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STATEMENT OF JULIAN ABELES, ESQ., MUSIC PUBLISHERS PROTECTIVE ASSOCIATION, INC.

Mr. ABELES. Mr. Chairman and honorable members of the committee, might I at the outset state that I was unexpectedly engaged in protracted litigation before coming here, taking a period of 5 weeks. This statement I prepared in less than an hour. After I read it I realized that it does not cover the subject matter the way I desire it, particularly in support of the various positions that are very material for the interests of my client.

Might I respect fully ask to submit a supplemental statement?

Mr. KASTEN MEIER. Yes. Without objection the committee will receive an additional statement from you.

Mr. ABELES. Thank you very much.

My name is Julian T. Abeles. I am a member of the law firm of Abeles & Clark with offices in New York City. Since my admission to practice, which has been quite a while ago, I have specialized in copyright law, particularly as applied to motion pictures and music.

Mr. KASTEN MEIER. May I interrupt just so that we have the record clear on this point?

The statement you are now making will be part of the record, and in addition to it you will submit an additional statement which will also be made part of the record.

Mr. ABELES. Yes. Could I cover part of what I say in that statement to take the place of this one altogether?

Mr. KASTENMEIER. This prepared statement will not appear in the record, but what you say at this point will appear in the record, in addition to which your subsequently produced written statement will also appear.

Mr. ABELES. Thank you, sir, very much.

(Subsequently the following was received:)

SUPPLEMENTAL STATEMENT OF JULIAN T. ABELES

Over the period of approximately 45 years that I have represented substantial music publishing interests, I have been closely associated with the music publishers in the various details of their business activities. I organized the music publishing affiliates of Metro-Goldwyn-Mayer, Inc., and TwentiethCentury Fox Film Corp., and in the acquisition of substantial music catalogs for such purpose I exercised my own judgment based upon past experience in the field, as to the potential value thereof. Over an extended period of time, I have represented Music Publishers Protective Association, Inc., the membership of which comprises practically all of the leading publishers of popular music in the United States, and Harry Fox, agent and trustee for over 1,000 music publishers in the United States, in the licensing and enforcement of the rights in their musical works, for the manufacture of phonograph records, electrical transcriptions for radio broadcasting, recordings for television performances, and recordings and performances in motion picture productions. In the representation of such interests, I have had to be thoroughly personally cognizant of every detail relating to the operation of the respective music publishers, as outlined in this statement.

In the statement of Alan W. Livingston, president of Capitol Records, Inc., he goes to every extreme in a concentrated effort to totally negate the functions of the music publisher, and create the illusion that the record manufacturer, standing alone, is the dynamic force in the exploitation and creation of the public demand for a musical work. For such purpose, he expounds the hypothesis (pp. 1065-1067) that "A music publisher with a good catalog of copyrights can make the most money by closing down his business, and his gross income

from license fees and performance fees become his net. Mr. Edwards, you asked that question before as to whether or not it was fair to compare the gross income of the publisher to the net profits of the record companies. A publisher, certainly a songwriter, has no gross versus net. As to the music pub

lisher, his overhead is determined, as I say. He can earn his performance fees even if he closes his business down." As I will demonstrate infra, based upon my personal knowledge of the respective functions of the music publisher and the record manufacturer, if the publishers were to desist in their current vital activities in the promotion of musical works, the statements submitted by the record manufacturer of their alleged current nominal net income, could readily be revised to reflect a mere nothing rather than curtailed net income. While the music publisher could conceivably voluntarily close down its business and reap some benefits from its past extensive promotional activity of its musical works, the record manufacturer would thereupon involuntarily have to close down its business, devoid of any future income. There would be no more hand to feed him.

The following irrefutably dissipates the wholly unwarranted degradation of the activities of the music publisher, in the promotion and exploitation of its musical works, to which the success of the record manufacturer is primarily attributable :

(1) The substantial salaries and advances paid by the pubilsher to the writer, to encourage him to develop material. Only a small part of such material is commercial, so that the unearned payments made by an established publisher to writers over a period of time, will be between approximately $500,000 to $1 million. In addition, the publisher will spend a considerable amount of time with the writer, in making essential changes in the composition for commercial requirements.

(2) The record companies would have it appear that the publisher merely furnishes a lead sheet of a composition to them, comprising only the melody line and lyrics with no accompaniment, and that they make the essential arrangement of the composition. On the contrary, it is virtually impossible today for a publisher to submit a composition to a record company, other than as recorded by an artist and orchestra on a demonstration record known in the trade as a "demo." This requires the services of an experienced arranger, the renting of a specially equipped demonstration studio, and employment of commercially acceptable artists and musicians. Such demonstration studios are maintained for such purpose, in principal cities throughout the country. The cost to the publisher of each of such demos is between approximately $350 to $1,000. As such demos are for all practical purposes commercial recordings, in many instances they are utilized by the record company as recorded. In other instances only slight technical variations are made, to conform to the style of a different recording artist. If the record company should determine not to manufacture records of the composition, the publisher's investment in the making of the demo is lost. In addition to such demos, the publisher will frequently have the master recording made by a specified artist and orchestra at the instance of the record company, but at the sole cost of the publisher. Of course, in such instances the recording is invariably utilized by the record company in its original form.

(3) The record companies would have it appear that in the exploitation of a composition, and accordingly the creation of a public demand for records thereof, the publisher is a nonentity. On the contrary, in the absence of the extensive and costly efforts of the publisher for such purpose, the composition would be unknown to the public and the demand for records thereof would be nil. It is noteworthy that, in the extended statements of the record companies, the method and means by which a public demand could materialize for a composition and accordingly the records thereof, in the absence of the publisher, is adroitly bypassed. The established publisher must maintain offices or representatives in principal cities. It must employ highly skilled professional contact men in such offices, who do extensive traveling, for the purpose of personally contacting artists, radio disc jockeys, producers of television shows, artist and repertoire men of record companies, and potential writers.

It must likewise make a substantial expenditure for advertising, including of the recordings made by the record manufacturers, and the wide dissemination of promotional material. In order to maintain such requisite activities, the established publisher expends between approximately $500,000 to $2 million yearly,

exclusive of Federal and State income taxes and writers royalties. The record company is the beneficial recipient thereof, because in the absence of such activities on the part of the music publisher, it is the one, as aforesaid, who would have to close down its business.

(4) In order to create and perpetuate what is known as a “standard composition," the publisher must consistently continue such activities through the years, to sustain the public demand therefor. The records of the Harry Fox office disclose that approximately 74 percent of the license fees realized from record com. panies, are from such standard compositions. Accordingly, if the record companies did not reap the benefits of such extensive and continued promotion thereof by the publisher, they could not possibly exist. The record companies assert that records are practically the sole source of the publishers' income from performing rights. On the contrary, a substantial part of such income is from live performances.

(5) The original term of copyright in a musical composition is only 28 years. Under the standard form of agreement required by the songwriters' association, the publisher only acquires a composition for the original copyright term. Even in the rare instances where the agreement provides for the renewal term, such grant of the writer is of no force or effect if he does not survive the period of renewal. The orginal publisher must then compete with other publishers for the acquisition thereof during the additional renewal term of 28 years. In such instances where the publisher has developed a standard composition, through constant extensive exploitation during the original term, there is keen competition for the acquisition of the renewal term. The result is that, if the original publisher can acquire the renewal rights, it must pay both a very substantial bonus and advance, which it will take years to recoup. Furthermore, when the renewal term has expired the composition will go into the public domain, and that is the end of the publisher's income therefrom. The domestic publisher does not have the assured benefits from the development of a standard composition, as in foreign countries where there is only one term of copyright which endures through 50 years after the death of the author, and the publisher invariably acquires it for such extended term.

The record companies have astutely avoided any mention of the fact that practically all of the principal record companies have their own music publishing units. Except in such instances where both the record and publishing companies are units of a motion picture company, they do not have the requisite experienced personnel or facilities for the exploitation of a musical composition, and accordingly for every such purpose they are practically nonexistent. The music publishing units of the motion picture companies, being essential for the exploitation of the music in their pictures, they must maintain such personnel and facilities. As set forth infra, the record companies themselves have demonstrated that a function of such other music publishing units is to realize a share of the actual publishers net income, without any activity or expenditure on their part. As Alan W. Livingston, president of Capitol Records, conceded, "We do have a small publishing firm" with "a small music publishing income" (p. 1073). Yet, this record company is one of the three major companies (p. 1060).

In the supplemental statement, including the purported analysis and demonstration charts submitted by Prof. John Desmond Glover, he has selected the musical composition "I Believe" as a typical example purportedly confirming the assertions in the respective statements of the witnesses for the record companies (a) that the music publisher is a nonentity, in the exploitation and creation of a public demand for the recording of a musical composition; (b) that the demand therefor is initiated and developed solely by the record company; and (c) that the publisher nevertheless unjustly reaps, for its own use and benefit, the substantial part of the financial returns therefrom. He would have it appear that the composition and the recordings thereof were initiated by the publisher furnishing to the record companies its copyrighted lead sheet of the melody thereof, without accompaniment, and that the development and creation of the public demand therefor resulted solely from the efforts of the record companies. Based upon this hypothesis, he then analyzes and illustrates "some essential characteristics typical of copyrighted music and the record industry in general." What really transpired, with respect to this typical example of such "characteristics," is well known in the music publishing industry and I happen to have personal knowledge of the details thereof. As will be irrefutably demonstrated infra, Professor Glover, in the preparation of his text and charts, was obviously

influenced by the title "I Believe," instead of basing his typical example upon typical facts.

He would have it appear by the footnote "Copyrighted 1953, by Cromwell Music, Inc." (p. 11), that the lead sheet "without accompaniment" (p. 13) was the form in which the composition was copyrighted by said publisher and submitted by it to the record companies for their alleged initial development and exploitation thereof. He would likewise have it appear that although, as he asserts, said publisher played no part in the development and exploitation thereof, it "generated for the copyright holder * * * license fees from recordings, amounting to $107,000 and 'performance' fees, largely made up of payments for broadcasting recorded music, amounting to $106,000" (p. 11).

The copyright of the said lead sheet "without accompaniment" to which he refers was not copyrighted by said publisher, but by the four writers thereof, on December 8, 1952, No. Eu 296633 (the Eu designating unpublished). It had been written by them for a Jane Froman television production of the Columbia Broadcasting System, Inc., and was subsequently featured by her rendition thereof in said production. The writers had followed the customary procedure of registering the same for copyright with only the words and melody for protection prior to the public rendition thereof, where it had not been previously acquired by a music publisher. Such initial rendition having received a favorable response, the broadcasting company contacted Mitch Miller, the artist and repertoire man in charge of recordings for its Columbia Records division, regarding its manufacture of records thereof. Although they had their own so-called music publishing subsidiary-April Music, Inc.-Miller wanted to make certain that the composition, and accordingly their records thereof, would have the requisite exploitation by a qualified music publisher, to assure the success of their recording. Accordingly, they then selected and contacted the said Cromwell Music, Inc., which had been highly successful in the requisite exploitation of new compositions and recordings thereof.

Columbia then arranged for the writers to transfer the composition to Cromwell, pursuant to an agreement between April and Cromwell whereby the former was to receive 50 percent of the net income of Cromwell therefrom. The composition was thereupon initially copyrighted by Cromwell by publication, complete with melody and accompaniment, and registered as a published work on February 2, 1953, No. Ep. 69561 (Ep. designating published). Cromwell had agreed to assign the said copyright to April on demand and pursuant thereto executed an assignment thereof to April on June 22, 1954. However, April thereupon obviously deemed this inadvisable, for on the following day, June 23, 1954, it reassigned the copyright to Cromwell, pursuant to the aforesaid agreement that Cromwell would again reassign it to April upon demand.

The exploitation of this composition by Cromwell was indeed a typical example of what such exploitation by a qualified publisher in its category can mean in creating a public demand therefor and accordingly for the records thereof. Professor Glover speaks of performing fees accruing therefrom of $106,000, "largely made up of payments for broadcasting recorded music." On the contrary the performing fees received by Cromwell for the live renditions of such composition, from the American Society of Composers, Authors & Publishers through which all of such rights were exercised, were in excess of those received from the broadcasting of recordings thereof. This likewise dissipates the testimony of David Kapp, president of Kapp Records, Inc., that "Approximately 95 percent of all new music in America is introduced by means of phonograph records" and "Today there is practically only one way the publisher and writer can reach the millions of Americans quickly with his new song-via a phonograph record" (pp. 1055, 1056). For the purpose of its extensive exploitation thereof, Cromwell published at least 15 different editions of said composition, including orchestrations and in every form of instrumentation. Of course, this called for most substantial expenditures on its part, in addition to the required payment to April, for which a one-half interest in the copyright was held in trust by Cromwell, of 50 percent of their net receipts. Accordingly, in speaking of the substantial returns over a period of 12 years that were "generated for the copyright holder," he left the "s" off the word "holder," in addition to adroitly avoiding any mention of the requisite most substantial expenditures by Cromwell to achieve such results. In the final analysis the net returns to Cromwell, of the amount "generated" for the copyright "holder(s)," was indeed a minor part thereof. Yet this has been cited "As an illustration of the role record companies and others play in the creative

process and the rewards that flow from these efforts" (p. 11). This would require a drastic revision in Professor Glover's employment of "I Believe" as a typical illustration of the development and respective returns of the record company and the publisher from a "copyrighted musical piece."

Professor Glover's entire analysis and calculations are founded upon the flagrantly erroneous hypothesis that "Presently, the cost of copyright license fees represents about 19 percent of the retail price." The following reflects the true percentage of the retail price, of the cost of such license fees to the record companies, under the licenses issued by the Harry Fox office.

Testimony of Professor Glover (p. 998) :

"Mr. EDWARDS. What percentage of the sales of the record industry is in the $3.98 area?

"Mr. GLOVER. About 73 percent. I am reminded.

"Mr. EDWARDS. About 75 percent. In other words, the small 45's is what percent?

"Mr. GLOVER. Twenty-two percent of the selections."

The license fees of a $3,98 record, containing 12 compositions, is 2 cents a composition for a total of 24 cents, which is only 6 percent of the retail price instead of 19 percent. However, in many instances the record company insists upon, and accordingly obtains, a special deal for 11⁄2 cents, 14 cents and even 1 cent a composition, which, of course, would materially reduce even such percentage.

The retail price of a 45 containing two compositions is 98 cents, of which the license fee is 2 cents per composition for a total of 4 cents, which is only 4.1 percent of the retail price instead of 19 percent. Likewise, in many instances the record company insists upon, and accordingly obtains, a special deal for a like reduced price.

According to Professor Glover's aforementioned testimony, these two records represent 97 percent of the sales of the record industry. Following is a chart reflecting the true percentage of the retail price of the cost of the license fees of the other record sales:

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Likewise, in instances the record company insists upon, and accordingly obtains, a special deal for a reduced price.

The foregoing, particularly the true radically smaller percentage of the retail price of the $3.98 and 45 records, which represent 97 percent of the sales of the record industry, completely dissipates Professor Glover's analysis and calculations. It exposes a substantial increase in the net profits of the record companies and a substantial reduction in the proportionate gross fees of the publishers. Deducting from such gross fees of the publishers, in addition to the writers' share of 50 percent, their extensive outlay for the requisite exploitation of their musical copyrights and the recordings thereof, set forth supra, it is readily understandable why, in the instance where the publisher can obtain the payment of the maximum royalty fee, the increase thereof is an essential requirement. It is an essential requirement that the publishers continue such requisite activities to assure the record sales. However, it is essential that their net returns are adequate to justify such activities. The record companies, in their fervent de sire to defeat such increase, have presented to Professor Glover, for his purported analysis and calculations, a decidedly distorted image of the true picture. Professor Glover's manipulation of this material was such an unexpected revelation that Goddard Lieberson, president of Columbia Records, could not restrain his delight, in remarking "I am delighted that Professor Glover has demonstrated some facts here today, many of them I think, that were new to us in the industry" (p. 1026).

With all that has been said, regarding the radical inaccuracies of Professor Glover's demonstration of facts "that were new to us in the industry," there are still more in the same category.

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