch television sets, “Does it make sense?" Well, it makes sense in the context of the purpose of section 110(5), which was to exempt the small establishment, which was making a use that really wasn't a significant use at all. That section had its origin, sir, in the licensing practices of ASCAP after a Supreme Court decision in 1931 when ASCAP said we are not going to license places that have just a small table model radio behind the counter. They will turn it off, first.

Mr. HUGHES. You are not suggesting to me, are you, that you are going to define a small establishment by whether it has one 9-inch or two 9-inch television sets, or a 27-inch television set, or a 36inch television?

I served as a bartender many years ago. A great job, I might say. [Laughter.]

Mr. KOENIGSBERG. I was a busboy myself. I know what you

mean.

Mr. HUGHES. You had to listen to confessions. You didn't have to solve any problems. This bar had two small television sets. That was when television was just coming into its own, but it is because they wanted the patrons at both ends of the bar to be able to see it. You almost had to have a magnifying glass to see it anyway in those days. But you are not suggesting that that makes sense?

Mr. KOENIGSBERG. Sir, this committee when it enacted this part in the 1976 act, focused on the significance of the use to the establishment, and thought that any use of multiple sets was too significant to be exempt. I think that is what Congress has done; that's the law as we find it, and that's the law that our members must live by, and we all must live by.

Could the law be clarified? Could section 110 be clarified? No sane person would say to you that it could not. Should the exemption contained in that law be expanded? We say emphatically not. Mr. HUGHES. How did you arrive at the 27-inch standard? Mr. KOENIGSBERG. There are different standards.

Mr. HUGHES. How did you arrive at the 36-inch standard, ASCAP?

Mr. KOENIGSBERG. The term used in the law is what is a single receiving apparatus of the kind commonly used in private homes. ASCAP took a look at statistics on what sorts of sets were sold, how many, where, when, projection, nonprojection, size of screen and so on, and came to that conclusion as to what a reasonable interpretation of what is "commonly used" would be. That is the simple answer.

Mr. HUGHES. Of course, that is all changing.

Mr. KOENIGSBERG. It changes. It is constantly changing, and has to be constantly reevaluated.

Mr. HUGHES. But does it make sense to base it upon that kind of a standard? It may very well be that Congress did contemplate your current interpretation when section 110(5) was drafted. I kind of doubt it, though. I don't think Congress ever dreamed that we would end up with this kind of an interpretation. Maybe my colleagues then did. I'm not sure, but it certainly does not make sense. With technology changing and with consumer demands changing, that seems like a senseless criteria to be used. Wouldn't you agree?

Mr. KOENIGSBERG. Well, sir, I remember the 1976 act. I was around then. I remember talking to Congressmen and Senators and their staff people on it. What Congress intended at the time was that the standard not be frozen for all time, but rather be flexible in terms of what is "commonly used" from time to time.

Now, would it make more sense to have a rigid standard that would be uniform in application, that would not expand the exemption, but would be clear? Perhaps the answer to that is yes.

Mr. HUGHES. Let me ask you an additional question and then I am going to yield to my colleagues who have a number of questions I'm sure.

At least with ASCAP you charge almost twice as much for mechanical audio with audiovisual than for mechanical audio only.

What is the justification for that since you do not license audiovisual works?

Mr. KOENIGSBERG. The justification, sir, is that the use of music in conjunction with audiovisual images is, on a relative basis, more valuable than the use of music alone in retransmissions.

The use of music in a bar when you have MTV up there is more powerful than just when you have a radio set playing in the background, and that's the thought. I should add to you, sir

Mr. HUGHES. But you do not license audiovisual?

Mr. KOENIGSBERG. We license the music in the audiovisual works, but not the audiovisual part of it themselves. We cannot; we do not have those rights.

Mr. HUGHES. So it is a judgment you have made that is enhanced by twice as much?

Mr. KOENIGSberg. Yes, sir, and I would add that we have tried repeatedly to sit down with the folks on the other side: the National Licensed Beverage Association, the National Restaurant Association. We would be delighted to sit down with them-and perhaps you can encourage them to do so and talk about this, and work out arrangements that we can all be happy with. We would be delighted to do so. We have tried.

Mr. HUGHES. That is why we are here today.

Mr. KOENIGSBERG. We have tried, and we would very much like to do that.

Mr. HUGHES. Good. The gentleman from Rhode Island.

Mr. REED. Thank you, Mr. Chairman. I would just like to clarify something I think that was said in passing and that is that there currently exists an exemption covering these small establishments, so no one is really quibbling with the notion that some exemption should be made for the incidental use of music.

The question seems to be how do you define that so that you create a situation in which artists can realize the rewards of their efforts, but at the same time small businesses are not caught up in what they object to as-I do not know what the right term would be-but a system in which they have little voice, that is, in effect, a monopoly demanding that they pay, and that it is not fair. You have heard the litany.

Am I to suppose from the testimony here today that you are not opposed to clarifying the systems so that we can get away from this kind of legal gap, this legal process which is so awkward.

Mr. KOENIGSBERG. From ASCAP's perspective-I'm sure it is true of BMI and SESAC-obviously we cannot sit down together because of the antitrust laws, but we would be delighted, nay, ecstatic to sit down with these good people and see if we could clarify with them an understanding of what is and what is not exempt, and indeed work out the terms of the license. We have been trying to do that, sir, for a long time.

Mr. REED. Well, the purpose today is essentially to leap over the logjam and to legislatively clarify it. I guess my real question is that I take it that there must be some legislative language which you would hypothetically agree would be helpful in terms of clarifying this, so that everyone understands, and that there is not the litigation and all of the confusion, which is, really, a cost to both ASCAP and BMI system and the small business community.

Mr. KOENIGSBERG. If we could sit down and work things out with the trade associations which represent the bulk of the users here, under the current legislation, which I think could be done, there would be no need for Congress to address this issue.

Could anyone come up with language? Of course, anyone could, but the point here is that we would much rather do it with the users, which is the way I think you would much rather have us do it as well.

Mr. REED. I am really concerned of the impact on small business, and it seems to me that in this stalemate situation that ASCAP, BMI and all the agencies have the upper hand. We would like to see, I think, if you could settle it yourselves, do so, but it hasn't been settled for a while. It is a growing and increasing problem. I think it is one in which we have to move with much more decisiveness to fix. Again, you are not talking up or you cannot get together; I think we should do that.

Mr. BERENSON. I think as Mr. Koenigsberg said it is far better if the individual users and the organizations get together to resolve the problems, but we keep talking about small users, incidental

users.

The problem is what is "incidental"? As Chairman Hughes said, he was recently in a restaurant, they played radio, and he liked the ambiance of which music was a part. As I mentioned in my address, Supreme Court Justice said, if it wasn't profitable they wouldn't be using it, they could pull the music.

Studies have been done, when you go into restaurants, the ambient music-what has been referred to here as "incidental music"keeps fannies in the seats, as George Steinbrenner once said. People sit in a restaurant longer because of music.

Or, conversely, Muzak will often offer music which is played at a faster beat to get people out of a restaurant, to eat faster. It serves the benefit, basically, of the proprietor to use music, and, as I've said before, to require a songwriter to be the only one to give his property as a gift free, mandated by Congress, is wrong.

There has to be negotiation between the users and the performing rights organizations, and that is what should go on, but no one should be forced by Congress to make a free gift.

Mr. REED. There is a certain free gift already written into the present language, is that correct?

Mr. BERENSON. Yes, there is.

Mr. REED. Well, we have already done that.

Mr. BERENSON. But what we are saying is that it should not be expanded.

Mr. KOENIGSBERG. And, sir, back in 1976, we did not oppose that exemption. Quite the contrary. That exemption was designed to codify what our licensing practice was. It took a slight additional twist, but that was fine with us. I remember it very vividly.

Mr. REED. Again, I appreciate your testimony, and I appreciate the fact that you are raising some very fundamental issues about property rights, who should enjoy them, and whether they should be with or without a benefit.

Again, I think we should move to clarify this issue. It seems to be one of these areas of massive litigation, and if we can make it cleaner and clearer I think we would all benefit.