PREPARED STATEMENT OF HON. CRAIG THOMAS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING

Thank you Mr. Chairman for holding this hearing today regarding the issue of music licensing practices. I appreciate you giving me the opportunity to appear before you and discuss my bill x.R. 3286, which is currently pending before this subcommittee.

Mr. Chairman, as you know, on October 14, 1993, I introduced X.R. 3288, the "Public Accommodations Exception Act of 1993." This bill is designed to amend the 1976 Copyright Act to provide placas of public accommodation with an exemption from licensing fees for music copyrights relating to radio and televisions used in these establishments. Currently, the law is vague and many restaurant and tavern owners across the country are being forced to pay licensing fees for operating these devices.

The issue of licensing fees is extremely complex. No one would dispute the right of performers to be properly compensated for their music or compositions. However, the current law is causing confusion and hardship for many business owners in my state and across the country. Every bar, restaurant and other establishment that serves food and drink in places of public accommodation has, at one time or another, been charged fees by the performing rights societies for the television and radio programming they present in their establishments. Unfortunately, many times these fees are charged in a confusing or ambiguous manner, without any oversight or controls.

I have heard from folks across Wyoming and the nation that have experienced trouble with the music-licensing organizations. often the fees charged by the organizations for playing radios or televisions vary greatly from year to year. In addition, many times they are threatened with legal action or harassed for doing something they did not know was wrong.

My bill would exempt these small business operators from being charged fees for using radios and televisions that are commonly used in private homes. In fact, Congress acted on this issue during the 94th Congress. The Conference Report accompanying the 1976 Copyright Act discusses at length the need to exempt from copyright liability businesses that merely operate ordinary radio or television apparatus in their establishments.

It is important to note a number of specific provisions in my bill. This legislation is designed to address a unique problem that restaurant and tavern owners are experiencing. It clarifies the law so that these individuals can operate their businesses without fear of costly litigation. It is also important to note that this bill only deals with performances which are incidental to the main purpose of the establishment and does not cover transmissions where a fee is charged in order to hear or see that broadcast. Records, tapes, jukeboxes or video recordings are not covered by my bill.

Mr. Chairman, the bottom line is this bill is designed to help small business owners solve a very difficult and confusing problem. H.R. 3288 will clarify an ambiguous law and simplify the U.S. code so that it is understandable for everyone across the nation. I look forward to working with the members of the subcommittee on this legislation and am hopeful we can take action on this measure in the coming months.

Thanks again for allowing me to appear before the subcommittee today.

Mr. HUGHES. The bill would exempt a food or drink establishment from an obligation to pay royalties, so long as the use of a radio or television is incidental and no direct charge is made to see or hear the radio or television, as I understand it.

As drafted, the bill covers all copyrighted works, it seems to me, not just music. And under my reading, cable and satellite transmission would be covered.

Was it your intent to cover audiovisual works such as sports programming, and cable, and satellite transmissions as well?

Mr. THOMAS. The meaning "sports program" has already been dealt with, as a matter of fact. If the language needs to be more specific, Mr. Chairman, I would have-it is designed to be the kind of background things that you get through radio and television that are not the focus of attention, but rather the background. That is the intent of the bill.

Mr. HUGHES. Ed, the key is incidental. Would you just describe for us what you would intend to include by the term "incidental"? Mr. PASTOR. Well, Mr. Chairman, cable, I think in my opinion, is excluded. There are sports bars where food, drink, and the sporting event that may be on television; there I would think that you would not have an exemption because the intent is to use the television sports program that is coming through as part of the environment. So I think in that case you would not exempt the transmission, but as for its background music or television on just for background, it is not the primary purpose, food and drink are the primary purpose, then I would see that as incidental.

Mr. HUGHES. Of course, the difficulty is that you go to an establishment often, or most people do, it seems to me because of the atmosphere, the ambiance, and music is a part of that. Obviously, music is an important part of that or else the restaurant owner or tavern owner would not pay the fee; they have an option: They could just turn it off, not permit it. So, obviously, music has some importance creating an atmosphere.

Where do you draw the line on what is incidental? For instance, I find it interesting that BMI would cover a television set of one dimension, 27 inches, whereby ASCAP, as I recall, would cover one that is at least 36 inches. I'm not sure what that has to do with incidental.

Mr. THOMAS. I think that is the point. Really, that argument over the size of the apparatus is really not important. The important part is whether it is the reason that the person came to the establishment. I think that is the telling point.

Mr. HUGHES. For instance, I was in a restaurant in Philadelphia just recently that my wife and I stopped into on our way back to the District. Surprisingly to us, in addition to the background music, some of the waiters at one point, on two occasions during the time we had dinner, started to sing. Would that be incidental in your judgment?

Mr. THOMAS. I think that's extremely incidental, as a matter of fact.

[Laughter.]

Mr. HUGHES. I thought it was pretty good.

Mr. THOMAS. And probably not solicited for the most part.

Mr. HUGHES. I sort of liked it. In fact, one of the reasons why I am going to go back, in addition to their good food, is that I found the entertainment to be absolutely marvelous, the two waitresses, and they had a saxophone player at one point. A waiter brought his sax out and started playing. But I would go back there because I enjoyed that music.

Mr. PASTOR. But I also think you probably go for the food and the drink that is also served. You know, sometimes you have waiters that sing "Happy Birthday" because it is somebody's birthday. Now, people usually don't go there because they want to have a birthday party there or they are going to get cake. The establishment because of the food and drink is what takes them there.

Mr. HUGHES. I hope nobody is collecting any royalties because somebody sang "Happy Birthday" to them?

Mr. PASTOR. I don't know. In some cases there may be. That is where the confusion is.

Mr. HUGHES. I thought it might be an ASCAP song. I thank you. You've been very, very helpful to us.

Mr. PASTOR. Well, thank you.

Mr. HUGHES. And I commend you for focusing in on what has become a problem. There is no question it is something we need to take a look at and see whether the copyright statute, in particular the one exemption that you are talking about, is relevant to today's activities throughout the country.

Thank you. You've been very helpful.

Mr. PASTOR. Thank you, Mr. Chairman.

Mr. HUGHES. The gentleman from North Carolina.

Mr. COBLE. Thank you, Mr. Chairman. I will be very brief. I will just extend, to some extent, Mr. Chairman, your line of questioning.

First of all, I want to commend you all for introducing the bill because I think this highlights what may well be a problem that needs to be resolved.

Now, the chairman touched on it, at least indirectly. I think it is significant to distinguish to what degree of significance the music attracted the patron, and I think you all have touched on that.

If it is incidental, that's one thing; if it is the primary thrust for having him come to the establishment, that is indeed another. Congressman Thomas, I know that you-and perhaps Congressman Pastor too-have had hands-on experience because I believe at one time were you not a proprietor of an establishment similar to what we are discussing?

Mr. THOMAS. Yes.

Mr. COBLE. Let me put a question to you, and then we would be glad to hear from you all.

Over the years, Mr. Chairman, I am confident that we on the subcommittee have received numerous letters of complaints concerning methods of collection, particularly of the ultimate filing of a lawsuit.

Now, I'm not convinced, folks, that this is the best use of our court system. Would it not be possible to establish or formulate some sort of mechanism to settle these disputes in a different way?

In many instances-and this is where I want to hear from you, Congressman Thomas and/or Congressman Pastor-in many instances I think we are dealing with a mom and pop operation, a small operation, that probably has a very limited profit margin scheme. They don't want to have to drop what they are doing, run to court, Mr. Chairman, defend themselves, spend obvious time and money doing so, dealing with lawyers, dealing with litigation.

I guess my ultimate question is, is there not a better way? So, gentlemen, how about responding to me.

Mr. THOMAS. Well, it seems to me that the first thing-and I suppose the issue that is before this committee and before the Congress-is to define more clearly in the law what it is so that there isn't the kind of ambiguity that exists now.

And it could be that you can't make it entirely clear. I suppose there is some other sort of method of finding resolution. The difficulty generally has been that the controversy often is over a relatively small amount of money, over $300 or $500 or whatever. Clearly, it is not logical or possible even for a small business person to go to court to resolve those kinds of issues, so the usual result is that they go ahead and pay it or else take the equipment completely out of the operation. And that was the choice we made on live music. It wasn't worth the cost for us, but then I don't object to the live music fee, by the way. But you have to make those decisions.

The difficulty is being sort kind of forced into litigation and paying because you do not want to have the cost of defending yourself in court. So I think clarity in the statute is the first step.

Mr. PASTOR. There is no conflict with me because I neither have owned a restaurant or a bar either before this or now, so this is mainly the issue. I bring the issue because people have come to me and said this has been a problem for us in Arizona and other places in the Nation.

A possibility, if there could be agreement between the performing rights societies and the industry associations, if there could be some kind of agreement of how they would enforce it, this exemption is a possibility. If the industry and the performing rights come to an agreement on how it is going to be enforced, that might be a way of getting out of the courts all the time.

Mr. COBLE. Thank you, gentlemen. Thank you, Mr. Chairman. Mr. HUGHES. The gentleman from Rhode Island.

Mr. REED. I would just like to commend the two gentlemen for their legislation. I think you focus on a very real problem for many small businesses.

Part of the problem was alluded to, I think, in both of your comments that for the individual business person it is a question of sort of having no choice, in a way. If they go to court, it is too expensive. To protest in other ways, it is too expensive.

I think what we would like to do is set up an arrangement so that they would be secure in knowing what they could do, and the system would police itself more effectively, so I want to commend you both for this legislation. I think it is very, very helpful for the small business community.