that composition and the compulsory license says similar use. ButMr. DANIELSON. I see your distinction now.

Mr. KASTEN MEIER. The gentleman from New York's time has expired.

Mr. DANIELSON. My apologies.

Mr. KASTENMEIER. The gentleman from New York.

Mr. PATTISON. I would like to pursue one question with Mr. Gramuglia. You say that you produce in Massena, N. Y., a performance and you record it and you make a deal with somebody out in Minnesota or somewhere to manufacture that.

Mr. GRAMUGLIA. In Massena, N.Y., we actually manufacture our

own.

Mr. PATTISON. You make a deal with somebody to split the costs? Mr. GRAMUGLIA. Right.

Mr. PATTISON. Your partner?

Mr. GRAMUGLIA. Not a partner.

Mr. PATTISON. What does he do with it?

Mr. GRAMUGLIA. He is a licensee. He takes the recording and manufactures it in Michigan or Georgia and sells on a local basis in Michigan or Georgia.

Mr. PATTISON. But, isn't the violation of the so-called antipiracy law-isn't that—isn't it up to you to complain? In other words, can't you consent to somebody else doing that?

Mr. GRAMUGLIA. I can consent. In other words, since our recording is copyrighted, I give him permission to record my recording. But if the present law is passed, 2223, in 2223, it says a person may not obtain a compulsory license for use of the duplication of a sound recording made by another. The gentleman in Georgia whom I license is making a duplication of my sound recording, so he is not entitled to a compulsory license. Even though he has gotten permission from me to make the duplication, he cannot make it, because the musical composition copyright holder does not have to give him a license.

A situation has happened in the State of Michigan where we licensed a gentleman from Michigan to do some of our recordings and he then turned around and went to the Harry Fox Agency and that agency said, "We will not give you a license. We want an advance from you before we will give you a license."

In the copyright law, there is no such thing as an advance, but the reason they can ask for an advance is because of these court decisions that Mr. Heilman talked about. The man in Michigan is making an identical use of my recording since it is actually my recording, and he is not entitled to a compulsory license.

Mr. PATTISON. I think that is a problem that can be solved very readily. I think it is a question of language. I don't think that is the intent of the law.

Let me pursue a different question. The question on this matter of the copyright owner not getting the 2-cent royalty after a certain time after you have done a cutout from it. Isn't it true that you pay the 2 cents for every tape that you—for everyone that

Mr. GRAMUGLIA. I

Mr. PATTISON. Wait a minute. I haven't finished my question. I don't think you can answer it.

Is it the law that you pay 2 cents for every record that you sell or manufacture?

Mr. GRAMUGLIA. No, the law that I have to work under, because I am not a large recording company, is that I have to pay 2 cents on each recording that is manufactured, but the large recording companies do not have a compulsory license. What they have is a negotiated license.

Mr. PATTISON. I understand. They are the first user.

Mr. GRAMUGLIA. Not always the first user. They don't have to be the first. They have got a standard clause contract and they get a lower

rate.

Mr. PATTISON. They go to the owner of the copyright and they say, we will give you a cent and a half. They know they don't have to give any more than 2 cents, so they-if it is a big enough volume deal, it may be that the copyright holder will say, oh, OK, I will do it for 11/2 cents. That is not under the compulsory license operation. I agree. Mr. GRAMUGLIA. Right.

Mr. PATTISON.. And they say we will give you a cent and a half for every tape that we manufacture, or they might even say for every tape that we sell.

Mr. HEILMAN. At full retail.

Mr. PATTISON. I understand, but that was their ideal. But, the point is, there is a case called the Selma case in Tennessee. Since the independent publishing companies have no power, in other words, if you are a small independent publishing company, it isn't like you are going to go to CBS and say, listen, man, you are going to pay me 2 cents. They will say forget it. We don't need you.

Mr. GRAMUGLIA. They had to submit to their will.

Mr. PATTISON. They have no choice. You say 2 cents. The only thing they don't have to say, they can say 12 cents. They don't have to agree to that but the objection that was made

Mr. GRAMUGLIA. But the court

Mr. PATTISON. That the copyright holder does not get anything beyond the time when you have taken it off your list is an objection that has already been resolved by agreement between the copyright holder and the manufacturer. Isn't that correct? He has agreed. I am the owner of the copyright. I agree you are only going to pay

Mr. GRAMUGLIA. The thing you don't understand, since the recording industry is only controlled by seven or eight corporations, they have no choice.

Mr. HEILMAN. They have no standing to sue. It is ruled that a composer goes into court demanding whatever money he has coming to him and the courts ruled since he allowed the publisher he signed his contract away. He has no standing to sue. Now, sometimes in the American Met versus Warner Brothers, 389 Fed.

Mr. PATTISON. You are telling me he sold his copyright, right? Mr. HEILMAN. He allowed a publisher to handle for him his copyright.

Mr. PATTISON. For whatever he may have sold it, for $50 the whole thing.

Mr. HEILMAN. Right. But, let's say the publisher then denies-does not want to retain the money, money that I send. A copyright holder

goes into court to demand money from me. The courts rule he has no standing to sue.

Mr. PATTISON. All right. That is a problem of a copyright holder, not your problem, right?

Mr. HEILMAN. Right.

Mr. PATTISON. That is not something you can complain about.
Mr. HEILMAN. But they have bypassed the compulsory license.

One thing I want to mention. In the 1909 Copyright Law, Congress looked ahead and said the danger lies in the possibility that one company might secure by purchase or otherwise a large number of copyrights of the most popular music and by controlling these copyrights, monopolize the business of manufacturing, selling music, producing machines otherwise free to the world. That has happened today. It has happened to a business that is $2.2 billion, and, gentlemen, I submit to you that a thorough check of the copyright office will show you that the major record labels, their subsidiary publishing companies. are administering tremendous amounts of copyrighted compositions of other companies. They control both the underlying work and their performers and, gentlemen, something has to be done today.

Mr. WALLY. Mr. Pattison, there is just one thing I want to point out and reiterate. The idea of copyright is to protect an artist so he will continue to perform and by granting him this protection, it is expected that certain things will be kept in the public domain. Again, I repeat,

there is a

Mr. PATTISON. You are using a term there that is a term of art.
Mr. WALLY. A work of art.

Mr. PATTISON. When you say that the purpose of copyright is to put works in the public domain

Mr. WALLY. Keep them there.

Mr. PATTISON. You use a bad term. It is to make a copyright work or works of art available to the public. Something that is in the public domain means that you no longer have a copyright interest in it, so it is a very—it would be very misleading to use that term.

Mr. WALLY. What I am trying to draw to is that these record companies, after 16 weeks, take it out of the public domain.

Mr. PATTISON. They take it out of circulation.

Mr. WALLY. Take it out of circulation, but nobody else can have access to it, pure and simple, and the one thing that

Mr. PATTISON. It never has to go into circulation at all, you know. If I have a copyright on something, I can refuse to let anybody play it ever.

Mr. WALLY. From what I understand, the antipiracy bill was designed to protect the artist, retailer, and consumer. I fail to see how an artist is protected if he is not allowed to make money. If a recording company decides, hey, Charlie, that is it, and they are no longer publishing, what is the artist to do? How is he to get protection?

Do you know what they do overseas? The royalty rights for a domestic production, produced overseas, the artist gets half of the contract. This was produced in England, RCA, a Perry Como record. He is getting paid half of the royalties and they are selling it over here. That is how they are protecting the artist.

Here is Simon and Garfunkel. How do you like it when this goes to a record club? When it goes to a record club, you are only going to get

half the royalties. He signed his rights away, that is true, for a limited amount of money, but I still mean-you are going to protect the artist. Fine. The record companies want to protect the artist. How? By producing it overseas and paying him half the royalties and bringing it back to America? How do they protect him? By saying you can't forevermore earn money? How can you lose money? A duplication is for making something you don't make otherwise. I fail to understand that. It is beyond logic.

Mr. KASTENMEIER. The time of the gentleman from New York has again expired.

Mr. GRAMUGLIA. May I make one point at the end?

Mr. KASTEN MEIER. In answer to a question raised?

Mr. GRAMUGLIA. Just one last point since I am really the only guy here that uses his own artists and performers to record their own material. The reason that I feel that the copyright bill, the sound copyright portion of the bill is such a failure, and you have to understand this, is the fact that the amount of new recordings being made available to the public is declining every single year. This year we are below the 1958 level. In 1958, there were more new sound recordings being made than there are made today. And the reason for it is because the industry-the distribution process, the way sound recordings are brought to the consumer, is a monopoly. Because of this monopoly, small recording companies like myself, can't get any place. We just can't break through this distribution network. We need some help. That is really it, and by helping us you help the small people.

Mr. KASTEN MEIER. Thank you, Mr. Gramuglia, and Mr. Heilman and Mr. Wally, for your testimony today.

This concludes our hearings today. The next meeting on copyright will be next Wednesday morning, July 23, at 10 a.m. in this room on the subject of performance royalties. The subcommittee will also be meeting tomorrow on a different subject.

The subcommittee stands adjourned.

Mr. HEILMAN. Thank you very much, gentlemen.

[Whereupon at 3:20 p.m., the committee recessed, to reconvene at 10 a.m., on Wednesday, July 23, 1975.]