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Attached thereto and made a part hereof is a reprint of this letter (Exhibit
The invitations were ignored.
Experience demonstrated that collective bargaining was to the advantage of the society as well as its licenses, and the plan of collective bargaining was encouraged by the society as far as practicable.
The following are instances of such collective bargaining:
A conference was held at Minneapolis between the representatives of the society and a committee representing an exhibitors association of Minnesota and South Dakota, and then and there the committee on behalf of three hundred exhibitors, agreed to take out licenses from the society for each of its members at rates varying from $5 per theater per annum to 10 cents per seat per annum in certain other theaters, the rates being adjusted at a joint conference according to the general business condition of the cities in which the theaters were located,
Subsequently, a similar conference was held with a committee representing an exhibitors' association of North Carolina, at Charlotte, N. C., where a like procedure was observed. At that conference with that committee, the representatives of the society agreed upon the rates which should prevail for licenses to be issued to every motion picture theater in the territory represented by the exhibitors organization. The rates were mutually agreed upon and as a result of the conference, the exhibitors organization recommended to each and every of its members that they proceed to take out the licenses at the rates agreed upon.
Further instances of collective bargaining between the society and other groups of resort proprietors is evidenced by the negotiations and the consummation of negotiations with the society and the New England Hotel Association, the Atlantic City Hotel Association, the New York Hotel Association, and the Dance Hall Proprietors Association, and the Society of Restrauteurs, the Motion Picture Theater Owners of Michigan, and the Motion Picture. Theater Owners of Virginia.
In all these instances satisfactory rates and terms and conditions of licenses were agreed upon in joint conference between the society and the respective associations, and the society has arrived at an honorable understanding and lived in terms of neighborliness in each instance. This again justifies the existence of the society.
The Motion Picture Theater Owners of America caused to be introduced a bill in the House of Representatives providing for the repeal of the musical performing rights provisions of the copyright act. Resolutions were passed by the National Association of Motion Picture Theater Owners and the various State organizations, asking all exhibitors to write to the Senators and Congressmen from their respective States to vote for such repeal. Contributions were solicited from all exhibitors to provide a fund for propaganda purposes to secure the repeal of the law.
During all this time, the rights of the members of the society were invaded, and the infringers were protected and defended by the State and local associations of motion-picture theater owners.
With respect to the advisory committee: At a meeting of the board held on July 26, 1923, at which Mr. Walter G. Douglas was present, it was reported that it was advisable in the interest of the society to appoint an advisory committee, the members thereof at all times to be subject to the approval of the board, to promulgate plans for the increase of the business of the society. The business of the society was lagging and in an unsatisfactory state, and the principal object of this advisory committee was to suggest to the board ways and means of increasing the society's business and suggesting to the board of directors ways and means for its betterment.
About two years ago another form of invasion of the rights of writers of musical works came into prominence-radio broadcasting. Within a very short period of time 576 radio broadcasting stations were installed, equipped, and in operation. The stations were licensed by the Department of Commerce. Bureau of Navigation.
The most distinctive, attractive, and prominent feature of the daily and nightly program broadcasted was music, and particularly the musical hits of the day. Radio took a sensational hold of the people. The industry did a
gross business of $175,000,000 last year. It is expected that it will do a business of $350,000,000 this year and $500,000,000 next year.
There are probably 3,000,000 or more receiving sets in use. Programs are announced in all the newspapers beforehand, with the day and hour when they can be heard.
The broadcasting performances are competitive and may destroy the very monopoly which the law intends the copyright owner to have. It has been publicly announced that the Radio Corporation of America proposes to erect 9 or 10 superpower stations of larger power and greater range, and to provide a national program of high quality, located at suitable points in the country and interconnected so as to enable all of these units to send out the same program simultaneously. (See hearings, March, 1924, Committee on the Merchant Marine and Fisheries, on H. R. 7357, p. 159.)
The radio audience pays partially for what it hears through paying for its radio equipment and in purchasing of radio parts. The rendition of songs in the studio is for the purpose of " public performance for profit." That profit has been received by the radio manufacturers who could not easily dispose of their sets unless the purchasers expected to hear something of their liking through them.
Broadcasting has become a business-a business supported by advertisers. The American Telegraph & Telephone Co., at its New York station, WEAF, charges $100 per 10 minutes' use and $400 per hour's use of its broadcasting station. The radio broadcaster renders entertainments varied unexpectedly from time to time with talks on where and when to buy commodities and commending such commodities. This advertising is paid for, yet those who listen do so mainly in expectation of more entertainment to follow.
It has occurred to the members of the defendant society whose sheet music and mechanical royalties have been cut one-half by reason of radio invasion that they should be paid for holding the auditors' attention.
In many instances the broadcasing is done for advertising purposes, to introduce the manufacturer's product into the market, to popularize and create a demand therefor, and to promote the sales of radioreceiving apparatus, parts, tubes, batteries, ear phones, loud speakers, and other radio accessories; to introduce the broadcaster and its products to the public in order to get certain advertising, good will, and celebrity from the operation of a broadcasting station.
The report and the hearings of the Committee of the House of Representatives on the Merchant Marine and Fisheries on radio regulation, May 13, 1924, report 719, Sixty-eighth Congress, first session, are very illuminating. I beg leave to submit and make part of this affidavit the testimony of Mr. Paul B. Klugh, executive chairman of the National Association of Broadcasters; Mr. David Sarnoff, vice president and general manager of the Radio Corporation of America; and William E. Harkness, asssistant vice president of the American Telephone & Telegraph Co.
The society viewed with great concern the actions and attitude of the broadcasters in giving or causing to be given performances of the works of its members without regard to the rights of the creator of such works.
At a meeting of the board of directors held on February 27, 1923, at which was present Mr. Walter G. Douglas, there was "read the various proposed amendments of the articles and by-laws of the society, each of which was considered separately and unanimously recommended by the board of directors for presentation at the general meeting of the society," among which was the following proposed amendment :
Amend section 1, subdivision (g) of Article I, so the same shall read as follows:
"(g) To grant licenses and collect royalties for the public representation of the works of its members by instrumentalists, singers, mechanical instruments, radio broadcasting stations, or any kind of combination of singers, instrumentalists, and mechanical instruments, and to allot and distribute such royalties."
At the general meeting of the entire membership of the society, held on March 1, 1923, there was presented to the general meeting of the society such amendment with others and the same were unanimously adopted and became part and parcel of the articles of association in the form as the same now appear in Exhibit B hereto attached.
At a meeting of the board of directors of the society held on the 20th of April, 1922, the chair requested an opinion from the counsel of the society
as to the rights of the members of the society to prevent the broadcasting of their compositions. Counsel for the society reported that he had given the subject considerable thought, and that he was prepared to say that under the copyright act, the unlicensed radio broadcasting of copyright musical' compositions infringed upon the rights of the copyright owner. Thereupon a resolution was adopted:
"To restrict the members of the society from granting any permission to broadcast their musical compositions unless a license was secured from the society granting such permission."
With a view of arriving at an agreement respecting the recognition of the rights of copyright proprietors in regard to public performance by radio broadcasting of their copyrighted works, a conference of the leading broadcasters and the representatives of the society was held on the 20th of September, 1922. Stenographic notes of the conference were taken and printed copies thereof were sent to every member of the society, including the plaintiff. The attitude of the society toward broadcasting was fully, fairly, frankly, and freely stated; that is, that the society expected that broadcasters would recognize the rights of the members of the defendant society and would pay reasonable royalties if they elected to use the works of the society and its affiliated foreign societies.
The plaintiff was fully apprised of the conference and the attitude of the society, and not only did the plaintiff take no exception thereto, but, on the contrary, gave its express approval of everything that was said and done in that regard.
At a meeting of the board of directors held on the 21st of September, 1922, at which was present Mr. Walter G. Douglas, an officer of the plaintiff, a report of the radio conference was made in the presence and hearing of Mr. Douglas. The report to the effect that the conference had been held on September 20, at which the representatives of the leading broadcasting stations of the East were in attendance, and that no definite answers were received as to the final attitude of the broadcasting stations.
The conference with the broadcasters was resumed on the 25th of October, 1922, and again the society emphasized its position concerning broadcasting.
At a meeting of the board of directors held on the 31st of October, 1922, at which was present Mr. Walter G. Douglas, it was reported to the board that the conference with the broadcasters was resumed on October 25th. At this meeting a resolution was unanimously carried
"to notify all broadcasting stations that they must discontinue using the works of the members of this society, unless a license is secured."
At a meeting held on December 19, 1922, at which Mr. Douglas was present, a report was made that the society had received a number of applications for licenses from radio broadcasting stations and that a committee of the society had met for the purpose of determining the license fee to be charged to each of the stations so applying.
At a meeting of the board held on March 22, 1923, at which Mr. Walter G. Douglas was present, it was unanimously resolved:
"That a special letter be sent to all publisher-members instructing them that permission to broadcast their publications be withdrawn and that their representatives be immediately notified that all compositions must be restricted by broadcasting stations which are not licensed by the society."
On October 20, 1923, the society wrote to Mr. Walter G. Douglas, of Waterson, Berlin & Snyder Co., to forward a list of the plaintiff's branch managers to whom the society was authorized to send information relative to the discontinuance of broadcasting at unlicensed stations. Mr. Douglas replied as follows:
WATERSON-BERLIN & SNYDER Co.,
New York, October 22, 1923.
AMERICAN SOCIETY OF PUBLISHERS, AUTHORS AND COMPOSERS,
New York City, N. Y. GENTLEMEN: In reply to your communication of October 20th, we have insrtucted our branch offices to discontinue broadcasting, and will not be necessary for you to write them.
Very truly yours,
W. G. DOUGLAS,
For WATERSON-BERLIN & SNYDER Co.
If this letter does not express approval of the policy and progress of the society with respect to radio broadcasting, then I am at a loss to understand by what other means, expressions, or actions the plaintiff could express its approval.
At a meeting of the board of directors held on November 27, 1923, it was reported that the society issued 25 licenses to broadcasting stations and that their infringements had been detected at various stations.
The broadcasters, like the hotel men and the motion-picture men, were organized into an association under the name of "The National Association of Broadcasters." The president of this association was one E. F. McDonald, jr., who operated station WJAZ, Chicago, and was the president of the Zenith Radio Corporation, and the general manager of Chicago Radio Laboratory. The Zenith Radio Corporation is a manufacturer and dealer of radio receiving sets.
The association on August 14, 1925, sent a communication to music publishers, reading as follows:
"To publishers of dance, jazz, blue, and popular music:
"The members of this association maintain that they will not pay for licenses from any copyright owner or recognize the right to collect any tax until the law plainly states that such payment may be legally collected.”
The radio broadcasters took the position that performances given in their studios were not public performances for profit. Printed communications as well as word-of-mouth declarations were issued expressing the intention to broadcast performances of copyrighted music works, whether or not the proprietors of such works be members of the society.
The challenge of the broadcasters was accepted and a suit was brought in behalf of the member, M. Witmark & Sons v. Bamberger, in the United States District Court of New Jersey to restrain a department store dealing in radio products from broadcasting plaintiff's copyrighted music. Judge Lynch in that case held that radio broadcasting was a public performance for profit (291 Fed. 776).
In a communication dated August 13, 1923, the National Association of Broadcasters, by Paul B. Klugh, its executive chairman, issued a circular letter reading, among other things, as follows:
66 AMERICAN SOCIETY WINS AGAINST WOR
“(Being the broadcasting station operated by Bamberger)
"This decision justifies the position taken by this association from its inception: "1. That our efforts be directed toward a revision of the copyright act rather than any contest in the courts under the present ambiguous law.
"2. That because of the proven value of broadcasting in creating sales of sheet music, phonograph records, and piano-player rolls (now admitted by Judge Lynch in his decision) it is unreasonable for any musical copyright owner to demand payment for use.
"3. That the American Society of Composers, Authors, and Publishers controls but a small percentage of the copyrights recorded in Washington, and therefore are in no position to make any concerted demand.
"4. That our bureau of music release furnishes weekly (for use by members only) good, new, copyrighted, popular music without the payment of any fee or tax.
"With our rapidly growing membership and the strength which comes from numbers, the future of the broadcasting art becomes clearer."
The National Association of Broadcasters thereupon launched a very vigorous campaign of attack against the society. Mr. McDonald and Mr. Paul B. Klugh, its executive chairman, called a number of conferences in which were invited motion-picture theater proprietors, hotel, dance hall, ball room, and other places of public amusement proprietors, as well as broadcasters and various trade associations to join with them, for the purpose of taking united action to prevent the society from continuing its activities; to defend actions brought by the society on behalf of its members to suppress infringements; to effectuate a dissolution of the society; introduce and press legislation to repeal the musical performing rights provision of the copyright act, and to
otherwise hinder and obstruct the society from protecting the rights of property of its members.
It was not a question with the broadcasters as to the reasonableness of a license fee or royalty for the privilege of performing copyrighted music. They refused to recognize the right of a copyright proprietor to control the performance of his works fr broadcasting purposes.
Assessments were levied upon the various members of the National Association of Broadcasters, and sums of money were subscribed by and collected from broadcasters, motion-picture theater owners, hotels, restaurants, cabarets, and dance-hall proprietors, as well as from trade associations, to carry on and to wage a warfare, legislative and legal, against the society.
On March 7, 1924, the Illinois Motion Picture Theatre Owners and the Chicago Exhibitors Association, meeting in executive session, unanimously voted to associate with the National Association of Broadcasters in its fight against the society. The Chicago organization voted to subscribe at least $10 a house toward the fund necessary for fighting the society. There are attached hereto articles published in the Exhibitors' Herald of March 22, 1924. (Exhibit G) in which it is stated that the executive secretary of the Motion Picture Theatre Owners of Wisconsin and George P. Aarons, secretary of the Motion Picture Theatre Owners of America, forecast that the exhibitors "will celebrate July 4, 1924, tax-free." It also stated in said articles that the Chicago association will raise at least $2,000 with which to fight the society. The Association of Broadcasters' plan of battle developed three points of attack on the society: First, the refusal to recognize the right of any copyright proprietor to control the performing rights of his works for broadcasting purposes; second, to secure a change in the copyright law which would deprive the copyright proprietor of all control over the performing rights of his works, and thus end the activities of the society; and third, to disintegrate the society by inducing its members to resign therefrom and to effect its dissolution. In order to furnish such broadcasting stations as did not care to assume the rôle of infringers with suitable instrumental and vocal numbers, the broadcasters' association developed a working plan which provided that radio stations with a plentiful supply of music in respect to which no license fee was claimed, and the broadcasters' association planned to extend the service of this bureau to picture theaters and to other purveyors of entertainment.
It was reported that Mr. E. F. McDonald openly boasted that the bureau had received 3,000 musical scores which were free of royalty.
Mr. McDonald further stated that in order to give motion-picture theaters the advantage of the music privileges of the broadcasters' association a class B associate membership had been formed and motion-picture men were invited to become members.
He also is said to have stated that funds collected under this class B membership will be used only by the association of broadcasters for the expense of maintaining and operating the music release bureau and for the purpose of conducting a nation-wide campaign for the amendment of the present copyright law.
It has been rumored that the National Broadcasters' Association has raised a fund in excess of $50,000 for the purpose of carrying on its legislative and legal activities against the society and its members; and for the repeal of the musical performing right provisions of the copyright act.
Prior to the 5th of February, 1924, the plaintiff, nor its president, Mr. Waterson, nor Mr. Walter Douglas, its general manager, and its representative upon the society's board of directors, never expressed any disagreement or dissatisfaction or complaint with or against the society's program and policy with respect to radio broadcasting, or any other of its activities or operations. On the contrary, from the time the plaintiff rejoined the society until the 5th of February, 1924, it had expressly approved and ratified every action taken by the society with respect to its various operations and activities, as well as its program and policies.
Like a thunderbolt out of a clear sky, without any previous protest or warning of any kind, there was publicly broadcast from station WDAP, located in Chicago and operated by a member of the National Association of Broadcasters, a letter written by the plaintiff to the National Association of Broadcasters, reading as follows: