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United Artists & Polygram have a joint distribution pack also.

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All A & M records and tapes are exclusively manufactured by CBS Records. London & Motown have a distribution pack.

Fantasy, Motown, ABC/ Dot are all handled exclusively by E. M. I. in all markets outside of the U. S. and Canada.

Mr. KASTENMEIER. Do all three of you represent compatible interests? I say that because, Mr. Gramuglia, you represent a group of small recording companies, which in part or in whole record their own music, so to speak.

Mr. GRAMUGLIA. That is correct.

Mr. KASTENMEIER. While I think, Mr. Heilman, you are not precisely in that

Mr. HEILMAN. No; EC Tape does no manufacturing at all. We only develop compilations and we market by year from 1929 forward through 1971 and rather than sell by any particular artist, we market the years as you would have bottled wine, the top 16 or the top 32 or the 64 songs of that particular year, which would interest you the most in the category of music that would interest you the most.

Mr. KASTENMEIER. And you believe that that is legal?

Mr. HEILMAN. Absolutely, sir. We are the only company ever to come out with a library program of music designed for 17 years and the only place we could advertise our product and sell it was by national mail order and you will note that we do not sell any tapes for a dollar because of our legal fees that we have incurred and because of the tremendous costs of advertising. We sell our 8-track tapes for $6.98, or $5.77. We are probably the only company in the United States to be in an unfair competition suit for being slightly higher than the original producer of old music.

Mr. KASTEN MEIER. One other question-one question I had was you indicate that it is in the consumer's interest that the law be modified such as you have recommended to the committee.

Mr. WALLY. Absolutely.

Mr. KASTENMEIER. I am wondering what evidence you have of that. When I say what evidence, are there consumer groups that you

can cite?

Mr. WALLY. I am a retailer and I think I can answer that.

Mr. KASTEN MEIER. OK. Are there consumer groups that you can cite that would urge this committee to take the course of action you recommend so that they would be benefited as consumers of popular music?

Mr. WALLY. Well, there is Ralph Nader's group, but may I also recommend an economic impact survey, which will show what I am about to say as being factual, and again, as a retailer, I deal with the public and I am also echoing the thoughts of other retailers that I represent.

To begin with, there is one quote that was made that I think will clear up a lot of things, Mr. Chariman, and it is a very unfortunate quote. You were quoted in "Billboard" as saying, and again, I want to tell you tie everything together, and I think you will understand what I am talking about-I want to quote both yourself and Mr.

Danielson.

You were quoted as saying something to the effect of pirates and duplicators being one and the same thing, and that was in the October 5, 1974, issue of "Billboard" magazine. You were saying duplicators do not make copies of out-of-press or nonhit recordings or works that don't become hits. Pirates siphon off the top. I direct this at you. You çan take a look at Mr. Heilman's list or here is one from US Tape, not available in the stores. Take a look at "Billboard" magazine, which I will hold up "Top 200"-you take the total number of weeks

each is on the chart and you will come out with the average life on the chart which is something like 16 weeks. That is No. 2.

Mr. KASTENMEIER. Incidentally, do you have the original "Billboard" magazine before you that you are citing from?

Mr. WALLY. I will give you several of them. I will even show you how the mathematics are done. Here is one of the top-100 tapes. If you like, I will give you a couple of others. If you take a look at week No. 1

Mr. KASTEN MEIER. I am referring to the quotation.

Mr. WALLY. Oh, no; that I don't have.

Mr. KASTENMEIER. That is what you should have.

Mr. WALLY. October 5, 1974.

Mr. KASTENMEIER. You are purporting to quote us. You ought to have

Mr. WALLY. No; I just took that out of the library. This is current and recent. The average life on the charts is something like 16 weeks. Now, if I can quote Representative Danielson, he said something to the effect, I believe copyright is to promote the arts. Now

Mr. KASTENMEIER. The question I asked a few minutes ago-
Mr. WALLY. Let me-

Mr. KASTENMEIER. No; you are not answering it. The question I asked was, "What consumer groups, if any, are you aware of that will take your position?"

Mr. WALLY. Ralph Nader's group. But, let me

Mr. KASTENMEIER. Well, Ralph Nader, I would like to inform you, was invited by this committee to testify, not just in connection with your situation, but generally, and declined to do so.

Mr. WALLY. But, can't the retailers speak for the consumer as the consumer is our customer?

Mr. KASTENMEIER. The retailers cannot, in my estimation, speak for anybody other than the retailers.

Mr. WALLY. Because I just want to say that 90 percent of what is currently on the charts today will not be available 2 years from now, just as 90 to 95 percent of what was on the charts 2 years ago is not available in any retail store today, and if you want, I will spend time with any of your legislative aides or whoever they are and shop the stores and point out lists that I have. The idea is the artist makes money, or should make money, on royalties, and if he is not being produced by the record companies, I don't see how the record companies can holler and say, hey, we are losing money to a duplicator, when they are not making the product. The artist is not getting royalties and the consumer has something that he wants.

Mr. KASTEN MEIER. The question the Chair was posing, and it was not posed in a hostile fashion, because I suspect that you possibly could make the case that consumers are injured-I don't know that you can, but I think maybe it is possible-but one way of doing it. it would seem to me, is to interest consumer groups in the point of view you are expressing and I have asked merely whether you have interested any consumer groups in the point of view that records are not available for less money now because of the copyright law. It would probably-I think it would help your point of view if you were able to do so.

Mr. HEILMAN. Mr. Kastenmeier

Mr. KASTENMEIER. Yes, Mr. Heilman.

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Mr. HEILMAN. Two years ago, the music industry was attempting to pass a bill in the State of Wisconsin. We went to St. Norbert's College and in 3 days I think enrollment in Green Bay, Wis.-in 3 days, we had 800 signatures out of a possible 3,400 people on campus. It is an amazing thing. What has happened here, the music industry has walked in-they walked into the courts, walked in to you gentlemen, and said this is a piracy case and all of a sudden everybody forgets about the basics of laws and basics of business and the practicalities. It is very difficult when I contact an organization and say I represent a duplicator, because automatically they say, oh, you are a record pirate, and it makes it very, very difficult really to talk to them.

But, I would say this. In the Senate hearings in 1967, a lady by the name of Isobel Marks, who was a member of the New York Bar, and she was assistant secretary of Decca Records since 1934, told the Senate Committee that hit records have a life of 12 weeks. They go on the charts, they stay on the charts for a few weeks, and the money has to be paid within a 6-month period.

Well, the record companies got protection from all hits after February 15, 1972, forward. They have absolutely no competition on the new music because no one can copy it because of the Federal penalties. And yet, they go back now and go back for at least 40 years in music, music that they have no interest in producing. They want complete control of that music, because some day, instead of 10 percent or 15 percent of their business being in old music, it might turn out to be 50 percent of the business, if the public's attitudes change. They have a complete lockup on an industry larger than all sports combined in America and yet from a practical side, I don't believe this committee has ever realized that a writer of a song takes that song to a publisher and when he signs that contract, that writer loses all rights that he has. Any moneys that are sent to the publisher, the publisher has complete control over. Whatever he retains, he then sends the money to the author. The author has been slighted.

The author-I have tendered over $150,000 to publishers, possibly $200,000. Less than $50,000 was ever accepted by publishers. They turned down hundreds of thousands of dollars last year, thereby depriving the author and composer.

Mr. KASTENMEIER. My time has expired. I will yield to the gentleman.

Mr. DANIELSON. I want to ask a question before you get onto another subject.

Understand something. You understand what you are talking about intimately. We do not. Now, explain what you mean that you sent $150,000 in and they turned down all except $50,000. Explain that.

Mr. HEILMAN. OK. Mr. Danielson, under the compulsory license provision, if you make use of it, you must tender 2 cents each time you manufacture that song. If you will look at my catalog, each of my tapes has 16 songs on it. So, that means for each musical composition, 16 times 2 cents I must tender 32 cents to the people who control those copyrights. So each time I record it, I send 32 cents to the publisher. Now, there can be 16 separate publishers. He takes the 32 cents. Let's assume one publisher owns all 16 songs. He keeps 16 cents for himself and he ships to the writers 16 cents. All of a sudden, since the music

companies have gained control of those publishers, they have-the publishers refuse the money. Thereby the author and composer

Mr. DANIELSON. Wait a minute. Since the music companies have obtained control of the publishers

Mr. HEILMAN. That is correct.

Mr. DANIELSON. Two different entities?

Mr. HEILMAN. Right.

Mr. DANIELSON. Explain the difference.

Mr. HEILMAN. OK. There is a manufacturing company, such as CBS.
Mr. DANIELSON. They are the ones who press the record.
Mr. HEILMAN. Right. And they have the performers.
Mr. DANIELSON. All right. Who is the publisher?

Mr. HEILMAN. The publisher is the man who presents them with the music. The writer, who wrote the song, takes it to a publisher. The publisher goes out and promotes it to a record company. Then, the publisher and the record companies have a meeting of the minds. They say, I will give you the performer, you give me the song. Many times they exercise a copublishing contract.

Mr. DANIELSON. You send them 32 cents.

Mr. HEILMAN. To the publisher.

Mr. DANIELSON. Go ahead.

Mr. HEILMAN. What has happened today is that these publishers have refused the money. Out of 154 separate publishing houses in the United States, 127 publishing houses refused my money; 27 did accept. Now, the 127 publishing houses that may encompass as many as 500, 1,000, 2,000 authors, they have deprived those authors of that money due them under the compulsory license, and yet you don't see one author come to you and say what has happened.

Mr. DANIELSON. You went from first to third, without touching second. What happens-you send them the 32 cents.

Mr. HEILMAN. Right.

Mr. DANIELSON. What is the next thing?

Mr. HEILMAN. They don't do anything with it.

Mr. DANIELSON. They must do something.

Mr. HEILMAN. They don't cash the checks. They just hold them orthey don't hold them, don't do anything.

Mr. DANIELSON. Do they send any communication of any kind? Mr. HEILMAN. Yes.

Mr. DANIELSON. You skipped that. Tell us about it.

Mr. HEILMAN. Through their license agent, Harry Fox, they will send a music form saying based on the 1972 Dutchess Case, they don't have to send the money, and it is a violation to tender payment under compulsory license.

Mr. DANIELSON. Do they cash the check?

Mr. HEILMAN. No, they don't.

Mr. DANIELSON. Do they return the check?

Mr. HEILMAN. No, they don't.

Mr. DANIELSON. As far as you know, the check is still sitting in their till.

Mr. HEILMAN. That is right.

Mr. DANIELSON. You see, you didn't tell the whole story. You say over what period of time did you send this money in?

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