APPENDIX 2.-REBUTTAL STATEMENT OF AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS (WITH ATTACHMENTS), IN RESPONSE TO TESTIMONY ON FEBRUARY 23-24, 1994

The American Society of Composers, Authors and Publishers (ASCAP) respectfully submits this statement to address issues raised by the Chairman and members of the Subcommittee, and to respond to the testimony given by music users and others who appeared before the Subcommittee at the oversight hearings held on February 23-24, 1994.

Introduction

In his testimony at the hearing, ASCAP's

President Emeritus, Morton Gould, observed that the Subcommittee was unlikely to hear that any music user believed he was paying too little for the right to perform ASCAP's members' copyrighted music. His prediction was accurate. Although a number of the witnesses expressed their "support" for the principle of fair compensation for use of copyrighted works, at bottom, all said that they should either pay less or nothing at all. And,

unfortunately, they did so through testimony containing numerous misstatements of fact.

In addition, the Chairman and members of the Subcommittee raised serious issues which should be

addressed. Accordingly, we shall first deal with those issues which the Chairman and the Subcommittee have

the standard for

indicated are uppermost in their minds uses by means of communication of transmissions in public establishments under 17 U.S.C. S 110(5), the desire for online access to information concerning ASCAP's repertory, and the question whether arbitration of rates would be a good idea. We will then turn to correct some of the more egregious misstatements by users who testified.

Because the focus of these hearings involved

practices and issues that arose under § 110 (5) of the Copyright Act, we believe it would be helpful to complete the record with the views of those who were closely associated with the creation of this provision of the law. For example, the Honorable Barbara Ringer, former and now Acting Register of Copyrights, might be able to shed some light on the context in which this language was developed and whether it has met its original expectations or has created any unanticipated problems.

Negotiation Concerning $ 110 (5) and

Licenses for General Establishments

At the hearing, ASCAP's representatives expressed the Society's strong desire to sit down with user groups representing "general establishments" (such as bars, grills, restaurants, taverns and nightclubs) and discuss the proper standard for the S 110 (5) exemption specifically.

After the hearing, ASCAP renewed that call

in a letter sent to these users' representatives. is attached as Exhibit A.

A copy

It is ASCAP's hope that such a meeting can take place under the Subcommittee's auspices. ASCAP's position is straightforward and was expressed at the hearing: We believe that it would be useful to reach agreement on a uniform standard for exempt and non-exempt uses of music by means of radio and television receivers in general

establishments.

Such an agreement would minimize disputes

and litigation. We hope the meeting we seek can be quickly

arranged.

We also would be happy to meet with these users' representatives and discuss any other licensing matters of

concern.

On-Line Access to ASCAP Repertory Information

As we testified, ASCAP has for some time been

Before the

looking into making information about our repertory available to users, members, and the general public, through access to an on-line computer system. hearings, ASCAP had determined to do just that. This is a costly undertaking and we have had to examine it thoroughly. We have chosen a system, and work on it has progressed to the point where ASCAP is about to begin implementing it. Obviously, there are many matters that have to be worked out, such as system security and covering its costs. We anticipate that the system will be tested very soon and will be up and running in a matter of months. In sum, ASCAP agrees with the Subcommittee that such on-line access is a good idea, and had undertaken to put such a system in place prior to the Subommittee's hearings.

Rate Arbitration

The question whether there should be some sort of compulsory arbitration of disputes between the performing rights organizations and music users was raised at the hearing. It was unclear as to whether arbitration was being advanced as a desirable procedure to determine reasonable license fees, to resolve disputes under existing

Section IX of the ASCAP Consent Decree allows any user to obtain a license by requesting one and prescribes a sixtyday negotiation period following which the user can apply to the United States District Court for a determination of the appropriate license fee. The Consent Decree contemplates that such proceedings would be carried on by groups representing either entire music-using industries or large segments of such industries. That is precisely what has transpired in the 44 years since the amended decree was

entered.

The broadcasters who testified at the hearings may have left the Subcommittee with the impression that the ASCAP fee determination procedures have failed to provide the relief contemplated by the decree.' Quite to the

Just as was the case with respect to the television broadcasters who sought a legislative remedy to their dispute with ASCAP -- the so-called "source-licensing" legislation sought in 1985 -- two of the broadcasters who testified before the Subcommittee are parties to the pending New England Continental Media proceeding under Section IX of the ASCAP Consent Decree. The proceeding has indeed been a protracted one, but that is the broadcasters' fault, not ASCAP's. Their counsel, not ASCAP's, has sought and obtained discovery of thousands of documents and attempted to have the court determine fees that are different