I turn next to educational television. Copyright proprietors have cheerfully made substantial concessions for the benefit of educational broadcasting. Educational television already serves 135 million people and is on the brink of a fantastic development, which will be financed by the Federal Government and our great foundations and universities. Every citizen-BMI included-welcomes the gerat services that educational broadcasting is presently performing and the two greater services it will perform in the future.

Educational broadcasters have no problem in clearing the performing rights of musical compositions. The machinery for such clearance is available and is being utilized by music users of every class and size. There is no reason, therefore, why educational broadcasters should seek so greatly to extend the exemptions in the bill.

I might say that BMI, like ASCAP, has arrived at a practical arrangement with the educational television network. What the educational broadcasters ask for is to be completely relieved of the duty of paying the author for the use of his works on "closed circuit" instructional broadcasting of statewide and, indeed, nationwide scope. There are already 1,100 closed-circuit educational systems in operation. While educational television uses every type of music, it is a prime market for so-called serious music, some of it written especially for educational purposes. Mr. Avery Claflin, testifying on behalf of the American Composers Alliance before the House subcommittee last spring, pointed out that educationl broadcasting of a serious composer's work may "form a large percentage-possibly the total—of all of his broadcast performances."

The author and the disseminator form an inevitable and indispensable partnership. Without the writer, there is nothing to disseminate. Without the disseminator the works do not see the light of day. Such extensive uncompensated broadcasts as the educational broadcasters contemplate would destroy a prime market for the works of many composers and would dry up a source of material crucial to education itself?

BMI regards section 111 as the core defect in an otherwise acceptable law. The section goes far beyond CATV and applies not only to radio and television as they are today and as they will be developed by the satellite and other devices, but to all forms of transmission and retransmission. If testimony is to be taken with respect to this section, BMI requests permission to testify. If statements are to be received BMI requests permission to file a statement.

One of the proposals of the educational broadcasters is modeled in part on section 111. The educational broadcasters are willing to accept full copyright liability for infringing performances of plays, dances, pantomimes, and motion pictures. They seek to discriminate, however, against the composers of musical and the authors of literary works. The remedies of injunction, impounding and damages, among others, and the penalties for willful infringement which are available to the person who sets a dance or a pantomine to a musical composition are not available to the original composer. As the proposal is couched, the composer and author would have no practical remedy. There is no justification for this discrimination, which can be made clearer when it is appropriate to discuss or to write about CATV.

When I listen in the evenings to channel 13, the excellent educational station in New York, I often hear the same music in the same context as on commercial stations. There is no difference to the ear or eye. In most countries of the world all broadcasting is nonprofit, usually governmental. Logic does not call for the granting of special privileges to a type of broadcasting which forms the pattern of so many countries.

I turn now to the proposed amendment which would entirely exempt from payment all performance of music taking place at any fair or agricultural or horticultural exposition which is governmental or otherwise nonprofit in purpose.

Of course, all such fairs are exempt under the bill now, even if they charge admission, if the proceeds are used solely for educational, religious, or charitable purposes-unless the fair pays fees to the performers or promoters of the musical entertainment at the fair. A fair that uses town, high school, military, or college bands or other musical entertainment which is not paid is entirely exempt under the bill.

I am sure that the wonderful people who run these fairs would never dream of suggesting that they should have the right to confiscate any other type of property. There is unfortunately something in the intangible nature of works of the mind which makes nice people forget that authors have to eat, too. They forget that the musical performers, whom it is apparently profitable for them to pay, would be useless if they did not have music to perform.

It is interesting to see what may have triggered this proposal. Commencing early last year, BMI diligently negotiated with the National Association of Fairs and Expositions. By the end of June an agreement was worked out with the association, the acceptance of which the association recommended to its members. This is the agreement which BMI then tendered to the fairs. Obviously, no one was bound by the recommendation. Equally, BMI is perfectly ready to reopen the discussions since it always wants to try to satisfy its potential customers and to clear up possible misunderstandings.

I must note, however, that what the contract calls for is a payment of nine-tenths of 1 percent of what the fair pays for musical talent. If the fair pays nothing for musical talent, it pays nothing to BMI.1 If fair pays $1,000 for musical talent, it pays $9 to BMI. Surely the laborer is still worthy of his hire. Surely a fair that finds it profitable to engage profesional musical talent can afford to pay something to the composers of the music which will be performed.

It seems clear to me that the advancement of agriculture is an educational purpose within the meaning of the bill. If the persons who operate fairs have any doubt as to this, BMI certainly has no objec tion to the addition of appropriate language which would clarify the point.

As a devoted vegetable gardener, I hold the nonprofit fair in high esteem. I must concede, however, that the concerts of nonprofit symphony orchestras and many other performances which pay musical entertainers have equally praiseworthy objectives. To grant an exemption to fairs would subvert the principles and purposes of the copyright revision bill in many areas.

1 If it operates a public dancehall, it pays a minimum of $5 a day.

I trust that you will prevent these unjustified erosions of the copyright revision bill from taking place. I trust that you will reconsider the very basis of section 111.

One must feel sympathy with the subcommittee in struggling with a bill which in many respects must seem complex and abstruse. Underlying the copyright law, and forming a touchstone, however, is a fundamental moral precept. It is that no one should profit from the labors of another man without compensating him.

I am deeply grateful to you for giving me this opportunity to appear before you.

Senator BURDICK. I just have one question.

On page 7 of your statement, at the bottom of the second paragraph, I find the following sentence:

"Obviously, the MOA proposal calls only for the voluntary payment of nominal amounts."

Mr. KAYE. Yes, sir.

Senator BURDICK. Would you call the payment of income tax a voluntary payment?

Mr. KAYE. No; the payment of income tax is enforceable.
Senator BURDICK. That is right.

Mr. KAYE. Let us view what purchase of record would mean.

Senator BURDICK. Just a minute. I want to follow up the question. Mr. KAYE. Pardon me, sir.

Senator BURDICK. As I recall the MOA testimony, they want to file a statement with penalties attached very similar to the filing of income

tax.

Mr. KAYE. They are proposing to pay $4

Senator BURDICK. I am not talking about the proposal, I am talking about the manner in which they were certified, which would not make it a voluntary payment; would it?

Mr. KAYE. Sir, you have to view the proposal in the amount of money that it would produce and the difficulty there would be in checking those reports. Now, in the first place, it would produce at the most. $4 a machine a year. You get a statement in which the man says, "I bought the following records." Let us assume you have the power of subpena. You cannot see the records that are in the machine. In some machines you can see the rim of the record; and others the record is entirely invisible.

Senator BURDICK. Cost of records is also part of his 1040.

Mr. KAYE. He does not itemize the payment for records, sir.

Senator BURDICK. This is a business cost he will file with his 1040 return every year.

Mr. KAYE. All I can say is when the operators buy their records at the retail store, in the "one stops," it is the manufacturer who will pay the excise tax deduction. The operator may include some amount for the general purchase of records in his income tax return but he will never identify the records.

I tried to describe what we had to do. Under this bill the mere listing of a record would not be evidence that it was a copyright infringement. You would have to sit there and buy beer or Coca-Cola until you heard the record performed before you could go after him. As the bill is drawn now he would have 30 days in which to pay you 2 cents for the record, although it would cost you $10 or $15 to make the investigation.

Now, I think they intend to improve that bill, Mr. Chairman, and at that point, they may have a more enforceable bill on which we would like to comment.

Senator BURDICK. We have not as much time as I would like to pursue this with you on a legal basis. We might use the argument that any record in a machine is presumed to have been played. The other party would have the right to rebut the assumption.

Mr. KAYE. That is what this bill says, but it is not on what the MOA proposal says. You have struck on one of the things that has to be done.

Senator BURDICK. This is getting a little out of the pasture, but I really meant to ask you whether a signed statement is a voluntary payment. That is all.

Mr. KAYE. In some Latin countries, I am told, in the past there were inadequate penalties and investigative procedures in income tax. In those countries, the income tax became pretty voluntary for the rich. We avoid that here.

Senator BURDICK. I know a few who would take serious issue with you as to whether it is voluntary or not.

Mr. KAYE. I am sorry, sir.

Senator BURDICK. Senator Fong?

Senator FONG. As I understand your argument, you are for a system of negotiation rather than compulsory licensing, is that correct? Mr. KAYE. Precisely so, sir.

Senator FONG. You feel this is a property right like all other property rights, that the parties should negotiate for what the traffic can bear?

Mr. KAYE. Exactly, and for a fair rate, and we would welcome the supervision over that of any governmental body or representative.

Senator FONG. Now, the payment of 2 cents a record is, to you, a compulsory license, or is that negotiation?

Mr. KAYE. Well, as soon as you put something in the statute which fixes a price, that is then compulsory licensing, rather than negotiation; yes, sir.

Senator FONG. And this bill contains a compulsory license as far as the manufacturer is concerned?

Mr. KAYE. It contains the complex provisions setting a compulsory license and a ceiling of $19.20 a year. If negotiation failed, we would be ready to accept that, although we consider the amount inadequate. We would prefer what you first said, Senator Fong, a bill which simply repealed the provision and left it to bargaining between all parties.

Senator FONG. In all phases?

Mr. KAYE. In all phase, sir.

Senator FONG. Now, you represent the BMI. Could you give us the difference between the BMI and the MOA in its objectives?

Mr. KAYE. Yes. Broadcast Music, Inc., is a corporation which acquires performing rights from writers and publishers. It acts as a licensing agency to broadcasters, hotels, restaurants, to everybody who uses music, and divides the money up between the publishers and writers who are affiliated with it. It is therefore a licensing agency. The Music Operators of America is a trade association which represents the coin-machine operator. It does not license rights and it

would not pay for rights. It represents them generally here in Washington and elsewhere, just as other trade associations legitimately and properly represent other industries.

Senator FONG. Does BMI represent writers?
Mr. KAYE. Yes, sir; writers and publishers.

Senator FONG. Now, the money that you collect, do you divide the money between the publishers and the writers?

Mr. KAYE. That is right. We use as a standard-the main standardof our distribution a very elaborate system of sampling broadcasting stations and counting the performances and a system of taking a census of the network performances, and on the basis of that, we divide the money.

Senator FONG. I see. So if a person is a popular writer, and his song is used continuously, you take a census of the number of times his song comes over the air or it has been played in a jukebox-well, not the jukebox. If this were to be enacted, then you would take the number of times his record is played on the jukebox.

Mr. KAYE. It would not be a census, sir, it would be a sample. We take a census of the network, but it would be impractical to take a census of over 4,000 broadcasting stations. It would cost so much money we could not divide it up. But we take a scientific sample, which was devised by Professor Lazersfield of Columbia University.

Senator FONG. That sample is used in the disposition of the revenues?

Mr. KAYE. Yes, sir.

Senator FONG. Can you give us an idea of why the publishers should be included in this?

Mr. KAYE. The publisher is the small businessman.

Senator FONG. Has he any rights in this?

Mr. KAYE. He makes an investment in the publication and exploitation of the song. Since sheet music sales are no longer overwhelming, since his revenue from records is limited by a compulsory clause, he depends, as the writer depends, for a livelihood, very substantially on performing rights. If he did not have revenue from performing rights, presumably, the publishing industry would lack economic support and there would be a lessened flow to the public of the creations of composers.

Senator FONG. And you think this is necessary for the existence of the publisher?

Mr. KAYE. I think so, from what I have been told.

Senator FONG. If the jukebox operators were able to see the points raised the other day, that the bill calls for a tremendous amount of paperwork, and that the expenditures for paperwork far exceeded the payment of what they would expect to pay for these copyrights, then the jukebox operators would be compelled to negotiate?

Mr. KAYE. Well, I think they exaggerated the difficulties, but I think that the difficulties are very great without exaggeration. Senator FONG. Yes.

Mr. KAYE. I think it is an effect of this clause that it imposes enough duties on both the coin-machine operator and the copyright proprietor so that it should tend to bring them together in negotiation, and I regard that as helpful.