A question: Then would it be correct to say that in these two organizations you would have practically a hundred per cent of the music that is copyrighted? Mr. MILLS. Yes, sir.

Now, what were the representations made to the broadcasters at that time as the grip which this organization had on what might be termed its tributaries? I will read Mr. Mills' own language in that respect. Mr. Mills says this:

The question is a proper one, and we shall answer frankly all questions asked us. Mr. Rosenthal tells me that 70 per cent of the licenses in force are with theaters. He is the general manager of the society, and he knows.

Mr. WHITE. About 70 per cent are theaters?

Mr. MILLS. Yes, sir; and the rest are hotels, caberets, dance halls, and so on. Mr. WHITE. What percentage of restaurants are subscribers?

Mr. MILLS. Of those operating caberets, or publicly performing music, practically 100 per cent.

Mr. WHITE. How many vaudeville theaters?

Mr. MILLS. All of those playing a regular policy of vaudeville; they are taken care of through our arrangement with the Vaudeville Managers' Protecive Association, which represents practically all of the recognized vaudeville theaters of the country.

Mr. WHITE. And you say that 70 per cent of your liceses are motion picture theaters which pay you 10 cents a sheet. Seventy per cent of 7,000 is 4,900. Are there that many motion-picture theaters in the country?

Mr. MILLS. There are about 23,000, of which about 15,000 are continuously operating, six or seven days a week.

And, as he said, last year they paid 10 cents a sheet as their tribute. Senator SHIPSTEAD. Each performance?

Mr. TUTTLE. No; on the yearly basis. All I know about this is what is in here. But you can see that it will run up into a gigantic sum of money.

Now, if I may with that, slight digression

The CHAIRMAN (interposing). Before you leave the society, is it a corporation?

Mr. TUTTLE. No; it is a voluntary, unincorporated association and says so itself.

The CHAIRMAN. For instance, liability for debts; could not that be enforced against any member?

Mr. TUTTLE. It falls under whatever liability a voluntary company would fall under in any particular State.

The CHAIRMAN. Is that operated in New York?

Mr. TUTTLE. Its head offices are in New York.

The CHAIRMAN. I imagine it is either a corporation or a partnership. Do you know which it is?

Mr. TUTTLE. All voluntary associations are treated by the law of New York as partnerships. It is not a corporation. It says here, "We constitute ourselves a voluntary association under the name of." Of course, they have no charter from the State at all, so they are distinctly a combination as termed by their own admission. They are also, by their own confession, 100 per cent monopoly. There are a few things that I would like to say before I revert to that subject.

Senator STANLEY. Right at that point let me understand you. Is it your contention that this association by virtue of its articles of association is an association in restraint of trade?

Mr. TUTTLE. Absolutely, and I will show you practices which would confirm that thought, if there could be any doubt about it, on their own confession. I do not see how anybody can read those

by-laws which I have read without appreciating the business significance of the provisions and what they are there for.

Senator DILL. If I may interrupt, a suit was started yesterday, was it not, on this trust?

Mr. TUTTLE. Yes; Mr. Waterson, one of the publishers, has become convinced that the methods now being pursued by the society are illegal. Mr. Waterson is one of the large publishers of the countries. He is listed in this publication as one of their members, Waterson, Berlin & Snyder Co. Mr. Waterson having withdrawn has found himself the subject of attack. Although he has withdrawn, they have not allowed him to withdraw from this pool the music which he was obliged to assign to them, this copyright music under that blank form of assignment which I have read to you right from the by-laws. They have not allowed him to withdraw that, and they are actually using that at the present time contrary to his will, and they are insisting that the radio people pay them a license fee in connection with that very music.

So that Mr. Waterson finds himself still serving the purposes of what he considers an illegal society and unable to extricate himself from it. He is subject to attack and he has brought suit to, among other things, have it held that that agreement by which he assigned originally his copyrighted music as a publisher to this society is now being used for illegal purposes, and is therefore, void.

The CHAIRMAN. This litigation is pending where?

Mr. TUTTLE. In New York, in the United States District Court for the Southern District of New York.

Senator SHIPSTEAD. What is the legal status of this license? Where do they get any authority to issue a license? Do you use the term license in the place of a permit?

Mr. TUTTLE. Yes. I think this is the answer to that: You see the copyright holders have all ceased to be copyright holders. They have all signed their copyrights to this pool. The pool says that all music they have constitute what they call a repertoire, and they do not allow anybody to buy from the pool individual numbers. That is one of the things that oppresses this broadcasting most severely. You can not go there and buy an individual number. They say you must buy wholesale under a wholesale license.

Now, this license gives us permission to go to the repertory-without reading the language-and select what we desire, but we have to pay on a wholesale basis, a lump sum, and whether the lump sum is small or not in the beginning, it is obvious to see that if the principle is upheld and embodied in a public policy, that lump sum is going to become the chief overhead charge on broadcasting.

Senator STANLEY. What percentage of your popular music that is used is copyrighted?

Mr. TUTTLE. I suppose that depends, sir, on the particular broadcasting, the style of entertainment and education that it puts out. I do not know whether any generalization could be made, but I should imagine that some of them would run up to well over half of their entertainment.

Senator STANLEY. One other question. Regarding the alleged illegality of this contract, do you maintain that it is the distribution of the profits under this peculiar arrangement or the fixing of the price of the article that would be in violation of the law?

Mr. TUTTLE. Both. They have absolute profit ability. They have acquired absolute ability to fix the price.

Senator STANLEY. I see that would follow. They would sell it instead of the individual.

Mr. TUTTLE. These articles, sir, are far in advance of the articles which were condemned by the United States Supreme Court in the Hardwood Lumber case. They undertake to do more things. In the first place, they undertook to have a complete monopoly and they have got it. They have the ability to fix the price and they exercise it. They have the ability to punish any recalcitrant member and they exercise it, and they have the ability to say to anybody, "You shall not put out a single piece of copyrighted music unless you buy from us wholesale," and they exercise that. I do not know what are the other indices of illegal monopoly. They are all there. Senator STANLEY. That voluntary assignment of stock for apparently lawful purpose is discussed more liberally in the Northern Securities cases, I think.

Mr. TUTTLE. Yes. Of course, the Hardwood Lumber Co. case was a close case on its facts because monopoly was very carefully hidden. It was done by sort of friendly meetings and they had an intelligence bureau from which intelligence was sent out. Every effort was made to conceal concerted action, but here concerted action is not only admitted but advertised.

The reason the public has taken this exceptional interest in this matter is because they know this public service is at stake. In the first place, if this principle of public policy is not embodied, the number of stations will have to be less, the program will be less excellent, the cost of parts will have to be more, and, ultimately, some form of tax control will have to be put into effect.

In

I want to touch very briefly on the legal side of the matter. my judgment, the bill as proposed here is not contrary to any of the fundamental principles of the copyright law or any of the special principles of it. It merely deals with a situation that was not thought of or heard of at that time, and, consequently, its object is clarification.

The opposition says, of course, that it entrenches in part upon the the copyright holder. In the first place, the copyright holder has not any copyright. As a man who writes an article is no longer a copyright holder, so his interest from that point of view need not be considered. The Society, not we, has taken that away from him. In the second place, it is not clear at all that he ever had that right as applied to radio.

Now, subdivision (e) is the section in question, and that says, "To perform the copyrighted work publicly for profit if it be a musical composition."

Now, what did Congress mean at that time by the words "public performance" and the words "for profit"? That is obviously a vital question. I think Congress meant no more than what those words meant at that time, to wit, a public performamce in a place of public entertainment, which was the subject being visibly seen there or heard there, and when they said, "for profit" they meant the profit which was either directly or indirectly visibly and immediately connected with the business, as a music hall or a restaurant or a cafeteria supplies by way of illustration. The statistics have already been

given you about that, and I need not go into the question of what particular broadcasters do. There is a decision on which the opposition relies. It is the only decision that touches this question in the slightest degree. There the thing was considered so close that the judge in his opinion recommended that the matter be reviewed in an appelate court, and for some reason, perhaps not now material, that was never done. This is a decision of a district court of New Jersey, Judge Lynch presiding.

The CHAIRMAN. What is the date of that?

Mr. TUTTLE. It is 291 Federal, 776, decided on August 11, 1923. That case presented this situation, as you will see in this case that there was an argument made for direct and visible connection, what might be called a proximate connection, between broadcasting and a profit. It was broadcasting at Bamberger's store, and, in the first place, right in the store, under the broadcasting station, they sold radio sets and parts; and, in the second place, they had what the court calls a slogan introducing entertainment each day, and that slogan was this: "L. Bamberger & Co., one of America's greatest stores, Newark, N. J., presents the following program." The court reasoning that says that there was in effect approximate connection. In the first place, it was an invitation for people to come to the store, and in the second place it was an indirect way of popularizing their radio sets there. Then, proceeding from that he has a recommendation that the matter be reviewed.

Senator DILL. Mr. Chairman, may I ask that that opinion be printed in the record of the hearing?

The CHAIRMAN. Yes; that will be done.

(The opinion above referred to is as follows:)

M. Witmark & Sons, v. L. Bamberger & Co. (District court D. New Jersey, August 11, 1923.)

1. Copyrights 66-Department store broadcasting song by radio held to do so for "profit." A department store selling radio equipment and conducting radio broadcasting station, the cost of which is charged against expenses of the business, in broadcasting therefrom a copyrighted song does so for "profit" within the copyright act of 1909 (Comp. St. par. 9517 et seq.) especially where it precedes its programs by broadcasting its own name and business slogan.

2. Copyrights 75-No defense that broadcasting of song advertises it. It is no defense to suit for infringement of copyright on a song by broadcasting it from radio broadcasting station that the song is thereby advertised, as copyright owner has the privilege of choosing his own method of advertising.

In equity. Suit by M. Witmark & Sons against L. Bamberger & Co. Decree for plaintiff.

Wall, Haight, Carey & Hartpence, of Jersey City, N. J., and Samuel W. Hollander, of Newark, N. J. (Thos. G. Haight of Jersey City, N. J., and Nathan Burkan, of New York City, of counsel), for plaintiff.

Pitney, Hardin & Skinner, of Newark, N. J. (Alfred F. Skinner, of Newark, N. J., of counsel), for defendant.

Lynch, District Judge: (1) The defendant conducts a gigantic department store in the city of Newark, N. J., and sells its wares at retail throughout the State of New Jersey, if not in adjacent States. Since February, 1922, it has conducted a radio department wherein radio equipment of all sorts is sold. It has also established and conducts a licensed radio broadcasting station known as station WOR, from which vocal and instrumental concerts and other entertainment and information are broadcasted on a wave length of 405 meters. The plaintiff owns the musical composition entitled "Mother Machree," and under the copyright act of 1909 (Comp. St. par. 9517 et seq.) possesses the exclusive right to perform that composition publicly for profit.

The plaintiff, alleging that the defendant performed, or caused to be performed, its composition "Mother Machree" by means of singing from the broadcasting station WOR and that this performance by the defendant was publicly for profit,

prays that a preliminary injunction issue restraining the defendant from the further performance of its copyrighted song. The defendant denies that this broadcasting of the copyrighted "Mother Machree" was or is for profit, its contention being that because everything it broadcasts is broadcasted without charge or cost to radio listeners, there is no performance publicly for profit within the meaning of the copyright act.

It being extremely unlikely that any facts developed upon final hearing will alter the undisputed situation now presented, and both parties desiring a speedy final determination of the issue, the court is disposed at this time to register its conclusions as to the law.

The question simmered down is: What is meant by the words "publicly for profit"? Fortunately, those words have been construed by the United States Supreme Court in the case of Herbert v. Shanley Co. (242 U. S. 591; 37 Sup. Ct. 232, 61 L. Ed. 511), a case frequently referred to by counsel on both sides of this cause. The facts there were as follows: The Shanley Co. conducted a public restaurant in New York City wherein was located a platform or small stage upon which orchestral selections were rendered, and songs were sung by paid performers for the entertainment of persons visiting the restaurant. No admission fee was charged. The owner of a copyrighted song known as "Sweethearts," alleging that his property rights were being invaded because his song was being sung by Shanley's performers, sought injunctive relief in the United States Court for the Southern District of New York. This relief was denied, it being the view of the district judge (and the judges of the circuit court of appeals concurred) that because no admission was charged at the door of the restaurant there was no performing of the song "Sweethearts" publicly for profit within the meaning of the copyrignt act. The United States Supreme Court, however, took a different view. Justice Holmes, in speaking for the court of last resort, had this to say: "If the rights under the copyright are infringed only by a performance where money is taken at the door they are very imperfectly protected. Performances not different in kind from those of the defendants could be given that might compete with and even destroy the success of the monopoly that the law intends the plaintiffs to have. It is enough to say that there is no need to construe the statute so narrowly. The defendants' performances are not eleemosynary. They are part of a total for which the public pays, and the fact that the price of the whole is attributed to a particular item which those present are expected to order, is not important. It is true that the music is not the sole object, but neither is the food, which probably could be got cheaper elsewhere. The object is a repast in surroundings that to people having limited powers of conversation or disliking the rival noise give a luxurious pleasure not to be had from eating a silent meal. If music did not pay it would be given up. If it pays it pays out of the public's pocket. Whether it pays or not the purpose of employing it is profit, and that is enough. Decrees reversed."

It is strenuously argued in behalf of the defendant in the instant cause that it was the view of the court of last resort that the facts, as developed in the Shanley situation, showed that there was a direct charge to those who patronized the restaurant-a direct charge for and on account of music which was collected from persons dining there. So far as appears, there was only one "item" charged for, to wit, food. In fixing the charge for food the restaurant proprietor undoubtedly took into consideration many items in addition to the cost of the food and the preparation and service of it. There was "attributed to" the "item" food, the musical entertainment and other attractions afforded the patrons. The diner at no time had the subject of entertainment charge called to his attention except in the high price of the food which he was permitted to procure. This, in our opinion, was an indirect way of collecting the charge for musical entertainment from those who were there to pay. To constitute a direct charge, it seems to us that there would have to be an admission fee charged at the entrance to the dining hall or a specific fee for entertainment would have to be charged the listener either while in or about to leave the premises.

There is another case which strikes us as being quite helpful. In the case of Harms et al. v. Cohen, 279 Fed. 276, District Judge Thompson held that the playing of copyrighted music by a pianist in a motion picture theater was an infringement of the copyright and relief was accorded the owner thereof. In that case an admission charge was collected from all who entered the theater for the purpose of viewing motion pictures. Incidental to the exhibition was the playing by a pianist of music which, to the pianist, seemed appropriate to the development of the play or events which were being portrayed on the screen. No selection of music was made up by the proprietor of the theater or consented

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