value of the catalog to Seeburg could cause some concern in music business circles. During the last decade Seeburg has built a vending machine empire by buying leading manufacturers, and in the last year it moved into the game field by acquiring the Williams Manufacturing Co. and the United Manufacturing Co.

Based on past performance, it's a safe bet that Seeburg's entry into the music publishing and record industries will be more than perfunctory.

In background music alone, Seeburg is currently getting ASCAP checks in five figures annually based on Seeburg-held copyrights.

Gordon revealed Seeburg now owns half of the copyrights in its background music library. The company's ASCAP publishing firm is Beatrice Music. It also owns a BMI firm, Fremont Music.

LABEL REGISTERED

A check with the trust fund of the American Federation of Musicians disclosed that Seeburg has had a label registered since 1961. Officials at AFM said the label has been inactive.

Seeburg's first move as a record manufacturer came in December when it released its discotheque package, all 33 little LP's. Its first move as a publisher began 4 years ago when it formed Seerose with Maurice Rosengarten in Zurich. Rosengarten is one of the deans of the European music industry.

The Seeburg discotheque library will be known as Rec-O-Dance and will cost the operator $60 a year to lease 10 little LP's. Changes are made four times a year.

Gordon explained that while the leasing arrangements caused some operator resentment when it was introduced 4 months ago, leasing is the only means for the company to maintain exclusive use of the product and to safeguard the operator from performance rights payments.

Mr. KASTEN MEIER. May I make only one closing statement about this?

I understand from past testimony that, while the jukebox people did not in fact care to pay anything, they would regard payment of increased mechanical fee on the record, which Mr. Hutchinson alluded to, as a possibility. They wouldn't be opposed to that. And I think you probably know that, in discussions in former years, we also talked about, at least one or two of us, as a possibility, putting on the record, not an additional mechanical royalty, but a performance royalty fee on a per-record charge, like a 2- or a 4-cent charge on the record. This would meet one fear of the jukebox industry, namely, it would keep the publishers and their organizations at arm's length from them, only so far as, you know, they reached the record manufacturing company, as they do under the mechanical royalty now. If it produced the same income to the ASCAP members and other members, would you have any objection to that type of thing?

Mr. FINKELSTEIN. I don't think this is a sound approach, Mr. Chairman, for two reasons: one, if you just increased the entire mechanical royalty, then the people who buy records for use in the home would have to pay what the jukebox people should pay.

Mr. KASTEN MEIER. That's not the proposal though.

Mr. FINKELSTEIN. Now as to the second proposal, that there be a separate record for jukeboxes, or a record with a separate label, the higher fee to be paid on that, you will remember the record manufacturers were in here, and they said:

When we put the labels on records, we don't know whether they are going to go into jukeboxes or not, and we don't know whether the record is going to sell or not, and we can't have separate labels.

52-380-66-pt. 1-14

I think Congressman Celler said, "What about different colored records or something?"

They said, "We can't get into that kind of operation." But secondly, they said:

We manufacture. We make copies. We don't know what uses are going to be made of our records, and we don't think it should be our obligation to follow that record after it leaves us. We should be able to turn it over, market our records with distributors, and they do what they wish with them.

And I think, as I said before, the whole philosophy of the copyright law is that, once you make a copy or a record, that must freely circulate. There must be no impediments to the free circulation of that record or that copy, once it is made, but if you make a public use of it (and, under the present law, for profit in the case of musical works) then a new right comes into being, and the person who makes that use must pay for it, and pay in proportion to his use. Then, there was also another factor that came before this committee when it was last considered, as to the number of fly-by-night record manufacturers who don't even pay their mechanical royalties.

There is no way of mixing these two rights. They are separate rights, and the original philosophy of this copyright law was sound, in separating the rights, and have each one discharge his obligation. Mr. KASTENMEIER. Of course, the attempt wasn't to mix the rights. It was to use the same technique in collection, solely.

Mr. FINKELSTEIN. It was to really mix them, in a sense, I think, Mr. Chairman, because the manufacturer of the record was going to be the person who would have to discharge performer's obligation, and that's what I referred to when I said, "Mixing the two rights."

Mr. KASTENMEIER. Yes.

Mr. FINKELSTEIN. Unless you were to say that you just call it the mechanical right, and not relate it to performance, but then if you did that, the person who bought it for home use would have to pay the extra royalty, so you are really saying it is a performance right, but the payment must be discharged by the manufacturer, which I think is unsound.

Mr. KASTENMEIER. It wouldn't necessarily be made by him. That is, the payment presumably would be added to the cost of the record, but he would, in fact, be collecting it, that's true. He would have that responsibility.

Mr. FINKELSTEIN. You know that when they sell these records, and when the jukebox gets through with a record for their public purpose, they put it in the used record market, and they get much more than the 2-cent record royalty they claim they now pay.

The ultimate purchaser of that record is the man in his home, and ultimately, no matter what you do, he is going to pay the cost of the recording fee. I really think these are separate.

Mr. KASTENMEIER. We thank you for your statement, Mr. Finkelstein.

Mr. FINKELSTEIN. Thank you.

Mr. KASTENMEIER. The committee has a disposition to sit. I think we will call our next witness and proceed as far as we can.

Mr. Sydney M. Kaye, representing Broadcast Music, Inc.

STATEMENT OF SYDNEY M. KAYE, CHAIRMAN OF THE BOARD AND GENERAL COUNSEL, BROADCAST MUSIC, INC., ACCOMPANIED BY DR. ROGER SESSIONS, PROFESSOR OF MUSIC, PRINCETON UNIVERSITY

Mr. KASTENMEIER. Mr. Kaye, would you proceed, and would you identify your colleague?

Mr. KAYE. Mr. Chairman, gentlemen of the committee, my name is Sydney M. Kaye. I practice law in the city of New York. I am chairman of the board and general counsel of Broadcast Music, Inc., which is commonly known as BMI. I appear here on its behalf.

I am accompanied by Dr. Roger Sessions, a distinguished composer and educator, who occupies the principal chair of music at Princeton, and whom I would like to introduce later.

Mr. Chairman, I have a written statement. Both because some of the things in it have been said and because questions have been raised to which I would like to respond, I should like to request that my statement be made part of the record at this point, and I think I can compress portions of it.

Mr. KASTENMEIER. Without objection, it will be received and be made part of the record at this point.

(The statement referred to follows:)

PREPARED STATEMENT OF SYDNEY M. KAYE, CHAIRMAN OF THE Board and GENERAL COUNSEL, BROADCAST MUSIC, INC., WITH RESPECT TO H.R. 4347

My name is Sydney M. Kaye. I am a member of the law firm of Rosenman, Colin, Kaye, Petschek & Freund in New York City and am chairman of the board and general counsel of Broadcast Music, Inc., commonly known as BMI. I appear on behalf of BMI as a proponent of the copyright revision bill.

BMI is a performing-rights licensing organization. It contracts with approximately 10,000 independent writers and 5,000 independent publishers to obtain from them the public performing rights in the music that they create. It licenses these performing rights to broadcasters, hotel owners, restaurants, and other establishments. BMI deals only in performing rights. All rights other than performing rights, such as publishing and recording rights, are retained and exercised solely by BMI's independent affiliates. All of the money BMI collects from its licensees, other than the amount needed for operating expenses and reserve, is distributed by BMI to the publishers and writers affiliated with it. These writers and publishers are located in every State of the Union.

The writers and publishers affiliated with BMI are the copyright proprietors of the musical compositions which receive the majority of performances on coin-operated machines in the United States today. In addition to composers of music of the "popular" type, there are numbered among the composers affiliated with BMI nine winners of Pulitzer Prizes.

The Oscars for the best music of a motion picture have been awarded to BMI-licensed music for the last 3 years, this year for the score and songs of "Mary Poppins." Such current musical plays as "Fiddler on the Roof," "Baker Street," "The Roar of the Grease Paint," and "Flora the Red Menace" are in the BMI repertory. BMI writers have created the music for many of the Nation's leading television shows. Wherever music is performed, BMI music is played.

Although BMI has a direct or indirect stake in almost every reform proposed by the copyright revision, I should like to limit my statement to several points which relate solely to the right of public performance, the area in which BMI operates.

It is no coincidence that the copyright problem which has most frequently been before the Congress during the last decade has been the jukebox clause. The jukebox exemption is the core defect of our present copyright law. Im

portant, for example, as is the extension of the copyright term, it will benefit only those supremely talented persons whose works are still in public demand after 56 years. The jukebox clause, on the contrary, wreaks its injustice on the vast majority of the writers and publishers of music. The revision bill before you does not, of course, bring about the outright repeal of the jukebox exemption. Rather, it continues to exempt the proprietor of the establishment in which a jukebox operated by others is located, unless such proprietor refuses to disclose the identity of the person who actually controls it. We accept this compromise.

Rather than argue the merits of the jukebox provision of the bill, I will merely echo the wisdom of the Committee on the Judiciary of the House of Representatives, which, in 1963, in report No. 733 stated:

"The committee is unable to find any logical or equitable justification for the continuance of the jukebox exemption. No satisfactory explanation has been given why the circumstance of coin operation alone should exempt the performance of jukebox music, while all other commercial performances of copyrighted music remains subject to protection. It seems to the committee that the repeal of the exemption will result in a fairer, more uniform, and more rational scheme of copyright protection for musical compositions."

As article 1, section 8, of the Constitution indicates, securing just rewards to authors, composers, and artists benefits the public by encouraging the creation of new works. At the same time, a copyright law must secure the right of the public to have access to the works of the mind and spirit. In a sense, therefore, a good copyright law, like almost every other good law, is a social compromise. We feel that the Register of Copyrights has struck a good balance in the bill which is before you.

BMI approves in principle, for instance, the reservations for the benefit of education which are set forth in the bill. We do not object to the free use of musical works by instructors and pupils in the course of face-to-face teaching activities in the classroom. We do not object to the free transmission of musical works by radio, television, or otherwise, primarily for reception in places normally devoted to instruction as part of the systematic instructional activities of a nonprofit educational institution. The social compromise which permits these uses for educational purposes without the consent of the author is certainly a generous recognition of the just needs of education.

We cannot but be conscious, however, of the fact that an effort is being made to secure a general exemption of musical performances by educational television stations. Such an exemption would be intolerable and unjust. The recently published report of the distinguished Rockefeller Panel on the Performing Arts refers (p. 141) to the advocacy of "some educational associations" and says:

"Their efforts are focused on gaining freedom from royalties and control by the author of material used by educational television. Although educational television, in its initial stages, clearly deserves concessions and intelligent cooperation in its development by artists, there seems to be no reason why it should receive blanket exemption from the payment of reasonable fees. Were it to receive this exemption-indeed if any educational institution were to receive it— artists would once more be in the position of being forced to provide a partial subsidy for the general cultural and intellectual development of the Nation."

Educational broadcasting makes use of every type of music. It has Broadway show programs, jazz programs, and the like. It is on the serious composer, however, that the exemption which is being sought would have its most devastating effect. The writers of serious music are already the victims of a serious economic imbalance. The use of their music by educational television stations without compensation would not only deprive them of a rightful area of revenue, however small, but would lessen their opportunity for compensation in other directions. Clearly, if an educational station broadcasts a recording of a symphony, a commercial station in the same community will not be inclined to broadcast the same work for a substantial time.

Among the serious writers whose performing rights are licensed by BMI are more than 200 who are in the music departments of American universities and colleges-not only Harvard, Yale, Princeton, and Columbia, but colleges of every size in almost every State of the Union and on the faculties of conservatories and other schools of music. These composers are teachers who are no less devoted to education than any of their colleagues. There is no reason why they as creators should be made second-class citizens as compared with those who disseminate

their works and be forced to make an involuntary contribution of their time and talent which they can ill afford.

All of us hope that educational television will flourish and proliferate. We must recognize, however, that the distinctions between educational and commercial television are even now being eroded. Educational television stations, for instance, may mention the name of the commercial donors who made their programs possible. The differences between the stations may further diminish. The requirements of educational stations for the use of music are in many respects identical with those of commercial stations and their audiences are overlapping. We must bear in mind that, in most countries of the world, the predominating broadcasting systems are operated solely for educational purposes and without profit motive. If the theory urged by some representatives of educational broadcasting were valid, it would lead to the absurd conclusion that in most countries of the world the author and composer should not receive a penny from either radio or television. Clearly, the present provisions of the revised bill must be retained.

I hope it will not detract too greatly from the generally affirmative nature of my presentation if I call attention to two subdivisions of section 109 of the bill which seem to be both unnecessary and unjustified. Subdivisions 6 and 7 of section 109 are not based upon the firm rock of principle but upon the fluctuating tides of technology and economics. When the jukebox exemption was adopted in 1909 it related primarily to a machine which played records audible only to a single person wearing earphones. Its operation probably did not constitute a public performance and the exemption seemed justified. With the development of modern technology, this exemption has proved a continuing plague. The sections to which I refer contain the same potential.

Subsection 6 exempts from copyright protection the transmission of a performance of music or, indeed, of a play or a motion picture, for profit purposes, by relaying it to the private rooms of a hotel or other public establishment without alteration of content, provided that no separate charge is made to occupants of the rooms directly to see or hear the transmission. Subsection 7 exempts from copyright protection the public communication for profit of a transmission on a “receiving apparatus of a kind commonly used in private homes," provided that no direct charge is made to see or hear the transmission.

If BMI could be assured that the technology and economics of today would undergo no future change, it would probably not make vigorous objection to either of these subsections, even though both take away from the copyright proprietor rights that he enjoys today. However, we already know of some directions, such as the burgeoning development of CATV, the emergence of pay television, and the transmission of programs to every part of the world from satellites, in which vast technical and economic changes will take place. And if the experience of the past teaches anything, it teaches us that there are frontiers of change which we cannot envision, much less pierce.

Let us examine subsection 6. Today the transmission of performances to hotel rooms involves the dissemination of broadcast programs from stations which are advertising supported. This activity of the hotel has only minimal economic effect and BMI, as a matter of policy, does not make any charge to the hotels. We have no reason to believe that this economic picture will remain static. Already CATV has been authorized to give service to millions of apartment dwellers in a large city.

Large amounts of gross receipts and profits will come from precisely the activities which this section frees from the control of the copyright owner. It is a truism that, if the copyright owner is to be adequately protected, he must be permitted to seek his royalties at the point where the gross receipts and profits from the use of his work will occur. If subsection 6 were in effect, a large establishment could, even today, transmit music and plays and motion pictures throughout its rooms without alteration or addition and, later in the day, sell advertising or other services from which substantial profit could be derived. There is no reason for exempting such receipts of public performance for profit of the author's work from payment.

Subsection 7 exempts the public communication for profit of transmissions of music and plays and motion pictures on a "receiving apparatus of a kind commonly used in private homes," provided that no direct charge is imposed on the audience to see or hear the performance. Even today, the development of luminescent screens for television reception demonstrates that the same kind