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Mr. HUGHES. Mr. Berenson, please proceed. STATEMENT OF MARVIN L. BERENSON, VICE PRESIDENT AND

GENERAL COUNSEL, BROADCAST MUSIC, INC. (BMI) Mr. BERENSON. Mr. Chairman, members of the subcommittee, my name is Marvin Berenson. I am general counsel for Broadcast Music, Inc., commonly referred to as BMI, a not-for-profit making U.S. performing rights organization representing approximately 150,000 songwriters and composers as well as 50,000 music publishers.

Founded over 50 years ago, BMI was established to be a competitive source of music licensing. BMI immediately established what is referred to as an "open door policy" so that alternative genres of music, such as jazz, gospel, country, R&B, and many others could be legally available to music users.

Today, BMI represents a repertoire of over 242 million musical works. Under the U.S. copyright law, if a person wishes to publicly perform a copyrighted musical composition, that person must obtain permission, in effect, a license from the creators of that musical composition.

As most songwriters would find it impossible to track and license all performances of their works, they enter into agreements with a performing rights organization, and grant to the organization a nonexclusive right of public performance.

Without organizations such as BMI, ASCAP, and SESAC, a user would be compelled to seek out every copyright owner whose music he or she is publicly performing in order to obtain permission for such performances.

No one can deny that music is pervasive in the American lifestyle. It is used in many ways and places: at home, in a car, an office, a retail business, restaurants, TV, cable television, movies, just to name a few. It is so readily available, that many people tend to think it is free, and they believe that they have the right to use music as they please. It is not scrambled like cable television networks; it is not something like Coca-Cola where the formula is secret.

Practically, music can be publicly performed without obtaining the mandated prior permission from a copyright owner. Property rights in an intangible such as music are often difficult to comprehend. People may assume that because music comes from a radio or television or record or tape that they have purchased, it is theirs to do with as they wish.

Although the copyright acts grants them exclusive rights that date back many decades, BMI and its sister performing rights organizations spend countless hours educating music users both as to the concept of copyright and the statute which confirms it. Even then people do not believe that they must pay for publicly performing music, although they may admit that it is someone else's property.

With the enactment of the 1976 Copyright Act, Congress made clear its intent to limit any exemption under section 110(5) to small commercial establishments, namely what has been referred to as "mom and pop” type businesses. For a detailed discussion, please refer to the text of my statement.

H.R. 3288 would deprive copyright owners of that which Congress long ago determined was theirs to receive. By greatly expanding the situations under which music can be used without compensation to its owners, this bill would make music a commodity that its creators would be compelled to donate free of charge to owners of restaurants and like establishments for use of their commercial benefit.

To say that music used by such establishments is incidental to the establishments main purpose is to fail to recognize what Supreme Court Justice Oliver Wendell Holmes stated over 75 years ago. That is, if music did not pay, it would be given up.

When a business offers something to its patrons, it is obviously thought to be good for business. When a radio or television is turned on in a restaurant, it has economic value to the proprietor. The people who created and own the music emanating from those devices, should not—and I repeat-should not be forced by statute to contribute their property, that is, their musical compositions, when no one else providing value to the business is asked to do the same.

Without BMI's efforts, the musical creations we can hear with a push of a button would otherwise go uncompensated. If that were to happen, the incentive for a composer to continue at his or her livelihood would disappear, leaving society all the poorer.

Regarding BMI's licensing practices, I will try to summarize our approach. Through advertising, telemarketing, videos, participation in industrywide seminars, working with the National Council of Better Business Bureaus, direct mail and personal visits, BMI representatives do their utmost to build relationships and to educate the business community about licenses for those wishing to use music in our repertoire.

BMI has and offers to a music user specific brochures which educate, and I have copies of these available for any member of the subcommittee who may desire them. Additionally, BMI has an 800 telephone number for inquiries from prospective licensees.

Most people are receptive to our contacts. That is because our licensing executives' contacts and presentations must follow the same philosophy as is apparent from our printed materials. We must educate and inform in a professional and cordial manner. We do not intimidate, we do not harass, we do not abuse.

If we were informed of any such conduct by a BMI representa tive, BMI immediately and thoroughly investigates the claim, and appropriate action is taken if necessary. Happily, instances of such claims have been far and few between, and, to the best of our knowledge, have always been satisfactorily resolved.

If the committee has any specific information with regard to unacceptable conduct by BMI representatives, we would appreciate receiving the specifics so we can look into such claims.

The heart of the matter is that performing rights organizations are implementing the law and it is difficult to explain our function without specifically referring to that law. The fact is that no fence can be put around the public performance of our music. Given this reality, BMI does its best to educate the music users on their need to comply with the obligations set forth in the copyright law.

In an effort to reduce the cost of licensing, and thereby reduce the amount of fees that users will be responsible for, BMI will negotiate master license agreements with associations of small businesses which use music. Such an agreement is administered by the association for the benefit of its members, and will usually provide for a reduced rate.

BMI has had discussions with various State restaurant associations about the possibility of licensing under such a structure. In fact, BMI has had a series of discussions with the New Jersey Restaurant Association. While BMI and the association has not yet reached an agreement, we believe the negotiations demonstrated that both parties recognize the value of music, and the benefits a master license can offer.

It should be noted that the majority of BMI's revenues are not derived from licenses structured and arrived at unilaterally, but are the result of extensive negotiations, with industry groups and associations. These include negotiations with industry groups and associations, local television, radio, hotels, jukeboxes, background music service, amusement parks, symphony orchestras, colleges and universities, and trade shows and conventions.

Of course, members of these industries are not bound by these negotiations, but the negotiation process does carry great weight because BMI is required by its consent decree to treat all similarly situated licensees in a nondiscriminatory manner.

Perhaps it would be best to look at what the license fees that BMI charges are for restaurants and retail stores using radio. The magnitude license fees for those licensees who utilize music by means of radio start at $105 per year for restaurants, nightclubs and the like. For retail establishments, the annual license fees range from $60 per year to $480 per year. Fees for television and audiovisual uses are somewhat higher.

A blanket license for such uses which offers access to over 2,500,000 songs created by BMI songwriters and composers comes to approximately 30 cents a day for a restaurant and 15 cents per day for retail business. This is truly a modest sum for music which enhances ones business.

The public tends to think of songwriters in terms of those who both write and perform. Successful writer artists such as Michael Bolton and Paul Simon are viewed as wealthy people who do not need the few dollars paid by restaurants and similar establishments. This is truly a distorted picture of the situation.

Most songwriters are not performers, and they rely upon the proceeds of their writings for their food and rent money. This is a vital part of their livelihood we are talking about.

I hope that these remarks have helped to give some insight into the types of licenses and BMI's method of licensing music. I welcome any questions you have, and thank you for the opportunity to be heard.

Mr. HUGHES. Thank you, Mr. Berenson.
[The prepared statement of.Mr. Berenson follows:]

PREPARED STATEMENT OF MARVIN L. BERENSON, SENIOR VICE PRESIDENT AND GENERAL COUNSEL, BROADCAST MUSIC, INC. (BMI)

Mr. Chairman, Members of the Subcommittee, my name is Marvin Berenson and I am General Counsel for BMI, a United States performing rights organization that

represents approximately 100,000 U.S. songwriters and composers and approximately 50,000 U.S. publishers. BMI collects license fees on behalf of those American creators is represents, as well as for the thousands of creators from around the world who have chosen BMI for U.S. representation. The license fees collected by BMI for the "public performances" of BMI's repertoire ce approximately 2,500,000 compositions are then distributed as royalcies to the writers and copyright holders BMI represents and include radio airplay, broadcast and cable television carriage, and live and recorded performances by all other users of music. Additionally, BMI represents its songwriters, composers and publishers in the collection of royalties under the Audio Home Recording Act of 1992.

BMI is headquartered in New York, with offices in Nashville, Los Angeles, London, Phoenix, San Juan, Middleboro (MA), and Red Bank (NJ). It

created in 1939 to provide a competitive source of music licensing in the United States. A not-for-profit-making corporation, BMI opened the door to performing rights representation for songwriters and composers of all types of music, many of whom were not eligible under the membership guidelines of the older American performing rights organizations.

From the outset, BMI adopted a dramatic series of innovations chac set it apart from its competitors. First and foremost was BMI'S "open door" policy.

When BMI came into existence, ASCAP represented the musical works of less than 150 publishers and slightly more than 1,000 writers which were the only u.s. works available through ASCAP. Additionally, SESAC, then a small, highly specialized organization, represented a very limited repertoire. The repertoire at that time almost entirely excluded forms of American music that were beginning to grow popularity, such as rhythm and blues, gospel, country, and jazz.

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BMI opened its doors to all writers and publishers, including many who in the past had not received royalties for the performance of their works. This "open door" policy made it possible for the users of music to have a greater number and variety of works to perform. BMI adopted a plan unier which writers and publishers would receive royalties for performances of their works, be they live or recorded, or presented on a national, regional or local basis.

Due in a large part to this "open door" policy, BMI has been a major force in the growth of American music over 54 years. Our writers and publishers have made extraordinary musical and cultural contributions, bringing country, rhythm and blues, rock & roll, Black, Latin, jazz gospel, film, pop, classical theatre and numerous other musical genres into the mainstream of public awareness.

Today, BMI represents approximately 150,000 copyright owners in all genres of music and on their behalf grants legal access to its repertoire of over 2,500,000 musical works through blanket license agreements. A blanket license agreement allows music users to make unlimited use of the works in BMI's repertoire for the year, for one annual fee. BMI's blanket licenses cover all classes and categories of music users, including major television networks using millions of copyrighted musical performances per year, radio and television broadcast stations, cable networks, as well as hotels, restaurants, universities, and many other venues. BMI logs airplay performances on radio and television through the most comprehensive and advanced survey and census techniques. Our most performed work, "Yesterday" by Paul McCartney and John Lennon, just surpassed the 6 million performance mark.

BMI writers have won numerous Grammys, American Music Awards, Oscars, Emmys, Tonys, Pulitzer Prizes, MTV and CMA Awards. BMI's roster includes such notable songwriters and composers as Alan Menken, John Williams, Lionel Hampton, Buddy Holly, Sandy Patti, John Lennon, Ray Charles, Eric Clapton, Paul Simon, Elvis Presley, Miles Davis, David Foster, Carole Bayer Sager, Bee Gees, Beach Boys, Willie Nelson, Thelonious Monk, Dolly Parton, Gloria Estefan, Nirvana, R.E.M., Michael

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