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Mr. LODWICK. No, sir.

Senator BURDICK (continuing). In America keeping a record of copies?

Mr. LODWICK. No, sir; not at all.

Mr. PASSANO. Senator, this will be explained as Mr. Lodwick finishes up his his paper.

For instance, if you go into a library and want something photocopied, you merely write up a slip giving the name of the article and the name of the journal and so on. These slips simply become the basis of the statistics reported to the clearinghouse for eventually determining the distribution.

Senator BURDICK. Well, I won't interfere with the line of thought. Mr. LODWICK. That is all right, sir.

Senator BURDICK. When you finished it just occurred to me what a colossal undertaking this might be.

Mr. LODWICK. It is pretty colossal, but a lot of colossal dollars are involved, sir, along with the future of publishers such as ourselves. Senator BURDICK. Proceed.

Mr. LODWICK. I think, to answer your question, let us go right to page 12, sir.

All we have done in this table is to assume we know how much was copied by each major classification. In answer to your question, si, about photocopying by schools and colleges, by Government, by business and industry, and by commercial photocopying services-here all we need are total quantities, with no identification of what was copied. Since the machines are taxed on an entire output basis, there would be no advantage in reporting anything but a reasonable, accurate estimate, perhaps once a year, to the copying machine manufacturer. Thus, a company liable for the excise tax on, say 1 million photocopies a year, could report that approximately 10 percent, or whatever, was from material bearing a copyright notice. Again, ball park estimates

will do.

Let us assume that business and industry account for 250 million photocopies of copyrighted material. We now have a grand total of 3 billion copies as a base for redistributing copyright royalties.

Now, only libraries have to identify what copyrighted sources were actually copied from.

Can we assume that a frequency distribution of copying based on library experience only can be applied to all copying of copyrighted works? We think so. Libraries serve all segments of the American public-all types of students, scholars, and businesses.

We feel there is a big enough mix of needs mirrored in library photocopying traffic to justify it as a giant and valid sample for determining copying-royalty distribution.

Thus, if library photocopying were 500 million of the 3 billion, it would be a fair assumption that any royalty page rate established for a copyrighted work should be multiplied by a factor of 6 to reflect the total effect of all copying on that work.

Here's how it might work with a typical scientific journal. Most of ours average 2 cents a page as a pro rata of their subscription price. If library experience indicated that all libraries made 50,000 copies of pages from a particular journal (this is not a big number, but rather typical), then the royalty distribution would be $6,000 ($.02 × 50,000

times a factor of 6). In other words, the library experience is assumed to be one-sixth of the total.

If this particular journal had a subscription rate of $30 per year, the $6,000 copying royalty payment would reimburse the scientific society and its publisher for the loss of income from only 200 potential subscribers lost to "convenience copying."

Mr. Chairman, all of what we have said is only a start toward a solution. We strongly believe that reasonable people could constructively work out better principles of analysis, clearer details of execution, more realistic "balancing of equities" than we have sketched above. And, quite obviously, there are plenty of ifs, ands, and buts which would have to be hashed out. For instance, the above, we believe, would be entirely acceptable to us as a publisher of scientific journals-we would definitely participate. But, as also a publisher of textbooks more and more subject to anthologizing, we probably would elect not to participate in royalty distribution for those particular copyrighted works.

This is basically a "no-tickee, no-washee" system for authors and publishers. If they elect to participate in copying-royalty distributions for any particular copyrighted work, they waive the right to require advance permissions for noncommercial copying. Quite obviously, as this system develops, copyrighted works will, in the future, have to bear both permissive and limitative conditions as a guide to the copiers. And the transition into this "way of life" will involve many headaches which reasonable people will have to live with.

Thanks to computer and systems technologies, the copying-royalty clearinghouse facility need not be much more than a modern, sophisticated accounting operation. It will have core storage of all active copyright owners; their names and addresses; their royalty rate per page (based on pro rata rate of list price); whether or not they are participating for that particular work in copying-royalty distributions. It will receive as "input" the reports from the libraries showing how much each copyrighted work was copied. It will pay out, say once a year, earned royalties above a reasonable minimum level.

We believe the copying-royalty clearinghouse should be under the jurisdiction of the Congress, and under the supervision of the Library of Congress.

Mr. Chairman, we do not have the competence to draft the specific legislative language that would carry out the objective of our recommendation that a nominal tax finance selected information-dissemination activities of the Government, establish a copying-royalty clearinghouse facility, and fund copying-royalty payments.

We do feel, however, that S. 597 should give some broad, statutory recognition of the concept.

And, since "the way to begin is to begin," there is no reason a reasonable timetable could not be set up along the lines of the following: (1) Develop and enact the necessary tax legislation, to be effective January 1, 1968; (2) authorize the Library of Congress to establish a copying-royalty clearance facility to be operational for the distribution of royalties by January 1, 1969.

We fully appreciate the complexities involved, but we are completely convinced that the effect of the copying machine on independent publishing must be faced up to now.

In summary, if all of us can only work out together a reasonable accommodation to the photocopying problem in the context of the basic principles of copyright, living with the computer age will come a lot easier.

What a wonderful and challenging opportunity.

(The prepared statement of Mr. Lodwick follows:)

STATEMENT OF LYLE LODWICK FOR THE WILLIAMS & WILKINS Co.-BALTIMORE, MD

Mr. Chairman and members of the subcommittee, two typical advertisements of copying machine manufacturers illustrate very clearly that independent publishers and their authors cannot survive much longer the economic competition of over 800.000 copying machines, which last year ground out over 14-billion copies and, with the addition of 200,000 more machines by 1970, will produce close to 30-billion pages of material, much of it of copyrighted works.

Says one advertisement:

"Look what happens when you put a coin-operated . . . copier in your library. Your readers make their own copies at the push of a button and you keep all the money . . .".

The happy librarian with her hands full of money tells the reader: "It's amaz ing how those coins add up.". Amazing, indeed.

Says another advertisement by another company:

"Anyone who comes into your library can walk up to a . . . copier and make a copy. That's how easy it is. It is easy for you too, because you don't have to collect coins, keep records, or share income. Makes positive copies of articles or pages from newspapers, magazines, encyclopedias, reference books. Makes scarce source material more readily available to more users. Discourages mutilation. . . . All collected coins belong to you.".

...

*

Mr. Chairman, S. 597 is a great bill, a "glorious" compromise, and an historic tribute to the dedicated work of your and Mr. Celler's committees and your staffs to Mr. Kaminstein and his colleagues-to the copyright bar in its entirety and to many in government, in the "not-for-profit" industries, and in private enterprise who know that "give-and-take" makes this great country work.

In theory, at least, and as a basis for possible future litigation, we feel that we do have protection in the 4th standard of "Fair Use" that considers the "effect of the use upon the potential market for or value of the copyrighted work”, and in the House Committee's now-famous two sentences:

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Where the unauthorized copying displaces what realistically might have been a sale, no matter how minor the amount of money involved, the interests of the copyright owner need protection. Isolated instances of minor infringements, when multiplied many times, become in the aggregate a major inroad on copyright that must be prevented.".

The House Committee's observation, of course, merely restates in modern and crystal-clear terms a state of affairs that existed in principle in the 1790's, when Mr. Madison and his friends recognized that many small printers scattered all over the 13 colonies could play large havoc with the country's creative authorship and with the risk-enterprise of the day.

Today, thanks to brilliant technology, effective merchandising, and well-conceived "public-image" promotion, Everyman can be, and is, his own "do-it-yourself" printer.

And so, we find the copying machine to be a new breed of "Juke-Box", with the capability of smothering our national resources of creativity and ingenuity. and of wiping out hundreds of publishers such as ourselves around the world. "Instant copying" has begotten "instant rationalization" in a casuistic, LSDkind of dream world where "Free Use" double thinks into "Fair Use".

The cold, hard fact is that "Fair Use", when applied to photocopying, is dead as a door nail as a practical, workable doctrine for our day.

The cold hard fact is that we are, right now, making business decisions to phase out of publishing certain kinds of scientific books and journals most vulnerable to photocopying. This means that many authors, and their ideas, are being and will be increasingly—denied entry into this classic kind of “information network."

We submit that it is not in the interest of science and of this country for people like ourselves to have to make these decisions in order to insure survival. And, certainly, litigation will come too late, and prove nothing.

It seems fairly certain that if we all do not face up to the 1967-reality of the copying machine, some 21st-century historian is going to look back and ask “Who Killed Cock Robin?" in the limbo-years between the copying machine of the mid-1960's and the promises of the new computer- and "imaging-technologies" of the mid-1970's.

Mr. Chairman, the great A. North Whitehead said:

"A clash of doctrines is not a disaster—it is an opportunity."

There is a very great opportunity for all of us involved in this complex dialogue to come quickly to a practical, realistic solution to the problem of directly or indirectly compensating authors and publishers for the manufacture of facsimiles of their copyrighted works by any mechanical or electronic device. It is to deal with the copying machine, by itself, as a current problem.

If we cannot now work out a reasonable, simple accommodation to the present impact on creativity and enterprise of the copying machine—a relatively unsophisticated and definable device-how on earth can we ever face up to the more complex problems of the very near, very sophisticted future imposed upon us by the computer and its related, more sophisticated technologies?

To put it more positively, doesn't the copying machine and its copyright implications give us an easy “pilot-plant” opportunity and challenge to sweat out the principles and mechanisms which can be later applied to all other imaging processes of the "communications revolution"?

"Control of the image" is, after all, at the heart of all we are debating about. In pointing out the necessity for compensation to authors and publishers, Mr. Herbert S. Bailey, Jr., of the Princeton University Press, has aptly stated (in "Saturday Review", June 11, 1966):

"The new technologies make it clear that what a publisher sells is not a book but the image of a book. The author writes the manuscript; then the publisher selects it for publication, edits it, and gives it a suitable typographic dress-an image. Currently he sells his image as printed on paper and bound in cloth or paper at a single manufacturing establishment; in the future he will usually sell the image as reproduced on copying machines at many locations, by remote or local control, on demand. .

Mr. Chairman, the atmosphere is right and ready for immediate statutory recognition in S. 597 of a copying-machine royalty system on a par with the recognition accorded juke-boxes, CATV and the like.

Many scientists we have talked with recognize the ultimate implications of uncompensated copying.

Many librarians we have talked with are sympathetic to a simple solution for indirectly compensating authors and publishers.

In a recent editorial, "Piracy by Photocopy", which appeared in the October 1966 issue of Bulletin of the Medical Library Association, a national leader in library science and member of the President's "National Advisory Commission on Libraries", Dr. Estelle Brodman, points out:

"Although the technological form might differ, the basic problems of copyright infringement and the basic arguments for copyright protection remain the same. They consist, essentially, of the ethical requirement that a person get an equitable return for his endeavors. An author should be compensated for the toil of producing a work-book, journal, article, picture, computer program-and a publisher for the risk to his capital ..

"The questions involved in solving the copyright problem of the midtwentieth century have excited more heat than light . . . What is needed is for sympathetic publishers, librarians, scholars, lawyers and accounting experts to sit down together in calm and quiet and debate this question on an intellectual plane, instead of an emotional one. Surely a society which can bring forth a computer and an understanding of the mechanisms of the genetic code can figure out a system of copyright protection which is not burdensome to any group. Librarians have a particular interest in seeing this happen".

We would like to offer a solution. We believe it is simple in principle, practical in application, painless to all. and-paradoxically, it will probably cause an even bigger boom in the use of copying machines.

It is to impose a flat, nominal, non-punitive 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.

The rationale behind the first objective is that those of us in business and industry, in the sciences, and in education who benefit the most from specialized governmental information services (the National Library of Medicine, the National Agricultural Library, the Clearinghouse for Federal Scientific and Technical Information, services of the Departments of Commerce and Defense, the National Referral Center for Science and Technology, ERIC, etc.) should directly support these necessary and socially-desirable functions in direct proportion to our own information and communication needs and activities-for which copying machine usage and volume is as good and as reasonable a barometer as any. And, since many other sectors of government benefit from publication activities of both the specialized government information services and of the "private sector", the copying machine output of government agencies themselves would help fund. through royalty credits, distribution of earned royalties to owners of copyrighted material that is reproduced by the government itself.

The rationale behind the second objective is self-explanatory: to have one central location from which earned royalties from photocopying can be determined and periodically distributed to participating copyright holders.

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?

In the words of Eliot Morison in a great book, "Men, Machines, and Modern Times":

"The problem presented (is) one filled with measurable, quantifiable data susceptible of analysis and the drawing of reasonable conclusions".

Defining just what is "a copying machine" is the first problem, and collection the corollary.

Let us assume 800,000 "copying machines" by generally accepted trade definitions. This excludes higher-volume duplicators, over 1⁄2-million in number, and producing, by some estimates, over 25 times the number of copies that are produced by the newer "convenience-copiers"! Some copying machines are "infringing" into the market traditionally held by duplicators. Should duplicating devices be included in the excise-tax plan? We think not-the traditional ground rules of copyright and copyright infringement can apply here, as always.

Since the market-erosion of "copying machines" is primarily in the 1 to 100 copies-per-page area, the liability for paying the tax could be limited to owners or lessees of most machines with this economic capability.

Assuming that a reasonable, workable definition of a "copying machine" can be hammered out-by parsing prose, by actual definition by manufacturer and model. by volume considerations, by compromise-should an excise tax on output be applied to the vast majority of copying machines-the small, desk models so useful in businesses and in offices?

We think not-they are, by and large, self-limiting in their effect on copyright owners; there would be too much red-tape in accounting internally for what was copied; and, what is copied in the privacy of an office is nobody else's business anyway. A flat $50/year tax would seem to be reasonable, and would yield revenues and credits (from governmental installations) of about $25,000,000 a year. With "duplicating" arbitrarily excluded, and the smaller copying machines taken care of by a simple, flat-sum tax, where is the primary source of revenues necessary to finance the information-dissemination and copying-royalty distribution activities of the government?

It mainly lies in those machines which, on a normal 8-hour-a-day basis, produce from about 1.000 to about 25,000 copies a month, and account for about 90% of all page-images copied-over 12-billion copies last year. Practically all have metered output, and most are leased. In the case of the latter, all that is necessary is for the copying-machine manufacturer to collect monthly from his lessees the tax on the output and turn it over to the government.

At -cent a page tax, a 10,000/month machine would yield $50 a month; at 2-cents a page tax, the national output in 1966 would have yielded $240-million. ("It's amazing how those coins add up."!)

Whatever rate established-and it should be only enough to cover minimal needs and not be a deterrent to legitimate copying-the collection mechanism

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