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inappropriate to allow a publisher to enjoy the fruits of his contribution a portion of the royalties arising from sound recordings licensed during the time the publisher owned the

copyright and promoted the song.

On termination, on the other hand, the composer regains

full control of, as well as the entire stream of revenues from,

all new uses of the song.

The music publisher receives no

benefit at all from any new post-termination uses of the song,

even if these new uses are the result of past promotional

activities on the part of the music publisher or past efforts by

the music publisher to support and nurture the songwriter. Thus,

if a Linda Ronstadt or a Joan Morris -- two popular per formers

who have been reaching into the repertory of standard hits were to record "Who's Sorry Now" in a new collection of standards, Ted Snyder's heirs would collect their full share of mechanical royalties, and Mills Music would get no portion of

this share.

Present law recognizes and encourages the collaborative

efforts between composer and publisher.

By permitting the music

publisher to enjoy all rights under a grant for recordings it licensed prior to an effective date of termination, the law

motivates the publisher to continue to promote the work

throughout the entire period of the grant. Bear in mind that the publisher's share of the royalties is what enables the publisher

to finance the extensive promotional activities I have been

describing and to nurture creative talent.

If publishers were to

be cut off from their share in pre-termination derivative works,

they would have less incentive to promote works as termination

approached.

The result might well be to break the momentum of

promotional activities and lessen the value of the work reclaimed

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intended congressional policy.

The Supreme Court specifically

found that Congress intended in the "termination provisions to

produce an accommodation and a balancing among various

interests."

Mills Music Inc. v. Snyder, 105 S. Ct. 638, 650 n. 41

(1985).

In this accommodation, an author regains the right to

exploit his work and to receive all compensation from this new exploitation, but the author does not gain new or enhanced compensation from pre-termination derivative works. This is the

case even if, for example, an author's grant gave up the screen rights to his book for a modest one-time payment and the book

later became the box office blockbuster of all time; under the

termination provisions, the author gains no benefit. In Mills Music, the composer continued to receive at least fifty percent of all royalties derived from pre-termination sound recordings

and gained entirely whatever income can be derived through the

creation of new derivative works or other future uses of his

song. Thus, the law currently leaves in place and gives effect

to agreements governing pre-termination derivative works, but

gives all future benefits for new uses to the authors.

The arrangement seen in Mills Music

which a host of

witnesses confirmed to Congress to be the standard within the

music industry provides for a fifty/fifty sharing of mechanical royalties between composer and publisher. (These days, some songwriters receive an even higher percentage of the royalties.) This is hardly the type of "unremunerative" grant Congress was particularly addressing when it created the termination right such as a grant that releases all of a

writer's interest in a work in exchange for a modest and one-time

lump sum payment.

In fact, lump sum transfers are virtually

unheard of in the music industry.

It is therefore not a "windfall" if, at the point the

composer regains ownership in the copyright, the publisher

continues to receive fifty percent of the royalties his efforts

have helped to generate, continuing this shared arrangement through the balance of the nineteen-year extension term. In effect, the publisher and the writer continue to share in what the publisher was responsible for promoting in the past and the writer, upon termination, recaptures all future use and exploitation value without any right by the publisher to share in

the new uses.

In the realities of the music business, composers have

much greater protection, and much greater bargaining power vis-avis publishers, than may first appear. It is as misleading to present songwriters as impecunious creaters at the mercy of publishers as it is to label publishers as "middlemen." The existence of a fifty/fifty standard reflects the historic

partnership between composers and publishers, and the greater

than fifty percent share that some composers receive today reflects the ability to bargain above the standard.

Moreover, the ability of composer and publisher to

negotiate a transaction favorable to the publisher is

significantly limited by the termination provisions of the

Copyright Act, for there is an inalienable right of termination

that the statute preserves for the composer and his heirs.

What

is more, under current law composers can, on a going forward

basis, seek agreements with publishers providing that in the

event of termination, 100% of the royalties from pre-termination

derivative works will go to the composer.

Thus, a composer and a

publisher can decide by contract whether the composer will take away the publisher's share of royalties on termination. In view of the contribution made by publishers, there is no sound basis

for legislatively writing such a provision into every agreement

to license a work to a music publisher, and thereby extinguishing the ability of the parties to address the issue as they see fit.

What is now being proposed is that, despite the

accommodation and balancing of interests reflected in current

law, an author or composer should take over "any right to

royalties" derived from the utilization of a pre-termination derivative work. Because of the historic relationship between

songwriters and music publishers described above and because of

the close involvement of music publishers in the creation of many

successful songs, I submit there is no reason to reconstruct the

balance previously struck by Congress.

To depart from the contractual arrangements governing pre

termination derivative works might create uncertainties in place of now clearly settled law. Multi-party situations are by no means limited to the music industry, and these arrangements are

For

almost certainly implicated by any change in the law.
example, a motion picture deal frequently includes contracts

between and among an author of a book, a book publisher, the

producer and one or more distributors, in which a copyright might

be assigned and royalties allocated to meet a variety of tax and

financing considerations and to recognize the respective

contributions of each party to the ultimate creation of the motion picture as a derivative work from the book. The law now leaves

intact, after termination, contractual arrangements governing

such pre-termination works, and the respective parties continue

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to create music that the public hears and enjoys.

Congress, in

the 1976 Act, struck a series of bargains and compromises that

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THE WELK MUSIC GROUP

1299 OCEAN AVENUE, SUITE 800. SANTA MONICA, CALIFORNIA 90401 (213) 451-5727/870-1582 TLX181915

Dean Kay

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Following my appearance at the hearing of November 20, 1985, I forwarded to other music publishers the statements submitted by me and all of the other witnesses.

I have now received, in response, letters that concur in my presentation.

In several instances, the letters also provide further illustra-
tion of the role of the music publisher and additional reasons why
the derivative works exception should not be amended.
I am enclosing copies of letters received from:
Warner Bros. Music;
Chappell/Intersong Music Group U.S.A.;
Famous Music Publishing Company;
The Lowrey Group of Music Publishing Companies;
Peer-Southern Organization;
September Music Corp.;
Shapiro Bernstein & Co., Inc.;
Jøbete Music Co., Inc.;
CBS Songs, Inc.; and
Acuff-Rose Songs

I respectfully request that my letter and these responses be made part of the heafing record. Respecoen

your

MA

T.B. HARMS COMPANY (ASCAP) VOGUE MUSIC (BMI). BIBO MUSIC PUBLISHERS (ASCAP) • HALL-CLEMENT PUBLICATIONS (BMI) • SOMEBODY'S MUSIC (SESAC)

JACK AND BILL MUSIC COMPANY (ASCAPHARRY VON TILZER MUSIC PUBLISHING COMPANY (ASCAP) CHAMPAGNE MUSIC CORP. (ASCAP)

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