If you believe it was a success, it was a success because the sole purpose was to make available to the members of the committee the sources of information and opinion across the spectrum, and to assist the committee in its important policymaking activities. I'd like to introduce very briefly the people who are accompanying me from the Copyright Office. On my left is Dorothy Schrader, associate register for legal affairs, whom you know well; on my immediate right, David Leibowitz, a policy planning advisor whom the committee also knows; and a new face, Walter Samspon, who is chief of the Licensing Division in the Copyright Office. Because of the previous testimony, I can shorten my own remarks considerably because a lot of issues have been exposed; and I presume, Mr. Chairman, that in the usual procedure the prepared statement will be submitted for the record and I can simply go to some specific points which have been raised earlier in the testimony. Mr. KASTENMEIER. Without objection, your entire statement and the attached materials will be accepted and made part of the record. Mr. LADD. Thank you, Mr. Chairman. [The complete statement follows:] SUMMARY OF STATEMENT OF DAVID LADD REGISTER OF COPYRIGHTS AND ASSISTANT LIBRARIAN OF CONGRESS FOR COPYRIGHT SERVICES Before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice House of Representatives The Free Market Copyright Royalty Act of 1983, H.R. 3419 (Mr. Hall) is based on the assumption that the "superstations" which are transmitted nationally by satellite resale carriers to cable systems for retransmission, can and, in some cases will, bargain for and acquire both broadcast and cable retransmission rights at market rates, thus moving towards a "free market" model and away from a compulsory license model. If such stations do, in fact, acquire cable retransmission licenses in the marketplace, the Copyright Office believes that the copyright obligations of cable systems transmitting these stations should be reduced, if not eliminated, to give way to the underlying marketplace negotiations. The Copyright Office thus endorses the objective of the bill. The Subcommittee should, however, scrutinize the bill to see whether, in its present form, the certification-classification procedure provided for in the bill will effectively impose the requirement of market conditions. H.R. 2902 (Mr. Synar) is intended to eliminate the varying treatment that certain cable systems located in different television markets face with respect to their calculation of compulsory license royalties. Under the former FCC rules governing distant signal carriage, cable systems located either in the second fifty television markets or "smaller" television markets were not permitted to carry as many distant independent stations as cable systems located in the "top fifty." One part of the CRT rate adjustment would therefore generate greater royalty payments by some systems in comparison with others even though distant signal carriage is identical. The bill thus has as its objective the even-handed application of the CRT-established 3.75% rate in this post-deregulation regime where all systems may import as many distant signals as they like. The Copyright Office takes no position on H.R. 2902. To the extent that the compulsory license rate is less than market rates, the compulsory license represents a subsidy from program suppliers to cable systems, resale carriers, or consumers, and perhaps all of them. The questions to ask about any subsidy, therefore, are: what is the need for it, for whom is it intended, how much is it, what is the economic or social purpose for it, and what is the likelihood that the subsidy will reach the intended beneficiaries? In its decision, the CRT explicitly aimed at market values for the newly allowed distant signals. The difference between the new rates and the previously existing rates is a subsidy. To enlarge the number of signals paid for at the previously lower rates is to increase the subsidy. And that difference should be submitted to the scrutiny of the questions stated. STATEMENT OF DAVID LADD REGISTER OF COPYRIGHTS AND ASSISTANT LIBRARIAN OF CONGRESS FOR COPYRIGHT SERVICES Before the Subcommittee on Courts, Civil Liberties, and the Administration of Justice House of Representatives 98th Congress, Second Session Mr. Chairman, Congressman Moorhead, and members of the Subcommittee, thank you and the Subcommittee staff for giving me the opportunity to appear here today. From its inception, the cable television industry has expanded both the quantity and variety of programming and information available to the American public. Today cable has entered nearly all major cities; but the cable industry got its start and initial strength by supplying program services to comparatively underserved non-metropolis markets. At the same time, the development of cable into a major component of our communications and program-delivery grid has created difficult communications and copyright policy concerns for the Congress and your Subcommittee in particular. Not until the 1976 General Revision was copyright liability imposed for the cable retransmission of copyrighted broadcast programming. controversy over copyright liability for cable Nevertheless, the retransmissions has continued. From the beginning, Section 111, combined with the provisions of Chapter 8 of the Act governing the distribution and adjustment of cable royalties by the Copyright Royalty Tribunal (CRT), and the cable carriage regulations of the Federal Communications Commission (FCC), were the foundations of the compulsory licensing scheme. Those foundations are connected, and any alteration in any of these inevitably strains the others. The removal by the FCC of its distant signal limitations and syndicated program exclusivity rules, effective June 1981, was one such alteration. This deregulation, which many viewed as being broader than any contemplated in the enactment the compulsory licensing system, reshaped its design and function. In addition, the royalty rate adjustment by the CRT in its decision of November 19, 1982, later affirmed, stirred fresh controversy. Today the Subcommittee turns its attention to proposals before you to modify the impact of this CRT rate adjustment on certain cable systems. Later this statement will also discuss the activities of the Copyright Office in collecting cable royalties and implementing the CRT rate adjustment. This statement is divided into six parts: (1) Summary of the Copyright Office position; (2) Review of the CRT rate adjustment and subsequent events stemming from this decision; (3) Review of the recent experience of the Copyright Office under the license; (4) Comments and recommendations on H.R. 2902 and H.R. 3419; (5) Copyright Office proposals for further amendment of the cable compulsory licensing provision; and; (6) Final remarks. 1. Summary of the Copyright Office Position The Copyright Office has previously expressed its preference for voluntary arrangements - that is, the market - to govern the use of copyrighted works, and the view that compulsory licensing systems should be employed sparingly and only where the market cannot work. 1/ The Congress did in the 1976 Revision adopt a compulsory licensing scheme; and both bills before you today are premised upon its continuation. - The Free Market Copyright Royalty Act of 1983, H.R. 3419, introduced by Representative Sam B. Hall, Jr., is so entitled because it is bottomed on the assumption that the so called superstations-- that is, television broadcast stations whose signals are, willingly or unwillingly, transmitted by satellite resale carriers to cable systems for retransmission can and, in some cases will, bargain for and acquire both broadcast and cable retransmission rights at market rates, thus moving towards a "free market" model and away from a compulsory license model. Thus, in effect, the superstations would become a species of cable origination network and would, like the other cable origination networks, acquire cable distribution rights by contract rather than having those rights governed by the compulsory license. If such stations do, in fact, acquire such licenses in the marketplace, the Copyright Office believes that the copyright obligations of cable systems transmitting these stations should be reduced, if not eliminated, to give way to the underlying marketplace negotiations. The Copyright Office thus endorses the objective of the bill. The Subcommittee should, however, scrutinize the bill to see whether, in its present form, the certification-classification procedure 1/ Copyright/Cable Television: Hearings Before the House Committee on the Judiciary, Subcommittee on Courts, Civil Liberties, and the Administration of Justice, 97th Cong., 1st Sess. 900, 904 (Part 1, Serial No. 44 1981) (Statement of David Ladd). |