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From the very inception of the society, relief was one of its principal objects and purposes; Article XIV, section 7, provides for the relief committee to investigate requests or applications for relief on behalf of a sick, infirm, needy, or deserving member, or his widow, infant children, or indigent parents. Upon the recommendation of such a committee the board may direct the payment of such sum or sums as in its judgment will satisfy the immediate necessity of such person or persons, and to make advances from royalties thereafter to accrue to the member.
Subdivision B provides that the board of directors shall annually vote a part of the proceeds derived from it operations for the purpose of giving financial aid to members of the society, their widows, infant children, or indigent parents.
The plaintiff well knows that writers of songs are the poorest paid of all professional workers. The plaintiff pays to its writers at the rate of 2 cents per copy of sheet music published and 33 per cent of the mechanical royalties. The mechanical royalties are fixed by statute at 2 cents per record or roll. The sheet music and mechanical royalties are divided among all the authors or composers of each composition. There are usually two authors--a lyric writer and a musical composer---to each song, so that each writer gets 1 cent per copy for music sold and 16% per cent of 2 cents of each phonograph record or music roll. The average earnings per year of song writers and composers are about $3,000.
The society has out of this reserve fund paid for medical relief, rent, food. hospital bills, undertaker, and burial bills of members, and made advances to needs members.
It is not true that all the publishers have been anxious to have their songs and music broadcast. Publishers and writers have learned to their sorrow that the introduction of radio broadcasting has cut the sales of sheet music and the sale of phonograph records and music rolls by one-half; that it has detracted from the attendance at legitimate theaters and is cutting down quite considerably the royalties earned by writers. Most of the publishers, composers, and authors have declared that unrestricted radio broadcasting is injurious to the popularity, vogue, and financial success of musical numbers; that the constant and repeated singing and playing of the same composition nine or ten times per night from various radio broadcasting stations satiates the public's craving for said publication and its overexploitation actually destroys it. The song "I Love You," from the musical play "Little Jesse James," had every earmark of being the greatest hit of 1923. Undestricted broadcasting and its overexploitation at the broadcasting stations shortened its life and decreased very materially its earnings.
The plaintiff says that broadcasting stations have been quite content, and are now cantent, to broadcast the songs and music without charge. Mr. Powell Crosley, jr., the treasurer of the National Association of Broadcasters, operating station WLW, at Cincinnati, has publicly declared that publishers will be charged for broadcasting such songs as they desire "plugged." Furthermore, in a circular letter of December 31, 1923, issued by the National Association of Broadcasters, Bureau of Music Release, it is stated:
"Inclosed please find information for song-writers which we wish you would glance over, as it explains our plans for helping writers to achieve success. When a number has been accepted by us for release, the copyright owner furnishes us with 100 dance orchestrations and the same amount of professional or song copies, which we distribute to our members, who in turn place them in the hands of artists who broadcast at their stations. The copyright owner also signs contracts allowing us a fair percentage of the mechanical royalties."
The National Association of Broadcasters approaches the proposition by asking the composer for a fair percentage of his mechanical royalties. Were it not for the activities of the society, composers desiring to broadcast would have to divide their sheet music royalties as well.
The arguments advanced by Mr. Waterson in his affidavit were the identical arguments urged by the broadcasters in their endeavor to seek a repeal of the musical performing provisions of the copyright act. These arguments neither Mr. Waterson, nor Mr. Walter Douglas, nor Mr. Snyder ever presented to the society. On the contrary, they were in full accord with the policy and progress of the society with regard to broadcasting. The language of the affidavit is not that of a music publisher but rather of a broadcaster justifying his desire to the free and unrestricted use of copyrighted music.
I deny that the society was surreptitiously soliciting broadcasting stations to plug" their music.
The plaintiff complains that the form of license agreement between the society and broadcasters. This form was no different than the form of license agreement issued to the hotels and to cabarets and to motion-picture theaters. The genesis of the cancellation clause has already been explained in a preceding part of this affidavit.
The plaintiff complains that there are over 500 broadcasting stations in the United States, and thus far the society has been able to force only a very small number of stations to take out licenses or to recognize the right of the society to exact tribute. The society in its activities has never sought to force anybody to take out licenses. It has demanded and insisted that users of copyrighted music shall desist from infringing upon the rights of its members, and those that were willing to respect rights could have licenses for the very reasonable license fees established by the society's rates. The society has endeavored and is endeavoring to establish that radio broadcasting by commercial stations operated for profit is a public performance for profit within section 1, subdivision (e) of the copyright laws.
Mr. E. F. McDonald, referred to in Mr. Waterson's affidavit, is the same E. F. McDonald who is the president of the National Association of Broadcasters, the bitterest of the society's foes. The license of the Edgewater Beach Hotel was canceled because there was a default in the payment of royalties under the agreement and for the further reason that it was constantly conniving with the broadcasting station maintained upon its premises in the rendition for profit of the society's numbers. The license to that hotel limited the performance to the hotel premises. It applied for a renewal of the license and during the course of discussion it was suggested that it would be distinctly to the interest of the broadcasting station operating upon the roof of the hotel if it also took out a license, and a rate therefor was finally agreed upon.
I am informed and verily believe that at no time was it ever stated or indicated that a license for the hotel would be withheld unless it also signed up for the broadcasting station.
It is strange indeed that Mr. Waterson should now make reference to this Edgewater Beach Hotel transaction, when at no time did he or his representatives on the plaintiff's board of directors ever present that matter to the board of directors for its investigation or action.
It is untrue that the broadcasting station connected with the Edgewater Beach Hotel did not use the society's numbers. The fact is that it did and persisted in so doing, and was a rank infringer. It was giving false announcements of titles, but actually broadcasting compositions of the members of the society.
Waterson attaches a letter from Mr. Louis Bernstein, of Shapiro, Bernstein & Co., to his representative in Minnesota, Charles Cordey, dated September 13, 1923. (Waterson's affidavit, p. 16.) His object is to have the court believe that Bernstein, a member of the society, was seeking by subterfuge to have his music broadcasted. The fact is that Bernstein did nothing of the kind, and there was nothing in the letter that should give rise to any such inference. That letter was plainly intended to have Cordey go to orchestra leaders and have them broadcast from stations that were duly licensed. Since there are 36 broadcasting stations licensed by the American society, and there are about 100 stations, such as charitable and educational institutions, that have the right to broadcast the society's music without any fee whatever, making a total of 136 stations, Bernstein was certainly within his rights and was not violating his agreement with the society in having his manager induce orchestra leaders to pay at these stations.
The letter of Jerome H. Remick & Co. to the manager of station WYAZ, at the Edgewater Beach Hotel (Waterson's affidavit, p. 17), was perfectly proper. I deny Waterson's statement that station WYAZ, on February 11, 1924, the date of that letter, was an unlicensed station. The fact is that it was licensed, and the best proof is that the plaintiff, in its own Exhibit D (E. F. McDonald, jr.'s affidavit) so states. Mr. McDonald in his affidavit states:
"In order to have the license renewed for the dining room; the hotel was forced to pay a considerable additional sum for the broadcasting privilege which was not wanted, and our company reimbursed the Edgewater Beach Hotel for this additional amount, and we have not used, even though we have a license, the music of the American Society."
The series of telegrams between the society and Abe Lyman, set forth on pages 18 and 19 of Waterson's affidavit, do not show that this society was doing anything that it had no right to do. The fact is that Lyman did not wish to conduct for broadcasting, and he asked the society to wire him so that he could show the wire to his employer, the Hotel Ambassador, at Los Angeles. All he was asked to do by the society was not to cooperate with broadcasting stations unless they secured licenses. The reasons for that was that none of these broadcasting stations respect the rights of the society and that all of them who are not licensed are openly infringing. The society does not propose to permit any of its members to assist or to participate in any infringements. This is within its rights.
The letter which is quoted in part from E. S. Hartman, the society's representative in Chicago, at pages 21 and 22 of Waterson's affidavit, illustrate that it is not easy at all times to control agents throughout the country who may become overzealous and step beyond the bounds of their authority. The fact is that when the society was informed by E. S. Hartman that he had drawn a proposed form of license for this broadcasting station at Elgin, Ill., to broadcast upon the condition that such station use exclusively the music of the society, Hartman was immediately informed that he had no right to do this, and that proposed form of license was changed. Hartman's act was without the knowledge, consent, or approval of the society.
All of the alleged grievances set up in Waterson's affidavit were never presented to the board of directors for investigation or action.
Waterson has incorporated, at pages 22 and 23 of his affidavit, the statements about radio having helped to make the musical composition Marcheta a great success, and he recites at length the experiences of Mr. Frank Sheridan. the publisher of that composition. This argument was advanced to the Senate Committee on Patents by Mr. Sheridan in person. Mr. Sheridan appeared before that committee last April and related his experience with Marcheta exactly as Mr. Waterson has summarized them in his affidavit.
I stated before that committee, and I state now, that radio broadcasting has had a tremendously unhappy effect upon the music-publishing business; that since broadcasting has come into wide use, the sale of sheet music of the music publishers has fallen off approximately 50 per cent. The revenue derived from publishers, from the phonograph companies, and piano-roll companies has fallen off in about the same proportion. The public no longer bulys sheet music, phonograph records, and music rolls.
It is strange that the plaintiff did not discover any of these unfair practices nor that the other publishers were resorting to subterfuges in order to have their numbers broadcasted during all the time that its representative, its officer and managing agent, Mr. Walter Douglas, sat on the board of directors and voted with the other directors on the matter of policy pertaining to the society.
Section 4, article 14, provides for a complaint committee and for the investigation of misconduct, fraud, fraudulent acts, or acts derogatory to the welfare of or prejudicial to the society. The plaintiff never asked for a redress of any of its alleged grievances now set up in the complaint, all of which alleged grievances are projected only after the plaintiff's attempted resignation from the society. The grievances alleged are not its grievances but the grievances of the broadcasters, and were aired before the House and Senate Committee cn Patents.
I deny that the society ever prevented any one of its members, under threat of expulsion, from playing independent music at any time or in any place. I deny that the society ever interfered with any rights or owners of independent music or the owners of any other kind of music.
With respect to the license issued to stations WJZ and WJY, this license was granted for one special night only, without any license fee, and as an experimental or test performance to determine the effect upon the society's works and upon the stations' suggestion that the program would be limited to the society's numbers.
The application should be denied.
Sworn to before me this 30th day of June, 1924.
HERMAN GREENLEY, Notary Public, New York City.
United States District Court for the Southern District of New York. Waterson, Berlin & Snyder Co., plaintiff, v. Gene Buck, as president of American Society of Composers, Authors, and Publishers, defendant.
STATE OF NEW YORK,
County of New York, 88:
Gene Buck, being duly sworn, deposes and says:
The plaintiff in its replying affidavit assigns as its reason for resigning from the society Mr. Waterson's discovery of unfair practices on the part of the society's representatives in connection with the Edgewater Beach Hotel-Zenith broadcasting station license, and the perfidy of some publisher members in surreptitiously broadcasting their numbers over nonlicensed stations.
THE EDGEWATER BEACH HOTEL-ZENITH BROADCASTINGS STATION INCIDENT
The facts with relation to this matter are set forth in the affidavit of Mr. F. S. Hartman, a reputable Chicago attorney, who handled that matter for the society in Chicago, and in the affidavit of Ted Ficrito.
Mr. Waterson, in his replying affidavit, states that "the reasons why this plaintiff resigned from the defendant society and instituted this action are simple enough * * *
"In the early part of February, 1924, I was in Chicago, and then ascertained the facts concerning the manner in which the representatives of the defendant society had employed its hold over the Edgewater Beach Hotel to force the Zenith broadcasting station to pay tribute to the society for a license which it did not want and did not use, * * * and I also ascertained that a number of the large publishing members of the society were resorting to subterfuge in order to have their numbers broadcasted over nonlicensed broadcasting stations."
The plaintiff was inspired in its acts by the Zenith broadcasting station, the broadcasting station then operated by the Zenith Radio Corporation, under the immediate direction of Mr. E. F. McDonald. Mr. McDonald was not only the president of the corporation, but he was, as well, the president of the National Broadcasters' Association. Hence, there was every incentive for the Edgewater-Zenith broadcasting station, and its active director, who was not only a manufacturer of radio apparatus but as well the president of the association of broadcasters opposed to the objects of the society, to break down if possible the morale and loyalty of an important member of the society, and thus, perhaps, create a breach in its wall of defense.
As to the question of alleged subterfuge by other members subjecting the plaintiff to unfair competition, the plaintiff lacked actual knowledge of any such facts, and did not first demand of the society the correction of such a condition, if it existed. As far as general rumor and report in Chicago were concerned, and to be credited, the plaintiff was as much accused as any other; and particularly and frequently was it alleged that the plaintiff was resorting to subterfuge through broadcasting via unlicensed stations by means of a group of singers representing a phonograph record manufacturing concern of which the plaintiff is the principal owners.
Accusations of bad faith are easy to make; allegations of subterfuge, prompted by selfish interests, inspired by those who would, if they could, break down and destroy the society, are not of themselves incontrovertible evidence of their truth. They are not admitted as true by the society; on the contrary, it is in a position to show, and to prove, that the EdgewaterZenith Station was a constant, flagrant, and willful infringer of copyrights, and that though the "license which it did not want and did not use" was available for it upon application, it preferred to violate the law and trust to its dexterity to avoid penalty; that it meant to hide behind the license already in effect and in use by the Edgewater Beach Hotel, in the premises on which its broadcasting station was located; and to rely upon its ability to pursuade sufficient members of the society to leave its rank to then make available for its unrestricted use the music which it did not hesitate to use, but for which it did not want to pay. The then ownership of the station has since been repudiated by the hotel in question, and since it passed out of the hands and control of those who were seeking in an underhanded manner to destroy the society, and into the possession of a great newspaper, it has taken out the license of the society and recognized the rights of copyright proprietors as defined by the law.
The broadcasters do not want the opportunity to bargain with the individual copyright owners for the right to publicly perform their individual copyrights, nor do they want the right to bargain with the plaintiff individually for the right to use its copyrights, nor have they made any endeavors to bargain with any responsible or reputable or well-known copyright owners not members of the society for the right to use their works under any other basis than a right to unrestricted and uncompensated free use.
I deny vehemently that the society forced the Zenith broadcasting station to take out a license which it did not want. The fact of the matter is that the Zenith broadcasting station was a willful, deliberate, and habitual infringer of the rights of the society, and such piracies were aggravated by the resort to subterfuge, deception, and misrepresentation of the titles of the number broadcasted in order to make detection more difficult. It sought to disguise its infringements by very subtle and crafty methods.
Mr. Waterson complains bitterly of the shaken confidence in the good faith of some of his fellow music publishers by their resort to subterfuge in connection with radio broadcasting, but the plaintiff was the first offender in that regard. The first instance of such radio broadcasting called to the society's attention was in the case of the song Songs for Sale," published and copyrighted by the plaintiff. When the plaintiff was called to account, it justified the same upon the claim that the song was acquired by it subject to the condition that the writer thereof should have the right to broadcast the same at any station, and that in fact it had not control over broadcasting rights of such number. That number was continuously broadcasted at all unlicensed stations in Chicago. This was followed by the broadcastings at nonlicensed stations of the compositions entitled " Electric Girl" and "Sunflower Maid," published and copyrighted by the plaintiff. The plaintiff, upon being interrogated with regard thereto, claimed that the songs in question were purchased by it under agreements which excepted from the sale and reserved to the former owners thereof the control of the broadcasting rights.
The next case of radio broadcasting over nonlicensed stations was with respect to the songs from "Earl Caroll's Vanities of 1923," published and copyrighted by the plaintiff. When complaint was made to the plaintiff regarding such broadcasting it justified itself by the claim that it did not own any of the performing rights to these numbers, particularly the broadcasting rights. Not only were these several numbers broadcasted continuously ever since their broadcasting commenced, sometimes before the plaintiff's resignation, but since such resignation it has caused to be broadcasted all over the country at nonlicensed stations all the numbers of its catalogue.
But other publishers, members of the society, grew as restive under what they considered the plaintiff's subterfuge, as the plaintiff now claims to have grown under what it considers the subterfuge of others. Examination into the situation discloses a condition wherein the pot derides the kettle's sootiness.
The plaintiff, however, seems early in the situation to have concluded that it would prefer to advertise its compositions via "radio," but finding itself prevented by the term of its agreement with the society, sought some way of terminating the agreement.
Hence the accusation that other members of the society have resorted to subterfuge in procuring the broadcasting of their compositions through unlicensed stations regardless of their obligations to the society.
The society has always been guided by the wishes of its members with respect to its program and policy, and if at a meeting of the board of directors a majority of the members desired the society to commit itself to the free broadcasting of the numbers within the society's repertory, then the society would have permitted such broadcasting under proper restrictions.
During 1922 the popularity of radiotelephony, and of the receiving sets designed for popular use in receiving broadcasted material, grew by leaps and bounds, until, in September of that year, the society called a conference, inviting a representative from every broadcasting station in the United States to attend, for the purpose of considering what was to be the future relationship between broadcasters, who obviously publicly performed, for purposes of profit, copyrighted music, and the proprietors of the copyrights thereof.
The conference was attended by a representative group of the radio interests; by various musical organizations and individuals, and by a representative of the United States Government. A full and frank discussion. participated in