confirmation that the change in copyright ownership has occurred. All music publishers accept and participate in this practice.

In determining the payee of royalties, Fox has

followed the provisions of the statutory compulsory license, whose terms are incorporated in the Fox license. The statutory license requires royalties earned upon "phonorecords made and distributed" to be paid to the owner of the music copyright at the time of distribution (17 U.S.C. $115(c); 1909 Act §1(e)).

When the language of the Fox license is understood

as it has consistently been applied, the major premise of the Court's decision disappears. If it is accepted that, as we contend, the "grants" preserved by the Exception are the Fox licenses, there is both "a contractual [and] a statutory basis for paying [all] of the derivative works royalties to the Snyders" (83 L. Ed. 2d at 568). That basis is the compulsory license provision of the Copyright Act, as incorporated into the Fox licenses.

We belive that five Supreme Court justices have

thwarted the will and intent of Congress; and on behalf of all creators we seek redress. We are pleased that two former Registers of Copyright and the present Register support our position.

We only ask this Committee and the Senate to return unencumbered ownership of

to us what they originally intended:

our reverted copyrights during the 19 years extended term and for the balance of the life of new copyrights after their 35th year subject always to the required sending of the Notice of

Termination, and the rights of the record companies and like users to continue to exploit our creations.

57-196 O 86 - 5

Senator SPECTER. Thank you, Mr. Weiss.

Speaking for myself, I do not know that the issue of congressional intent is a very dominant one in this hearing, because the Court has already said what the congressional intent is, and I think that what we are going to be looking for on this legislation is the statement of public policy.

So let me begin with you, Ms. Ringer, where you articulate really on policy grounds the position that there was not a bargaining for the benefit, there was not an expectation of the benefit, and there was not anything done to deserve the benefit.

It might help the discussion if you would amplify those conclusions as you see the underlying policy considerations with the specific case. Take an illustrative case and run through the factual context under the Supreme Court's decision of the case, contrasted with the way you think it ought to be for the policy reasons you have stated.

Ms. RINGER. The Mills case is probably as good an example as any. Let me say at the outset that I do not in any way take issue with what music publishers do. I think that they do a lot of good, and it is a worthy industry, and all that. The fact is that this was a 1923 copyright, and in 1923 the Mills Co. expected to get at most 56 years. They bargained for that; they got it. And here we are, way up in the 1980's, and as Mr. Weiss has very effectively pointed out, the company has passed through many hands. None of those people that were bargaining then had anything to do with the use of the work in 1985, or in 1980, or whenever the facts arose in the case. The simple fact is that any business-not just businesses involving copyrights-when it makes an investment, plans how it will get the return back on that investment. And we, as I indicated in my statement, looked very deeply into some kind of meaningful number of years that would ensure that the publisher would get a fair shake. The publishers themselves agreed to 35 years in 1964, when this provision was drafted.

Senator SPECTER. Mr. Kay, what is your response?

Mr. KAY. Well, first I would like to say that we have acquired several music publishing companies, and we pick up the gauntlet and run with it to promote and continue to get as much value as possible out of the songs. What we do, I think, benefits songwriters and, of course, benefits ourselves.

We definitely are partners in the situation, continue to be―― Senator SPECTER. How about Ms. Ringer's comment about 1923 and 1956 bring you to 1979, but not beyond?

Mr. KAY. In some of the catalogs that we have acquired, there are agreements existing that date back well into the first 28 years of copyrights that do deal with the issue of extension of the copyrights. These contracts were negotiated at that particular time by knowledgeable people on both sides. I believe that publishers and writers did anticipate an extension in copyright terms, because U.S. law was so antiquated and has not come in line with the laws throughout the rest of the world-50 years past the death of the writer. They certainly did anticipate that there were going to be extensions in many cases.

So I believe that

Senator SPECTER. Well, absent an express extension, then what?

Mr. KAY. Well, again, in my own experience, for the length of time that I have been in this particular business, extension has been anticipated. We have acquired catalogs based on the assumption that there would be an extension of copyright and that we would participate in that extension. All we are really asking to participate in now are those derivative works that existed prior to the end of the 56-year term that we helped to promote, and we continue to help to promote.

We will, of course, continue to promote those works into the 19year terms, and it gets more and more important for music publishers to be involved in this area of promotion of existing copyrights or existing licensed works, because again, one of our major functions is to keep our catalogs alive and the writers' catalogs alive, as well.

Senator SPECTER. Mr. Karp, Mr. Kay presses hard the issue of partnership, contribution, merit on the part of his side of it. What do you think? You had said earlier that you thought that was really not germane, not relevant.

Mr. KARP. I do not think it is relevant, first because the termination clause unquestionably cuts off the rights of publishers who invest large, vast sums of money in creating and distributing a work, when it is not a derivative work, but "the" work. They are cut off after the 56 years of copyright.

No one bargained a nickel more because they put the phrase in the contract or any extensions thereof.

I should point out that a music publisher, book publisher, or any other publisher does not have to worry about termination

Senator SPECTER. Have you ever tried to strike the clause "or extensions thereof" and found no argument?

Mr. KARP. No; no one could do it.

Senator SPECTER. No one could do it? Why not?

Mr. KARP. Because they did not have the power to do it.

Senator SPECTER. Did you ever try?

Mr. KARP. Yes, I am sure people have tried.

Senator SPECTER. You have tried?

Mr. KARP. Yes. I tried to take out the clause "and any renewal thereof," and a book publisher told me, "I have never signed a contract like that in my life." But my point—

Senator SPECTER. And you did not storm out of the room?

Mr. KARP. One of the things I try to point out in my statement is that there are many clauses that authors in their right minds will not take, if they have any choice, but they do not have a choice. Let me make this point, though, Senator Specter. Any music publisher or book publisher can, if it wants to do what other employers do, avoid termination by taking on the economic burden of hiring a writer and paying the writer a salary whether or not the work is successful.

But publishers of books and music do not do that because the risk is far too great, and therefore it is the author who really makes the investment and takes the risk. And because the author does that, the author as an independent contractor becomes the copyright owner.

This whole debate would be ended if publishers said:

I want this work forever; therefore, I am agreeing to hire you, and I am going to pay you a salary, and whether this book you spent 3 years writing is a hit or a flop, you can make $400,000 from it.

You will not find a publisher willing to do that, nor a music publisher.

Where they do hire writers as employees, they do not have a termination clause problem.

Mr. KAY. May I respond, Senator?

Senator SPECTER. Yes, please do.

Mr. KAY. We pay over $200,000 a year in advances and salaries to writers we have under contract to support them in their activities. We have writers in whom I believe in that we've been in the hole to the tune of about $50,000 to $100,000; we keep them on staff.

I have a writer that I think is wonderful who has been with me for 7 years but who has yet to earn his keep-and I will continue to believe in him. I have writers who have been fortunate enough to become millionaires as a result of our combined efforts, and I have writers who are, as I said, in the hole.

I think that we do support a creative team, and the moneys that are generated by copyrights, we plow back into helping new songwriters.

Senator SPECTER. Mr. Weiss, what is the issue of hardship? We talk about a balancing of the equities. How has the Mills Music decision impacted in an adverse way, if at all, on writers?

Mr. WEISS. Well, let me start by citing my experience as a songwriter when I began. There is no such thing as equal bargaining power. To begin with, a song is such an ephemeral thing, it is such a blind item, I could walk in with "The Star-Spangled Banner," and nobody is going to know it until it is out on the market and it becomes a hit, and people say, "Oh, I love that national anthem.” But before that, nobody knows.

And when I walk in with that song, I cannot bargain with the publisher and say, "Well, I have got 'The Star-Spangled Banner' and therefore I want such-and-such a deal and such-and-such an advance," or a bonus. There is no such kind of bargaining power. Plus the fact that at the end of the period of the 56 years, these songs-were it not for the new copyright law-these songs would have gone into public domain. And it was because Congress wanted the songwriters to finally reach that point of bargaining powerafter 56 years, you would know whether or not you had a national anthem on your hands-they decided, well, it is time we gave this power to the writer at the end of that period.

And we have forgive me if I use the term-widows, children, who are supposedly in line to receive this money back. If you want to call it a windfall, be my guest. But now, with this 5-to-4 decision, it is kind of an irony. It is like Swiss cheese. We own something, but we do not own it. It has been given back to us by the Congress, but there are so many holes in it that we are not going to own it, because these publishers will continue to claim royalties on those copyrights. Well, it is a current hardship, but it is going to affect every song, not only those renewal for those 19 years, but every song that is and ever will be written by every songwriter. If the publisher who has it in the first period of time continues to receive

royalties when the contract expires, then there is no equal bargaining position whatsoever for the songwriter.

Senator SPECTER. All right. Thank you all very much.

Does anybody else have anything they would like to say before we conclude?

Mr. KARP. I would just like to add one point. I turn back to book publishing, because we should not lose sight of the fact that this issue is not limited to music and composers, nor is the performance of one publisher who may be exemplary——

Senator SPECTER. You want to turn back to book publishers. Senator Goldwater may have a question for you, Mr. Karp, for the record.

Mr. KARP. I would be glad to answer it, as long as it is on book publishing and not the defense budget.

The point I was going to make is this: As Mr. Weiss said, and he was absolutely right, there is no equality of bargaining, and as a result, authors grant rights in perpetuity to publishers-such as the right to license paperback editions of the author's book. The author gives that for the life of the copyright. When the publisher has the right, with its superior bargaining power, it never grants such a license to a paperback book publisher; it only grants a license for 5 or 7 years.

The reason is very simple. Harper & Row has a lot more power, Random House has a lot more power, than almost any author that deals with them. They can get much more from the author than they are willing to give to some other user. And this is true all across-the-board, and this is what termination clauses were attempting to remedy.

Mr. OBERMAN. Senator, may I add one comment?
Senator SPECTER. Yes.

STATEMENT OF MICHAEL S. OBERMAN

Mr. OBERMAN. In the course of his statement, Mr. Weiss indicated that the realities of the music industry were not put before the courts in the course of the litigation. That was because the courts were not called upon to make a policy judgment. That had been the task of Congress. The courts were called upon, and did attempt, to determine what had been congressional intent. Our briefs in the Mills Music case set forth at length an explanation of what that intent was. We have submitted a set of the briefs. And I do submit that each time one comes back to Judge Weinfeld's opinion in the district court, it becomes clear that he attempted, and I think successfully so, to show what had been intended by Congress-a balancing and accommodation of interests as between creators, publishers, and other users.

Senator SPECTER. Mr. Oberman, you are representing that the Supreme Court did not consider the underlying merits of the situation, but only congressional intent?

Mr. OBERMAN. Essentially so. The case was decided on summary judgment. There was no factual record developed as to what the various roles were in the industry. Instead, the parties marshaled from the very lengthy legislative history what had been presented