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copyright royalties to performers or record companies for the prime programming material they use to secure their audiences, revenues and equity values.
2. Recordings Have Replaced “Live” Performances. Broadcasters used to pay for "live" performers, but these artists have actually been replaced by their own recordings. It is inequitable for these recorded performances to be broadcast for profit without any payment being made to the performers.
3. Composers and Publishers Receive Performance Royalties. Under the existing Copyright Law, broadcasters pay the composer and publisher of the song that is played over the air in a sound recording. But the performers and record company whose artistry and skill brought that composition to life in a recorded performance, and whose creative contribution is at least equal to, if not greater than, that of the composer, are paid nothing.
4. No "Free Ride” for Record Companies. The record companies do not get a "free ride" from broadcasters. Radio stations do not use recordings for their programming to do record companies a favor. They use recordings because that is the best way, in their judgment, to build audiences, which attracts advertisers, which leads to profits, and also increases station equity value. Further, about 56% of the records played are "oldies" that enjoy few current sales, if any. Record companies and performers derive little benefit from such air-play, but these recorded performances draw massive listening audiences for broadcasters and, in turn, advertising revenues for the stations. Finally, record companies purchase over $32 million of advertising time from radio stations annually-about three times the total projected performance royalties under the proposed legislation.
5. Broadcasting Industry Very Profitable. The broadcasting industry is exceedingly healthy. Between 1967 and 1973 (the last year for which data are available), the pre-tax profits of radio stations rose 39 percent, and advertising revenues rose 61 percent.
6. Royalty Fees Are Very Modest. The proposed performance royalty fee is not burdensome. About one-third of the nation's radio stations would pay 68¢ per day. Another third would pay $2.05 per day. The remaining third of the stations—large stations with more than $200,000 in annual advertising revenues—would make a modest payment of one percent of net advertising revenues. Thus, even a station earning revenues of $1 million annually would pay only $27.40 daily, or $1.14 per hour to compensate the vocalists, musicians and record companies for the exploitation of their creative efforts. Clearly, the performance royalties are fair and reasonable, particularly in light of the immense advertising revenues that recorded music produces." The rate schedule is as follows: Revenues
Annual fee More than $200,000.
1 percent of net ad
vertising revenues. $100,000 to $200,000_
$750. $25,000 to $100,000.
$250. $25,000 and under...
None. Further, all-news stations or others which do not rely heavily on recorded music would pay only a pro rata share of the performance royalty percentage. has not been established here is that the last revision of the copyright laws took place in 1909, long before sound recordings became a significant source of programming materials for commercial exploitation by broadcasters and others.
7. Performance Royalty Consistent with Cable TV Royalties. The principle underlying the performance rights bills is identical to that supported by the broadcasters in the general revision bill. Broadcasters assert that cable systems should be required to pay the broadcaster and copyright owners when cable TV picks up the broadcasters' over-the-air signal. In testimony before the House Copyright Subcommittee, they said “it is unreasonable and unfair to let (the cable TV) industry ride on our backs, as it were, to take our product, resell it, and not pay us a dime." But broadcasters, too, are “taking somebody else's product and ... selling it for profit.” In directly parallel fashion, therefore, they should be required to pay the creators of sound recordings when they use that programming material for their profit.
8. Performance Royalty Recognized Abroad. The principle of the bill is not at all radical. Almost all other Western nations require the payment of performance royalties to performers and recording companies. Some of these foreign payments are currently denied to U.S. artists and companies because our country offers no reciprocal right. The primary reason that the principle
1 A chart detailing, by state, the number of radio stations in each of the royalty rate categories is set forth after page 9, infra.
II. THERE CAN BE NO "CONSTITUTIONAL DOUBT" THAT THE PRODUCTION OF A SOUND
RECORDING IS A CREATIVE ACTIVITY DESERVING OF COPYRIGHT PROTECTION 1. Copyright Protection Covers Wide Variety of Creative or Intellectual Efforts. Copyright protection has never been limited to the “Writings" of "Authors" in the literal words of the Constitution. To the contrary, Congress has granted a copyright to a wide variety of works embodying creative or intellectual effort, including such "Writings” as musical compositions, maps, works of art, drawings or plastic works of a scientific or technical character, photographs, motion pictures, printed and pictorial illustrations, merchandise labels, and so on.
2. Constitutionality of Copyright for Sound Recordings Upheld. Both Congress and the Courts have recognized that sound recordings may be granted copyright protection under the Constitution. In the Anti-piracy Act of 1971, where Congress conferred limited copyright protection upon sound recordings, the Senate Judiciary Committee concluded that "sound recordings are clearly within the scope of 'writings of an author' capable of protection under the Constitution." The Committee rejected the constitutional ection once again only last year,
The Courts have expressly upheld the constitutionality of legislation according copyright protection to sound recordings. In Capitol Records, Inc. v. Mercury Records Corp.,' the Court said that “there can be no doubt that, under the Constitution, Congress could give to one who performs a ... musical composition the exclusive right to make and vend phonograph records of that rendition."
A three-judge federal Court has likewise concluded that the activities of sound recording firms "satisfy the requirements of authorship found in the copyright clause. . ."5 The United States Supreme Court, too, has indicated that the copyright clause can extend to "recordings of artistic performances."*
Finally, the Copyright Office has advised that it is within Congress' constitutional power to grant copyright protection to sound recordings."
3. Creativity in Production of Sound Recording. Performers and record companies engage in creative activity when they use their artistic skills, talents, instruments and engineering to produce and record a unique arrangement and performance of a musical composition. The Senate Judiciary Committee has found creative copyrightable elements in the “performer whose performance is captured and ... the record producer responsible for setting up the recording session and electronically processing the sound and compiling and editing them to make the final sound recording.” 5
PS. Rep. No. 92-72. 92d Cong., 1st Sess., pp. 4-5.
Goldstein v. California, 412 U.S. 546, 562 (1973).
S. 1111 AND H.R. 5345-NUMBER OF RADIO STATIONS, BY STATE, IN EACH ROYALTY RATE CATEGORY
Categories are annual revenues of reporting stations, in thousands of dollars]
Stations located in SMSA
$0 to $25 $25 to $100 $100 to $200
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S. 1111 AND H.R. 5345-NUMBER OF RADIO STATIONS, BY STATE, IN EACH ROYALTY RATE CATEGORY
(Categories are annual revenues of reporting stations, in thousands of dollars)
stations with revenues between $100,000 and $200,000 pay a flat fee of $750; stations with more than $200,000 in revenues pay a 1 percent royalty on net advertising receipts.
Source: FCC filings by individual stations for 1972. Note: Under the royalty rate proposed in S. 1111 and H.R.5345, stations with annual revenues under $25,000 are exempt; stations with revenues between $25,000 and $100,000 pay a flat fee of $250;
I. RECORDING COMPANIES AND PERFORMING ARTISTS MERIT A PERFORMANCE
The performer's interpretation of a tune is crucial to its success, and is no less a contribution to the recorded product than is the composer's original lyrics and score.
Many vocalists and musicians are not sustained by royalties from record sales, and their opportunities for live performances have been sharply curtailed by the use of pre-recorded music by broadcasters. A performance royalty would alleviate this situation.
The recording company's creative contribution to a song is very significant; it constitutes original creative activities to which copyrght protection can be granted under the Constitution.
The recording company must underwrite severe financial risks in the production of a record; over three-fourths of all records fail to break even financially and the proportion of failures is rising. Yet broadcasting companies profit from the airplay of all records, whether successful or not.
Congress and the Register of Copyrights have noted the merits of a performance royalty for sound recordings. In addition, the constitutionality of vesting a copyright in a sound recording has been upheld by the courts. The performer's interpretation of a tune is crucial to its success
Performers' interpretations of tunes and their participation in the actual creation of audible music contributes creatively to the recorded product no less than the actual tunes composers contribute to recordings. A record is a composite of the artistic creativity not only of the composer, but also of the performer and the recording company.'
As William Cannon stated,
“There are many factors in the total popularity of a record, and the song itself is many times of minor importance. The most important factors vary in predominance from record to record and any one of them may be of prime importance on a particular recording. These are the artist (singer, instrumentalist, or group) ...; the song or tune, but never in its origi state; the arranger who embellishes the composition or orchestrates the work and decides how the total musical sound will be arrived at ...; the engineers who control acoustics and make electronic alterations in the sounds ...; and the very important area of exposure and promotion to the public.” 10
The performer can make an important creative contribution to every type of recording. The highly talented jazz musician's original interpretation of a musical composition is often far removed from the original tune set down in lines of notes of the copyrighted work. In classical music, too, there can be considerable variation in the interpretation of a piece. As the Director of the Boston Symphony Orchestra stated,
“Improvisation is one of the earmarks of the performer in music. . . . You're engaged in a creative act whenever you interpret a score. If the performer and the artists were not important, then one recording of Beethoven's Ninth would be sufficient for everyone for all time. Why bother with a second interpretation if it can be no different than the first? Or a third ?" 11
The role of the artist can be even greater with popular music. Here it is often the artist's performance as much as-or more than-the composer's tune that makes the recording attractive to both record buyers and radio audiences. The artist as much as the tune have made hits of Barbra Streisand's “People”, Frank Sinatra's "My Way", and the like. There must be a hundred versions of "White Christmas". hut it is Bing Crosby's special rendition which is continuously popular at Christmas each year. Listeners are eager to hear albums by Andy Williams or the Boston Pops Orchestra, but may be less concerned with any particular song or its composer. In some cases a song which enjoyed
• The statement of John Desmond Glover before the Subcommittee on Patents, Trademarks, and copyrights, Committee on the Judiciary, U.S. House of Representatives, 1965, in Part II, Exhibit 4, gives an illustration of the significant creative contribution of the artist and the record manufacturer to the simple melody copyrghted by the composer and publisher in order to transform this simple melody into a commercial product.
10 Statement of William Cannon, owner of the Cannon Coin Machine Co., Hearings Before the Subcommittee on Patents, Trademarks, and copyrights of the Committee on the Judiciary, U.S. House of Representatives on H.R. 4347, 1965, pp. 565–566.
11 Statement of Erich Leinsdorf, then Music Director of the Boston Symphony Orchestra, in Hearings Before the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the judiciary, U.S. Senate ... 8. 597, April 1967, p. 821.