performances which otherwise would be bought and provide an income to the performers and copyright holders that made them possible. Nearly all of the people who contribute their skills and talents to the making of American films and TV products belong to one or more of the unions affiliated with our Department. These unions* have negotiated contracts on behalf of their members which provide that they will share in the income derived from the exploitation of their work product on video cassettes. Each contract is highly complex and different, so that generalizations are not possible. Suffice it to say that the additional income that copyright owners will receive through enactment of H.R. 1029 will be shared in one way or another with the artists and supporting personnel in the motion picture industry. We are not Luddites. We are not trying to stop the rental practice or even limit it. The people I represent are asking that the benefits derived from renting the products they create be shared with them; that those who profit from the use of their copyrighted work return some of their profits to support and enhance the creative source; that the law make it possible for more not fewer people to own video cassette programs by enabling the industry to bring down the purchase price to the consumer. Mr. Chairman, I urge the speediest possible favorable action on H.R. 1029. I would also like to take this opportunity to state our support for H.R. 1027 and S. 32, the Record Rental Amendment of 1983, and urge quick and positive action on that legislation as well. American Federation of Musicians, American Federation of Television and Radio AFFILIATES THE DEPARTMENT FOR PROFESSIONAL EMPLOYEES, AFL-CIO Actors' Equity Association American Federation of Government Employees American Federation of Musicians American Federation of State, County and Municipal Employees American Federation of Teachers American Federation of Television and Radio Artists American Guild of Musical Artists Association of Theatrical Press Agents and Managers Brotherhood of Railway and Airline Clerks Communications Workers of America Federation of Professional Athletes International Alliance of Theatrical Stage Employes and Moving Picture Machine Operators International Association of Machinists International Brotherhood of Electrical Workers International Federation of Professional and Technical Engineers International Union of Electronic, Electrical, Technical, Salaried and Machine Workers International Union of Operating Engineers International Union, United Automobile, Aerospace & Implement Workers of America National Association of Broadcast Employees and Technicians Office and Professional Employees International Union Retail, Wholesale and Department Store Union Screen Actors Guild Seafarers International Union Service Employees International Union United Association of Journeymen Plumbers United Food and Commercial Workers Mr. KASTENMEIER. Thank you, Mr. Golodner. Let me yield to my colleagues first. The gentleman from Kentucky. Mr. Mazzoli. I thank the chairman. I want to apologize to the chairman and the committee for being late. I was just finishing chairing my hearings on the question of the Salvadoran people and whether to grant them what is called extended voluntary departure, or in effect, a delay of their deportation, so we just this moment got finished. I want to thank the gentleman for his indulgence and thank the witnesses. I intend to read your statements in more detail and the statements of those that have gone before, but let me ask just a couple of questions if I could. I spy in the audience two good friends of mine from home, Paul Gold and Chuck Pattock, both of whom have video places at home and sell and rent video cassettes. We had a nice talk yesterday. is: Let me ask my friend from the AFL-CIO, one of the arguments Look, the studios are making money hand over fist. Why should we help the people who live in Beverly Hills in any way get richer? They already have their two and three Mercedes and the whole thing. Why put it on the back of Joe Lunchbucket? Why make him pay more? Mr. Golodner, if you could, just address those kind of unfocused concerns. Is too much money going to the producers and not enough to your people? In effect, if we were to adopt a bill like this, are we going to guarantee that the camera people and the crew and the gaffers and so forth get their money out of this? Mr. GOLODNER. As I just indicated, Mr. Mazzoli, we have negotiated contracts with the producers which will result in them sharing in any additional revenues which may come because of the change in the law under 1029. You may recall that- Mr. MAZZOLI. In other words, you have already done those contracts? They are already signed off? Mr. GOLODNER. Yes, we have contracts on them. As I say, one way or another, we intend to share in this, but we can't share in a pot that doesn't exist. As far as the myth about the moguls of Hollywood living by their swimming pools and driving their fat Cadillacs or whatever-and I don't mean to knock Cadillacs, they are marvelous cars-this has been, I think, adequately addressed in numerous studies done by the National Endowment for the Arts and done by the U.S. Department of Labor, which indicates appalling economic situations facing the people in our country who engage in the performing arts and the supportive areas. True, there are the stars, the celebrities which we all hear about. They make news, but what we don't hear about is the thousands and thousands of people who support those stars, who are in the casts; who are journeymen actors and they are making minimum union salaries and they are supporting their children and their families with, by and large, lower incomes than the average Ameri can. Mr. MAZZOLI. So in your judgment it would not be true that we would just simply add to the already bulging bankrolls of the people who are already sitting on top of the pile if a bill like this were to pass? Mr. GOLODNER. No, sir. Mr. MAZZOLI. Other people. Now, let me ask you, would the people Mr. GOLODNER. No, sir, I would like to address the second part of your question—— Mr. MAZZOLI. Sure, but I would also like to follow it by one thing. You represent a lot of people in the AFL-CIO who make a lot less than some of the people in Hollywood, modest earners such as people in the factories. I know back home in Louisville, your group has a very extensive operation. How is it going to go down with the AFL-CIO that you want them to pay more for these? Mr. GOLODNER. I think-that is what I wanted to address and- Mr. MAZZOLI. Thank you. Mr. GOLODNER [continuing]. And I think I tried to explain that. We are convinced that the price is not going to go up if this legislation passes. Quite the contrary, we are convinced that the price, the sale price to the end user will probably go down. Right now Mr. MAZZOLI. How does that happen? My friends tell me that it is bound to go up. Mr. GOLODNER. Well, right now, as I indicated, the only way that the producer of this product can recoup is through the sale. They cannot share in the rentals and rentals are 90 percent of the money that is exchanged in this market-through rentals, not through sales. There is, in reality, a two-tier market out there. There are those who have no intention of using it for their own enjoyment; they intend to turn around and rent it and make their money off of the rentals. These are the commercial video rental stores, an important part of the business. And then there is the Joe Lunchbucket, whom you are talking about, who for various reasons would like to buy these tapes. Because of the first-sale doctrine, it is difficult for the producers of these products to retail for the two markets. They can only retail for one, the sales market to the rental stores. Mr. MAZZOLI. Isn't it kind of logical and sequential to suggest that if Hollywood gets more out of this action through some divvy of the rental market that somebody is going to be paying more for that? Are the video people going to eat it? Are they going to take it on the chin for that and give it to Joe at the same price or are they going to pass it off to Joe? Mr. GOLODNER. What we expect will probably happen is that the producers are going to develop this two-tier market. They would like to sell their tape for a number of reasons and they would like to bring the sale price down so that your Joe Lunchbucket, who may live where easy access to a video rental store did not exist, could buy their product and have it in his home whenever he wanted if he chose to do that. Perhaps more threatening, as I have indicated in my testimony, is the very strong possibility that people will be able to tape with the same ease you now tape audio at home, making their own copies and even the rental market will be gone. So the retail price has to come down and I think the industry realizes that. Mr. MAZZOLI. Let me ask you this Mr. GOLODNER. Now, if they were free to establish two pricing mechanisms, for example, and I am only speculating. I don't run their business, but basically the talk has been here about freeing up the marketplace, letting people do what is in their best free enterprise interests, and that would in the long run be best for the consumer. But the producer's hands are tied by the first-sale doctrine. He can't be free. Mr. MAZZOLI. Let me ask you this: How come some of the others say, look, why don't you get your money up front. You can charge us $39.95 or $49 or $60 or $70, but get yours out front and then let us do our own number thereafter and just don't pay attention, because any other program you have for capturing some part of this rental market is going to be so complicated, so much paperwork, so much redtape that it is going to cause my mom-and-pop store to probably collapse. Get yours up front; get a good product; we will pay for it, and then see you later. Mr. GOLODNER. That is what is beginning to happen and we hear complaints, including from the retailers, that prices are going up too high. They would like to see them lower. You can't have it both ways. I agree with you that left alone, probably this is what is going to happen and Joe Lunchbucket is going to suffer because he is also going to have to pay the $70, $80, $90 for a cassette. Mr. MAZZOLI. If he wants to buy it. He may not want to buy it. He may want to rent it, and they suggest that they could still get the rental market going. My very last question-and I thank the chairman, he is always very kind to latecomers-is this: Would you object to having something specifically written into this bill that would limit the amount of money that could be acquired by way of raised fees to the people who would rent these. In effect, to make sure that if the marketplace doesn't work like you suggest it will, that there would be a guarantee that you are not going to have a high fee to the user? I understood yesterday some of the thought in the industry is to make the people pay for renting as if they are going to the movies, in effect, $5 or $6, not 50 cents or 25 cents or something like that. Would you object to a limit on how far they could go? Mr. GOLODNER. I think that, as I say, I think the first-sale doctrine is already a limitation on the free market, on allowing the market mechanisms to work. I just do not believe▬▬ Mr. MAZZOLI. All right, you- Mr. GOLODNER [continuing]. That the producers want to put themselves out of business by pricing themselves out of the market. They want the widest market possible. Mr. MAZZOLI. On the same basis, Mr. Golodner, would you object to putting antitrust language in here to prevent their saying, you are going to make us take your dogs and forget the good stuff. Mr. GOLODNER. Oh, no, I have no objection. Mr. MAZZOLI. I thank you, Mr. Chairman. Mr. KASTENMEIER. The gentleman from California, Mr. Berman. Mr. BERMAN. Thank you, Mr. Chairman. I don't have any questions, really, but I just, if I might just use my years of background as a student of economics-I am being facetious to respond to some of the comments and questions asked by the gentleman from Kentucky. We have had testimony from the |