Mr. EDWARDS. Mr. John Deion, on behalf of the National Restaurant Association, you are welcome and you may proceed. STATEMENT OF JOHN DEION, OWNER, LAST CALL SALOON, ON My name is John Deion. About 12 years ago I left a good job at John Hancock Insurance when my wife and I decided to renovate an old boiler room in a commercial building in Providence, RI. We turned it into a rhythm and blues club called the Last Call Saloon. I totally agree with what my colleagues have said here today regarding bill H.R. 3288, and I fully support it. I also would like to see all incidental music included. I would like to say that I agree with the basic premise of music copyright laws, and I agree that some fees should be paid by music users. And like Mr. Gregg and my colleagues here, I also would like to see the legislation go even further toward addressing the virtually unchecked powers of the music licensing organizations. Specifically, I think this market needs an impartial, third-party mechanism other than the courts to deal with concerns and conflicts that may arise between establishments such as mine and ASCAP, BMI, and SESAC. There is a wide perception in our industry that the enforcement of copyright laws is extremely arbitrary and inequitable. As a person who as paid fees to these organization over 12 years, I do not really know if every person who uses music in the State of Rhode Island is paying the same fee. I have asked, but have never been able to find out. As it stands, the law from my perspective appears to be extremely one-sided in favor of the music licensing organizations. Mr. EDWARDS. Aren't those records public? Can't you just ask for a printout of the fees for the State? Mr. DEION. I have asked repeatedly, Mr. Chairman, if all, for instance, my competitors are paying fees and I have never been able to get a clear answer. There is no, to my knowledge, ability for me to discern that information. I have asked representatives from both BMI and ASCAP. In fact, very recently, I found out that one of my competitors had never been licensed with BMI until recently, and they had been in business 5 or 6 years. Mr. EDWARDS. What was their response in writing? Mr. DEION. It was never in writing. This was a verbal conversation. My BMI rep had met with me in the fall. Mr. EDWARDS. Thank you. Mr. DEION. If I may go on? Mr. EDWARDS. Yes, proceed. Mr. DEION. Any legal action on my part would be prohibitively expensive. Music licencing organizations know this, and I think treat us small business owners with a great deal of impunity. This environment has made small business easy targets for these large uncontrolled organizations. The music licensing organizations can charge virtually at will, without having to account for their activities to any governmental agency anywhere. 82-244 O-94-5 Certainly, they are not guided by the same forces of the economy and competition that we are. You may be aware, Mr. Chairman, that Rhode Island has endured particularly unpleasant economic conditions over the past 2 years. They were made worse by the crash of many of our State's major credit unions a little more than 2 years ago. In that time, my business has had to cut back. If anything, the economic benefit that we get from music has diminished, not increased. My patronage is down. I have only sold out maybe a dozen times on show on the past 2 years. My revenue is down. My wife and I have taken personal pay cuts. I have even taken to doing things like laying off the janitorial service and doing it myself in order to save money. But the breaking point for me was that in the middle of a significant downturn in my business, and I think in the business of everyone else, BMI and ASCAP wanted rate increases. ASCAP wanted as much as 20 percent. In this economy, if I raise my prices by 20 percent, I would put myself out of business. The margins in this business wouldn't tolerate it. People would stop coming to my club. But I am not a monopoly. I was faced with either paying the fee or going to court, and as I have said, and as my colleagues, court is not and option for us. Over the years, my attorneys have said to pay the money and to keep quite, so that is what I have done. The other part of this issue that I would like to discuss is the license agreements itself. In signing this agreement, we as business people give up an enormous amount of our personal privacy and rights. We are forced to give these associations access to our records at a level that almost compares to the Internal Revenue Service. The contract itself is very one-sided. It offers a lot of protection to the copyright association, but gives us little room to redress grievances. There is even a clause in the license agreement that says if I do anything to interfere with their ability to do business in the State or region that they can revoke my license. I am very concerned and I wonder how they will construe my appearance here today. Ultimately, they seem to have the ability to pull my license, and, in fact, I have had several representatives on several occasions to tell me that I should consider it a privilege to have a license, not a right. If I were to try to have music without a license, they could fine me to the point of putting me out of business, and this would be legal. What I find most upsetting, Mr. Chairman, is that as a small business I have no recourse. How, in America, does an organization designed to benefit musicians have a right to pull the plug on a small businesses? I appreciate this opportunity to testify before you hear today, Mr. Chairman. I am a small businessman who is being dealt with unfairly and without recourse. I hope your hearing today and the others yet to come will shed some more light on this situation, and ultimately lead to a solution. Thank you again for allowing me to testify. PREPARED STATEMENT OF JOHN DEION, OWNER, LAST CALL SALOON, PROVIDENCE, RI, ON BEHALF OF THE NATIONAL RESTAURANT ASSOCIATION My name is John Deion. About 12 years ago, I left a good job at John Hancock insurance when my wife and I decided to renovate an old boiler room in a commercial building in Providence, Rhode Island, and turn it into a rhythm and blues club that we named the Last Call Saloon. I agree totally with what Mr. Gregg has said here today. I support HR 3288 and would also like to see all incidental music included. I agree with the basic premise of music copyright laws and I agree that some fees There is a wide perception in our industry that the enforcement of the copyright laws is extremely arbitrary and inequitable. As a person who has paid fees for over 12 years, I don't know if every person who uses music in the state of Rhode Island is paying that same fee. I have asked, but never found out. As it stands, the law from my perspective appears extremely one-sided in favor of the music licensing organizations. Any legal action on our part would be prohibitively expensive. The music licensing organizations know this and treat us small business owners with a great degree of impunity. This environment has made small business easy targets for these large uncontrolled organizations. The music licensing organizations can charge virtually at will, without having to account for their activities to any governmental agency anywhere. Certainly they are not guided by the same forces of the economy and competition that we are. You may be aware that Rhode Island has endured particularly unpleasant economic conditions over the past two years, which were made worse by the crash of our state's credit union a little more than two years ago. In that time my business has had to cut back. If anything the economic benefit we get from music has diminished, not increased. My patronage is down I've only sold out maybe a dozen times in the last two years. Revenue is down. We've taken personal cuts in pay. I've even taken to doing things like laying off the janitorial service and doing it myself -- to save money. But the breaking point for me was that in the middle of a significant downturn in my business -- and I think in the business of everyone else -- BMI and ASCAP wanted rate increases. ASCAP wanted 20 percent. In this economy, if I raised my prices by 20 percent, I would put myself out of business. The margins in this business wouldn't tolerate it. People would stop coming to my club. But I'm not a monopoly. I was faced with either paying the fee or going to court. And as I've said, court is not an option. Over the years my attorneys have said pay the money and keep quiet. So that's what I did. The other part of this issue that I would like to discuss is the license agreement itself. In signing this agreement, we as business people give up an enormous amount of our personal privacy and rights. We are forced to give these companies access to our records at a level that almost compares to the Internal Revenue Service. The contract itself is very one-sided. It offers a lot of protection to the copyright association but gives us little room to redress grievances. There is even a clause in the license agreement that says that if I do anything that Ultimately, they seem to have the ability to pull my music license. And, in fact, I have had representatives on several occasions tell me I should consider it a privilege to have a license, not a right. If I were to try to have music without a license, they could fine me to the point of being put out of business -- legally. What I find most upsetting, Mr. Chairman, is that as a small business I have no recourse. How in America can an organization designed to benefit musicians have a right to pull the plug on a small business? I hope your I appreciate this opportunity to testify before you today, Mr. Chairman. I'm a small businessman who's being dealt with unfairly and without recourse. hearing today and others yet to come will shed some more light on this situation and ultimately lead to a solution. For nearly ten years ASCAP's fees for establishments like yours have changed only to keep pace with inflation, while our expenses have increased at a greater rate due in large part to the costs of billing and collection of delinquent accounts. Over these years, many new songwriters and music publishers joined ASCAP. These members, and those members of 40 affiliated foreign societies, have enlarged and enriched our repertory substantially. Today, there are many more compositions available for performance under an ASCAP license agreement than ever before. An ASCAP license agreement is the easiest and least expensive way for users of music to obtain permission to perform any of the songs in the vast ASCAP repertory. For these reasons, we find it is both necessary and fair that ASCAP's license fees be increased. The changes in our Rate Schedule generally amount to 20%; however, you can save 20% in license fees by paying your annual fee by January 31 of that year. Enclosed is the new license agreement for your establishment. It will replace the current agreement, which we are now terminating effective January 1, 1992 pursuant to subparagraph "1(c)" which reads: "Either party may, on or before thirty days prior to You may continue to pay your current lower fees for six months. To obtain this benefit, you must sign and return the new license agreement by January 31, 1992, together with payment of $1,278.50 which represents $815.00 in license fees due through the date of termination of your current agreement and $463.50 to cover license fees for the period through July 1, 1992. |