DETACHED COIN BOXES.

Slots Placed at Convenient Locations Some Distance.
from Electric Piano Offer Increased Profits.

Largely increased receipts would be realized by owners of electric pianos placed in restaurants, cafes, ice-cream

Instrument Exhibited at Electrical Show Has No Slot- parlors and similar resorts, where patrons sit at tables, if

Designed for Parlor and Hotel Use.

Visitors to the spectacular electrical show at the Coli-
seum, just coming to a close, found particular interest in
the electric piano exhibit. One so-called "parlor electric,"
that possesses the distinction of having no front or rear
excrescences, no slot, and no action-revealing glass panel,
was given special attention by the promenaders. This in-
strument has the usual appearance of a first-class piano
of regular style, without the telltale marks of the mechan-
ically operated piano. It is operated in the manner com-
mon to electric pianos, but its construction gives it un-
usual distinction in appearance. The electric connection
is concealed, being made at the back of the piano. The
music roll, with which it is furnished, contains ten num-
bers and the instrument is equipped with several expres-.
sion devices. Throughout the piano is designed for par-
lor use and for sale to high-grade trade. The manufac-
turer states that it is especially suited to hotels of the
better sort, and particularly to the large summer hotels.
There it could be installed without introducing a cheap
or crude element and played in dining-rooms during meals
and at dances. No slot is provided, so the music would
simply be switched on or off at the will of the proprietor.

separate coin slot boxes were installed. Detached coin
receivers that are satisfactory have now been invented
a. it will prove to the advantage of the electric piano
owner, if his business is of the above described character,
to put them into use.

There are many persons who, to hear the strains of a
popular air, would slip a nickel into the slot if it were
within convenient reach who would not go to the trouble
or exertion of rising and walking the length of the room
to reach the player. The fact that the musical machin-
ery could thus inconspicuously be set in motion would
appeal to others who might find the promenade to and
from the piano, in a crowded room, somewhat embar-
rassing. The nickel, too, would prove a much lighter tax
to the economical diner than the double tip to waiter and
orchestra for the frequent "request" heard in restau-
rants of high and low degree. If he discovered that a
nickel in the slot at the side of the table would furnish
music as an accompaniment to his meal he would doubt-
less learn to forego the erstwhile charms of the imitation
cut glass and "Hungarian" orchestra farther up the street.
In this manner both the cafe keeper and his patron would
profit-the former through the accumulation of nickels, and
the latter in that he secures good music-to aid his diges-
tion-at a very reasonable price.

Mr. KASTENMEIER. Now the committee would be pleased to hear from Mr. Sanford Bomstein, representing the National Licensed Beverage Association.

STATEMENT OF SANFORD BOMSTEIN, MEMBER, GOVERNMENTAL AFFAIRS COMMITTEE, NATIONAL LICENSED BEVERAGE ASSOCIATION

Mr. BOMSTEIN. Mr. Chairman and members of the committee, my name is Sanford Bomstein, a member of the Governmental Affairs Committee of the National Licensed Beverage Association.

I am also president of the Restaurant Beverage Association of Washington, D.C., an affiliate of the national association.

The National Licensed Beverage Association has affiliates in 31 States and the District of Columbia, and consists of approximately 40,000 food and beverage retailers. We are small business people, a large proportion being family operated, with but one or two employees. I address the committee on section 114 of H.R. 4347, the section which seeks to remove the exemption from payment of royalties on coinoperated music machines.

The suggestion that the exemption be lifted does not please us. But, to lift the exemption and leave performance rights societies unbridled as to the charges they can exact for reproductions, greatly displeases and disturbs us.

The members of this committee have asked previous witnesses for a guide or yardstick as to an acceptable amount of royalty. These witnesses have shied away from a definitive answer.

Anticipating that this committee would appreciate a positive position, our governing body, the board of directors of the National Licensed Beverage Association, discussed the subject at its March meeting in Oakland, Calif. A vote was had, and the following maximum annual license fees were recommended.

This is on an aggregate basis.

Mr. Chairman and members of the committee, your copies of my statement do not contain the statement that it is on an aggregate basis, but this was because of the haste in which I was called upon to prepare this statement.

All of these fees that are suggested are on an aggregate basis, between ASCAP, BMI, SESAC, and any other performing society, not individually.

1. All coin-operated automatic phonographs 5 years and olderflat fee of $15.

2. Those with 100 plays-$20.

3. Those with 160 plays-$25.

4. Those with 200 plays and over $30.

And, that the above rates be incorporated in the law for a 5-year period, and subject to review by Congress at the end of this period. We are not deceived by our proposal. We know that our proprietors will likely pay one-half of any royalty assessed. This is so because all expenses of the operation of a machine are usually taken off the top before net income, if any, is divided between the owner of a machine and the proprietor.

However, our national association, after careful consideration and deliberation, has endorsed this concession.

I make one last point in this brief statement. Many of our members, particularly in resort areas, own their machines. Operators do not choose to place and service a machine for a small take for 3 or 4 months.

We recommend that a proprietor owning three machines or less should be exempt from any requirement for payment of a royalty. Thank you for your kind attention.

Mr. KASTEN MEIER. Thank you, Mr. Bomstein.

I assume, then, your board of directors does concede the point of performance rights, that this would be a payment for performance rights.

Mr. BOMSTEIN. This is true.

Mr. KASTENMEIER. Of course, the committee is grateful for any recommendation, particularly when it is precise.

Mr. St. Onge?

Mr. ST. ONGE. No questions.

Mr. KASTENMEIER. Mr. Tenzer?

Mr. TENZER. On page 2 you add to your written statement the provision that this applies on an aggregate basis to all of the so-called licensees, or protective organizations, as they have been referred to

here.

Mr. BOMSTEIN. That is right.

Mr. TENZER. These are flat fees that you are referring to an annual fee?

Mr. BOMSTEIN. That is correct.

Mr. TENZER. Your statement does not say

that.

Mr. BOMSTEIN. It says maximum annual license fees were recommended.

Mr. TENZER. Thank you for calling that to my attention.

Under your proposal, who would pay the performance fee, the owner of the location, or the operator of the coin-operated machine?

Mr. BOMSTEIN. This is on the assumption that the operator would pay, and that half of it would be paid by the location.

Now, as to the collection of this, of course this would be a complex thing, and could be worked out in some other manner. We don't

know.

Mr. TENZER. By the term "operator," you don't refer to the owner of the location, you refer to the operator of the coin-operated machine; is that correct?

Mr. BOMSTEIN. That is right. In other words, we are going on the assumption that this will be collected through the operator, and not the location.

In my own case, I operate three places in the District of Columbia, unlicensed, because I have live entertainment. This would give me the privilege, under here, if I decided to go out and buy my own jukeboxes, that I would not have to pay for having jukeboxes and live entertainment, which I do have.

Mr. KASTEN MEIER. Have you or your organization offered testimony in connection with this particular problem before? You know there have been a number of hearings in the past.

Mr. BOMSTEIN. I do know, and I am aware of this. I am a little disadvantaged to answer your question truthfully. Mr. Tom Lawrence is in the hospital. He is our legal counsel.

I could not honestly answer this. I assume that he has rendered testimony in the past, but as to whether or not it was the same, I couldn't tell you.

Mr. KASTENMEIER. The reason for the question was to determine if you had testified in the past, whether your position was the same, or substantially different.

Mr. BOMSTEIN. I am going on a matter of previous opinions. I don't believe it was the same in the past.

Mr. KASTENMEIER. Thank you, Mr. Bomstein.

The last witness today will be Mr. Robert E. Nims of New Orleans, representing the National Small Business Association.

STATEMENT OF ROBERT E. NIMS, NATIONAL SMALL BUSINESS ASSOCIATION

Mr. NIMS. Mr. Chairman and gentlemen of the subcommittee, my name is Robert E. Nims. I am the owner and operator of A.M.A. Distributors, 1711 St. Charles Avenue, New Orleans, La., who distribute and operate coin-operated phonographs.

I appear here both individually and as a representative of the National Small Business Association of Washington, D.C.

I appreciate the opportunity to appear before your committee.

I appear here in opposition to the removal of the exemption of section 114 of H.R. 4347 and similar exemptions in related bills that would remove the exemption for coin-operated phonographs from the copyright law.

I started my business immediately after World War II, 20 years ago, and presently employ 40 technicians, clerical, sales, and service personnel.

When I entered this business, I was 1 of approximately 50 music box operators in New Orleans. Today, I am one of the five major music box operators that still remain in a marginal business in the New Orleans area.

Other witnesses will probably go into greater detail as to the decline of the coin-operated phonograph industry. There are many contributing reasons to this decline, but the major factors are increased cost of capital investment and higher labor costs against little or no appreciable increase in receipts.

The coin-operated phonograph takes in no more money today than it did 10 or 15 years ago. In many instances, not as much.

Because of the aforementioned facts, music box operators today cannot afford to place their coin phonographs in many locations that would desire them. No businessman can exist operating at a loss.

Due to this situation, many businessmen in the restaurant, tavern, lounge, and similar businesses have been forced to do without this modest accomodation for their customers, or to buy their own music box.

If they buy their own, it is usually old, not properly serviced, and serves as little more than an inadequate substitute for the equipment

that previously was profitable for a bona fide music box businessman to operate in the same establishment.

I respectfully bring this to your attention, to point out that when you speak of the owners and operators of coin-operated phonographs, you are not speaking only of 6,500 to 7,000 businessmen engaged in operating these music boxes as a marginal business, but including also approximately 100,000 extremely small business people that individually have their own coin phonographs in submarginal locations.

The businessmen in our industry cannot sustain a further loss of profit. Each location has to be treated as an individual business, subject to local, State, Federal licenses, personal property taxes, cost of equipment, phonograph records, and continuing cost of maintenance, and monetary considerations to the owners of the establishments wherein the music boxes are placed.

I would like to point out at this time that it has been brought out that there are a number of taverns, restaurants, lounges, bars, and businessmen who own their own phonographs. In doing business with taverns, restaurants, and other establishments, the operator has always had competition in this matter, and he has always had to make considerable monetary considerations to the owners of the businesses wherein the machines are placed.

Most of the time, he has been placed in a bargaining position, and had to give a fairly good consideration, where he could still naturally try to make a profit.

Mr. KASTENMEIER. What is the practice in the industry? Is it a 50-50 split, or is it likely to be something else?

Mr. NIMS. No, this is the normal procedure, 50-50. In some instances and I can only speak of my ownself or of the operators in the area in which I operate, I can't speak for the Music Operators of America or the general public-but in our particular instance, where we have city, State, and local licenses, these licenses are taken off the top of the machine, or, in other words, the location owner pays half and the operator pays half. But the previous witness for the National Licensed Beverage Association testified erroneously, and I am sure he did not mean to make the inference that the location owner wherein this music box is placed pays half of the expenses on the phonograph. Nothing could be further from the truth. He does not pay half of the depreciation of the equipment. He does not pay for half the records. He does not pay for the mechanics that service it, and so on and so forth.

I am sure he was referring to half of the licenses.

In his testimony here that the licensed beverage people are people who own places wherein these boxes are established he clearly stated that they would be willing to go along, even though they object to this legislation. They would be willing to go along with it, providing the music box operator would have to pay it.

If it were an individually owned location where an individual owns the jukebox, they don't want to pay it. But the operator has been paying for years. He has been economically at the mercy of the phonograph record business, and many other businesses in regard to his expenses, so I guess they feel he can continue to pay as he has in the past.