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In the early days of commercial television, programs were either produced live (for which no synchronization license was required) or on a film called a "kinescope" (for which a synchronization license was required). The commercial television networks needed synchronization as well as performance licenses, and asked ASCAP to use its best efforts to secure synchronization licenses from its publisher members, for the normal single network use. ASCAP's members were willing to grant such licenses, free of charge. When a network wished to use the kinescope for a rerun, a fee was paid directly to the publisher. This procedure became standard industry practice.

Public broadcasters recognized that synchronization licenses were needed for lawful duplication of their programs. The 1909 Copyright Act does not impose a "for profit" limitation on the right to record. From at least the early 1960's they obtained synchronization licenses from individual copyright owners without any difficulty. But then, as their uses grew, they stopped requesting synchronization licenses apparently in reliance on an agreement reached in principle with ASCAP in 1967.

Public broadcasters have asserted that they are under no obligation to obtain performance licenses because, they say, their performances are not "for profit" within the meaning of the 1909 law. We disagree and have tried to reach an amicable resolution by negotiation. Finally, we are very close to agreement.

II. Negotiating with Public Broadcasting

Our negotiations with representatives of public broadcasting have been going on for a decade and are, finally, close to fruition.

The history is instructive. As we have pointed out, public broadcasting recognized the need to obtain synchronization licenses. NET alone was paying two publishers-Associated Music Publishers and Boosey & Hawkes-about $10,000 annually in synchronization fees by the mid-1960's. After preliminary talks with the National Association of Educational Broadcasters and the National Educational Television and Radio Center (NET) in 1965 and 1966, NET asked us in February, 1967, to use our best efforts to obtain synchronization licenses from our publisher members in much the same way these rights were obtained for the commercial networks. This was to be part of a performance agreement between NET and ASCAP. We agreed to do so and from that point on NET stopped obtaining synchronization licenses from our members-even though the agreement was never signed and NET never paid any fee to ASCAP.

ASCAP had proposed, and NET had agreed to accept, a three-year performing rights license at a token fee of $20,000 per year, which was less than what NET was paying for synchronization fees alone. But, discussions concerning the wording and details of the agreement dragged on for the next year and a half because public broadcasting sought worldwide audiovisual rights in addition to the rights needed for United States broadcast purposes. Despite the oral agreement between NET and ASCAP for the three-year term commencing May 1, 1968, no license agreement was signed, and no license fee was paid.

In July 1969, ASCAP again attempted to achieve a formal agreement with public broadcasting. The Corporation for Public Broadcasting (CPB) had been established and a national interconnected network inaugurated. Again, documents were exchanged but no license agreement was signed, nor any payment made. Meanwhile, public broadcasting had stopped obtaining synchronization licenses.

In the ensuing years, the structure of public broadcasting changed radically and the public broadcasting industry grew tremendously. NET was succeeded by the Public Broadcasting Service (PBS). Gross revenues of public broadcasting grew from about $100,000,000 in 1970 to $250,000,000 in 1974. Nevertheless, throughout this period, the public broadcasting industry did not pay any license fees to the authors, composers and publishers of copyrighted nondramatic musical works, whose property they were using in increasingly large quantity.

By October, 1973, the nature of the industry's programming had changed and included far more entertainment than it had previously. ASCAP again sought to negotiate a license arrangement through PBS and CPB. A February, 1974 meeting was scheduled and then called off by public broadcasting. We did not meet until July, 1974. In October, 1974, the negotiations resulted in an agreement in principle: Public broadcasting would pay ASCAP $150,000 per year for three years starting January 1, 1975, for its national programs only. As we do for the commercial networks, we agreed to use our best efforts to obtain free synchronization licenses from our publisher members. But public broadcasting desired much broader synchronization licenses than commercial broadcasters,

and a problem arose over additional rights-so-called audiovisual rights-which public broadcasting insisted on obtaining free if they were to make an agreement with us.

The agreement reached in principle in October, 1974 was not signed.

Knowing how close we were to an agreement, the staff of the Senate Subcommittee on Patents, Trademarks, and Copyrights called all parties together to discuss the proposed Mathias Agreement and possible alternatives to it. In the spring of this year, a series of meetings were held between representatives of authors, composers and publishers of music and public broadcasting, under the auspices of the Senate Subcommittee. Agreement was reached quickly on virtually all points of a five-year package at fees of $300,000 for the first two years, $400,000 for the next two years, and $500,000 for the last year. BMI believed these fees were somewhat low, but had agreed to the $500,000 annual figure and also indicated its willingness to reach an accommodation.

But the reason our current talks did not result in an agreement is that public broadcasting insisted on compulsory arbitration at the end of each license term-a provision which would effectively result in a compulsory license without the Mathias Amendment. We rejected this proposal as unjustified and unreasonable, particularly because we regard the figures discussed as experimental rather than as reasonable fees.

Public broadcasting claims to need compulsory arbitration to be assured that the license agreements will continue. No other user of copyrighted musical works requires such a provision. In ASCAP's experience, when negotiations fail to produce agreement by the end of a license term, the talks are continued and the license is extended. Our extension agreements routinely provide for retroactive adjustment when new terms are agreed on. We have furnished copies of our extension agreements to the representatives of public broadcasting.

The compulsory arbitration suggested is unsatisfactory because the experimental license fees we were willing to accept are based on public broadcasting's representations of what it can now afford. Those representations were accepted in an effort to reach an agreement but they do not reflect an objective determination of the value of the right being granted. Arbitrators would inevitably use this initial, unobjective license fee as the standard for the next fee-surely an inequitable result given the genesis of the initial fee and the potential future growth of public broadcasting. The public broadcasters were unwilling to accept our proposal that we begin the agreement with an arbitrated fee and then provide for future arbitrations in succeeding terms.

This, indeed, is the present system--the federal court now provides assurance to public broadcasting that it will not be without a license to perfrom our members' works. We refer to the method of licensing and judicial review of reasonableness of license fees set forth in ASCAP's 1950 Amended Consent Judgment. That Judgment provides that any user who requests a license in writing is automatically licensed. It prescribes a mandatory negotiation period. If the parties fail to agree, the user may ask for judicial determination of a reasonable license fee by the United States District Court for the Southern District of New York. This mechanism has functioned efficiently for both ASCAP and users of copyrighted works over the past 25 years.

In sum, the compulsory arbitration demanded by public broadcasting is unnecessary, indeed it is redundant. Were public broadcasting to drop this demand, it is apparent that agreement would be reached which would satisfy all of public broadcasting's real needs.

We have recited this history so that the Committee will know how little remains to be done before final agreement is reached making this amendment wholly academic.

The chief reason given by public broadcasting for seeking this amendment is that the new copyright law would impose new liability on the public broadcasters. We believe this is a misstatement of the present law.

III. Under current law, public broadcasting is liable for copyright infringement without performance and synchronization licenses

A. PUBLIC BROADCASTERS PERFORM "FOR PROFIT" UNDER THE 1909 COPYRIGHT ACT Contrary to their repeated assertion that public broadcasters do not need performing rights licenses because they do not perform "for profit" under the 1909 Copyright Act, performances broadcast by the public broadcasters are for profit, Associated Music Publishers, Inc. v. Debs Memorial Radio Fund, Inc., 141 F. 2d 852 (2d Cir. 1944), was an infringement suit by a copyright owner against the

operators of radio station WEVD in New York. The station was operated by a nonprofit corporation for philanthropic and educational purposes. WEVD performed the plaintiff's copyrighted musical composition on one of its "sustaining" programs, on which there was no commercial advertising. (It also broadcast commericially sponsored programs.) The broadcaster claimed it did not infringe the copyright because it did not perform "for profit".

The court held the performance was "for profit", stating:

"The fees for advertising are obtained in order to aid the broadcasting station to pay its expenses and repay the advances to it by the Forward Association. The 'sustaining' programs are similarly broadcast in order to maintain and further build up the listening audience and thus furnish the field from which the paying advertisers may reap a profit. It can make no difference that the ultimate pur-. poses of the corporate defendant were charitable or educational. Both in the advertising and sustaining programs Debs was engaged in an enterprise which resulted in profit to the advertisers and to an increment to its own treasury whereby it might repay its indebtedness to Forward Association and avoid an annual deficit. The performance was for profit and the owner had the statutory right to preclude each and all of them [the defendants] from reaping where they had not sown." (at 855, emphasis added.)

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As in Debs, a sizable portion of public broadcasting revenues are contributed by corporate "underwriters". These "underwriters" advertise their sponsorship of programs broadcast by public broadcasters and receive good will and profit in return. There is no doubt that these "underwriters" are equivalent to sponsors of commercial broadcasters. There has, in fact, been a recent judicial finding to that effect.

In Rohauer v. Killiam Shows, Inc., 379 F. Supp. 723 (S.D.N.Y. 1974), a publictelevision station (WNET, New York) was held liable for copyright infringement. It broadcast a film without permission of the owner of the copyright. In discussing the liability of the program's corporate "underwriter", the Bowery Savings Bank, the court said:

"With regard to the liability of the Bowery Savings Bank, I should note at the outset that I attach no weight to its self styled role as an 'underwriter' rather than a 'sponsor' of the televised showings. Programs shown on educational television stations, such as Channel 13, do not have sponsors in the conventional sense; rather, a company which has contributed toward the presentation is. usually permitted a brief and rather sedate announcement of its contribution, which usually appears at the end of the program. Here, in addition, the entire 'Silent Years' series was extensively advertised in the press, on public buses, and in other media; all such advertising bore Bowery's name. It is also conceded that Bowery distributed posters bearing its name as well as a still photograph from the motion picture. Although Bowery was unable to engage in the crasser forms of self promotion to which commercial television has accustomed us, I find that its participation in the financing and promotion of the series qualifies it as a sponsor." (at 729–730, emphasis added)

The sedate type of announcement used to credit sponsors of public broadcasting programs is very similiar to the form used in radio's infancy. Typically, an announcement is made at the beginning and end of public television shows, stating "This program is made possible through a grant from the XYZ corporation". Compare this with the only announcements made at the beginning and ending of programs of radio station WOR in 1923: This is Radio Station WOR, a service of L. Bamberger & Co., One of America's Great Stores, Newark, N.J. Those announcements were held to make the station's performances of copyrighted music "for profit". M. Witmark & Sons v. Bamberger & Co., 291 F. 776 (D.N.J. 1923). The court said:

"Undoubtedly the proprietors [of Bamberger's] in their individual capacities have done and do many things of a public spirited and charitable nature on account of which they are entitled to the highest commendation. But it does not appear, and the court cannot believe, that those charitable acts are all labeled or stamped, 'L. Bamberger & Co., One of America's Great Stores, Newark, N.J.'" (at 779)

Public broadcasters perform copyrighted works in programs which they use to attract audiences, just as WEVD did in the Debs case. They use those audiences to gain financial support, through direct viewer and listener contributions and also through corporate sponsorship of programs. The corporate sponsors in turn derive profit from advertising and good will as in the Rohauer case. However viewed, these performances are clearly "for profit".

B. PUBLIC BROADCASTING HAS INFRINGED BOTH PERFORMANCE AND SYNCHRONIZATION RIGHTS BUT COPYRIGHT OWNERS HAVE EXERCISED FORBEARANCE IN THE EXPECTATION THAT AGREEMENT WOULD BE REACHED.

Clearly, the owners of copyrighted musical compositions could have successfully sued the public broadcasters for copyright infringement under the present law. They have not done so for two principal reasons.

First, public broadcasting can be said to have been in its infancy during the 1960's. Initially, public broadcasting stations had to struggle to become established. This paralleled the development of commercial radio, commercial television and each new user industry. Copyright proprietors have felt that infant industries should be encouraged in their development. ASCAP granted free licenses to commercial television networks and stations until 1949.

Second, as has been shown, negotiations between copyright owners and public broadcasting have been carried on almost constantly since the mid-1960's. Throughout that period, we hoped to reach agreement and therefore saw no reason to commence infringement litigation.

Our forbearance is, we think, evidence of our members' good faith and desire to aid public broadcasting. We believe the time has come for public broadcasting, now quite mature, to reciprocate and join all other users of copyrighted works by entering into reasonable license arrangements.

IV. Public broadcasting has grown and changed significantly in the past decade, and can be expected to continue to grow and to change

The public broadcasting industry has grown and changed so that a compulsory license is even more inappropriate today than it was when first proposed by public broadcasting in 1967.

A. THE PUBLIC BROADCASTING INDUSTRY NOW COMPETES WITH COMMERCIAL BROADCASTING AS A NATIONAL MEDIUM

In the early 1960's public broadcasting was universally known as "educational broadcasting". It consisted of local stations licensed almost exclusively to educational institutions, state school systems or school boards, whose purposes were correspondingly educational in nature: to expand or enrich the classroom experience.

The catalyst for change from educational to public television was the report of the Carnegie Commission on Educational Television, released in 1967. Its recommendations were central to the Public Broadcasting Act of 1967, which established the Corporation for Public Broadcasting to provide interconnection of the individual stations, develop outlets for national programming, and increase the support given to local stations.

CPB in turn established the Public Broadcasting Service to manage the interconnection service which became operational in late 1970. PBS not only serves as an interconnector of the stations, but also as a central coordinator between the stations and program producers. The radio equivalent of PBS is National Public Radio (NPR) which came into being in early 1971. Unlike PBS, NPR produces some of its own programs as well as coordinating other producers and local stations. See, generally, "The Story of Public Broadcasting", Broadcasting, November 8, 1971, pp. 30-36.

The difference between the number of educational broadcasting stations in 1965, and the number of public broadcasting stations in 1975, demonstrates the large and rapid growth of the industry. In 1965 the number of noncommercial educational television stations in operation was 103 and the number of noncommercial radio stations was 259. Today, there are 254 public television stations and 660 public radio stations in operation.

Public broadcasters clearly compete with commercial broadcasters for audience. They compete in other ways too: According to Broadcasting, August 19, 1974, "Public television stations in major markets are competing vigorously with commercial facilities to supply production and technical services for fee. Commercial broadcasters who helped furnish equipment and money for early development of educational TV are beginning to think they were had." In producing and duplicating programs for sale to schools and other users, public broadcasters also compete with companies engaged in marketing audiovisual material to the same buyers.

By developing a national interconnection service and a central program clear. ing house, public broadcasting now competes with commercial broadcasting on a

nationwide basis. Masterpiece Theatre, for example, reaches the same national audience as any commercial network programs.

B. THE PROGRAMMING OF PUBLIC BROADCASTING CONTAINS SUBSTANTIAL ENTERTAINMENT AND CULTURAL MATERIAL THAT COMPETES WITH COMMERCIAL BROADCASTING FOR THE SAME AUDIENCE

In its testimony before this Subcommittee in 1965, and before the Senate in 1967 see, generally, Hearings on H.R. 4347, H.R. 5680, H.R. 6831, H.R. 6835 before Subcomm. No. 3 of the House Comm. on the Judiciary, 89th Cong., 1st Sess., ser. 8, pt. 1 (1965)-hereinafter “The 1965 House Hearings" and Hearings on s. 597 before the Subcomm. on Patents, Trademarks, and Copyrights of the Senate Comm. on the Judiciary, 90th Cong., 1st Sess. (1967)-hereinafter "The 1967 Senate Hearings"), public broadcasting repeatedly stressed that it was providing an educational service to schools and homes by supplying instructional and educational programs. The claim that its educational programs were much different from the entertainment and cultural programs supplied by commercial broadcasters runs throughout the testimony. For example, William G. Harley, President of the National Association of Educational Broadcasting (NAEB), stated (1965 House Hearings, at 484):

"To impose commercial standards and restriction upon copyrighted materials used for educational purposes by educational stations would severely limit the effect of operation and development of these stations in the service of education.” (emphasis in original)

At the same hearings, Eugene N. Aleinikoff, chairman of the Joint National Educational Television-Educational Television Stations Committee on Music and Copyright, stated (at 486–487):

"... let me make clear exactly what ETV [educational television] stations are and the nature of the educational programing they broadcast. . . . ETV stations broadcast television lessons for the local schools from 9 a.m. to 3 p.m. every day. The late afternoon is usually devoted to teacher-training courses and programs for children. Evening programing is divided between adult education and community topics, supplemented by broader documentary and cultural programs provided by National Educational Television and other regional organizations. Whatever its source, this adult programing is invariably selected to inform and enlighten an interested and engaged audience, rather than merely to entertain or pass the time of a mass audience. Exhibit 'C', which is also attached, is a statement of the average weekly schedule of the ETV station operating at the University of North Carolina. We thought the committee would be interested in seeing a weekly schedule to examine exactly what kinds of programs are broadcast by a university station."

The weekly schedule Mr. Aleinikoff referred to as "Exhibit C" is appended to our statement as Exhibit A.

To paraphrase Mr. Aleinikoff, we think the Subcommittee will be interested in comparing a current weekly schedule of the same station, which is attached as Exhibit B, with the 1965 schedule.

In 1965, during the school day (9 a.m.-3 p.m.), Station WUNC-TV broadcast such programs as "U.S. History: 11th grade level," "Physical Science: 9th grade level," and "World History: 10th grade level." During the week of June 21-27, 1975, the only programs broadcast during the school day were "Sesame Street," "Mr. Rogers" and "The Electric Company." Certainly, these fine programs are aids to education. Our point, however, is that they are nationally produced and distributed programs. Public broadcasting can no longer allege any difficulty with copyright clearances and payments for such programs. (Indeed, Children's Television Workshop, producer of "Sesame Street" and "The Electric Company," is ASCAP's neighbor, one floor below us at One Lincoln Plaza.)

A comparison of the late afternoon programming is also revealing. For example, the 1965 Wednesday afternoon schedule included "Methods for Modern Teachers," "Lip Reading" and "College Credit Course: First Year Algebra." In 1975, the 3-6 p.m. time slot continued to be filled by "Sesame Street," "The Electric Company" and "Mr. Rogers."

But most revealing is a comparison of the evening programming, which Mr. Aleinikoff in 1965 described as "adult education and community topics supplemented by broader documentary and cultural programs . . . selected to inform and enlighten, . . ., rather than merely to entertain or pass the time of a mass audience." The weekday evening programs in 1965 included "Public Affairs," "Encounter-discussion program," "The French Chef," "Landscaping Your Home," 57-786-76-pt. 2—17

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