have been established by operators in some areas, but this is by no means generally accepted. In many areas, rates are still at 10¢ per play or three plays for a quarter, and there are even some areas where the rate remains at 5¢ per play.

These conflicting and continuing pressures have necessarily and inevitably resulted in a general reduction in the level of operators' income from operation of jukeboxes. This economic picture explains why almost all operators have diversified their activities by adding amusement and vending machines to their jukebox operations. In fact, I am quite certain from my own experience that most operators cannot afford to operate jukeboxes unless they also operate amusement and vending machines. Further emphasizing the serious economic condition of the jukebox industry was discontinuance, in 1974, of the manufacture of jukeboxes by the Wurlitzer Company, which was one of the four American manufacturers of jukeboxes.

4. Jukebox operators serve as promoters of records, and contend, therefore, that they provide a service to performers and record companies which is of sufficient benefit to obviate any claim of the payment of royalties for play of records on jukeboxes.

5. Record manufacturers and performers, traditionally, have secured compensation for their recordings through contractually negotiated royalties. They do not need added Congressional assistance to demand and receive adequate compensation for their recordings. Just this week, for example, Billboard magazine is reporting a $9,900,000 distribution to musicians throughout the United States from Phonograph Record Manufacturers Fund, a fund which provides annual distributions to musicians, and was created by private contractual negotiations without the intervention of Congress. A copy of the Billboard article is attached hereto and made part hereof. We urge the Committee, therefore, to require record manufacturers and performers to come forward with proof that any such Congressional assistance is needed before any such statutory benefits are conferred upon them. 6. In the face of continuing reports of "payola" in the recording industry we question whether record manufacturers can demonstrate their competence or entitlement to statutorily created royalties which would only aggravate a problem that industry seems unable to control.

7. We also oppose a statutory royalty for record manufacturers and performers because we believe Congress lacks the power to confer such benefits upon them. In our view, record manufacturers, particularly, are not "authors" within the meaning of the Copyright Clause of the Constitution. In giving equal benefits to record manufacturers, along with performers, we believe this Bill is fatally defective and cannot stand.

8. Finally, we oppose any new royalty for the recording arts as a matter of principle because we believe that there should be but one royalty for any one performance, and that if Congress creates any new kind of musical copyrights they should be shared in a single royalty among all those who claim to have contributed to the finished product.

In closing, I would like to state to this Committee that within the jukebox industry there have been. and still are, many who vigorously oppose the creation of any performance royalty to be paid by jukebox operators. This is because they believe jukebox operators perform a compensating service in the play of music on their machines. Any proposal to impose a new royalty upon jukebox operators would substantially intensify that opposition and would make it increasingly difficult for the industry's leaders to preserve support for the provisions of the Copyright Revision Bill as the industry's representatives have agreed to them. We earnestly urge your Committee, therefore, to disapprove the Bill, H.R. 5345.

Thank you for giving us this opportunity to present the views of Music Operators of America, Inc.

[From Billboard magazine, July 26, 1975]

MUSICIANS TASTING FAT $9.9 MIL MELON
(By Is Horowitz)

NEW YORK.-One busy horn player in Los Angeles will bank an extra $35.000 next week when he receives his slice of the $9,915,620 melon to be distributed by the Phonograph Record Manufacturers Special Payments Fund.

Checks going out Aug. 1 represent the largest payoff since the fund was established in 1964. The total is some 30 percent over the $7.6 million dispensed in

1974. This year's sum will be divided among just over 41,000 union musicians, also a record number, who played at least one record date during the past five years. Smallest checks, for $9.90, will go to those who played only a single date in 1970, and none since. But 775 frequently-employed AFM stalwarts will get more than $5,000 each.

Name of the Los Angeles sidemau is being withheld by fund guardians, but his $35,000 "royalty" places him at the work summit of all musicians playing for recordings.

The fund's bankroll comes from record manufacturers who contribute .05 percent of their gross sales at suggest list, less a 15 percent packaging deduction and an additional allowance of 20 percent for free goods on product recorded under AFM jurisdiction. Material recorded abroad is exempt, even though manufactured and sold in this country or Canada.

Eight AFM locals, with Los Angeles' Local 47 well out in front at 35 percent, will share in 80 percent of the fund money, a breakdown of the payout shows New York's Local 802 accounts is second at 19 percent, and Nashville's Local 257 accounts for 15 percent of the total.

After these power jurisdictions the falloff in recording work and fund payoffs is rapid. Chicago accounts for 3 percent; Memphis, Detroit and Toronto about 2.5 percent each; and Montreal 1.5 percent.

Manufacturer payments to the fund are due semi-annually on Feb. 15 and Aug. 15. Books are closed on April 30 each year in calculating musician shares. While most credit to sidemen is given for recordings made during the most recent accounting period, lesser credit is given, on a descending scale, to session work going back over five years. This is to provide some continuing payment to recording musicians, according to a fund spokesman.

Re H.R. 5345.

Hon. ROBERT W. KASTEN MEIER,

PERRY S. PATTERSON, Coudersport, Pa., July 30, 1975.

Chairman, Subcommittee on Courts, Civil Liberties and the Administration of Justice; House Judiciary Committee, Rayburn House Office Building, Washington, D.C.

DEAR CHAIRMAN KASTENMEIER AND MEMBERS OF THE SUBCOMMITTEE: I write as counsel for the Rock-Ola Manufacturing Corporation, The Seeburg Corporation, and Rowe International, Inc., the only manufacturers of coin operated automatic phonographs in the United States.

I am a retired partner of the Chicago and Washington firm of Kirkland, Ellis and Rowe, and the foregoing companies, and other manufacturers who have vanished from the scene, have been represented by partners of my former firm and by me on copyright legislation matters for over forty years. I continue the practice of law in Coudersport, Pennsylvania.

The automatic phonograph manufacturers join the Music Operators of America in their unqualified opposition to H.R. 5345 the so-called Performing Artists Royalty Bill.

This measure would drastically expand the provisions of H.R. 5345 relating to performance royalties in audio or visual recordings by creating a hitherto non-existent right to royalties for public performances via radio, television, coin operated phonographs and background music on the part of "performers" who are defined as "musicians, singers, conductors, actors, narrators and others" whose performance of a literary, musical or dramatic work is embodied in a sound recording.

The multimillion dollar revenues of the existing Performing Rights Societies, ASCAP, BMI, and SESAC, have for years impressed the performers of copyrighted works and the record manufacturers with the apparently limitless potential sources of revenues from the entertainment media and accordingly they are again seeking a share, as a class of persons with the contemplation of the constitutional copyright clause, rights which are under existing law accorded to authors for limited times, to exclusive rights to their writings and discoveries. Given the obvious economic incentives, those who would create a broad class of performers to be rewarded for their various talents appear to have no difficulty in asking for statutory definition of their royalty entitlement. It goes without saying that to superimpose through the vehicle of copyright an additional royalty fee on the reproduction of sound recordings on jukeboxes and upon radio

and television broadcasters, who already are paying royalties for the use of copyrighted works of composers, authors and publishers, would give rise to substantial additional costs necessarily to be borne ultimately by the consuming public.

Inevitably either new performers rights organizations or expanded existing organizations are required to decide which performers among the myriads of musicians, singers (choruses and choirs), conductors, narrators, actors and others are entitled to share in the new royalty.

The purpose of this memorandum is not to advise the Committee on the resolution of the claimed economic or equitable entitlement of performers as a broad class, but to point out that it is inappropriate in view of the fundamental constitutional questions involved to create a class of literally thousands of potential claimants plus record manufacturers and establishing a precedent for even broader extension of the concept of copyright protection.

The equitable and economic justification for the use of the Federal Copyright Law to extend to record producers is exhaustively analyzed in an article in Volume 43, No. 1, November 1974 issue of The George Washington Law Review. In the 86 page study, the authors, Messrs. Robert L. Bard and Lewis S. Kurlantzick ultimately conclude that there is no economical justification for the establishment of a hitherto non-existent public performance right with respect to records. The authors demonstrate that performers are already being adequately compensated for their capacity to produce records attractive to broadcasters. Record and tape piracy. they note, are no longer a threat to manufacturers in view of the Federal and State laws on the subject. The authors conclude with the following statement-particularly relevant in the light of recent focus of attention on the problem of payola :

"Finally, establishment of the public performance right inevitably will increase the existing strong pressures inducing record producers to offer improper inducements to employees of the broadcast industry to get their records played on the air."

The Subcommittee should not simply decide whether the granting of copyright protection to performers and record manufacturers would be "sound policy," although even from a policy standpoint there are sound grounds for excluding the performers from the General Revision. The Committee must work within the constraints imposed by the limited grant of authority conferred by Article 1. Sec. 8, cl. 8 of the Constitution, which gives Congress the following power: "To promote the Progress of Science and Useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries." (Emphasis added)

The language, purpose and history of this clause demonstrate that it is not a license to confer copyright or patent monopolies on any group who might appear deserving of economic reward, and, as the following paragraph will indicate, an attempt to grant such a monopoly to performers and record manufacturers poses very real constitutional problems.

The issue of "performers' rights" is not one of first impression before the Congress or the Judiciary Committee. Bills have been introduced periodically since 1936 with the objective of creating performers' monopolies. Kaplan & Brown, Cases on Copyright, Unfair Competition, and Other Topics Bearing on the Protection of Literary, Musical, and Artistic Works 590 (1969). Congress has heeded before the warning that an attempt to create such rights would go beyond the power of Congress. See Hearings Before Subcommittee on Patents, Trademarks and Copyrights of the House Committec on the Judiciary on H.R. 1269, 1270 and 2570, 80th Congress, 1st Sess., ser. 10, at 26, 30, 34-38, 232, 267, 269, 270, 277 (1947).

Two cogent explanations of why copyright protection for performers and record manufacturers would be of dubious constitutionality were developed during the above hearings. First, the Copyright Clause gives Congress the power to afford protection to "Authors and Inventors". A performer, as defined in the Scott Bill is simply not an author much less an inventor. It includes virtually everyone participating in either a major or minor role as an actor, singer, musician and in addition, conductors, narrators and others. The definition of what constitutes a performer whose so called creative talents may be copyrightable is So sweeping that the determination of which performers are to receive royalties and in what amount carry the prospect of new unwarranted economic burdens to the entire entertainment industry including jukebox operators, jukebox manufacturers and the public.

If so broad a definition of "Author" had been intended, then the framers would not have felt called upon to include the word "Inventors" in the Clause. For surely an inventor is as much an author in his field as a performer is in his. The framers, however, expressly included “Inventors" in the Copyright Clause, and from this inclusion one must conclude that the framers intended to have "authors" take its ordinary accepted meaning.

The second basis for rejection was also based on the literal phrasing of the Copyright Clause. This clause authorizes Congress to secure to authors the "exclusive right" to their writings. A performer works with a writing which is usually copyrighted or upon which the copyright has expired but in any event which someone else has authored. Since the author has been granted an “exclusive right" in the work it is simply illogical and unreasonable for the performer to superimpose on such a right a further entitlement to royalties for performing the works or making a record of it.

For these and other reasons prior attempts to enact statutes establishing performers' copyright protection have been rejected, Sec. e.g. H.R. 1270, 80th Congress, 1st Sess. (1947), reported adversely by a Subcommittee of the House Judiciary Committee, 93 Con. Rec. pt. 15, at p. D406 (1947). There is no reason for suspecting the correctness of Congressional judgment in the past. The Senate in enacting S. 1361 in 1974, deleted the performers' and record manufacturers' royalty. The House Subcommittee has no basis for taking a contrary view.

In spite of the above, the contention has been made that performers should be regarded as authors and their performances should be considered to be writings. It will be argued that changing times have created concepts of authorship and creativity that did not exist when the Constitution was drafted, and that the Constitution must be interpreted to reflect that fact. Admittedly, a capacity for growth must be read into the Copyright Clause. In many instances this argument may have merit, but not in the case of performers as defined in the Scott Amendment or record manufacturers whose creative talents are more along materialistic than aesthetic lines. There were plenty of performers, i.e.. actors, musicians, singers, etc., around at the time the Constitution was adopted and it is not conceivable they were regarded as authors in the constitutional sense. Performers are not a new concept although record manufacturers are. If the framers had wanted to create a sweeping monopoly on actors, musicians and other performers they could have done so by simply writing Art. 1. § 8, cl. 8 as follows: "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors, Inventors and Performers the exclusive right to their respective writings, discoveries and performances:" (Emphasis added)

If the Congress feels moved to expand the statutory scope of the Copyright Clause to reach performers and record manufacturers, it must answer affirmatively the following questions: "Does the public interest necessitate the creating of this new type of monopoly?" "Is the country faced with such a shortage of performers of nondramatic art that the public interest requires new incentives to draw people into these fields?" "Are performers and record companies "cre ators" of writings in the constitutional sense?" Hardly. There appears to be little or no justification from the standpoint of promoting the progress of Seience and the Useful Arts for extending the copyright monopoly to performers and record manufacturers. In this connection reference is made to a lead article in Billboard Magazine of July 26, 1975, reflecting the distribution in 1975 to musicians by the record manufacturers of 9.9 million, an increase of 30 percent over the 1974 payoff.

There has been an indicated disposition on the part of the Supreme Court to scrutinize the constitutionality of certain instances of protection granted under the present statute, even in cases where the issue of constitutionality was not raised by the parties. In Mazer v. Stein, 347 U.S. 201, (1954), the Supreme Court held a sculpture was within the scope of the Copyright Act. The pending General Copyright Revision, H.R. 2223, expressly includes sculpture. Justice Douglas, in a concurring opinion in which he was joined by Justice Black, stated that the Court should face the constitutional issue even though not raised. Id. at 219–21. With reference to the Copyright Clause he wrote: "The power is thus circumscribed: It allows a monopoly to be granted only to ‘authors' for their 'writings. Is a sculptor an ‘author' and is his statue a 'writing' within the meaning of the Constitution? We have never decided the question." Id. at 219-20.

After listing a number of unlikely articles which the Copyright Office had accepted for copyright the Justice stated: "Perhaps these are all writings' in

the constitutional sense. But to me, at least, they are not obviously so. It is time that we came to the problem full face." Id. at 221.

Thus, it is evident that there is some doubt even with regard to those things covered in the present act. Mere copying is not copyrightable cf. Donald v. Meyers TV Sales, 426 F. 2d 1027, cert. denied 400 U.S. 392. This is surely not an invitation for Congress to go farther, particularly where the sweeping and unqualified definition of "periormers" which includes the catch-all, "others", not only brings a multitude of new potential royalty claimants into the picture but where it would establish a precedent for the creation of royalty entitlement in other naturally talented performers such as figure skaters, golfers, tennis players, basketball players and the like, to say nothing of creative performers such as comedians and news commentators.

The Supreme Court has demonstrated in even more recent cases that it has a preference for curtailing monopoly in the patent and copyright areas. See Sears, Roebuck & Co. v. Stiffel Co., 316 U.S. 225 (1904), and Compco Corp v. Day-Brite Lighting, Inc., 376 U.S. 234 (1964). In these cases the Supreme Court struck down state attempts to extend the property rights of creators beyond those validly granted by the federal patent and copyright laws. The Court expressly stated that, "To forbid copying would interfere with federal policy found in Art. 1, Sec. 8, cl. 8 of the Constitution . . . "Compco, supra at 237. This is a policy of allowing monopoly only in limited areas for limited times. Note, however, that the copying is not itself the subject of further copying. To obtain valid copyright the material must be original, although the cases vary widely on the degree of novelty, originality or variation required for a new copyright. 17 U.S. CA § 1 note 13, annotations.

In summary, the Committee must not allow the arguments of contending economic interests to obscure Congress' responsibility to remain within the limits defined by the Copyright Clause. This power does not extend to creating a monopoly on the behalf of copiers of already copyrighted works, ie., performers and record manufacturers.

If the economic needs of performers and record manufacturers are relevant to their entitlement to a special royalty so also is the economy of the automatic phonograph manufacturers. In the case of the automatic phonograph manufacturers, which numbered about 10 thirty years ago, three now remain. The three companies are Rock-Ola, Seeburg and Rowe International.

In 1974 the Wurlitzer Corporation, which had manufactured musical instruments since 1856 and automatic phonographs since 1908 discontinued the manufacture of automatic phonographs because of the deteriorating economic climate of the industry. In a letter to shareholders in the 1974 Annual Report, the Company's President said: "The major trouble area affecting the earnings picture during the past year was our coin-operated phonograph business which has been unsatisfactory from the profit viewpoint for the last few years. At a Board of Directors' meeting on March 5, 1974 it was decided to discontinue phonograph manufacturing and selling operations in the United States."

The three surviving manufacturers for whom I speak have not yet benefited from Wurlitzer's withdrawal from competition. Each company has supplied me with information concerning their operations but have requested that I consolidate such information for reasons of competitive confidentiality.

In the aggregate, dollar sales volume and unit production are down between 20 percent and 30 percent. Employment is down drastically, in one company from 1,450 employees to 450 employees. Another company has shutdown production for three months in early 1975. Distributors' inventories in certain instances are as much as 300 percent above normal and sales are not improving.

The juke box business has not kept pace with population growth. It is estimated that there are fewer juke boxes in operation now than in the period 25 years ago after World War II.

The present and prospective monetary contribution of the automatic phonograph industry to the record industry and the performing rights societies is adequate and equitable. Enactment of H.R. 2223 as now drafted will result in a contribution by the operators to the music industry of an estimated $8,500,000.00 a year. This is nearly 10 percent of the total distributions of the performing rights societies ASCAP, BMI and SESAC which in 1974 was reported to be approximately $97.5 million.

The manufacturers believe the operators are contributing their fair share for their use of music and recommend approval of Section 116 of H.R. 2223 as drafted. They oppose H.R. 5345 which would expose the operators to additional unwarranted monetary burdens.