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early days they merely used it to advertise their wares like station WOR owned by the Bamberger Co. in Newark, N.J., which at the end of each program would announce, "L. Bamberger & Co., One of America's great stores," and the judge in that case said that he commended them for their public spirit but it was passing strange that every time they made this great public gesture they ended up by saying they were one of America's great stores, and that was held to be a performance for proft. The arguments were all made then by broadcasters-the same arguments we hear now.

Let us say a broadcaster today, a radio broadcaster, goes out and buys a phonograph record. The work has already been performed pursuant to the author's agreement with the record company. He has gotten his 2 cents. There is nothing new here. There is merely a broadcasting of the recorded performance. The broadcaster pays his good money for the record, puts it on, spins it, and before and after that whirl of the record there is an advertising announcement. The author has not done anything new. Why should he get another payment?

If Mr. Zimmerman's logic is sound, then it is unsound to require the broadcaster to pay anything when he spins a record. If that is unsound, however, then 80 percent of the author's money today goes right down the drain because that is where the 80 percent comes from.

Now, do the authors get too much? Here is the experience in ASCAP. The serious composers get so little in America when their works are used-there is so little opportunity for commercial usethat the writers of popular music do this: Whenever ASCAP collects a dollar from a concert or a symphony orchestra, the popular writers add $14 more, so that the serious composer will have enough money to encourage him to continue to devote his life to writing serious music. Now, someone asked Richard Rodgers what the gimmick was, how he justified a thing like that, and Rodgers said, "Well, now, if we were a large commercial corporation, we would set aside a certain percentage of our receipts for research. We popular writers feel that the people that write serious music are doing our research for us and in our own selfish interest we want to see that they continue writing music." This is clearly in the public interest. It certainly cannot be that the serious composer or any composer is already getting too much money or enough money if some of the writers have to dig into their jeans to make money available to other writers.

I do not think that it is asking too much to say to the CATV people, when you use this music and you get money from it directly from the public for no other purpose except to deliver entertainment, that you just pay an amount to authors commensurate with your receipts from the use of their copyrighted material.

Now, the next point that Mr. Zimmerman makes, he says, "up to now"-page 5-"the television broadcasting industry has had no difficulty in obtaining programing material".

I do not think Mr. Zimmerman either watches television or reads comments on it or ever reads a criticism. If he read Broadcasting this week, he would find that the broadcasters have such a dearth of material in the United States they are going to Europe for material. Television has a voracious appetite. It has used up almost all the old movies. They say they cannot get enough writers of talent to write

and I am sure there is enough talent in America if the money is there and if television and community antenna are willing to pay the money. I am sure that there is enough talent in America to satisfy the needs of television, but at this moment they say there is not. They go to Europe for it, and I think they go to Europe because they can get a cheaper product. They are more interested in quantity than quality.

I do not think that that indicates that the American author is getting too much today or that he is living off the fat of the land. The average income of a writer, whether it be a member of ASCAP or a member of the Authors League, the novelist or dramatist, is under $3,000 a year. Yes, we hear of unusually successful people like Richard Rodgers and Irving Berlin, the late Cole Porter, but you do not compare them with the people in U.S. Steel or the Texas tycoons, and yet I think that they make as great a contribution as anyone in America to the enrichment of the life of our Nation.

It seems passing strange that authors should be singled out by the Department of Justice coming in here and saying they get enough, and should not charge poor General Electric, which has all these CATV systems and all the applications, and other owners of CATV systems-the great utilities and the Teleprompter Co., and all these collective broadcasting stations and networks owning CATV systems who come in here and say they are willing to give copyrights away for the contour A area-you know, they may be talking as if they were copyright owners. In truth they are CATV owners. CBS is a large owner in Canada. It has several options for CATV systems in the United States. RCA is a CATV owner and is just waiting to see how it will enlarge its interests. The other network, ABC, is going to try it through a different route, through the communication satellite, now that it has been purchased by I.T. & T. which plans a satellite operation. There is where your networks lie, and how the Department of Justice can assimilate the networks to the copyright cwners is a great mystery to me.

Now let us turn to Mr. Zimmerman's statement on page 6: "The existence of CATV transmission should increase the amount paid by sponsors."

What would happen in a case like this? A CATV owner decides he is going to bring in something unique for his viewers. He gets a UHF license and you know how many of them are hanging around— nobody takes them, but a CATV operator could take up a UHF license, could put entertainment material on it, with very little advertising, and then say to his CATV subscribers, "Here is what I am bringing you, program material not interrupted by advertising.'

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What would the author get out of that station? Those in ASCAP would get 21% percent of what would be almost nothing-if based on what the advertising pays-but the CATV operator who would own that station would get a very substantial sum in toll charges to CATV subscribers. It would attract more and more subscribers to that station. That is something that the person, the telecaster in the VHF business, broadcasting without the CATV arm, could not afford to do. And every time that you increase that kind of programingthere is only one set, they can only have one program on at a time—if the viewer is glued to that program without advertising, he is not glued to the program with advertising and the advertiser is going to pay less and not more.

I just do not think Mr. Zimmerman has looked at the economics of this industry and its possibilities. I looked all over in his statement for mention of the communications satellite which everybody knows is right around the corner. The Ford Foundation wants to jump in. Comsat is up there already. I.T. & T. wants to come in. RCA wants it. All are scrambling for this thing. And one day we will all wake up like the day we woke up and found that Russia had the atomic bomb. One day we will wake up and find there it is, that nobody ever anticipated this thing happening to television, that suddenly television is not what it was when this bill came before this committee. It is sure to happen. It is not just an idle dream.

Now, the next point that Mr. Zimmerman makes is that, "Finally the CATV liability here proposed would in fact be a departure from the system by which copyright holders are now compensated. Generally speaking, the television viewer in effect now pays for the television programing indirectly, by buying the products of the sponsors." Well, I have already mentioned that actually the nonviewer pays as well as the viewer but if you charge CATV only the viewer will pay. That seems much fairer. Besides, it will improve the programs that people at home get and if there is more money available for authorship, I think that will be a service to the public and not a disservice. Finally, Mr. Zimmerman says: "In conclusion we believe that this copyright proposal may have harmful anticompetitive consequences.' Now, I do not know how payment to the writers and publishers in ASCAP can have anticompetitive consequences and when Mr. Zimmerman was asked what about it, he did not know of any need for an exemption of CATV in a case where copyright rates are regulated by an antitrust consent decree, as in the case of ASCAP.

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When I was here before, Mr. Chairman, you asked whether I believed in the white, black, and gray areas and I said I thought they all should pay and you said, "You think it is all black," and I think we agreed that was my position.

I certainly appreciate the opportunity to come here and comment on Mr. Zimmerman's remarks. I am sorry I could not have done better but I have just heard the remarks and got the copy and this is the best I could do under the circumstances.

Senator BURDICK. In other words, it is still black?

Mr. FINKELSTEIN. I think so, Mr. Chairman.

Senator BURDICK. Thank you.

Mr. FINKELSTEIN. Thank you very much.

(The following was subsequently received and by order of the chairman printed at this place in the record :)

AMERICAN SOCIETY OF COMPOSERS, AUTHORS AND PUBLISHERS,
New York, N.Y., September 6, 1966.

Re S. 1006, supplement to statement of August 25, 1966.
Hon. QUENTIN N. BURDICK,
Acting Chairman, Committee on Patents, Trademarks, and Copyrights, U.S.
Senate, Washington, D.C.

DEAR MR. CHAIRMAN: When I appeared before the Committee in rebuttal on August 25, I emphasized the financial power of the CATV operators for whom the Department of Justice was seeking an exemption from the requirements of the Federal Copyright Laws. Attached is a survey showing that only 25 group owners of CATV systems own in the aggregate over 650 CATV franchises and have applications pending for almost 400 more.

I also mentioned that J. Leonard Reinsch, President of the Cox Broadcasting Corporation, and Retiring Director of the National Community Antenna Association had referred to copyright fees as "a normal cost of doing business." His entire statement on this subject reads as follows (National Community Television Association Bulletin, July 18, 1966):

"THE COPYRIGHT QUESTION

"A recent court ruling, currently subject to appeal, implies that CATV operators may be required to pay fees for the privilege of transmitting copyrighted material to cable television subscribers. It has been suggested that this would impose a critical financial burden on the operators. In our opinion, the alarm is not warranted. Copyright fees are a normal cost of doing business in many fields. As in radio and television today, they would constitute a relatively small element in the total cost of providing a service desired by the public."

In addition, I should like to call the Committee's attention to a similar statement in a current prospectus of the Teleprompter Company, indicating that they can pay such royalties without any materially adverse effect on the company, even though Teleprompter's "principal activity is the ownership and operation of community antenna television (CATV) systems in sixteen communities throughout the United States." Referring to the case of United Artists Television, Inc. v. Fortnightly Corp. (and a similar case pending against Teleprompter) the prospectus states:

"Even if plaintiffs ultimately prevail in either or both actions, management of the Corporation believes that the effect on the Corporation will not be materially adverse."

In any event, as the Department of Justice concedes, where rates of copyright owners are already regulated under the antitrust laws, as in the case of ASCAP, there is no need of granting a copyright exemption to CATV.

It is submitted that if any concession is to be made to CATV, it should be done under the Commerce clause of the Constitution, and not the Copyright clause. The Commerce clause enables the FCC, if deemed necessary, to require stations holding a television license, to obtain rights for CATV operators for their contour "A" area; it also enables the Department of Justice to insist on rate regulation in cases of collective licensing. These avenues are open if resort to them is needed.

No case has been made for an exemption of CATV-a commercial operation— under the copyright law. The rights of authors should not be made subservient to the claims of private commercial interests. This was done in 1909 with respect to coin-operated machines. The precedent should never have been established. It is unsound and is not likely to be continued. It certainly should not be extended.

I appreciate the permission extended by the Committee to appear in rebuttal, and this further opportunity to supplement my extemporaneous remarks.

Respectfully submitted.

HERMAN FINKELSTEIN.

69 173 67—16

25 group owners of CATV systems-Number of franchises, franchise applications pending, and ownership of TV and radio stations

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Georgia Cablevision Corp.

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(80 percent).

Capital Cablevision...

American Cable TV, Inc. (Phoe-
nix, Ariz.).

Also interest in and operates
Community TV Reception
Co. (Sherman Oaks, Calif.).
Also interest in:

Savannah TV Cable Co..
Cable-Vista, Inc...

Telesystem Corp. (Glenside, Pa).
Also interest in Pioneer Valley
Cablevision (Keene, N.H.).
Telesis Corp. (Chicago, Ill.)..
Minnesota All Channel Cable-
vision (80 percent).

Russell, Kans. franchises (80
percent).

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Telesis Engineering (100 percent).

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