STATEMENT OF LYLE LODWICK, DIRECTOR OF MARKETING, THE WILLIAMS & WILKINS CO.: ACCOMPANIED BY ANDREA WIDERMAN, ASSOCIATE DIRECTOR OF MARKETING Mr. LODWICK. Yes, sir. Mr. Chairman, I am not going to read all of our close-to-15 pages into the record, and I would like to make use of some visuals which Miss Widerman will handle for us. The first display is an advertisement from one of the photocopying manufacturers (covered on the first page of our testimony). The tag line on it is "It's Amazing How Those Coins Add Up." This is an advertisement aimed at the library industry-one of our billion dollar, "not-for-profit" industries-and like much testimony I guess you get, it all boils down to those three little words, "please send money." I should add that part of our royalty proposal is in this vein. The second advertisement, which is another appeal to utilize this very fine machine in saving on multiple purchases and reducing payroll costs in the library while being of service to the users, says about the same thing, "Insert a Coin, Make a Copy, All Collected Coins Belong to You." Now, I would like to go to the next chart which is a breakdown of what we see as the copying machine market, sir. The chart, emphasizing that the copying machine is the copyright law's first headache in the second half of the 20th century, stressesas on the first page of our testimony-the 1966 position of the copying machine industry: 800,000 machines, 14 billion copies in the United States alone, and dollar sales at $700 million. These figures are pretty much a ball-park distillation of other ball-park estimates that have appeared in Newsweek, in Fortune, in annual reports of some of the manufacturers, and also in some reports of security analysts. I cannot account for their complete accuracy. I certainly would not go in or out of the stock market on the basis of these figures, but I think they are of the order of magniture that demonstrates our problems. The thing that is of interest to us in this chart is that in 1960 there were about 270,000 machines with an output of about 4 billion copies. By 1970, some forecasts call for 1 million copying machines producing over 30 billion copies. Now, the thing we would like to emphasize is that all the wonderful "free-use-is-fair-use" arguments-which some might say are rationalizations-presented by the education and library interests we think were just fine and valid arguments for about 1958. Now, this copying machine, the "convenience copier," sir, is pretty much of a phenomenon of the 1960's. Prior to the 1960's there were a reasonably small number of machines and they had a very reasonable, insignificant effect on our markets. We felt we were reasonable people to put up with the reasonable librarians' reasonable code of ethics: That they would not copy too much. All of which reminds me of the old phrase of David Harum: "A reasonable number of fleas is good for a dog, because it keeps him from brooding over a dog." Like Harum's dog, we did not start brooding over our problem until roughly about 1963, when the copying machines added up to more fleas than we know how to scratch. If there are going to be 1 million copying machines by 1970, according to the industry's own forecasts, we are already running late in trying to cope with their economic competition. In addition, there is a duplicating market, and we get into another related area of some 530,000 machines with 400 billion copies, and $3 billion sales volume. To use the tag line of one of the manufacturers: "It's amazing how those coins add up." Now, sir, I would like to go to the top of page 6. In the first five pages we make mainly one point: If we cannot face up to the problems of the copying machine right now, we will never be able to face up to the problems of the computer. The copying machine is a relatively unsophisticated and relatively definable device, and a lot of its problems can be measured quantitatively in very measurable data. We would like to offer a solution. We believe it is a simple solution in principle, practical in application, painless to all, and-paradoxically, it will cause an even bigger boom in the use of copying machines. It is to impose a flat, nominal, nonpunitive tax on copying machines and their entire output: (1) to fund certain information activities of the Government operated for the particular benefit of business, scientific, and educational organizations; (2) to fund the collection, accounting, and distribution of copying royalties to participating copyright owners. I am skipping now to page 7, sir, the third paragraph. Underlying both objectives is a basic assumption that in general, copyrighted work can be copied without the necessity for the copier to get advance permission of the participating copyright holder. Just what is involved? The first thing is defining a copying machine and defining a duplicator. I would like to conserve your time, sir, if we went right to page 9, to about the middle. Before I read this I would like to point out that there are many ways to find out how many machines there are and what their entire output is. The rest of our presentation is to go on the assumption there are several ways to skin this cat. I will read from now on, and please stop me, sir, if there are any points where I have not made it clear because I skipped. First, we propose that publicly supported, "not for profit," libraries be required, in this public interest, to keep track of the number of pages photocopied from each work bearing a copyright notice in their collections, and report this information periodically to whatever copyright-royalty clearinghouse facility is established to handle the situation. Skipping to the next paragraph. We would like to emphasize- Mr. LODWICK. Yes, sir. Senator BURDICK (continuing). Suppose a student goes into the Library of Williston, N. Dak. Mr. LODWICK. Yes, sir. Senator BURDICK (continuing). And copies a page from a scientific journal in longhand, pencil; is that a violation? Mr. LODWICK. I do not believe so, sir. But on this question of copying longhand, I think since the time Gutenberg came around with movable type nobody has ever been able to sell a handwritten copy. Senator BURDICK. What is the difference between a penciled copy and a Xerox copy? Mr. LODWICK. Mainly, sir, in the economic effect on our industry. Mr. PASSANO. The penciled copy, Senator, was self-limiting. It was not enough to really interfere with sales. The Xerox copies are in theory just the same but practically very much more damaging to our markets. Senator BURDICK. Suppose a teacher sends a student down to get this material, and he brings the material back and they put it on a mimeograph machine and they mimeograph it for the class. Mr. PASSANO. That is a violation, of course, and always has been. Senator BURDICK. And you are treating with this also? Mr. LODWICK. Yes, sir. I want to emphasize here we have been active in this copyright dialog about 2 years. Two years ago, we had hoped some kind of a "fair use" code could be developed which would enable us to live with the copying machine. Since that time, we've become convinced that "fair use" is a dead doctrine as far as photocopying is concerned. I have purposely displayed these books on the table here because, unless there is some fulminating infringer in the room, I am sure I have watched personally more infringements of scientific books and journals than anybody, or all combined, in this room. Senator BURDICK. Just go ahead. I was curious about the extent of copying. Mr. LODWICK. Yes, sir. Starting at the bottom of page 9 of our testimony-we would like to emphasize that the librarians' responsibility for copying machine usage does not require any more bookkeeping than logging and accumulating the amount of pages copied by users of the copying machines under the library's control, and identifying the source-items bearing a copyright notice and the quantities copied therefrom. It is reportable if it bears a copyright notice-from 1910 on-as pointed out later, royalty distribution will be made only-by the clearinghouse if the copyright is valid and the owner requests participation. Interpolating here, what we are saying in our proposal is to remove for all practical purposes all redtape, all requests for permission, have no royalty collection by anybody, and let the copying machine perform what is its best function, the rapid dissemination of knowledge. What would this information, reported by all publicly supported libraries, yield? A national picture of how many times each copyrighted work was copied a national sum of just how much copying of copyrighted works is done by patrons of "not for profit" libraries a national sample of the relative copying popularity of copyrighted works that can be a reasonable basis for extrapolating the total copying of each copyrighted work. Again, commonsense and reasonable accommodation must play a role. Right here is a chart that somewhat summarizes what we are getting to here. These are purely hypothecations, guesses, on how much the quantity reproduced is for each of the major classes. The major problem is to determine how much of all copying is of copyrighted works, if we are assuming there is some way to indirectly compensate authors and publishers. Now, by one means or another, we can find out. Libraries are very important in this proposal because only libraries are going to have to keep track of what they copy. If libraries, and I say "if," copies 500 million photocopies a year, all educational institutions-a billion and a half, the Government-750 million, and business and industry a quarter of a billion, we would come up with about 3 billion copies of copyrighted material of the total of 14 billion photocopies. Again, if the libraries are the only ones who are going to keep track of what was copied from, which a lot of them do anyway, and a lot of librarians have told me it is a rather simple procedure for the machines under their control-then the libraries can be the whole source, a giant, a very big, sample for determining how much copying is done of all works by all people. Now, if the ratio, say, were 500 million copies of libraries to 3 billion total copyrighted pages, we would come up with a one to six ratio. And so, if you put a 2-cent a page tax on all output, for the 3 billion copies there would be available some $60 million to run a clearinghouse and effect a reasonable and equitable distribution of royalties to the copyright holders. Senator BURDICK. Just a minute. Mr. LODWICK. Yes, sir. Senator BURDICK. Have you talked to librarians about this? Senator BURDICK. And they say they can keep records of this with a minimum of cost? Mr. LODWICK. Well, there would be costs to it, sir. Senator BURDICK. Would they have to keep not only the number of copies but every book that has a copyright, they would have to keep the name of the copyright holder? Mr. LODWICK. Yes, sir; but they are doing it already. Mr. LODWICK. Well, in many libraries of those I know of in the medical and technical area. Many of the libraries are in the reprinthouse publishing business anyway, and they have on premises many of these Xerox-type console models. A customer fills out a form indicating the source item of the copyrighted work, and the number of pages they are paying the library for. I am saying that it is essentially a clerical bookkeeping task that is Senator BURDICK. I am talking about the hundreds and hundreds of libraries in the small towns around here that do not have that arrangement or setup. Mr. LODWICK. Well, let me put it this way: Whatever the setup, I think the cost of it, sir, is minimal in terms of the problem. I am not overstating-we have a tough problem on our hands, if I can put it this way. Senator BURDICK. First of all, we would have to sort out which is copyrighted material and which is not. Mr. LODWICK. They do not have to make that determination under this plan, sir. If it has a copyright notice it is assumed it is copyrighted. The libraries themselves are not paying royalties under this proposal. They are not collecting moneys at all for this purpose. What they are doing is Senator BURDICK. What does the library do with this for 30 days, let us say? Mr. LODWICK. I beg your pardon? Senator BURDICK. We have issued copies for the past 30 days. What do they do with this list, the librarians? Mr. LODWICK. Under this suggestion we are utilizing all the libraries as reporters. They will send periodic reports to the royalty clearinghouse, to enable the latter to determine the amounts copied nationally of each copyrighted work for later royalty distribution. Senator BURDICK. You are going to set up a clearinghouse? Mr. LODWICK. Yes, sir. Senator BURDICK. Is that private or public? Mr. LODWICK. Well, it could be either. My own personal feeling is it should be within the Government as far as the royalty distributions are concerned. I am just talking about a clearinghouse for royalty distributions here, sir, not a "permissions" clearinghouse. Perhaps I had better read further if you would like. Senator BURDICK. I am just a little bit worried about your asking for 2 cents a copy here. Aren't you a bit afraid that the administration costs are going to be quite high? Mr. LODWICK. They could be substantial, sir. I would like to put it back in the context of the little library or the medium-sized library. One of the toughest effects of photocopying on businesses such as ours-where we mainly print 2,000 or 3,000 copies each of monographs and journals and distribute them around the world-is that the copying machine permits the library to save on purchases of multiple subscriptions to journals, duplicate copies of books. Now, another thing that a lot of people in the library field have reminded us of-if you eliminate a circulation desk you are cutting your payroll costs by a whale of an amount. We have libraries now that have a policy that journals and books do not circulate, and we will have more in the future. So, the library saves in terms of cutting down on their acquisitions, and they save more importantly on the heavy payroll and overhead costs involved in circulating of journals and books. It seems to us that the costs of library reporting are more than offset by the savings and income created by the copying machine. I am talking of the libraries as businesses, sir. They could certainly make periodic, 6-month or a year reports on what was copied from their collections. You can start a system with 3- by 5-inch cards and move on up to more sophisticated accounting machines-it's just another bookkeeping problem. The total library output would be the first basis for determining how much was copied from each work bearing a copyright notice, but whether and how it gets paid out or not is the function of the clearinghouse-only it can tell such work bore a valid copyright. Senator BURDICK. Does your plan call for every college, every school, every Government agency, every business place 79-397-67-pt. 3-21 |