We now have a quorum call, so we will stand in recess until 2 o'clock. This subcommittee has permission to sit in the afternoon during the session and for the rest of this week. We will come back to this room and we will continue with our other witnesses. I think we will be able to get through our schedule today. We will urge our witnesses to speak up, and we will have a table for those members of the press brought into the room so that they will have a table to work from. The subcommittee stands in recess.

(Whereupon, at 12:15 p.m., the subcommittee recessed, to reconvene at 2 p.m., the same day.)

AFTER RECESS

(The subcommittee reconvened at 2 p.m., Representative Robert W. Kastenmeier, chairman of the subcommittee, presiding.) Mr. KASTEN MEIER. The committee will come to order.

This afternoon in continuation of our hearing we will proceed by having, with the permission of intervening witnesses formally so scheduled at least in that order, Mr. Deighton and Mrs. Linden, who appeared earlier in collaboration with Senator Keating.

Mr. KEATING. Mr. Chairman, I don't think that applies to Mrs. Linden. I don't believe she is a scheduled witness today. Hers will be somewhat longer. She does not plan to testify today. It was only Mr. Deighton, and I appreciate its being done for my convenience. I am very grateful to the other witnesses.

Mr. KASTEN MEIER. Yes, Mr. Karp and Mr. Lacy have consented to this. We appreciate your correction.

Mr. Deighton will testify at this time. You may proceed, sir.

STATEMENT OF LEE DEIGHTON, CHAIRMAN OF THE BOARD, MACMILLAN CO., ON BEHALF OF THE AMERICAN TEXTBOOK PUBLISHERS INSTITUTE

Mr. DEIGHTON. Mr. Chairman, I am Lee Deighton, chairman of the board of the Macmillan Co., which was established in this country in 1896. For the past 38 years, I have been engaged in the writing, editing, and selling of instructional materials for the schools and colleges of our country. Today I speak as a representative of the American Textbook Publishers Institute. I offer my prepared statement for the record.

(Mr. Deighton's statement is as follows:)

PREPARED STATEMENT OF THE AMERICAN TEXTBOOK PUBLISHERS

INSTITUTE ON H.R. 4347

Mr. Chairman, I am Lee Deighton, chairman of the board of the Macmillan Co., which was established in this country in 1896. For the past 38 years, I have been engaged in the writing, editing, and selling of instructional materials for the schools and colleges of our country. Today I speak as a representative of the American Textbook Publishers Institute.

Permit me first to identify this organization. It is a trade association of 110 members who account for 90 percent of the textbooks, reference books, tests, and maps used by our schools and colleges.

The total sales of these companies in 1964 were $945 million. And of this total, $509 million were sales of textbooks primarily to domestic schools and colleges. No single company in this highly competitive industry had more than 12 percent of the total industry volume in 1964.

In the course of these hearings you will learn from our friends, the educators, that access to copyrighted materials is of prime importance to the progress of education in this country. To this principle textbook publishers give their full assent. The very basis of our enterprise is that schools and colleges do in fact need the copyrighted materials that we produce. We have no other market but the schools for our product.

No one questions the importance of instructional materials in the schoolsthe textbooks, tests, workbooks, laboratory manuals, films, filmstrips, which are the tools of instruction. They are essential for students and teachers alike. It would be hard to find a school in your congressional districts without them.

In a very real sense, one of the basic questions before the Congress in this copyright legislation is who is going to prepare these instructional materials? Are they to be prepared as at present by a competitive private industry with no special interests to serve? Are they to be prepared by nonprofit organizations? Or are they to be prepared by agencies of Federal and State Governments?

I have read every word of the great debate in the House of Representatives during the consideration of the Act for Elementary and Secondary Schools. I have been struck by the frequency with which the sensitive nature of textbooks was mentioned. I was impressed by the total agreement of the House that nothing in that great act should or would lead in any measure to Federal control of the books to be used in the Nation's schools.

My argument is simply that this Nation requires a private, competitive publishing industry to prepare these books. And this industry requires the protection of a strong copyright law for its existence.

My presentation is in two parts. First, I should like to set forth what it is that textbook publishers do. Second, I should like to refer to specific sections of the bill before you, not as a lawyer but as a practicing publisher, concerned with its effects upon our business.

First, then, as to the nature of textbook publishing. A project begins in the publisher's editorial department. It begins with a survey of materials currently available and of the needs of children and teachers. This information comes to us in a steady flow from the 2,300 bookmen who call upon the schools and colleges of the country. These representatives listen alertly and eagerly to the expressed wishes of their customers.

It is for this reason that we consider ourselves an integral part of the Nation's educational enterprise. We are considered in this light by the educators themselves. For 10 years the National Education Association and the American Textbook Publishers Institute have had the closest communication through a joint committee to consider mutual problems. This interchange has resulted, we believe, in better publishing and better schools. The people in the schools are our customers. They are our authors. We exist in a kind of intellectual symbiosis. Having discovered, then, that educational change requires a new product, the textbook publisher commits his resources to its development. His first step is creative, and in every succeeding step until publication, his contribution is creative. He begins with plans for a better instructional tool. He seeks out teachers who can effectively criticize and contribute to these plans and who will also write the manuscripts required. He advances sums of money to support the writers while they learn to write and produce the text materials. The publisher supports his editorial staff and artists or illustrators who prepare the graphic materials for the enterprise: pictures, charts, maps, diagrams, filmstrips, records, and all the wonderful array of audiovisual materials that currently accompany our printed materials. All of the costs involved to this point

we call editorial costs.

The period of time involved in preparation of manuscripts ranges from an occasional minimum of 3 years to an occasional maximum of 10 years. During this period editorial costs mount, as you would expect, and mount and mount. There is no known alternative to this harrowing expense.

Having finally secured manuscripts, the publisher sends them to a printer. Publishers, with few exceptions, do not own printing plants. There now begins the expense of setting type, making engravings of artwork, and producing plates from which books will be printed. This area of cost, we call plant expense.

Having finally secured printing plates, the publisher is ready to produce an inventory of the finished product. Books must be printed in sizable quantities in order to keep unit costs at a minimum.

These three areas of cost: editorial, plant, and inventory-are of approximately equal weight. What do they come to in production of a book or a series of books? A single high school textbook will require investment of $50,000 before the first copy is available for sale. A series of elementary school textbooks with many components will require as much as $1 million investment before it is ready for marketing.

Textbook publishing is, in a very real sense, risk enterprise. There is no way to know in advance that a book or a series of books will sell. We can and do test our product in classrooms at various stages of development. But we cannot know the market response to our products until they are published. Schools do not buy on prospect; they buy only with product in hand. Some industries can market-test a mockup of a product. We do not enjoy this luxury. We cannot market-test a product until we have a full inventory in our warehouses.

Textbook publishing is a risk enterprise, and it is an enterprise that requires courage and creativity. What is the net return for this speculation? In 1964, the return after taxes was approximately 8 percent for the entire textbook industry.

I have taken this much of your time with the nature of textbook publishing in order to explain why copyright is so important to us. It is the only protection we have against piracy or copying which would destroy our market and jeopardize our investment. In short, if anyone may copy our work without license, one book would do where a hundred have been used before.

Our country is indeed fortunate that the Congress is so well informed through many of its committees on the technological advances in handling information. You are well aware of photocopying, and the use of microfilm and magnetic tape in storing and retrieving information.

New devices in this field are arriving at a breathless pace. Only a few days ago five new machines were introduced for printing from microfilm at a cost of 2 cents per page. It has become literally cheaper to copy printed materials than to buy an original copy. As a consequence of rapid changes in technology, the cheerfully reassuring Fry Report of 1962 on photocopying is obsolete. There is scarcely an institution of higher learning today that is not equipped with photocopy machines, used to copy the pages of books. For a look at the near future it is necessary to go back no further than April 8, 1963, publication date of a study prepared by the American Library Association for the Rome Air Development Center of the U.S. Air Force. The title of the study is "The Library and Information Networks of the Future." On page 21 we find these words: "Using xerographic printers, report duplicates in hard copy could be prepared locally. Or, with facsimile, it would be possible to scan the basic report in the center and have it reproduced miles away at a remote regional location. It could also be scanned with video and reviewed on a TV monitor elsewhere. Finally, it could be duplicated on file in its microform and forwarded to the user in that way. In any event, the integrity of the basic file would remain intact, and the electronic information center would become a duplicating rather than a circulating library."

These new developments promise an exciting future in which information handling and communication will be improved not only for schools but for our entire society. Textbook publishers welcome these technological advances. They want their materials used in these new devices. They ask only that these uses be protected by copyright so that they will be paid for, just as the devices are to be paid for.

Few of us today can imagine the technological changes that lie ahead. The advances in information science and technology make revision of the copyright law imperative. The forward reach of technology requires careful evaluation of the proposed law so that we may avoid by inadvertency a defeat of the very purpose of copyright: to provide incentive.

The American Textbook Publishers Institute is a proponent of copyright revision, but with an eye to the future we respectfully urge that portions of the proposed legislation be amended to make it consistent with the purpose of copyright.

Let me turn now to the second part of this statement: the specific sections of the bill which seem likely to have impact upon our industry. Here I cannot speak as a lawyer but only as a practicing publisher. I am aware that the technical language in a bill such as this is extremely important. I am aware that words in general usage take on specific meaning in the context of a law.

It seems clear to me that section 106 sets forth in detail the rights that I had supposed copyright owners to have. But in the following sections the word "exemptions" appears, and it appears for the first time to my knowledge in any copyright legislation. The textbook publishers have looked carefully at these exemptions. We are dismayed to discover in sections 108, 109, 110, and in the applicable definitions in sections 101 and 106, provisions which appear to undermine the very foundations of educational publishing.

With the help of our lawyers, the educational publishers have learned to parse the language of these sections. We noted, for example, that the word “transmit” appears in these sections. "To transmit" is defined in section 101, page 4, lines 13-15, as follows: "To transmit a performance or exhibition is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent."

This definition would encompass not only radio, telephonic, and television broadcasting, but any other transmission of educational materials orally or visually from one place to another. This, of course, is the way in which information retrieval systems operate. The application of this definition to sections 109 and 110 would permit wholesale free use of educational materials. We cannot believe that this was the intent in the draft of these sections. This seems to us to be a matter of language, and we ask for clarification.

Educational publishers are particularly concerned with section 109. We understand and we concur that a teacher ought to be able to hold up a map before a class without worrying about copyright law. We understand that teachers and pupils ought to be able to read aloud from copyrighted materials. Let me add parenthetically, that in teachers manuals accompanying our textbooks, we provide tests, exercises, keys, and other material with the express provision that teachers may use them in any way they wish. These uses are permitted under the present law. The proposed bill not only continues these rights but appears to go much further. It appears to provide free use by educational institutions of copyrighted material not only in the commonsense, traditional manner but by the use of machines. The end result of this free use would be to displace the educational materials we publish and ultimately to destroy our market. We are disturbed by the application of the definition of terms set forth in section 106 as they apply to the exemptions 108 and 109.

Section 106, subsection (b), at lines 31-38 on page 6, reads as follows: "(b) Definitions of certain exclusive rights:

"(1) To 'perform' a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture, to show its images or to make the sounds accompanying it audible. "(2) To 'exhibit' a work means to show a copy of it, either directly or by means of motion picture films, slides, television images, or any other device or process."

These are exclusive rights of the copyright owner, and they are properly detailed in order to provide the fullest protection. We would not have it otherwise.

However, when these definitions of "to exhibit" and "to perform" are read into the exemptions of sections 108 and 109, educational publishers are shocked. For here they learn that there is proposed language in a copyright law that would permit such many and varied free uses of copyrighted material as to threaten the very market for these materials.

Mr. Chairman, by "threaten" I do not mean that our profits would be reduced; I mean that the publication of instructional materials would no longer be economically feasible.

Reference books, atlases, and dictionaries are not read from cover to cover. They are used occasionally and from time to time. Each use involves the reading of a limited number of pages, an excerpt, if you like, from the total work. To an increasing degree, handbooks and textbooks are used in this way in the schools and colleges. A standardized test may be a booklet of many pages, but the answer sheets may be only a page or two. Consumable materials such as workbooks and laboratory manuals are used one page, or one passage, at a time. The definitions of "perform” and “exhibit" as applied to sections 108 and 109 would permit free use of these materials bit by bit in information retrieval systems, on opaque projectors, and in a variety of ways that we cannot now specifically foresee. To enact these sections as they stand would be to determine by policy that the private publication of instructional materials is to be discontinued.

In the long dialog on copyright that has preceded these hearings, much has been said about fair use. Section 107, page 7, lines 7, 8, and 9 reads: "107. Limitations on exclusive rights: fair use. "Notwithstanding the provisions of section 106, the fair use of a copyrighted work is not an infringement of copyright."

This section we heartily endorse. It leaves the definition of fair use to the courts where it has rested since 1790. As a practical matter, fair use can be determined only by consideration of the facts of the use. No effort to spell out fair use by statute can cover all situations. We respectfully suggest that language added to section 107 in an effort to clarify fair use would not succeed. It would raise a whole new set of undecided questions for courts to settle, and would lead of necessity to costly litigation. Until such questions were settled in the highest court, no one would know precisely what is fair use and what is not.

Further, the great virtue of the fair-use doctrine is its flexibility, permitting ready application to novel situations as they arise. Any detailed expansion by statutory language would introduce elements of rigidity, inappropriate in a fastchanging society.

In our discussions of fair use with educators the question at issue has not been the right of teachers to use copyrighted materials, but payment for this Clearly, educational exemption from payment is not applicable to instructional materials, since exemption would destroy the only market these materials have.

use.

The first statements on copyright from educational sources requested that all copyrighted works should be available to teachers for copying. It is interesting to note that recent statements from these same sources recognize the special nature of consumable materials and answer sheets for standardized tests and exempt them from requests for copying privileges. We believe this matter requires continued study and we believe the study will reveal that all works prepared for use as instructional material should be similarly exempted.

Educational institutions and organizations are our market. We cannot sell our materials anywhere else. If these institutions and organizations are exempted from the application of copyright, there is no market, and we can no longer function as part of the educational enterprise. At this moment more than 70 million Americans are engaged in instruction in one form or another with educational institutions and organizations. To exempt so large a group from the applications of copyright would be fatal to the publication of instructional materials by private industry. We respectfully urge that fair use not be confused with free use.

May I turn, finally, to section 601 on pages 31, 32, and 33. Textbook publishers believe that this section, requiring manufacture of books in the United States as a prerequisite of copyright, is an outright tariff provision that has no place in a copyright law. Our primary concern is that this requirement places an impossible burden upon publication of scholarly and technical books for which type must be set abroad. Without prejudice to our basic beliefs, we have been consulting with the Book Manufacturers' Institute in an effort to reach an accommodation. We understand that section 601 is to be considered later in these hearings, and we intend to continue our present discussions with the manufacturers. Educational publishers stand with all who declare the importance of education to our national welfare. Within this context, the American Textbook Publishers Institutue wants to go on record as confirming its belief in a free competitive economy. We urge that the laws of this Nation continue to support the concept of private property and payment for individual services rather than conscription of the services of teachers, authors, or publishers.

Mr. Chairman, it is recorded in the annals of Irish history that in the year A.D. 512, the monk Columcille borrowed a copy of a psalter from St. Finian and made a copy of it. Finian demanded not only the original book but the copy as well. In the ensuing bitterness, the High King of Ireland ruled in Finian's favor, saying: "To every cow its calf; to every book its copy.”

Mr. DEIGHTON, Permit me first to identify this organization. It is a trade association of 110 members who account for 90 percent of the textbooks, reference books, tests, and maps used by our schools and colleges.

The total sales of these companies in 1964 were $945 million. Of this total, $509 million were sales of textbooks primarily to domestic