REVISION OF COPYRIGHT LAWS THURSDAY, MARCH 19, 1936 HOUSE OF REPRESENTATIVES, The committee met at 9:30 a. m., Honorable Fritz G. Lanham presiding. Mr. LANHAM. The committee will come to order. When we adjourned yesterday we were to hear this morning Mr. Caldwell with further reference to the broadcasting features of the bills before us, and we would be glad to hear Mr. Caldwell at this time. I suggest that as usual with the witnesses, Mr. Caldwell be permitted to complete his statement before being interrogated by members of the committee. Mr. Caldwell. STATEMENT OF LOUIS G. CALDWELL, ATTORNEY FOR NATIONAL BROADCASTERS' ASSOCIATION Mr. CALDWELL. Mr. Chairman and gentlemen of the committee, my name is Louis G. Caldwell. My office is in the National Press Building, Washington, D. C., and I am a lawyer, a member of a Chicago law firm. Together with Mr. Kaye, I am here as counsel for the National Association of Broadcasters. In view of the courtesy which the committee extended to me yesterday, which I thoroughly appreciate, the least I can do is to be as brief, and to avoid as much repetition, as I can. I have before me a prepared statement, which is very lengthy, and which I would not have the heart to impose upon the committee, in view of the matters which have already been covered. So that, with some reluctance and sacrifice of author's pride, I am going to surrender my grand performing rights on this manuscript and confine myself to a few of the small rights. Mr. LANHAM. Would you like to have it included in the record? Mr. CALDWELL. I would, Mr. Chairman, if it is permissible. Mr. LANHAM. In addition to your remarks, without objection, the statement prepared by Mr. Caldwell will be inserted in the record. (The document above referred to will be found in the appendix to the hearing.) Mr. CALDWELL. In dividing the presentation of the broadcasters' case between us, Mr. Kaye and I foresaw that there would be some repetition and duplication, but the extent of it was somewhat exceeded when some of your questions led Mr. Kaye into some fields which I had anticipated covering. Consequently, the greater por tion of what I intended to cover, I am going to omit entirely and confine myself to a summary, rather than a full presentation of the other parts. I think I can be of best service to you by going to the background of facts in the light of which the broadcasters' case must be viewed, and particularly the independent broadcasters' case, if there is to be a sound legislative treatment of the problems. I want to say at this point that my experience has been entirely in the representation of independently owned stations, and I naturally look at their problems entirely from their viewpoint yet I hasten to assure you that Mr. Kaye has outlined and fairly stated their position, as well as the position of the networks. In other words, his statements have been a fair reflection of the position of the entire industry. In treating this background, I want to treat particularly two objections, the two which I think bear most directly on the problems of innocent infringements and the borderline between innocent and guilty infringement, as well, of course, as on the $250 minimum penalty. One fallacy which underlay a good part of the testimony during the first two weeks, and which has been partly touched upon, is the idea that the two networks are the entire industry or the greater part of it. The fact is that there are 638 broadcasting stations in this country. That figure represents the latest compilation of the Federal Communications Commission as of February 1, 1936. It includes some 15 or 20 stations authorized or under construction, but the rest are all in full-fledged operation. Out of the 638 stations, 277 have power of 100 watts or less. None of them owned by the two major networks, and I believe almost none of them taking network programs. Out of the total of 168, only 67 have power in excess of one kilowatt at night. I emphasize the night-time power because you realize, of course, that those are the valuable hours of operation, and there are some daytime stations which have a larger amount of power, which might be deceptive unless you realize that the operation is confined to daytime. The two networks, as you have been told, have a total of 21 stations which they own, control, or direct the programs over, one of them having 14 stations and the other 7. They have about 160 stations affiliated in one way or another, slightly under 80 in one case and slighty over 80 in the other. By an affiliate station, I need not tell you I mean a station which takes network programs during part of its hours of operation. It may be a fairly large part, as it is in a few cases, or it may be a rather small part, as it is in most cases. The affiliate station is independently owned and operated, and for the rest of its hours of operation must put on its own programs, and take its own responsibility in all the issues in which we are interested today. These two networks are not the only networks. To mention a few in the list there is the Mutual, Yankee, Michigan network, Don Lee; I think there are two in Texas, a couple in California, Virginia State, and many others. Some of these have a few large stations connected with them, but most of them consist of groups of small stations operating in a rather limited area, such as the territory of one State or perhaps a slightly larger region. Many of them are groups of simply 100-watt stations hooked up occasionally or regularly by wire. There are quite a few stations which get programs from two networks, maybe more, but there are a number which carry two. It is a daily practice for stations not connected with any network to hook up by wire for the giving of a particular program and for the time being to be engaged in the simultaneous transmission of the same program which proceeds from one or the other of them. There are a number of small stations that engage in rebroadcasting, that is, that pick up the programs of larger stations by radio sets and send it out from their own station. Under the law, this cannot be done without the consent of the originating station, but this consent has been rather frequent and in some cases regularly given. To add to the complicated web of wires all over the country, there are of course the international programs. Daily programs come back and forth over the boundaries to the north, from Canada, and to some extent over the boundary to the south, and then radio programs are coming with increasing frequency from Europe and Asia. To look at this complicated web from another viewpoint, the program of a station, whether it is performed in the studio of a station or elsewhere, may be made up of live talent or of phonograph records. If it is the latter case, it means that the original performance took place somewhere else, in the studio usually of the manufacturer of the phonograph record. As to live talent, it may be at the station's studio, it may be at the night club, it may be from a hotel orchestra, or from a restaurant orchestra, it may be at some public auditorium, or it may be in front of the Palazzo Venezia in Rome. The stations putting on these various performances-and I want to remind you all the stations and not merely the networks are involved in one way or another in this situation-you have a great majority that are located in small towns and cities, some in larger cities amidst sparsely settled territory, where the advertising support is, to say the best, precarious at times, and in some cases precarious all the time. At any one time in the evening you have no more than a maximum of 421 stations operating in the evening in this country, in spite of the total of 638. This is because over half of the stations operate part time. Some of them divide time with two, three, or four on the same wave lengths, others can operate only until sunset and others perhaps a few minutes or an hour beyond sunset. That type of station has, to a large extent, the same overhead as your full-time station, and only a proportionate opportunity of gaining revenue. Overhanging all this is the short-term licensing, under which all these stations are operated. Under the rules of the Federal Communications Commission, they must renew their right to exist twice a year. Now, to turn to a second line of thought, on which there was a great deal of misconception inherent in the evidence during the early 53579-36-28 part of the hearing, and which has been partly corrected; that is, that A. S. C. A. P. is the only licensing agency, or that an A. S. C. A. P. license protects the licensee, or that the A. S. C. A. P. license is the dividing line between an infringer and a noninfringer. It may be interesting to you as part of the background to know a few figures as to musical compositions. I have heard the guess made that there are 16,000,000 musical compositions. I am not responsible for that figure, and I know it is vastly beyond the number which is of any practical importance. Mr. Mills, who is, without doubt, I think, the best-informed man on this subject of the number and status of musical compositions, mentioned a figure of 3,000,000. I believe that is the number which A. S. C. A. P. is in the course of card indexing, and tracing pedigrees. This number includes all music, public domain, copyright, foreign and domestic, arrangements, adaptations, and everything else. I believe the number of cards completed already is somewhat in the neighborhood of 1,300,000. That That, however, is all musical compositions. We are interested primarily in active musical compositions, that is, those that are played at least once in a while by some user in this country. In his testimony before the Canadian commission last year, Mr. Mills estimated this number to be 160,000 active compositions, and 300,000 relatively inactive but played once in a while. The Canadian commission conducted quite a survey of the performance of all Canadian stations, or at least the major ones, and found that during the year 1934 they had played a total of only 26,000 different musical compositions. Of course, when we talk about active music, it makes a lot of difference whether you are talking about the key stations, big stations in New York, or a little 100-watt station in the sticks, operating on phonograph records and local talent. But, whatever the figure is, it is somewhere between the range of 26,000 and 160,000 and there again that includes all music, not simply copyrighted music. Not all numbers have been copyrighted in this country. The record in the Copyright Office, I understand, shows that since 1909 there have been approximately 470,000 published musical compositions registered, and somewhere between 225,000 and 250,000 unpublished registered. In other words, a total of not more than 720,000. This figure involves some duplication, first, because the renewals have occurred in connection with some 50,000 of them and, secondly, because unpublished numbers are, to a considerable extent, later published. A very interesting fact with regard to the present tendency is the increase in the number of unpublished musical compositions that are registered. Last year there were 27,459 musical compositions registered, of which over one-half were unpublished. This 27,000 plus was out of a total of 142,000 of all types of copyrightable works. I am told that that is because the composer wants to keep his rights protected as against the publisher. In other words, if the publisher gets the copyright, he gets with it the incidental rights, such as the small performing rights and the rights to collect royalties. Now in all I have said, I am speaking only of small performing rights, and when I deal with these licensing organizations, I shall do so. You have already had it explained to you that these licenses, with rare exceptions, do not carry the grand performing rights. The small performing right is the right to perform a single musical composition. A clear example of a grand performing right is where you perform an entire dramatic or dramatico-musical work, or something like that, or you perform substantial portions of it. In between the two extremes there is a continuous field of controversy. It is claimed that if I perform over a broadcasting station three musical compositions from the same show, whether consecutive or not, and do it vocally, that is a grand performing right. It has even been claimed that if I do that with two numbers, it is a grand performing right. You will not find any cases bearing on that, and I suppose that is largely because no man wants to take the risk which is involved in trying out that question. But wherever that line between the two is, the broadcaster, if he has determined that he wants the grand right, inust go to the person owning it, which, in almost all cases, will be someone other than these licensing agencies. That is one item of expense which will not be included in any totals which we can properly give you of what we pay for music. Another has to do with electrical transcriptions. In the case of the phonograph record, as you know, under the present law the manufacturer pays 2 cents a record to the publisher or to the owner of the copyright, and that has nothing to do with the broadcaster. The broadcaster, if he has an A. S. C. A. P. license, can play that phonograph record over his station, if it is A. S. C. A. P. music. It is a part of the small performing rights, for which he has paid. An electrical transcription presents a very different situation. The manufacturer of that transcription pays the copyright owner a flat royalty of from 5 to 10 dollars a composition. This is paid to the Music Publishers' Protective Association which, in turn, is composed of the principal A. S. C. A. P. publishers. Then, in addition, the manufacturer must pay 25 or 50 cents for each time a broadcasting station broadcasts that particular record which cost, of course, is passed on to the broadcasters, representing a very important item with those stations which make a large use of those transcriptions. I am not mentioning any of these items in the spirit of criticism, but simply to show the additional cost of music with which the broadcaster is faced. Now, with that background, I want to give you a few facts regarding these licensing agencies. First and foremost, and by all odds the most important, is the A. S. C. A. P. I agree thoroughly with all that has been said that its repertoire is absolutely essential to the continued successful existence of any broadcasting station. At former hearings it has been told to you that their repertoire included about 90 percent of the popular music, about 100 percent of the production music, and a lesser percentage of the classical music. We all have accepted that figure; I do not know whether it is accurate or not, but I can believe that it is not far from wrong. |