Every operator, no matter how many jukeboxes he maintains, must have a service truck. As a result, he has to pay the cost of purchasing the truck and maintaining it-by buying gasoline, oil, repairs, tires, and insurance. Competition is high in the jukebox business. In order for the operator to keep his machines in his best locations and to satisfy the location owners, he should replace at least 25 percent of his machines each year. But the operators in North Carolina are only able to afford buying four or five new jukeboxes each year. Even though they only purchase four or five machines each year, this costs them around $4,500 in new machines every year. Then, just like automobiles, jukeboxes lose their value quickly. Each machine depreciates about $250 the first year and $150 each of the next several years. An additional expense is the maintenance of the jukeboxes. The operator is constantly replacing worn parts, including light bulbs and needles. Also, there is the problem of vandals breaking into a jukebox and taking the coin box. This is a common occurrence. Some operators have as many as three or four break-ins a week. Often, it costs as much as $25 to repair a jukebox after it has been broken into in that manner. It is too expensive for jukebox operators to buy insurance to protect their machines. In the case of vandalism or fire destroying a jukebox, the operator must absorb that expense as part of his operating expenses. Also, the jukebox operators have local taxes to contend with. In North Carolina an operator must annually obtain a $100 operator's license and pay, for each of his machines, a $10 State tax, a $5 city tax, a $5 county tax, and a county personal property tax of approximately $10. In South Carolina, each operator annually pays on each one of his jukeboxes a $25 State tax, a $12.50 city tax and a $12.50 county tax, plus the property tax. The jukebox operator must pay all these expenses from his $9 revenue and hope to have a fair salary and profit. Section 116 will have a substantial impact on the jukebox operations in the Carolinas. As I mentioned, it's all one man can do to handle 40 to 50 machines properly. He cannot afford the time to keep any books other than the bare minimum required by the Federal Government for income tax purposes. He must attend to every one of his machines at least once a week to replace records, empty the coin box, and make repairs. In addition he must find time to make new contacts for locations to place his jukeboxes. Section 116 will have a very substantial impact on these one-man operations in North Carolina. Section 116 demands these operators maintain extraordinary records, above and beyond that which the operator normally keeps. According to section 116 the operator must maintain a detailed inventory of all selections on all his machines. Since the operator changes eight to 10 selections on every machine every week, there must be a running inventory to keep abreast of the status of records in each machine. In order to take this inventory properly, each one of these one-man operators must hire a man to accompany him on his routine calls. This employee would have to follow the operator around as he changed selections, and record the selections removed, the selections installed and the date on which the replacement occurred. Hopefully, this employee could perform all the other requirements of section 116, such as calculating the royalty due each copyright owner each quarter, preparing the quarterly and annual reports, and filing the applications for certificates. Taking on this additional employee will cost the one-man operator roughly $100 a week or $5,200 a year. It is obviously clear that the operator could only afford this additional cost by raising the prices he charges per play. It is questionable whether the market could stand an increase. The operator's burden would be relieved somewhat if he were to pay a royalty only on the selections purchased each quarter. However, that, too, would be an additional bookkeeping burden on the jukebox operators in the Carolinas who on the average retain only a minimum of records. Aside from this, there is the significant problem as to whether or not the average operator would be able to cope with the requirements of section 116. Many jukebox operators are not really smart enough to fully understand section 116, let alone comply with it. For example, take the seemingly simple requirement in subclause (b) (1) (a) which requires that an operator must record a statement with the Register of Copyrights every time a jukebox is placed in an establishment. Consider that requirement in the following context. It is often necessary for an operator in North Carolina and South Carolina to change a machine from location to location throughout a quarter in order to determine the best location for that machine. An operator may move four or five of his machines as many as three or four times each quarter as a result of the opening and closing of locations in which jukeboxes are kept. Some of the locations are marginal locations where, as they go out of business, the jukebox operator must remove his machine and place it in another location, if one can be found. Otherwise, the jukebox is stored until a suitable location can be fouund. Also, generally each location owner wants a new jukebox in his place every year. If the location is good, the operator has to comply in order to keep that customer. Then, in turn, the replaced machine is moved to a less desirable location, the machine in that location is moved to an even lesser desirable location and so forth. At each one of these changes of location, the operator is required to file a new application with the Register of Copyrights. This requirement appears to be an impossible burden on the operator. In conclusion, in my opinion, section 116 would lay an overwhelming financial burden on jukebox operators in the Carolinas and throughout the country. The average operator in North and South Carolina cannot afford to hire another employee at a cost of more than $5,000 per year to do nothing but maintain inventories of selections. Section 116 is impractical not only from the financial viewpoint but also from the standpoint of complexity. I sincerely doubt whether some jukebox operators have the ability to understand and comply with section 116. For these reasons, I suggest that substantial changes be made to section 116 to reduce the financial burden and to eliminate its complexity. Senator BURDICK. Thank you for your statement. The next witness will be Robert E. Nims of the National Small Business Association. STATEMENT OF ROBERT E. NIMS, NEW ORLEANS, LA., REPRESENTING THE NATIONAL SMALL BUSINESS ASSOCIATION OF WASHINGTON, D.C.; ACCOMPANIED BY HERBERT LIEBENSON, LEGISLATIVE DIRECTOR, NATIONAL SMALL BUSINESS ASSOCIATION, WASHINGTON, D.C. Mr. NIMS. Mr. Chairman and gentlemen of the subcommittee, my name is Robert E. Nims. I am the owner and operator of A.M.A. Distributors, 1711 St. Charles Avenue, New Orleans, La., who distribute and operate coin-operated phonographs in Mississippi and Louisiana. I appear here both individually and as a representative of the National Small Business Association of Washington, D.C. I am accompanied by Mr. Herbert Liebenson, legislative director of the National Small Business Association. I appreciate the opportunity to appear before your committee. I wish to submit my full statement for the record. Senator BURDICK. It will be so received without objection. Mr. NIMS. I appear here in opposition to section 116 of S. 597 and similar provisions in related bills that would remove the exemption for coin-operated phonographs from the copyright law. Just a few days ago Senator Smathers, a member of the full committee and chairman of the Senate Select Committee on Small Business, indicated his concern as to what the Federal Government is doing to cushion the impact of a recession on the Nation's small businessmen. The U.S. News & World Report of March 6, in commenting on the impact of the new minimum wage law, said: Changes in the federal minimum wage, just weeks after taking effect, already are having an impact on businesses across the U.S. Workers in scattered areas are being laid off, and work hours cut back as employers try to avoid overtime pay. Many companies say their profits are squeezed as labor costs rise. Prices on a wide variety of goods and services are going up. Every sign indicates, further, that other far-reaching effects lie ahead ***. Increases in the minimum-wage rates alone tell only part of the story. Employers, in many instances, are finding that they must raise salaries up and down the line to maintain traditional pay differentials. The survey showed this Hospitals, farms, small stores, restaurants and other retail and service establishments are hardest hit ***. In addition to this there were new increases that employers had to pay in social security, and additional increases are being studied now by the Ways and Means Committee of the House. Now before you is S. 597. Sections 115 and 116 discriminate against my business. To justify such a raid on the income of my business by third parties, with the sanction of the Federal Government, you will hear testimony from the American Society of Composers, Authors, and Publishers, and from Broadcast Music, Inc. These two organizations no doubt will stress that the copyright law, as passed in 1909, did not anticipate the growth of coin-operated phonographs. On the other hand I submit that: (1) Congress did not anticipate the inventions of radio and television, and (2) That fairness, in light of the changed conditions, the changed market, and the means of developing that market, requires a decrease. not an increase, in the compensation of the composer and publisher. According to the previous testimony given before committees by ASCAP, it is evident that ASCAP has no real knowledge of the jukebox industry, or if it does, it has purposely tried to paint a distorted picture. THE DEVELOPMENT OF THE MARKET Tin Pan Alley no longer exists. The function of the publisher in 1909 was to be a good judge as to the commercial possibility of a song, publish it, then plug it through having the composition sung or played. There as an element of risk since his income would be derived from sheet music sales. Today the publisher takes little or no risk. He publishes the song, as a matter of practice, only after a demand has been created by radio stations and through music boxes. The sales of sheet music today in great part are made to serious musicians, school and church choral groups, and bands. The publisher is, and should be, protected on those sales. The publisher contributes little, if any, to the success of most songs played today in coin-operated phonographs. Popularity depends largely on The recording group; The record company; The amount of promotion; The arrangement of the tune; and The electronic marvels, the echoes, beeps, whines, and rumblings, that are achieved by the recording studio engineer. The tipoff is that in the music business today you rarely hear, "What a great song." The usual comment is "What is a great record.” How can the publishers justify receiving royalties on all recordings placed in a coin-operated phonograph when in fact very little of the music played in today's jukebox will ever be published? Should there be protection above the current law for music that is popular today and forgotten forever tomorrow? There should be no concern that genius will be unrewarded. The present law grants statutory copyrights for 28 years and allows owners to extend the copyrights for another 28 years. For this reason, an Irving Berlin or a Cole Porter of today and tomorrow do not have the problems of the Stephen Fosters of yesterday. A wise Congress has provided protection for them. Composers, with merit, quickly become wealthy. But for their own selfish reasons there is an effort being made now by the ASCAP's and the BMI's to sell this Congress on an analogy between the lasting creations of a Richard Rodgers and the outpouring of wailings from today's jukebox. This takes some courage. But the bootstrap they employ simply is not strong enough. Oh, well. That's show biz. Fundamental questions for this committee are who are the real composers of the hit records being played, and what real service are publishers giving toward the popularity of these hit records for which they are receiving millions of dollars a year? I appreciate the cooperation of the chairman in granting me permission to play a few bars of a couple of numbers. The first is from Lerner-Loewe's creation of "My Fair Lady." (At this point a recording of a selection from "My Fair Lady" was played.) Mr. NIMS. That song is "On the Street Where You Live" and I am sure that everybody recognized it. ASCAP would like you to believe that the jukebox industry is a big market for this truly artistic composition, but the real truth is that this type of music is really not a factor in the coin-operated phonographs of today. For comparative purposes I will play a few bars of the record that was No. 2 on the list of top hits for 1965, a record typical of today's record industry, a record that sold well over 1 million copies. (At this point a recording of "Wooly Bully" by Sam the Sham and the Pharohs was played.) Mr. NIMS. The words of "Wooly Bully" are: Mattie told Hattie About a thing she saw. A great big bully With a wooly dog. Wooly Bully, Wooly Bully Wooly Bully, Wooly Bully, Wooly Bully Mattie told Hattie Let's not take no chance Get yourself a bully Learn to do the dance Wooly Bully, Wooly Bully Wooly Bully, Wooly Bully, Wooly Bully. The recording artist of this gold record told a nightclub audience: I think the reason this record sold so many copies is that nobody can understand the words. I am sure you have heard enough of "Wooly Bully." I am not presenting a distorted picture. As part of my statement I am attaching a copy of page 50 from the trade publication, Cash Box magazine, dated December 24, 1966, listing the top records of the past 4 years according to an independent annual yearend survey. Except for three or four songs and two or three revivals of former "standards" of 25 or 30 years ago, this compilation substantiates my testimony as to the manner in which the market is developed today and the function of the publisher. For example, let us examine the top 10 hit records for 1965. They were: "Back In My Arms Again"-The Supremes "Wooly Bully"-Sam The Sham & The Pharohs "Mr. Lonely"-Bobby Vinton "I Can't Help Myself"-Four Tops "Satisfaction"-Rolling Stones "You've Lost That Lovin' Feeling"-Righteous Brothers "Come See About Me"-The Supremes "The In Crowd"-Ramsey Lewis "You Were On My Mind"-We Five I'm sure that you did not recognize the names of more than one or two. Of the top 10 records here are the lyrics of the No. 1 song of 1965, "Back In My Arms Again," by the Supremes: |