Now, you might ask, how does it happen, then, if these limitations are unconstitutional, that no question has been raised about the compulsory licensing of phonograph records in the 1909 law. It was just this simple.

There again words did it. When Congress granted the new right, the law had this provision: "And as a condition of extending the copyright control to such mechanical reproductions"-first, the author was finally given the right to control the mechanical reproduction—and then the law says: "And as a condition of extending the copyright control to such mechanical reproduction"-and then you have this compulsory license.

So that if an author came into court and questioned the constitutionality of that provision, the right itself might fall with the condition. And so nobody came in and tested the condition for fear that he would lose the new right that he got.

But the 50 or almost 60 years that have elapsed since 1909 do not hallow that invasion of right. And I do not think that it should be continued now with these private people who call themselves community antenna television operators coming in and asking for it.

It

Now, I think that applies whether it be the Teleprompter Co. and these other large interests coming into New York City and threatening to rip up our streets with underground wires of their own, because they do not want to pay fees to American Tel & Tel, or whoever owns those tubes, they tear up our streets, as they have on several occasions-I do not think it makes any difference whether it is these large companies that come into New York, or someone in a remote area. is just a question of price. If the symphony orchestra can pay for the use of music, why cannot these other private commercial interests do it? They do not say the charge is too great, they do not say there would be any impediment, in the case of music at least. And I am only talking about those copyrights that are made available to everybody on a prestated basis, and on a basis that nobody claims is unreasonable. I am not talking about those exclusive grants where the motion picture company can say to the telecaster, "We will not give you the right unless you pay an amount that is equal to what we ought to be getting from the community antenna operator." I am not talking about that. I am only talking about this kind of thing.

We go to the broadcaster and say, "We think that a rate of 2 percent, or whatever it is, of what you get from your advertisers for the sale of this package of entertainment is a reasonable rate considering what you get."

Now, the broadcaster says, "Oh, we think that is too much." And so he goes to court, under a decree that we have, acting collectively as we do. He takes us to the Federal court, and he says, "I want the court to lower these rates."

And what evidence do we submit to the court?

Well, we talk about what the use of music is, and what income these broadcasters have.

Now, if the broadcaster were engaging in selling the subscription service to the subscribers, we would take that into consideration as part of his income. But if Congress should write into the law that that particular performance-and it now has been held to be a performance that that performance is exempt, we cannot under any circum

stances say to a court, "You must take into consideration the value of a right that Congress has said is exempt." That is a contradiction in terms. If it is exempted it is not a right. And so we cannot be paid for it. We cannot charge the broadcaster. It may be that because he gets a free license from the U.S. Government for this channel that nobody else can occupy, he may come in here and say, "As far as we are concerned, we are not going to use our power to squelch the poor little CATV fellow, in on area where he takes just our local programs." In resolving that argument that the two of them have, whatever compromises they may be willing to make among themselves, I do not think the composer should be squeezed out. I think he should have the opportunity to be considered, bearing in mind what the history has been, and considering that in this whole picture the author is the only one that creates anything of value-the other boys, they are just delivering a package, and why they should be able to come in and say, "We do not want to pay you for the thing that makes our package salable." As I say, I can only understand it in the light of history-because the authors have been pushed around so much in the

past.

Now, I want to save the committee's time and skip as much as I can here. Let me in summary say this. We now find history repeating itself. Wire television operators are afraid that broadcasters may use the exclusive channels assigned to them by the FCC in a manner that will jeopardize the hundred million dollars that these operators expect to collect from the public annually in subscription fees. There can be no doubt that wire television is here to stay regardless of what this committee does. The only question is, Who will own these private enterprises and reap the enormous profit which will inure to the owners? The contending forces are broadcasters against other powerful financial interests who are attracted to the television media.

I appear for the composers and authors, whose music plays a large part in making these television enterprises profitable. The Constitution says that the Congress shall encourage them by securing exclusive rights to them, albeit for limited times. This subcommittee is entrusted with the consideration of legislation in that domain. You are asked to take away from authors certain rights that the law now gives them. Those who call upon you to do this have not given any reason why distinguished men and women, the composers of America, should lose their property rights. They do not charge that it is difficult to secure licenses from them. There is no claim that the rates charged for the use of copyrighting music are out of line. The only excuse given is that in 1909 Congress sanctioned an invasion of rights of composers to solve a dispute among manufacturers of piano rolls.

The fact is that no exemption whatever is justified whether the wire television service is in New York or elsewhere. I have already covered that.

Let me point out, as the previous witness did, that if a small UHF station pays for the use of copyrights, certainly the large CATV operator should do so.

And really concluding, Mr. Chairman, I should like to say, the principle should be recognized that, as one of the early statutes said, New Hampshire, I believe, no property is more peculiarly a man's own than the product of his brain. I should think the CATV people

would recognize this, and that they at least would have come around and said, "Cannot we work something out before coming to this committee for relief?"

Thank you, Mr. Chairman.

(The statement of Herman Finkelstein follows:)

STATEMENT OF HERMAN FINKELSTEIN ON BEHALF OF AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS (ASCAP) CONCERNING S. 1006 (USE OF COPYRIGHTED MUSIC BY CATV SYSTEMS)

Mr. Chairman, my name is Herman Finkelstein. I reside in New York City and am a member of the New York and Connecticut Bars. I appreciate the invitation of this Committee to appear here on behalf of the American Society of Composers, Authors and Publishers commonly known as ASCAP.

The members of ASCAP (8,469 composers and authors and 2,788 publishers) have a vital interest in the pending bills to revise our copyright laws. They are the men and women who write the nation's outstanding musical workssuch household names as Harold Arlen, Samuel Barber, Irving Berlin, Richard Rodgers, Leonard Bernstein, Ira Gershwin, Johnny Mercer, Harry Warren, who have had long and successful careers in music and many who are just starting on their musical careers. The membership includes the widows, children and estates of such deceased writers as George Gershwin, Oscar Hammerstein, Victor Herbert, Jerome Kern, Cole Porter, John Philip Sousa. Their music will live long after their copyrights expire. Some writers reach fame and popular appeal at a relatively early age, such as Bob Dylan, the leader of a new type of music sometimes called "folk-rock," which swept the nation and has been taken up by young people all over the world. Others achieve posthumous fame after lives of sacrifice and privation.

I have mentioned only a few of the thousands who have devoted their whole lives to the music profession. It is in the nation's best interest to encourage all who possess the rare talent that is needed to write the nation's music, and the willingness to face the many disappointments that are the common experience of those who follow this calling. The story of any generation is best told by its songs. Unlike so many others engaged in advancing the cultural life of the nation, those who write these songs do not ask for a subsidy; they merely want the property rights in their works safeguarded when those works are used by others who present public performances of their works or are active commercial participants in bringing those performances to the public.

Mr. Chairman, the issue before this Committee is one of vital importance to our nation. You must decide whether a single economically powerful pressure group the operators of subscription television systems known as "CATV”— shall be permitted to have free use of the works of the world's authors (for authorship knows no national boundaries) notwithstanding that-so far as music is concerned-their works are readily available at modest nondiscriminatory rates which do not require lengthy individual bargaining or possible interference with a particular use.

The business of so-called CATV operators is essentially a wire television system. As Judge Herlands recently pointed out in a decision holding two CATV systems liable for infringement of certain copyrighted motion pictures:*

"The terms 'community antenna,' as used by defendant for self-description, is [sic] a misnomer and reflects a fundamental misconception. Defendant's two systems are not 'community' ventures. They are large-scale commercial enterprises, advertising and promoting television programs, and making profit out of the exploitation of television programs, including plaintiff's copyrighted motion pictures. Nor are defendant's operations simply that of passive 'antennas' used only to receive telecasts. In fact, defendant's two systems, among other processes, receive, electronically reproduce and amplify, relay, transmit and distribute television programs-operations requiring complex, extensive and expensive instrumentation. These systems function as wire television systems, only one of whose structural components consists of antennas."

All members of ASCAP are required by federal court order to permit any of their works to be used at any time by such users as the CATV operators at a single price for access to the whole repertory-or, at the option of the user, separate licenses may be negotiated with the individual members. If the

*United Artists Television, Inc. v. Fortnightly Corp. (S.D.N.Y., May 23, 1966).

used chooses the full repertory type of license and he is dissatisfied with the rate quoted by ASCAP, he may apply to the federal court for a determination of reasonable rates. Like the radio and television broadcasters, the CATV operators are well organized, and any such rate litigation would be conducted for them on an industry-wide basis.

So, Mr. Chairman, you can see that the clearance of music does not present a real problem to the CATV operators.

As opposed to the writers and publishers of music, whose works are available to all at prescribed rates which, in the public interest, must be fair and nondiscriminatory, the CATV operators can furnish or refuse the programs of any stations. They are the sole judges, and make the decision wholly in their own self interest. To quote from a statement made by their trade associationNational Community Television Association, Inc.-in a recent court case:

"Community antennas [CATV operators] do not hold themselves out to render service to the public at large * * *. At this point it should be recalled that a community antenna does not obligate itself to receive [and transmit] any and all channels available at its antenna site * * *. The agreement with the customer may be to receive certain channels, but not such broadcast signals as the customer may specify. Thus community antennas provide a specialized service for a limited part of the public under special contracts. Since the community antenna serves only particular persons within a class under special contracts and limits the signals it will receive [and transmit] to those broadcast by certain stations rather than all stations capable of reception, it is not a common carrier." Thus, any exemption of CATV operators would amount to a taking of the author's property rights for the benefit of a purely private group. It would result in grave injustice to the writers and publishers of musical works without any justification in terms of the public interest. Even when property is normally taken in the public interest, the laws of eminent domain prescribe fair compensation. The CATV operators cannot justify their attempted confiscation of the property rights of authors.

The CATV operators can afford to pay for the copyrighted music they use. They do not assert that the royalty rates for music are out of line. It is an axiom in determining a fair rate for the use of music that the rate must be keyed to the income of the user. Thus, a UHF television station with a few sponsors or advertisers-or a so-called educational television station-may pay little or nothing. But if their programs are picked up by a commercial enterprise such as a CATV operators and delieverd at a price, a payment should be made at this point commensurate with the value of the music to that operator. Let us take an example of a symphony orchestra which performs a composer's work in its auditorium. The performance is broadcast by a UHF station. A CATV operator then picks up the performance and makes it available to subscribers. Under present arrangements, the symphony orchestra pays the composer an amount related to the economics of the orchestra, which of course is very small considering that practically all symphony orchestras operate at a deficit. The UHF station pays another small amount-it, too, has serious economic problems. Then the work is carried by a prosperous CATV operator to subscribers who pay a fee for the privilege of witnessing the performance. After all, if the CATV operators did not deliver entertainment they would not be in business. They are certainly as much involved in this performance as is the UHF station whose facilities they use. This has already been established as a matter of law (United Artists Television, Inc. v. Fortnightly Corp., supra.)

The television networks and stations pay composers a royalty based on the revenues that the networks and stations collect from advertisers-they do not pay composers anything based on the additional revenues CATV operators collect from their subscribers.

No one can claim that composers are in better financial position to forego payment for their works than the CATV operators are to make such payments. Even if there were any doubt about this, the fact is that but for their use of the composer's property (and properties of other authors) the CATV operators would have nothing to sell.

The Constitution recognizes the importance of encouraging authorship by enactment of federal law's safeguarding their exclusive rights.* Unlike other

*Article 1, Sec. 8, Ch. 8 of the U.S. Constitution provides: "The Congress shall have power * **to promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and dis coveries.'

forms of property, the rights of authors are enjoyed only for a limited period. During that period their rights must be exclusive. Any statutory exemption in favor of CATV operators would do violence to the whole spirit of the constitutional mandate.

If the public interest demands that CATV operators be accorded certain protection as against possible abuses by the owners of the broadcasting stations whose programs they pick up, that should be a matter for regulation of broadcasters under the Federal Communications Act rather than copyright legislation legalizing the appropriation of the copyright owner's property for private purposes.

Broadcasters receive from the United States a valuable license giving them exclusive rights to use certain international highways (wave lengths) for the communication of intelligence and entertainment. They pay nothing for those exclusive privileges, but may sell them for millions of dollars when ownership of the station (i.e., the right to use the particular channel) changes hands. If Congress should feel that the CATV operators have a claim on these broadcasters to make their programs available to them, then Congress may empower the Federal Communications Commission (F.C.C.) to deny broadcasting licenses to any broadcaster who fails to acquire such rights for the CATV operator. If there were such a requirement, ASCAP would grant all broadcasters the right to authorize CATV operators to use the musical compositions of its members in their subscription service. If a price for this license could not be agreed upon, it would be fixed by the Federal Court. Such a system would recognize the property rights of authors and fully safeguard any legitimate interest of CATV operators.

One may ask: If authors are willing to grant a license to broadcasters which will clear rights for CATV operators, why do they object to a statutory exemption of the CATV use? The answer seems clear: In a judicial proceeding to determine a fair rate for the broadcaster's use of copyrighted music, the court may not assign any value to a use (CATV) which is exempted from application of the United States Copyright Law. On the other hand, if the property right is recognized under the copyright law, but a statute relating to federal communications imposes upon the broadcaster an obligation to acquire CATV rights for all of its programs, then the author's property rights are respected and the burden of clearance is placed where Congress specifies. We are not concerned with that problem here. It should be taken up as a communications problem, not as a copyright problem.

We have seen what may happen when an exemption is given to a particular special interest. In 1909, an exemption was given to owners of coin-operated machines. That was in the days when the machines which the Committee considered were located in "penny parlors." The charge per play was one cent. The coin machines were phonographs with earphones; the records played were reproduced mechanically rather than electrically; the attraction lay more in the novelty than in the music reproduced; the industry was small, and the use peripheral. Today, juke boxes account for over $500 million dollars in receipts from playing copyrighted music. It is the largest single user of that music. Yet it pays nothing at a time when all who have analyzed the situation objectively feel that the exemption should be repealed. But it is not easy to bring laws down to date. There never should have been an exemption in the first place; nor should there be an exemption for CATV. Any such exemption would establish another unjust provision in our copyright law.

At the present time we know the injustices that may result from any exemption in favor of CATV operators. If they may legally pick up visual images of TV stations, logically they will be permitted to pick up the transmission of sound from AM and FM radio stations. The programs of these stations consist mainly of music-playing phonograph records or albums. That is the same fare that is supplied by background music services such as MUZAK. If CATV operators may use this music without payment, they will drive out such independent users as MUZAK and other similar users; or MUZAK will be driven to convert to a secondary music service, thus depriving musical composers of a very important market and source of income.

Unlike other works, such as motion pictures and dramatic programs which may range in time from a half hour to two hours, each song may be rendered in two or three minutes. It may be preceded or followed by a commercial announcement, but the announcement is not made during the rendition of the song. Payment by the originating station, however, is based on receipts from the ad