The bill would also require these royalties to be paid on all the records manufactured, which is directly contrary to the industry-wide practice that has required record producers to pay such royalties only on records sold. 2. The record industry fully supports Senate Amendment 131 which would retain the present system of royalty payments by record producers to music publishers. 3. We submit and vigorously contend that the music publishers and composers have not demonstrated any economic need or justification for the drastic departures from current industry practices, contained in Section 115 (c) (2) of S. 597. 4. Time and time again, the music publishers have been requested by the record industry, by the Copyright Office and by the House Judiciary Subcommittee to present their profit figures, and as House Report No. 83, dated March 8, 1967, cryptically states: "This the publishers declined to do ***” (p. 71). We submit that the publishers' failure to disclose their figures, is fatal to their demands for more money from the record industry. 5. On the other hand, the independent and objective Glover survey made by members of the Harvard Graduate School faculty, of the profits, costs and return on investment of the record industry, and the testimony of representatives of the record industry on March 21, 1967, demonstrate that the record industry is highly competitive, extremely risky, and without corresponding profits. For example, in many cases, 5 out of 6, or often as many as 9 out of 10, single "popular" records and more than half of all" popular" long playing albums released, the record producers lose money. (Livingston, pp. 3-4) In 1964, for example, 80% of all record releases lost money (although the music publishers still received royalties on them), and that the net profits of record companies, after taxes were 1.7 %, a drop from 3.6% earned in 1955. In 1955, the return on net worth was 5.5% and in 1964 it had gone to 3.8%; as contrasted with the average return on invested capital in all industries of 9.4%. In further contrast, between 1955 and 1964, the percentage of the record sales dollar payable to the music publishers increased from 8% to 11%, (Arnold, pp. 6-7) 6. To establish once again that the present statutory royalty rate is the actual royalty rate paid by the record industry to the music publishers, the firm of Brach, Gosswein and Lane, Certified Public Accountants, New York City, has reported the results of their survey as follows: During the calendar year 1966, 96% of all licenses (other than for such appar ent exceptions as premium or budget line and record club releases) were obtained at the full statutory royalty rate. 7. In contrast, the music publishers and composers, to our knowledge, hare failed to produce for this Committee any financial data to support their claims for more money from the record producers, or to show that they are underpaid. or to show that their rate of return is as low as, or lower, than the record producers. 8. Before describing the impact on the music industry and the consumer of any increase in royalty rates to be paid by the record industry to the publishers, it should be first noted that S. 597 is heavily weighted in favor of the music publish ers and composers and, of course, their performance collection agencies: ASCAP, BMI and SESAC. There is no corresponding benefits to the record industry. S. 597 greatly increases the monetary benefits now accruing to publishers and composers from sheet music, radio and television broadcasts, background music, motion pictures and live presentations on and off Broadway and on the campuses, in nightclubs and the like By extending the term of copyright to life plus 50 years; By providing for new sources of royalty payments from juke boxes and CATV; and By increasing the amounts of monetary penalties and damages for infringements. 9. Now it may be only human nature for the objects of this proposed legislative bounty to ask for more, and more, and more, but in the complete absence of any economic justification, it is difficult for the record industry to understand— How S. 597 arrived at the increased royalties to the music publishers; or The basis for the statement contained in the House Committee Report that such increases to be imposed on the record producers represented a “com promise" (p. 74). 10. I believe that years ago, the publishers and composers shared the record royalty on a 66-33% basis; now it is 50%-50%. Perhaps there is still an inequitable division between them. But, we submit that the adjustment should be resolved between them and should not be resolved by increasing the rates now paid by an already economically troubled record industry. 11. The record industry has been appropriately referred to as one experiencing "profitless prosperity". (McCracken) The proposed increases in the statutory payments by record producers to the music publishers, from 25% to 100%, must and will have a grave impact on all segments of the music economy and on the con sumer: Many small and marginal producers will go out of business. The economic health and vigor of many other financially less well producers will be drastically curtailed. The effect will be to concentrate the record industry in the hands of fewer, larger and stronger financed companies. There will be fewer recording opportunities for new composers and other talent. The recording of classical music will be seriously curtailed which even under present rates is recorded and distributed at a loss in 87% of the releases. (Glover: Davis) There will be less employment for musicians. The consumer will suffer. He will purchase less music for his dollar and certain types of music will become unavailable to him. 12. These predictable results will negate the effectiveness of the compulsory licensing which has worked so well in the past and has been endorsed on that basis by the House Committee. 13. We submit that there has been a lack of candor by the publishers and composers: This group has not established any economic need for their demands for more royalties from the record industry. Moreover, the Head (Mr. Lane) of the Composers Guild, has publicly stated (New York Times, August 8, 1966): "Years ago, a publisher bought a song, plugged it and got it published, in the eventual hope of getting a record. Now, a song is nothing without a record at the start". Mr. Lane did not refer to that statement in his testimony before this Committee on April 12, 1967. That statement was made by him at the time of contract negotiations between the composer and publisher associations. The statement is clear enough. He was telling the publishers that their share of the royalty "take" from the record companies was out-of-line, Yet the composers align themselves with the publishers. and before this Committee Mr. Lane characterized the claims of the record companies as "self-seeking nonsense". (p. 7). 14. We submit that our presentations to this Committee and Mr. Lane's public admission that "a song is nothing without a record at the start", fully support those provisions of Senate Amendment 131 which Would retain the schedule of royalty payments now made by record producers to music publishers; and Would base these payments on the quantities of records distributed-the current practice-and not on the basis of the number manufactured. Senator MCCLELLAN. Thank you very much. This concludes the session today. Before we recess, the Chair will make a brief closing statement. The subcommittee has now concluded 17 days of hearings on copyright law revision. We have heard 149 witnesses. In addition, many statements have been submitted for inclusion in the record. Approximately 100 proposed amendments have so far been suggested for the consideration of the subcommittee. Last week I was requested by Dr. Donald Horning, Director of the President's Office of Science and Technology, to have the subcommittee hear testimony from Government agencies concerning the impact of this legislation on the use of computer systems. I agreed to that request. The subcommittee will conduct a 1-day hearing on that issue. I am not in a position today to announce the date of that session. It will, however, be scheduled on as early a date as our other work will permit. In order to permit the staff to prepare the lengthy transcript for printing, the hearing record will close on May 10. This was previously announced by cochairman, Senator Burdick. The forthcoming hearing on the computer question will be printed separately and interested parties will be afforded an opportunity to file written statements. Although the formal hearing record will close on May 10, it may be that when the subcommittee undertakes a study of the record, a need will develop for additional information on certain questions and issues. I cannot predict when the subcommittee will be able to act on this legislation. We will proceed with reasonable diligence, but because of the significance and the complexity of this measure, it will obviously require considerable time before the committee can likely report a bill. equ I want to take this occasion also to thank Senator Burdick for having cooperated with the Chair and having consented to cochair and for having cochaired these hearings with me. Otherwise, these hearings could not have progressed and we could not have expedited them as well as we have, because the burden of my work would not have permitted me to have been present and held hearings on each of the 17 days. I want to especially thank the staff, Mr. Brennan, and Mr. Williams and others of the committee staff, for their excellent work in organizing these hearings and keeping them in order so that they would run smoothly. I think we have accommodated most everyone who wanted to be heard, have we not? Mr. BRENNAN. Yes, we have, Mr. Chairman. Senator MCCLELLAN. We have accommodated them, either by listening to them or by according them space in the record to insert a statement. I made a statement during the course of one of the witness' testimony that this is a complicated piece of legislation. The answers to what is right, what is equitable, what is fair and what is just, in connection with the many different problems is not going to be easy to find. But the committee will. It has no desire on earth, is motivated by nothing else in the world except to bring out the best copyright revision bill that it can. We will try to do it. I want to thank all of the witnesses for their courtesy. Most of you have presented excellent statements from your point of view in support of the position you have taken. Thank you very much. The committee is adjourned. (Thereupon at 4:50 p.m., the hearings were closed.) APPENDIX U.S. SENATE, Hon. JOHN L. MCCLELLAN, COMMITTEE ON AGRICULTURE AND FORESTRY, April 24, 1967. Chairman, Subcommittee on Patents, Trademarks, and Copyrights, Senate Judiciary Committee, Washington, D.C. DEAR JOHN: I understand your Subcommittee is scheduled to hold hearings on the Copyrights bill on Friday, April 28th and that testimony will be received with regard to Senator Williams' amendment. I would like to bring the enclosed letter to your attention and ask that it be made a part of the official record of the hearing. Sincerely yours, Enclosure. Senator GEORGE D. AIKEN, U.S. Senate, Washington, D.C. GEORGE D. AIKEN. RADIO STATION WBTN, Bennington, Vt., April 22, 1967. DEAR SENATOR AIKEN: On the whole we have no particular objection to bill S. 597-the copyright bill. However, please object strenuously to the amendment proposed by Senator Harrison Williams, D-New Jersey. If this amendment should pass requiring broadcasters to pay a fee to record companies and performers each time a record is played, we'd either have to hire a squeaky country/western group or might go out of business with high fees. The present situation on fees is bad enough without making it worse! We feel sure you will use your good influence to see that this amendment is not considered. As you already know radio stations over our nation give wide exposure to performers by playing records on the air and as performers they now receive two fees-one when a record is pressed and a second based on sales. According to comments from NAB, if adopted, this amendment would more Best personal regards to both you and your great assistant Lola. Chairman, Subcommittee on Patents, Trademarks, and Copyrights, Senate Judiciary Committee, Washington, D.C. DEAR JOHN: I am in receipt of the enclosed letter from the Vermont Association of Broadcasters with regard to copyright revisions. I request that this letter be made part of the official record of the hearings on S. 597. Sincerely yours, Enclosure. GEORGE D. AIKEN. VERMONT ASSOCIATION OF BROADCASTERS, May 6, 1967. Hon. GEORGE D. AIKEN, U.S. Senate, Washington, D.C. DEAR SIR: The Vermont Association of Broadcasters oppose "Williams performer rights amendment", to copy right bill, but do not, oppose S. 597 itself if properly clarified. We urge rejection of "Williams amendment" and clarification of CATV provisions of S.597. Very truly yours, VINCENT J. D'ACUTI, President. U.S. SENATE, COMMITTEE ON APPROPRIATIONS, May 18, 1967. Hon. JOHN L. MCCLELLAN, Chairman, Subcommittee on Patents, Copyrights, and Trademarks, Committee on the Judiciary, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: Enclosed is a copy of a letter which I recently received from a constituent regarding copyright legislation. My constituent has made a number of suggestions regarding the copyrighting of scientific papers and publications. It would be very much appreciated if you could have his suggestions made a part of the hearings, and that you give every consideration to Mr. Alldredge's suggestions. Best regards, Sincerely yours, Enclosure. Subject: Copyright Law. Washington, D.C. GORDON ALLOTT, U.S. Senator. ALLDREDGE & MCCABE, Denver, Colo., May 2, 1967. SIR: The April 17, 1967 issue of Chemical & Engineering News carried this note: "The House last week approved the first revision of the copyright law since 1909 by a vote of 379 to 29. The bill goes to the Senate where hearings on a similar bill have been under way for several weeks. H.R. 2512 makes many changes in the copyright law and attempts to settle the long-standing controversy over how much copying teachers and libraries may do by applying the doctrine of fair use to such cases. In determining fair use four factors should be considered: the purpose and character of the use, the nature of the copyrighted work, the amount used in relation to the whole, and the effect of the use on the potential market for or value of the work." I understand that this law is going to extend the copyright-protection period and that the American Chemical Society officials may favor this. I am a longtime member of the Society, and I do not favor this. The copyright-protection period on non-technical publications is of no concern to me although it does seem unnecessary to extend it beyond the present 27 years, because the creator of the written work rarely personally benefits beyond that period. But all scientific papers and publications should be protected for very short periods in order to accelerate the dispersal of scientific knowledge. My suggestions are 1. Magazine articles should receive no protection as concerns Xerox or Verifax copies for up to 10 copies so that research workers in the field could communicate with each other immediately. 2. Magazine articles should receive no protection on "Article" or "Articles" reprints after 6 months so that industrial and research organizations could bring new scientific knowledge to the attention of entire segments of industry. 3. For reproduction as microfilm and micro-cards all scientific periodicals should be free of copyright protection after 3 years. |